NICHOLAS II INC, 485BPOS, 2000-01-28

NICHOLAS II INC
485BPOS, 2000-01-28

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{letterhead}

VIA EDGAR TRANMISSION January 28, 2000

Securities and
Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20540

Re: Nicholas II, Inc. (the "Fund")
SEC File No. 2-85030
Pre-Effective Amendment No.___
Post-Effective Amendment No. 16
Registration Statement on Form N-1A

To whom it may concern:

In connection with the amendment by the Fund of its
registration statement on Form N-1A under Section 8 of the
Investment Company Act of 1940, as amended, and pursuant to the
provisions of Rule 472 and Rule 485 under the Securities Act of
1933, as amended, and pursuant to Regulation S-T relating to
electronic filings, we enclose for filing a copy of Post-
Effective Amendment No. 16 to the Registration Statement.
As indicated in the Exhibit Index certain exhibits will follow
in subsequent filing(s) as well as other pertinent financial data.

Very truly yours,

NICHOLAS COMPANY, INC.

/s/ Jeffery T. May
--------------------
JEFFREY T. MAY
Senior Vice President and Treasurer
Enclosure
As filed with the Securities and Exchange Commission on January 28, 2000.

File No. 811-3851
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
PRE-EFFECTIVE AMENDMENT NO. __
POST-EFFECTIVE AMENDMENT NO. 16

AND

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 16

NICHOLAS II, INC.
(Exact Name of Registrant as Specified in Charter)

700 North Water Street, Milwaukee, Wisconsin 53202
(Address of Principal Executive Offices) (Zip Code)

(414) 272-6133
(Registrant's Telephone Number, including Area Code)

ALBERT O. NICHOLAS, PRESIDENT
NICHOLAS II, INC.
700 NORTH WATER STREET
MILWAUKEE, WISCONSIN 53202
(Name and Address of Agent for Service)

Copy to:
TERESA M. LEVY
MICHAEL BEST & FRIEDRICH LLP
100 EAST WISCONSIN AVENUE
MILWAUKEE, WISCONSIN 53202

It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b)
on January 28, 2000 pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a)(1)
on ____________ pursuant to paragraph (a)(1)
75 days after filing pursuant to paragraph(a)(2)
on _______________ pursuant to paragraph (a)(2) of Rule 485

If appropriate, check the following box:
This post-effective amendment designates a new
effective date for a previously filed post-effective
amendment.

Title of Securities Being Registered: COMMON STOCK, $0.01 PAR
VALUE PER SHARE

Pursuant to Rule 24f-2, the Registrant hereby registers an
indefinite amount of securities. On December 30, 1999,
Registrant filed the necessary Rule 24f-2 Notice and filing fee
with the Commission for its fiscal year ended September 30, 1999.

NICHOLAS II, INC.

PROSPECTUS
JANUARY 31, 2000

The Fund's investment objective is long-term growth. To
achieve its objective, the Fund invests in a diversified group
of common stocks having growth potential.

This Prospectus gives vital information about the Fund. For
your own benefit and protection, please read it before you
invest, and keep it on hand for future reference.

Investment Adviser
NICHOLAS COMPANY, INC.

Minimum Initial Investment - $500

AS WITH ALL MUTUAL FUNDS, THE
SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED
OF THE FUND'S SHARES OR DETERMINED WHETHER THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANYONE
WHO TELLS YOU OTHERWISE IS COMMITTING A CRIME.

700 NORTH WATER STREET
SUITE 1010
MILWAUKEE, WISCONSIN 53202

414-272-6133
800-227-5987
TABLE OF CONTENTS

PAGE

AN OVERVIEW OF THE FUND.................................

FUND INVESTMENTS........................................

INVESTMENT RISKS........................................

FINANCIAL HIGHLIGHTS....................................

MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE.............

THE FUND'S INVESTMENT ADVISER...........................

PRICING OF FUND SHARES..................................

PURCHASE OF FUND SHARES.................................

REDEMPTION OF FUND SHARES...............................

EXCHANGE BETWEEN NICHOLAS FAMILY OF FUNDS...............

TRANSFER OF FUND SHARES.................................

DIVIDENDS, DISTRIBUTIONS AND FEDERAL TAX STATUS.........

DIVIDEND AND DISTRIBUTION REINVESTMENT PLAN.............

SYSTEMATIC WITHDRAWAL PLAN..............................

INDIVIDUAL RETIREMENT ACCOUNTS..........................

MASTER RETIREMENT PLAN..................................

FOR MORE INFORMATION ABOUT THE FUND Back Cover

You should rely only on the information contained in this
document, or incorporated by reference. The Fund has not
authorized anyone to provide you with information that is
different.

This Prospectus is not an offer to sell, or a solicitation
of an offer to buy shares of the Fund to any person in any state
or jurisdiction where it is unlawful to make such an offer.
Changes in the affairs of the Fund have possibly occurred between
the date of the Prospectus and the time you receive it.

AN OVERVIEW OF THE FUND

GOALS

The Fund strives to increase the value of your shares (capital
appreciation) over the long-term.

PRINCIPAL INVESTMENT STRATEGIES

To pursue the Fund's goal of long-term capital growth, the Fund
primarily invests in common stocks of domestic small- and medium-sized
companies. The Fund believes a company's annual sales volume and the
market capitalization (the number of shares outstanding multiplied by
the per share price) are the factors most illustrative of a company's
size. In distinguishing company size in terms of sales volume, the
Fund considers a company's sales volume relative to peer companies in
the company's industry. In terms of market capitalization, the Fund
generally considers companies with market capitalizations up to $2.0
billion as "small," between $2.0 billion and $10.0 billion as "medium"
and greater than $10.0 billion as "large." To a lesser extent, the
Fund may invest in companies with large market capitalizations. The
Fund looks for established companies with the potential for superior
growth in sales and earnings in a diversified group of industries. The
Fund seeks companies that are well positioned to take advantage of
emerging long-term social and economic trends, and have ample resources
to sustain their growth. The Fund's investment philosophy is basically
a long-term growth philosophy, based upon the assumption that if a
company achieves superior growth in sales and earnings, eventually the
company's stock will achieve superior performance.

A major portion of the Fund's portfolio will be invested in common
stocks of the types of companies, and in the manner, as described
above, at all times. The Fund does not have a pre-set asset allocation
strategy which would require that the Fund maintain a specific
percentage of its assets in equity-related securities (i.e., stocks)
and income-related securities (i.e., bonds). In addition, there is no
minimum or maximum percentage of the Fund's assets which is required to
be invested in the securities of companies in any particular industry
or group of industries.

For further information on the Fund's principal investment
strategies and how the Fund invests, see "Fund Investments" starting on
page 5.

PRINCIPAL RISKS OF INVESTING

As with any mutual fund, the Fund can not guarantee that it will
meet its goals or that it's performance will be positive over any
period of time. The Fund's investments change in value. Consequently,
the value of your Fund shares may change. This may occur because a
particular stock market fluctuates or because of other specific factors
affecting the value of a particular investment of the Fund. If the
value of the Fund shares or the value of the Fund's investments go
down, you may lose money.

In addition, because the Fund will invest most of its assets in
the securities of small- and medium-sized companies, the Fund may face
additional risks. Small- to medium-sized companies often have a
limited market for their securities and limited financial resources,
and are usually more affected by changes in the economy. Securities of
small- to medium-sized companies also often fluctuate in price more
than common stocks of larger companies, such as many of those included
in the Dow Jones Industrial Average. During the history of the Fund,
its price per share has often been more volatile than the Dow Jones
Industrial Average. If the value of the Fund's investments in small-
to medium-sized companies decreases, the value of the Fund's shares
also may go down.

The Fund also faces selection risk, which is the risk that the
stocks the Fund purchases will underperform markets or other mutual
funds with similar investment objectives and strategies. In addition,
although the Fund generally will invest in the common stocks of small-
and medium-sized companies, certain investments by the Fund and certain
investment techniques the Fund may use entail other risks, as described
elsewhere is this Prospectus.

Since there are risks inherent in all investments in securities,
there is no assurance that the Fund's objectives will be achieved.
Before you invest, please read "Investment Risks" starting on page 6.

WHO MAY WANT TO INVEST

The Fund may be appropriate if you:

Have a longer time horizon
Are willing to accept higher short-term risk
Want to diversify your portfolio
Are seeking a fund for the growth portion of an asset
allocation portfolio
Are investing with long-term goals in mind, such as
retirement or to fund a child's future education

The Fund may NOT be appropriate if you:

Are investing with a shorter time horizon in mind
Are uncomfortable with an investment that will fluctuate
in value
Are primarily looking for current income

PERFORMANCE INFORMATION

The bar chart and table shown below indicate the risks of investing
in the Fund. They show the variability of the Fund's total return over
time and how the Fund's historical performance compares with
alternative broad measures of market performance.

The bar chart below shows the Fund's calendar year total returns
for the last ten years. (1)

BAR CHART PLOT POINTS
<TABLE>
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- -6.21% 39.56% 9.38% 6.40% 1.03% 28.55% 19.38% 37.01% 9.24% 1.17%
</TABLE>
(1) The Fund's fiscal year end is September 30. The Fund's year-to-
date return (nine months) as of September 30, 1999 was (11.66)%.

For the ten calendar year periods shown in the above bar chart,
the highest quarterly return was 20.79% (for the quarter ended March
31, 1991) and the lowest quarterly return was (17.23)% (for the quarter
ended September 30, 1990).

This next table shows how the Fund's average annual returns for
the one, five and ten calendar year periods ending on December 31, 1999
(the Fund's most recently completed calendar year) compare to the
returns of the Russell 2000 Index and the Lipper Mid-Cap Core Index.

ONE FIVE TEN
YEAR YEARS YEARS
------ ------- -------
THE FUND 1.17% 18.37% 13.59%
RUSSELL 2000 INDEX 21.26% 16.69% 13.40%
LIPPER MID-CAP CORE INDEX 28.19% 20.07% 15.94%

The Russell 2000 Index is an unmanaged index that represents the
average performance of a group of stocks of approximately 2000
companies and is a widely used benchmark for small-capitalization U.S.
stocks. The Lipper Mid-Cap Core Index is an unmanaged equally weighted
index of the 30 largest mutual funds included in the Lipper Mid-Cap
Core funds classification. The Lipper Mid-Cap Core funds will normally
have an average price-to-earnings ratio, price-to-book ratio and three-
year earnings growth figure compared to the U.S. diversified mid-cap
funds' universe average. The table in the Fund's prospectus for fiscal
1998 included the Lipper Mid Cap Fund Index, an unmanaged equally
weighted index of the 30 largest mutual funds included in the Lipper
Mid Cap fund category. The Lipper Mid Cap Fund Index is no longer
published by Lipper Analytical Services Mutual Fund Performance Analysis.
Therefore, the table above includes the Lipper Mid-Cap Core Index as a
replacement index.

OF COURSE, THE FUND'S PAST PERFORMANCE IS NO GUARANTEE OF ITS FUTURE RETURNS.

FEES AND EXPENSES OF THE FUND

FUND INVESTORS PAY VARIOUS FEES AND EXPENSES, EITHER DIRECTLY OR
INDIRECTLY. THE TABLE BELOW DESCRIBES THE FEES AND EXPENSES THAT YOU
MAY PAY IF YOU BUY AND HOLD SHARES OF THE FUND.

SHAREHOLDER FEES
(fees paid directly from your investment)

Maximum Sales Charge (Load) Imposed on Purchases............ None
Maximum Deferred Sales Charge (Load)........................ None
Maximum Sales Charge (Load) Imposed on Reinvested Dividends. None
Redemption Fees............................................. (1)
Exchange Fee................................................ (2)

ANNUAL FUND OPERATING EXPENSES (3)
(expenses that are deducted from Fund assets)

Management Fees............................................. 0.52%
Distribution [and/or Service] (12b-1) Fees.................. None
Other Expenses.............................................. 0.09%
Total Annual Fund Operating Expenses........................ 0.61%
__________

(1) A fee of $12.00 is charged for each wire redemption.
(2) A fee of $5.00 is charged for each telephone exchange.
(3) Annual Fund Operating Expenses are based on expenses incurred for
the fiscal year ended September 30, 1999.

EXAMPLE: THIS EXAMPLE HELPS YOU COMPARE THE COSTS OF INVESTING IN
THE FUND WITH THE COST OF INVESTING IN OTHER MUTUAL FUNDS.

ONE THREE FIVE TEN
YEAR YEAR YEAR YEAR
---- ----- ------ -----
THE EXAMPLE ASSUMES THAT YOU
INVEST $10,000 IN THE FUND FOR THE
TIME PERIODS INDICATED AND THEN
REDEEM ALL OF YOUR SHARES AT THE
END OF THOSE PERIODS. THE
EXAMPLE ALSO ASSUMES THAT YOUR
INVESTMENT HAS A 5% RETURN
EACH YEAR AND THAT THE FUND'S
OPERATING EXPENSES REMAIN
THE SAME. ALTHOUGH YOUR
ACTUAL COSTS MAY BE HIGHER OR
LOWER, BASED ON THESE
ASSUMPTIONS, YOUR COSTS WOULD BE: $62 $195 $340 $762
__________

For a further description of the fees paid to the Fund's adviser,
The Nicholas Company, Inc., see "The Fund's Investment Adviser" on page
12.

PORTFOLIO MANAGEMENT

Mr. David O. Nicholas is Senior Vice President and the Portfolio
Manager of the Fund and is primarily responsible for the day-to-day
management of the Fund's portfolio. David O. Nicholas is President and
Chief Investment Officer of the Adviser, and has been employed by the
Adviser since 1985. For a further discussion of Mr. David O. Nicholas'
experience see "The Fund's Investment Adviser."

FUND INVESTMENTS

The Fund's main goal is increased share value (capital
appreciation) over the long-term. It strives to meet its goal
by investing primarily in a diversified portfolio of equity
securities of small- and medium-sized U.S. companies, which it
believes, have growth potential.

The Fund believes a company's annual sales volume and market
capitalization (the number of shares outstanding multiplied by
the per share price) are the factors most illustrative of a
company's size. To determine company size in terms of sales
volume, the Fund compares a company's sales volume to peer
companies in the company's industry. In terms of market
capitalization, the Fund uses the following standard:

MARKET CAPITALIZATION
---------------------
Small........................ 0 to $2.0 Billion
Medium....................... $1.0 Billion to $10.0 Billion
Large........................ Over $10.0 Billion

To pursue the Fund's goal it also may, to a lesser extent,
invest in companies with large capitalizations. The Fund's
investment philosophy is basically a long-term growth philosophy,
based upon the assumption that if a company achieves superior
growth in sales and earnings, eventually the company's stock will
achieve superior performance.

The Fund looks for companies with the potential for superior
growth in sales and earnings. The Fund seeks companies that it
believes are well positioned to take advantage of emerging, long-
term social and economic trends, and have ample financial
resources to sustain their growth. The Fund considers a number
of factors in assessing a company's value, including :

* a company's strategic position in its industry
* sales and earnings growth
* product development
* quality of management
* overall business prospects
* a company's price to earnings ratio
(including an analysis of such ratio in relation
to the company's growth rate and industry trends)

Income is not a significant factor in selecting the Fund's
investments. The Fund does not have a pre-set asset allocation
strategy which requires that it maintain a specific percentage of
its assets in equity-related securities (i.e., stocks) and income-
related securities (i.e., bonds). In addition, there is no
minimum or maximum percentage of the Fund's assets which must be
invested in the securities of companies in any particular
industry or group of industries. But, the Fund may not invest
more than 5% of its total net assets in the securities of any one
company, and not more than 25% of the value of the Fund's total
net assets may be concentrated in companies in any particular
industry or group of industries. In addition, the Fund may not
hold more than 10% of the voting securities of any one company.

The Fund may hold an investment for any length of time, and
will buy or sell securities whenever the Fund sees an appropriate
opportunity. It does not buy stocks with a view toward a quick
sale or to obtain short-term trading profits (defined as profits
on assets held less than twelve months). The Fund may reduce or
sell investments in companies if there is an actual or perceived
deterioration in the fundamentals of a company (including the
company's financial condition or performance, management-related
problems, product-line or service-line issues, or industry
problems). The Fund also may reduce or sell investments in
companies if a company's market capitalization grows to a point
that it is clearly no longer a small- or medium-capitalization
stock or if a company's stock price appreciates excessively in
relation to its fundamental prospects. Investments in companies
also may be sold if they fail to realize their growth potential
or if there are other more attractive opportunities elsewhere.

The Fund expects that a major portion of its portfolio will
be invested at all times in common stocks of the types of
companies, and in the manner previously described. However, the
Fund also may invest in the securities of unseasoned companies
(companies with a record of less than three years of continuous
operation) (but in no event in an aggregate amount in excess of
5% of the Fund's total assets), debt securities and preferred
stock convertible into common stock, securities of other
investment companies (up to 10% of the Fund's total assets) and
securities offered in private placements. The Fund also may
invest in certain higher-risk securities and engage in other
investment practices.

Although the Fund's primary investment strategy is to
achieve capital appreciation, for liquidity or flexibility, the
Fund also may invest in cash, investment grade and non-investment
grade fixed income securities and repurchase agreements. Cash
and cash equivalent securities will be retained by the Fund in an
amount sufficient to provide moderate liquid reserves so that the
Fund has sufficient cash to meet shareholder redemption requests
and other operating expenses.

As a temporary defensive tactic because of adverse market,
economic, political or other conditions, the Fund also may invest
in cash, investment grade and non-investment grade fixed income
securities and repurchase agreements. During any period in which
the Fund maintains such a temporary defensive tactic, it may not
achieve its investment objective.

INVESTMENT RESTRICTIONS WHICH MAY BE CHANGED WITHOUT SHAREHOLDER APPROVAL

The Fund's Board of Directors has adopted the following
investment restrictions which may be changed by the Board without
shareholder approval:

* No investments in interests in oil, gas or other mineral
exploration programs (but investments in securities of companies
engaged in oil, gas or mineral activities are permitted)

* No investments in puts, calls, straddles, spreads or any
combination thereof

* No investments in securities of other open-end investment
companies

* The Fund may make borrowings but only for temporary or
emergency purposes and then only in amounts not in excess of 5%
of the lower of cost or market value of the Fund's total net
assets

The Board will give advance notice to shareholders of any change
to these investment restrictions by filing with the SEC an
amended Statement of Additional Information.

All percentage limitations discussed in the "Fund
Investments" section apply on the date of investment by the Fund.
Thus, if an investment satisfies a percentage restriction when
it is made, no violation of that restriction occurs due to
changes afterwards in the market value of the investment or the
total assets of the Fund.

The Fund may use many different investment strategies in
seeking its investment objectives, and it has certain investment
restrictions. These strategies and certain of the restrictions
and policies governing the Fund's investments are explained in
detail in the Fund's Statement of Additional Information, which
is incorporated by reference herein. If you would like to learn
more about how the Fund may invest, you should request a copy of
the Statement of Additional Information. To learn how to obtain
a copy of the Statement of Additional Information, see the back
cover page of this Prospectus.

INVESTMENT RISKS

This section contains a summary description of the principal
risks of investing in the Fund. As with any mutual fund, there
can be no guarantee that the Fund will meet its goals or that you
won't lose money on your investment. There is no guarantee that
the Fund's performance will be positive over any period of time.

Because of the following risks, you could lose money on your
investment over the short- or long-term:

MARKET RISK. The value of the Fund's investments, and
therefore, the value of your Fund shares, may go up or down.
Value changes in the Fund's investments and consequently, your
Fund shares may occur because a particular stock market
fluctuates. Stock markets tend to run in cycles, with periods
when stock prices generally go up, known as "bull markets," and
periods when stock prices generally go down, referred to as "bear
markets." Stock prices in general may decline over short or
extended periods. Thus, there is a possibility that the value of
the Fund's investments will decrease because of declines in the
stock market, regardless of the success or failure of the
operations of the Fund's portfolio companies. At other times,
there are specific factors that may adversely affect the value of
a particular investment of the Fund, which in turn may reduce the
value of the Fund's investments, and consequently, your Fund
shares.

PORTFOLIO-SPECIFIC RISK. Because the Fund invests most of
its assets in the securities of small- and medium-sized
companies, the Fund may be subject to additional risks. Small-
to medium-sized companies often have a limited market for their
securities and limited financial resources, and are usually more
affected by changes in the economy. Securities of small- to
medium-sized companies also often fluctuate in price more than
common stocks of larger companies, such as many of those included
in the Dow Jones Industrial Average. Therefore, during the
history of the Fund, its price per share has often been more
volatile than the Dow Jones Industrial Average. If the value of
the Fund's investments in small- to medium-sized companies
decrease, the value of the Fund's shares also may go down.

SELECTION RISK. The Fund also is subject to selection risk,
which is the risk that the stocks the Fund's adviser selects will
underperform the markets or other mutual funds with similar
investment objectives and strategies.

RISKS RELATED TO CERTAIN OTHER PORTFOLIO INVESTMENTS AND
STRATEGIES.The Fund may use other investment strategies.
These strategies and the associated non-principal risks are
described in further detail in the Fund's Statement of Additional
Information which is incorporated by reference, herein.

In view of the risks inherent in all investments in
securities, there is no assurance that the Fund's objectives will
be achieved.

FINANCIAL HIGHLIGHTS

THE FOLLOWING FINANCIAL HIGHLIGHTS TABLE HELPS YOU UNDERSTAND THE FUND'S
FINANCIAL PERFORMANCE FOR THE PAST FIVE FISCAL YEARS ENDED SEPTEMBER
30, 1999. CERTAIN INFORMATION REFLECTS FINANCIAL RESULTS FOR A SINGLE
FUND SHARE. THE TOTAL RETURNS IN THE TABLE REPRESENT THE RATE THAT AN
INVESTOR WOULD HAVE EARNED (OR LOST) ON AN INVESTMENT IN THE FUND
(ASSUMING REINVESTMENT OF ALL DIVIDENDS AND DISTRIBUTIONS). THE TABLE
HAS BEEN EXAMINED BY ARTHUR ANDERSEN LLP, INDEPENDENT PUBLIC
ACCOUNTANTS, WHOSE REPORT THEREON IS INCLUDED IN THE FUND'S ANNUAL
REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1999. THE TABLE SHOULD
BE READ IN CONJUNCTION WITH THE FINANCIAL STATEMENTS AND RELATED NOTES
INCLUDED IN THE FUND'S ANNUAL REPORT, WHICH ARE INCORPORATED BY
REFERENCE INTO THE STATEMENT OF ADDITIONAL INFORMATION AND WHICH MAY
BE OBTAINED WITHOUT CHARGE BY CALLING OR WRITING THE FUND.
<TABLE>
Year Ended September 30,
------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF YEAR.......................... $34.78 $40.65 $33.34 $30.07 $26.71

INCOME FROM INVESTMENT
OPERATIONS:
Net investment income.......... .01 .13 .08 .10 .24
Net gains (losses) on
securities (realized and
unrealized)................... $1.18 (.69) 10.47 5.84 5.22
----- ---- ------ ------ ------
Total from investment
operations................. $1.19 (.56) 10.55 5.94 5.46
----- ------ ------ ------ ------
LESS DISTRIBUTIONS:

From net investment income..... (.13) ( .08) (.08) (.18) (.21)

From capital gains............. (4.01) (5.23) (3.16) (2.49) (1.89)
------ ------ ------ ------ ------
Total distributions (4.14) (5.31) (3.24) (2.67) (2.10)
------ ------ ------ ------ ------

NET ASSET VALUE, END
OF YEAR........................... $31.83 $34.78 $40.65 $33.34 $30.07
------ ------ ------ ------ ------
------ ------ ------ ------ ------

TOTAL RETURN....................... 2.50% (1.66)% 34.94% 21.35% 22.39%

RATIOS/SUPPLEMENTAL DATA:
Net assets, end of
year (millions)................... $874.1 $960.0 $994.4 $774.8 $682.2
Ratio of expenses to average
net assets........................ .61% .59% .61% .62% .66%
Ratio of net investment income
to average net assets............. .03% .33% .23% .29% .68%
Portfolio turnover rate............ 21.03% 20.47% 30.21% 24.47% 19.63%
</TABLE>

PLEASE CONSIDER THE PERFORMANCE INFORMATION ABOVE IN LIGHT OF THE
FUND'S INVESTMENT OBJECTIVES AND POLICIES, AND MARKET CONDITIONS
DURING THE REPORTED TIME PERIODS. AGAIN, YOU MUST REMEMBER THAT
HISTORICAL PERFORMANCE DOES NOT NECESSARILY INDICATE WHAT WILL HAPPEN
IN THE FUTURE. THE VALUE OF YOUR FUND SHARES MAY GO UP AND DOWN.

MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE

The Fund's primary objective is long-term capital appreciation. In an
effort to achieve this objective, the Adviser generally invests in common
stocks of small- and medium-sized companies having growth potential.
Individual stock selection is the focal point of the Adviser's equity
philosophy. The Adviser's efforts are directed toward purchasing stocks of
fundamentally sound companies at reasonable prices. It also is the
Adviser's strong conviction that superior long-term results are achieved
through the minimization of capital losses during adverse periods in the
general market. The Adviser primarily seeks stocks where the
price/earnings ratio is low in relation to earnings growth or where the
price is reasonable in relation to book value. Above average secular
earnings growth and strong current earnings momentum are important factors.

The Fund ended fiscal 1999 with a net asset value per share of $31.83,
a total return of 2.50% (distributions reinvested), and approximately $874
million in total net assets. At September 30, 1999, the Fund's portfolio
consisted of holdings in 46 companies, representing 87.87% of the Fund's
total net assets. The other 12.13% of the Fund's total net assets were
invested in convertible bonds, short-term investments and cash.

The Fund's performance for the year was positively impacted by its
exposure to the media and entertainment industry, with strong performance
from radio stock, Clear Channel Communication; cable network company, USA
Network; and raceway company, International Speedway Corporation. The
market value of the Fund's holdings in the media and entertainment industry
increased 4.91% in fiscal 1999. Further, performance by technology
companies such as ADC Telecommunications, Hughes Electronics and Qwest
Communication helped the Fund's performance. However, the Fund's exposure
to healthcare and financial stocks, in general, hurt the Fund's annual
performance, with the exception of biotech company, Biogen, Inc., which was
a strong performer (with an increase in market value of 19.75% in fiscal
1999). The market value of the Fund's holdings in the healthcare products
and services sector decreased 10.82% and the bank and finance sector was
flat in fiscal 1999. Fears of rising inflation, government reimbursement
cuts and heavy tax loss selling continued to depress both of these sectors
in fiscal 1999.

In terms of portfolio mix, at September 30, 1999, the Fund held
significant positions in technology and communications companies (12.89% of
the Fund's total net assets); banks and finance entities (11.87%); business
service companies (10.45%); health care product companies and health care
service companies (7.76% and 7.63%, respectively); and media and
entertainment companies (6.80%). During fiscal 1999, the Fund
significantly increased its relative percentage of net assets invested in
technology and communications companies and significantly decreased its
relative percentage of net assets invested in health care products and
health care services companies.

The Fund's 12-month return of 2.50% for fiscal 1999 compared to
returns of 27.79% for the Standard & Poor's 500 Index (dividends
reinvested) and 19.07% for the Russell 2000 Index (dividends reinvested).
The strong returns of such indices in 1999 was primarily attributable to
the excellent short-term performance of large-cap growth stocks, especially
technology stocks, and smaller-cap speculative investments, such as initial
public offerings (IPOs) of Internet companies. Due to its portfolio
composition (primarily non-speculative small- and medium-capitalization
companies, with a modest emphasis on the technology sector), the Fund
performed poorly relative to these comparative indices as well as other
mutual funds which were focused more on small-cap speculative and
technology driven investments.

The Fund will continue to follow its long-term disciplined investment
philosophy and will forego short-term profit for long-term sustainability.
Although this approach can hold back performance if the market continues to
focus on speculative issues, such as IPOs and Internet related stocks, the
Fund will maintain its investment approach to balance risk and return.

Set forth below is a line graph showing a comparison of the initial
account value and subsequent account values at the end of each of the most
recently completed ten fiscal years, and the most recently completed
quarter ended December 31, 1999 of the Fund, assuming a $10,000 investment
in the Fund at the beginning of the first fiscal year, to the same
investment over the same periods in two peer group indices. The peer group
in the graph includes the Lipper Mid-Cap Core Index and the Russell 2000
Index. The line graph in the Fund's prospectus for fiscal 1998 included
the Russell 2000 Index and the Lipper Mid Cap Fund Index, an unmanaged
equally weighted index of the 30 largest mutual funds in the Lipper Mid Cap
fund category. The Lipper Mid Cap Fund Index is no longer published by
Lipper Analytical Services Mutual Fund Performance Analysis. Therefore,
the line graph below includes the Lipper Mid-Cap Core Index, an unmanaged
equally weighted index of the 30 largest mutual funds included in the
Lipper Mid-Cap Core funds classification, as a replacement index. The
Lipper Mid-Cap Core funds will normally have an average price-to-earnings
ratio, price-to-book ratio and three-year earnings growth figure compared
to the U.S. diversified mid-cap funds' universe average. The Fund believes
the returns of the Lipper Mid-Cap Core and Russell 2000 indices are
representative of the performance of small- and medium-capitalized
companies, which are the types of companies in which the Fund primarily
invests. Therefore, the Fund believes the Lipper Mid-Cap Core and Russell
2000 indices provide a meaningful and representative basis of comparison
for Fund investors.

COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
NICHOLAS II, INC., LIPPER MID-CAP CAOR INDEX AND RUSSELL 2000 INDEX
<TABLE>

% TOTAL RUSSELL % TOTAL LIPPER % TOTAL
NICHOLAS II, INC. RETURN 2000 RETURN MID-CAP RETURN
----------------- ------- ------- ------- --- -------
<S> <C> <C> <C> <C> <C> <C>
09/30/89 10,000 10,000 10,000
09/30/90 8,386 -16.14% 7,284 -27.16% 8,002 -19.98%
09/30/91 11,817 40.91% 10,569 45.09% 12,041 50.47%
09/30/92 12,477 5.59% 11,514 8.95% 12,461 3.49%
09/30/93 14,248 14.19% 15,330 33.14% 16,696 33.99%
09/30/94 15,030 5.49% 15,741 2.68% 17,127 2.58%
09/30/95 18,395 22.39% 19,418 23.36% 21,200 23.78%
09/30/96 22,322 21.35% 21,967 13.13% 24,352 14.87%
09/30/97 30,122 34.94% 29,258 33.19% 31,770 30.46%
09/30/98 29,622 - 1.66% 23,693 -19.02% 27,294 -14.09%
09/30/99 30,362 2.50% 28,212 19.07% 33,377 22.29%
12/31/99 34,768 14.51% 33,414 18.44% 42,576 27.56%
</TABLE>

The Fund's average annual total returns for the one,
five and ten year periods ended on the last day of the most
recent fiscal year are as follows:

ONE YEAR ENDED FIVE YEARS ENDED TEN YEARS ENDED
SEPTEMBER 30, 1999 SEPTEMBER 30, 1999 SEPTEMBER 30, 1999
------------------ ------------------ ------------------
Average Annual Total
Return........ 2.50% 15.10% 11.75%

Past performance is not predictive of future performance.

THE FUND'S INVESTMENT ADVISER

The Adviser is the investment adviser to five other mutual
funds and to approximately 25 institutions and individuals with
substantial investment portfolios. The additional mutual funds
it advises are: Nicholas Fund, Inc., Nicholas Income Fund, Inc.,
Nicholas Limited Edition, Inc., Nicholas Money Market Fund, Inc.
and Nicholas Equity Income Fund, Inc. As of December 31, 1999,
the Adviser had approximately $7 billion in assets under
management.

The annual fee paid to the Adviser is paid monthly and is
based on the average net asset value of the Fund, as determined
by valuations made at the close of each business day of the
month.

The following table illustrates the calculation of the
Adviser's annual fee:

ANNUAL FEE CALCULATION
NET ASSET (BASED ON THE AVERAGE
VALUE OF THE FUND NET ASSET VALUE OF THE FUND)
----------------- ----------------------------
Up to and including $50,000,000...... 0.75 of 1%
Over $50,000,000 and
including $100,000,000............. 0.60 of 1%
In excess of $100,000,000............ 0.50 of 1%

The Fund pays all of its operating expenses. Operating
expenses include, but are not limited to, fees paid for
attendance at Board meetings to directors who are not interested
persons of the Adviser or officers or employees of the Fund,
salaries of administrative and clerical personnel, association
membership dues, auditing and accounting services, legal fees and
expenses, printing, fees and expenses of any custodian or trustee
having custody of Fund assets, postage, charges and expenses of
dividend disbursing agents, registrars and stock transfer agents,
including the cost of keeping all necessary shareholder records
and accounts and handling any problems related thereto, and
certain other costs and costs related to the aforementioned
items.

The Adviser has undertaken to reimburse the Fund to the
extent that the aggregate annual operating expenses, including
the investment advisory fee, but excluding interest, taxes,
brokerage commissions, litigation and extraordinary expenses,
exceed the lowest, i.e., most restrictive, percentage of the
Fund's average net assets established by the laws of the states
in which the Fund's shares are registered for sale, as determined
by valuations made as of the close of each business day of the
year. The Adviser shall reimburse the Fund at the end of any
fiscal year in which the aggregate annual operating expenses
exceed such restrictive percentage.

David O. Nicholas is the Portfolio Manager of the Fund and
is primarily responsible for the day-to-day management of the
Fund's portfolio. He has been Portfolio Manager for, and
primarily responsible for the day-to-day management of, the
portfolios of the Fund and Nicholas Limited Edition, Inc. since
March 1993. He also has been Co-Portfolio Manager of Nicholas
Fund, Inc. since November 1996.

PRICING OF FUND SHARES

When you buy shares of the Fund, the price per share you pay
is the net asset value ("NAV") per share of the Fund. The NAV of
a share of the Fund is determined by dividing the total value in
U.S. dollars of the Fund's total net assets by the total number
of shares outstanding at that time. Net assets of the Fund are
determined by deducting the liabilities of the Fund from the
total assets of the Fund. The NAV is determined as of the close
of trading on the New York Stock Exchange ("NYSE") on each day
the NYSE is open for unrestricted trading.

PURCHASE OF FUND SHARES

MINIMUM To Open An Account....... $500
INVESTMENTS To Add To An Account..... $100
$ Minimum Balance.......... $500
[ICON]
The Fund's Automatic Investment Plan has
a minimum monthly investment of $50. Due to
fixed expenses incurred by the Fund in
maintaining individual accounts, the Fund
reserves the right to redeem accounts that
fall below the $500 minimum investment
required due to shareholder redemption (but
not solely due to a decrease in net asset
value of the Fund). In order to exercise
this right, the Fund will give advance
written notice of at least 30 days to the
accounts below such minimum.

APPLICATION
INFORMATION You may apply to purchase shares of
[ICON] the Fund by submitting an application to
Nicholas II, Inc., c/o Firstar Mutual Funds
Services, LLC ("Firstar"), P.0. Box 2944,
Milwaukee, Wisconsin 53201-2944. See the
back cover page of this Prospectus for
information on how to contact the Fund. The
Fund also has available an Automatic
Investment Plan for shareholders. You
should contact the Fund for additional information.

When you make a purchase, your purchase
price per share will be the net asset value
("NAV") per share next determined after the
time the Fund receives your application in
proper order. The NAV is calculated once a
day based on the closing market price for
each security held in the Fund's portfolio.
The determination of NAV for a particular day
is applicable to all purchase applications
received in proper order by the close of
trading on the NYSE on that day (usually 4:00
p.m., New York time).

Applications to
purchase Fund shares received in proper
order on a day when the NYSE is open for
trading, prior to the close of trading
on that day, will be based on the NAV as
of the close of trading on that day.
Applications to
purchase Fund shares received in proper
order after the close of trading on the
NYSE will be based on the NAV as
determined as of the close of trading on
the next day the NYSE is open.

Purchase of shares will be made in full
and fractional shares computed to three
decimal places.

OVERNIGHT You should be aware that DEPOSIT in the U.S.
DELIVERY mail or with other independent delivery services, or
[ICON] receipt at Firstar's Post Office Box, of
purchase applications DOES NOT constitute
receipt by Firstar or the Fund.
DO NOT mail letters by overnight courier to
the Post Office Box address. OVERNIGHT
COURIER DELIVERY SHOULD BE SENT TO FIRSTAR
MUTUAL FUND SERVICES, LLC, THIRD FLOOR, 615
EAST MICHIGAN STREET, MILWAUKEE, WISCONSIN
53202.

Your application to purchase Fund shares
must be in proper order to be accepted, may
only be accepted by the Fund or an Authorized
Agent of the Fund and is not binding until
accepted. Applications must be accompanied
by payment in U.S. funds. Your check should
be drawn on a U.S. bank, savings and loan or
credit union. Checks are accepted subject to
collection at full face value in U.S. funds.
The transfer agent will charge a $20 fee
against your account, in addition to any loss
sustained by the Fund, if any payment check
is returned to the transfer agent for
insufficient funds. The Fund will not accept
applications under circumstances or in
amounts considered disadvantageous for
shareholders. If you open an account
(including custodial accounts) without a
proper social security number or taxpayer
identification number, it may be liquidated.
Proceeds will be distributed to the owner(s)
of record on the first business day following
the 60th day of investment, net of the backup
withholding tax amount.

WIRE PURCHASE You also may purchase Fund shares via the
[ICON] Federal Reserve wire system. If a wire is to be
an initial purchase, please call Firstar (414-
276-0535 or 800-544-6547) with the appropriate account
information prior to sending the wire.
Firstar will provide you with a confirmation
number for any wire purchase, which will
ensure the prompt and accurate handling of
funds. To purchase shares of the Fund by
federal wire transfer, instruct your bank to
use the following instructions:

Wire To: Firstar Bank Milwaukee, N.A.
ABA 075000022

Credit: Firstar Mutual Funds Services, LLC
Account 112-952-137

Further
Credit: Nicholas II, Inc.
(shareholder account number)
(shareholder registration)

The Fund and its transfer agent
are not responsible for the consequences of
delays resulting from the banking or Federal
Reserve wire system, or from incomplete
wiring instructions.

CERTIFICATES The Fund won't issue certificates
representing Fund shares unless the shareholder
specifically requests certificates in
writing. Signature guarantees may be
required. Certificates are mailed to
requesting shareholders approximately two
weeks after receipt of the request by the
Fund. The Fund won't issue certificates for
fractional shares even if requested. Where
certificates are not requested, the Fund's
transfer agent, Firstar, will credit the
shareholder's account with the number of
shares purchased. Written confirmations are
issued for all purchases of Fund shares.

THIRD PARTY USE OF A PROCESSING INTERMEDIARY TO
Purchases PURCHASE FUND SHARES. You can purchase shares
[ICON] of the Fund through certain broker-dealers, financial
institutions or other service providers
("Processing Intermediaries"). If you do,
the Processing Intermediary, rather than you,
may be the shareholder of record. Processing
Intermediaries may use procedures and impose
restrictions in addition to or different from
those applicable to shareholders who invest
in the Fund directly. You should read the
program materials provided by the Processing
Intermediary in conjunction with this
Prospectus before you invest in the Fund this
way.

Processing Intermediaries may
charge fees or other charges for the services
they provide to their customers. Such
charges may vary among Processing
Intermediaries, but in all cases will be
retained by the Processing Intermediary and
not remitted to the Fund or the Adviser.

The Fund also may enter into an
arrangement with some Processing
Intermediaries which authorizes them to
process purchase orders on behalf of the Fund
on an expedited basis (an "Authorized
Agent"). Receipt of a purchase order by an
Authorized Agent will be deemed to be
received by the Fund for purposes of
determining the NAV of the Fund shares to be
purchased. If you place a purchase order
through an Authorized Agent, you will pay the
Fund's NAV per share next computed after the
receipt by the Authorized Agent of such
purchase order, plus any applicable
transaction charge imposed by the Authorized
Agent.

Of course, you do not have to use
the services of a Processing Intermediary, or
pay the fees that may be charged for such
services. You can invest directly with the
Fund without a sales charge.

REDEMPTION OF FUND SHARES

REDEMPTION You may redeem all or part of your Fund
[ICON] shares by any of the methods described
below. All redemptions will be processed
immediately upon receipt and
written confirmations will be issued for all
redemptions of Fund shares. The redemption
price will be the Fund's NAV next computed
after the time of receipt by Firstar (or by
an Authorized Agent of the Fund) of the
certificate(s), or written request in the
proper order as described below, or pursuant
to proper telephone instructions as described
below.

* Requests for
redemption of Fund shares received in
proper order on a day when the NYSE is
open for trading, prior to the close of
trading on that day, will be based on
the NAV as of the close of trading on
that day.
* Requests for
redemption of Fund shares received in
proper order after the close of trading
on the NYSE will be based on the NAV as
determined as of the closing of trading
on the next day the NYSE is open.

THE FUND WILL RETURN AND NOT
PROCESS REDEMPTION REQUESTS THAT CONTAIN
RESTRICTIONS AS TO THE TIME OR DATE
REDEMPTIONS ARE TO BE EFFECTED.

If any of the shares you want
redeemed were purchased recently by personal
or certified check, the Fund reserves the
right to hold payment up to 15 days or until
notified that investments made by check have
been collected, at which time your redemption
request will be processed and payment made.

REDEMPTIONS If you redeem in writing, be sure
BY MAIL that the redemption request is signed by each
[ICON] shareholder in the exact manner as the Fund account
is registered and include the redemption amount and
the shareholder account number.

If you have certificates for your shares, you may
redeem by delivering to the Fund, c/o
Firstar Mutual Fund Services, LLC, P.O.
Box 2944, Milwaukee, Wisconsin
53201-2944, the certificate(s) for the
full shares. The certificate(s) must be
properly endorsed or accompanied by
instrument of transfer, in either case
with signatures guaranteed by an
eligible "guarantor institution," which
is a bank, a savings and loan
association, a credit union, or a member
firm of a national securities exchange.
A notary public is not an acceptable
guarantor.

If you don't
have certificates for your shares, you
may redeem by delivering an original
signed written request for redemption
addressed to Nicholas II, Inc., c/o
Firstar Mutual Fund Services, LLC, P.O.
Box 2944, Milwaukee, Wisconsin 53201-
2944. If the account registration is
individual, joint tenants, sole
proprietorship, custodial (Uniform
Transfer to Minors Act), or general
partners, the written request must be
signed exactly as the account is
registered. If the account is owned
jointly, all owners must sign.

YOU MAY NOT FAX YOUR REDEMPTION
REQUEST.

The Fund may require additional
supporting documents for written redemptions
made by corporations, executors,
administrators, trustees and guardians.
Specifically, if the account is registered in
the name of a corporation or association, the
written request must be accompanied by a
corporate resolution signed by the authorized
person(s). A redemption request for accounts
registered in the name of a legal trust must
have a copy of the title and signature page
of the trust agreement on file or must be
accompanied by the trust agreement and signed
by the trustee(s).

If you are uncertain about what
documents or instructions are necessary in
order to redeem shares, please write or call
Firstar (414-276-0535 or 800-544-6547, prior
to submitting a written redemption request.
A written redemption request will not become
effective until all documents have been
received in properorder by Firstar.

If you have an individual
retirement account ("IRA") or other
retirement plan, you must indicate on your
written redemption requests whether or not to
withhold federal income tax. Unless a
redemption request specifies not to have
federal income tax withheld, the redemption
will be subject to withholding. Please
consult your current Disclosure Statement for
any applicable fees.

OVERNIGHT You should be aware that DEPOSIT in the
DELIVERY mail or with other independent
[ICON] delivery services or receipt at
Firstar's Post Office Box of redemption requests
DOES NOT constitute receipt by
Firstar or the Fund. DO NOT mail letters by
overnight courier to the Post Office Box
address. OVERNIGHT COURIER DELIVERY SHOULD
BE SENT TO FIRSTAR MUTUAL FUND SERVICES, LLC,
THIRD FLOOR, 615 EAST MICHIGAN STREET,
MILWAUKEE, WISCONSIN 53202.

TELEPHONE
REDEMPTIONS You can redeem your shares by
[ICON] telephone unless you decline that option in
writing. Telephone redemptions can only be
made by calling Firstar (800-544-6547 or 414-
276-0535). In addition to the account
registration, you will be required to provide
the account number and social security
number. Telephone calls will be recorded.

Telephone redemption requests
must be received prior to the closing of the
NYSE (usually 4:00 p.m., New York time) to
receive that day's NAV. There will be no
exceptions due to market activity. During
periods of substantial economic or market
changes, you may have difficulty making a
redemption by telephone. If you are unable
to contact Firstar by telephone, you may
redeem your shares by delivering the
redemption request in person or by mail. The
maximum telephone redemption is $50,000 per
account/per business day. The maximum
telephone redemption for related accounts is
$100,000 per business day. The minimum
telephone redemption is $500 except when
redeeming an account in full.

The Fund reserves the right to
refuse a telephone redemption if it is
believed advisable to do so. Procedures for
redeeming Fund shares by telephone may be
modified or terminated at any time by the
Fund or Firstar. Neither the Fund nor
Firstar will be liable for following
instructions communicated by telephone which
they reasonably believe to be genuine. The
Fund and Firstar will employ reasonable
procedures to confirm that instructions
received by telephone are genuine, and if
they do not, they may be liable for losses
due to unauthorized or fraudulent
instructions.

TAX EFFECT OF For federal income tax purposes, a
REDEMPTION redemption generally is treated as a sale of
[ICON] the shares being redeemed. You may
recognize capital gain or loss
equal to the difference between the
redemption price and your cost basis for the
shares being redeemed. See "Dividends,
Distributions and Federal Tax Status" for
further tax information.

The Fund ordinarily pays for
redeemed shares within seven days after
receipt of a request in proper order, except
as provided by the rules of the Securities
and Exchange Commission. Redemption proceeds
to be wired also ordinarily will be wired
within seven days after receipt of the
request, and normally will be wired on the
next business day after a NAV is determined.
The Fund reserves the right to hold payment
up to 15 days or until satisfied that
investments made by check have been
collected.

You may instruct Firstar to mail
the proceeds to the address of record or to
directly mail the proceeds to a pre-
authorized bank account. The proceeds also
may be wired to a pre-authorized account at a
commercial bank in the United States.
Firstar charges a wire redemption fee of
$12.00. Please contact the Fund for the
appropriate form if you are interested in
setting your account up with wiring
instructions.

SIGNATURE A signature guarantee of each owner is
GUARANTEES required to redeem shares in the following
[ICON] situations, for all size transactions:

* if you change the ownership on your account
* upon redemption of shares when certificates
have been issued for your account
* when you want the redemption proceeds sent to a
different address than is registered on
the account
* for both certificated and uncertificated shares,
if the proceeds are to be made payable
to someone other than the account owner(s)
* any redemption transmitted by federal wire
transfer to your bank not previously set up with
the Fund
* if a change of address request has been received
by the Fund or Firstar within 15 days of a
redemption request

In addition, you must have your
signature guaranteed if you request
redemption of $100,000 or more from your
account. Your redemption will not be
processed until the signature guarantee, if
required, is received in proper order. A
notary public is not an acceptable guarantor.

THIRD PARTY USE OF A PROCESSING INTERMEDIARY TO REDEEM FUND
REDEMPTIONS SHARES.
[ICON] As with the purchase of Fund shares, you may redeem
shares of the Fund through certain broker-
dealers, financial institutions and other
service providers ("Processing Intermediaries").
You should read the program materials provided by
the Processing Intermediary before you redeem your
shares of the Fund this way. Then follow those
instructions and procedures.

Processing Intermediaries may
charge fees or other charges for the services
they provide to their customers. Such
charges vary among Processing Intermediaries,
but in all cases will be retained by the
Processing Intermediary and not remitted to
the Fund or the Adviser.

The Fund also may enter into an
arrangement with some Processing
Intermediaries authorizing them to process
redemption requests on behalf of the Fund on
an expedited basis (an "Authorized Agent").
Receipt of a redemption request by an
Authorized Agent will be deemed to be
received by the Fund for purposes of
determining the NAV of Fund shares to be
redeemed. For redemption orders placed
through an Authorized Agent, you will receive
redemption proceeds which reflect NAV per
share next computed after the receipt by the
Authorized Agent of the redemption order,
less any redemption fees imposed by the
Authorized Agent.

You do not have to use the
services of a Processing Intermediary, or pay
the fees that may be charged for such
services, unless you hold Fund shares through
a Processing Intermediary. Then you must
redeem your shares through such Processing
Intermediary. In such event, you should
contact the Processing Intermediary for
instructions on how to redeem. Otherwise if
you originally invested directly with the
Fund, you can redeem Fund shares through the
Fund without a redemption charge.

EXCHANGE BETWEEN NICHOLAS FAMILY OF FUNDS

You may exchange Fund shares for
shares of other mutual funds for which
Nicholas Company, Inc. serves as the
investment adviser.

EXCHANGES Nicholas Company, Inc. also is adviser
[ICON] to the following funds which have investment objectives
and net assets as noted below:

NET ASSETS AT
FUND INVESTMENT OBJECTIVE SEPT. 30, 1999
---- -------------------- --------------
Nicholas Fund, Inc. Capital appreciation $4,782,783,840

Nicholas Limited Long-term growth $ 273,310,802
Edition, Inc.(1)

Nicholas Equity Reasonable income with moderate
Income Fund, Inc long-term growth as a secondary
Consideration $ 20,053,386

Nicholas Income High current income consistent
Fund, Inc. with the preservation and
conservation of capital value $ 210,293,122

Nicholas Money High level of current income as
Market Fund, Inc. as is consistent with preserving
capital and liquidity $ 144,734,499

(1)You should be aware
that Nicholas Limited Edition, Inc. is
restricted in size to ten million shares
(without taking into account shares
outstanding as a result of capital gain and
dividend distributions). The exchange
privilege into that mutual fund may be
terminated or modified at any time or times
when that maximum is reached.

If you choose to exercise
the exchange privilege, your shares will be
exchanged at their next determined NAV. If
you exercise an exchange into the Nicholas
Money Market Fund, Inc. on a day when the New
York Stock Exchange is open for trading but
the Federal Reserve Banks are closed, your
shares of the Fund will be redeemed on the day
upon which the exchange request is received;
however, issuance of your Nicholas Money
Market Fund, Inc. shares will be delayed one
business day. In such a case, the exchanged
amount would be uninvested for this one-day
period.

If you are interested in
exercising the exchange privilege you must
obtain the appropriate prospectus from
Nicholas Company, Inc.

An exchange constitutes a
sale for federal tax purposes and you may
realize a capital gain or loss upon the
exchange, depending upon whether the NAV at
the time is more or less than your cost basis.
An exchange between the funds involving master
retirement plans and IRA accounts generally is
not a taxable transaction for federal tax
purposes. See "Dividends, Distributions and
Federal Tax Status" for further information.

The exchange privilege may
be terminated or modified only upon 60 days
advance notice to shareholders. You may
exchange shares of the Fund for shares of
other available Nicholas mutual funds directly
through Nicholas Company, Inc. without cost by
written request.

EXCHANGE If you are interested in
BY exercising the exchange by mail privilege, you
MAIL may obtain the appropriate prospectus from
[ICON] Nicholas Company, Inc. Signatures required are
the same as previously explained under "Redemption
of Fund Shares."

EXCHANGE You also may exchange by telephone among
BY all Nicholas mutual funds. Only exchanges of $500.00
TELEPHONE or more will be executed using the telephone
[ICON] exchange privilege. Firstar charges a $5.00 fee for
each telephone exchange. In an effort to
avoid the risks often associated with large
market timers, the maximum telephone exchange
per account per day is set at $100,000, with a
maximum of $l,000,000 per day for related
accounts. You are allowed four telephone
exchanges per account during any twelve-month
period.

Procedures for exchanging
Fund shares by telephone may be modified or
terminated at any time by the Fund or Firstar.
Neither the Fund nor Firstar will be
responsible for the authenticity of exchange
instructions received by telephone. Telephone
exchanges can only be made by calling Firstar
(414-276-0535 or 800-544-6547). You will be
required to provide pertinent information
regarding your account. Calls will be
recorded.

TRANSFER OF FUND SHARES

You may transfer Fund shares in instances such as the death of
a shareholder, change of account registration, change of account
ownership and in cases where shares of the Fund are transferred as
a gift. You can obtain documents and instructions necessary to
transfer Fund shares by writing or calling Firstar (414-276-0535
or 800-544-6547) or Nicholas Company, Inc. (414-272-6133 or 800-
227-5987) prior to submitting any transfer requests.

DIVIDENDS, DISTRIBUTIONS AND FEDERAL TAX STATUS

The Fund intends to continue to qualify annually as a
"regulated investment company" under the Internal Revenue Code of
1986 and intends to take all other action required to ensure that
little or no federal income or excise taxes will be payable by the
Fund. As a result, the Fund generally will seek to distribute
annually to its shareholders substantially all of its net
investment income and net realized capital gain in one
distribution for each fiscal year.

For federal income tax purposes, distributions by the Fund,
whether received in cash or invested in additional shares of the
Fund, will be taxable to the Fund's shareholders, except those
shareholders that are not subject to tax on their income. The
maximum tax rate on long-term capital gains for sales of
securities held greater than twelve months is 20%. Income
distributed from the Fund's net investment income and net realized
short-term capital gains are taxable to shareholders as ordinary
income, whether distributed as cash or additional shares.
Distributions generally will be made annually in December. The
Fund will provide information to shareholders concerning the
character and federal tax treatment of all dividends and
distributions.

At the time of purchase of Fund shares, the Fund may have
undistributed income or capital gains included in the computation
of the NAV per share. Therefore, a dividend or capital gain
distribution received shortly after such purchase by a shareholder
may be taxable to the shareholder, although it is, in whole or in
part, a return of capital and may have the effect of reducing the
NAV per share.

Under federal law, some shareholders may be subject to a 31%
"backup withholding" on reportable dividends, capital gain
distributions (if any) and redemption payments. Generally,
shareholders subject to backup withholding will be those (i) for
whom a taxpayer identification number is not on file with the Fund
or who, to the Fund's knowledge, have furnished an incorrect
number, or (ii) who have failed to declare or underreported
certain income on their federal returns. When establishing an
account, you must certify under penalties of perjury that the
taxpayer identification number you give to the Fund is correct and
that you are not subject to backup withholding.

The foregoing tax discussion relates to federal income taxes
only and is not intended to be a complete discussion of all
federal tax consequences. You should consult with a tax adviser
concerning the federal, state and local tax aspects to an
investment in the Fund.

DIVIDEND AND DISTRIBUTION REINVESTMENT PLAN

Unless you elect to accept cash in lieu of shares, all
dividends and capital gain distributions are automatically
reinvested in additional shares of the Fund through the Dividend
and Distribution Reinvestment Plan (the "Reinvestment Plan"). You
may electi to accept cash on the application to purchase shares,
by telephone or by separate written notification . All
reinvestments are at the net asset value per share in effect on
the dividend or distribution date and are credited to the
shareholder's account. Firstar will notify you of the number of
shares purchased and the price following each reinvestment period.

You may withdraw from or thereafter elect to participate in the
Reinvestment Plan at any time by giving written or telephonic
notice to Firstar. An election must be received by Firstar prior
to the dividend record date of any particular distribution for the
election to be effective for that distribution. If an election to
withdraw from or participate in the Reinvestment Plan is received
between a dividend record date and payment date, it shall become
effective on the day following the payment date. The Fund may
modify or terminate the Reinvestment Plan at any time on 30 days'
written notice to participants.

SYSTEMATIC WITHDRAWAL PLAN

If you own $10,000 or more of Fund shares at the current market
value, you may open a Systematic Withdrawal Plan (the "Plan") and
receive monthly, quarterly, semiannual or annual checks for any
designated amount. Firstar reinvests all income and capital gain
dividends in shares of the Fund. You may add shares to, withdraw
shares from, or terminate the Plan, at any time. Each withdrawal
may be a taxable event to you. Liquidation of the shares in
excess of distributions may deplete or possibly use up the initial
investment, particularly in the event of a market decline, and
withdrawals cannot be considered a yield or income on the
investment. In addition to termination of the Plan by the Fund or
shareholders, the Plan may be terminated by Firstar upon written
notice mailed to the shareholders. Please contact Nicholas
Company, Inc. for copies of the Plan documents.

INDIVIDUAL RETIREMENT ACCOUNTS

Individuals who receive compensation, including earnings from
self-employment, may be able to establish a traditional IRA, a
Roth IRA and/or an Education IRA. The Fund offers prototype IRA
plans for adoption by individuals who qualify. A description of
applicable service fees and application forms are available upon
request from the Fund. The IRA documents also contain a
Disclosure Statement which the IRS requires to be furnished to
individuals who are considering adopting an IRA. It is important
you obtain up-to-date information from the Fund before opening an
IRA.

Qualifying individuals who have a traditional IRA may make
deductible contributions to it. Taxation of the income and gains
paid to a traditional IRA by the Fund is deferred until
distribution from the IRA.

Qualifying individuals who maintain a Roth IRA may make non-
deductible contributions to it. However, the amounts within the
Roth IRA accumulate tax-free and qualified distributions will not
be included in a shareholder's taxable income. The contribution
limit is $2,000 annually ($4,000 for joint returns) in aggregate
with contributions to traditional IRAs. Certain income phase-outs
apply.

Like the Roth IRA, qualifying individuals may make non-
deductible contributions to an Education IRA, but the investment
earnings accumulate tax-free, and distributions used for higher
education expenses are not taxable. Contribution limits are $500
per account and certain income phase-outs apply.

As long as the aggregate IRA contributions meet the Fund's
minimum investment requirement of $500, the Fund will accept any
allocation of such contributions between spousal, deductible and
non-deductible accounts. The acceptability of this calculation is
the sole responsibility of the shareholder. For this reason, it
is advisable for you to consult with your personal tax adviser to
determine the deductibility of IRA contributions.

Because a retirement program involves commitments covering
future years, it is important that the investment objectives of
the Fund be consistent with your own retirement objectives.
Premature withdrawals from an IRA may result in adverse tax
consequences. Consultation with a tax adviser regarding the tax
consequences is recommended.

MASTER RETIREMENT PLAN

The Fund has available a master retirement plan for
self-employed individuals. You may contact the Fund for
additional information or if you wish to participate in the plan.
Consultation with a tax adviser regarding the tax consequences of
the plan is recommended.

PROSPECTUS

JANUARY 31, 2000

NICHOLAS II, INC.

NO LOAD - NO SALES CHARGE

FOR MORE INFORMATION ABOUT THE FUND:

The Fund's Statement of Additional Information ("SAI"), dated
January 31, 2000, contains more detailed information on all
aspects of Nicholas II, Inc., and is incorporated by reference in
this Prospectus. Additional information about the Fund also is
available in the Fund's Annual and Semiannual Report to
Shareholders.

To request a free copy of the current Annual/Semiannual
report or SAI, or to make shareholder inquiries, please write or
call: Nicholas II, Inc., 700 North Water Street, Milwaukee,
Wisconsin 53202, 800-227-5987 (toll-free). Additional
information about the Fund also can be obtained from the Fund's
Internet website at www.nicholasfunds.com.

In addition, you can review the Fund's reports and SAIs at
the Public Reference Room of the Securities and Exchange
Commission in Washington, D.C. Information on the operation of
the Public Reference Room may be obtained by calling the
Commission at 800-SEC-0330. Reports and other information about
the Fund also are available on the Commission's Internet website
at www.sec.gov. For a duplicating fee, copies of such
information may be obtained by writing the Public Reference
Section of the Commission, Washington, D.C. 20549-6000.

For the most current price and return information for the
Fund, you may call the Fund at 800-227-5987 (toll-free) or 414-
272-6133 or check the Fund's website at www.nicholasfunds.com.
You also can find the most current price of the Fund's shares in
the business section of your newspaper in the mutual fund section
under the heading "Nicholas Group" - "Nch II." If you prefer to
obtain this information from an on-line computer service, you can
do so by using the ticker symbol "NCTWX" or the cusip number
653740100.

Investment Adviser
NICHOLAS COMPANY, INC.
Milwaukee, Wisconsin
414-272-6133 or 800-227-5987

Transfer Agent Custodian
FIRSTAR MUTUAL FUND SERVICES, LLC FIRSTAR BANK MILWAUKEE, N.A.
Milwaukee, Wisconsin Milwaukee, Wisconsin
414-276-0535 or 800-544-6547

Independent Public Accountants Counsel
ARTHUR ANDERSEN LLP MICHAEL BEST & FRIEDRICH LLP
Milwaukee, Wisconsin Milwaukee, Wisconsin

NICHOLAS II, INC.
700 NORTH WATER STREET, SUITE 1010
MILWAUKEE, WISCONSIN 53202
WWW.NICHOLASFUNDS.COM

INVESTMENT COMPANY ACT FILE NO. 811-3851

NICHOLAS II, INC.

FORM N-1A

PART B: STATEMENT OF ADDITIONAL INFORMATION

NICHOLAS II, INC.

STATEMENT OF ADDITIONAL INFORMATION

700 North Water Street, Suite 1010
Milwaukee, Wisconsin 53202
414-272-6133
800-227-5987

This Statement of Additional Information is not a prospectus
and contains information in addition to and more detailed than
that set forth in the current Prospectus of Nicholas II, Inc.
(the "Fund"), dated January 31, 2000. It is intended to provide
you with additional information regarding the activities and
operations of the Fund, and should be read in conjunction with
the Fund's current Prospectus and the Fund's Annual Report for
the fiscal year ended September 30, 1999, which are incorporated
herein by reference, as they may be revised from time to time.
The Fund's Prospectus provides the basic information you should
know before investing in the Fund.

To obtain a free copy of the Fund's Prospectus and Annual
Report, please write or call the Fund at the address and
telephone number set forth above.

NO LOAD FUND - NO SALES OR REDEMPTION CHARGE BY THE FUND

Investment Adviser
NICHOLAS COMPANY, INC.

January 31, 2000

TABLE OF CONTENTS
PAGE

INTRODUCTION...............................................

INVESTMENT OBJECTIVES AND INVESTMENT STRATEGIES AND THEIR
RELATED RISKS.........................................

INVESTMENT RESTRICTIONS....................................

INVESTMENT RISKS...........................................

THE FUND'S INVESTMENT ADVISER..............................

MANAGEMENT - DIRECTORS, EXECUTIVE OFFICERS
AND PORTFOLIO MANAGER OF THE FUND........................

PRINCIPAL SHAREHOLDERS.....................................

PRICING OF FUND SHARES.....................................

PURCHASE OF FUND SHARES....................................

REDEMPTION OF FUND SHARES..................................

EXCHANGE BETWEEN NICHOLAS FAMILY OF FUNDS..................

TRANSFER OF FUND SHARES....................................

DIVIDENDS, DISTRIBUTIONS AND FEDERAL TAX STATUS............

DIVIDEND AND DISTRIBUTION REINVESTMENT PLAN................

SYSTEMATIC WITHDRAWAL PLAN................................. 19

INDIVIDUAL RETIREMENT ACCOUNTS.............................

MASTER RETIREMENT PLAN.....................................

BROKERAGE..................................................

PERFORMANCE DATA...........................................

CAPITAL STRUCTURE..........................................

STOCK CERTIFICATES.........................................

ANNUAL MEETING.............................................

SHAREHOLDER REPORTS........................................

CUSTODIAN AND TRANSFER AGENT...............................

INDEPENDENT ACCOUNTANTS AND LEGAL COUNSEL..................

FINANCIAL INFORMATION.....................................

INTRODUCTION

Nicholas II, Inc. ("Fund") was incorporated under the laws
of Maryland on June 28, 1983. The Fund is an open-end,
diversified management investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act").
This type of investment is commonly called a mutual fund. As an
open-end investment company, it obtains its assets by
continuously selling shares of its common stock, $0.01 par value,
to the public. Proceeds from such sales are invested by the Fund
in securities of other companies. In this manner, the resources
of many investors are combined and each individual investor has
an interest in every one of the securities owned by the Fund.
The Fund provides each individual investor with diversification
by investing in the securities of many different companies in a
variety of industries and furnishes experienced management to
select and watch over its investments. As an open-end investment
company, the Fund will redeem any of its outstanding shares on
demand of the owner at their net asset value next determined
following receipt of the redemption request. The investment
adviser to the Fund is Nicholas Company, Inc. (the "Adviser").

INVESTMENT OBJECTIVES AND
INVESTMENT STRATEGIES
AND THEIR RELATED RISKS

The Fund's main goal is increased share value over the long-
term. It strives to meet its goal by investing primarily in a
diversified portfolio of equity securities of small- and medium-
sized companies, which it believes, have growth potential.

The Fund believes a company's annual sales volume and the
market capitalization (the number of shares outstanding
multiplied by the per share price) are the factors most
illustrative of a company's size. To determine company size in
terms of sales volume, the Fund compares a company's sales volume
to peer companies in the company's industry. In terms of market
capitalization, the Fund uses the following standard:

MARKET CAPITALIZATION

Small........................ 0 to $2.0 Billion
Medium....................... $2.0 Billion to $10.0 Billion
Large........................ Over $10.0 Billion

The Fund looks for companies with the potential for superior
growth in sales and earnings. These are companies that are well
positioned to take advantage of emerging, long-term social and
economic trends, and have ample financial resources to sustain
their growth. The Fund considers a number of factors in
assessing a company's value, including :

The Fund expects that a major portion of it's portfolio will
be invested at all times in common stocks of the types of
companies, and in the manner, already described. However, the
Fund also may invest in the securities of unseasoned companies
(companies with a record of less than three years of continuous
operation) (but in no event in an aggregate amount in excess of
5% of the Fund's total assets), debt securities and preferred
stock convertible into common stock, securities of other
investment companies (up to 10% of the Fund's total assets) and
securities offered in private placements. The Fund also may
invest in certain higher-risk securities and engage in other
investment practices.

Liquidity, Information and Valuation Risks of Certain
Portfolio Investments

From time to time, the Fund may acquire the securities
of unseasoned companies (i.e., companies which have a record
of less than three years continuous operation) and
securities issued in private placements (i.e., securities
not registered for purchase and sale by the public under the
Securities Act of 1933, as amended). Securities of
unseasoned companies and securities issued in private
placements may be illiquid or volatile making it potentially
difficult or impossible to sell them at the time and at the
price the Fund would like. In addition, important
information about these types of companies, securities or
the markets in which they trade, may be inaccurate or
unavailable. Consequently, it may be difficult to value
accurately these securities as well.

These types of investments are made by the Fund when
the Adviser believes such investments offer the possibility
of capital appreciation. The Fund may not invest more than
5% of the Fund's total assets in the securities of
unseasoned companies. In addition, the Fund may not invest
more than 5% of the Fund's total assets in bonds, debentures
or other debt securities distributed in private placements.

Debt Securities and Preferred Stock

Debt securities, such as bonds, involve credit risk,
which is the risk that the borrower will not make timely
payments of principal and interest. Debt securities also
are subject to interest rate risk, which is the risk that
the value of the security may fall when interest rates rise.
In general, the market price of debt securities with longer
maturities will go up or down more in response to changes in
interest rates than shorter term securities. The value of
preferred stock and debt securities convertible into common
stock generally will be affected by its stated dividend rate
or interest rate, as applicable, and the value of the
underlying common stock. As a result of the conversion
feature, the dividend rate or interest rate on convertible
preferred stock or convertible debt securities generally is
less than would be the case if the security were not
convertible. Therefore, the value of convertible preferred
stock and debt securities will be affected by the factors
that affect both equity securities (such as stock market
movements generally) and debt securities (such as interest
rates). Some convertible securities might require the Fund
to sell the securities back to the issuer or a third party
at a time that is disadvantageous to the Fund.

These types of investments are made by the Fund when
the Adviser believes such investments offer the possibility
of appreciation in value. The Adviser intends generally to
limit the Fund's purchase of debt securities and preferred
stock to those which are rated in one of the top four rating
categories by any of the nationally recognized statistical
rating organizations ("NRSROs"), or will be unrated
instruments but deemed by the Adviser to be comparable in
quality to instruments so rated on the date of purchase.
However, this policy does not prevent the Fund from
retaining a security if its credit quality is downgraded to
a non-investment grade level after purchase.

Repurchase Agreements

The Fund may only enter into repurchase agreements with
a member bank of the Federal Reserve System or a primary
dealer in U.S. Government securities. Under such
agreements, the Fund buys U.S. Government securities from
the bank or primary dealer and simultaneously agrees to sell
the securities back to the bank or primary dealer at a
mutually agreed upon time and price. While the underlying
obligation is a U.S. Government security, the obligation of
the seller to repurchase the security is not guaranteed by
the U.S. Government. Delays or losses could result if the
bank or primary dealer defaults on its repurchase obligation
or becomes insolvent, which could adversely impact the
Fund's net asset value.

Not more than 20% of the Fund's total net assets, taken
at market, may be invested in repurchase agreements;
provided, however, that repurchase agreements maturing in
more than seven days may not constitute more than 5% of the
Fund's total net assets, taken at market.

Fixed Income Securities

The Fund may temporarily invest in investment grade and
non-investment grade fixed income securities as a temporary
defensive measure when conditions are deemed to warrant such
action. "Investment grade fixed income securities" refers
to fixed income securities ranked in one of the top four
debt security rating categories of any of the NRSROs, or
unrated but deemed by the Adviser to be comparable in
quality to instruments so rated on the date of purchase.
However, this policy does not prohibit the Fund from
retaining a security if its credit quality is downgraded to
a non-investment grade level after purchase.

The fixed income securities described in the fourth
category of these rating services possess speculative
characteristics. In addition, non-investment grade
securities tend to reflect individual corporate developments
to a greater extent, tend to be more sensitive to economic
conditions and tend to have a weaker capacity to pay
interest and repay principal than higher rated securities.
Because the market for lower rated securities may be thinner
and less active than for higher rated securities, there may
be market price volatility for these securities and limited
liquidity in the resale market. Factors adversely impacting
the market value of high yielding, high risk securities also
will adversely impact the Fund's net asset value.

Borrowings

The use of borrowings can increase the Fund's exposure
to market risk. If the Fund borrows money to make more
investments than it otherwise could or to meet redemptions,
the Fund's share price may be subject to greater fluctuation
until the borrowing is paid off. The Fund may make
borrowings but only for temporary or emergency purposes and
then only in amounts not in excess of 5% of the lower of
cost or market value of the Fund's total net assets.

Investments in Other Investment Companies

The Fund may invest generally up to 10% of its total
assets in securities of other investment companies.
Investments in these securities will involve duplication of
advisory fees and certain other expenses.

INVESTMENT RESTRICTIONS WHICH MAY BE CHANGED WITHOUT SHAREHOLDER
APPROVAL

The Fund's Board of Directors has adopted the following
investment restrictions which may be changed by the Board without
shareholder approval:

* No investments in interests in oil, gas or other mineral
exploration programs (but investments in securities of companies
engaged in oil, gas or mineral activities are permitted)

* No investments in puts, calls, straddles, spreads or any
combination thereof

* No investments in securities of other open-end investment
companies

* The Fund may make borrowings but only for temporary or
emergency purposes and then only in amounts not in excess of 5%
of the lower of cost or market value of the Fund's total net
assets

The Board will give advance notice to shareholders of any change
to these investment restrictions by filing with the SEC an
amended Statement of Additional Information.

All percentage limitations discussed in the "Fund Investments" s
ection apply on the date of investment by the Fund. Thus, if an
investment satisfies a percentage restriction when it is made,
no violation of that restriction occurs due to changes afterwards
in the market value of the investment or the total assets of the
Fund.

INVESTMENT RESTRICTIONS

The Fund has adopted the following restrictions, which are
matters of fundamental policy and cannot be changed without the
approval of the holders of a majority of its outstanding shares,
or, if less, 67% of the shares represented at a meeting of
shareholders at which 50% or more of the holders are represented
in person or by proxy.

1. The Fund will not purchase securities on margin,
participate in a joint trading account, sell securities
short, or act as an underwriter or distributor of
securities other than its own capital stock. The Fund
will not lend money, except for:

(a) the purchase of a portion of an issue of
publicly distributed debt securities;

(b) investment in repurchase agreements in
an amount not to exceed 20% of the total net
assets, taken at market, of the Fund; provided,
however, that repurchase agreements maturing in
more than seven days will not constitute more than
5% of the value of total net assets, taken at
market; and

(c) the purchase of a portion of bonds,
debentures or other debt securities of types
commonly distributed privately to financial
institutions in an amount not to exceed 5% of the
value of total net assets, taken at market, of the
Fund;

provided, however, that the total investment of
the Fund in repurchase agreements maturing in more than
seven days, when combined with the type of investment
set forth in 1(c) above, will not exceed 5% of the
value of the Fund's total net assets, taken at market.

2. The Fund will not purchase or sell real estate or
interests in real estate, commodities or commodity
futures. The Fund may invest in the securities of real
estate investment trusts, but not more than 10% in
value of the Fund's total net assets will be so
invested.

3. The Fund may make temporary bank borrowings (not
in excess of 5% of the lower of cost or market value of
the Fund's total net assets).

4. The Fund will not pledge any of its assets.

5. Investments will not be made for the purpose of
exercising control or management of any company. The
Fund will not purchase securities of any issuer if, as
a result of such purchase, the Fund would hold more
than 10% of the voting securities of such issuer.

6. Not more than 5% of the Fund's total net assets,
taken at market value, will be invested in the
securities of any one issuer (not including U.S.
Government securities).

7. Not more than 25% of the value of the Fund's total
net assets will be concentrated in companies of any
particular one industry or group of industries.

8. The Fund will not acquire or retain any security
issued by a company, if an officer or director of such
company is an officer or director of the Fund, or is an
officer, director, shareholder or other interested
person of the Adviser.

9. The Fund may not issue senior securities in
violation of the 1940 Act.

INVESTMENT OBJECTIVES AND INVESTMENT STRATEGIES

The Fund has adopted primary investment objectives, which are
fundamental policies. The section captioned "FUND INVESTMENTS" in the
Fund's Prospectus describe the principal investment objectives and the
investment policies applicable to the Fund. Please read the Prospectus in
conjunction with this Statement of Additional Information. The Fund also
has adopted certain other investment strategies and policies which are not
fundamental and may be changed by the Board of Directors without
shareholder approval. However, any changes will be made only upon advance
notice to shareholders. Such changes may result in the Fund having
secondary investment and other policy objectives different from the
objectives which a shareholder considered appropriate at the time of
investment in the Fund. Set forth below is additional information on the
other Fund investment strategies and permissible investments which the Fund
may use in an effort to obtain its primary objective.

CERTAIN OTHER INVESTMENT STRATEGIES AND PORTFOLIO INVESTMENTS

From time to time, the Fund may acquire the securities of unseasoned
companies (i.e., companies which have a record of less than three years
continuous operation) and securities issued in private placements (i.e.,
securities not registered for purchase and sale by the public under the
Securities Act of 1933, as amended). These types of investments are made
by the Fund when the Adviser believes such investments offer the
possibility of capital appreciation. The Fund may not invest more than 5%
of the Fund's total assets in the securities of unseasoned companies. In
addition, the Fund may not invest more than 5% of the Fund's total assets
in bonds, debentures or other debt securities distributed in private
placements.

From time to time, the Fund may acquire debt securities and preferred
stock that are convertible into or carry rights to acquire common stock,
and other debt securities, such as those selling at substantial discounts.
These types of investments are made by the Fund when the Adviser believes
such investments offer the possibility of appreciation in value. The
Adviser intends generally to limit the Fund's purchase of debt securities
and preferred stock to those which are rated in one of the top four rating
categories by any of the nationally recognized statistical rating
organizations ("NRSROs"), or will be unrated instruments but deemed by the
Adviser to be comparable in quality to instruments so rated on the date of
purchase. However, this policy does not prevent the Fund from retaining a
security if its credit quality is downgraded to a non-investment grade
level after purchase.

The Fund may only enter into repurchase agreements with a member bank
of the Federal Reserve System or a primary dealer in U.S. Government
securities. Under such agreements, the Fund buys U.S. Government
securities from the bank or primary dealer and simultaneously agrees to
sell the securities back to the bank or primary dealer at a mutually agreed
upon time and price. Not more than 20% of the Fund's total net assets,
taken at market, may be invested in repurchase agreements; provided,
however, that repurchase agreements maturing in more than seven days may
not constitute more than 5% of the Fund's total net assets, taken at
market.

The Fund may temporarily invest in investment grade and non-investment
grade fixed income securities as a temporary defensive measure when
conditions are deemed to warrant such action. "Investment grade fixed
income securities" refers to fixed income securities ranked in one of the
top four debt security rating categories of any of the NRSROs, or unrated
but deemed by the Adviser to be comparable in quality to instruments so
rated on the date of purchase. However, this policy does not prohibit the
Fund from retaining a security if its credit quality is downgraded to a non-
investment grade level after purchase.

The Fund may make borrowings but only for temporary or emergency
purposes and then only in amounts not in excess of 5% of the lower of cost
or market value of the Fund's total net assets.

The Fund may invest generally up to 10% of its total assets in
securities of other investment companies. All percentage limitations
discussed in this section apply on the date of investment by the Fund.
Thus, if an investment satisfies a percentage restriction when it is
made, no violation of that restriction occurs due to changes afterwards in
the market value of the investment or the total assets of the Fund

INVESTMENT RESTRICTIONS

The Fund has adopted the following restrictions, which are matters of
fundamental policy and cannot be changed without the approval of the
holders of a majority of its outstanding shares, or, if less, 67% of the
shares represented at a meeting of shareholders at which 50% or more of the
holders are represented in person or by proxy.

1. The Fund will not purchase securities on margin, participate
in a joint trading account, sell securities short, or act as an
underwriter or distributor of securities other than its own
capital stock. The Fund will not lend money, except for:

(a) the purchase of a portion of an issue of publicly
distributed debt securities;

(b) investment in repurchase agreements in an amount
not to exceed 20% of the total net assets, taken at market,
of the Fund; provided, however, that repurchase agreements
maturing in more than seven days will not constitute more
than 5% of the value of total net assets, taken at market;
and

(c) the purchase of a portion of bonds, debentures or
other debt securities of types commonly distributed
privately to financial institutions in an amount not to
exceed 5% of the value of total net assets, taken at market,
of the Fund;

provided, however, that the total investment of the Fund in
repurchase agreements maturing in more than seven days, when
combined with the type of investment set forth in 1(c) above,
will not exceed 5% of the value of the Fund's total net assets,
taken at market.

2. The Fund will not purchase or sell real estate or interests
in real estate, commodities or commodity futures. The Fund may
invest in the securities of real estate investment trusts, but
not more than 10% in value of the Fund's total net assets will be
so invested.

3. The Fund may make temporary bank borrowings (not in excess
of 5% of the lower of cost or market value of the Fund's total
net assets).

4. The Fund will not pledge any of its assets.

5. Investments will not be made for the purpose of exercising
control or management of any company. The Fund will not purchase
securities of any issuer if, as a result of such purchase, the
Fund would hold more than 10% of the voting securities of such
issuer.

6. Not more than 5% of the Fund's total net assets, taken at
market value, will be invested in the securities of any one
issuer (not including U.S. Government securities).

7. Not more than 25% of the value of the Fund's total net
assets will be concentrated in companies of any particular one
industry or group of industries.

8. The Fund will not acquire or retain any security issued by a
company, if an officer or director of such company is an officer
or director of the Fund, or is an officer, director, shareholder
or other interested person of the Adviser.

9. The Fund may not issue senior securities in violation of the
1940 Act.

INVESTMENT RESTRICTIONS WHICH MAY BE CHANGED WITHOUT SHAREHOLDER APPROVAL

The Fund's Board of Directors has adopted the following investment
restrictions which may be changed by the Board without shareholder
approval:

* Not more than 5% of its total net assets may be invested in equity
securities which are not readily marketable and in securities of
unseasoned companies (companies which have a record of less than three
years' continuous operation, including the operation of any predecessor
business of a company which came into existence as a result of a merger,
consolidation, reorganization or purchase of substantially all of the
assets of such predecessor business)

* No investments in interests in oil, gas or other mineral exploration
programs (but investments in securities of companies engaged in oil, gas
or mineral activities are permitted)

* No investments in puts, calls, straddles, spreads or any combination
thereof

* No investments in securities of other open-end investment companies

* The Fund may make borrowings but only for temporary or emergency
purposes and then only in amounts not in excess of 5% of the lower of
cost or market value of the Fund's total net assets

The Board will give advance notice to shareholders of any change to these
investment restrictions by filing with the SEC an amended Statement of
Additional Information.

All percentage limitations apply on the date of investment by the
Fund. Thus, if an investment satisfies a percentage restriction when it is
made, no violation of that restriction occurs due to changes afterwards in
the market value of the investment of total assets of the Fund.

INVESTMENT RISKS

THIS SECTION CONTAINS A SUMMARY DESCRIPTION OF THE RISKS OFOTHER
INVESTMENT STRATEGIES AND RELATED INVESTMENTSOF THE FUND AS DISCUSSED IN
THIS STATEMENT OF ADDITIONAL INFORMATION. FOR A DESCRIPTION OF THE
PRINCIPAL RISKS OF INVESTING IN THE FUND, PLEASE SEE THE "INVESTMENT RISKS"
SECTION IN THE FUND'S PROSPECTUS. AS WITH ANY MUTUAL FUND, THERE CAN BE NO
GUARANTEE THAT THE FUND WILL MEET ITS GOALS OR THAT YOU WON'T LOSE MONEY ON
YOUR INVESTMENT. THERE IS NO GUARANTEE THAT THE FUND'S PERFORMANCE WILL BE
POSITIVE OVER ANY PERIOD OF TIME.

OTHER RISKS RELATED TO CERTAIN PORTFOLIO INVESTMENTS AND
STRATEGIES. Although the Fund generally will invest in the common stocks
of small- and medium-sized companies, certain investments the Fund may
acquire and certain investment techniques the Fund may use entail other
risks:

LIQUIDITY, INFORMATION AND VALUATION RISKS OF CERTAIN PORTFOLIO
INVESTMENTSSecurities of unseasoned companies and securities issued in
private placements, which may be acquired by the Fund from time to
time, may be illiquid or volatile making it potentially difficult or
impossible to sell them at the time and at the price the Fund would
like. In addition, important information about these types of
companies, securities or the markets in which they trade, may be
inaccurate or unavailable. Consequently, it may be difficult to value
accurately these securities as well.
DEBT SECURITIES AND PREFERRED STOCK

Debt securities, such as bonds, involve credit risk, which is the
risk that the borrower will not make timely payments of principal and
interest. Debt securities also are subject to interest rate risk,
which is the risk that the value of the security may fall when
interest rates rise. In general, the market price of debt securities
with longer maturities will go up or down more in response to changes
in interest rates than shorter term securities. The value of
preferred stock and debt securities convertible into common stock
generally will be affected by its stated dividend rate or interest
rate, as applicable, and the value of the underlying common stock. As
a result of the conversion feature, the dividend rate or interest rate
on convertible preferred stock or convertible debt securities
generally is less than would be the case if the security were not
convertible. Therefore, the value of convertible preferred stock and
debt securities will be affected by the factors that affect both
equity securities (such as stock market movements generally) and debt
securities (such as interest rates). Some convertible securities
might require the Fund to sell the securities back to the issuer or a
third party at a time that is disadvantageous to the Fund.
REPURCHASE AGREEMENTS While the underlying obligation of a repurchase
agreement purchased by the Fund is a U.S. Government security, the
obligation of the seller to repurchase the security is not guaranteed
by the U.S. Government. Delays or losses could result if the bank or
primary dealer defaults on its repurchase obligation or becomes
insolvent, which could adversely impact the Fund's net asset value.

FIXED INCOME SECURITIES
The Fund's investments in investment grade and non-investment
grade fixed income securities may carry some risk. Investment grade
fixed income securities described in the fourth category of the NRSROs
possess speculative characteristics. In addition, non-investment
grade securities tend to reflect individual corporate developments to
a greater extent, tend to be more sensitive to economic conditions and
tend to have a weaker capacity to pay interest and repay principal
than higher rated securities. Because the market for lower rated
securities may be thinner and less active than for higher rated
securities, there may be market price volatility for these securities
and limited liquidity in the resale market. Factors adversely
impacting the market value of high yielding, high risk securities also
will adversely impact the Fund's net asset value.

BORROWINGS

In view of the risks inherent in all investments in securities, there
is no assurance that the Fund's objectives will be achieved.

THE FUND'S INVESTMENT ADVISER

Nicholas Company, Inc., located at 700 North Water Street,
Suite 1010, Milwaukee, Wisconsin 53202, is the Fund's investment
adviser. The Adviser furnishes the Fund with continuous
investment service and is responsible for overall management of
the Fund's business affairs, subject to supervision by the Fund's
Board of Directors. The Adviser is the investment adviser to
five other mutual funds to approximately 25 institutions and
individuals with substantial investment portfolios. The other
funds for which the Adviser serves as investment adviser are
Nicholas Fund, Inc., Nicholas Income Fund, Inc., Nicholas Limited
Edition, Inc., Nicholas Money Market Fund, Inc. and Nicholas
Equity Income Fund, Inc., with primary investment objectives and
net assets as set forth below.

NET ASSETS AT
FUND INVESTMENT OBJECTIVE SEPT. 30, 1999
---- -------------------- --------------
Nicholas Fund, Inc. Capital appreciation $4,782,783,840

Nicholas Limited Long-term growth $ 273,310,802
Edition, Inc.(1)

Nicholas Equity Reasonable income $ 20,053,386
Income Fund, Inc

Nicholas Income High current income $ 210,293,122
Fund, Inc.

Nicholas Money Current income $ 144,734,499
Market Fund, Inc.

The annual fee paid to the Adviser is paid monthly and is
based on the average net asset value of the Fund, as determined
by valuations made at the close of each business day of the
month.

The following table illustrates the calculation of the
Adviser's annual fee:

NET ASSET
VALUE OF THE FUND ANNUAL FEE CALCULATION
----------------- ----------------------
Up to and including $50,000,000............ (0.75 of 1%)

Over $50,000,000 and (0.60 of 1%)
including $100,000,000....................

In excess of $100,000,000................. (0.50 of 1%)

For the fiscal year ended September 30, 1999, total net
assets of the Fund were $874,145,289. The Fund paid the Adviser
a fee for the fiscal year ended September 30, 1999 totalling
$5,305,196.

Under an Investment Advisory Agreement with the Fund, the
Adviser, at its own expense and without reimbursement from the
Fund, furnishes the Fund with office space, office facilities,
executive officers and executive expenses (such as health
insurance premiums for executive officers). The Adviser also
pays all sales and promotional expenses of the Fund other than
expenses incurred in complying with laws regulating the issue or
sale of securities. The Fund pays for all of its operating
expenses, including, but not limited to, the costs of preparing
and printing its registration statements required under the
Securities Act and the 1940 Act, and any amendments thereto, the
expense of registering its shares with the Securities and
Exchange Commission and in the various states, the printing and
distribution cost of prospectuses mailed to existing shareholders
and to persons making unsolicited requests for information, the
cost of stock certificates, reports to shareholders, interest
charges, taxes and legal fees and expenses. Also included as
"operating expenses" which are paid by the Fund are fees of
directors who are not interested persons of the Adviser or
officers or employees of the Fund, salaries of administrative and
clerical personnel, association membership dues, auditing,
accounting and tax consulting services, fees and expenses of any
custodian or trustees having custody of Fund assets, printing and
mailing expenses, postage and charges and expenses of dividend
disbursing agents, registrars and stock transfer agents,
including the cost of keeping all necessary shareholder records
and accounts and handling any problems related thereto.

During the fiscal years ended September 30, 1999, 1998 and
1997, the Fund paid the Adviser an aggregate of $5,305,196,
$5,548,861 and $4,371,278, respectively, in fees.

The Investment Advisory Agreement with the Adviser is not
assignable and may be terminated by either party, without
penalty, on 60 days notice. Otherwise, the Investment Advisory
Agreement continues in effect so long as it is approved annually
by (i) the Board of Directors or by a vote of a majority of the
outstanding shares of the Fund and (ii) in either case, by the
affirmative vote of a majority of directors who are not parties
to the Investment Advisory Agreement or "interested persons" of
the Adviser or of the Fund, as defined in the 1940 Act cast in
person at a meeting called for the purpose of voting for such
approval.

Albert O. Nicholas is President and a Director of the Fund,
is Chief Executive Officer and Chairman of the Board of the
Adviser, and is a controlling person of the Adviser through his
ownership of 91% of the outstanding voting securities of the
Adviser. Thomas J. Saeger, Executive Vice President and
Secretary of the Fund, is Executive Vice President and Assistant
Secretary of the Adviser. David L. Johnson is Executive Vice
President of the Fund and Executive Vice President of the
Adviser. He is a brother-in-law of Albert O. Nicholas. David O.
Nicholas, Senior Vice President and Portfolio Manager of the
Fund, is President and Chief Investment Officer and a Director of
the Adviser. Lynn S. Nicholas is a Senior Vice President of the
Fund and of the Adviser. David O. Nicholas and Lynn S. Nicholas
are the son daughter, respectively, of Albert O. Nicholas.
Jeffrey T. May is a Senior Vice President and Treasurer of the
Fundand is Senior Vice President and Treasurer of the Adviser.
Candace L. Lesak is Vice President of the Fund, and is an
employee of the Adviser. Mark J. Giese is a Vice President of
the Fundand is a Vice President of the Adviser. Kathleen A.
Evans is an Assistant Vice President of the Fundand is a Vice
President of the Adviser. Tracy C. Eberleinis an Assistant Vice
President of the Fund, and is an employee of the Adviser. David
E. Leichtfuss, 100 E. Wisconsin Avenue, Milwaukee, Wisconsin is a
Director and the Secretary of the Adviser. Mr. Leichtfuss is a
partner with the law firm of Michael Best & Friedrich LLP,
Milwaukee, Wisconsin, legal counsel to the Fund and the Adviser.
Daniel J. Nicholas, 2618 Harlem Boulevard, Rockford, Illinois, is
Director Emeritus of the Adviser. Mr. Nicholas, a brother of
Albert O. Nicholas, is a private investor.

MANAGEMENT - DIRECTORS, EXECUTIVE OFFICERS
AND PORTFOLIO MANAGER OF THE FUND

The overall operations of the Fund are conducted by the
officers of the Fund under the control and direction of its Board
of Directors. The Board of Directors governs the Fund and is
responsible for protecting the interests of shareholders. The
Board of Directors consists of individuals who meet periodically
throughout the year to oversee the Fund's activities and review
the Fund's performance. The following table sets forth the
pertinent information about the Fund's officers and directors as
of January 31, 2000:

NAME, AGE AND POSITIONS HELD PRINCIPAL OCCUPATIONS
ADDRESS WITH FUND PAST FIVE YEARS
-------------- -------------- -----------------------
* Albert O. Nicholas, 68 President and Chief Executive Officer
700 North Water Street Director and Chairman of the
Milwaukee, WI 53202 Board, Nicholas Company,
Inc., the Adviser to the
Fund. He has been
Portfolio Manager (or Co-
Portfolio Manager, in
the case of Nicholas
Fund, Inc., since
November 1996) for, and
primarily responsible
for the day-to-day
management of the
portfolios of Nicholas
Fund, Inc., Nicholas
Income Fund, Inc. and
Nicholas Equity Income
Fund, Inc. since the
Adviser has served as
investment adviser for
such funds. He is a
Chartered Financial
Analyst.
Melvin L. Schultz, 66 Director Director and Management
3636 North 124th Street Consultant, Professional
Wauwatosa, WI 53222 Management of Milwaukee,
Inc. He is a Certified
Professional Business
Consultant and provides
financial advice to
members of the medical
and dental professions.
Richard Seaman, 74 Director Management Consultant,
5270 North Maple Lane on an independent basis,
Nashotah, WI 53058 primarily in the areas
of mergers, acquisitions
and strategic planning.
Robert H. Bock, 67 Director Professor of Business
3132 Waucheeta Trail Strategy and Ethics ,
Madison, WI 53711 University of Wisconsin
School of Business,
since 1965. From 1972 to
1984, he was Dean of the
School of Business.
Thomas J. Saeger, 55 Executive Vice Executive Vice President
700 North Water Street President and and Assistant Secretary,
Milwaukee, WI 53202 Secretary Nicholas Company, Inc.,
the Adviser to the Fund,
and employed by the
Adviser since 1969. He
is a Certified Public
Accountant.
David L. Johnson, 57 Executive Vice Executive Vice
700 North Water Street President President, Nicholas
Milwaukee, WI 53202 Company, Inc., the
Adviser to the Fund, and
employed by the Adviser
since 1980. He is a
Chartered Financial
Analyst.

David O. Nicholas, 38 Senior Vice President, Chief
700 North Water Street President and Investment Officer and
Milwaukee, WI 53202 Portfolio Manager Director, Nicholas
Company, Inc., the
Adviser to the Fund and
employed by the Adviser
since 1985. He has been
Portfolio Manager for,
and primarily
responsible for the day-
to-day management of,
the portfolios of
Nicholas II, Inc. and
Nicholas Limited
Edition, Inc. since
March 1993. He also has
been Co-Portfolio
Manager of Nicholas
Fund, Inc. since
November 1996. He is a
Chartered Financial
Analyst.
Lynn S. Nicholas, 43 Senior Vice Senior Vice President,
700 North Water Street President Nicholas Company, Inc.,
Milwaukee, WI 53202 the Adviser to the Fund,
and employed by the
Adviser since September
1983. She is a
Chartered Financial
Analyst.
Jeffrey T. May, 43 Senior Vice Senior Vice President
700 North Water Street President and and Treasurer, Nicholas
Milwaukee, WI 53202 Treasurer Company, Inc., the
Adviser to the Fund, and
employed by the Adviser
since July 1987. He is
a Certified Public
Accountant.
Candace L. Lesak, 42 Vice President Employee, Nicholas
700 North Water Street Company, Inc., the
Milwaukee, WI 53202 Adviser to the Fund,
since February 1983.
She is a Certified
Financial Planner.
Mark J. Giese, 29 Vice President Vice President, Nicholas
700 North Water Street Company, Inc., the
Milwaukee, WI 53202 Adviser to the Fund, and
employed by the Adviser
since July 1994. He
graduated from the
University of Wisconsin
- Madison with a Masters
of Science degree in
Finance in May of 1994.
He is a Certified Public
Accountant and a
Chartered Financial
Analyst.
Kathleen A. Evans, 51 Assistant Vice Vice President, Nicholas
700 North Water Street President Company, Inc., the
Milwaukee, WI 53202 Adviser to the Fund, and
employed by the Adviser
since March 1985.
Tracy C. Eberlein, 39 Assistant Vice Employee, Nicholas
700 North Water Street President Company, Inc., the
Milwaukee, WI 53202 Adviser to the Fund,
since January 1985. She
is a Certified Financial
Planner.
____________________

* Albert O. Nicholas is the only director of the Fund who is
an "interested person" in the Adviser, as that term is
defined in the 1940 Act. Mr. Nicholas is Chief Executive
Officer and a Director of the Adviser and owns 91% of the
outstanding voting securities of the Adviser.

Mr. David O. Nicholas is the Portfolio Manager of the Fund
and is primarily responsible for the day-to-day management of the
Fund's portfolio.

The Investment Advisory Agreement between the Fund and
Nicholas Company, Inc. states that the Fund shall pay the
directors' fees of directors who are not interested persons of
Nicholas II, Inc. The amount of such fees is subject to increase
or decrease at any time, but is subject to the overall limitation
on the Fund's annual expenses.

The table below sets forth the aggregate compensation
received from the Fund by all directors of the Fund during the
fiscal year ended September 30, 1999. No officers of the Fund
receive any compensation from the Fund, but rather, are
compensated by the Adviser in accordance with its investment
advisory agreement with the Fund.
<TABLE>
Pension or Estimated Total Compensation
Aggregate Retirement Annual From Fund and Fund
Name and Compensation Benefits Benefits Complex Paid to
Position From the Accrued As Upon Directors(1)
Fund Part of Fund Retirement
Expenses
--------- ------------- ------------ ---------- -------------------
<S> <C> <C> <C> <C>
Albert O. Nicholas(2) $ 0 $ 0 $ 0 $ 0
Melvin L. Schultz(2) $ 5,000 $ 0 $ 0 $ 21,200
Richard Seaman(2) $ 5,000 $ 0 $ 0 $ 11,200
Robert H. Bock(2) $ 5,000 $ 0 $ 0 $ 11,200
</TABLE>
___

(1) During the fiscal year ended September 30, 1999, the Fund and
other funds in its Fund Complex (i.e., those funds which also
have Nicholas Company, Inc. as its investment adviser, namely
Nicholas Fund, Inc., Nicholas Equity Income Fund, Inc.,
Nicholas Limited Edition, Inc., Nicholas Income Fund, Inc.
and Nicholas Money Market Fund, Inc.) compensated those
directors who are not "interested persons" of the Adviser in
the form of an annual retainer per director per fund and
meeting attendance fees. During the fiscal year ended
September 30, 1999, the Fund compensated the disinterested
directors at a rate of $750 per director per meeting attended
and an annual retainer of
$2,000 per year. Except for reimbursement of out-of-pocket
expenses, the disinterested directors did not receive
any other form or amount of compensation from the Fund
Complex during the fiscal year ended September 30, 1999. All
other directors and officers of the Fund were compensated by
the Adviser in accordance with its investment advisory
agreement.

(2) Mr. Nicholas also is a member of the Board of Directors of
Nicholas Fund, Inc., Nicholas Equity Income Fund, Inc.,
Nicholas Limited Edition, Inc., Nicholas Income Fund, Inc.
and Nicholas Money Market Fund, Inc. Mr. Schultz also is a
member of the Board of Directors of Nicholas Fund, Inc.,
Nicholas Limited Edition, Inc., Nicholas Income Fund, Inc.,
Nicholas Equity Income Fund, Inc. and Nicholas Money Market
Fund, Inc. Mr. Seaman also is a member of the Board of
Directors of Nicholas Fund, Inc. and Nicholas Equity Income
Fund, Inc. Mr. Bock also is a member of the Board of
Directors of Nicholas Fund, Inc. and Nicholas Equity Income
Fund, Inc.

PRINCIPAL SHAREHOLDERS

No persons are known to the Fund to own beneficially or of
record 5% or more of the outstanding shares of the Fund as of
September 30, 1999. All directors and executive officers of the
Fund as a group (13 in number) beneficially own approximately
3.7% of the outstanding shares of the Fund as of December 31,1999.

PRICING OF FUND SHARES

When you buy shares of the Fund, the price per share you pay
is the net asset value ("NAV") per share of the Fund. The NAV of
a share is determined by dividing the total value in U.S. dollars
of the Fund's total net assets by the total number of shares
outstanding at that time. Net assets of the Fund are determined
by deducting the liabilities of the Fund from the total assets of
the Fund. The NAV is determined as of the close of trading on
the New York Stock Exchange ("NYSE") on each day the NYSE is open
for trading. The NYSE is open for trading Monday through Friday
except New Year's Day, President's Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Martin Luther King Day,
Thanksgiving Day and Christmas Day. Additionally, if any of the
aforementioned holidays falls on a Saturday, the NYSE will not be
open for trading on the preceding Friday, and when any such
holiday falls on a Sunday, the NYSE will not be open for trading
on the succeeding Monday, unless unusual business conditions
exist (such as the ending of a monthly or yearly accounting
period).

Equity securities traded on a stock exchange will ordinarily
be valued on the basis of the last sale price on the date of
valuation, or in the absence of any sale on that day, the closing
bid price. Most debt securities, excluding short-term
investments, are valued at the current evaluated bid price.
Securities for which there are no readily available market
quotations and other assets and liabilities of the Fund will be
valued at their then current fair value using methods determined
in good faith by the Board of Directors.

PURCHASE OF FUND SHARES

MINIMUM INVESTMENTS. The minimum initial purchase is $500
and the minimum for any subsequent purchase is $100, except in
the case of reinvestment of distributions. The Automatic
Investment Plan has a minimum monthly investment of $50. Due to
the fixed expenses incurred by the Fund in maintaining individual
accounts, the Fund reserves the right to redeem accounts that
fall below the $500 minimum required investment due to
shareholder redemption (but not solely due to a decrease in net
asset value of the Fund). In order to exercise this right, the
Fund will give advance written notice of at least 30 days to the
accounts below such minimum.

APPLICATION INFORMATION. Applications for the purchase of
shares are made to Nicholas II, Inc., c/o Firstar Mutual Fund
Services, LLC ("Firstar"), P.O. Box 2944, Milwaukee, Wisconsin
53201-2944. The Fund also has available an Automatic Investment
Plan for shareholders. You should contact the Fund for additional
information.

When you make a purchase, your purchase price per share will
be the NAV per share next determined after the time the Fund
receives the application in proper order. The determination of
the NAV for a particular day is applicable to all purchase
applications received in proper order at or before the close of
trading on the NYSE on that day (usually 4:00 p.m., New York
time).

Applications to purchase Fund shares received in
proper order on a day when the NYSE is open for
trading, prior to the close of trading on that day,
will be based on the NAV as of the close of trading on
that day.
Applications to purchase Fund shares received in
proper order after the close of trading on the NYSE
will be based on the NAV as determined as of the close
of trading on the next day the NYSE is open.

Purchase of shares will be made in full and fractional shares
computed to three decimal places.

You should be aware that DEPOSIT in the U.S. mail or with
independent delivery services, or receipt at Firstar's Post
Office Box, of purchase applications does not constitute receipt
by Firstar or the Fund. DO NOT mail letters by overnight courier
to the Post Office Box address. OVERNIGHT COURIER DELIVERY
SHOULD BE SENT TO FIRSTAR MUTUAL FUND SERVICES, LLC, THIRD FLOOR,
615 EAST MICHIGAN STREET, MILWAUKEE, WISCONSIN 53202-5207.

Your application to purchase Fund shares must be in proper
order to be accepted, may only be accepted by the Fund or an
Authorized Agent of the Fund and is not binding until accepted.
Applications must be accompanied by payment in U.S. funds. Your
check should be drawn on a U.S. bank, savings & loan or credit
union. Checks are accepted subject to collection at full face
value in U.S. funds. The transfer agent will charge a $20 fee
against your account, in addition to any loss sustained by the
Fund, if any payment check is returned to the transfer agent for
insufficient funds. The Fund will not accept applications under
circumstances or in amounts considered disadvantageous for
shareholders. If you open an account (including custodial
accounts) without a proper social security number or taxpayer
identification number, it may be liquidated. Proceeds will be
distributed to the owner(s) of record on the first business day
following the 60th day of investment, net of the backup
withholding tax amount.

WIRE PAYMENTS. You also may purchase Fund shares via the
Federal Reserve wire system. If a wire purchase is to be an
initial purchase, please call Firstar (414-276-0535 or 800-544-
6547) with the appropriate account information prior to sending
the wire. Firstar will provide you with a confirmation number
for any wire purchase which will ensure the prompt and accurate
handling of funds. To purchase shares of the Fund by federal
wire transfer, instruct your bank to use the following
instructions:

Wire To: Firstar Bank Milwaukee, N.A.
ABA 075000022
Credit: Firstar Mutual Fund Services, LLC
Account 112-952-137
Further Credit: Nicholas II, Inc.
(shareholder account number)
(shareholder registration)

The Fund and its transfer agent are not responsible for the
consequences of delays resulting from the banking or Federal
Reserve wire system, or from incomplete wiring instructions.

CERTIFICATES. The Fund won't issue certificates
representing Fund shares unless the shareholder specifically
requests certificates in writing. Certificates are mailed to
requesting shareholders approximately two weeks after receipt of
the request by the Fund. The Fund won't issue certificates for
fractional shares even if requested. Where certificates are not
requested, the Fund's transfer agent, Firstar, will credit the
shareholder's account with the number of shares purchased.
Written confirmations are issued for all purchases of Fund
shares.

THIRD PARTY PURCHASES - USE OF A PROCESSING INTERMEDIARY TO
PURCHASE FUND SHARES. You can purchase shares of the Fund
through certain broker-dealers, financial institutions or other
service providers ("Processing Intermediaries"). If you do, the
Processing Intermediary, rather than you, may be the shareholder
of record. Certain service providers may receive compensation
from the Fund for providing transfer agent-related services
relating to the accounts held in street name. Processing
Intermediaries may use procedures and impose restrictions in
addition to or different from those applicable to shareholders
who invest in the Fund directly. You should read the program
materials provided by the Processing Intermediary in conjunction
with this Statement of Additional Information before you invest
in the Fund this way.

Processing Intermediaries may charge fees or other charges
for the services they provide to their customers. Such charges
may vary among Processing Intermediaries, but in all cases will
be retained by the Processing Intermediary and not remitted to
the Fund or the Adviser.

The Fund also may enter into arrangements with some
Processing Intermediaries which authorizes them to process
purchase orders on behalf of the Fund on an expedited basis (an
"Authorized Agent"). Receipt of a purchase order by an
Authorized Agent will be deemed to be received by the Fund for
purposes of determining the NAV of Fund shares to be purchased.
If you place purchase orders through an Authorized Agent, you
will pay the Fund's NAV per share next computed after the receipt
by the Authorized Agent of such purchase order, plus any
applicable transaction charge imposed by the Authorized Agent.

Of course, you do not have to use the services of a
Processing Intermediary, or pay the fees that may be charged for
such services. You can invest directly with the Fund without a
sales charge.

REDEMPTION OF FUND SHARES

REDEMPTION PRICE. You may redeem all or part of your Fund
shares by any of the methods described below. All redemptions
will be processed immediately upon receipt and written
confirmations will be issued for all redemptions of Fund shares.
The redemption price will be the Fund's NAV next computed after
the time of receipt by Firstar (or by an Authorized Agent of the
Fund) of the certificate(s), or written request in the proper
order and described below, or pursuant to proper telephone
instructions as described below.

Requests for redemption of Fund shares received in
proper order on a day when the NYSE is open for
trading, prior to the close of trading on that day,
will be based on the NAV as of the close of trading on
that day.
Requests for redemption of Fund shares received in
proper order after the close of trading on the NYSE
will be based on the NAV as determined as of the
closing of trading on the next day the NYSE is open.

THE FUND WILL RETURN AND NOT PROCESS REDEMPTION REQUESTS
THAT CONTAIN RESTRICTIONS AS TO THE TIME OR DATE REDEMPTIONS ARE
TO BE EFFECTED.

If any of the shares you want redeemed were purchased
recently by personal or certified check, the Fund reserves the
right to hold payment up to 15 days or until notified that
investments made by check have been collected, at which time your
redemption request will be processed and payment made.

WRITTEN REDEMPTIONS. If you redeem in writing, be sure that
the redemption request is signed by each shareholder in the exact
manner as the Fund account is registered and include the
redemption amount and the shareholder account number.

If you have certificates for your shares, you may
redeem by delivering to the Fund, c/o Firstar Mutual
Fund Services, LLC, P.O. Box 2944, Milwaukee, Wisconsin
53201-2944, the certificate(s) for the full shares.
The certificate(s) must be properly endorsed or
accompanied by instrument of transfer, in either case
with signatures guaranteed by an eligible "guarantor
institution," which is a bank, a savings and loan
association, a credit union, or a member firm of a
national securities exchange. A notary public is not
an acceptable guarantor.

If you don't have certificates for your shares, you may
redeem by delivering an original signed written request for
redemption addressed to Nicholas II, Inc., c/o Firstar Mutual
Fund Services, LLC, P.O. Box 2944, Milwaukee, Wisconsin 53201-
2944. If the account registration is individual, joint tenants,
sole proprietorship, custodial (Uniform Transfer to Minors Act),
or general partners, the written request must be signed exactly
as the account is registered. If the account is owned jointly,
all owners must sign.

YOU MAY NOT FAX YOUR REDEMPTION REQUEST.

The Fund may require additional supporting documents for
written redemptions made by corporations, executors,
administrators, trustees and guardians. Specifically, if the
account is registered in the name of a corporation or
association, the written request must be accompanied by a
corporate resolution signed by the authorized person(s). A
redemption request for accounts registered in the name of a legal
trust must have a copy of the title and signature page of the
trust agreement on file or must be accompanied by the trust
agreement and signed by the trustee(s).

If you are uncertain about what documents or instructions
are necessary in order to redeem shares, please write or call
Firstar (414-276-0535 or 800-544-6547), prior to submitting a
written redemption request. A written redemption request will
not become effective until all documents have been received in
properorder by Firstar.

If you who have an individual retirement account ("IRA"), a
master retirement plan or other retirement plan must indicate on
their written redemption requests whether or not to withhold
federal income tax. Redemption requests lacking an election not
to have federal income tax withheld will be subject to
withholding. Please consult your current Disclosure Statement
for any applicable fees.

You should be aware that DEPOSIT in the mail or with other
independent delivery services or receipt at Firstar's Post Office
Box of redemption requests DOES NOT constitute receipt by Firstar
or the Fund. DO NOT mail letters by overnight courier to the
Post Office Box address. OVERNIGHT COURIER DELIVERY SHOULD BE
SENT TO THE FIRSTAR MUTUAL FUND SERVICES, LLC, THIRD FLOOR, 615
EAST MICHIGAN STREET, MILWAUKEE, WISCONSIN, 53202.

TELEPHONE REDEMPTIONS. You can redeem your shares by
telephone unless you decline that option in writing. Telephone
redemptions can only be made by calling Firstar (800-544-6547 or
414-276-0535). In addition to the account registration, you will
be required to provide the account number and social security
number. Telephone calls will be recorded.

Telephone redemption requests must be received prior to the
closing of the NYSE (usually 4:00 p.m., New York time) to receive
that day's NAV. There will be no exceptions due to market
activity. During periods of substantial economic or market
changes, you may have difficulty making a redemption by
telephone. If you are unable to contact Firstar by telephone,
you may redeem your shares by delivering the redemption request
in person or by mail. The maximum telephone redemption is
$50,000 per account/per business day. The maximum telephone
redemption for related accounts is $100,000 per business day.
The minimum telephone redemption is $500 except when redeeming an
account in full.

The Fund reserves the right to refuse a telephone redemption
if it is believed advisable to do so. Procedures for redeeming
Fund shares by telephone may be modified or terminated at any
time by the Fund or Firstar. Neither the Fund nor Firstar will
be liable for following instructions communicated by telephone
which they reasonably believe to be genuine. The Fund and
Firstar will employ reasonable procedures to confirm that
instructions received by telephone are genuine, and if they do
not, they may be liable for losses due to unauthorized or
fraudulent instructions.

EFFECT OF REDEMPTION. For federal income tax purposes, a
redemption generally is treated as a sale of the shares being
redeemed. You may recognize capital gain or loss equal to the
difference between the redemption price and your cost basis for
the shares being redeemed. See "Dividends, Distributions and
Federal Tax Status" for further tax information.

The Fund ordinarily pays for redeemed shares within seven
days after receipt of a request in proper order, except as
provided by the rules of the Securities and Exchange Commission.
Redemption proceeds to be wired also ordinarily will be wired
within seven days after receipt of the request, and normally will
be wired on the next business day after a NAV is determined. The
Fund reserves the right to hold payment up to 15 days or until
satisfied that investments made by check have been collected.

You may instruct Firstar to mail the proceeds to the address
of record or to directly mail the proceeds to a pre-authorized
bank account. The proceeds also may be wired to a pre-authorized
account at a commercial bank in the United States. Firstar
charges a wire redemption fee of $12.00. Please contact the Fund
for the appropriate form if you are interested in setting your
account up with wiring instructions.

Although not anticipated, it is possible that conditions may
arise in the future which would, in the opinion of the Fund's
Adviser or Board of Directors, make it undesirable for the Fund
to pay for all redemptions in cash. In such cases, the Board may
authorize payment to be made in portfolio securities or other
property of the Fund. However, the Fund has obligated itself
under the 1940 Act to redeem for cash all shares presented for
redemption by any one shareholder up to $250,000 (or 1% of the
Fund's net assets if that is less) in any 90-day period.
Securities delivered in payment of redemptions would be valued at
the same value assigned to them in computing the net asset value
per share. Shareholders receiving such securities would incur
brokerage costs when these securities are sold.

SIGNATURE GUARANTEES. A signature guarantee of each owner
is required to redeem shares in the following situations, for all
size transactions:

* if you change the ownership on your account
* upon redemption of shares when certificates have
been issued for your account
* when you want the redemption proceeds sent to a
different address than is registered on the account
* for both certificated and uncertificated shares,
if the proceeds are to be made payable to someone other
than the account owner(s)
* any redemption transmitted by federal wire
transfer to your bank not previously set up with the
Fund
* if a change of address request has been received
by the Fund or Firstar within 15 days of a redemption
request

In addition, you must have your signature guaranteed if you
request redemption of $100,000 or more from your account. Your
redemption will not be processed until the signature guarantee,
if required, is received in proper order. A notary public is not
an acceptable guarantor.

THIRD PARTY REDEMPTIONS - USE OF A PROCESSING INTERMEDIARY
TO REDEEM FUND SHARES. As with the purchase of Fund shares, you
may redeem shares of the Fund through certain broker-dealers,
financial institutions and other service providers ("Processing
Intermediaries"). Certain service providers may receive
compensation from the Fund for providing transfer agent-related
services relating to the accounts held in street name. You should
read the program materials provided by the Processing
Intermediary before you redeem your shares of the Fund this way.
Then follow those instructions and procedures.

Processing Intermediaries may charge fees or other charges
for the services they provide to their customers. Such charges
vary among Processing Intermediaries, but in all cases will be
retained by the Processing Intermediary and not remitted to the
Fund or the Adviser.

The Fund also may enter into an arrangement with some
Processing Intermediaries authorizing them to process redemption
requests on behalf of the Fund on an expedited basis (an
"Authorized Agent"). Receipt of a redemption request by an
Authorized Agent will be deemed to be received by the Fund for
purposes of determining the NAV of Fund shares to be redeemed.
For redemption orders placed through an Authorized Agent, you
will receive redemption proceeds which reflect NAV per share next
computed after the receipt by the Authorized Agent of the
redemption order, less any redemption fees imposed by the
Authorized Agent.

You do not have to use the services of a Processing
Intermediary, or pay the fees that may be charged for such
services, unless you hold Fund shares through a Processing
Intermediary. Then you must redeem your shares through such
Processing Intermediary. In such event, you should contact the
Processing Intermediary for instructions on how to redeem.
Otherwise, if you originally invested directly with the Fund, you
can redeem Fund shares through the Fund without a redemption
charge.

EXCHANGE BETWEEN NICHOLAS FAMILY OF FUNDS

Shares of the Fund may be exchanged for shares of other
mutual funds for which Nicholas Company, Inc. serves as the
investment adviser. Nicholas Company, Inc. is also the
investment adviser to the following funds which have investment
objectives and net assets as noted below:
NET ASSETS AT
FUND INVESTMENT OBJECTIVE SEPT. 30, 1999
---- -------------------- --------------
Nicholas Fund, Inc. Capital appreciation $4,782,783,840

Nicholas Limited Long-term growth $ 273,310,802
Edition, Inc.(1)

Nicholas Equity Reasonable income with moderate
Income Fund, Inc long-term growth as a secondary
Consideration $ 20,053,386

Nicholas Income High current income consistent
Fund, Inc. with the preservation and
conservation of capital value $ 210,293,122

Nicholas Money High level of current income as
Market Fund, Inc. as is consistent with preserving
capital and liquidity $ 144,734,499

(1)You should be aware that Nicholas Limited Edition, Inc. is
restricted in size to ten million shares (without taking into
account shares outstanding as a result of capital gain and
dividend distributions). The exchange privilege into that
mutual fund may be terminated or modified at any time or
times when that maximum is reached.

If you choose to exercise the exchange privilege, the shares
will be exchanged at their next determined NAV. If you exercise
an exchange into the Nicholas Money Market Fund, Inc. on a day
when the NYSE is open for trading but the Federal Reserve Banks
are closed, your shares of the Fund will be redeemed on the day
upon which the exchange request is received; however, issuance of
your Nicholas Money Market Fund, Inc. shares will be delayed one.
In such a case, the exchanged amount would be uninvested for this
one-day period.

If you are interested in exercising the exchange privilege
you must obtain the appropriate prospectus from Nicholas Company,
Inc.

An exchange constitutes a sale for federal tax purposes and
you may realize a capital gain or loss upon the exchange,
depending upon whether the NAV at the time is more or less than
your cost basis. An exchange between the funds involving master
retirement plans and IRA accounts generally is not a taxable
transaction for federal tax purposes. See "Dividends,
Distributions and Federal Tax Status" for further information.

The exchange privilege may be terminated or modified only
upon 60 days advance notice to shareholders;

Exchange of shares can be accomplished in the following
ways:

Exchange by Mail. An exchange of shares of the Fund for
shares of other available Nicholas mutual funds directly
through Nicholas Company, Inc. will be made without cost to
you through written request. If you are interested in
exercising the exchange by mail privilege you may obtain the
appropriate prospectus from Nicholas Company, Inc.
Signatures required are the same as previously explained
under "Redemption of Fund Shares."
Exchange by Telephone. You also may exchange by telephone
among all Nicholas mutual funds. Only exchanges of $500.00
or more will be executed using the telephone exchange
privilege. Firstar charges a $5.00 fee for each telephone
exchange. In an effort to avoid the risks often associated
with large market timers, the maximum telephone exchange per
account per day is set at $100,000 with a maximum of
$l,000,000 per day for related accounts. You are allowed
four telephone exchanges per account during any twelve month
period.

Procedures for exchanging Fund shares by telephone may be
modified or terminated at any time by the Fund or Firstar.
Neither the Fund nor Firstar will be responsible for the
authenticity of exchange instructions received by telephone.
Telephone exchanges can only be made by calling Firstar at 414-
276-0535 or 800-544-6547. You will be required to provide
pertinent information regarding your account. Calls will be
recorded.

TRANSFER OF FUND SHARES

You may transfer shares of the Fund in instances such as the
death of a shareholder, change of account registration, change of
account ownership and in cases where shares of the Fund are
transferred as a gift. You can obtain documents and instructions
necessary to transfer Fund shares by writing or calling Firstar
(414-276-0535 or 800-544-6547) or Nicholas Company, Inc.
(414-272-6133 or 800-227-5987) prior to submitting any transfer
requests.

DIVIDENDS, DISTRIBUTIONS AND FEDERAL TAX STATUS

The Fund intends to continue to qualify annually as a
"regulated investment company" under the Internal Revenue Code of
1986 and intends to take all other action required to ensure that
little or no federal income or excise taxes will be payable by
the Fund. As a result, the Fund generally will seek to
distribute annually to its shareholders substantially all of its
net investment income and net realized capital gain.

The Code imposes a 4% nondeductible excise tax on a
regulated investment company, such as the Fund, if it does not
distribute to its shareholders during the calendar year an amount
equal to 98% of the Fund's investment company ordinary income,
with certain adjustments, for such calendar year, plus 98% of the
Fund's capital gain net income (if any) for the one-year period
ending on October 31 of such calendar year. In addition, an
amount equal to any undistributed investment company taxable
income or capital gain net income from the previous calendar year
must also be distributed to avoid the excise tax. The excise tax
is imposed on the amount by which the Fund does not meet the
foregoing distribution requirements. The Fund intends to make
distributions necessary to avoid imposition of the excise tax.

For federal income tax purposes, distributions by the Fund,
whether received in cash or invested in additional shares of the
Fund, will be taxable to the Fund's shareholders, except those
shareholders that are not subject to tax on their income. The
maximum tax rate on long-term capital gains for sales of
securities held greater than twelve months is 20%. Income
distributed from the Fund's net investment income and net
realized short-term capital gains are taxable to shareholders as
ordinary income, whether distributed as cash or additional
shares. Distributions generally will be made annually in
December. The Fund will provide information to shareholders
concerning the character and federal tax treatment of all
dividends and distributions.

Dividends paid by the Fund to individual shareholders will
not qualify for any dividends received exclusion; however,
corporate shareholders will be eligible for a dividends received
deduction, subject to a reduction for various reasons, including
the fact that the total of dividends received from domestic
corporations in any year are less than 100% of the Fund's gross
income.

At the time of purchase of Fund shares, the Fund may have
undistributed income or capital gains included in the computation
of the NAV per share. Therefore, a dividend or capital gain
distribution received shortly after such purchase by a
shareholder may be taxable to the shareholder, although it is, in
whole or in part, a return of capital and may have the effect of
reducing the NAV per share.

Under federal law, some shareholders may be subject to a 31%
"backup withholding" on reportable dividends, capital gain
distributions (if any) and redemption payments. Generally,
shareholders subject to backup withholding will be those (i) for
whom a taxpayer identification number is not on file with the
Fund or who, to the Fund's knowledge, have furnished an incorrect
number, or (ii) who have failed to declare or underreported
certain income on their federal returns. When establishing an
account, you must certify under penalties of perjury that the
taxpayer identification number you give to the Fund is correct
and that you are not subject to backup withholding.

The foregoing tax discussion relates to federal income taxes
only and is not intended to be a complete discussion of all
federal tax consequences. You should consult with a tax advisor
concerning the federal, state and local tax aspects to an
investment in the Fund.

DIVIDEND AND DISTRIBUTION REINVESTMENT PLAN

Unless you elect to accept cash in lieu of shares, all
dividends and capital gain distributions are automatically
reinvested in additional shares of the Fund through the Dividend
and Distribution Reinvestment Plan (the "Reinvestment Plan").
You may elect to accept cash on the application to purchase
shares, by telephone or by separate written notification. All
reinvestments are at the NAV per share in effect on the dividend
or distribution date and are credited to the shareholder's
account in full and fractional shares if necessary. Firstar will
notify you of the number of shares purchased and the price
following each reinvestment period. As in the case of normal
purchases, stock certificates are not issued unless requested.
In no instance will a certificate be issued for a fraction of a
share.

You may withdraw from or thereafter elect to participate in
the Reinvestment Plan at any time by giving written notice or
telephonic notice to Firstar. An election must be received by
Firstar prior to the dividend record date of any particular
distribution for the election to be effective for that
distribution. If an election to withdraw from or participate in
the Reinvestment Plan is received between a dividend record date
and payment date, it shall become effective on the day following
the payment date. The Fund may modify or terminate the
Reinvestment Plan at any time on 30 days' written notice to
participants.

SYSTEMATIC WITHDRAWAL PLAN

If you own $10,000 or more of Fund shares at the current
market value, you may open a Systematic Withdrawal Plan (the
"Plan") and receive monthly, quarterly, semi-annual or annual
checks for any designated amount. Firstar reinvests all income
and capital gain dividends in shares of the Fund. You may add
shares to, withdraw shares from, or terminate the Plan, at any
time. Each withdrawal may be a taxable event to you.
Liquidation of shares in excess of distributions may deplete or
possibly use up the initial investment, particularly in the event
of a market decline, and withdrawals cannot be considered a yield
or income on the investment. In addition to termination of the
Plan by the Fund or shareholders, the Plan may be terminated by
Firstar upon written notice mailed to the shareholders. Please
contact Nicholas Company, Inc. for copies of the Plan documents.

INDIVIDUAL RETIREMENT ACCOUNTS

Individuals who receive compensation, including earnings from
self-employment, may be able to establish a traditional IRA, a
Roth IRA and/or an Education IRA. The Fund offers a prototype
IRA plans for adoption by individuals who qualify. A description
of applicable service fees and application forms are available
upon request from the Fund. The IRA documents also contain a
Disclosure Statement which the IRS requires to be furnished to
individuals who are considering adopting an IRA. It is important
you obtain up-to-date information from the Fund before opening an
IRA.

Like the Roth IRA, qualifying individuals may make non-
deductible contributions to an Education IRA , but the investment
earnings accumulate tax-free, and distributions used for higher
education expenses are not taxable. Contribution limits are $500
per account and certain income phase-outs apply.

As long as the aggregate IRA contributions meet the Fund's
minimum investment requirement of $500, the Fund will accept any
allocation of such contribution between spousal, deductible and
non-deductible accounts. The acceptability of this calculation
is the sole responsibility of the shareholder. For this reason,
it is advisable for you to consult with your personal tax adviser
to determine the deductibility of IRA contributions.

Because a retirement program involves commitments covering
future years, it is important that the investment objectives of
the Fund be consistent with the participant's retirement
objectives. Premature withdrawals from a retirement plan may
result in adverse tax consequences. Consultation with a tax
adviser regarding the tax consequences of the plan is
recommended.

MASTER RETIREMENT PLAN

The Fund has available a master retirement plan for
self-employed individuals. You may contact the Fund for
additional information or if you wish to participate in the Plan.
Consultation with a tax adviser regarding the tax consequences of
the Plan is recommended.

BROKERAGE

The Adviser decides which securities to buy for the Fund and
when to sell them. It also selects the broker or dealer who
places the Fund's investment business and negotiates their
commissions. The Adviser selects a broker or dealer to execute a
portfolio transaction on the basis that such broker or dealer
will execute the order as promptly and efficiently as possible
subject to the overriding policy of the Fund. This policy is to
obtain the best market price and reasonable execution for all its
transactions, giving due consideration to such factors as
reliability of execution and the value of research, statistical
and price quotation services provided by such broker or dealer.
The research services provided by brokers consist of
recommendations to purchase or sell specific securities, the
rendering of advice regarding events involving specific companies
and events and current conditions in specific industries, and the
rendering of advice regarding general economic conditions
affecting the stock market and the economy. The Fund and the
Adviser are not affiliated with any broker.

Purchases and sales of portfolio securities are frequently
placed, without any agreement or undertaking to do so, with
brokers and dealers who provide the Adviser with brokerage and
research services. Section 28(e) of the Securities Exchange Act
of 1934 ("Section 28(e)") permits the Adviser, under certain
circumstances, to cause the Fund to pay a broker or dealer a
commission for effecting a transaction in recognition of the
value of the brokerage and research service provided by the
broker or dealer. Brokerage and research services include (i)
furnishing advice as to the value of securities, the advisability
of investing in, purchasing or selling securities, and the
availability of securities or purchasers or sellers of
securities; (ii) furnishing analyses and reports concerning
issuers, industries, securities, economic factors and trends,
portfolio strategy and the performance of accounts; and (iii)
effecting securities transactions and performing functions
incidental thereto. Such commissions may be less than, equal to
or exceed the amount another broker would have charged for
effecting the transaction.

The Adviser believes it is important to its investment
decision-making process to have access to independent research.
The Adviser understands that since the brokers and dealers
rendering such services are compensated through commissions, such
services would be unilaterally reduced or eliminated by the
brokers and dealers if none of the Fund's transactions were
placed through them. While these services have value which
cannot be measured in dollars, the Adviser believes such services
do not reduce the Fund's or the Adviser's expenses. Higher
commissions may be paid by the Fund, provided (i) the Adviser
determines in good faith that the amount is reasonable in
relation to the services in terms of the particular transaction
or in terms of the Adviser's overall responsibilities with
respect to the accounts as to which it exercises investment
discretion; (ii) such payment is made in compliance with the
provisions of Section 28(e) and other applicable state and
federal law; and (iii) in the Adviser's opinion, the total
commissions paid by the Fund will be reasonable in relation to
the benefits to the Fund over the long term.

In instances where the Adviser determines that the
supplemental research and statistical services are of significant
value, it is the practice of the Adviser to place the Fund's
transactions with brokers or dealers who are paid a higher
commission than other brokers or dealers. The Adviser utilizes
research and other information obtained from brokers and dealers
in managing its other client accounts. On the other hand, the
Adviser obtains research and information from brokers and dealers
who transact trades for the Adviser's other client accounts,
which is also utilized by the Adviser in managing the Fund's
portfolio.

The following table shows the dollar amount of brokerage
commissions paid to firms by the Fund for certain research
services provided and the approximate dollar amount of the
transactions involved for the fiscal year ended September 30,
1999.

AMOUNT OF COMMISSIONS
PAID TO FIRMS THAT AMOUNT OF
PROVIDED RESEARCH BROKERAGE TRANSACTIONS
SERVICES(1) INVOLVED(1)
--------------------- ----------------------
The Fund........ $77,416 $24,500,110

(1) The provision of such research services was not the
only factor considered in the placement of all noted
business with such firms. In addition, the amounts
disclosed do not include commissions paid to firms who
provided unsolicited research services as well as research
customarily provided by brokerage firms in the normal
course of business.

The Adviser does not specifically negotiate commissions and
charges with a broker or dealer in advance of each transaction.
The approximate brokerage discount and charges are, however,
generally known to the Adviser prior to effecting the
transaction. In determining the overall reasonableness of the
commissions paid, the Adviser compares the commission rates to
those it pays on transactions for its other client accounts and
to the rates generally charged in the industry to institutional
investors such as the Fund. The commissions also are considered
in view of the value of the research, statistical and price
quotation services, if any, rendered by the broker or dealer
through whom a transaction is placed.

The Adviser may effect portfolio transactions with brokers or
dealers who recommend the purchase of the Fund's shares. The
Adviser may not allocate brokerage on the basis of
recommendations to purchase shares of the Fund.

Over-the-counter market purchases and sales are generally
transacted directly with principal market makers who retain the
difference between their cost in a security and its selling
price. In some circumstances where, in the opinion of the
Adviser, better prices and executions are available elsewhere,
the transactions are placed through brokers who are paid
commissions directly.

Total brokerage commissions paid by the Fund during fiscal
year ended September 30, 1999, 1998 and 1997 totaled $614,970,
$352,279 and $522,280, respectively.

PERFORMANCE DATA

The Fund may quote a "total return" or an "average annual
total return" from time to time in advertisements or in
information furnished to present or prospective shareholders.
The "total return" of the Fund is expressed as a ratio of the
increase (or decrease) in value of a hypothetical investment in
the Fund at the end of a measuring period to the amount initially
invested. The "average annual total return" is determined by
discounting the "total return" for the number of time periods
represented. These values are computed according to the following
formulas:

n
P(1+T) = ERV
or
Total Return = ERV - 1
---
P
n
Average Annual Total Return = the nth root of ERV - 1
-----
P

where:
P = a hypothetical initial payment of $1,000.
T = average annual total return.
n = number of years from initial investment to the end of theperiod.
ERV = ending redeemable value of a hypothetical
$1,000 payment made at the beginning of the one, five and ten
year periods.

<TABLE>
ONE YEAR ENDED FIVE YEARS ENDED TEN YEARS ENDED
SEPTEMBER 30, 1999 SEPTEMBER 30, 1999 SEPTEMBER 30, 1999
---------------------- ---------------------- ------------------
<S> <C> <C> <C>
Total Return........... 2.50% 102.01% 203.63%

Average Annual Total
Return................. 2.50% 15.10% 11.75%

</TABLE>

For purposes of these calculations, the following
assumptions are made: (1) all dividends and distributions by the
Fund are reinvested at the NAV calculated on the reinvestment
dates during the period; (2) a complete redemption at the end of
the periods is made; and (3) all recurring fees that are charged
to all shareholder accounts are included.

These figures are computed by adding the total number of
shares purchased by a hypothetical $1,000 investment in the Fund
to all additional shares purchased within a one year period with
reinvested dividends and distributions, reducing the number of
shares by those redeemed to pay account charges, taking the value
of those shares owned at the end of the year and reducing it by
any deferred charges, and then dividing that amount by the
initial $1,000 investment. This computation does not reflect any
sales load or other nonrecurring charges, since the Fund is not
subject to such charges.

The "total return" and "average annual total return"
calculations are historical measures of performance and are not
necessarily indicative of future performance. Such measurements
will vary from time to time depending upon market conditions, the
composition of the Fund's portfolio, operating expenses, and the
distribution policy as determined by the Board of Directors.
These factors should be considered when evaluating the Fund's
performance.

In sales materials, reports and other communications to
shareholders, the Fund may compare its performance to certain
indices, including the Dow Jones Industrial Average, the Standard
& Poor's 500r Index , NASDAQ, the Russell 2000 Index and the
United States Department of Labor Consumer Price Index. The Fund
also may include evaluations of the Fund published by nationally
recognized financial publications and ranking services, such as
Forbes, Money, Financial World, Barron's, Lipper Analytical
Services Mutual Fund Performance Analysis, Morningstar , Inc.,
CDA Investment Technologies Inc. and Value Line, Inc..

CAPITAL STRUCTURE

Nicholas II, Inc. is authorized to issue 200,000,000 shares
of common stock, par value $0.01 per share. Each share has one
vote and all shares participate equally in dividends and other
distributions by the Fund, and in the residual assets of the Fund
in the event of liquidation. There are no conversion or sinking
fund provisions applicable to shares, and holders have no
preemptive rights and may not cumulate their votes in the
election of directors. Shares are redeemable and are
transferable. Fractional shares entitle the holder to the same
rights as whole shares except fractional shares have no voting
rights.

STOCK CERTIFICATES

The Fund will not issue certificates evidencing shares
purchased unless so requested in writing. Where certificates are
not issued, the shareholder's account will be credited with the
number of shares purchased, relieving shareholders of
responsibility for safekeeping of certificates and the need to
deliver them upon redemption. Written confirmations are issued
for all purchases of shares. Any shareholder may deliver
certificates to the Fund's transfer agent, Firstar, and direct
that his account be credited with the shares. A shareholder may
in writing direct Firstar at any time to issue a certificate for
his shares without charge.

ANNUAL MEETING

Under the laws of the State of Maryland, registered
investment companies, such as the Fund, may operate without an
annual meeting of shareholders under specified circumstances if
an annual meeting is not required by the 1940 Act. The Fund has
adopted the appropriate provisions in its By-Laws and will not
hold annual meetings of shareholders unless otherwise required to
do so.

In the event the Fund is not required to hold annual
meetings of shareholders to elect Directors, the Board of
Directors of the Fund will promptly call a meeting of
shareholders of the Fund for the purpose of voting upon the
question of removal of any Director when requested in writing to
do so by the record holders of not less than l0% of the
outstanding shares of common stock of the Fund. The affirmative
vote of two-thirds of the outstanding shares, cast in person or
by proxy at a meeting called for such purpose, is required to
remove a Director of the Fund. The Fund will assist shareholders
in communicating with each other for this purpose pursuant to the
requirements of Section 16(c) of the 1940 Act.

SHAREHOLDER REPORTS

Shareholders will be provided at least semiannually with a
report or a current prospectus showing the Fund's portfolio and
other information. After the close of the Fund's fiscal year,
which ends September 30, an annual report or current prospectus
containing financial statements audited by the Fund's independent
public accountants, Arthur Andersen LLP, will be sent to
shareholders.

CUSTODIAN AND TRANSFER AGENT

Firstar Bank Milwaukee, N.A. ("Firstar Bank") acts as
Custodian of the Fund. Firstar, 615 East Michigan Street,
Milwaukee, Wisconsin 53202, acts as Transfer Agent of the Fund
and Dividend Disbursing Agent. As such, Firstar Bank holds all
securities and cash of the Fund, delivers and receives payment
for securities sold, receives and pays for securities purchased,
collects income from investments and performs other duties, all
as directed by officers of the Fund. Firstar Bank and Firstar do
not exercise any supervisory function over the management of the
Fund, the purchase and sale of securities or the payment of
distributions to shareholders.

INDEPENDENT ACCOUNTANTS AND LEGAL COUNSEL

Arthur Andersen LLP, 100 East Wisconsin Avenue, Milwaukee,
Wisconsin 53202, are the independent accountants for the Fund.
Michael Best & Friedrich LLP, 100 East Wisconsin Avenue,
Milwaukee, Wisconsin 53202, have passed on the legality of the
shares of the Fund being offered.

FINANCIAL INFORMATION

The schedule of investments, the financial statements and
notes thereto and the Report of Independent Public Accountants
contained in the Annual Report of the Fund for the fiscal year
ended September 30, 1999, which have been filed with the SEC
pursuant to Rule 30d-1 of the 1940 Act, are incorporated herein
by reference. You may obtain a copy of the Annual Report without
charge by writing or calling the Fund.

NICHOLAS II, INC.

FORM N-1A

PART C: OTHER INFORMATION

PART C. OTHER INFORMATION

ITEM 23. EXHIBITS

All exhibits required to be filed with this Form N-lA
pursuant to Item 23 thereof are listed in the Exhibit Index
appearing elsewhere in this Registration Statement and (i) appear
in their entirety herein or (ii) are incorporated by reference to
previous filings with the Securities and Exchange Commission.

ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH
THE FUND

The Registrant is not under common control with any
other person. The Registrant, Nicholas Fund, Inc., Nicholas
Income Fund, Inc., Nicholas Limited Edition, Inc., Nicholas Money
Market Fund, Inc. and Nicholas Equity Income Fund, Inc., which
are all Maryland corporations, share a common investment adviser,
Nicholas Company, Inc.; however, each such fund has an
independent Board of Directors responsible for supervising the
investment and business management services provided by the
adviser. The Registrant does not control any other person.

ITEM 25. INDEMNIFICATION

Article VII, Section 7 of the By-Laws of the Registrant
provides for the indemnification of its officers and director
against liabilities incurred in such capacities to the extent
described therein, subject to the provisions of the Maryland
General Business Corporation Law; such Section 7 is incorporated
herein by reference to the By-Laws of the Registrant previously
filed with the Securities and Exchange Commission. In addition,
Registrant maintains a joint errors and omissions insurance
policy with a $2.0 million limit of liability under which the
Registrant, the Adviser and the other funds advised by the
Adviser, and each of their respective directors and officers, are
named insureds.

The investment adviser to the Registrant, Nicholas
Company, Inc., has, by resolution of its Board of Directors,
agreed to indemnify Registrant's officers, directors and
employees to the extent of any deductible or retention amount
required under insurance policies providing coverage to such
persons in connection with liabilities incurred by them in such
capacities.

ITEM 26. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT
ADVISER

Incorporated by reference to pages 10-14 of the
Statement of Additional Information pursuant to Rule 411 under
the Securities Act of 1933, as amended.

ITEM 27. PRINCIPAL UNDERWRITERS

None.

ITEM 28. LOCATION OF ACCOUNTS AND RECORDS

All accounts, books or other documents required to be
maintained pursuant to Section 31(a) of the Investment Company
Act of 1940, as amended, and the rules of the Securities and
Exchange Commission promulgated thereunder, are located at the
offices of Registrant, 700 North Water Street, Milwaukee,
Wisconsin, and at the offices of Registrant's custodian and
transfer agent, Firstar Trust Company, 615 East Michigan Street,
Milwaukee, Wisconsin.

ITEM 29. MANAGEMENT SERVICES

None.

ITEM 30. UNDERTAKINGS

The Registrant's By-Laws provide that it will indemnify
the Officers and Directors of Registrant for liabilities incurred
by them in any proceeding arising by reason of the fact that any
such person was or is a director or officer of the Registrant.
Insofar as indemnification for liability arising under the
Securities Act of 1933, as amended ("Act") may be permitted to
directors, officers and controlling persons of the Registrant
pursuant to the Act, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and may, therefore, be unenforceable. In
the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of
the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person, the Registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.

The undersigned Registrant hereby undertakes to deliver
or cause to be delivered with the prospectus, to each person to
whom the prospectus is sent or given, the latest annual report to
security holders that is incorporated by reference in the
prospectus and furnished pursuant to and meeting the requirements
of Rule 14a-3 or Rule 14c-3 under the Securities and Exchange Act
of 1934, as amended; and, where interim financial information
required to be presented by Article 3 of Regulation S-X are not
set forth in the prospectus, to deliver, or cause to be delivered
to each person to whom the prospectus is sent or given, the
latest quarterly report that is specifically incorporated by
reference in the prospectus to provide such interim financial
information.
EXHIBIT INDEX

SEQUENTIAL
EXHIBIT NO. DESCRIPTION PAGE NO.

(a) Articles of Incorporation of Registrant (as amended) *

(b) By-Laws of Registrant *

(d) Investment Advisory Agreement between Registrant
and Nicholas Company, Inc *

(g) Custodian Agreement between Registrant and First
Wisconsin Trust Company *

(i) Opinion of Michael Best & Friedrich LLP, counsel
to the Registrant, concerning the legality of
Registrant's common stock, including consent to the
use thereof. **

(j) Consent of Arthur Andersen LLP, independent
public accountants **

(n) Financial Data Schedule *

* Powers of Attorney *

* Incorporated by reference to previous filings with the
Securities and Exchange Commission.

** Filed herewith.
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, the
Registrant, Nicholas II, Inc., a corporation organized and existing under
the laws of the State of Maryland, hereby certifies that it meets all of
the requirements for effectiveness of this Amendment to its Registration
Statement pursuant to Rule 485(a) under the Securities Act of 1933, and has
duly caused this Amendment to its Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, on the 28th day
of January, 2000.

NICHOLAS II, INC.

By: /s/ Thomas J. Saeger
-------------------------
Thomas J. Saeger, Executive
Vice President, Secretary and
Principal Financial
and Accounting Officer

Pursuant to the requirements of the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, this Amendment
to the Registration Statement has been signed below by the following
persons in the capacity indicated on the 28th day of January, 2000.

Albert O. Nicholas*
- --------------------- President (Chief Executive
Albert O. Nicholas Officer), and Director

Thomas J. Saeger*
- -------------------- Executive Vice President,
Thomas J. Saeger Secretary, Chief Financial
Officer, and Chief Accounting
Officer

Robert H. Bock*
- --------------- Director
Robert H. Bock

Melvin L. Schultz*
- ------------------ Director
Melvin L. Schultz

Richard Seaman*
- --------------- Director
Richard Seaman

* By: /s/ Thomas J. Saeger
----------------------------------
Thomas J. Saeger, as
Attorney-in-Fact for the above officers
and directors, under authority of
Powers of Attorney previously filed

LIST OF CONSENTS

1. Consent of Michael Best & Friedrich LLP
(included in Exhibit (i))

2. Consent of Arthur Andersen LLP
(included as Exhibit (j))

January 28, 2000

Nicholas II, Inc.
700 North Water Street
Suite 1010
Milwaukee, WI 53202

Gentlemen:

We have acted as counsel to Nicholas II, Inc. (the
"Fund"), a corporation organized under the laws of the State
of Maryland, in connection with the preparation and filing
of a registration statement on Form N-1A and amendments
thereto ("Registration Statement"), relating to the
registration of the shares of common stock of the Fund
("Common Stock") under the Securities Act of 1933, as
amended.

We have reviewed the Articles of Incorporation and By-
Laws of the Fund and the Registration Statement; we also
have examined such other corporate records, certified
documents and other documents as we deem necessary for the
purposes of this opinion and we have considered such
questions of law as we believe to be involved. We have
assumed without independent verification the genuineness of
signatures and the conformity with originals of all
documents submitted to us as copies. Based upon the
foregoing, we are of the opinion that:

1. The Fund is validly incorporated under the laws of
the State of Maryland, and has the corporate power to carry
on its present business.

2. The Fund is authorized to issue up to two hundred
million (200,000,000) shares of Common Stock, par value $.01
per share, including those shares currently issued and
outstanding.

<PAGE>

Nicholas II, Inc.
January 28, 2000
Page Two

3. The shares of Common Stock of the Fund to be
offered for sale pursuant to the Registration Statement have
been duly authorized and, upon the effectiveness of Post-
Effective Amendment No. 16 to the Registration Statement and
compliance with applicable federal and state securities laws
and regulations, when sold, issued (within the limits
authorized under the Articles of Incorporation of the Fund)
and paid for as contemplated in the Registration Statement,
such shares will have been validly and legally issued, fully
paid and non-assessable.

We consent to the filing of this opinion as an exhibit
to the Registration Statement and to the reference to us in
the prospectus comprising Part A and elsewhere in the
Registration Statement.

Very truly yours,

MICHAEL BEST & FRIEDRICH

/s/ David E. Leichtfuss
----------------------
David E. Leichtfuss

ARTHUR ANDERSEN LLP

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of
our report, and to all references to our Firm, included in or made
a part of this Form N-1A registration statement (No. 811-3851) for
Nicholas II, Inc.

ARTHUR ANDERSEN LLP

Milwaukee, Wisconsin,
January 24, 2000.