NICHOLAS FUND, INC.
November 20, 2000
Report to Fellow Shareholders:
For the first six months of its current fiscal year ending
March 31, 2001, Nicholas Fund's total return was
0.37%. During this same time, the S&P 500 was down 3.60%.
For the nine months ended September 30, 2000, Nicholas Fund
rose 4.59%, comparatively the S&P 500 was down 1.39%. Other
stock market indices were also lower, namely, the Dow Jones
Industrial Average which declined 6.31% year-to-date while
the NASDAQ was off 9.74% .
Returns for Nicholas Fund, Inc. and selected indices are
provided in the chart below for the periods ended
September 30, 2000.
[CAPTION]
<TABLE> Average Annual Total Return*
----------------------------------
9 1 5 10 15 July 14, 1969**
Months Year Years Years Years 31.2 Years
------ ------ ------ ------ ------ ---------------
<C> <C> <C> <C> <C> <C> <C>
Nicholas Fund Inc. (Distributions Reinvested) 4.59% 17.27% 16.36% 17.10% 14.31% 13.67%
Standard & Poors 500 Index (Dividends Reinvested) (1.39)% 13.27% 21.68% 19.43% 17.89% 12.94%
Consumer Price Index 2.84% 3.46% 2.53% 2.73% 3.21% 5.11%
Ending value of $10,000 invested in Nicholas
Fund, Inc. (Distributions Reinvested) $10,459 $11,727 $21,327 $48,467 $74,394 $545,850
</TABLE>
Our sector weightings have not changed much in recent
months. At September 30, technology was 25% of net assets,
health care represented 21%, financials were 19% and
consumer staples totaled 12%. In each area, management
invests in companies with above-average growth
characteristics. Moreover, we practice diversification,
especially in the technology portion, thereby reducing risk
exposure.
It appears that the economy is starting to slow.
Manufacturing is losing steam. Employment, while at an
extremely high level, shows signs of moderating. Car sales
are beginning to decline and retail sales are tepid. Rising
gas prices and the declining Wall Street "wealth effect" are
problems too. These facts and a serene inflation outlook
indicate that we may have seen the last of tightening moves
by the Federal Reserve Board. The possibility of interest
rate cuts in 2001 may not be wishful thinking.
In regard to the stock market outlook, our belief is that
the overall market has been in a bearish trend since the
spring of 1998. Only select stocks, such as Cisco Systems
and General Electric, plus the technology stampede of 1999
through early 2000, has made the capitalization-weighted
market indices look strong. To illustrate further, the
Value Line Geometric Composite Index which has returned just
2.5% a year over the last four years ended October 31, 2000,
gives equal weight to each of approximately 1,700 widely
held stocks.
Despite extreme and unprecedented stock market volatility in
the recent past, management is more sanguine about future
investment return prospects. Furthermore, since the indices
reflect the outperformance of a few big company stocks, it
should be easier for managed portfolios to beat the market
averages. We are dedicated to that goal.
Sincerely,
\s\ \s\
Albert O. Nicholas David O. Nicholas
Co-Portfolio Manager 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)
---------------------------------------------------------------
[CAPTION]
<TABLE>
Six Months
Ended 09/30/2000 Year ended March 31,
-----------------------------------------
(unaudited) 2000 1999 1998 1997 1996
---------------- ---- ---- ---- ---- ----
<C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $84.56 $85.20 $93.98 $67.11 $63.81 $52.22
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .05 .39 .51 .36 .40 .57
Net gains (losses) on securities
(realized and unrealized) .38 5.22 (.43) 32.67 8.64 15.68
------ ------ ------ ------ ------ ------
Total from investment operations .43 5.61 .08 33.03 9.04 16.25
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
From net investment income (.09) (.31) (.59) (.36) (.42) (.57)
From capital gains (15.45) (5.94) (8.27) (5.80) (5.32) (4.09)
------ ------ ------ ------ ------ ------
Total distributions (15.54) (6.25) (8.86) (6.16) (5.74) (4.66)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $69.45 $84.56 $85.20 $93.98 $67.11 $63.81
------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------
TOTAL RETURN 0.37%** 6.75% 0.13% 50.98% 14.68% 32.38%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (millions) $4,527.7 $4,900.9 $5,619.4 $5,907.2 $3,989.5 $3,655.3
Ratio of expenses to average net assets .72%* .73% .71% .71% .72% .74%
Ratio of net investment income
to average net assets .13%* .46% .58% .44% .61% .87%
Portfolio turnover rate 31.51%* 39.72% 25.04% 17.01% 15.18% 25.70%
*Annualized.
**Not annualized.
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
-----------------------------------------------------------
Top Ten Portfolio Holdings
September 30, 2000 (unaudited)
-------------------------------------------------------------
Percentage
of Net Assets
----------------
General Motors Corporation - Class H 3.65%
Cintas Corporation 2.69%
Mercury General Corporation 2.64%
Citigroup Inc. 2.47%
Marshall & Ilsley Corporation 2.45%
Berkshire Hathaway Inc. - Class A 2.23%
Health Management Associates, Inc. - Class A 2.13%
USA Networks, Inc. 2.10%
Guidant Corporation 2.09%
Qwest Communications International Inc. 2.08%
-----
Total of top ten 24.53%
------
------
Schedule of Investments
September 30, 2000 (unaudited)
---------------------------------------------------------------
[CAPTION]
<TABLE>
Shares or Quoted
Principal Market
Amount Value
------------- -----------------
<C> <C>
(Note 1(a))
COMMON STOCKS - 94.41%
Basic Materials - 1.85%
245,000 Valspar Corporation (The) $ 5,632,550
1,950,000 Vulcan Materials Company 78,365,625
-------------
83,998,175
-------------
Capital Goods - 0.86%
1,501,825 Thermo Electron Corporation * 39,047,450
-------------
39,047,450
Communication Services - 6.03%
1,065,000 Global TeleSystems, Inc. * 4,859,063
1,958,882 Qwest Communications International Inc. * 94,148,766
895,000 Sprint Corp (PCS Group) * 31,380,937
2,700,000 Sprint Corporation 79,143,750
763,000 Verizon Communications 36,957,813
750,000 XO Communications Inc. * 26,390,625
-------------
272,880,954
-------------
Consumer Cyclicals -
Products - 1.33%
1,260,700 Harley-Davidson, Inc. 60,356,012
-------------
Consumer Cyclicals -
Retail - 1.71%
1,350,000 Circuit City Stores, Inc. - Circuit City Group 31,050,000
800,000 Kohl's Corporation * 46,150,000
-------------
77,200,000
-------------
Consumer Cyclicals -
Services - 4.53%
2,794,850 Cintas Corporation 121,750,653
1,446,000 Fastenal Company 83,325,750
-------------
205,076,403
-------------
Consumer Staples - Drug,
Retail, Food & Beverage - 4.82%
1,735,000 CVS Corporation 80,352,187
1,550,000 McDonald's Corporation 46,790,625
2,400,000 Walgreen Co. 91,050,000
-------------
218,192,812
-------------
Consumer Staples - Media &
Entertainment - 7.35%
1,388,600 Clear Channel Communications, Inc. * 78,455,900
625,000 Time Warner Inc. 48,906,250
4,330,000 USA Networks, Inc. * 94,989,375
711,925 Viacom Inc. - Class B * 41,647,612
1,800,000 Walt Disney Company (The) 68,850,000
-------------
332,849,137
-------------
Energy - 1.33%
350,000 Anadarko Petroleum Corporation 23,261,000
200,000 Coastal Corporation (The) 14,825,000
250,000 Exxon Mobil Corporation 22,281,250
-------------
60,367,250
-------------
Financial - Banks &
Diversified Financials - 8.52%
2,070,666 Citigroup Inc. 111,945,381
1,603,218 Fifth Third Bancorp 86,373,370
1,415,200 Freddie Mac 76,509,250
2,209,063 Marshall & Ilsley Corporation 110,729,283
-------------
385,557,284
-------------
Financial - Brokerage &
Investment Management - 5.66%
1,569 Berkshire Hathaway Inc. - Class A * 101,043,600
1,400,000 Merrill Lynch & Co., Inc. 92,400,000
688,000 Morgan Stanley Dean Witter & Co. 62,909,000
-------------
256,352,600
-------------
Financial - Insurance - 4.44%
4,220,300 Mercury General Corporation + 119,487,244
2,737,000 Protective Life Corporation 81,767,875
-------------
201,255,119
-------------
Financial - Real Estate - 0.01%
760,625 HomeFed Corporation * 456,375
-------------
Health Care - Products - 16.89%
1,850,000 Abbott Laboratories 87,990,625
1,156,000 American Home Products Corporation 65,386,250
945,000 Elan Corporation, plc * 51,738,750
800,000 Eli Lilly and Company 64,900,000
1,341,000 Guidant Corporation * 94,791,938
1,023,796 Medtronic, Inc. 53,045,430
1,180,000 Pfizer Inc. 53,026,250
775,100 Pharmacia Corporation 46,651,331
1,763,600 Stryker Corporation 75,724,575
3,327,400 Sybron International Corporation * 79,857,600
1,414,927 Watson Pharmaceuticals, Inc. * 91,793,389
-------------
764,906,138
-------------
Health Care Services - 3.97%
905,725 Cardinal Health, Inc. 79,873,623
4,631,737 Health Management Associates, Inc. - Class A * 96,398,026
961,052 National HealthCare Corporation * + 3,483,814
-------------
179,755,463
-------------
Technology - Communication
Equipment - 6.71%
2,000,000 ADC Telecommunications, Inc. * 53,781,200
550,000 Alcatel 34,581,250
2,550,000 Motorola, Inc. 72,037,500
520,000 Nokia OYJ 20,702,500
850,000 Nortel Networks Corporation 50,628,125
325,000 QUALCOMM Incorporated * 23,156,250
1,020,000 Tellabs, Inc. * 48,705,000
-------------
303,591,825
-------------
Technology - Hardware 8.87%
162,095 Agilent Technologies * 7,932,524
675,000 Cisco Systems, Inc. * 37,293,750
1,950,000 Compaq Computer Corporation 53,781,000
750,000 Dell Computer Corporation * 23,109,375
500,000 EMC Corporation * 49,562,500
150,700 Gateway, Inc. * 7,045,225
425,000 Hewlett-Packard Company 41,225,000
1,013,500 Intel Corporation 42,123,594
350,000 International Business Machines Corporation 39,375,000
615,000 Sun Microsystems, Inc. * 71,801,250
600,000 Texas Instruments Incorporated 28,312,500
-------------
401,561,718
-------------
Technology - Services - 5.88%
850,000 Automatic Data Processing, Inc. 56,843,750
425,000 Computer Sciences Corporation * 31,556,250
4,450,200 General Motors Corporation - Class H * 165,458,436
2,007,100 Loral Space & Communications Ltd. * 12,293,488
-------------
266,151,924
-------------
Technology Software - 3.65%
350,000 Microsoft Corporation * 21,109,375
590,000 Oracle Corporation * 46,462,500
800,000 Rational Software Corporation * 55,500,000
297,500 VERITAS Software Corporation * 42,245,000
------------
165,316,875
------------
TOTAL COMMON STOCKS
(cost $2,507,228,659) 4,274,873,514
-------------
</TABLE>
SHORT-TERM INVESTMENTS - 5.70%
Commercial Paper - 5.19%
-------------------------------------------------------------
$ 5,000,000 Universal Foods Corporation
6.80%, due October 2, 2000 5,000,000
4,500,000 Fiserv, Inc.
6.80%, due October 3, 2000 4,499,150
8,500,000 Universal Foods Corporation
6.80%, due October 4, 2000 8,496,789
2,500,000 Banta Corporation
6.80%, due October 5, 2000 2,498,583
2,000,000 Quad/Graphics, Inc.
6.80%, due October 5, 2000 1,998,867
9,000,000 Quad/Graphics, Inc.
6.80%, due October 6, 2000 8,993,200
10,000,000 A.O. Smith Corporation
6.80%, due October 10, 2000 9,984,889
6,000,000 Banta Corporation
6.80%, due October 11, 2000 5,989,800
15,000,000 ConAgra, Inc.
6.67%, due October 11, 2000 14,974,987
7,500,000 Briggs & Stratton Corporation
6.80%, due October 12, 2000 7,485,833
4,500,000 Fiserv, Inc.
6.80%, due October 12, 2000 4,491,500
16,500,000 Fiserv, Inc.
6.80%, due October 13, 2000 16,465,717
7,000,000 Banta Corporation
6.80%, due October 16, 2000 6,981,489
7,800,000 Fiserv, Inc.
6.80%, due October 17, 2000 7,777,900
3,200,000 Marcus Corporation
6.80%, due October 18, 2000 3,190,329
11,000,000 WICOR Industries, Inc.
6.80%, due October 29, 2000 10,964,678
11,500,000 Fiserv, Inc.
6.80%, due October 20, 2000 11,460,900
6,500,000 Banta Corporation
6.80%, due October 23, 2000 6,474,217
6,000,000 Universal Foods Corporation
6.80%, due October 24, 2000 5,975,067
6,000,000 Fiserv, Inc.
6.80%, due October 25, 2000 5,973,933
5,000,000 A.O. Smith Corporation
6.80%, due October 26, 2000 4,977,333
10,000,000 Fiserv, Inc.
6.80%, due October 27, 2000 9,952,778
9,500,000 Universal Foods Corporation
6.80%, due October 30, 2000 9,449,755
5,000,000 Banta Corporation
6.80%, due October 31, 2000 4,972,611
14,400,000 Fiserv, Inc.
6.80%, due November 1, 2000 14,318,400
4,000,000 A.O. Smith Corporation
6.80%, due November 2, 2000 3,976,578
7,500,000 Marcus Corporation
6.80%, due November 3, 2000 7,454,667
4,000,000 Quad/Graphics, Inc.
6.80%, due November 6, 2000 3,973,556
5,000,000 WICOR Industries, Inc.
6.80%, due November 7, 2000 4,966,000
5,000,000 Fiserv, Inc.
6.80%, due November 8, 2000 4,965,056
8,300,000 Quad/Graphics, Inc.
6.80%, due November 9, 2000 8,240,424
8,000,000 Universal Foods Corporation
6.85%, due November 10, 2000 7,940,633
-------------
234,865,619
-------------
Variable Rate Demand Notes - 0.51%
21,614,985 Firstar Bank U.S.A., N.A.
6.29%, due October 2, 2000 21,614,985
1,310,000 Sara Lee Corporation
6.22%, due October 2, 2000 1,310,000
110,000 Wisconsin Electric Power Company
6.24%, due October 2, 2000 110,000
--------------
23,034,985
--------------
TOTAL SHORT-TERM INVESTMENTS
(cost $257,231,055) 257,900,604
------------
TOTAL INVESTMENTS
(cost $2,764,459,714) - 100.11% 4,532,774,118
---------------
LIABILITIES
NET OF OTHER ASSETS - (0.11)% (5,098,052)
---------------
TOTAL NET ASSETS
(Basis of percentages
disclosed above) - 100% $4,527,676,066
---------------
---------------
+ 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
September 30, 2000 (unaudited)
--------------------------------------------------------
ASSETS:
Investments in securities at market value (Note 1 (a)) -
Nonaffiliated issuers (cost $2,729,262,810) -
see accompanying schedule of investments......... $4,409,803,061
Affiliated issuers (cost $35,196,904) -
see accompanying schedule of investments (Note 5) 122,971,057
--------------
Total investments....................... 4,532,774,118
--------------
Receivables --
Investment securities sold................... 11,578,462
Dividends and interest....................... 796,827
--------------
Total receivables....................... 12,375,289
--------------
Total assets............................ 4,545,149,407
--------------
LIABILITIES:
Payables --
Investment securities purchased.............. 12,678,690
Management fee (Note 2)...................... 2,528,658
Other payables and accrued expenses.......... 2,265,993
--------------
Total liabilities....................... 17,473,341
--------------
Total net assets........................ $4,527,676,066
--------------
--------------
NET ASSETS CONSIST OF:
Fund shares issued and outstanding............... $2,614,492,495
Net unrealized appreciation on
investments (Note 3)............................. 1,767,644,855
Accumulated undistributed net realized
gains on investments............................. 142,682,079
Accumulated undistributed net investment income.. 2,856,637
--------------
$4,527,676,066
--------------
--------------
NET ASSET VALUE PER SHARE ($.50 par value, 200,000,000 shares authorized),
offering price and redemption price ($4,527,676,066/65,190,641 shares
outstanding)..................................... $69.45
------
------
The accompanying notes to financial statements
are an integral part of this statement.
Statement of Operations
For the six months ended September 30, 2000 (unaudited)
--------------------------------------------------------
INCOME:
Dividends --
Nonaffiliated issuers ....................... $ 11,339,863
Affiliated issuers (Note 5).................. 2,912,336
Interest.......................................... 5,318,502
--------------
19,570,701
--------------
EXPENSES:
Management fee (Note 2)........................... 15,080,554
Transfer agent fees............................... 1,142,341
Postage and mailing .............................. 147,428
Custodian fees.................................... 115,844
Printing ......................................... 66,880
Registration fees................................. 31,158
Telephone ........................................ 15,530
Legal fees........................................ 15,000
Audit and tax consulting fees..................... 11,000
Directors' fees................................... 7,593
Other operating expenses.......................... 18,610
-------------
16,651,938
--------------
Net investment income................... 2,918,763
--------------
NET REALIZED GAINS (LOSSES) ON INVESTMENTS:
Nonaffiliated issuers ............................ 186,880,793
Affiliated issuers (Note 5) ...................... (41,791,819)
--------------
145,088,974
--------------
NET DECREASE IN UNREALIZED APPRECIATION ON INVESTMENTS (131,506,411)
--------------
Net realized and unrealized gain on investments 13,582,563
--------------
Net increase in net assets resulting
from operations.............................. $16,501,326
--------------
--------------
The accompanying notes to financial statements
are an integral part of this statement.
Statements of Changes in Net Assets
For the six months ended September 30, 2000 (unaudited)
and the year ended March 31, 2000
------------------------------------------------------------
[CAPTION]
<TABLE>
Six Months
Ended 09/30/2000 2000
------------- --------------
<C> <C> <C>
OPERATIONS:
Net investment income................................................ $ 2,918,763 $ 24,088,499
Net realized gains on investments.................................... 145,088,974 943,646,604
Net decrease in unrealized appreciation on investments............... (131,506,411) (657,712,416)
-------------- --------------
Net increase in net assets resulting
from operations........................................... 16,501,326 310,022,687
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income
($0.0900 and $0.3114 per share, respectively)...................... (5,072,063) (19,670,553)
Distributions from net realized gains on investment transactions
($15.4500 and $5.9433 per share, respectively)..................... (870,704,274) (384,359,917)
-------------- --------------
Total distributions......................................... (875,776,337) (404,030,470)
-------------- --------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares issued (1,224,339 and 3,201,699
shares, respectively).............................................. 92,211,789 260,402,343
Reinvestment of distributions (11,436,095 and 4,460,866
shares, respectively) 800,069,205 374,800,666
Cost of shares redeemed (5,428,977 and 15,655,897 shares,
respectively)...................................................... (406,236,112) (1,259,669,228)
-------------- --------------
Increase (decrease) in net assets derived from capital share
transactions 486,044,882 (624,466,219)
-------------- --------------
Total decrease in net assets (373,230,129) (718,474,002)
-------------- --------------
NET ASSETS:
Beginning of the period (including undistributed net
investment income of $5,009,937 and $244,740, respectively)......... 4,900,906,195 5,619,380,197
---------------- --------------
End of the period (including undistributed net investment
income of $2,856,637 and $5,009,937, respectively)............... $4,527,676,066 $4,900,906,195
---------------- --------------
---------------- --------------
</TABLE>
The accompanying notes to financial statements are
an integral part of these statements.
Notes to Financial Statements
September 30, 2000 (unaudited)
-------------------------------------------------
(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 September 30, 2000 no
reclassifications were required.
(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 September 30,
2000, based on investment cost for federal tax purposes is as follows:
Aggregate gross unrealized appreciation on investments...... $1,972,749,793
Aggregate gross unrealized depreciation on investments...... (205,104,938)
---------------
Net unrealized appreciation ................................ $1,767,644,855
---------------
---------------
(4) Investment Transactions --
For the six months ended September 30, 2000, the cost of purchases and the
proceeds from sales of investment securities, other than short-term
obligations, aggregated $707,215,908 and $1,123,236,560, respectively.
(5) Transactions with Affiliates -
Following is an analysis of fiscal 2001 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 03/31/00 Purchases Sales 09/30/00 2001 2001
------------- ----------- --------- ----- ------- --------- ---------
<C> <C> <C> <C> <C> <C> <C>
Mercury General Corporation 4,237,400 - 17,100 4,220,300 $2,025,744 $ 357,048
National HealthCare Corporation 1,099,452 - 138,400 961,052 - (4,210,375)
National Health Investors, Inc. (a) 1,385,300 - 1,385,300 - 886,592 (37,938,492)
--------------------------
2,912,336 (41,791,819)
==========================
</TABLE>
(a) As of September 30, 2000, the Fund is no longer affiliated with
this company.
Historical Record (unaudited)
-------------------------------------------------------------------------
[CAPTION]
<TABLE>
Net Investment Dollar
Net Income Capital Gain 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, 1986............... 35.26 0.5750 0.6100 15.8 times 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 5.9433 37.3 543,813
September 30, 2000........... 69.45 0.0900(a) 15.4500(a) 36.4 545,850
* Date of Initial Public Offering.
** Based on latest 12 months accomplished earnings.
*** Assuming reinvestment of all distibutions.
</TABLE>
(a) Paid June 19, 2000 to shareholders of record June 16, 2000.
Range in quarter end price/earnings
ratios since December 31, 1974
High Low
--------------- ---------------
March 31, 2000 37.3 March 31, 1982 8.3
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 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>
Nicholas Fund
______________________________
<C> <C> <C>
$1,000 initial investment on 07-14-69* 09-30-90
Number of years of investing $100 each month following
the date of the initial investment 31.2 10
Total cash invested $ 38,500 $13,000
Total dividends and capital gains distributions reinvested $363,428 $14,809
Total full shares owned 09/30/00 11,779 442
Total market value on 09/30/00 $818,039 $30,684
</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.
NICHOLAS FAMILY OF FUNDS DECEMBER 2000 DISTRIBUTION SCHEDULE
[CAPTION]
<TABLE>
FUND RECORD DATE EX-DIVIDEND DATE PAYMENT DATE
<C> <C> <C> <C>
NICHOLAS FUND December 21 December 22 December 22
NICHOLAS II December 20 December 21 December 21
NICHOLAS LIMITED EDITION December 27 December 28 December 28
NICHOLAS EQUITY INCOME December 26 December 27 December 27
NICHOLAS INCOME December 27 December 28 December 28
</TABLE>
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
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
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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.
700 North Water Street
Milwaukee, Wisconsin 53202
www.nicholasfunds.com
September 30, 2000
