NICHOLAS EQUITY INCOME FUND INC, 485BPOS, 1999-07-30

NICHOLAS EQUITY INCOME FUND INC
485BPOS, 1999-07-30

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VIA EDGAR TRANMISSION July 30, 1999

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

Re: Nicholas Equity Income Fund, Inc. (the "Fund")
SEC File No. 33-69804
Pre-Effective Amendment No.___
Post-Effective Amendment No. 6
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. 6 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 July 30, 1999

Registration No. 33-69804
811-8062
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. 6

AND

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
POST-EFFECTIVE AMENDMENT NO. 6

NICHOLAS EQUITY INCOME FUND, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)

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

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

ALBERT O. NICHOLAS, PRESIDENT
NICHOLAS EQUITY INCOME FUND, INC.
700 NORTH WATER STREET
MILWAUKEE, WISCONSIN 53202

Copy to:
TERESA M. LEVY
MICHAEL BEST & FRIEDRICH LLP
100 EAST WISCONSIN AVENUE
MILWAUKEE, WISCONSIN 53202
(Name and Address of Agent for Service)

It is proposed that the filing will become effective:

[ ] immediately upon filing pursuant to paragraph (b)
[X] on July 30, 1999 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)
[ ] 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 under the Investment Company Act of
1940, the Registrant hereby elects to register an indefinite
number of shares of its Common Stock. On June 22, 1999 the
Registrant filed the necessary Rule 24f-2 Notice and filing fee
with the Commission for its fiscal year ended March 31, 1998.

NICHOLAS EQUITY INCOME FUND, INC.

FORM N-1A

PART A: PROSPECTUS

NICHOLAS EQUITY INCOME FUND, INC.

PROSPECTUS
JULY 30, 1999

The Fund's primary investment objective is to produce reasonable
income for the investor. Moderate long-term growth is a
secondary consideration.

This Prospectus gives vital information about the Fund. For
your 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 - $2,000

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 TRUTHFUL 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................................. __

YER 2000 ISSUES........................................ __
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 this Prospectus and the time you receive it.

AN OVERVIEW OF THE FUND

GOALS

The Fund's main goal is to produce reasonable income and the Fund's
secondary goal is moderate long-term growth.

To achieve reasonable income, the Fund seeks an income
yield that exceeds the corporate dividend yield on the securities
included in the Standard and Poor's 500 Composite Stock Price
Index (the "S&P 500 Index"). To achieve "moderate" long-term growth,
the Fund seeks a five year return which approximates three-fourths of
the average total return achieved over a five-year period on the S&P
500 Index.

PRINCIPAL INVESTMENT STRATEGIES

The pursue the Fund's investment objectives, the Fund invests in a
diversified portfolio of income-producing equity securities (including
common stocks, preferred stocks and convertible securities) and corporate
and government fixed income investments (including notes, bonds and
debentures). The Fund is not managed as a balanced portfolio and does
not have a pre-set asset allocation strategy which would require that a
specific percentage of assets be invested in stocks and bonds at all
times. However, the Fund normally invests at least 65% of its total
assets in income-producing equity securities. The Fund's asset
allocation is determined by the Adviser at any given time in light of its
assessment of current economic conditions and investment opportunities.

In selecting investments, the Adviser performs its own in-depth
credit analysis on the credit quality of issuers. In this evaluation,
the Adviser considers, among other things, the issuer's financial
resources, its sensitivity to economic conditions and trends, its
operating history, the quality of the issuer's management and regulatory
matters. The Adviser generally selects income-producing securities which
have a higher expected dividend yield than the current quoted dividend
yield on the S&P 500 Index. If the Fund invests in an equity security
that pays a dividend at a rate below the yield of the S&P 500 Index at
the time of purchase, the Adviser will attempt to offset this lower rate
through other holdings that pay dividends or interest at rates deemed to
be sufficient so that the Fund's current net income exceeds the yield of
the S&P 500 Index.

The Fund may invest in both investment grade and non-investment
grade securities and its investments may include both rated and unrated
securities. In terms of credit quality of investments, the Fund is
subject to the following two restrictions: (a) at time of investment,
not more than 35% of the Fund's total assets may be invested in non-
investment grade preferred stocks, convertible securities and debt
securities; and (b) the Fund only may invest in securities rated at least
B (or its equivalent) (also known as "non-investment grade bonds" or
"junk bonds") by any national rating organization at the time of purchase
(or if unrated, believed to be of comparable quality at the time of purchase
by the Adviser). The Fund invests in both short-term and long-term debt
securities and is not limited as to the maturities of the securities in
which it invests.

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

PRINCIPAL RISKS OF INVESTING

As with any mutual fund, the Fund can not guarantee it will meet its
goals or that its performance will be positive over any period of time.

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

STOCK MARKET RISK. Stock market risk involves the possibility that
the value of the Fund's investments in equity securities will decrease
because of declines in the stock market, regardless of the success or
failure of the operations of the Funds' portfolio companies. At other
times, there are specific factors that may adversely affect the value
of a particular investment of the Fund.

CREDIT RISK. Credit risk involves the possibility that the issuers
of securities held in the Fund's portfolio may fail to make timely
interest and principal payments. The Fund's investments may include non-
investment grade securities (securities with lower credit qualities)
which recognized rating agencies consider speculative with respect to the
issuer's continuing ability to pay interest or principal.

INTEREST RATE RISK. Interest rate risk refers to the risk that the
prices of the Fund's investments, particularly fixed income investments,
are likely to fall if interest rates rise. This is because the prices of
debt securities typically move in the opposite direction of interest
rates. Debt securities with longer maturities generally are affected to
a greater degree than debt securities with shorter maturities. Because
the Fund does not have a policy limiting the maturity of its investments,
and the Fund may invest in debt securities with longer maturities, the
Fund may be subject to greater interest rate risk than a fund that
primarily invests in short-term debt securities. In addition, the income
you receive from the Fund is based in part on interest rates which can
vary widely over the short- and long-term. If interest rates decline,
your income from the Fund may decline as well.

SELECTION RISK. The Fund also faces selection risk, which is the
risk that the investments the Fund purchases will underperform the
markets or other mutual funds with similar investment objectives and
strategies.

In view of the risks inherent in all investments in securities,
there is no assurance that the Fund's objectives will be achieved. In
addition, certain investments by the Fund and certain investment
techniques the Fund may use may involve other risks. Before you invest,
please read "Investment Risks" (starting on page _) which discusses the
above-noted risks and other risks in greater detail.

WHO MAY WANT TO INVEST

The Fund may be appropriate if you:

* Are looking for income from equity and bond investments,
but who also want to be invested in the stock market for its
long-term growth potential

* Are looking for reasonable current income

* Are long-term moderate risk oriented investors

* Are seeking a mutual fund for an income portion of a
diversified portfolio

The Fund may NOT be appropriate if you:

* Are investing for maximum return over a long time horizon

* Are uncomfortable with an investment that will fluctuate
in value

* Are investing with a short time horizon in mind

* Require absolute stability of your principal

PLEASE NOTE THE FUND'S OBJECTIVE STRESSES REASONABLE INCOME.
ALTHOUGH THE ADVISER WILL CONSIDER THE POSSIBILITY OF SOME CAPITAL
APPRECIATION IN SELECTING INVESTMENTS FOR THE FUND, YOU SHOULD NOT EXPECT
THE FUND TO REACH THE GROWTH POTENTIAL OF FUNDS WHICH HAVE GROWTH OR
CAPITAL APPRECIATION AS THEIR PRIMARY OBJECTIVE.

PERFORMANCE INFORMATION

The bar chart and table which follow show 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.

This bar chart shows the Fund's calendar year total returns over the
following five years.(1)

BAR CHART PLOT POINTS
---------------------
1994 1995 1996 1997 1998
---- ---- ---- ---- ----
4.14% 17.21% 15.90 % 19.37% 1.96%
____________

(1) The Fund's initial public offering was November 23, 1993; therefore,
calendar year return data prior to 1994 is not applicable. The
Fund's fiscal year end is March 31. The Fund's calendar year-to-date
return (six months) as of June 30, 1999 was 1.06%.

For the five years, 1994 through 1998, the highest quarterly return
was 11.05% (for the quarter ended December 31, 1998) and the lowest
quarterly return was (12.97)% (for the quarter ended September 30, 1998).

This next table shows how the Fund's average annual returns for the
one and five calendar years, and life of the Fund, ending on December 31,
1998 (the Fund's most recently completed calendar year) compare to the
returns of the S&P 500 Index and the Lehman Brothers Intermediate
Corporate Bond Index ("Lehman Brothers Bond Index").

FOR THE TIME PERIOD
FROM INCEPTION
ONE FIVE (NOVEMBER 23, 1993)
YEAR YEARS TO DECEMBER 31, 1998
------- ------ ----------------------
THE FUND 1.96% 11.48% 11.22%
S&P 500 INDEX 28.58% 24.05% 23.91%*
LEHMAN BROTHERS BOND INDEX 8.29% 7.16% 7.17%*

* From November 30, 1993 to December 31, 1998

The S&P 500 Index is a capitalization-weighted index that represents
the average performance of a group of 500 companies and is a widely used
benchmark for large-capitalization U.S. stocks. The Lehman Brothers Bond
Index is a broad-based bond market index (including issuers of investment
grade, US dollar denominated non-convertible corporate debt with maturities
from one up to ten years.

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(4)............................................. 0.70%
Distribution [and/or Service] (12b-1) Fees .................... None
Other Expenses................................................. 0.40%
Total Annual Fund Operating Expenses (4)....................... 1.10%
__________

(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 March 31, 1999
(4) Management Fees and Total Annual Fund Operating Expenses do not
reflect the Adviser's voluntary absorbtion of Fund operating
expenses, including the investment advisory fee, in excess of 0.90%
of the average net assets of the Fund on an annual basis. During the
fiscal year ended March 31, 1999, the Adviser voluntarily absorbed Fund
expenses. After reimbursement of expenses, Management Fees and Total
Annual Fund Operating Expenses were 0.50%, and 0.90%, respectively.
The Adviser may decrease or discontinue its absorbtion of the Fund's
operating expenses at any time in its sole discreation.

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
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: $112 $350 $606 $1,340

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
__.

PORTFOLIO MANAGEMENT

Albert O. Nicholas is the Portfolio Manager of the Fund and is
primarily responsible for the day-to-day management of the Fund's
portfolio. Mr. Nicholas is President and a Director of the Fund. Mr.
Nicholas has been a director of the Adviser since 1967, served as
President of the Adviser from 1967 to 1998, and currently serves as Chief
Executive Officer of the Adviser. For a further discussion of Mr. Albert
O. Nicholas' experience, see "The Fund's Investment Adviser."

FUND INVESTMENTS

GENERAL

The Fund's main goal is to produce reasonable income for the
investor. To achieve reasonable income, the Adviser seeks an income
yield that exceeds the corporate dividend yield on the securities
included in the Standard and Poor's 500 Composite Stock Price Index
("S&P 500 Index"). Reasonable income is a primary investment
objective and may not be changed without shareholder approval.

The Fund's secondary goal is moderate long-term growth.
To achieve "moderate" long term growth, the Fund seeks a
five year return which approximates three-fourths of the average
total return achieved over a five-year period on the S&P 500 Index.
Moderate long-term growth is the Fund's secondary investment
objective and may be changed by the Fund's Board of Directors
without shareholder approval but with advance notice to shareholders
in the form of an amended Statement of Additional Information filed
with the SEC.

The Fund's investments will include both income-producing
equity securities and fixed income investments. The Fund will
not be managed as a balanced portfolio and does not have a pre-
set asset allocation strategy which would require that a specific
percentage of Fund assets be invested in equity-related
securities (i.e., stocks) and income-related securities (i.e.,
bonds) at all times. However, the Fund normally will invest at
least 65% of its total assets in income-producing equity
securities. The Fund's asset allocation will be determined by
the Adviser at any given time in light of its assessment of
current economic conditions and investment opportunities. The
Fund will not limit its investments to any particular type or
size of company or industry. The Fund may invest in companies
with small, medium and large market capitalizations if the
Adviser believes the companies have the potential to produce
reasonable income and, secondarily, moderate long-term growth.

In addition to relying, in part, on the ratings assigned to
fixed income securities, the Fund also will rely on the Adviser's
judgment, analysis and experience in evaluating the credit
worthiness of the issuer. In this evaluation, the Adviser will
consider, among other things, the issuer's financial resources,
its sensitivity to economic conditions and trends, its operating
history, the quality of issuers' management and regulatory
matters.

EQUITY INVESTMENTS

The Fund normally will invest at least 65% of its total
assets in income-producing equity securities, which may include
common stocks, preferred stocks and securities convertible into
common or preferred stocks. The Adviser generally selects income-
producing securities which have a higher expected dividend yield
than the current quoted dividend yield on the S&P 500 Index. If
the Fund invests in an equity security that pays a dividend at a
rate below the yield of the S&P 500 Index at the time of
purchase, the Adviser will attempt to offset this lower rate
through other holdings that pay dividends or interest at rates
deemed to be sufficient so that the Fund's current net income
exceeds the yield of the S&P 500 Index. The Fund generally will
acquire equity securities with dividend paying histories or which
pay current dividends. The Fund only may invest in preferred
stock and convertible securities if such securities provide a
current interest or dividend payment stream at the time of
purchase.

FIXED INCOME INVESTMENTS

The portion of the Fund's assets not invested in income-
producing equity securities generally will be invested in
corporate and government fixed income securities, which may
include notes, bonds and debentures. As discussed further below,
the Fund's corporate fixed income investments may include
investment grade and non-investment grade fixed income
securities (junk bonds).

Governmental fixed income securities include obligations
supported by the full faith and credit of the United States, such
as U.S. Treasury obligations and obligations of certain
instrumentalities and agencies, and mortgage-backed and related
securities issued or guaranteed by the United States Government,
its agencies or instrumentalities, or issued or guaranteed by
private issuers or guarantors equivalent to the quality standards
of corporate fixed income securities, and other government
securities.

The Fund invests in both short-term and long-term debt
securities. Debt securities with longer maturities generally
tend to produce higher yields but are subject to greater interest
rate risk than debt securities with shorter maturities. The Fund
is not limited as to the maturities of the securities in which it
invests. The weighted average maturity, which is likely to vary
from time to time, of the corporate bonds owned by the Fund on
March 31, 1999 was 4.7 years.

CREDIT QUALITY OF FUND INVESTMENTS

The Fund may invest in both investment grade and non-
investment grade securities. The Fund's investments may include
both rated and unrated securities. In selecting rated
investments, the Adviser will rely upon the ratings assigned to
certain income-producing equity securities and debt securities.
The Fund will invest in unrated securities when the Adviser
believes the financial condition of the issuers of such
securities and/or protection offered by the terms of the
securities limit the risk to the Fund to a degree comparable to
that of rated securities in which the Fund may invest.

At time of investment, not more that 35% of the Fund's
total assets may be invested in non-investment grade preferred
stocks, convertible securities and debt securities. In addition,
the Fund only may invest in securities rated at least B (or its
equivalent) by any national rating organization at the time of
purchase (or unrated but believed to be of comparable quality at
the time of purchase by the Adviser). However, subsequent to the
purchase, the ratings of the securities may fall below B.

OTHER INVESTMENTS

The Fund also may invest in the following types of
securities, subject to certain limitations as described below:

* Repurchase agreements (only with a member bank of
the Federal Reserve System or a primary dealer in U.S.
government securities, and only in an amount not to
exceed 20% of the Fund's total net assets, taken at
market, at the time of investment; and within that
limit, that repurchase agreements maturing in more than
seven days will not constitute more than 10% of the
value of the total net assets)

* Securities issued in private placements (subject
to the restriction that investments in bonds,
debentures and debt securities distributed in private
placements cannot exceed 10% of the value of the total
net assets of the Fund)

* Securities of real estate investment trusts
("REITs") and other real estate-based securities
(including securities of companies whose assets consist
substantially of real property and interests therein)
listed on a national securities exchange or authorized
for quotation on the National Association of Securities
Dealers Automated Quotation System ("NASDAQ") (subject
to the restriction that at time of investment, the Fund
may not invest more than 10% in value of the Funds'
total assets in REITs and not more than 25% in value of
the Fund's total assets in the real estate industry in
the aggregate)

INVESTMENT RESTRICTIONS WHICH MAY BE CHANGED WITHOUT SHAREHOLDER APPROVAL

The Fund's Board of Directors may change the following
restrictions without shareholder approval:

* Not more than 5% of the Fund's total net assets
may be invested in equity securities which are not
readily marketable and in securities of unseasoned
companies (i.e., 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 oil, gas or other mineral leases
are permitted (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 are permitted, and the Fund
will not invest in options, financial futures or stock
index futures, other than hedging positions or
positions covered by cash or securities, if as a result
thereof, more than 5% of the Fund's assets would be so
invested

* No short sales of securities are permitted

* No purchases or sales of real property are
permitted (including limited partnership interests, but
excluding readily marketable interests in REITs or
readily marketable securities of companies which invest
in real estate)

* No purchases of securities of other investment
companies, except to the extent permitted by the
Investment Company Act of 1940, as amended

The Board will give advance notice to shareholders of any change
to these 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, changes afterwards in the market
value of the investment or the total assets of the Fund will not
result in a violation of that restriction.

MORE INFORMATION ABOUT THE FUND'S INVESTMENTS

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 THE
FUND'S PERFORMANCE WILL BE POSITIVE OVER ANY PERIOD OF TIME.

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

STOCK 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.

CREDIT RISK. Credit risk refers to an issuer's ability to
make timely payments of interest or principal. The Fund may
invest in non-investment grade securities (securities with lower
credit qualities). Recognized rating agencies consider non-
investment grade securities to be speculative with respect to the
issuer's continuing ability to pay interest or principal. Lower
grade securities may have less liquidity, a higher incidence of
default and the Fund may incur higher expenditures to protect the
Fund's interest in such securities than investments in higher
grade securities. Issuers of lower grade securities generally
are more sensitive to negative corporate developments, such as a
decline in profits, or adverse economic conditions, such as a
recession, than issuers of higher grade securities. In addition,
because the Fund may invest in lower grade securities the
achievement of the Fund's investment goals may be more
dependent on the Adviser's own credit analysis than would be the
case if the Fund invested primarily in higher quality debt
securities.

While the risk of investing in lower rated securities with
speculative characteristics is greater than the risk of investing
in higher rated securities, the Fund attempts to minimize this
risk through diversification of its investments and by analysis
of each issuer and its ability to make timely payments of
interest and principal.

INTEREST RATE RISK. Interest rate risk refers to the risk
that the prices of the Fund's investments, particularly the debt
securities in which the Fund may invest, are likely to fall if
interest rates rise. This is because the prices of debt
securities typically move in the opposite direction of interest
rates. Debt securities with longer maturities generally are
affected by changes in interest rates to a greater degree than
debt securities with shorter maturities. Because the Fund does
not have a policy limiting the maturity of its investments, and
the Fund may invest in debt securities with longer maturities,
the Fund may be subject to greater interest rate risk than a fund
that primarily invests in short-term debt securities.

In addition, the income you receive from the Fund is based
primarily on interest rates, which can vary widely over the short-
and long-term. If interest rates decline, your income from the
Fund may decline as well.

RISKS RELATED TO PREFERRED STOCK AND CONVERTIBLE
INVESTMENTS. Preferred stocks may provide a higher dividend rate
than the interest yield on debt securities of the same issuer,
but are subject to greater risk of fluctuation in market value
and greater risk of non-receipt of income. Unlike interest on
debt securities, dividends on preferred stocks must be declared
by the issuer's board of directors before becoming payable.
Preferred stocks are in many ways like perpetual debt securities,
providing a stream of income but without a stated maturity date.
Because they often lack a fixed maturity or redemption date,
preferred stocks are likely to fluctuate substantially in price
when interest rates change. Preferred stocks have claims on
assets and earnings of the issuer which are subordinate to the
claims of all creditors but senior to the claims of common stock
holders.

The value of convertible 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 convertible debt securities will
be affected by the factors that affect both equity securities
(such as stock market movements) 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.

INVESTMENTS IN UNRATED DEBT SECURITIES. Unrated securities
will be considered for investment by the Fund, but only when the
Adviser believes the financial condition of the issuer of such
securities and/or protection afforded by the terms of the
securities limit the risk to the Fund to a degree comparable to
that of rated securities in which the Fund may invest. Although
unrated securities are not necessarily of lower quality than
rated securities, the market for them may not be as liquid and
thus they may carry greater market risk and a higher yield than
rated securities. These factors have the effect of limiting the
availability for purchase by the Fund and also may limit the
ability of the Fund to sell such securities at their fair market
value either to meet redemption requests or in response to
changes in the economy or the financial markets.

HIGH YIELD BOND MARKET RISK. The entire high yield bond
market can experience sudden and sharp price swings due to a
variety of factors, including changes in economic forecasts,
stock market activity, large sustained sales by major investors,
a high-profile default or just a change in the market's
volatility.

CALL RISK. If interest rates fall, it is possible that
issuers of bonds with high interest rates will prepay or "call"
their bonds before their maturity dates. In such event, the
proceeds could be reinvested by the Fund in bonds with the new,
lower interest rates, resulting in a possible decline in the
Fund's income and distributions to shareholders.

SELECTION RISK. The Fund also faces selection risk, which
is the risk that the investments the Fund purchases will
underperform the markets or other mutual funds with similar
investment objectives and strategies.

LIQUIDITY RISK. The Fund may purchase securities in
private placements. Restricted securities may have a
contractual limit on resale or may require registration under
federal securities laws before they can be sold publicly.
Difficulty in selling these securities may result in a loss to
the Fund or additional costs, which could adversely impact the
Fund's net asset value. However, the Fund is subject to an
investment restriction that the Fund will not invest more than
10% of its total net assets in bonds, debentures and debt
securities distributed in private placements. In addition,
because the market for lower rated debt securities may be thinner
and less active than for higher rated securities, there may be
market price volatility for the Fund's lower rated debt
securities and limited liquidity in the resale market.

RISKS RELATED TO INVESTMENTS IN 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. At time of investment, not more than 20%
of the Fund's total net assets, taken at market, may be invested
in repurchase agreements.

RISKS RELATED TO INVESTMENTS IN REITS AND OTHER REAL ESTATE-
BASED SECURITIES. The Fund may invest in REITs and other real
estate-based securities listed on a national securities exchange
or authorized for quotation on NASDAQ. These securities are
subject to risks related to the real estate industry. The
performance of these securities are dependent on the types and
locations of the properties owned by the entities issuing the
securities and how well the properties are managed. For instance,
the income of the properties could decline due to vacancies,
increased competition or poor management, and the property values
of the properties could decrease due to a decline in neighborhood
condition, overbuilding, uninsured damages caused by natural
disasters, property tax increases or other factors.
In addition, these securities also are subject to market risk
(the risk that stock prices overall will decline over short or
even extended periods) and interest rate risk (the risk that the
prices of these securities will decrease if interest rates rise).
At time of investment, not more than 10% of the Fund's total
assets may be invested in REITs, and in the aggregate, not more
than 25% of the Fund's total assets may be invested in the real
estate industry.

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
(For a share outstanding throughout the period)

THE FOLLOWING FINANCIAL HIGHLIGHTS TABLE HELPS YOU
UNDERSTAND THE FUND'S FINANCIAL PERFORMANCE FOR THE PAST FIVE
FISCAL YEARS ENDED MARCH 31, 1999. CERTAIN INFORMATION REFLECTS
FINANCIAL RESULTS FOR A SINGLE FUND SHARE. THE TOTAL RETURNS IN
THE TABLE REPRESENTS 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 MARCH 31, 1999. THE FINANCIAL HIGHLIGHTS SHOULD BE
READ IN CONJUNCTION WITH THE FINANCIAL STATEMENTS AND RELATED
NOTES INCLUDED IN THE FUND'S ANNUAL REPORT WHICH IS INCORPORATED
BY REFERENCE INTO THE STATEMENT OF ADDITIONAL INFORMATION AND
WHICH MAY BE OBTAINED WITHOUT CHARGE BY WRITING OR CALLING THE
FUND.
<TABLE>
CAPTION>
Year Ended March 31,
--------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF YEAR $14.35 $12.27 $12.35 $10.56 $10.04
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income .44 .47 .48 .36 .30
Net gains (losses) on
securities (realized
and unrealized) (1.66) 2.77 .44 1.77 .50
----- ----- ----- ----- -----
Total from investment
operations 1.22 3.24 .92 2.13 .80
----- ----- ----- ----- -----

LESS DISTRIBUTIONS:
From net investment income (.48) (.50) (.45) (.34) (.28)
From capital gains (.33)(3) (.66) (.55) -- --
----- ----- ----- ----- -----

Total distributions (.81) (1.16) (1.00) (.34) (.28)
------ ----- ------ ------ ------

NET ASSET VALUE, END OF
YEAR $12.32 $14.35 $12.27 $12.35 $10.56
----- ----- ----- ------ ------
----- ----- ----- ------ ------

TOTAL RETURN (8.65)% 27.83% 7.83% 20.61% 8.13%

RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year
(millions) $25.0 $29.0 $20.8 $15.8 $11.8
Ratio of expenses to
average net assets 0.090%(1) 0.90%(1) 0.90%(1) 1.38% (1) 1.73%
Ratio of net investment
income to average net
assets 3.36%(2) 3.61%(2) 4.12%(2) 3.26% (2) 3.32%
Portfolio turnover rate 54.41% 36.83% 23.05% 68.85% 10.98%

</TABLE>

(1) Net of reimbursements by the Adviser. Absent reimbursement of
expenses, the ratio of expenses to average net assets would have been
1.10%, 1.08%, 1.18% and 1.40% for the fiscal years ended March 31,
1999, 1998, 1997 and 1996, respectively. Also, the ratio of net
investment income to average net assets would have been 3.16%, 3.43%,
3.84% and 3.24% for the fiscal years ended March 31, 1999, 1998, 1997
and 1996, respectively.

(2) Also, the ratio of net investment income to average net assets would
have been 3.16%, 3.43%, 3.84% and 3.24% for the fiscal years ended
March 31, 1999, 1998, 1997 and 1996, respectively.

(3) See Note 1(d) of the Fund's financial statements for the fiscal year
ended March 31, 1999, included in the Fund's fiscal 1999 Annual Report,
for a discussion of the components of distributions from capital gains.

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 OR DOWN.

MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE

The Fund's primary investment objective is to produce
reasonable income for the investor. Moderate long-term growth is
a secondary goal. The Fund seeks an income yield that exceeds
the composite dividend yield on the securities included in the
S&P 500 Index.

As of March 31, 1999, the Fund's income yield (i.e., the 30-
day annualized yield) was 3.91%, the Fund's cash distribution
rate was 4.15%, and the composite dividend yield on the
securities included in the S&P 500 Index was approximately 1.20%.
The Fund's total return for the fiscal year ended March 31, 1999
was (8.65)%, while the total return for the S&P 500 Index was
18.47% and the total return for the Lehman Brothers Intermediate
Corporate Bond Index was 6.52%.

Commencing on February 12, 1996, the Adviser began to absorb
expenses in excess of 0.90% of total net assets, until further
notice. As a result, the Fund's total return, yield and
distribution rate during the fiscal year ended March 31, 1999,
was higher than if the Fund paid for all expenses and fees. If
the Fund had paid for all expenses and fees, the Fund's total
return, yield and distribution rate would have been (8.85)%,
3.71%, and 3.95%, respectively.

As of March 31, 1999, the Fund was invested approximately
69% in common stocks, 8% in non-convertible bonds, 6% in
convertible bonds and 17% in short-term investments. Of the
Fund's investments in common stocks, approximately 99% were
income-producing securities. Management believes this strategy
of investing in equities with higher dividend yields should
reduce the overall volatility of the Fund and more adequately
protect the Fund's capital.

During the fiscal year ended March 31, 1999, the Adviser
shifted the Fund's portfolio to a greater percentage invested in
dividend-paying common stocks, and a lesser percentage invested
in convertible and non-convertible debt securities.

The Adviser plans to continue this shift in fiscal year
2000. The reduction in fixed income securities and subsequent
increase in common stocks will likely close the wide gap between
the yield noted above and the dividend yield on the S&P 500 Index
which allows the Fund to better provide for moderate long-term
growth. The Fund will likely fluctuate more with stock market
movements.

The line graph which follows compares the initial account
value and subsequent account value at the end of each of the
completed fiscal quarters and years of the Fund, assuming a
$10,000 investment in the Fund at the beginning of the period, to
the same investment over the same periods in the S&P 500 Index
and the Lehman Brothers Intermediate Corporate Bond Index.

(The performance graph plot points are as follows:)
<TABLE>
<CAPTION>
Lehman
Nicholas Intermediate
Equity Income % S&P 500 % Corporate Bonds %
Value returns Value returns Value returns
----- ------- ----- ------- ------------ -------
<S> <C> <C> <C> <C> <C> <C>

11/30/93 10,000.00 10,000.00 10,000.00
12/31/93 9,930.00 -0.07 10,120.75 1.31 10,062.00 0.62
03/31/94 10,052.96 0.60 9,736.90 -3.79 9,787.31 -2.73
06/30/94 10,108.25 0.55 9,777.89 0.42 9,710.97 -0.78
09/30/94 10,540.88 4.28 10,255.95 4.89 9,810.99 1.03
12/31/94 10,407.01 -1.27 10,254.34 -0.02 9,794.31 -0.17
03/31/95 10,870.13 4.45 11,252.75 9.74 10,316.35 5.33
06/30/95 10,969.04 0.91 12,326.98 9.55 10,963.18 6.27
09/30/95 11,773.07 7.33 13,306.74 7.95 11,187.93 2.05
12/31/95 12,196.90 3.60 14,108.55 6.03 11,664.46 4.17
03/31/96 13,109.23 7.48 14,865.99 5.37 11,492.47 -1.39
06/30/96 13,204.93 0.73 15,533.25 4.49 11,547.63 0.48
09/30/96 13,367.35 1.23 16,013.52 3.09 11,772.81 1.95
12/31/96 14,134.64 5.74 17,348.28 8.34 12,116.58 2.92
03/31/97 14,104.04 0.00 17,813.47 2.68 12,066.90 -0.41
06/30/97 15,085.90 6.73 20,923.48 17.45 12,485.62 3.47
09/30/97 16,325.96 8.22 22,490.79 7.49 12,881.41 3.17
12/31/97 16,872.88 3.35 23,136.74 2.87 13,128.74 1.92
03/31/98 19,069.17 7.09 26,364.21 13.95 13,349.30 1.68
06/30/98 17,799.94 -1.49 27,234.74 3.30 13,614.95 1.99
09/30/98 15,491.28 -12.97 24,525.66 -9.95 14,159.55 4.00
12/31/98 17,203.07 11.05 29,748.74 21.30 14,217.60 0.41
03/31/99 16,506.35 -4.05 31,230.94 4.98 14,219.02 0.01

The Fund's average annual total returns for the one, five
and life periods ended on the last day of the most recent fiscal
year are as follows:
Time Period From Inception
For Periods Ended (November 23, 1993)
March 31, 1999 to March 31, 1999
-------------- --------------------
Average Annual One Year Five Years
-------- ----------
Total Return......... (8.65)% 10.43% 9.82%

Past performance is not predictive of future performance.

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 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 II, Inc., Nicholas Limited Edition, Inc. and Nicholas
Money Market Fund, Inc. As of March 31, 1999, the Adviser had
approximately $8 billion in assets under management.

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 0.70 of 1%

In excess of $50,000,000 0.60 of 1%

From time to time, the Adviser may voluntarily waive all or
a portion of its management fee and/or absorb certain Fund
expenses without further notification of the commencement or
termination of such waiver or absorption. As a result, the Fund's
total return, yield and distribution rate will be higher than if the
fees and expenses had been paid by the fund.

Commencing on February 12, 1996, the Adviser began to absorb all Fund
operating expenses, including the investment advisory fee, in excess of
0.90% of the average net assets of the Fund on an annual basis, until
further notice. From time to time and in its sole discretion, the
Adviser may: (i) further reduce or waive its fee or reimburse the Fund
for certain of its expenses in order to reduce the Fund's expense ratio;
or (ii) decrease the amount of absorption of, or eliminate its absorption
of, the Fund's operating expenses in excess of 0.90% of the average net
assets of the Fund on an annual basis.

Under the 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 issuance
or sale of securities.

The Fund pays all of its operating expenses. Operating
expenses include but are not limited to, fees paid for attendance
at Board meetings 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 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.

Albert O. Nicholas. is President, Portfolio Manager and a
Director of the Fund, is Chief Executive Officer and a Director
of the Adviser, and is a controlling person of the Adviser
through his ownership of 91% of the outstanding voting securities
of the Adviser. 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 the Fund, Nicholas Fund, Inc. and Nicholas
Income Fund, Inc. since the Nicholas Company, Inc. has served as
investment adviser for such funds. He also was Portfolio Manager
for Nicholas II, Inc. and Nicholas Limited Edition, Inc. from the
date of each such fund's inception until March 1993. He is a
Chartered Financial Analyst.

Mr. David O. Nicholas, is Senior Vice President of the Fund
and President, Chief Investment Officer and a Director of the
Adviser, and assists in the management of the Fund. He has been
employed by the Adviser since December 1985, and is a Chartered
Financial Analyst. 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, and has been Co-Portfolio Manager of
Nicholas Fund, Inc. since November 1996.

PURCHASE OF FUND SHARES

To Open An Account...... $2,000
INVESTMENTS To Add To An Account.... $100
MINIMUM $ Minimum Balance......... $2,000
[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 $2,000 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 You may apply to purchase shares of the Fund by
INFORMATION submitting an application to Nicholas Fund, Inc.,
c/o Firstar Mutual Fund Services, LLC ("Firstar"),
P.O. 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.

You should be aware that DEPOSIT in the U.S. mail
or with other 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.

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 a 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 PURCHASES You also may purchase Fund shares via
[ICON] 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 purchases 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 Equity Income Fund, 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
[ICON] shares unless the shareholder specifically requests
certificates in writing to the Fund. 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 PURCHASE
PURCHASES FUND SHARES You can purchase shares of the Fund through
[ICON] 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 may also 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 don't 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 shares by
PRICE any of the following methods.
$ All redemptions will be processed immediately upon
[ICON] request 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 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.

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 that the
BY MAIL redemption request is signed by eachshareholder in the
[ICON] 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 them 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, 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 them
by delivering an original signed written request
for redemption addressed to Nicholas Fund, Inc.,
c/o Firstar Mutual Funds 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, Iif 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
PROPER ORDER 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 delivery services
[ICON] 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 You can redeem your shares by telephone
REDEMPTIONS unless you decline that option in writing. This option
[ICON] does not apply to IRA accounts and master retirement
plans for which Firstar Bank Milwaukee, N.A. acts as
custodian Telephone redemptions can only be made by
calling Firstar 800-544-6547 or 414-276-0535. In
addition to account registration information, 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
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 that it reasonably believes 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 sale of the shares being
[ICON] 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 may also 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 required to
GUARANTEES redeem shares in the following situations, for all
[ICON] 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
REDEMPTIONS FUND SHARES. As with the purchase of Fund shares, you
[ICON] 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 the
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 don't 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 directly
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 to
the following funds which have investment objectives
and net assets as noted below:

</TABLE>
<TABLE>
<CAPTION>
NET ASSETS AT
FUND INVESTMENT OBJECTIVE MARCH 31, 1999
---- -------------------- ------------------
<S> <C> <C>
Nicholas Fund, Inc. Capital appreciation $5,619,380,197

Nicholas II, Inc. Capital appreciation $1,025,443,733

Nicholas Limited
Edition, Inc. (1) Long-term growth $ 316,277,568

Nicholas Income High current income consistent
Fund, Inc. with the preservation and
conservation of capital value $ 236,867,198

Nicholas Money High level of current income as
Market Fund, Inc. as is consistent with preserving
capital and liquidity $ 166,513,123
____________
</TABLE

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

EXCHANGE You may also exchange by telephone among
BY all Nicholas mutual funds. Only exchanges of
TELEPHONE $500.00 or more may be executed using the telephone
[ICON] 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 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 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

Dividends of the Fund, if any, are paid to shareholders usually
in April, July, October and December. In those years in which
sales of portfolio securities result in net realized capital gains
(after utilization of any available capital loss carry-overs),
such gains are distributed to shareholders in December and/or April.
It is the practice of the Fund to distribute capital gains in
shares of the Fund at NAV or, at each shareholder's election, in
cash. 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.

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 securities held
longer 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 in cash or additional shares. 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 shares, the Fund may have
undistributed income or capital gains included in the computation
of the net asset value 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 net asset value 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 solely 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 of an
investment in the Fund.

DIVIDEND, AND DISTRIBUTION REINVESTMENT PLAN

You may withdraw from or thereafter elect to participate in the
Reinvestment Plan at any time by giving written notice to the
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 at the current market value, you may
open a Systematic Withdrawal Plan ("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 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 the 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 phaseouts
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 phaseouts apply.

As long as the aggregate IRA contributions meet the Fund's
minimum requirement of $2,000, 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 are consistent with the participant's retirement
objectives. Premature withdrawals from an IRA may result in
adverse tax consequences. Consultation with a tax adviser
regarding 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 wishing to participate in the
plan. Consultation with a tax adviser regarding the tax
consequences of the plan is recommended.

YEAR 2000 ISSUES

The "Year 2000" issue presents a significant technological
challenge for the securities industry. Due to the limited memory
and the high cost of storage space associated with early computer
equipment, the century was implied rather than actually stored.
As a result, many computer systems are unable to interpret dates
beyond 1999. Software and hardware which is not designed to work
across centuries may potentially malfunction on January 1, 2000.
Because dates are part of every securities transaction, accurate
date calculations are critical.

The Fund has focused on the Year 2000 computer conversion
issue and management believes that there should be a smooth
transition on the part of suppliers of services to the Fund. The
Fund's custodian bank and transfer agent has reported that the
necessary conversion process is in progress, and it appears to
have dedicated the appropriate level of resources to solve the
problem.

The Adviser has identified and is taking steps it believes are
reasonably designed to resolve potential problems and address the
Year 2000 issue, although there can be no assurances that these
steps will be sufficient. The Adviser, which performs the Fund's
internal accounting and pricing functions, is in the process of re-
engineering its hardware to handle the century date and has identified
and is taking steps to resolve potential software problems. Some systems
are currently compliant. Internal testing is ongoing, and the
Fund expects that all systems will have been converted by mid-
1999.

In addition, there can be no assurances that the Year 2000
issue will not have an adverse effect on issuers who securities
are held by the Fund or on global markets or economies generally.

PROSPECTUS

JULY 30, 1999

NICHOLAS EQUITY INCOME FUND, INC.

NO LOAD - NO SALES CHARGE

FOR MORE INFORMATION ABOUT THE FUND:

The Fund's Statement of Additional Information ("SAI"), dated
July 30, 1999, contains more detailed information on all aspects
of Nicholas Equity Income Fund, 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/Semi-Annual
report or SAI, or to make shareholder inquiries, please write or
call: Nicholas Equity Income Fund, 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" - "NchEq". If you prefer to
obtain this information from an on-line computer service, you can
do so by using the ticker symbol "NSEIX" or cusip number
653734103.

INVESTMENT ADVISER
NICHOLAS COMPANY, INC.
Milwaukee, Wisconsin
414-272-6133 or 800-227-5987

TRANSFER AGENT CUSTODIAN
FIRSTAR MUTUAL FUND SERVICES, LLC FIRSTARBANK 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 EQUITY INCOME FUND, INC.
700 NORTH WATER STREET
SUITE 1010
MILWAUKEE, WISCONSIN 53202
www.nicholasfunds.com

INVESTMENT COMPANY ACT FILE NO. 811-8062

NICHOLAS EQUITY INCOME FUND, 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 Equity
Income Fund, Inc. (the "Fund"), dated July 30, 1999. It is
intended to provided 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 March 31, 1999, which is
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 CHARGE

Investment Adviser:
NICHOLAS COMPANY, INC.

NICHOLAS EQUITY INCOME FUND, INC.

FORM N-1A

PART B: STATEMENT OF ADDITIONAL INFORMATION

July 30, 1999

TABLE OF CONTENTS

PAGE

INTRODUCTION............................................ __

INVESTMENT OBJECTIVES AND
PRINCIPAL INVESTMENT STRATEGIES......................... __

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.............................. __

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 Equity Income Fund, Inc. (the "Fund") was
incorporated under the laws of Maryland on September 1, 1993.
The Fund is an open-end, diversified management investment
company registered under the Investment Company Act of 1940, as
amended (the "1940 Act"). As an open-end investment company, it
obtains its assets by continuously selling shares of its common
stock, $0.0001 par value per share, to the public. Proceeds from
such sales are invested in securities of other companies by the
Fund. 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. The Fund
also 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 the net asset value next determined following receipt of the
redemption request. The investment adviser to the Fund is
Nicholas Company, Inc. (the "Adviser").

The Fund's primary objective is to produce reasonable income
for the investor. Moderate long-term growth is a secondary goal.
The Fund seeks an income yield that exceeds the composite
dividend yield on the securities included in the Standard &
Poor's 500r Composite Stock Price Index ("S&P 500 Index"). The
Fund generally will have at least 65% of its total assets
invested in income-producing equity securities to achieve these
objectives. The equity securities in which the Fund may invest
include, but are not limited to, common stocks, preferred stocks,
or convertible securities. The Fund generally will focus on
dividend-paying stocks. The Fund is designed for investors who
seek higher current income and less volatility than the typical
growth or capital appreciation equity fund.

INVESTMENT OBJECTIVES AND
PRINCIPAL INVESTMENT STRATEGIESS

GENERAL

The Fund's main goal is to produce reasonable income for the
investor. To achieve reasonable income, the Adviser seeks an income
yield that exceeds the corporate dividend yield on the securities
included in the Standard and Poor's 500 Composite Stock Price Index
("S&P 500 Index"). Reasonable income is a primary investment objective
and may not be changed without shareholder approval.

For liquidity or flexibility, or as a temporary defensive
measure because of adverse market, economic, political or other
conditions, the Fund also may invest in cash, repurchase
agreements and short-term, investment grade fixed income
securities. These short-term instruments include United States
("U.S.") Government obligations (including bills, notes and
bonds), certificates of deposit, bankers' acceptances, commercial
paper (rated A-1 or A-2 by Standard and Poor's or Prime-1 or
Prime-2 by Moody's or the equivalent by any other national rating
organization, or unrated but deemed by the Adviser to be of
comparable quality to instruments so rated on the date of
purchase), short-term corporate debt issues and repurchase
agreements. In the event the Fund so invests as a temporary
defensive tactic the Fund may not achieve its investment objective
during such period.

Generally, the Fund does not intend to purchase securities
for short-term trading; however, when circumstances warrant,
securities may be sold without regard to the length of time held.
Furthermore, the Fund does not intend to engage in investment
techniques such as leveraging, short-selling, options and futures
transactions or lending portfolio securities.

EQUITY INVESTMENTS

FIXED INCOME INVESTMENTS

CREDIT QUALITY OF FUND INVESTMENTS

The Fund may invest in both investment grade and non-
investment grade securities (junk bonds). The Fund's
investments may include both rated and unrated securities.
In selecting rated investments, the Adviser will rely upon
the ratings assigned to certain income-producing equity
securities and debt securities. The Fund will invest in
unrated securities when the Adviser believes the financial
condition of the issuers of such securities and/or protection
offered by the terms of the securities limit the risk to the
Fund to a degree comparable to that of rated securities in
which the Fund may invest.

OTHER INVESTMENTS

The Fund also may invest in the following types of
securities, subject to certain limitations as described below:

Repurchase agreements (only with a member bank of
the Federal Reserve System or a primary dealer in U.S.
government securities, and only in an amount not to
exceed 20% of the Fund's total net assets, taken at
market, at the time of investment; and within that
limit, that repurchase agreements maturing in more than
seven days will not constitute more than 10% of the
value of the total net assets)

Securities issued in private placements (subject
to the restriction that investments in bonds,
debentures and debt securities distributed in private
placements cannot exceed 10% of the value of the total
net assets of the Fund)

Securities of real estate investment trusts
("REITs") and other real estate-based securities
(including securities of companies whose assets consist
substantially of real property and interests therein)
listed on a national securities exchange or authorized
for quotation on the National Association of Securities
Dealers Automated Quotation System ("NASDAQ") (subject
to the restriction that at time of investment, the Fund
may not invest more than 10% in value of the Funds'
total assets in REITs and not more than 25% in value of
the Fund's total assets in the real estate industry in
the aggregate)

To the extent the Fund invests in securities issued in
private placements pursuant to Section 4(2) of the Securities Act
of 1933, as amended (the "Act"), such securities will not be
registered for purchase and sale by the public under the Act.
The determination of the liquidity of these securities is a
question of fact for the Board of Directors to determine, based
upon the trading markets for the specific security, the
availability of reliable price information and other relevant
information. There may be a risk of little or no market for
resale associated with such private placement securities if the
Fund does not hold them to maturity. In addition, to the extent
that qualified institutional buyers do not purchase restricted
securities pursuant to Rule 144A, the Fund's investing in such
securities may have the effect of increasing the level of
illiquidity in the Fund's portfolio.

INVESTMENT RESTRICTIONS WHICH MAY BE CHANGED WITHOUT SHAREHOLDER
APPROVAL

The Fund's Board of Directors may change the following
restrictions without shareholder approval:

Not more than 5% of the Fund's total net assets
may be invested in equity securities which are not
readily marketable and in securities of unseasoned
companies (i.e., 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 oil, gas or other mineral leases
are permitted (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 are permitted, and the Fund
will not invest in options, financial futures or stock
index futures, other than hedging positions or
positions covered by cash or securities, if as a result
thereof, more than 5% of the Fund's assets would be so
invested

No investments in securities of other open-end
investment companies

No short sales of securities are permitted

No purchases or sales of real property are
permitted (including limited partnership interests, but
excluding readily marketable interests in REITs or
readily marketable securities of companies which invest
in real estate)

No purchases of securities of other investment
companies, except to the extent permitted by the
Investment Company Act of 1940, as amended

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

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 (all percentage limitations apply on the
date of investment by the Fund):

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) the purchase of bank certificates of
deposit or commercial paper;

(c) investment in repurchase agreements in
an amount not to exceed 20% of the total net
assets of the Fund; provided, however, that
repurchase agreements maturing in more than seven
days will not constitute more than 10% of the
value of the total net assets; and

(d) the purchase of a portion of bonds,
debentures or other debt securities of types
commonly distributed in private placements to
financial institutions, such illiquid amount of
which shall not exceed 10% of the value of the
total net assets of the Fund.

2. The Fund may not issue senior securities in
violation of the 1940 Act. 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, and the Fund may make borrowings from banks,
provided that immediately after any such borrowing all
borrowings of the Fund do not exceed one-third of the
Fund's net assets. The exceptions to this restriction
are not for investment leverage purposes but are solely
for extraordinary or emergency purposes and to
facilitate management of the Fund's portfolio by
enabling the Fund to meet redemption requests when the
liquidation of portfolio instruments is deemed to be
disadvantageous or not possible. While the Fund has
borrowings in excess of 5% of the value of the Fund's
total assets outstanding, it will not make any
purchases of portfolio instruments. If due to market
fluctuations or other reasons, the net assets of the
Fund fall below 300% of its borrowings, the Fund will
promptly reduce its borrowings in accordance with the
1940 Act. To do this, the Fund may have to sell a
portion of its investments at a time when it may be
disadvantageous to do so.

3. The Fund will not mortgage, pledge or hypothecate
any of its assets except to secure permitted borrowings
and then only in an amount up to 15% of the value of
the Fund's total net assets taken at cost at the time
of such borrowings.

4. Investments will not be made for the purpose of
exercising control or management of any company. In
addition, 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.

5. The Fund may not purchase the securities of any
one issuer, except securities issued or guaranteed by
the United States or its instrumentalities or agencies,
if immediately after and as a result of such purchase
the value of the holdings of the Fund in the securities
of such issuer exceeds 5% of the value of the Fund's
total assets.

6. Not more than 25% of the value of the Fund's total
net assets will be concentrated in companies of any one
industry or group of related industries. This
restriction does not apply to U.S. government
securities, which are obligations issued or guaranteed
by the U.S. Government, its agencies or
instrumentalities.

7. The Fund may 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 and other real estate-based
securities (including securities of companies whose
assets consist substantially of real property and
interests therein) listed on a national securities
exchange or authorized for quotation on NASDAQ, but not
more than 10% in value of the Fund's total assets will
be invested in real estate investment trusts nor will
more than 25% in value of the Fund's total assets be
invested in the real estate industry in the aggregate.

DESCRIPTION OF RATINGS

As set forth in the Prospectus, the Fund may invest in
various debt securities, convertible securities and preferred
stock that are assigned specific ratings by nationally recognized
statistical rating organizations ("NRSROs"), including Standard &
Poor's Corporation and Moody's Investor Services, Inc. A brief
description of various of the ratings and their meanings follows.

DEBT SECURITIES

STANDARD AND POOR'S CORPORATION. An S&P corporate debt
rating is a current assessment of the creditworthiness of an
obligor with respect to a specific obligation. This assessment
may take into consideration obligors such as guarantors, insurers
or lessees. The ratings are based in varying degrees on the
following considerations: (i) likelihood of default-capacity and
willingness of the obligor as to the timely payment of interest
and repayment of principal in accordance with the terms of the
obligation; (ii) nature of and provisions of the obligation; and
(iii) protection afforded by, and the relative position of the
obligation in the event of bankruptcy, reorganization or other
arrangement under the laws of bankruptcy and other laws affecting
creditors' rights.

S&P's rating categories are as follows:

AAA rated bonds are highest grade obligations. They
possess the ultimate degree of protection as to
principal and interest. Marketwise, they move with
interest rates, and hence, provide the maximum safety
on all counts.

AA rated bonds also qualify as high-grade
obligations, and in the majority of instances differ
from AAA issues only in a small degree. Here, too,
prices move with the long-term money market.

A rated bonds are regarded as upper medium-grade.
They have considerable investment strength but are not
entirely free from adverse effects of changes in
economic and trade conditions. Interest and principal
are regarded as safe. They predominantly reflect money
rates in their market behavior, but to some extent,
also economic conditions.

BBB rated bonds, or medium-grade category bonds, are
borderline between definitely sound obligations and
those where the speculative element begins to
predominate. These bonds have adequate asset coverage
and normally are protected by satisfactory earnings.
Their susceptibility to changing conditions,
particularly to depressions, necessitates constant
watching. Marketwise, the bonds are more responsive to
business and trade conditions than to interest rates.
This group is the lowest which qualifies for commercial
bank investment.

BB-B rated bonds are regarded, on balance, as
predominantly speculative with respect to the issuer's
capacity to pay interest and repay principal in
accordance with the terms of the obligation. While
such bonds will likely have some quality and protective
characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse
conditions.

CCC rated bonds have a currently identifiable
vulnerability to default, and are dependent upon
favorable business, financial and economic conditions
to meet timely payment of interest and repayment of
principal. In the event of adverse business, financial
or economic conditions, they are not likely to have the
capacity to pay interest and repay principal.

CC-C rated bonds are usually bonds which are
subordinated to senior debt that is assigned an actual
or implied "CCC" or "CCC-" rating. A "C" rated bond
may also involve a situation where a bankruptcy
petition has been filed, but debt service payments are
continued.

D rated bonds are in payment default. They involve
a situation where interest payments or principal
payments are not made on the date due even if the
applicable grace period has not expired, unless
Standard & Poor's believes such payments will be made
during such grace period. A "D" rated bond may also
involve the filing of a bankruptcy petition if debt
service payments are jeopardized.

MOODY'S INVESTORS SERVICES, INC. Moody's bond rating
categories are as follows:

AAA rated bonds are judged to be of the best quality.
They carry the smallest degree of investment risk and
are generally referred to as "gilt edged." Interest
payments are protected by a large or by an
exceptionally stable margin and principal is secure.
While the various protective elements are likely to
change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of
such issues.

AA rated bonds are judged to be of high quality by
all standards. Together with the Aaa group they
comprise what are generally known as high-grade bonds.
They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa
securities, or fluctuation of protective elements may
be of greater amplitude, or there may be other elements
present which make the long-term risk appear somewhat
larger than in Aaa securities.

A rated bonds possess many favorable investment
attributes and are to be considered as upper medium-
grade obligations. Factors giving security to
principal and interest are considered adequate, but
elements may be present which suggest a susceptibility
to impairment sometime in the future.

BAA rated bonds are considered as medium-grade
obligations, i.e., they are neither highly protected
nor poorly secured. Interest payments and principal
security appear adequate for the present, but certain
protective elements may be lacking or may be
characteristically unreliable over any great length of
time. Such bonds lack outstanding investment
characteristics and, in fact, have speculative
characteristics as well.

BA rated bonds are judged to have speculative
elements; their future cannot be considered as well
assured. Often the protection of interest and
principal payments may be very moderate and thereby not
well safeguarded during both good and bad times over
the future. Uncertainty of position characterizes
bonds in this class.

B rated bonds generally lack characteristics of the
desirable investment. Assurance of interest and
principal payments or of maintenance of other terms of
the contract over any long period of time may be small.

CAA rated bonds are of poor standing. Such issues may
be in default or there may be present elements of
danger with respect to principal or interest.

CA rated bonds represent obligations which are
speculative in a high degree. They are often in
default or have other marked shortcomings.

C rated bonds are the lowest rated class of bonds.
Bonds so rated can be regarded as having extremely poor
prospects of ever attaining any real investment
standing.

The ratings of S&P and Moody's represent their opinions as
to the quality of the instruments rated by them. Such ratings,
which are subject to revision or withdrawal, are general and are
not absolute standards of quality.

PREFERRED STOCK

STANDARD & POOR'S CORPORATION. An S&P preferred stock
rating is an assessment of the capacity and willingness of an
issuer to pay preferred stock dividends and any applicable
sinking fund obligations. A preferred stock rating differs from
a bond rating inasmuch as it is assigned to an equity issue,
which issue is intrinsically different from, and subordinated to,
a debt issue. Therefore, to reflect this difference, the
preferred stock rating symbol will normally not be higher than
the bond rating symbol assigned to, or that would be assigned to,
the senior debt of the same issuer.

The preferred stock ratings are based on the following
considerations:

I. Likelihood of payment - capacity and willingness
of the issuer to meet the timely payment of preferred
stock dividends and any applicable sinking fund
requirements in accordance with the terms of the
obligation.

II. Nature of, and provisions of, the issue.

III. Relative position of the issue in the event of
bankruptcy, reorganization, or other arrangements
affecting creditors' rights.

S&P's rating categories for preferred stock are as follows:

AAA This is the highest rating that may be assigned by S&P to a
preferred stock issue and indicates an extremely strong
capacity to pay the preferred stock obligations.

AA A preferred stock issue rated "AA" also qualifies as a high-
quality fixed income security. The capacity to pay
preferred stock obligations is very strong, although not as
overwhelming as for issues rated "AAA."

A An issue rated "A" is backed by a sound capacity to pay the
preferred stock obligations, although it is somewhat more
susceptible to the adverse effects of changes in
circumstances and economic conditions.

BBB An issue rated "BBB" is regarded as backed by an adequate
capacity to pay the preferred stock obligations. Whereas it
normally exhibits adequate protection parameters, adverse
economic conditions or changing circumstances are more
likely to lead to a weakened capacity to make payments for a
preferred stock in this category than for issues in the "A"
category.
BB, Preferred stock rated "BB," "B," and "CCC" are regarded, on
B balance, as predominantly speculative with respect to the
CCC issuer's capacity to pay preferred stock obligations. "BB"
indicates the lowest degree of speculation and "CCC" the
highest degree of speculation. While such issues will
likely have some quality and protective characteristics,
these are outweighed by large uncertainties or major risk
exposures to adverse conditions.

CC The rating "CC" is reserved for a preferred stock issue in
arrears on dividends or sinking fund payments but that is
currently paying.

CA Preferred stock rated "C" is a non-paying issue.

DA Preferred stock rated "D" is a non-paying issue with the
issuer in default on debt instruments.

MOODY'S INVESTORS SERVICES, INC. Because of the fundamental
differences between preferred stocks and bonds, Moody's uses a
variation of its bond rating symbols in the quality ranking of
preferred stock. The symbols, presented below, are designed by
Moody's to avoid comparison with bond quality in absolute terms.
It should always be borne in mind that preferred stock occupies a
junior position to bonds within a particular capital structure
and these securities are rated by Moody's within the universe of
preferred stocks.

Moody's preferred stock ratings are as follows:

AAA An issue which is rated "aaa" is considered to be a top-
quality preferred stock. This rating indicates good asset
protection and the least risk of dividend impairment within
the universe of preferred stocks.

AA An issue which is rated "aa" is considered a high-grade
preferred stock. This rating indicates that there is a
reasonable assurance the earnings and asset protection will
remain relatively well maintained in the foreseeable future.

A An issue which is rated "a" is considered to be an upper-
medium grade preferred stock. While the risks are judged to
be somewhat greater than in the "aaa" and "aa"
classification, earnings and asset protection are,
nevertheless, expected to be maintained at adequate levels.

BAA An issue which is rated "baa" is considered to be a medium
grade preferred stock, neither highly protected nor poorly
secured. Earnings and asset protection appear adequate at
present but may be questionable over any great length of
time.

BA An issue which is rated "ba" is considered to have
speculative elements and its future cannot be considered
well assured. Earnings and asset protection may be very
moderate and not well safeguarded during adverse periods.
Uncertainty of position characterizes preferred stocks in
this class.

B An issue which is rated "b" generally lacks the
characteristics of a desirable investment. Assurance of
dividend payments and maintenance of other terms of the
issue over any long period of time may be small.

CAA An issue which is rated "caa" is likely to be in arrears on
dividend payments. This rating designation does not purport
to indicate the future status of payments.

CA An issue which is rated "ca" is speculative in a high degree
and is likely to be in arrears on dividends with little
likelihood of eventual payments.

C This is the lowest rated class of preferred or preference
stock. Issues so rated can be regarded as having extremely
poor prospects of ever attaining any real investment
standing.

GENERAL

The S&P "AA" and "A" ratings may be modified by the addition
of a plus or minus sign to show relative standing within the
major rating categories.

Moody's security rating symbols may contain numerical
modifiers of a generic rating classification. The modifier 1
indicates that the security ranks in the higher end of its
generic rating category, the modifier 2 indicates a mid-range
ranking, and the modifier 3 indicates that the issue ranks in the
lower end of its generic rating category.

The ratings of S&P and Moody's represent their opinions as
to the quality of the instruments rated by them. It should be
emphasized that such ratings, which are subject to revision or
withdrawal, are general and are not absolute standards of
quality.

INVESTMENT RISKS

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

SELECTION RISK. The Fund also faces selection risk,
which is the risk that the investments the Fund purchases will
underperform the markets or other mutual funds with similar
investment objectives and strategies.

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, and to approximately 25 institutions and
individuals with substantial investment portfolios. The other
five mutual funds it advises are Nicholas Fund, Inc., Nicholas
II, Inc., Nicholas Limited Edition, Inc., Nicholas Income Fund,
Inc. and Nicholas Money Market Fund, Inc., with primary
investment objectives and net assets set forth below.
NET
ASSETS AT
FUND PRIMARY INVESTMENT OBJECTIVE MARCH 31, 1999
---------- ---------------------------- --------------
Nicholas Fund, Inc. Capital Appreciation $5,619,380,197
Nicholas II, Inc. Long-Term Growth 1,025,443,733
Nicholas Limited Edition, Inc. Long-Term Growth 316,277,568
Nicholas Income Fund, Inc. High Current Income 36,867,198
Nicholas Money Market Fund, Inc. Current Income 166,513,123

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 annual fee is seven-tenths of one percent (.70 of 1%)
of the average net asset value of the Fund, up to and including
$50,000,000, and six-tenths of one percent (.60 of 1%) of the
average net asset value in excess of $50,000,000.

From time to time, the Adviser may voluntarily waive all or a
portion of its management fee and/or absorb certain Fund expenses
without further notification of the commencement or termination
of such waiver or absorption. Any such waiver or absorption will
temporarily lower the Fund's overall expense ratio and increase
the Fund's overall return to investors. Effective February 12,
1996, the Adviser began to absorb all Fund expenses in excess of
0.90% of net assets. For the fiscal years ended March 31, 1997,
1998 and 1999, the Adviser reimbursed $50,419, $46,168 and
$52,886 to the Fund. During the fiscal years ended March 31,
1997, 1998 and 1999, the Fund paid the Adviser an aggregate of
$77,384 (after reimbursement of $50,419), $129,059 (after
reimbursement of $46,168), and $135,625 (after reimbursement of
$52,886), respectively, in fees.

Under anInvestment 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 pays all
executive expenses and 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 all of
its operating expenses, including, but not limited to, the costs
of preparing and printing post-effective amendments to its
registration statements required under the Securities Act and the
1940 Act, and any amendments thereto and of preparing and
printing registration statements in the various states, the
printing and distribution cost of prospectuses mailed to existing
shareholders, the cost of stock certificates, reports to
shareholders, interest charges, taxes and legal expenses.
"Operating expenses" which are paid by the Fund also include but
are not limited to 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, 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 also 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. The total expenses of the
Fund as a percentage of net assets for the fiscal years ended
March 31, 1998 and 1999 were 0.90% in each year after a voluntary
waiver. However, the Adviser was not required to reimburse the
Fund for excess expenses for the fiscal years ended March 31,
1998 or 1999.

The agreement with the Adviser is not assignable and may be
terminated by either party, without penalty, on 60 days notice.
Otherwise, the 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, as amended, cast in person at a meeting called for the
purpose of voting for such approval.

Albert O. Nicholas is President, Portfolio Manager and a
Director of the Fund, is also Chairman, Chief Executive Officer
and a Director 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.
Lynn S. Nicholas, Senior Vice President of the Fund, is Senior
Vice President of the Adviser. She is the daughter of Albert O.
Nicholas. David O. Nicholas, Senior Vice President of the Fund,
is President and Chief Investment Officer and a Director of the
Adviser. He is the son of Albert O. Nicholas. Candace L. Lesak,
Vice President of the Fund, is an employee of the Adviser. Tracy
C. Eberlein, an Assistant Vice President of the Fund, also is an
employee of the Adviser. Jeffrey T. May, Senior Vice President
and Treasurer of the Fund, is Senior Vice President and Treasurer
of the Adviser. Mark J. Giese, Vice President of the Fund, also
is Vice President of the Adviser. David E. Leichtfuss, Secretary
and Director of the Adviser, is a partner in the law firm of
Michael Best & Friedrich LLP, Milwaukee, Wisconsin, legal counsel
to both the Fund and the Adviser. Daniel J. Nicholas, 2618
Harlem Boulevard, Rockford, Illinois, is a Director of the
Adviser, a brother of Albert O. Nicholas, and a private investor.

MANAGEMENT - DIRECTORS, EXECUTIVE OFFICERS
AND PORTFOLIO MANAGERS 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 at
July 31, 1999:

Name, Age and Positions Principal Occupations
Address Held During Past
with Fund Five Years
- ------------------- ------------- -------------------------
* Albert O. President, Chief Executive Officer
Nicholas, 68 Director and Chairman of the
700 North Water and Board, Nicholas Company,
Street Co- Inc., the Adviser to the
Milwaukee, WI 53202 Portfolio Fund. He has been
Manager Portfolio Manager (Co-
Portfolio Manager, in the
case of the Fund, since
November, 1996) for, and
primarily responsible
for, the day-to-day
management of the
portfolios of the Fund,
Nicholas Equity Income
Fund, Inc. and Nicholas
Income Fund, Inc. since
the Adviser has served as
investment adviser for
such funds. He was the
Portfolio Manager for
Nicholas II, Inc. and
Nicholas Limited Edition,
Inc. from the date of
each such fund's
inception until March
1993. 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, 73 Director Management Consultant, on
5270 North Maple an independent basis
Lane primarily in the areas of
Nashotah, WI 53058 mergers, acquisitions and
strategic planning.

Robert H. Bock, 67 Director Professor, University of
102 Commerce Wisconsin School of
1155 Observatory Business, Madison,
Drive Wisconsin. From 1973 to
Madison, WI 53706 1984 he was the Dean of
the School of Business at
the University of
Wisconsin.

David L. Johnson, 57 Executive Executive Vice-President,
700 North Water Vice- Nicholas Company, Inc.,
Street President the Adviser to the Fund,
Milwaukee, WI 53202 since 1980. He is a
Chartered Financial
Analyst.

Thomas J. Saeger, 55 Executive Executive Vice-President
700 North Water Vice- and Assistant Secretary,
Street President, Nicholas Company, Inc.,
Milwaukee, WI 53202 Secretary the Adviser to the Fund,
since 1969. He is a
Certified Public
Accountant.

Lynn S. Nicholas, 43 Senior Senior Vice-President,
700 North Water Vice- Nicholas Company, Inc.,
Street President the Adviser to the Fund,
Milwaukee, WI 53202 and employed by the
Adviser since 1983. She
is a Chartered Financial
Analyst.

David O. Nicholas, 38 Senior President, Chief
700 North Water Street Vice- Investment Officer and
Milwaukee, WI 53202 President, Director, Nicholas
Co- Company, Inc., the
Portfolio Adviser to the Fund and
Manager 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, and Co-
Portfolio Manager of the
Fund since November,
1996. He is a Chartered
Financial Analyst.

Jeffrey T. May, 43 Senior Senior Vice-President and
700 North Water Vice- Treasurer of Nicholas
Street President, Company, Inc., the
Milwaukee, WI 53202 Treasurer Adviser to the Fund and
employed by the Adviser
since 1987. He is a
Certified Public
Accountant.

Candace L. Lesak, 41 Vice- Employee of Nicholas
700 North Water President Company, Inc., the
Street Adviser to the Fund,
Milwaukee, WI 53202 since 1983. She is a
Certified Financial
Planner.

Tracy C. Eberlein, 38 Assistant Employee of Nicholas
700 N Water Street Vice- Company, Inc., the
Milwaukee, WI 53202 President Adviser to the Fund,
since 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, and is the only director who has a direct or
indirect interest in the Adviser. Mr. Nicholas is Chief
Executive Officer and a director of the Adviser and owns 91%
of the outstanding voting securities of the Adviser.

See "The Fund's Investment Adviser" for a description of the
relationships of the officers of the Fund to the Adviser and the
family relationships between directors of the Adviser and
officers and directors of the Fund.

The aggregate remuneration paid by the Fund during the fiscal
year ended March 31, 1999 to all Fund directors as a group
amounted to $3,600. No remuneration is paid to officers and
directors of the Fund who are "interested persons" of the
Adviser.

The table below sets forth the aggregate compensation received
by all directors of the Fund during the fiscal year ended March
31, 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>
<TABLE>
<CAPTION>
Aggregate Pension or Retirement Estimated Total Compensation
Compensation Benefits Accrued As Annual Benefits From Fund and Fund
Name and Position From the Fund Part of Fund Expenses Upon Retirement Complex Paid to Directors
- ------------------ ------------- --------------------- --------------- -------------------------
<S> <C> <C> <C> <C>
Albert O. Nicholas(2) $0 $0 $0 $0
Melvin L. Schultz(2) $1,200 $0 $0 $21,200
Richard Seaman(2) $1,200 $0 $0 $11,200
Robert H. Bock(2) $1,200 $0 $0 $11,386
</TABLE>
___________
(1) During the fiscal year ended March 31, 1999, the Fund and
other funds in the Nicholas Fund Complex (i.e., those funds
which also have Nicholas Company, Inc. as its investment
adviser, namely Nicholas Equity Income Fund, Inc., Nicholas
II, 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 March 31, 1999, the Fund compensated the disinterested
directors at a rate of $500 per director per meeting
attended and an annual retainer of $3,000 per director.
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 March 31, 1999. All other directors and
officers of the Fund were compensated by the Adviser in
accordance with its Investment Advisory Agreement.

(2) Messrs. Albert O. Nicholas and Melvin L. Schultz are also
members of the Board of Directors of Nicholas Equity Income Fund,
Inc., Nicholas II, Inc., Nicholas Limited Edition, Inc., Nicholas
Income Fund, Inc. and Nicholas Money Market Fund, Inc Messrs.
Richard Seaman and Robert H. Bock are also members of the Board
of Directors of Nicholas Equity Income Fund, Inc. and Nicholas
II, Inc.

PRINCIPAL SHAREHOLDERS

Mr. Albert O. Nicholas, President and a Director of the Fund,
Chief Executive Officer and a Director of the Adviser, and owner
of 91% of the outstanding voting securities of the Adviser, owned
no shares of the Fund as of June 30, 1999. The Nicholas
Family Foundation owned of record 124,120 shares. Ms. Nancy
Nicholas, the spouse of Mr. Nicholas, owned of record 546,870
shares, and the Nicholas Company, Inc. Profit-Sharing Trust, of
which Mr. Nicholas and Mr. David E. Leichtfuss are trustees,
owned 46,242 shares (Messrs. Nicholas and Leichtfuss have the
right, in conjunction with one another, to vote these shares).
The collective beneficial ownership of Mr. Nicholas was 717,232
shares or 39.87% as of June 30, 1999. As a beneficial owner of
more than 25% of the issued and outstanding shares of the Fund,
Mr. Nicholas may be deemed to "control" the Fund, as such term is
defined in the 1940 Act.

No other persons are known to the Fund to own beneficially or
of record 5% or more of the shares of the Fund as of June 30,
1999. All directors and executive officers of the Fund as a
group (12 in number) beneficially owned approximately 43.28% of
the full shares of the Fund as of June 30, 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 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. 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).

Bid prices for debt securities are obtained from the Fund's
pricing service which consults one or more market makers of each
debt security being priced. Debt securities listed on a national
exchange may be priced at the last sales price if the Fund's
pricing service believes such price represents market value of
the security for institutional trades. The pricing of all debt
securities takes into account the fact that the Fund trades in
institutional size trading units. Common stocks and other equity-
type securities traded on a stock exchange or NASDAQ ordinarily
will 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. Securities for which current quotations are not
readily available and other assets and liabilities of the Fund
are valued at fair value using methods determined in good faith
by the Board of Directors.

PURCHASE OF FUND SHARES

MINIMUM INVESTMENTS. The minimum initial purchase is $2,000
and the minimum for any subsequent purchase is $100, except in
the case of reinvested dividends and 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 $2000 minimum required
investment due to shareholder redemption (but not solely due to a
decrease in NAV 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 Equity Income Fund, 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 net asset value ("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 applications for the purchase of shares received bythe 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 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 other
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.

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 will not be accepted unless they are accompanied by
payment in U.S. funds. Your payment check should be drawn on a
U.S. bank, savings and loan or credit union. Checks are 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 to 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 purchases which will ensure 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 Equity Income Fund, 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 purchased 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 authorizing 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 purchase orders
through an Authorized Agent, a shareholder will pay the Fund's
net asset value 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 don't 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 following methods. 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 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 close 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 portion of the shares to be redeemed represents an
investment made by personal or certified check, the Fund reserves
the right to hold a payment for up to 15 days or until satisfied
that investments made by check have been collected, at which time
the 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 Equity Income Fund, 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 PROPER ORDER
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.

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 declined this option in writing. This option does not
apply to IRA accounts and master retirement plans for which
Firstar Bank Milwaukee, N.A. ("Firstar Bank") acts as custodian.
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. 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
responsible for the authenticity of redemption instructions
received 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.

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 redemptions 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 the instructions and procedures outlined.

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 the 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 directly 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 the 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:

<TABLE>
<CAPTION>
NET ASSETS AT
FUND INVESTMENT OBJECTIVE MARCH 31, 1999
---- -------------------- ------------------
<S> <C> <C>
Nicholas Fund, Inc. Capital appreciation $5,619,380,197

Nicholas II, Inc. Capital appreciation $1,025,443,733

Nicholas Limited
Edition, Inc. (1) Long-term growth $ 316,277,568

Nicholas Income High current income consistent
Fund, Inc. with the preservation and
conservation of capital value $ 236,867,198

Nicholas Money High level of current income as
Market Fund, Inc. as is consistent with preserving
capital and liquidity $ 166,513,123
____________
</TABLE
~~
(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), and that 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 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 may be delayed an
additional 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
the your cost basis. An exchange between the funds involving
master retirement or IRA accounts generally will not constitute a
taxable transaction for federal tax purposes. See "Dividends,
Distributions and Federal Tax Status" for further tax
information.

This 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. 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. 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 for which the Nicholas
Company, Inc. serves as investment adviser. Only exchanges
of $500.00 or more may 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 (the "Code") 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 will generally
seek to distribute annually to its shareholders substantially all
of its net investment income and net realized capital gain (after
utilization of any available capital loss carryovers). However,
the Code contains a number of complex tests relating to
qualification as a regulated investment company which the Fund
possibly might not meet in any particular year. If the Fund does
not qualify as a "regulated investment company" under the Code,
it would be treated for tax purposes as an ordinary corporation,
and all its taxable income will be taxed to the Fund at corporate
rates.

The Code generally 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 net investment income, with certain
adjustments, for such calendar year, plus 98% of the Fund's
capital gains for the one-year period ending on October 31 of
such calendar year. In addition, an amount equal to any
undistributed net investment taxable income or capital gains from
the previous calendar year also must 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. 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 you are not subject to backup withholding.

The foregoing tax discussion relates solely to federal
income taxes 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 of 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 of the Fund, 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 shares and fractional shares,
if necessary. Firstar will notify you of the number of shares
purchased and the price following each reinvestment period. If
the application of such distributions to the purchase of
additional shares of the Fund would result in the issuance of
fractional shares, the Fund may, at its option, either issue
fractional shares (computed to three decimal places) or pay to
the shareholder cash equal to the value of the fractional share
on the dividend or distribution payment date. 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 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 Fund shares worth $10,000 or more 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 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 may 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 contributors to a 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 phaseouts apply.

As long as the aggregate IRA contributions meet the Fund's
minimum investment requirement of $2,000, 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 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.

BROKERAGE

The Adviser decides which securities to buy for the Fund and
went 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 or dealer.

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 such 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 or dealer 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 determins 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 also are utilized by the Adviser in managing the Fund's
portfolio.

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 generally are
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.

Brokerage commissions paid by the Fund during the fiscal
year ended March 31, 1999, 1998 and 1997 totaled $29,767, $13,577
and $10,920, respectively.

PERFORMANCE DATA

The Fund may from time to time include its "total return,"
"average annual total return," "yield" and "distribution rate" in
advertisements or in information furnished to present and
prospective shareholders. All performance figures are based on
historical earnings and are not intended to indicate future
results. 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
the total return discounted for the number of represented time
periods and is expressed as a percentage. The rate represents
the annual rate achieved on the initial investment to arrive at
the ending redeemable value. The ending value assumes
reinvestment of dividends and capital gains and the reduction of
account charges, if any. This computation does not reflect any
sales load or other nonrecurring charges, since the Fund is not
subject to such charges.

P(1+T)n = ERV

Total Return = ERV - 1
---
P

Average Annual Total Return = nth root of ERV - 1
---
P

where:

P = a hypothetical initial payment of $1,000

T = average annual total return

n = number of years

ERV = ending redeemable value of a hypothetical $1,000 payment
made at the beginning of the one, five and
ten year periods.

One Year Five Year Ten Year
-------- --------- --------
Total Return (8.65)% 64.22% 65.09%
Average Annual
Total Return (8.65)% 10.43% 9.82%

For purposes of the above 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.

The "30-day yield" of the Fund is calculated by dividing the
Fund's net investment income per share, as defined by the
Securities and Exchange Commission, for the 30-day period by the
net asset value per share on the last day of the stated period.
Net investment income represents dividends and interest generated
by the Fund's portfolio securities reduced by all expenses and
any other charges that have been applied to all shareholder
accounts. The calculation assumes the 30-day net investment
income is compounded monthly for six months and then annualized.
The Fund's distribution rate is calculated by using annualized
distributions and dividing by the net asset value per share on
the last day of the period. Generally, the distribution rate
reflects the amounts actually paid to shareholders at a point in
time and is based on book income, whereas the yield reflects the
earning power, net of expenses, of the Fund's portfolio
securities at a point in time. The Fund's yield may be more or
less than the amount actually distributed to shareholders
("distribution rate"). Methods used to calculate advertised
yields and total returns are standardized for all bond and stock
mutual funds by the Securities and Exchange Commission.

The yield is computed as follows:

Yield = 2[((A-B/CD)+1)6-1]
where:
A = Dividend and interest income.
B = Expenses accrued for the period (net of
expense reimbursement).
C = Average daily number of shares
outstanding during the period that were entitled
to receive dividends.
D = Maximum offering price per share on the
last day of the period.

In sales materials, reports and other communications to
shareholders, the Fund may compare its performance to certain
indices, including, but not limited to, the Dow Jones Industrial
Average, the Standard & Poor'sr Index Composites, NASDAQ, the
Russell 2000r Index and 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 Equity Income Fund, Inc. is authorized to issue
500,000,000 shares of common stock, $0.0001 par value 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. The
shares are fully paid and non-assessable when issued. There are
no conversion or sinking fund provisions applicable to shares,
and shareholders have no preemptive rights and may not cumulate
their votes in the election of directors.

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 Articles of
Incorporation and 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 10% 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 March 31, 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 and Dividend
Disbursing Agent of the Fund. As custodian, 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, has passed on the legality of the
shares of Common Stock of the Fund being offered.

FINANCIAL INFORMATION

The schedule of investments, 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 March 31, 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 free copy of the Annual Report by
writing or calling the Fund.

NICHOLAS EQUITY INCOME FUND, 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,
as indicated in such Exhibit Index.

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

The Registrant is not under common control with any
other person. However, as of June 30, 1999, Albert O. Nicholas
may be deemed to beneficially own 39.87% of the issued and
outstanding shares of Common Stock of the Fund, and therefore may
be deemed to "control" the Fund, as such term is defined in the
Investment Company Act of 1940. The Registrant, Nicholas Fund,
Inc., Nicholas Income Fund, Inc., Nicholas Limited Edition, Inc.,
Nicholas II, Inc. and Nicholas Money Market Fund, Inc., which are
all Maryland corporations and are diversified management-type
investment companies registered under the Investment Company Act
of 1940, as amended, 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

(a) Article Fourteenth of the Articles of Incorporation of
Registrant provides that the Registrant shall indemnify and
advance expenses to its current acting and its former officers
and directors to the fullest extent that indemnification of
officers and directors is permitted by the Maryland General
Corporation Law.

(b) Article VII, Section 7 of the By-laws of Registrant
provides for the indemnification of officers and directors of
Registrant for claims arising from his or her service to
Registrant, excepting claims in which such officer or director
has been adjudicated guilty of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in
the conduct of his or her office. In the absence of any
adjudication, indemnification will be determined by resolution of
two-thirds of the members of the Board of Directors who are not
"interested persons" and not involved in such action or claim.
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.

(c) Registrant will maintain insurance coverage for the
benefit of officers and directors with respect to many types of
claims that may be made against them, some of which may be in
addition to those described in Article VII, Section 7 of the By-
laws of Registrant, subject to the limitations of federal law
(see Item 27(e), below). The investment adviser to the
Registrant, Nicholas Company, Inc., has, by resolution of its
Board of Directors, agreed to indemnify the 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.

(d) The Annotated Code of Maryland, Corporations and
Associations, Section 2-418 generally provides that, under
certain circumstances, corporations may indemnify any person who
was or is a party to any action by virtue of having been an
officer, director, employee or agent of the corporation,
including indemnification for judgments, fines, settlement
amounts and reasonable expenses actually incurred if the person
acted in good faith. This statute also provides a corporation
may maintain insurance on behalf of directors, officers,
employees or agents for liabilities arising out of such persons'
actions in such position. Such state law is subject to the
limitations of applicable federal law (see Item 27(e), below).

(e) Insofar as indemnification for liabilities arising
under the Securities Act of 1933 or the Investment Company Act of
1940 may be permitted to officers, directors, controlling
persons, employees and agents of Registrant pursuant to the
Articles of Incorporation, Article VII, Section 7 of the By-laws
of Registrant, Maryland law or otherwise, Registrant has been
advised that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as
expressed in said Acts and is, therefore, unenforceable. In the
event a claim for indemnification for such liabilities (other
than payment by Registrant of expenses incurred or paid by an
officer, director, controlling person, employee or agent in
connection with the successful defense of any action, suit or
proceeding) is asserted by such officer, director, controlling
person, employee or agent in connection with the securities being
registered, 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
said Acts and will be governed by the final adjudication of such
issue.

ITEM 26. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT
ADVISER

Incorporated by reference to pages __-__ 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.

ITEM 29. MANAGEMENT SERVICES

None.

ITEM 30. UNDERTAKINGS

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 *

(b) By-Laws of Registrant *

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

(g) Custodian Agreement between Registrant
and Firstar 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 **

(k) Financial Data Schedule ___

(l) 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,
Nicholas Equity Income Fund, 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(ba) under the Securities Act of 1933, and has duly caused
this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, on the 28th day of
July, 1999.

NICHOLAS EQUITY INCOME FUND, INC.

By: /s/ Thomas J. Saeger
------------------------
Thomas J. Saeger,
Executive Vice
President and Secretary

Pursuant to the requirements of the Securities Act of 1933,
as amended, and the Investment Company Act of 1940, as amended,
this Registration Statement has been signed below by the
following persons in the capacities indicated on the 28th day of
July, 1999.

Signature Title
--------- -----

/s/ Albert O. Nicholas* President, Chief Executive
------------------- Officer and Director
Albert O. Nicholas

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

/s/Robert H. Bock* Director
----------------
Robert H. Bock

/s/Richard Seaman* Director
----------------
Richard Seaman

/s/Melvin L. Schultz* Director
------------------
Melvin L. Schultz

* 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
(To be filed by amendment and included in Exhibit )

2. Consent of Arthur Andersen LLP
(To be filed by amendment and included as Exhibit (j))

</TABLE>

July 30, 1999

Nicholas Equity Income Fund, Inc.
700 North Water Street
Suite 1010
Milwaukee, Wisconsin 53202

Gentlemen:

We have acted as counsel to Nicholas Equity Income Fund, 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 these
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 independant verification of the genuiness of
signatures and to 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 organized under the laws of the State
of Maryland, and has the corporate power to carry on its present
business and is duly authorized to own its properties and conduct
its business in those states where such authorization is presently
required.

2. The Fund is authorized to issue up to five hundred million
(500,000,000) shares of Common Stock, par value $.0001 per share,
including those shares currently issued and outstanding.

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. 4 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 benn 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,

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

David E Leichtfuss

MICHAEL BEST & FRIEDRICH

DEL/ljg

CONSENT OF INDEPENDANT PUBLIC ACCOUNTANTS

As independant public accountants, we hereby consent to the use
of our report, and to all references to our, included in or made
a part of this form N-1A registration statement for the Nicholas
Equity Income Fund, Inc.

/s/ ARTHUR ANDERSON & CO.

Milwaukee, Wisconsin
July 26, 1999