Nicholas II, Inc.

NCTWX - (Class I)

NNTWX - (Class N)

Mid-cap Growth

Nicholas II, Inc. was the second equity fund launched by Nicholas Funds in 1983. The investment strategy focus is on mid-cap growth stocks of companies with sound business fundamentals, attractive earnings prospects and valuations priced at a discount to their long-term potential.  David O. Nicholas, CFA is the lead portfolio manager for the Fund and has been at the helm since 1993.  He also serves as the Chief Investment Officer for Nicholas Company.

The Fund’s focus on mid-cap stocks sits firmly in the Nicholas investment philosophy. Mid-cap stocks with market capitalizations generally between $3 billion to $35 billion often present greater growth potential compared to larger stocks and greater stability compared to smaller stocks.  At times, Nicholas II may own smaller companies that we believe can successfully grow their business and capitalization into the mid-sized universe. In our opinion the blend of growth and consistency creates an investment strategy that can serve as a core holding for investors with an investment objective with a growth bias.

As is true with the other Nicholas Funds, a critical component to the Fund’s style is buying stocks at valuations that offer the best opportunity for capital appreciation over the long-run, but also provide a margin of safety against declining stock prices. The Nicholas philosophy has strongly maintained the benefits of buying stocks at valuations that are affordable relative to their long-term potential. We believe the Fund’s history suggests this approach can produce more consistent, risk-adjusted returns over time.

  • Snapshot
  • Objective
  • Performance
  • Portfolio Manager
  • Distribution History
  • Documents &
    Forms

Investment Approach

Nicholas II pursues long-term capital growth through a diversified stock portfolio of small- to medium-sized companies with capitalizations generally between $500 million to $10 billion. The Fund is typically benchmarked against the Russell Midcap Growth Index. 


 

Fund Facts

Portfolio Manager: David O. Nicholas
Style: Mid-Cap Growth
Fund Inception: 10/17/1983
Fund Assets (millions):  
    Class I $607.5*
    Class N $99.1*
Number of Holdings: 74*
   
* as of 06/30/2016  
Min. Initial Investment Class I: $100,000
Min. Initial Investment Class N: $500
Fiscal Year-End: September 30
Prospectus Date Class I: January
Prospectus Date Class N: January & April
Cusip Class I: 653740100
Cusip Class N: 653740209
Ticker Class I: NCTWX
Ticker Class N: NNTWX

 

Characteristics*

Weighted Avg Forward P/E Capped: 20.78x
Weighted  Avg Trailing P/E Capped: 22.46x
Weighted Median Mkt Cap (million): $10,208.5
Weighted Avg Mkt Cap (million): $15,516.3
Weighted  Harmonic Avg. Price/Book: 3.88x
Turn Over Rate: (03/31/16)(1) 30.47%
Standard Deviation Class I: 10-Yr(2) 15.12%
Sharpe Ratio Class I: 10-Yr(2) 0.52   
Standard Deviation Class N: 10-Yr(2) 15.12%
Sharpe Ratio Class N: 10-Yr(2) 0.49   

 

Sector Diversification*

Sector Diversification

Top Ten Holdings*

Holdings % Net Assets
LKQ Corporation . 2.11%
Vantiv, Inc. - Class A   2.04%
Thermo Fisher Scientific Inc. 1.96%
Teleflex Incorporated 1.88%
Fastenal Company   1.83%
Tractor Supply Company  1.74%
ANSYS, Inc.  1.73%
Ulta Salon, Cosmetics & Fragrance, Inc.  1.72%
IHS Inc. - Class A  1.72%
Aon plc   1.70%
Total 18.43%

(1) Annualized
(2) Average Annual

* Data as of 06/30/16 unless stated otherwise.


 

Morningstar Ratings

Class I    
  Rating # of Funds
Overall 650
3 Year 650
5 Year 5 stars 573
10 Year 5 star 429

Morningstar Category: Mid-Cap Growth
Source: Morningstar, as of June 30, 2016.
The Overall Morningstar Rating™ for a fund is derived from a weighted average
of the risk-adjusted performance figures associated with its three-,five- and ten year (if applicable) Morningstar Rating™ metrics. (3)

 

Class N    
  Rating # of Funds
Overall 650
3 Year 650
5 Year 5 stars 573
10 Year 5 star 429

 

(3) © [2016] Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or loses arising from any use of this information. For each fund with at least a three-year history, Morningstar calculates a Morningstar Rating ™ (based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a fund’s monthly performance, including the effects of sales charges, loads, and redemption fees), placing more emphasis on downward variations and rewarding consistent performance. The top 10% of funds in each category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars and the bottom 10% receive 1 star. (Each share class is counted as a fraction of one fund within this scale and rated separately, which may cause slight variations in the distribution percentages.) One cannot invest directly in an index. Fund holdings and/or sector weightings are subject to change at any time and are not recommendations to buy or sell any security. 

Past performance does not guarantee future results.

 

Investment Objective

Nicholas II, Inc. strives to increase the value of your investment over the long-term (“long-term growth”) by investing in a diversified portfolio of small- and mid-sized companies. The Fund looks for established companies with the potential for superior sales and earnings growth that are positioned to benefit from emerging, long-term social and economic trends. Our goal is to find what we believe are great companies and hold them for the long-term.

Investment Policies & Considerations

Nicholas II's management team believes that company selection is a key to providing superior returns over time. Our goal is to find companies that have the potential for outstanding earnings and sales growth, and are positioned to benefit from long-term economic and social trends. Some of the factors we consider in assessing companies include:

  • Growth rate of 12% or better
  • High return on capital
  • Strong cash flow
  • Consistent earnings
  • Return on equity (ROE) of 15%, or an improving ROE
  • Debt to total capitalization of less than 50%
  • A price-to-earnings ratio lower than two times the growth rate
  • An enduring franchise or brand Honest, capable management
  • Significant management ownership of stock
  • Long-term and short-term business momentum


It is our strong conviction that superior long-term results are achieved by minimizing capital losses in adverse markets. We do not attempt to forecast short-term market swings, but work to preserve gains and minimize losses using long-term, fundamental valuation techniques. Our portfolio turnover is moderate as our goal is to find, and hold, stock in great companies. However, if a stock is not meeting our expectations, or has become over-valued, we will sell it.
At Nicholas, our watchword is patience. We believe it is a key to superior long-term results.

 

  •  Quarter-End Performance
  • Month-End Performance
  • Quarterly Performance Presentation

As of June 30, 2016

Average Annual Returns

Fund 3 Month YTD  1 Year  3 Year 5 Year 10 Year
Nicholas Fund (NICSX) 1.87% 0.35% -8.53% 10.96% 12.30% 8.97%
Nicholas II - Class I (NCTWX) -0.28% 0.08% -5.72% 10.02% 9.69% 7.86%
Nicholas II - Class N (NNTWX) -0.33% -0.04% -6.04% 9.66% 9.32% 7.50%
Nicholas Limited Edition - Class I (NCLEX) 2.88% 2.70% -3.94% 7.58% 8.03% 8.16%
Nicholas Limited Edition - Class N (NNLEX) 2.75% 2.51% -4.31% 7.20% 7.65% 7.81%
Nicholas Equity Income Fund (NSEIX) 3.62% 6.30% 0.34% 8.75% 9.97% 9.65%
Nicholas High Income Fund - Class I (NCINX) 2.75% 5.13% -1.88% 2.13% 4.30% 5.14%
Nicholas High Income Fund - Class N (NNHIX) 2.64% 4.98% -2.25% 1.74% 3.94% 4.83%
             

 

  1 Year 5 Year 10 Year 7-Day Yield 7-Day
Effective
Yield
 
Nicholas Money Market (NICXX) 0.00% 0.00% 0.96% 0.00% 0.00%  

 

The 7-Day Yield quotation, rather than the Total Return quotation, more closely reflects the current earnings of the Fund.

Performance data quoted represents past performance and does not guarantee future results.  The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost.  Performance current to the most recent month end may be lower or higher than the performance quoted.

As of July 31, 2016

Average Annual Returns

Fund 3 Month YTD  1 Year  3 Year 5 Year 10 Year
Nicholas Fund (NICSX) 2.84% 2.71% -8.67% 9.60% 13.45% 9.24%
Nicholas II - Class I (NCTWX) 3.72% 3.72% -3.93% 9.43% 11.70% 8.42%
Nicholas II - Class N (NNTWX) 3.65% 3.52% -4.27% 9.05% 11.31% 8.05%
Nicholas Limited Edition - Class I (NCLEX) 7.20% 7.94% 0.92% 7.25% 9.88% 8.90%
Nicholas Limited Edition - Class N (NNLEX) 7.10% 7.72% 0.55% 6.88% 9.50% 8.56%
Nicholas Equity Income Fund (NSEIX) 5.62% 9.57% 2.56% 8.29% 11.73% 9.96%
Nicholas High Income Fund - Class I (NCINX) 3.28% 7.37% 0.58% 2.28% 4.57% 5.33%
Nicholas High Income Fund - Class N (NNHIX) 3.16% 7.22% 0.25% 1.92% 4.19% 4.98%
             

 

  1 Year 5 Year 10 Year 7-Day Yield 7-Day
Effective
Yield
 
Nicholas Money Market (NICXX) 0.00% 0.00% 0.92% 0.00% 0.00%  

 

The 7-Day Yield quotation, rather than the Total Return quotation, more closely reflects the current earnings of the Fund.

Performance data quoted represents past performance and does not guarantee future results.  The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost.  Performance current to the most recent month end may be lower or higher than the performance quoted.

Click the icon below to access the
Fund's Quarterly Performance Presentation

Quarterly Performance Presentation

 

Nicholas Fund's Expense Ratio: 0.72%
Nicholas II – Class I's Expense Ratio: 0.61%
Nicholas II – Class N's Expense Ratio: 0.96%
Nicholas Limited Edition – Class I's Expense Ratio: 0.86%
Nicholas Limited Edition – Class N's Expense Ratio: 1.21%
Nicholas Equity Income Fund's Expense Ratio: 0.72%
Nicholas High Income Fund – Class I's Expense Ratio: 0.71%(1)
Nicholas High Income Fund – Class N's Expense Ratio: 1.06%(1)
Nicholas Money Market Fund's Expense Ratio: 0.51%

The Adviser has agreed to voluntarily absorb management fees of 0.30% of Nicholas Money Market Fund's average net assets on an annual basis during the fiscal year ending December 31, 2016. This absorption continues today; however, the Adviser may decrease or discontinue it at any time.  The most recent expense ratios can be found in each funds current annual or semiannual report.

(1)The expense ratio may not correlate to the "Ratio of expenses to average net assets" provided in the Financial Highlights in the Fund's Annual or Semiannual Report. The information in the Financial Highlights reflects the operating expenses of the Fund and does not include Acquired Fund Fees and Expenses. "Acquired Fund Fees and Expenses" are those expenses incurred indirectly by the Fund as a result of acquiring investments in shares of one or more other investment companies.

Nicholas Money Market Fund has fee waivers in effect. Investment performance reflects these fee waivers. In the absence of such waivers, total returns would be reduced.

 

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David O. Nicholas, CFA

Chief Investment Officer and Portfolio Manager
Industry experience: 33 years
Nicholas Company Tenure: 30 years
Lead Portfolio Manager - Nicholas II, Inc. and Nicholas Limited Edition, Inc.
Co-Portfolio Manager - Nicholas Fund, Inc.

 

Dave Nicholas joined Nicholas Company as an investment analyst in 1986.  His current responsibilities include Portfolio Manager and Chief Investment Officer.   Dave’s focus has been primarily on small and mid-capitalization companies that meet the criteria for Nicholas II and Nicholas Limited Edition Funds.  Dave’s approach is aligned with the Nicholas core investment philosophy and process, while adjusting it to meet the characteristics of small and mid-capitalization growth companies.  Core elements to the philosophy include identifying companies with secular growth capabilities, consistent earnings growth, strong balance sheets and solid management teams.  Dave also shares Ab’s preference for non-consensus strategies when market opportunities arise.

Dave began his career with First Wisconsin Bank, now known as U.S. Bank, where he worked as an analyst before joining Nicholas Company.

Dave is the lead manager of the Nicholas II and Nicholas Limited Edition Funds, our mid-cap growth and small-cap growth strategies.  He also serves as Chief Investment Officer for Nicholas Company.

Dave earned a B.B.A. in Finance from the University of Wisconsin-kriMadison and completed his M.S. in Finance at the University of Wisconsin- Milwaukee, where he is a member of the University’s Business School Advisory Board.   Dave is a member of the Milwaukee Investment Analysts Society, and a Chartered Financial Analyst.


 


 

NOTE: None of the distributions included income from U.S. Treasuries, U.S. Agencies, state government or municipalities.
 

Distribution Year

Share Class

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Distribution History 2015 - Class I

Pay Date Net
Investment Income
Short Term
Capital Gains
Long Term
Capital Gains
Total
Distribution
12/28/2015 0.0931 0.0000 1.4736 1.5667
Distribution Year
  • 2015
Share Class
  • Class I

Distribution History 2015 - Class N

Pay Date Net
Investment Income
Short Term
Capital Gains
Long Term
Capital Gains
Total
Distribution
12/28/2015 0.0000 0.0000 1.4736 1.4736
Distribution Year
  • 2015
Share Class
  • Class N

Please print, complete and mail to the appropriate address:

Nicholas Family Of Funds
c/o U.S. Bancorp Fund Services, LLC
P.O. Box 701
Milwaukee, WI 53201-0701

Overnight Express:

Nicholas Family Of Funds
c/o U.S. Bancorp Fund Services, LLC
615 East Michigan Street
Milwaukee, WI 53202


Order By Telephone

1-800-544-6547

Automated transactions are available 24 hours a day, 7 days a week.

To speak to a representative, call Monday - Friday, from 8am - 7pm, Central Time.

Shareholders calling from outside the U.S. may call collect, 414-765-4124, Monday - Friday, from 8am -7pm, Central Time.



The Nicholas Funds are offered only to United States residents, and information on this site is intended only for such persons. Nothing on this web site should be considered a solicitation to buy or an offer to sell shares of any Nicholas Fund in any jurisdiction where the offer or solicitation would be unlawful under the securities laws of such jurisdiction. 

An investment in the Money Market Fund, Inc. is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund.

Please refer to each prospectus for important information about each investment company, including investment objectives, risks, charges and expenses. 

Mutual fund investing involves risk; principal loss is possible. Small- and medium-capitalization companies tend to have limited liquidity and greater price volatility than large-capitalization companies. Investments in debt securities typically decrease in value when interest rates rise. This risk is usually greater for longer-term debt securities such as limited liquidity and great volatility. Investment by the Funds in lower-rated and non-rated securities presents a greater risk of loss to principal and interest than higher-rated securities. 

Past performance does not guarantee future results.

Diversification does not assure a profit nor protect against loss in a declining market.

Glossary of terms   |   Privacy & Security

Nicholas Funds are distributed by Quasar Distributors, LLC

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