February 4, 1997


Report to Fellow Shareholders:

      It  is  a pleasure to report that Nicholas Fund had a  good
calendar  year in 1996.  Total return to shareholders was  19.78%
with  distributions reinvested.  While this result was below  the
performance  of  the S&P 500 (large companies), it  exceeded  the
results of the Russell 2000 results (small  companies).  Nicholas 
Fund tends  to own stocks in both categories.  Outstanding upward 
moves in bank,  finance,   insurance  and  health  care  equities
were   largely   responsible   for  the year's return.  As is our  
custom,  we  are fully invested with 4.4% in cash.

      More  of  the  same, and it's great -- a  modestly  growing
economy,  quiescent  inflation and  a  reasonable  interest  rate
environment   continue  in  place. Company  earnings  are  strong
for  the  most  part.  Add   to  this scene  the  tremendous  net
inflows  of  cash  into stock  mutual funds which  in  turn  have
invested  in  the  market, thereby helping to cause  "very  high"
equity  valuations.   Moreover, the rising use  of  indexing  has
resulted  in  large  company stocks outperforming  small  company
stocks.   This  could prove dangerous for the market  indexes  in
1997,  especially in view of the fact that the S&P 500  rose  38%
and  23%  in 1995 and 1996, respectively.  Over long time  spans,
the S&P has compounded at about 10% annually.  Another reason for
some caution is the fact that the stock market has not had a  10%
correction  in over six years.  We do not predict market  trends,
but  we  do  want you to know the facts of the current investment
scene.

     Long-term performance of the Fund is shown below for time
periods ended December 31, 1996.
                                                       
<TABLE>
<CAPTION>

                                                       Average Annual Total Return*
                                            -----------------------------------------------------
                                                                                  July 14, 1969**
                                            1 year   5 years   10 years   15 years   27.2 years
                                            ------   -------   --------   --------   ----------
<S>                                        <C>       <C>        <C>        <C>         <C>
Nicholas Fund (Distributions Reinvested)   +19.78%   +13.45%    +13.99%    +16.54%     +13.59%
Standard & Poor's 500 (Income Reinvested)  +22.95%   +15.20%    +15.28%    +16.78%     +11.88%
Russell 2000 (Income Reinvested)           +16.49%   +15.64%    +12.41%    +13.49%        N/A
Consumer Price Index                        +3.31%    +2.84%     +3.68%     +3.56%      +5.49%     
Ending Value of $10,000 invested in      
 Nicholas Fund (Distributions Reinvested)  $11,978   $18,793    $37,040    $99,279    $331,098             
 
</TABLE>
                               

     *Total returns are historical  and  include  change  in
     share  price  and  reinvestment of dividend and capital
     gain distributions.   Past  performance is no guarantee
     of future results.  Principal  value  and  return  will
     fluctuate so an investment, when redeemed, may be worth
     more or less than original cost.
     
     **Date   of  initial   public  offering.  Starting time
     period for Standard & Poor's 500 and the Consumer Price
     Index was June 30, 1969.

       In   addition  to  our  constant  emphasis  on  investment
performance, I  want shareholders to know that our administrative
staff is continuing to do its job effectively and in an extremely
cost-conscious  manner.   This effort is  an  important  part  of
achieving good investment results.  As most of you know, we are a
pure  no-load mutual fund with no front or rear-end sales charges
and  no  12b-1  fees.  The total annual expenses  (which  include
management  fees) of running Nicholas Fund amounts to about  .74%
of assets compared to approximately 1.4% for the average domestic
stock fund.  I am   very pleased and proud of the accomplishments
of this segment of our operation.

      Management  hopes to build on the solid foundation  of  the
past  few  years via intense research, competent stock selection,
larger positions in favored stocks and patience.  Please keep  in
mind  that Nicholas Company is consistently attempting to achieve
reasonable returns in a low risk, conservative manner.  Thank you
for being part of the Nicholas Fund.

                         Sincerely,

                         /s/ Albert O. Nicholas   /s/ David O. Nicholas
                         ----------------------   ---------------------
                             Albert O. Nicholas       David O. Nicholas
                             Co-Portfolio Manager     Co-Portfolio Manager


Nicholas Fund, Inc.

TOP TEN PORTFOLIO HOLDINGS
December 31, 1996.

                                                   Percentage of
                                                    Net Assets
                                                   -------------
Federal National Mortgage Association...............   4.21%
Federal Home Loan Mortgage Corporation..............   4.16%
Mercury General Corporation.........................   3.32%
General Motors Corporation - Class H................   3.25%
Tyco International Ltd. ............................   2.61%
Travelers Group, Inc. ..............................   2.47%
SunAmerica, Inc. ...................................   2.45%
Wells Fargo & Company...............................   2.37%
Berkshire Hathaway, Inc. ...........................   2.05%
Circuit City Stores, Inc. ..........................   2.04%

Total of top ten holdings
  as a percent of net assets........................   28.93%

---------------------------------------------------------------

HISTORICAL RECORD

_______________________________________________________________

<TABLE>
<CAPTION>
                                   (ADJUSTED FOR TWO-FOR-ONE STOCK SPLIT JUNE 15, 1979)

                         NET       NET INVESTMENT    CAPITAL GAIN    DOLLAR WEIGHTED    GROWTH OF AN
                     ASSET VALUE       INCOME        DISTRIBUTIONS   PRICE/EARNINGS    INITIAL $10,000
                      PER SHARE      PER SHARE         PER SHARE        RATIO**         INVESTMENT***
                     __________    ______________    _____________   _______________   _______________
<S>                   <C>           <C>                <C>              <C>              <C>
July 14, 1969*        $  6.59       $  --              $  --             --              $   10,000
March 31, 1986          35.26        0.5750              0.6100          15.8 times          87,699
March 31, 1987          39.94        0.8820              0.1870          16.3               102,386
March 31, 1988          32.15        1.8400              4.0340          14.1                98,557
March 31, 1989          35.27        1.0250              0.4510          13.2               113,155
March 31, 1990          37.72        0.9240              1.0540          14.9               127,360
March 31, 1991          42.99        0.7900              0.2250          16.9               149,179
March 31, 1992          49.68        0.6790              0.8240          19.4               178,015
March 31, 1993          52.91        0.6790              2.0420          18.5               200,098
March 31, 1994          51.10        0.8175              1.0470          16.7               200,182
March 31, 1995          52.22        0.7070              3.3170          17.2               221,970
March 31, 1996          63.81        0.5650              4.0945          21.0               293,836
December 31, 1996       65.94        0.4190(a)           5.3155(a)       22.3               331,098


  *  Date of Initial Public Offering                    (a) Paid May 22, 1996 to shareholders of record May 16, 1996
 **  Based on latest 12 months accomplished earnings        and December 31, 1996 to shareholders of record December 
                                                            26, 1995.
 **  Assuming reinvestment of all distributions         

</TABLE>

Range in quarter end price/earnings
  ratios since December 31, 1974

    High             Low
--------------   -------------
12/31/96  22.3   3/31/82   8.3