NICHOLAS LIMITED EDITION INC, 485BPOS, 1997-04-29

NICHOLAS LIMITED EDITION INC
485BPOS, 1997-04-29

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April 29, 1997

VIA EDGAR TRANSMISSION

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

Re: Nicholas Limited Edition, Inc. (the "Fund")
SEC File No. 33-11420
Post-Effective Amendment No. 10
Registration Statement on Form N-1A

Gentlemen:

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 Post-Effective
Amendment No. 10 to the Registration Statement, including
exhibits relating thereto, marked to show changes effected
by the Amendment.

This Amendment shall be effective on the date of filing, in
accordance with Rule 485(b). As legal counsel to the Fund, we
have prepared the Amendment, and we hereby represent pursuant to
Rule 485(b)(4) that the Amendment does not contain disclosures
which would render it ineligible to become effective pursuant to
Rule 485(b).

Very truly yours,

MICHAEL BEST & FRIEDRICH

/s/ Kate M. Fleming
_______________________
KMF/ljg Kate M. Fleming
Enclosure

As filed with the Securities and Exchange Commission on April 29, 1997

File No. 33-11420

FORM N-1A

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

POST-EFFECTIVE AMENDMENT NO. 10

and

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940

AMENDMENT NO. 10

NICHOLAS LIMITED EDITION, 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 LIMITED EDITION, INC.
700 NORTH WATER STREET
MILWAUKEE, WISCONSIN 53202

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

It is proposed that the filing will become effective:

X immediately upon filing pursuant to paragraph (b)
on 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

Pursuant to Rule 24f-2, the Registrant hereby registers an
indefinite amount of securities. On February 26, 1997,
Registrant filed the necessary Rule 24f-2 Notice and filing fee
with the Commission for its fiscal year ended December 31, 1996.

NICHOLAS LIMITED EDITION, INC.
CROSS-REFERENCE SHEET
(As required by Rule 481(a))

Part A. Information Required in Prospectus Heading
_______ __________________________________ _______

Item 1. Cover Page............................. Cover Page
Item 2. Synopsis............................... Introduction; Performance
Data
Item 3. Condensed Financial Information........ Consolidated Disclosure
of Fund Fees and
Expenses; Financial
Highlights; Management's
Discussion of Fund
Performance
Item 4. General Description of Registrant...... Introduction; Investment
Objectives and Policies;
Investment Restrictions
Share Limitation
Item 5. Management of the Fund................. Investment Adviser

Item 5A. Management's Discussion of
Fund Performance....................... Management's Discussion
of Fund Performance
Item 6. Capital Stock and Other Securities..... Transfer of Capital
Stock; Dividends and
Federal Tax Status;
Capital Structure; Annual
Meeting; Shareholder
Reports
Item 7. Purchase of Securities Being Offered.. Purchase of Capital
Stock; Redemption of
Capital Stock; Exchange
Between Funds; Transfer
of Capital Stock;
Determination of Net
Asset Value; Dividend
Reinvestment Plan;
Individual Retirement
Account; Master Retirement
Plan
Item 8. Redemption or Repurchase.............. Purchase of Capital
Stock; Redemption of
Capital Stock
Item 9. Pending Legal Proceedings............. N/A

Part B. Information Required in Statement of Additional Information
_______ ___________________________________________________________

Item 10. Cover Page............................ Cover Page
Item 11. Table of Contents..................... Table of Contents
Item 12. General Information and History....... Introduction; Share
Limitation
Item 13. Investment Objectives and Policies.... Investment Objectives and
Policies; Investment
Restrictions
Item 14. Management of the Fund................ Investment Adviser;
Management - Directors,
Executive Officers and
Portfolio Managers of the
Fund
Item 15. Control Persons and Principal Holders
of Securities......................... Principal Shareholders

Item 16. Investment Advisory and Other
Services.............................. Investment Adviser;
Custodian and Transfer
Agent; Independent
Auditors and Legal
Counsel
Item 17. Brokerage Allocation and other
practices............................. Brokerage
<PAGE>
CROSS-REFERENCE SHEET
(Continued)
Item 18. Capital Stock and Other Securities.... Transfer of Capital
Stock; Income Dividends
and Federal
Tax Status; Capital
Structure; Shareholder
Reports; Annual Meeting
Item 19. Purchase, Redemption and Pricing of
Securities Being Offered.............. Purchase of Capital
Stock; Redemption of
Capital Stock; Exchange
Between Funds; Transfer
of Capital Stock;
Determination of Net
Asset Value; Dividend
Reinvestment Plan;
Systematic Withdrawl
Plan; Individual
Retirement Account; Master
Retirement Plan
Item 20. Tax Status............................ Dividends, Distributions
and Federal Tax Status
Item 21. Underwriters.......................... N/A
Item 22. Calculations of Performance Data...... Performance Measurement
Item 23. Financial Statements.................. Financial Information

Part C. Other Information
_______ _________________

Item 24. Financial Statements and Exhibits..... Part C
Item 25. Persons Controlled By or Under
Common Control with Registrant........ Part C
Item 26. Number of Holders of Securities....... Part C
Item 27. Indemnification....................... Part C
Item 28. Business and Other Connections
of Investment Adviser................. Part C
Item 29. Principal Underwriters................ Part C
Item 30. Location of Accounts and Records...... Part C
Item 31. Management Services................... Part C
Item 32. Undertakings.......................... Part C

NICHOLAS LIMITED EDITION, INC.

FORM N-1A

PART A: PROSPECTUS

NICHOLAS LIMITED EDITION, INC.
PROSPECTUS

700 NORTH WATER STREET, SUITE 1010
MILWAUKEE, WISCONSIN 53202
414-272-6133

800-227-5987

Nicholas Limited Edition, Inc. (the "Fund") is an open-end
management investment company having as its investment objective
long-term growth in which income is a secondary consideration.
To achieve its objective, the Fund will invest in a diversified
list of common stocks having growth potential.

This offering is limited in scope and amount. See "SHARE
LIMITATION."

NO-LOAD FUND - NO SALES CHARGE

INVESTMENT ADVISER
NICHOLAS COMPANY, INC.

MINIMUM INITIAL INVESTMENT - $2,000

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS
THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

This Prospectus sets forth concisely the information about
the Fund that a prospective investor should know before
investing. Additional information about the Fund has been filed
with the Securities and Exchange Commission in the form of a
Statement of Additional Information, dated April 30, 1997. Upon
request to the Fund at the address and telephone number set forth
above, the Fund will provide copies of the Statement of
Additional Information without charge to each person to whom a
Prospectus is delivered.

April 30, 1997

INVESTORS SHOULD READ AND RETAIN THIS PROSPECTUS FOR FUTURE REFERENCE.

TABLE OF CONTENTS

Page
------

INTRODUCTION.............................................. 1
CONSOLIDATED DISCLOSURE OF FUND FEES AND EXPENSES......... 1
FINANCIAL HIGHLIGHTS...................................... 2
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE............... 3
PERFORMANCE DATA.......................................... 5
SHARE LIMITATION.......................................... 5
INVESTMENT OBJECTIVES AND POLICIES........................ 5
INVESTMENT RESTRICTIONS................................... 7
INVESTMENT ADVISER........................................ 8
PURCHASE OF CAPITAL STOCK................................. 9
REDEMPTION OF CAPITAL STOCK............................... 10
EXCHANGE BETWEEN FUNDS.................................... 12
TRANSFER OF CAPITAL STOCK................................. 13
DETERMINATION OF NET ASSET VALUE.......................... 13
DIVIDENDS AND FEDERAL TAX STATUS.......................... 13
DIVIDEND REINVESTMENT PLAN................................ 14
SYSTEMATIC WITHDRAWAL PLAN................................ 14
INDIVIDUAL RETIREMENT ACCOUNT............................. 14
MASTER RETIREMENT PLAN.................................... 14
CAPITAL STRUCTURE......................................... 15
ANNUAL MEETING............................................ 15
SHAREHOLDER REPORTS....................................... 15
CUSTODIAN AND TRANSFER AGENT.............................. 15
INDEPENDENT ACCOUNTANTS AND LEGAL COUNSEL................. 15

No person has been authorized to give any information or to
make any representations other than those contained in this
Prospectus and the Statement of Additional Information dated
April 30, 1997 and, if given or made, such information or
representations may not be relied upon as having been authorized
by Nicholas Limited Edition, Inc.

This Prospectus does not constitute an offer to sell
securities in any state or jurisdiction in which such offering
may not lawfully be made. The delivery of this Prospectus at any
time shall not imply that there has been no change in the affairs
of Nicholas Limited Edition, Inc. since the date hereof.

INTRODUCTION

Nicholas Limited Edition, Inc. (the "Fund") was incorporated
under the laws of Maryland on January 26, 1987. The Fund is an
open-end, diversified management investment company registered
under the Investment Company Act of 1940, as amended. As an
open-end investment company, it obtains its assets by
continuously selling shares of its Common Stock, $.01 par value
per share, to the public. Proceeds from such sales are invested
by the Fund in securities of other companies. The resources of
many investors are combined and each individual investor has an
interest in every one of the securities owned by the Fund. The
Fund provides each individual investor with diversification by
investing in the securities of many different companies in a
variety of industries and furnishes experienced management to
select and watch over its investments. As an open-end investment
company, the Fund will redeem any of its outstanding shares on
demand of the owner at their net asset value next determined
following receipt of the redemption request. The investment
adviser to the Fund is Nicholas Company, Inc. (the "Adviser").

The primary investment objective of the Fund is long-term
growth. Current income is a small factor in considering the
selection of investments. The Fund intends to invest primarily
in common stocks. The Fund may invest in common stocks of
companies which are not actively traded or which are smaller, out
of favor or have limited operating history upon which to base an
evaluation of future performance, and thus may carry greater risk
than investments in the common stocks of larger, more established
companies. The Fund also may invest in debt securities which
carry a high degree of risk. Consequently, the Fund is not
intended to be a complete investment program.

CONSOLIDATED DISCLOSURE OF FUND FEES AND EXPENSES

SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price).................. None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price).................. None
Deferred Sales Load (as a percentage of original
purchase price or redemption proceeds, as applicable) None
Redemption Fees (as a percentage of redemption
proceeds, if applicable)(1).......................... None
Exchange Fee(2)........................................ None

ANNUAL FUND OPERATING EXPENSES(3) (AS A PERCENTAGE OF AVERAGE NET
ASSETS)
Management Fee......................................... 0.75%
12b-1 Fees............................................. None
Other Expenses......................................... 0.11%
Total Fund Operating Expenses.......................... 0.86%
- ------------
(1) There is a fee of up to $12.00 for federal fund wire
redemptions.
(2) There is a $5.00 fee for telephone exchanges only.
(3) Annual Fund Operating Expenses are based on expenses incurred
for the fiscal year ended December 31, 1996.

<TABLE>
EXAMPLE

1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
A shareholder would pay the
following expenses on a $1,000
investment, assuming: (1) 5%
annual return and (2) redemption
at the end of each time period.............. $9 $27 $48 $106

</TABLE>

This Example should not be considered a representation of past
or future expenses. Actual expenses may be
greater or lesser than those shown.

The purpose of the table is to assist the rospective investor
in understanding the various costs and expenses that an investor
in the Fund will bear directly and indirectly. For a description
of "Management Fees" and "Other Expenses," see "Investment
Adviser."

FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR)

The following Financial Highlights of the Fund for the nine
years ended December 31, 1996, and for the period from May 18,
1987 (date of initial public offering) through December 31, 1987,
have been audited by Arthur Andersen LLP, independent public
accountants, whose report thereon is included in the Fund's
Annual Report for the fiscal year ended December 31, 1996. The
table should be read in conjunction with the financial statements
and related notes included in the Fund's Annual Report which are
incorporated herein by reference.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
___________________________________________________________________________________
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
YEAR......................... $19.22 $17.09 $18.68 $18.77 $16.86 $12.03 $12.49 $11.29 $9.15 $10.00
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income........ .01 .08 .10 .09 .08 .12 .12 .15 .10 .09
Net gains or (losses) on
securities (realized and
unrealized)................ 4.14 5.07 (.68) 1.59 2.74 5.07 (.34) 1.82 2.39 (.85)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from investment
operations................ 4.15 5.15 (.58) 1.68 2.82 5.19 (.22) 1.97 2.49 (.76)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends (from net
investment income)........ (.01) (.08) (.10) (.09) (.08) (.12) (.12) (.15) (.10) (.09)
Distributions (from capital
gains)..................... (2.62) (2.94) (.91) (1.57) (.83) (.24) (.12) (.62) (.25) --
Distributions (in excess of
book realized gains)....... (-) .- .- (0.11) .- .- .- .- .- .-
Total distributions..... (2.63) (3.02) (1.01) (1.77) (.91) (.36) (.24) (.77) (.35) (.09)
----- ------ ------ ------ ------ ------ ------ ------ ------ ------
NET ASSET VALUE,
END OF YEAR.................. $20.74 $19.22 $17.09 $18.68 $18.77 $16.86 $12.03 $12.49 $11.29 $9.15
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------ ------ ------

TOTAL RETURN................. 21.81% 30.18% (3.04%) 9.03% 16.78% 43.22% (1.73%) 17.36% 27.26% (7.58%)**

RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year
(millions)................... $232.8 $169.6 $142.6 $180.8 $190.2 $175.3 $70.9 $57.3 $33.0 $19.3
Ratio of expenses to average
net assets................... .86% .90% .90% .88% .92% .94% 1.07% 1.12% 1.32% 1.48%***
Ratio of net investment
income to average net assets. .06% .38% .52% .42% .45% 1.05% 1.10% 1.37% 1.03% 2.21%***
Portfolio turnover rate...... 32.31% 35.77% 16.29% 24.35% 24.44% 12.62% 15.15% 30.65% 30.69% 0%
Average commission rate paid
by the Fund on portfolio
investment transactions $0.048 $0.045 -- -- -- -- -- -- -- --
- ---------------------
</TABLE>
* For the period from May 18, 1987 (date of initial public offering)
through December 31, 1987.

** Not annualized.

*** Annualized.

**** Disclosure of this rate is required by the Securities and
Exchange Commission on a prospective basis beginning with
the Fund's 1996 fiscal year end. The Fund has chosen to
disclose this rate beginning in fiscal 1995.

MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE

The Fund's primary objective is long-term capital
appreciation. In an effort to achieve this objective, the
Adviser purchases stocks for the Fund in small and medium size
companies that represent good value in relation to their growth
prospects. Individual stock selection is the focal point of the
Adviser's equity philosophy. The Adviser's efforts are directed
toward purchasing stocks that represent good value based upon the
criteria outlined below. It is also the Adviser's strong
conviction that superior long-term results are achieved through
the minimization of capital losses during adverse periods in the
general market. The Adviser primarily seeks stocks where the
price/earnings ratio is low in relation to earnings growth or
where the price is reasonable in relation to book value. Above
average secular earnings growth and strong current earnings
momentum are important factors.

The Fund's performance in 1996 was driven primarily by
holdings in business/computer service companies, health care
companies, finance companies and retailers. As a percentage of
the Fund's total net assets, the Fund's investments in health
care companies increased from 24.6% at December 31, 1995 to 32.6%
at December 31, 1996; the Fund's investments in media,
communications and entertainment companies increased from 5.2% at
December 31, 1995 to 9.1% at December 31, 1996; the Fund's
investments in banks and finance-related companies decreased from
13.9% at December 31, 1995 to 7.6% at December 31, 1996; and the
Fund's investments in consumer products and services companies
decreased from 7.7% at December 31, 1995 to 2.0% at December 31,
1996. At December 31, 1996, major holdings of the Fund included
Keane, Inc. (a software-related company), representing 6.55% of the
Fund's total net assets, Heartland Express, Inc. (a trucking
company), representing 5.45% of the Fund's total net assets, and
International Speedway Corporation (owner of various speedways)
company), representing 4.69% of the Fund's total net assets. The
Fund's strong performance in 1996 again was due more to
individual stock selection rather than any industry or investment
style selection.

For the last six years, the Standard & Poor's 500 Index has
advanced without a 10% correction. In fact, 1995 and 1996 have
the best consecutive years for total return (up 69.3%) since 1975
and 1976 (up 69.8%). This bull market has been driven by an
environment of low inflation, declining interest rates, strong
corporate earnings and a high degree of liquidity originating
primarily from the desire by middle-aged individuals for
retirement savings. Against this backdrop, the Fund performed
well in 1996, with an average annual total return of 21.81%,
compared to the Russell 2000 Index of 16.49% and the Standard &
Poor's 500 Index of 22.95%.

The overall stock market experienced a strong year in 1996;
however, the Adviser believes it was extremely narrow in focus
mainly on larger companies and technology issues. One study
suggested that four stocks (Intel, Microsoft, Cisco Systems, and
Oracle) contributed more than 40% of the NASDAQ Composite Index
increase. Without these stocks, the NASDAQ Composite Index would
have been up approximately 13.2%. This large company out-
performance also can be seen by the S&P 500 Index's total return
of 22.95% in 1996 versus the Russell 2000 Index's 1996 total
return of 16.49%.

Though the Adviser always strives to beat the S&P 500 Index,
the Fund's performance in 1996 was strong when compared to the
small company indexes. Also, the Fund's risk profile is such
that performance in speculative bull markets should remain modest
compared to others who take bigger risks. The trade-off
hopefully will mean lower volatility for shareholders along with
more consistent returns over a full market cycle.

During 1996 and the first quarter of 1997, stock market
valuations remained high by historical standards, resulting in
the Adviser staying cautious short-term. Longer-term, the
Adviser believes the Fund's portfolio companies will continue to
have the ability to grow profitably and generate cash.
Furthermore, smaller companies have underperformed larger
companies for about a decade. Therefore, the Adviser remains
long-term bullish on the outlook for the Fund.

1 Set forth below is a comparison of the initial account value
and subsequent account values at the end of each of the completed
fiscal years of the Fund, assuming a $10,000 investment in the
Fund at the beginning of the first fiscal year, to the same
investment over the same periods in the Standard & Poor's 500r
Composite Stock Price Index and the Russell 2000 Index.

COMPARISON OF CHANGE IN VALUE OF $10,000.00
INVESTMENT IN NICHOLAS LIMITED EDITION, INC,
S&P 500 INDEX AND RUSSELL 2000 INDEX

DATE Nicholas Limited S&P 500 RUSSELL
Edition, Inc. INDEX 2000 INDEX
_________ __________________ __________ _____________

May 18, 1987 $10,000.00 10,000.00 10,000.00

December 31, 1987 9,242.11 7,585.00 8,676.00

December 31, 1988 11,761.53 9,472.91 10,107.54

December 31, 1989 13,803.81 11,011.31 13,284.34

December 31, 1990 13,565.57 8,863.00 12,860.57

December 31, 1991 19,428.92 12,944.41 16,789.47

December 31, 1992 22,689.87 15,327.48 18,078.90

December 31, 1993 24,737.64 18,225.90 19,886.80

December 31, 1994 23,984.86 17,894.19 20,151.29

December 31, 1995 31,222.63 22,983.30 27,726.16

December 31, 1996 38,031.30 26,773.25 34,092.09

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

One Year Five Years Time Period From Inception
Ended Ended (May 18, 1987) to
December 31, 1995 December 31, 1995 December 31, 1995
___________________ _________________ _____________________
Average Annual
Total Return... 21.81% 14.38% 14.89%

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
performance. Principal value and return will fluctuate so an
investment, when redeemed, may be worth more or less than
original cost.
PERFORMANCE DATA

The Fund may from time to time include its "total return" or
"average annual total return" in advertisements or in information
furnished to present or prospective shareholders. The "total
return" of the Fund is expressed as a ratio of the increase (or
decrease) in value of a hypothetical investment in the Fund at
the end of a measuring period to the amount initially invested.
The "average annual total return" is 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.

The "total return" and the "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. For additional information regarding the
calculation of these performance data, see the Statement of
Additional Information.

In sales materials, reports and other communications to
shareholders, the Fund may compare its performance to certain
indices, including, but not limited to, the Standard & Poor's
500r Composite Stock Price Index, the National Association of
Securities Dealers Automated Quotation System, the Russell 2000
Index and the United States Department of Labor Consumer Price
Index. The Fund also may include evaluations of the Fund
published by nationally recognized financial publications and
ranking services, such as Forbes, Money, Financial World, Lipper
Analytical Services Mutual Fund Performance Analysis and
Morningstar Mutual Funds.

SHARE LIMITATION

The Fund is restricted in size to a maximum of 14 million
shares of Common Stock outstanding. A maximum of ten million
shares (net of redemptions) are available for purchase by
investors and four million are reserved for reinvestment of
capital gain and dividend distributions. At such time as the
maximum of ten million shares are issued and outstanding (without
taking into account shares outstanding as a result of capital
gain and dividend distributions), the Fund will close to all new
investments, including additions to existing accounts, other than
through reinvestment of capital gain and dividend distributions.
However, redemptions of shares will continue to be accepted.
Should the number of outstanding shares decline through
redemptions, the officers of the Fund may, in their discretion,
authorize the Fund to reopen for further investment. Due to the
limitation on its size, the Fund may be forced to sell securities
to meet redemption requests in adverse market conditions.

The officers of the Fund have the right to restrict
investments by any single shareholder by rejecting any new or
additional subscription for shares (including exercise of the
exchange privilege with other investment companies for which
Nicholas Company, Inc. serves as investment adviser but not
including reinvestment of capital gain and dividend
distributions) which would result in the aggregate value of such
shareholder's account equaling 5% or more of the total net assets
of the Fund. For the purpose of this restriction, related
accounts (as determined by the officers of the Fund in their
discretion) may be grouped together to determine an aggregate
account value.

INVESTMENT OBJECTIVES AND POLICIES

The Fund has adopted primary investment objectives, which
are fundamental policies. The Fund also has adopted secondary
investment objectives and certain other policies which are not
fundamental and may be changed by the Board of Directors without
shareholder approval. However, any such change will be made only
upon advance notice to shareholders. Such changes may result in
the Fund having secondary investment and other policy objectives
different from the objectives which a shareholder considered
appropriate at the time of investment in the Fund.

The primary investment objective of the Fund is long-term
growth. Current income is a small factor in considering the
selection of investments. There are market risks inherent in any
investment and there can be no assurance the objective of the
Fund will be realized, nor can there be any assurance against
possible loss in the value of the Fund's portfolio.

1 It is the policy of the Fund to invest in securities which
are believed by the Adviser to offer possibilities for increase
in value. For the most part, these will be common stocks of
companies which the officers of the Fund consider to have
favorable long-term prospects. Since the major portion of the
Fund's portfolio consists of common stocks, its net asset value
may be subject to greater fluctuation than a portfolio containing
a substantial amount of fixed income securities. Securities are
not purchased with a view to rapid turnover or to obtain short-
term trading profits, which are defined as profits on assets held
less than twelve months.

The Fund's investment philosophy is long-term growth, which
is based on the assumption that if a company achieves superior
growth in sales and earnings, eventually the company's stock
will achieve superior performance. While small and medium size
companies often have a limited market for their securities,
limited financial resources and are usually more affected by
changes in the economy in general, they also may have the
potential for more rapid, and greater, long-term growth because
of newer and more innovative products. Securities of unseasoned
companies where the risks are considerably greater than with
securities of more established companies also may be acquired
from time to time by the Fund when the Adviser believes such
investments offer possibilities of capital appreciation.
However, the Fund is limited to 5% in the percentage of total
Fund net assets which may be invested in the securities of
unseasoned companies (i.e., companies which have a record of less
than three years' continuous operation.)

Debt securities and preferred stock that are convertible
into or carry rights to acquire common stock, other debt
securities, such as those selling at substantial discounts, and
warrants listed on the New York or American Stock Exchange may be
acquired from time to time when the Adviser believes such
investments offer the possibility of long-term appreciation in
value. The Fund will not invest more than 5% of its total assets
(at the time of purchase) in non-investment grade fixed income
securities, some of which may have speculative characteristics or
may even be in default. An investment in debt securities which
are in default carries a high degree of risk and may have the
consequence that interest payments with respect to such
securities may be reduced, deferred, suspended or eliminated and
may have the further consequence that principal payments may
likewise be reduced, deferred, suspended or cancelled, causing
the loss of the entire amount of the investment. Non-investment
grade securities tend to reflect individual corporate
developments to a greater extent, tend to be more sensitive to
economic conditions and tend to have a weaker capacity to pay
interest and repay principal than higher rated securities.
Because the market for lower rated securities may be thinner and
less active than for higher rated securities, there may be market
price volatility for these securities and limited liquidity in
the resale markets. Factors adversely impacting the market value
of high yielding, high risk securities will adversely impact the
Fund's net asset value.

It is anticipated the major portion of the portfolio will at
all times be invested in common stocks. However, there is no
minimum or maximum percentage of the Fund's assets which is
required to be invested in any type of security. Cash and cash
equivalent securities will be retained by the Fund in an amount
sufficient to provide moderate liquid reserves so that the Fund
has sufficient cash to meet shareholder redemption requests and
other operating expenses. The Fund also may invest in variable
rate demand notes. The Fund reserves freedom to temporarily
invest its assets in investment grade fixed income securities (or
unrated but deemed by the Adviser to be comparable in quality to
instruments so rated on the date of purchase) as a defensive
measure, when conditions are deemed to warrant such action.
"Investment grade fixed income securities" refers to fixed income
securities ranked in the top four categories by any of the
nationally recognized statistical rating organizations, as
defined in Section 270.2a-7 of the Code of Federal Regulations,
or unrated but deemed by the Adviser to be comparable in quality
to instruments so rated on the date of purchase. The fixed
income securities described in the fourth category of these
rating services possess speculative characteristics.

The Fund has reserved the right to invest in repurchase
agreements as a temporary defensive measure. Repurchase
agreements may be entered into only with a member bank of the
Federal Reserve System or a primary dealer in U.S. Government
securities. While the obligation is a U.S. Government security,
the obligation of the seller to repurchase the security is not
guaranteed by the U.S. Government, thereby creating the risk that
the seller may fail to repurchase the security. Furthermore, in
the event of default by the seller under a repurchase agreement
construed to be a collateralized loan, the underlying securities
are not owned by the Fund but only constitute collateral for the
seller's obligation to pay the repurchase price. Therefore, the
Fund may suffer time delays and incur costs or losses in
connection with the disposition of the collateral.

The Fund also may invest in securities which are issued in
private placements pursuant to Section 4(2) of the Securities Act
of 1933, as amended (the "Act"). Such securities are not
registered for purchase and sale by the public under the Act.
The liquidity of such securities is a question of fact for the
Board of Directors to determine at the time of purchase and
periodically thereafter as circumstances warrant, based upon the
trading markets for the specific security, the availability of
reliable price information and other relevant information. The
Fund generally will not invest more than 25% of its total assets
in securities eligible for resale under Rule 144A. 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. However, the Fund's limit on its aggregate
holdings of all illiquid assets is 15% of its total assets. The
Fund may invest generally up to 10% of its total assets in
securities of other investment companies. Investments in the
securities of other investment companies will involve duplication
of advisory fees and certain other expenses.

INVESTMENT RESTRICTIONS

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

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

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

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

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

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

2. The Fund will not purchase or sell real estate or interests
in real estate, commodities or commodity futures. The Fund
may invest in the securities of real estate investment
trusts and other real estate-based securities listed on a
national securities exchange or authorized for quotation on
the National Association of Securities Dealers Automated
Quotations System, but not more than 10% in value of the
Fund's total net assets will be invested in real estate
investment trusts nor will more than 25% in value of the
Fund's total net assets be invested in the real estate
industry in the aggregate.

3. The Fund may not issue senior securities in violation of the
Investment Company Act of 1940, as amended. 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.

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

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

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

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

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

All percentage limitations apply on the date of investment by the
Fund.

In addition to the foregoing restrictions, the Fund has
adopted other restrictions to comply with the securities laws of
various states. These restrictions may be changed by the Board
of Directors of the Fund without shareholder approval.

INVESTMENT ADVISER

Under an investment advisory agreement dated January 26,
1987, Nicholas Company, Inc. (the "Adviser"), 700 North Water
Street, Suite 1010, Milwaukee, Wisconsin, furnishes the Fund
with continuous investment service and is responsible for overall
management of the Fund's business affairs, subject to supervision
of the Fund's Board of Directors. Nicholas Company, Inc. is the
investment adviser to five other mutual funds, which, like the
Fund, are sold without sales charge, and to approximately 35
institutions and individuals with substantial investment
portfolios. The other funds for which Nicholas Company, Inc.
acts as investment adviser are Nicholas Fund, Inc., Nicholas
Income Fund, Inc., Nicholas II, Inc., Nicholas Money Market Fund,
Inc. and Nicholas Equity Income Fund, Inc.

The annual fee is paid monthly to the Adviser and is based
on the average net asset value of the Fund as determined by the
valuations made at the close of each business day of the month.
The annual fee is three-fourths of one percent (0.75 of 1%) of
the average net asset value of the Fund. The annual fee is
higher than that paid by most other investment companies.

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

Albert 0. Nicholas is President and a Director of both the
Fund and the Adviser. 91% of the outstanding voting securities
of the Adviser are owned by Albert 0. Nicholas.

Mr. David O. Nicholas is a Senior Vice President and the
Portfolio Manager of the Fund and is primarily responsible for
the day-to-day management of the Fund's portfolio. He is a
Senior Vice President and a Director of the Adviser, and has been
employed by the Adviser since December 1985. He also is a
Chartered Financial Analyst. He has been Portfolio Manager for,
and primarily responsible for the day-to-day management of, the
portfolios of the Fund and Nicholas II, Inc. since March 1993,
and has been Co-Portfolio Manager of Nicholas Fund, Inc. since
November 1996. Mr. Albert O. Nicholas was Portfolio Manager of
the Fund from the date of the Fund's inception until March 1993.

PURCHASE OF CAPITAL STOCK

Applications for the purchase of shares are made to
Nicholas Limited Edition, Inc., c/o Firstar Trust Company, P.O.
Box 2944, Milwaukee, Wisconsin 53201-2944. The Fund has
available an Automatic Investment Plan for shareholders. Anyone
interested should contact the Fund for additional information.

The price per share will be the net asset value next
computed after the time the application is received in proper
order and accepted by the Fund. The determination of the net
asset value for a particular day is applicable to all
applications for the purchase of shares received at or before the
close of trading on the New York Stock Exchange ("Exchange") on
that day (usually 4:00 p.m. New York time). Accordingly,
purchase orders received on a day the Exchange is open for
trading prior to the close of trading on that day will be valued
as of the close of trading on that day. Applications for
purchase of shares and requests for redemption of shares received
after the close of trading on the Exchange will be based on the
net asset value as determined as of the close of trading on the
next day the Exchange is open.

The Fund does not consider the U. S. Postal Service or other
independent delivery services to be its agents. Therefore,
deposit in the mail or with such services, or receipt at Firstar
Trust Company's Post Office Box of purchase applications or
redemption requests, does not constitute receipt by Firstar Trust
Company or the Fund. Correspondence intended for overnight
courier should not be sent to the Post Office Box address.
OVERNIGHT COURIER DELIVERY SHOULD BE SENT TO FIRSTAR TRUST
COMPANY, THIRD FLOOR, 615 EAST MICHIGAN STREET, MILWAUKEE,
WISCONSIN 53202.

All applications to purchase capital stock are subject to
acceptance or rejection by authorized officers of the Fund and
are not binding until accepted. Applications will not be
accepted unless they are accompanied by payment. Payment should
be made by check or money order drawn on a U.S. bank, savings and
loan or credit union. The custodian will charge a $20 fee
against a shareholder's account, in addition to any loss
sustained by the Fund, for any payment check returned to the
custodian for insufficient funds. It is the policy of the Fund
not to accept applications under circumstances or in amounts
considered disadvantageous for shareholders. Any accounts
(including custodial accounts) opened without a proper social
security number or taxpayer identification number may be
liquidated and distributed to the owner(s) of record on the first
business day following the 60th day of investment, net of the
back-up withholding tax amount.

The Board of Directors has established $2,000 as the minimum
initial purchase and $100 as the minimum for any subsequent
purchase, except in the case of dividend reinvestment. The
Automatic Investment Plan has a minimum monthly investment of
$50. Due to the limited size of the Fund and the 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 required investment due to shareholder redemption (but
not solely due to a decrease in net asset value of the Fund). In
order to exercise this right, the Fund would give 30 days advance
written notice to the accounts below such minimums. Purchase of
shares will be made in full and fractional shares computed to
three decimal places.

To purchase additional shares of the Fund by federal wire
transfer, please send to:

FIRSTAR BANK MILWAUKEE, N.A.
ABA #0750-00022
TRUST FUNDS, ACCOUNT #112-952-137
777 EAST WISCONSIN AVENUE
MILWAUKEE, WISCONSIN 53202
FOR FURTHER CREDIT TO NICHOLAS LIMITED EDITION, INC.
[YOUR ACCOUNT NUMBER AND THE TITLE OF THE ACCOUNT]

If a wire purchase is to be an initial purchase, please call
Firstar Trust Company (414-276-0535 or 800-544-6547) with the
appropriate account information prior to sending the wire.

Shares of Common Stock of the Fund may be purchased or sold
through certain broker-dealers, financial institutions or other
service providers ("Processing Intermediaries"). When shares of
Common Stock of the Fund are purchased this way, the Processing
Intermediary, rather than its customer, 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. A Processing
Intermediary may be required to register as a broker or dealer
under certain state laws. An investor intending to invest in the
Fund through a Processing Intermediary should read the program
materials provided by the Processing Intermediary in conjunction
with this Prospectus. Processing Intermediaries may charge fees
for the services they provide to their customers. Investors who
do not wish to receive the services of a Processing Intermediary,
or pay the fees that may be charged for such services, may want
to consider investing directly with the Fund. Direct purchase or
sale of shares of Common Stock of the Fund may be made without a
sales or redemption charge.

Certificates representing Fund shares purchased will not be
issued unless the shareholder specifically requests certificates
by signed written request 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.
In no instance will certificates be issued for fractional shares.
When certificates are not requested, the Fund's transfer agent,
Firstar Trust Company, Milwaukee, Wisconsin, will credit the
shareholder's account with the number of shares purchased.
Written confirmations are issued for all purchases and
redemptions of Fund shares.

REDEMPTION OF CAPITAL STOCK

A shareholder may require the Fund at any time during normal
business hours to redeem his/her shares in whole or in part. If
in writing, redemption requests must be signed by each
shareholder, in the exact manner as the Fund account is
registered, and must state the amount of the redemption and
identify the shareholder account number. When shares are
represented by certificates, redemption is accomplished by
delivering to the Fund, c/o Firstar Trust Company, P.O. Box 2944,
Milwaukee, Wisconsin 53201-2944, the certificate(s) for the full
shares to be redeemed. The certificate(s) must be properly
endorsed or accompanied by instrument of transfer, in either case
with signatures guaranteed by an "eligible guarantor institution"
as defined in Section 240.17Ad-15 of the Code of Federal
Regulations. An "eligible guarantor institution" includes 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 certificates have not been issued, redemption can be
accomplished by delivering an original signed written request for
redemption addressed to Nicholas Limited Edition, Inc., c/o
Firstar Trust Company. Facsimile transmission of redemption
requests is not acceptable. If the account registration is
individual, joint tenants, sole proprietorship, custodial
(Uniform Gift to Minors Act), or general partners, the written
request must be signed exactly as the account is registered. If
the account is owned jointly, both owners must sign. Written
confirmations are issued for all redemptions of Fund shares.

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 be accompanied by the trust agreement
and signed by the trustee(s).

If there is doubt as to what documents or instructions are
necessary in order to redeem shares, please write or call Firstar
Trust Company, (414-276-0535 or 800-544-6547), prior to
submitting the written redemption request. A written redemption
request will not become effective until all documents have been
received in proper form by Firstar Trust Company.

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

The Fund does not consider the U.S. Postal Service or other
independent delivery services to be its agents. Therefore,
deposit in the mail or with such services or receipt at Firstar
Trust Company's Post Office Box of redemption requests does not
constitute receipt by Firstar Trust Company or the Fund. Do not
mail letters by overnight courier to the Post Office Box address.
CORRESPONDENCE MAILED BY OVERNIGHT COURIER SHOULD BE SENT TO
FIRSTAR TRUST COMPANY, THIRD FLOOR, 615 MICHIGAN STREET,
MILWAUKEE, WISCONSIN 53202.

Telephone redemption is automatically extended to all
accounts in the Fund unless this privilege is declined in
writing. This option does not apply to IRA accounts and master
retirement plans for which Firstar Trust Company acts as
custodian. Telephone redemptions can only be made by calling
Firstar Trust Company at 800-544-6547 or 414-276-0535. In an
effort to prevent unauthorized or fraudulent redemption requests
by telephone, the Fund and its transfer agent employ reasonable
procedures to confirm that such instructions are genuine. In
addition to the account registration, you will be required to
provide either the account number or social security number.
Telephone calls will be recorded. Telephone redemption requests
must be received prior to the closing of the New York Stock
Exchange (usually 4:00 p.m., New York time) to receive that day's
net asset value. There will be no exceptions due to market
activity. The maximum telephone redemption is $25,000 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 Trust Company. Neither the Fund nor
Firstar Trust Company will be liable for following instructions
communicated by telephone that it reasonably believes to be
genuine.

All redemptions will be processed immediately upon receipt.
The redemption price is the net asset value next computed after
the time of receipt by Firstar Trust Company of the
certificate(s) or written request in the proper form set forth
above, or pursuant to proper telephone instructions (see below).
The Fund will return redemption requests that contain
restrictions as to the time or date redemptions are to be
effected. The Fund ordinarily will make payment for redeemed
shares within seven days after receipt of a request in proper
form, except as provided by the rules of the Securities and
Exchange Commission. Redemption proceeds which are to be wired
normally will be wired on the next business day after a net asset
value is determined. Firstar Trust Company charges a wire
redemption fee of up to $12.00. The Fund reserves the right to
hold payment up to 15 days or until satisfied that investments
made by check have been collected. For Federal income tax
purposes, a redemption generally is treated as a sale of the
shares being redeemed, with the shareholder recognizing capital
gain or loss equal to the difference between the redemption price
and the shareholder's cost for the shares being redeemed.

The shareholder may instruct Firstar Trust Company 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 Trust Company charges a wire redemption
fee of up to $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:
(i) if you change the ownership on your account; (ii) upon
redemption of shares when certificates have been issued for your
account; (iii) when you want the redemption proceeds sent to a
different address than is registered on the account; (iv) for
both certificated and uncertificated shares, if the proceeds are
to be made payable to someone other than the account owner(s);
(v) any redemption transmitted by federal wire transfer to your
bank not previously set up with the Fund; or (vi) if a change of
address request has been received by the Fund or Firstar Trust
Company within 15 days of a redemption request. In addition,
signature guarantees are required for all redemptions of $100,000
or more from any shareholder account in the Nicholas Family of
Funds. A redemption will not be processed until the signature
guarantee if required, in proper form. A notary public is not an
acceptable guarantor.

EXCHANGE BETWEEN FUNDS

If a shareholder chooses to exercise the exchange privilege,
the shares will be exchanged at their next determined net asset
value. When an exchange into the Nicholas Money Market Fund,
Inc. would involve investment of the exchanged amount on a day
when the New York Stock Exchange is open for trading but the
Federal Reserve Banks are closed, shares of the Fund will be
redeemed on the day upon which the exchange request is received;
however, issuance of Nicholas Money Market Fund, Inc. shares may
be delayed an additional day in order to avoid the dilutive
effect on return (i.e. reduction in net investment income per
share) which would result from issuance of such shares on a day
when the exchanged amount cannot be invested. In such a case,
the exchanged amount would be uninvested for this one day period.
Shareholders interested in exercising the exchange privilege must
obtain the appropriate prospectus from Nicholas Company, Inc.
Such an exchange constitutes a sale for Federal income tax
purposes and a capital gain or loss generally will be recognized
upon the exchange, depending upon whether the net asset value at
the time is more or less than the shareholder's cost. An
exchange between the Funds involving master retirement (Keogh) or
IRA accounts generally will not constitute a taxable transaction
for Federal income tax purposes.

The exchange privilege may be terminated or modified only
upon 60 days advance notice to shareholders. Shareholders are
reminded, however, that the Fund is restricted in size to ten
million shares, and thus the exchange privilege into the Fund may
be terminated or modified at a time when that maximum is reached.

Shares of the Fund may be exchanged for shares of other
investment companies for which Nicholas Company, Inc. serves as
the investment adviser and which permit such exchanges. Nicholas
Company, Inc. is also the investment adviser to Nicholas Fund,
Inc., Nicholas Income Fund, Inc., Nicholas II, Inc., Nicholas
Money Market Fund, Inc. and Nicholas Equity Income Fund, Inc.
Nicholas Fund, Inc. has an investment objective of capital
appreciation in which income is a secondary consideration.
Nicholas Income Fund, Inc.'s investment objective is to seek high
current income consistent with the preservation and conservation
of capital value. Nicholas II, Inc. has as its investment
objective long-term growth in which income is a secondary
consideration. Nicholas Money Market Fund, Inc. has an
investment objective of achieving as high a level of current
income as is consistent with preserving capital and providing
liquidity. Nicholas Equity Income Fund, Inc. has an investment
objective of reasonable income, with moderate long-term growth as
a secondary consideration. Exchange of shares can be
accomplished in the following ways:

Exchange by Mail. An exchange of shares of the Fund for
shares of other available Nicholas mutual funds will be made
without cost to the investor through written request.
Shareholders interested in exercising the exchange by mail
privilege may obtain the appropriate prospectus from Nicholas
Company, Inc. Signatures required are the same as previously
explained under "Redemption of Capital Stock."

Exchange by Telephone. Shareholders may exchange by
telephone among all funds for which the Nicholas Company, Inc.
serves as investment adviser. Only exchanges of $l,000 or more
may be executed using the telephone exchange privilege. Firstar
Trust Company 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. Four telephone exchanges per account during
any twelve month period will be allowed.

Procedures for exchanging Fund shares by telephone may be
modified or terminated at any time by the Fund or Firstar Trust
Company. Neither the Fund nor Firstar Trust Company will be
responsible for the authenticity of exchange instructions
received by telephone.

Telephone exchanges can only be made by calling Firstar Trust
Company at 4l4-276-0535 or 800-544-6547. You will be required to
provide pertinent information regarding your account. Calls will
be recorded.

TRANSFER OF CAPITAL STOCK

Shares of the Fund may be transferred 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. Documents and instructions to
transfer capital stock can be obtained by writing or calling
Firstar Trust Company (414-276-0535 or 800-544-6547) or Nicholas
Company, Inc. (414-272-6133 or 800-227-5987) prior to submitting
any transfer requests.

DETERMINATION OF NET ASSET VALUE

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. Other
securities will be valued at the current bid price. Any
securities for which there are no readily available market
quotations will be valued at fair value, as determined in good
faith by the Board of Directors. Brokerage commissions will be
excluded in calculating values. All assets other than securities
will be valued at their current fair value as determined in good
faith by the Board of Directors.

DIVIDENDS AND FEDERAL TAX STATUS

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. Long-
term capital gains distributed by the Fund will retain the
character that it had at the Fund level. Income distributed from
the Fund's net investment income and net realized short-term
capital gains are taxable to shareholders as ordinary income.
Distributions will be made annually in December. The Fund will
provide information to shareholders concerning the character and
federal tax treatment of any distribution.

Since 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, 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%
withholding on reportable dividends, capital gain distributions
(if any) and redemption payments ("backup withholding").
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; and (ii) who have failed to
declare or underreported certain income on their Federal returns.
When establishing an account, an investor must certify under
penalties of perjury that the taxpayer identification number
supplied to the Fund is correct and that he is not subject to
backup withholding.

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

DIVIDEND REINVESTMENT PLAN

Unless a shareholder elects to accept cash in lieu of shares,
all dividend and capital gain distributions are automatically
reinvested in additional shares of the Fund through the Dividend
Reinvestment Plan. An election to accept cash may be made on the
application to purchase shares or by separate written
notification or by telephone. All reinvestments are at the net
asset value per share in effect on the dividend or distribution
record date and are credited to the shareholder's account.
Shareholders will be advised of the number of shares purchased
and the price following each reinvestment period.

Shareholders may withdraw from or thereafter elect to
participate in the Dividend Reinvestment Plan at any time by
giving written or telephonic notice to the Transfer Agent. An
election must be received by the Transfer Agent 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 Dividend 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 Dividend Reinvestment Plan
at any time on 30 days written notice to participants.

SYSTEMATIC WITHDRAWAL PLAN

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

INDIVIDUAL RETIREMENT ACCOUNT

Individuals may be able to establish their own tax sheltered
individual retirement plans ("IRA"). The Fund offers a prototype
IRA Plan for adoption by individuals who qualify for spousal,
deductible and non-deductible IRA accounts. As long as the
aggregate IRA contributions meet the Fund's minimum requirements
of $2,000, the Fund will accept any allocation of such
contributions between spousal, deductible and non-deductible
accounts. The acceptability of this calculation is the sole
responsibility of the shareholder. For this reason, it is
advisable for taxpayers to consult with their personal tax
adviser to determine the deductibility of their IRA
contributions.

A description of applicable service fees and as well as
applicable 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. As changes occur from time to time in existing
IRA regulations, it is important that you obtain up-to-date
information from the Fund before opening an IRA.

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

MASTER RETIREMENT PLAN

The Fund has available a master retirement plan (formerly
called a Keogh Plan) for self-employed individuals. Any person
seeking additional information or wishing to participate in the
Plan may contact the Fund. Consultation with a tax adviser
regarding the tax consequences of the Plan is recommended.

CAPITAL STRUCTURE

The Fund is authorized to issue fourteen million (14,000,000)
shares of Common Stock, $.01 par value per share. Of these, the
Board of Directors of the Fund has determined that a maximum of
ten million shares (net of redemptions) are available for
purchase by investors and four million shares are reserved for
reinvestment of capital gain and dividend distributions. See
"Share Limitation" for a description of the restrictions
applicable to purchase of shares of the Fund by investors.

Each full share has one vote and all shares participate
equally in dividends, other distributions by the Fund, and the
residual assets of the Fund in the event of liquidation. There
are no conversion or sinking fund provisions applicable to
shares, and holders have no preemptive rights and may not
cumulate their votes in the election of directors. Shares are
redeemable and transferable. Fractional shares entitle the
holder to the same rights as whole shares.

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 Investment Company Act
of 1940, as amended. The Fund has adopted the appropriate
provisions in its Articles of Incorporation 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 the 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
Investment Company Act of 1940, as amended.

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 December 31, an annual report or current prospectus
containing financial statements audited by the Fund's independent
public accountants will be sent to shareholders. Inquiries
concerning the Fund may be made by telephone at 414-272-6133 or
800-227-5987, or by writing to Nicholas Limited Edition Inc.,
700 North Water Street, Suite 1010, Milwaukee, Wisconsin 53202.

CUSTODIAN AND TRANSFER AGENT

Firstar Trust Company, 615 East Michigan Street, Milwaukee,
Wisconsin 53202, acts as Custodian and Transfer Agent for the
Fund.

INDEPENDENT ACCOUNTANTS AND LEGAL COUNSEL

Arthur Andersen LLP, 777 East Wisconsin Avenue, Milwaukee,
Wisconsin 53202, are the independent accountants for the Fund.
Michael Best & Friedrich, 100 East Wisconsin Avenue, Milwaukee,
Wisconsin 53202, has passed on the legality of the shares of
Common Stock of the Fund being offered.

PROSPECTUS

NICHOLAS LIMITED EDITION, INC.

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

CUSTODIAN AND TRANSFER AGENT
FIRSTAR TRUST COMPANY
Milwaukee 414-276-0535 or 800-544-6547

INDEPENDENT PUBLIC ACCOUNTANT
ARTHUR ANDERSEN LLP
Milwaukee

COUNSEL
MICHAEL BEST & FRIEDRICH
Milwaukee

NICHOLAS LIMITED EDITION, INC.

700 NORTH WATER STREET
MILWAUKEE, WISCONSIN 53202

April 30, 1997

NICHOLAS LIMITED EDITION, INC.

FORM N-1A

PART B: STATEMENT OF ADDITIONAL INFORMATION

NICHOLAS LIMITED EDITION, INC.

STATEMENT OF ADDITIONAL INFORMATION

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

This Statement of Additional Information, which is not a
prospectus, supplements and should be read in conjunction with
the current Prospectus of Nicholas Limited Edition, Inc. (the
"Fund"), dated April 30, 1997, and the Fund's Annual Report for
the fiscal year ended December 31, 1996, which is incorporated
herein by reference, as they may be revised from time to time.
To obtain a 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.

April 30, 1997

TABLE OF CONTENTS

Page
------
INTRODUCTION............................................. 1

SHARE LIMITATION......................................... 1

INVESTMENT OBJECTIVES AND POLICIES....................... 1

INVESTMENT RESTRICTIONS.................................. 3

INVESTMENT ADVISER....................................... 5

MANAGEMENT - DIRECTORS, EXECUTIVE OFFICERS
AND PORTFOLIO MANAGER OF THE FUND...................... 7

PRINCIPAL SHAREHOLDERS................................... 9

PURCHASE OF CAPITAL STOCK................................ 9

REDEMPTION OF CAPITAL STOCK.............................. 11

EXCHANGE BETWEEN FUNDS................................... 13

TRANSFER OF CAPITAL STOCK................................ 13

DETERMINATION OF NET ASSET VALUE......................... 14

INCOME, DIVIDENDS AND FEDERAL TAX STATUS................. 14

DIVIDEND REINVESTMENT PLAN............................... 15

INDIVIDUAL RETIREMENT ACCOUNT............................ 15

MASTER RETIREMENT PLAN................................... 16

BROKERAGE................................................ 16

PERFORMANCE DATA......................................... 17

CAPITAL STRUCTURE........................................ 18

STOCK CERTIFICATES....................................... 18

SHAREHOLDER REPORTS...................................... 18

ANNUAL MEETING........................................... 18

COMMUNICATIONS BETWEEN SHAREHOLDERS...................... 19

CUSTODIAN AND TRANSFER AGENT............................. 19

INDEPENDENT ACCOUNTANTS AND LEGAL COUNSEL................ 19

FINANCIAL INFORMATION.................................... 19

INTRODUCTION

The primary investment objective of the Fund is long-term
growth. Current income is a small factor in considering the
selection of investments. The Fund intends to invest primarily
in common stocks. The Fund may invest in common stocks of
companies which are not actively traded or the companies are
smaller, out of favor or have limited operating history upon
which to base an evaluation of future performance, and thus may
carry greater risk than investments in the common stocks of
larger, more established companies. The Fund may also invest in
debt securities which carry a high degree of risk. Consequently,
the Fund is not intended to be a complete investment program.

SHARE LIMITATION

The Fund will be restricted in size to a maximum of 14
million shares of Common Stock outstanding. A maximum of ten
million shares (net of redemptions) are available for purchase by
investors and four million shares are reserved for reinvestment
of capital gain and dividend distributions. At such time as the
maximum of ten million shares are issued and outstanding (without
taking into account shares outstanding as a result of capital
gain and dividend distributions), the Fund will close to all new
investments, including additions to existing accounts, other than
through reinvestment of capital gain and dividend distributions.
However, redemptions of shares will continue to be accepted.
Should the number of outstanding shares decline through
redemptions, the officers of the Fund may, in their discretion,
authorize the Fund to reopen for further investment. Due to the
limitation on its size, the Fund may be forced to sell securities
to meet redemption requests in adverse market conditions.

INVESTMENT OBJECTIVES AND POLICIES

.95 It is the policy of the Fund to invest in securities which
are believed by the Adviser to offer possibilities for increase
in value. For the most part, these will be common stocks of
companies which the officers of the Fund consider to have
favorable long-term prospects. Since the major portion of the
Fund's portfolio consists of common stocks, its net asset value
may be subject to greater fluctuation than a portfolio containing
a substantial amount of fixed income securities. Securities are
not purchased with a view to rapid turnover or to obtain short-
term profits, which are defined as profits on assets held less
than twelve months.

Securities of unseasoned companies where the risks are
considerably greater than with securities of more established
companies also may be acquired from time to time by the Fund
where the Adviser believes such investments offer possibilities
of capital appreciation. Some of these risks may be lack of
large daily trading volume, lack of financial resources adequate
to withstand a sustained downturn in the economy or the company's
own financial prospects, dependence upon single suppliers or
customers, dependence upon key personnel, lack of earnings
history upon which to predict future performance and a general
lack of other historical data with which to evaluate expected
response to recurring market contingencies. However, the Fund is
limited in the percentage of total fund assets which may be
invested in the securities of unseasoned companies (i.e.,
companies which have a record of less than three years'
continuous operation).

Debt securities and preferred stock that are convertible
into or carry rights to acquire common stock, other debt
securities (such as those selling at substantial discounts) and
warrants listed on the New York or American Stock Exchanges may
be acquired from time to time when the Adviser thinks such
investments offer the possibility of appreciation in value. The
Fund generally will not invest more than 5% of its total assets
(at the time of purchase) in noninvestment grade fixed-income
securities, some of which may have speculative characteristics or
may even be in default. An investment in debt securities which
are in default carries a high degree of risk and may have the
consequence that interest payments with respect to such
securities may be reduced, deferred, suspended or eliminated and
may have the further consequence that principal payments may
likewise be reduced, deferred, suspended or cancelled, causing
the loss of the entire amount of the investment. Non-investment
grade securities tend to reflect individual corporate
developments to a greater extent, tend to be more sensitive to
economic conditions and tend to have a weaker capacity to pay
interest and repay principal than higher rated securities.
Because the market for lower rated securities may be thinner and
less active than for higher rated securities, there may be market
price volatility for these securities and limited liquidity in
the resale markets. Factors adversely impacting the market value
of high yielding, high risk securities will adversely impact the
Fund's net asset value.

Securities are not purchased with the intent of rapid
turnover or to obtain short-term trading profits. Short-term
trading profits are defined as profits on assets held less than
twelve months. The term "portfolio turnover rate" refers to the
percentage determined by dividing the lesser of the cost of
purchases or the proceeds from sales of portfolio securities
during the year by the average of the value of the portfolio
securities owned by the Fund during the year. "Portfolio
turnover rate" excludes investments in U.S. Government
obligations and all other securities with less than one year to
maturity at the time of purchase. The portfolio turnover rate
for the Fund for the years ended December 31, 1994, 1995 and 1996
were 16.29%, 35.77% and 32.31%, respectively.

The Fund has reserved the right to invest in repurchase
agreements ("REPOs") as a temporary defensive measure.
Repurchase agreements may be entered into only with a member bank
of the Federal Reserve System or a primary dealer in U.S.
Government securities. Under such agreements, the bank or
primary dealer agrees, upon entering into the contract, to
repurchase the security from the Fund at a mutually agreed upon
time and price. The prices at which the trades are conducted do
not reflect accrued interest on the underlying obligation. While
the obligation is a U.S. Government security, the obligation of
the seller to repurchase the security is not guaranteed by the
U.S. Government, thereby creating the risk that the seller may
fail to repurchase the security.

Repurchase agreements may be construed to be collateralized
loans by the purchaser to the seller secured by the securities
transferred to the purchaser. The Fund will require the seller
to provide additional collateral if the market value of the
securities falls below the repurchase price at any time during
the term of the repurchase agreement. In the event of default by
the seller under a repurchase agreement construed to be a
collateralized loan, the underlying securities are not owned by
the Fund but only constitute collateral for the seller's
obligation to pay the repurchase price. Therefore, the Fund may
suffer time delays and incur costs or losses in connection with
the disposition of the collateral. The Fund also would retain
ownership of the securities in the event of a default under a
repurchase agreement that is construed not to be a collateralized
loan. In such event, the Fund also would have rights against the
seller for breach of contract with respect to any losses arising
from market fluctuations following the failure of the seller to
perform.

INVESTMENT RESTRICTIONS

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

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

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

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

2. The Fund will not purchase or sell real estate or
interests in real estate, commodities or commodity
futures. The Fund may invest in the securities of real
estate investment trusts and other real estate-based
securities listed on a national securities exchange or
authorized for quotation on the National Association of
Securities Dealers Automated Quotations System, 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.

3. The Fund may not issue senior securities in
violation of the Investment Company Act of 1940, as
amended. 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.

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

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

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

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

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

In addition to the foregoing restrictions, the Fund has
adopted the following restrictions which may be changed by the
Board of Directors of the Fund without shareholder approval.
However, so long as the securities of the Fund are registered for
sale in those states which require these restrictions, the
restrictions will not be changed. Any such change would be made
only upon advance notice to shareholders in the form of an
amended Statement of Additional Information filed with the
Securities and Exchange Commission.

1. The Fund will not acquire or retain any security
issued by a company if one or more directors or
shareholders or other affiliated persons of its
investment adviser beneficially own more than one-half
of one percent (.5 of 1%) of such company's stock or
other securities, and all of the foregoing persons
owning more than one-half of one percent (.5 of 1%)
together own more than 5% of such stock or security.

2. The Fund will not invest more than 15% of its total
assets in equity securities which are not readily
marketable and in securities of unseasoned companies,
that is, 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.

3. The Fund will not invest in interests in oil, gas
or other mineral exploration programs, but this shall
not prohibit the Fund from investing in securities of
companies engaged in oil, gas or mineral activities.

4. The Fund will not invest in puts, calls, straddles,
spreads or any combination thereof.

5. The Fund will not purchase any securities which
would cause more than 2% of its total assets at the time
of such purchase to be invested in warrants which are
not listed on the New York Stock Exchange or the
American Stock Exchange, or more than 5% of its total
assets to be invested in warrants whether or not so
listed, such warrants in each case to be valued at the
lesser of cost or market, but assigning no value to
warrants acquired by the Fund in units with or attached
to debt securities.

6. The Fund will not invest more than 15% of its total
assets in restricted securities (i.e. securities
acquired directly or indirectly from an issuer, or from
a person in a control relationship with such an issuer
in a transaction or chain of transactions not involving
any public offering) excluding restricted securities
eligible for resale pursuant to Rule 144A under the
Securities Act of 1933, as amended, that have been
determined to be liquid by the Board of Directors of the
Fund.

7. The Fund will not invest in securities of other
open-end management-type investment companies.

All percentage limitations apply on the date of investment by
the Fund. As a result, if a percentage restriction is adhered to
at the time of investment, a later increase in percentage
resulting from a change in market value of the investment or the
total assets of the Fund will not constitute a violation of that
restriction.

INVESTMENT ADVISER

Under an Investment Advisory Agreement dated as of
January 26, 1987, Nicholas Company, Inc. (the "Adviser"), 700
North Water Street, Suite 1010, Milwaukee, Wisconsin, furnishes
the Fund with continuous investment service and is responsible
for overall management of the Fund's business affairs, subject to
supervision of the Fund's Board of Directors. The Adviser is the
investment adviser to approximately 35 institutions and
individuals with substantial investment portfolios and to the
following five mutual funds which are sold without sales charge:

<TABLE>
<CAPTION>
NET ASSETS AS OF
FUND PRIMARY INVESTMENT OBJECTIVE DECEMBER 31, 1995
---- ---------------------------- -----------------
<S> <C> <C>
Nicholas Fund, Inc. Capital Appreciation $3,989,488,700
Nicholas II, Inc. Long-Term Growth $ 775,749,939
Nicholas Money Market Fund, Inc. Current Income $ 125,621,864
Nicholas Equity Income Fund, Inc. Reasonable Income $ 20,821,309
Nicholas Income Fund, Inc. High Current Income $ 199,257,523
</TABLE>

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 three-fourths of one percent (.75 of 1%) of the
average net asset value of the Fund. The annual fee is higher
than that paid by most other investment companies. At December
31, 1996, total net assets of the Fund were $232,754,156. The
fee paid to the Adviser for the Fund's fiscal year ended December
31, 1996 was $1,596,133.

Under the Investment Advisory Agreement, 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 bears all sales and
promotional expenses of the Fund, other than expenses incurred in
complying with laws regulating the issue or sale of securities,
and fees paid for attendance at Board meetings to directors who
are not interested persons of the Adviser or officers or
employees of the Fund. 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 of 1933, as amended, and the
Investment Company Act of 1940, as amended, 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 fees and expenses. Also included as "operating
expenses" which will be paid by the Fund are fees of directors
who are not interested persons of the Adviser or officers or
employees of the Fund, salaries of administrative and clerical
personnel, association membership dues, auditing and accounting
services, printing, fees and expenses of any custodian or
trustees 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 any other costs related to the
aforementioned items.

The Adviser has undertaken to reimburse the Fund to the
extent that the aggregate annual operating expenses, including
the investment advisory fee, but excluding interest, taxes,
brokerage commissions, litigation and extraordinary expenses
exceed the lowest, i.e., most restrictive, percentage of the
Fund's average net assets established by the laws of the states
in which the Fund's shares are registered for sale, as determined
by valuations made as of the close of each business day of the
year. During the fiscal years ended December 31, 1996, 1995 and
1994, the Fund paid the Adviser an aggregate of $1,596,133,
$1,167,360 and $1,171,405, respectively, in fees. During none of
the foregoing fiscal years did the expenses borne by the Fund
exceed the expense limitation then in effect and the Adviser was
not required to reimburse the Fund for any additional expenses.

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

Albert 0. Nicholas is President and a Director of both the
Fund and the Adviser. Thomas J. Saeger, Executive Vice
President, Secretary and a Director 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
0. Nicholas. Lynn S. Nicholas and David O. Nicholas are Senior
Vice Presidents of the Fund and Senior Vice Presidents of the
Adviser. David O. Nicholas also is a Director of the Adviser.
They are the daughter and son, respectively, of Albert O.
Nicholas. Jeffrey T. May is a Senior Vice President of the Fund
and a Senior Vice President and Treasurer of the Adviser.
Candace L. Lesak is a Vice President of the Fund and an employee
of the Adviser. Mary C. Gosewehr is Treasurer of the Fund and is
an employee of the Adviser. John J. O'Hare II is an Assistant
Vice President of the Fund and a Vice President of the Adviser.
David E. Leichtfuss, a Director of the Adviser, is a partner in
the law firm of Michael Best & Friedrich, 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. Mr. Nicholas, a brother of Albert 0.
Nicholas, is a private investor.

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

The overall operations of the Fund are conducted by the
officers of the Fund under the control and direction of its Board
of Directors. The following table sets forth the pertinent
information about the Fund's officers and directors as of April
28, 1997:

NAME, ADDRESS AND PRINCIPAL POSITIONS HELD
OCCUPATION AGE WITH FUND
DURING PAST FIVE YEARS
______________________________ ___ ______________

*Albert O. Nicholas 66 President
President and a Director of and Director
Nicholas Company, Inc., 700 N.
Water Street, Milwaukee, WI
53202, Adviser to the Fund,
since 1967. Previously, he was
an investment analyst and
portfolio manager for the M&I
Marshall & Ilsley Bank,
Milwaukee, WI (1959-1967). He
is a Chartered Financial
Analyst. He has been Portfolio
Manager (or Co-Portfolio
Manager, in the case of Nicholas
Fund, Inc. since November 1996)
for, and primarily responsible
for the day-to-day management
of, the portfolios of Nicholas
Fund, Inc., Nicholas Income
Fund, Inc. and Nicholas Equity
Income Fund, Inc. since the
Adviser has served as investment
adviser for such funds. He also
was Portfolio Manager for the
Fund and Nicholas II, Inc. from
the date of each such fund's
inception until March 1993.
Melvin L. Schultz 63 Director
3636 N. 124th Street, Milwaukee,
WI 53222, Director and
Management Consultant,
Professional management of
Milwaukee, Inc. He is a
Certified Professional Business
Consultant and renders financial
advice to members of the medical
and dental professions. He has
been engaged in this profession
since 1962.
*Thomas J. Saeger 52 Executive Vice
Executive Vice President and President,
Assistant Secretary, Nicholas Secretary and
Company, Inc., 700 N. Water Director
Street, Milwaukee, WI 53202, the
Adviser to the Fund, since 1969.
He is a Certified Public
Accountant.
David L. Johnson 55 Executive
Executive Vice President, Vice President
Nicholas Company, Inc., 700 N.
Water Street Milwaukee, WI
53202, the Adviser to the Fund,
since 1980. He is a Chartered
Financial Analyst.
Lynn S. Nicholas 40 Senior Vice
Senior Vice President, Nicholas President
Company, Inc., 700 N. Water
Street, Milwaukee, WI 53202, the
Adviser to the Fund, since
September 1983. She is a
Chartered Financial Analyst.
David O. Nicholas 35 Senior Vice
President
Senior Vice President and a
Director of Nicholas Company,
Inc., 700 N. Water Street,
Milwaukee, WI 53202, the Adviser
to the Fund, and employed by the
Adviser since December 1985. He
is a Chartered Financial
Analyst. He has been Portfolio
Manager for, and primarily
responsible for the day-to-day
management of, the portfolios of
the Fund and Nicholas II, Inc.
since March 1993. He also has
been Co-Portfolio Manager of
Nicholas Fund, Inc. since
November 1996.

Jeffrey T. May 40 Senior Vice
Vice President and Treasurer, President
Nicholas Company, Inc., 700
North Water Street, Milwaukee,
WI 53202, the Adviser to the
Fund, and employed by the
Adviser since 1987. He is a
Certified Public Accountant.
Candace L. Lesak 3938 Vice
Employee, Nicholas Company, President
Inc., 700 North Water Street,
Milwaukee, WI 53202, the Adviser
to the Fund, since February
1983. She is a Certified
Financial Planner.
Mary C. Gosewehr 3635 Treasurer
Employee, Nicholas Company,
Inc., 700 N. Water Street,
Milwaukee, WI 53202, the Adviser
to the Fund, since April 1985.
John J. O'Hare II 3837 Assistant
Vice President, Nicholas Vice
Company, Inc., 700 North Water President
Street, Milwaukee, Wi 53202, the
Adviser to the Fund, and
employed by the Adviser since
1992. In 1991, he was a Vice
President and Senior Investment
Analyst with Barrington Research
Associates, Inc., and from 1987
to 1991, he was a Vice President
and Senior Investment Analyst
with the Kemper Securities
Group. He is a Chartered
Financial Analyst.
- ---------------------

* Messrs. Nicholas and Saeger are "interested persons" of the
Adviser, as that term is defined in the Investment Company
Act of 1940, as amended.

Reference is made to the section "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.

Albert O. Nicholas is also President, and a Director of
Nicholas Income Fund, Inc., Nicholas Money Market Fund, Inc.,
Nicholas Fund, Inc., Nicholas II, Inc. and Nicholas Equity Income
Fund, Inc. Melvin L. Schultz is a Director of Nicholas Fund,
Inc., Nicholas II, Inc., Nicholas Equity Income Fund, Inc.,
Nicholas Income Fund, Inc. and Nicholas Money Market Fund, Inc.
Thomas J. Saeger is Senior Vice President and Secretary of
Nicholas Fund, Inc., and Executive Vice President and Secretary
of Nicholas Income Fund, Inc., Nicholas II, Inc., Nicholas Money
Market Fund, Inc., and Nicholas Equity Income Fund, Inc.
David L. Johnson is Senior Vice President of Nicholas Fund, Inc.,
and Executive Vice President of Nicholas Income Fund, Inc.,
Nicholas II, Inc., Nicholas Money Market Fund, Inc. and Nicholas
Equity Income Fund, Inc. Lynn S. Nicholas is Vice President of
Nicholas Money Market Fund, Inc. and Senior Vice President of
Nicholas Fund, Inc., Nicholas II, Inc. and Nicholas Equity Income
Fund, Inc. David O. Nicholas is Senior Vice President of
Nicholas Fund, Inc., Nicholas II, Inc., Nicholas Equity Income
Fund, Inc., Nicholas Income Fund, Inc. and Nicholas Money Market
Fund, Inc. Mr. May also is Senior Vice President and Treasurer
of Nicholas Income Fund, Inc., Nicholas II, Inc., Nicholas Fund,
Inc., Nicholas Equity Income Fund, Inc., and Nicholas Money
Market Fund, Inc. Ms. Lesak also is Vice President of Nicholas
Income Fund, Inc., Nicholas Fund, Inc., Nicholas II, Inc.,
Nicholas Money Market Fund, Inc. and Nicholas Equity Income Fund,
Inc. Mr. O'Hare also is Vice President of Nicholas II, Inc.

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

The table below sets forth the aggregate compensation
received from the Fund by all directors of the Fund during the
year ended December 31, 1996. 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.

TOTAL
PENSION OR COMPENSATION
RETIREMENT ESTIMATED FROM FUND
AGGREGATE BENEFITS ANNUAL AND FUND
COMPENSATION ACCRUED AS BENEFITS FUND
NAME AND POSITION FROM THE PART OF THE UPON COMPLEX
FUND(1) FUND RETIREMENT PAID TO
EXPENSES DIRECTORS(1)
_________________ ____________ ___________ __________ ____________
Albert O. Nicholas,
Director(2) $0 $0 $0 $0
Melvin L. Schultz,
Director(2) $1,200 $0 $0 $17,400
Thomas J. Saeger $0 $0 $0 $0
Director
- ------------

(1) During the fiscal year ended December 31, 1996, the
Fund and other funds in its Fund Complex (i.e., those
funds which also have Nicholas Company, Inc. as its
investment adviser, namely Nicholas Fund, Inc.,
Nicholas II, Inc., Nicholas Income Fund, Inc,
Nicholas Money Market Fund, Inc. and Nicholas
Equity Income 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 year
ended December 31, 1996, the Fund compensated
the disinterested directors at a rate of $300 per
director per meeting attended. The disinterested
directors did not receive any other form or amount
of compensation from the Fund Complex during the
fiscal year ended December 31, 1996. All other
directors and officers of the Fund were compensated
by the Adviser in accordance with its investment
advisory agreement.

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

PRINCIPAL SHAREHOLDERS

No persons are known to the Fund to own beneficially or of
record 5% or more of the full shares of the Fund as of March 31,
1997. All directors and executive officers of the Fund as a
group (ten in number) own approximately 5.45% of the full shares
of the Fund as of March 31, 1997.

PURCHASE OF CAPITAL STOCK

Applications for the purchase of shares are made to
Nicholas Limited Edition, Inc., c/o Firstar Trust Company, P.O.
Box 2944, Milwaukee, Wisconsin 53201-2944. Firstar Trust Company
acts as Transfer Agent and Custodian for the Fund. The Fund has
available an Automatic Investment Plan for shareholders. Anyone
interested should contact the Fund for additional information.

The price per share will be the net asset value next
computed after the time the application is received in proper
order and accepted by the Fund. The determination of the net
asset value for a particular day is applicable to all
applications for the purchase of shares received at or before the
close of trading on the New York Stock Exchange (the "Exchange")
on that day (usually 4:00 p.m. New York time). Accordingly,
purchase orders received on a day the Exchange is open for
trading, prior to the close of trading on that day, will be
valued as of the close of trading on that day. Applications for
purchase of shares and requests for redemption of shares received
after the close of trading on the Exchange will be based on the
net asset value as determined as of the close of trading on the
next day the Exchange is open.

The Fund does not consider the U S. Postal Service or other
independent delivery services to be its agents. Therefore,
deposit in mail or with such services, or receipt at Firstar
Trust Company's Post Office Box of purchase applications or
redemption requests does not constitute receipt by Firstar Trust
Company or the Fund. Correspondence intended for overnight
courier should not be sent to the Post Office Box address.
OVERNIGHT COURIER DELIVERY SHOULD BE SENT TO FIRSTAR TRUST
COMPANY, THIRD FLOOR, 615 EAST MICHIGAN STREET, MILWAUKEE,
WISCONSIN 53202.

All applications to purchase capital stock are subject to
acceptance or rejection by authorized officers of the Fund and
are not binding until accepted. Applications will not be
accepted unless they are accompanied by payment in U.S. funds.
Payment should be made by check or money order drawn on a U.S.
Bank, Savings & Loan or Credit Union. The custodian will charge
a $20 fee against a shareholder's account for any payment check
returned to the custodian for insufficient funds. It is the
policy of the Fund not to accept applications under circumstances
or in amounts considered disadvantageous for shareholders. Any
accounts (including custodial accounts) opened without a proper
social security number or tax identification number may be
liquidated and distributed to the owner(s) of record on the first
business day following the 60th day of investment, net of the
back-up withholding tax amount.

To purchase additional shares of the Fund by Federal wire
transfer, please send to:

If a wire purchase is to be an initial purchase, please call
Firstar Trust Company (414-276-0535 or 800-544-6547) with the
appropriate account information prior to sending the wire.

REDEMPTION OF CAPITAL STOCK

A shareholder may require the Fund at any time during normal
business hours to redeem his/her shares in whole or in part. If
in writing, redemption requests must be signed by each
shareholder, in the exact manner as the Fund account is
registered, and must state the amount of the redemption and
identify the shareholder account number. When shares are
represented by certificates, redemption is accomplished by
delivering to the Fund, c/o Firstar Trust Company, P.O. Box 2944,
Milwaukee, Wisconsin 53201-2944, the certificate(s) for the full
shares to be redeemed. The certificate(s) must be properly
endorsed or accompanied by instrument of transfer, in either case
with signatures guaranteed by an "eligible guarantor institution"
as defined in Section 240.17Ad-15 of the Code of Federal
Regulations. An "eligible guarantor institution" includes 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.

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 trust agreement on file or be
accompanied by the trust agreement and signed by the trustee(s).

If there is doubt as to what documents or instructions are
necessary in order to redeem shares, please write or call Firstar
Trust Company, (414-276-0535 or 800-544-6547), prior to
submitting the written redemption request. No written redemption
request will become effective until all documents have been
received in proper form by Firstar Trust Company.

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

Telephone redemption is automatically extended to all
accounts in the Fund unless this privilege is declined in
writing. This option does not apply to IRA accounts and master
retirement plans for which Firstar Trust Company acts as
custodian. Telephone redemptions can only be made by calling
Firstar Trust Company at 800-544-6547 or 414-276-0535. In an
effort to prevent unauthorized or fraudulent redemption requests
by telephone, the fund and its transfer agent employ reasonable
procedures to confirm that such instructions are genuine. In
addition to the account registration, you will be required to
provide either the account number or social security number.
Telephone calls will be recorded. Telephone redemption requests
must be received prior to the closing of the New York Stock
Exchange (usually 4:00 p.m., Eastern time) to receive that day's
net asset value. There will be no exceptions due to market
activity. The maximum telephone redemption is $25,000 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 shareholder may instruct Firstar Trust Company 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 Trust Company
charges a wire redemption fee of up to $12.00. Please contact
the Fund for the appropriate form if you are interested in
setting your account up with wiring instructions.

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

The By-Laws of the Fund authorize the Board of Directors to
impose a redemption charge in such amounts not exceeding 2% of
the amount redeemed, at such times and under such conditions as
it may deem appropriate. The Board of Directors has not imposed
a redemption charge. Advance notice will be given to
shareholders before any change is made in the redemption charge.

The right of redemption may be suspended for any period
during which the New York Stock Exchange is closed other than the
customary weekend and holiday closings, and may be suspended for
any period during which trading on the Exchange is restricted as
determined by the Securities and Exchange Commission, or the
Commission has by order permitted such suspension, or the
Commission has determined that an emergency exists as a result of
which it is not reasonably practicable for the Fund to dispose of
its securities or to determine fairly the value of its net
assets. For federal income tax purposes, a redemption generally
is treated as a sale of the shares being redeemed, with the
shareholder recognizing capital gain or loss equal to the
difference between the redemption price and the shareholder's
cost for the shares being redeemed.

SIGNATURE GUARANTEES

A signature guarantee of each owner is required to redeem
shares in the following situations, for all size transactions:
(i) if you change the ownership on your account; (ii) upon
redemption of shares when certificates have been issued for your
account; (iii) when you want the redemption proceeds sent to a
different address than is registered on the account; (iv) for
both certificated and uncertificated shares, if the proceeds are
to be made payable to someone other than the account owner(s);
(v) any redemption transmitted by federal wire transfer to your
bank not previously set up with the Fund; or (vi) if a change of
address request has been received by the Fund or Firstar Trust
Company within 15 days of a redemption request. In addition,
signature guarantees are required for all redemptions of $100,000
or more from any shareholder account in the Nicholas Family of
Funds. A redemption will not be processed until the signature
guarantee, if required, is received in proper form. A notary
public is not an acceptable guarantor.

EXCHANGE BETWEEN FUNDS

Shares of the Fund which have been outstanding at least 15
days may be exchanged for shares of other investment companies
for which Nicholas Company, Inc. serves as the investment adviser
and which permit such exchanges. Nicholas Company, Inc. is also
the investment adviser to Nicholas Fund, Inc., Nicholas Income
Fund, Inc., Nicholas II, Inc., Nicholas Money Market Fund, Inc.
and Nicholas Equity Income Fund, Inc. The investment objective
of Nicholas Fund, Inc. is capital appreciation in which income is
a secondary consideration. The investment objective of Nicholas
Income Fund, Inc. is high current income consistent with the
preservation and conservation of capital values. Nicholas II,
Inc. has the investment objective of long-term growth through
capital appreciation. Nicholas Money Market Fund, Inc. has an
investment objective of achieving as high a level of current
income as is consistent with preserving capital and providing
liquidity. Nicholas Equity Income Fund, Inc. has an investment
objective of reasonable income, with moderate long-term growth as
a secondary consideration.

If a shareholder chooses to exercise the exchange privilege,
the shares will be exchanged at their net asset values so that
the net asset value of the shares being redeemed will be
determined on the redemption day and the net asset value of
Nicholas Income Fund, Inc., Nicholas Fund, Inc., Nicholas II,
Inc. or Nicholas Equity Income Fund, Inc., shares to be purchased
will be determined the following business day. When an exchange
into the Nicholas Money Market Fund, Inc. would involve
investment of the exchanged amount on a day when the New York
Stock Exchange is open for trading but the Federal Reserve Banks
are closed, shares of the Fund will be redeemed on the day upon
which the exchange request is received; however, issuance of
Nicholas Money Market Fund, Inc. shares may be delayed an
additional day in order to avoid the dilutive effect on return
(i.e. reduction in net investment income per share) which would
result from issuance of such shares on a day when the exchanged
amount cannot be invested. Exchange of shares can be
accomplished in the following ways:

Exchange by Mail. An exchange of shares of the Fund for
------------------
shares of other available Nicholas mutual funds will be made
without cost to the investor through written request.
Shareholders interested in exercising the exchange by mail
privilege may obtain the appropriate prospectus from
Nicholas Company, Inc.

Signatures required are the same as previously explained
under "Redemption of Capital Stock."

Exchange by Telephone. Shareholders may exchange by
-----------------------
telephone among all funds for which the Nicholas Company,
Inc. serves as investment adviser. Only exchanges of
$l,000 or more may be executed using the telephone
exchange privilege. Firstar Trust Company 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. Four telephone exchanges per account during
any twelve month period will be allowed.

Telephone exchanges can only be made by calling Firstar
Trust Company at 4l4-276-0535 or 800-544-6547. You will be
required to provide pertinent information regarding your account.
Calls will be recorded.

This exchange privilege is available only in states where
shares of the Fund being acquired may legally be sold, and the
privilege may be terminated or modified at any time upon advance
notice to shareholders.

TRANSFER OF CAPITAL STOCK

Shares of the Fund may be transferred 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. Documents and instructions to
transfer capital stock can be obtained by writing or calling
Firstar Trust Company (414-276-0535 or 800-544-6547) or Nicholas
Company, Inc. (414-272-6133 or 800-277-5987) prior to submitting
any transfer requests.

DETERMINATION OF NET ASSET VALUE

The net asset value of a share is determined by dividing the
total value of the net assets of the Fund 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 total
assets. The net asset value is determined as of the close of
trading on the New York Stock Exchange on each day the Exchange
is open for unrestricted trading which, in general, means Monday
through Friday of each week except New Year's Day, Washington's
Birthday, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas.

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. Other
securities will be valued at the current bid price. Any
securities for which there are no readily available market
quotations will be valued at fair value, as determined in good
faith by the Board of Directors. Brokerage commissions will be
excluded in calculating values. All assets other than securities
will be valued at their then current fair value as determined in
good faith by the Board of Directors.

INCOME, DIVIDENDS AND FEDERAL TAX STATUS

FEDERAL TAX STATUS OF THE FUND

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 insure
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 carry-overs). 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 investment company income, with
certain adjustments, for such calendar year, plus 98% of the
Fund's capital gain net income for the one-year period ending on
October 31 of such calendar year. In addition, an amount equal
to any undistributed investment company taxable income or capital
gain net income from the previous calendar year must also be
distributed to avoid the excise tax. The excise tax is imposed
on the amount by which the Fund does not meet the foregoing
distribution requirements. The Fund intends to make
distributions necessary to avoid imposition of the excise tax.

DIVIDENDS AND DISTRIBUTIONS

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. Long-
term capital gains distributed by the Fund will retain the
character that it had at the Fund level. Income distributed from
the Fund's net investment income and net realized short-term
capital gains are taxable to shareholders as ordinary income.
Distributions will be made annually prior to the end of the
Fund's fiscal year (December 31). The Fund will provide
information to shareholders concerning the character and the
treatment of any distribution.

BACKUP WITHHOLDING OF DIVIDENDS AND REDEMPTION PAYMENTS

Under the Interest and Dividend Tax Compliance Act of 1983,
some shareholders may be subject to a 31% withholding on
reportable dividends, capital gain distributions (if any) and
redemption payments ("backup withholding"). 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; (ii) who have failed to declare or underreported certain
income on their federal returns. When establishing an account,
an investor must certify under penalties of perjury that the
taxpayer identification number supplied to the Fund is correct
and that he is not subject to backup withholding.

THE FOREGOING TAX DISCUSSION RELATES SOLELY TO U.S. FEDERAL
TAXES AND IS NOT INTENDED TO BE A COMPLETE DISCUSSION OF ALL
FEDERAL TAX CONSEQUENCES. SHAREHOLDERS SHOULD CONSULT WITH A TAX
ADVISER CONCERNING THE APPLICATION OF FEDERAL, STATE AND LOCAL
TAXES TO AN INVESTMENT IN THE FUND.

DIVIDEND REINVESTMENT PLAN

Unless a shareholder elects to accept cash in lieu of
shares, all dividends and capital gains distributions are
automatically reinvested in shares through the Dividend
Reinvestment Plan. An election to accept cash may be made in an
application to purchase shares or by separate written
notification or by telephone. All reinvestments are at the net
asset value per share in effect on the dividend or distribution
record date and are credited to the shareholder's account. 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. Shareholders will
be advised of the number of shares purchased and the price
following each reinvestment. 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.

Shareholders may withdraw from or thereafter elect to
participate in the Dividend Reinvestment Plan at any time by
giving written or telephonic notice to the Transfer Agent. An
election must be received by Firstar Trust Company 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 Dividend 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 Dividend Reinvestment Plan
at any time on 30 days written notice to participants.

INDIVIDUAL RETIREMENT ACCOUNT

Individuals may be able to establish their own tax-sheltered
individual retirement plans ("IRA"). The Fund offers a prototype
IRA Plan for adoption by individuals who qualify for spousal,
deductible and non-deductible IRA accounts. As long as the
aggregate IRA contributions meet the Fund's minimum requirements
of $2,000, the Fund will accept any allocation of such
contributions between spousal, deductible and non-deductible
accounts. The acceptability of this calculation is the sole
responsibility of the shareholder. For this reason, it is
advisable for taxpayers to consult with their personal tax
adviser to determine the deductibility of their IRA
contributions.

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 Internal
Revenue Service requires to be furnished to individuals who are
considering adopting an IRA. As changes occur from time to time
in existing IRA regulations, it is important that you obtain
up-to-date information from the Fund before opening an IRA.

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

MASTER RETIREMENT PLAN

The Fund has available a master retirement plan (formally
called a Keogh Plan) for self-employed individuals. Any person
seeking additional information or wishing to participate in the
Plan may contact the Fund. Consultation with a tax adviser
regarding the tax consequences of the Plan is recommended.

BROKERAGE

The Adviser, who decides to buy and sell securities, selects
a broker or dealer for the execution of 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 issuers of securities and events and
current conditions in specific industries, and the rendering of
advice regarding general economic conditions affecting the stock
market and the U.S. economy.

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.

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
supplemental research and statistical and price quotation
services. The Adviser understands that since the brokers and
dealers rendering such services are compensated therefor by
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.

In instances where it is determined by the Adviser 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. However, commissions
paid are generally lower than those paid prior to the elimination
of fixed minimum rates in 1975 and are no higher than rates which
could be obtained from other brokers or dealers who would also
furnish comparable supplemental research and statistical
services. 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 are also utilized by the
Adviser in managing the Fund's portfolio.

The Adviser, which is the investment adviser to the Nicholas
Fund, Inc., Nicholas Income Fund, Inc., Nicholas II, Inc.,
Nicholas Money Market Fund, Inc. and Nicholas Equity Income Fund,
Inc., as well as to the Fund, may occasionally make investment
decisions which would involve the purchase or sale of securities
for the portfolios of more than one of the funds at the same
time. As a result, the demand for securities being purchased or
the supply of securities being sold may increase, and this could
have an adverse effect on the price of those securities. It is
the Adviser's policy not to favor one fund over another in making
recommendations or in placing orders. If two or more of the
Adviser's clients are purchasing a given security on the same day
from the same broker or dealer, the Adviser may average the price
of the transactions and allocate the average among the clients
participating in the transactions. It is the Adviser's policy to
allocate the commission charged by such broker or dealer to each
fund in direct proportion to the number of shares bought or sold
by the particular fund involved.

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

Over-the-counter market purchases and sales are generally
transacted directly with principal market makers who retain the
difference between their cost in a security and its selling
price. In some circumstances where, in the opinion of the
Adviser, better prices and executions are available elsewhere,
the transactions are placed through brokers who are paid
commissions directly. The Fund paid aggregate brokerage
commissions of approximately $74,282, $99,222 and $165,936 in
fiscal 1994, 1995 and 1996, respectively. The increase in
brokerage commissions paid in fiscal 1996 compared to fiscal 1995
was primarily a result of the growth in Fund assets and the
necessity to invest these assets.

PERFORMANCE DATA

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

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

where:
P = a hypothetical initial payment of $1000
T = average annual total return
n = number of years

ERV = at the end of the 1, 5 or 10 year periods, the ending
redeemable value of a hypothetical $1000 payment made at the
beginning of the 1, 5 and 10 year periods.

FOR THE PERIODS TIME PERIOD FROM INCEPTION
ENDED DECEMBER 31, 1996 (MAY 18, 1987)
-----------------------
ONE YEAR FIVE YEARS TO DECEMBER 31, 1996
--------- ---------- -------------------------
Total Return
Average Annual 21.81% 95.75% 280.31%

Total Return 21.81% 14.38% 14.89%

For purposes of these calculations, the following
assumptions are made: (1) all dividends and distributions by the
Fund are reinvested at the net asset value 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 $1000 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 $1000 investment. This computation does not reflect any
sales load or other nonrecurring charges, since the Fund is not
subject to such charges.

The "total return" and "average annual total return"
calculations are historical measures of performance and are not
necessarily indicative of future performance. Such measurements
will vary from time to time depending upon market conditions, the
composition of the Fund's portfolio, operating expenses, and the
distribution policy as determined by the Board of Directors.
These factors should be considered when evaluating the Fund's
performance.
In sales materials, reports and other communications to
shareholders, the Fund may compare its performance to certain
indices, including, but not limited to, the S&P 500 Index, the
National Association of Securities Dealers Automated Quotation
System, the Russell 2000 Index and the United States Department
of Labor Consumer Price Index. The Fund also may include
evaluations of the Fund published by nationally recognized
financial publications and ranking services, such as Forbes,
Money, Financial World, Lipper Analytical Services Mutual Fund
Performance Analysis and Morningstar Mutual Funds.

CAPITAL STRUCTURE

The Fund is authorized to issue fourteen million
(14,000,000) shares of Common Stock, $0.01 par value per share.
Of these, the Board of Directors of the Fund has determined that
an aggregate maximum of ten million shares (net of redemptions)
are available for purchase by investors and four million shares
are reserved for reinvestment of capital gain and dividend
distributions. Each share has one vote and all shares
participate equally in dividends and other distributions by the
Fund, and in the residual assets of the Fund in the event of
liquidation. There are no conversion or sinking fund provisions
applicable to shares, and holders have no preemptive rights and
may not cumulate their votes in the election of directors.
Shares are redeemable and are transferable. Fractional shares
entitle the holder to the same rights as whole shares.

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 Trust Company,
and direct that his account be credited with the shares. A
shareholder may in writing direct Firstar Trust Company at any
time to issue a certificate for his shares without charge.

SHAREHOLDER REPORTS

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 Investment Company Act
of 1940, as amended. The Fund has adopted the appropriate
provisions in its Articles of Incorporation and will not hold
annual meetings of shareholders unless otherwise required to do
so.

COMMUNICATIONS BETWEEN SHAREHOLDERS

In the event the Fund is not required to hold annual
meetings of shareholders to elect Directors by virtue of the
amendment to Maryland law described under "Annual Meeting," 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 so
to do 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 Investment Company Act of
1940, as amended.

CUSTODIAN AND TRANSFER AGENT

Firstar Trust Company, 615 East Michigan Street, Milwaukee,
Wisconsin 53202, acts as Custodian of the Fund. As such, Firstar
Trust Company 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 Trust Company does not exercise any supervisory function
over the management of the Fund, the purchase and sale of
securities or the payment of distributions to shareholders.
Firstar Trust Company also acts as the Fund's Transfer Agent and
Dividend Disbursing Agent.

INDEPENDENT ACCOUNTANTS AND LEGAL COUNSEL

Arthur Andersen LLP, 777 East Wisconsin Avenue, Milwaukee,
Wisconsin 53202, are the independent accountants for the Fund.
The selection of the Fund's independent public accountants is not
subject to annual ratification by the Fund's shareholders unless
otherwise required by the Investment Company Act of 1940, as
amended. Michael Best & Friedrich, 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, the financial statements and
notes thereto and the Report of Independent Public Accountants
contained in the Annual Report of the Fund for the fiscal year
ended December 31, 1996, are incorporated herein by reference.

NICHOLAS LIMITED EDITION, INC.

FORM N-1A

PART C: OTHER INFORMATION

PART C. OTHER INFORMATION

ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
---------------------------------

(a) Financial Statements: Per share income and capital
--------------------
changes information with respect to the Registrant's common stock
appears in Part A; the Registrant's statement of assets and
liabilities, including the schedule of investments, as of
December 31, 1996, and the related statement of operations for
the year then ended, the statement of changes in net assets for
each of the two years in the period then ended, and the per share
income and capital changes for each of the years in the period
then ended are incorporated in Parts A and B by reference to the
Annual Report to Shareholders of the Registrant for its fiscal
year ended December 31, 1996.

(b) Exhibits: All exhibits required to be filed pursuant
--------
to Item 24(b) are listed in the Exhibit Index which appears
elsewhere herein, and (i) appear in their entirety herein, or
(ii) are incorporated by reference to previous filings with the
Commission, as indicated in such Exhibit Index.

ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH
-----------------------------------------------------
REGISTRANT
----------
The Registrant is not under common control with any other
person. The Registrant, Nicholas Fund, Inc., Nicholas II, Inc.,
Nicholas Income Fund, Inc., Nicholas Money Market Fund, Inc. and
Nicholas Equity Income Fund, Inc. 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 26. NUMBER OF HOLDERS OF SECURITIES
-------------------------------

As of March 31, 1997, the number of record holders of the
securities of the Registrant was as follows:

Title of Class Number of Record Holders
---------------- ------------------------
Common Stock 9,329

ITEM 27. INDEMNIFICATION
---------------
Article VII, Section 7 of the By-Laws of the Registrant
provides for the indemnification of its officers and directors
against liabilities incurred in such capacities to the extent
described therein, subject to the provisions of the Maryland
General Business Corporation Law; such Section 7 is incorporated
herein by reference to the By-Laws of the Registrant previously
filed with the Securities and Exchange Commission.

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.

ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
----------------------------------------------------
None.

ITEM 29. PRINCIPAL UNDERWRITERS
----------------------
None.

ITEM 30. 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 the Registrant, 700 North Water Street, Milwaukee,
Wisconsin 53202 or Firstar Trust Company, 615 East Michigan
Street, Milwaukee, Wisconsin 53202.

ITEM 31. MANAGEMENT SERVICES
-------------------
None.

ITEM 32. UNDERTAKINGS
------------
The Registrant's By-Laws provide that it will indemnify its
officers and directors for liabilities incurred by them in any
proceeding arising by reason of the fact that any such person was
or is a director or officer of the Registrant. Insofar as
indemnification for liability arising under the Act may be
permitted to directors, officers and controlling persons of the
Registrant under the Securities Act of 1933 ("Act"), or
otherwise, the Registrant has been advised that, in the opinion
of the Securities and Exchange Commission, such indemnification
is against public policy as expressed in the Act and may,
therefore, be unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by the Registrant of expenses incurred or paid by a director,
officer of controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final
adjudication of such issue.

The 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
Shareholders which 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 Exchange Act of 1934;
and, where interim financial information required to be presented
by Article 3 of Regulation S-X is 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 which is incorporated by reference in the Prospectus to
provide such interim financial information.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933,
as amended, and the Investment Company Act of 1940, as amended,
Nicholas Limited Edition, 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(b) under the Securities Act of 1933, and has duly caused this
Registration Statement to be signed on its behalf by the
undersigned on the 28th day of April, 1997.

NICHOLAS LIMITED EDITION, INC.

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

Pursuant to the requirements of the Securities Act of 1933,
as amended, and the Investment Company Act of 1940, as amended,
this Amendment to the Registration Statement has been signed
below by the following persons in the capacities indicated on
April 29, 1997.

/s/Albert O. Nicholas President (Principal Executive
______________________ Officer) and Director
Albert O. Nicholas

/s/Melvin L. Schultz Director
______________________
Melvin L. Schultz

/s/Thomas J. Saeger Executive Vice
______________________ President, Chief Financial
Thomas J. Saeger Officer, Chief Accounting
Officer and Director

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 and filed herewith.

EXHIBIT INDEX
Sequential
Exhibit No. Description Page No.
___________ ___________ __________

(b)(1) Articles of Incorporation of the Registrant
(incorporated by reference to Part C of
Registrant's initial Registration Statement
as filed with the Commission on January 27,
1987). *

(b)(2) By-Laws of the Registrant (incorporated by
reference to Part C of Registrant's initial
Registration Statement as filed with the
Commission on January 27, 1987). *

(b)(4) Specimen certificate evidencing common
stock, par value $0.01 per share, of the
Registrant (incorporated by reference to
Part C of Registrant's Pre-Effective
Amendment No. 1 to its initial Registration
Statement as filed with the Commission on
April 15, 1987). *

(b)(5) Investment Advisory Agreement, dated
January 26, 1987, between the Registrant
and Nicholas Company, Inc. (incorporated by
reference to Part C of Registrant's initial
Registration Statement as filed with the
Commission on January 27, 1987). *

(b)(8) Custodian Agreement, dated January 26, 1987,
between the Registrant and Firstar Trust
Company (incorporated by reference to Part C
of Registrant's initial Registration
Statement as filed with the Commission on
January 27, 1987). *

(b)(10) Opinion of Michael Best & Friedrich,
counsel to the Registrant, concerning the
legality of the Registrant's common stock,
including consent to the use thereof.

(b)(11) Consent of Arthur Andersen LLP, independent
public accountants.

(b)(12) Statements of Assets and Liabilities of
Registrant, including the Schedule of
Investments, as of December 31, 1996, and
the Financial Highlights for the nine
years ended December 31, 1996 and for the
period from May 18, 1987 through December
31, 1987 [included in the Annual Report to
Shareholders of Registrant for the fiscal
year ended December 31, 1996].

(b)(14.1) Registrant's Prototype IRA Plan. *

(b)(14.2) Registrant's Master Retirement Plan for Self
Employed Individuals. *

(b)(16) Schedule for computation of performance
quotation provided in response to Item 22
of Form N-1A.

(b)(17) Financial Data Schedule

(b)(99) Power of Attorney (incorporated by reference
to Registrant's initial Registration
Statement, as filed with the Commission on
January 27, 1987). *
- ------------
*Previously filed with the Securities and Exchange Commission.

LIST OF CONSENTS

1. Consent of Michael Best & Friedrich
(included in Exhibit (b)(10))

2. Consent of Arthur Andersen LLP
(included as Exhibit (b)(11))

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our report,
and to all references to our Firm, included in or made a part of this Form N-1A
registration statement for Nicholas Limited Edition, Inc.

ARTHUR ANDERSEN LLP

Milwaukee, Wisconsin,
April 23, 1997.

February 28, 1997
Report to Shareholders:

Nineteen hundred ninety-six, what a year for stocks. Let's
make that the last two years, or for that matter, the last six
years! For six straight years Standard & Poor's 500 Index has
advanced without a 10% correction. In fact, 1995 and 1996 have
been the best consecutive years total return (up over 61.3%) since
1975 and 1976 (up 69.8%). This raging bull market has been
driven by an environment of low inflation, declining interest
rates, strong corporate earnings and a high degree of liquidity
originating from baby boomers desire for retirement savings.
Nicholas Limited Edition (the "Fund") performed well in 1996
returning 21.81%, as compared to its benchmark, the Russell
2000 small company index, of 16.49%. Performance figures are shown
below for Nicholas Limited Edition and various indexes for the
time periods ended December 31, 1996:

Average Annual Total Return*
------------------------------
1 Year 3 Years 5 Years
------ ------- -------
Nicholas Limited Edition, Inc.
(Distributions Reinvested) +21.81% +15.41% +14.38%
Standard & Poor's 500
(Income Reinvested) +22.96% +19.68% +15.22%
NASDAQ Composite (Excludes Income) +22.71% +18.45% +17.10%
Russell 2000 (Income Reinvested) +16.49% +13.68% +15.64%
Ending value of $10,000 invested in
Nicholas Limited Edition
(Distributions Reivested) $12,181 $15,374 $19,575

*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. Since inception on May
18, 1987, the average annual total return of the Fund
is 14.89%.

Strong performance of our holdings in the business/computer
service sector drove much of the years results. The desire to
improve corporate productivity has and will continue to spur
this trend. Other performance drivers included selected health
care stocks, financials and retailers. The Fund's out-
performance of its benchmark was due more to individual stock
selection rather than any industry or investment style selection.

As previously mentioned, we have experienced a strong year
in 1996, however, it has been extremely narrow in focus. The
focus has been mainly on larger companies and technology issues.
One study I recently saw suggested that four stocks (Intel,
Microsoft, Cisco Systems, and Oracle) contributed more than 40%
of the NASDAQ Composite index increase. These four stocks had an
average price appreciation of 84% and have an average market
capitalization of approximately $69 billion. Without these stocks
the NASDAQ index would have been up approximately 13.2%. This
large company out-performance can also be seen by the S&P 500's
total return of 22.95% versus the Russell 2000's 1996 total return
of 16.49%.

Though we always like to beat the S&P 500, we feel good
about the Fund's performance in 1996 and the long-term when
compared to the smaller company indexes. Also, the Fund's risk
profile is such that performance in speculative bull markets
will remain modest compared to others who take bigger risks. The
trade-off hopefully will mean lower volatility for shareholders
along with more consistent returns over a full market cycle.

As I write this letter, the markets are reaching all-time
highs almost daily. Stock market valuations are high by
historical standards so we remain cautious short-term.
Long-term, we are confident and excited about our portfolio
companies'ability to grow profitably and generate cash. Finally,
small companies have underperformed large companies for about a
decade. Therefore, we remain long-term bullish on the outlook
for Nicholas Limited Edition.

Sincerely,

/s/ David O. Nicholas
-----------------------
David O. Nicholas
Portfolio Manager
Schedule of Investments
December 31, 1996
- -------------------------------------------------------------------------

Shares or Quoted
Principal Market
Amount Value
- ----------- -------------
(Note 1(a))
COMMON STOCKS - 92.6%
BANKS AND FINANCE 7.6%
18,125 DBT Online, Inc.*............................. $ 539,219
220,000 First Merchants Acceptance Corporation *...... 4,207,500
174,901 Litchfield Financial Corporation.............. 2,579,790
97,500 Marshall & Ilsley Corporation................. 3,375,937
70,265 Mercury Finance Company....................... 860,746
40,000 Security Capital Corporation.................. 2,950,000
71,040 State Financial Services Corporation-Class A.. 1,420,800
432,800 Surety Capital Corporation * +................ 1,758,467
-----------------
17,692,459
-----------------

BUSINESS SERVICES - 17.8%
158,000 Alternative Resources Corporation.*........... 2,745,250
152,825 American List Corporation..................... 4,642,059
162,500 Analysts International Corporation............ 4,590,625
150,000 Checkfree Corporation *....................... 2,568,750
62,000 Danka Business Systems PLC.................... 2,193,250
65,000 Envoy Corporation *........................... 2,437,500
121,111 Interim Services, Inc. *...................... 4,299,440
480,250 Keane, Inc. *................................. 15,247,938
100,000 Viking Office Products, Inc. *................ 2,668,800
-----------------
41,393,612
-----------------

CONSUMER PRODUCTS AND SERVICES - 2.0%
39,250 Central Parking Corporation................... 1,314,875
40,000 Extended Stay America, Inc. *................. 805,000
25,000 MoneyGram Payment Systems, Inc.*.............. 331,250
177,600 ThermoQuest Corporation *..................... 2,286,600
-----------------
4,737,725
-----------------

HEALTH CARE PRODUCTS - 12.3%
203,400 Ballard Medical Products...................... 3,788,325
60,000 DENTSPLY International Inc.................... 2,850,000
96,000 Elan Corporation, plc.*....................... 3,192,000
85,000 Forest Laboratories, Inc. *................... 2,783,750
155,000 Haemonetics Corporation *..................... 2,925,625
258,500 Respironics, Inc. *........................... 4,491,438
115,000 Sofamor/Danek Group, Inc. *................... 3,507,500
192,500 Tecnol Medical Products, Inc. *............... 2,911,562
70,650 Thermo Cardiosystems Inc. *................... 2,119,500
-----------------
28,569,700
-----------------

HEALTH CARE SERVICES - 20.3%
37,500 American HomePatient, Inc. *.................. 1,021,875
275,000 American Oncology Resources, Inc. *........... 2,818,750
227,000 Assisted Living Concepts Inc.*................ 3,461,750
43,500 Cardinal Health, Inc.......................... 2,533,875
75,000 CompDent Corporation *........................ 2,643,750
236,000 Emeritus Corporation *........................ 3,186,000
102,000 First Commonwealth, Inc. *.................... 2,014,500
391,100 Harborside Healthcare Corporation *........... 4,644,312
188,600 Healthsource, Inc. *.......................... 2,475,375
155,000 MedPartners, Inc. *........................... 3,255,000
129,000 National Surgery Centers, Inc. *.............. 4,902,000
45,000 OccuSystems, Inc. *........................... 1,215,000
85,000 Renal Care Group, Inc.*....................... 2,688,125
69,800 United Dental Care, Inc. *.................... 2,120,175
68,850 United Healthcare Corporation................. 3,098,250
182,550 VIVRA Incorporated *.......................... 5,042,944
-----------------
47,121,681
-----------------

INDUSTRIAL PRODUCTS AND SERVICES - 4.2%
307,692 Anicom, Inc.*................................. 2,846,151
50,000 Republic Industries, Inc. *................... 1,559,400
255,000 Thermo Optek Corporation *.................... 2,900,625
192,200 ThermoSpectra Corporation *................... 2,354,450
-----------------
9,660,626
-----------------

INSURANCE - 5.9%
122,430 Capitol Transamerica Corporation.............. 3,764,723
60,000 PMI Group, Inc. (The)......................... 3,322,500
148,200 Poe & Brown, Inc.............................. 3,927,300
70,000 Protective Life Corporation................... 2,791,250
-----------------
13,805,773
-----------------

MEDIA, COMMUNICATIONS AND ENTERTAINMENT - 9.1%
140,000 Asia Satellite Telecommunications
Holdings, Limited.*.................... 3,272,500
246,000 Grand Prix Association of Long Beach Inc. * +. 2,460,000
539,310 International Speedway Corporation............ 10,921,028
95,000 Penske Motorsports, Inc. *.................... 2,398,750
221,000 United States Satellite Broadcasting
Company, Inc.*......................... 2,210,000
-----------------
21,262,278
-----------------

REAL ESTATE - 1.9%
119,000 National Health Investors, Inc................ 4,507,125
-----------------

RETAIL TRADE - 3.3%
103,000 Kohl's Corporation *.......................... 4,042,750
110,000 O'Reilly Automotive, Inc. *................... 3,520,000
-----------------
7,562,750
-----------------

TRANSPORTATION - 8.2%
520,188 Heartland Express, Inc. *..................... 12,679,582
150,000 Knight Transportation, Inc. *................. 2,850,000
205,000 Landair Services, Inc. *...................... 2,050,000
42,000 Midwest Express Holdings, Inc. *.............. 1,512,000
-----------------
19,091,582
-----------------

TOTAL COMMON STOCKS
(cost $142,527,784) 215,405,311
----------------

CONVERTIBLE BONDS - 4.5%
$2,500,000 Baby Superstore, Inc.,
4.875%,due 10/1/00......................... 2,465,625
1,560,000 National Healthcare, L.P.,
6.00%, due 7/1/00.......................... 4,461,600
3,550,000 Richey Electronics, Inc.,
7.00%, due 3/1/06.......................... 3,536,688
------------
TOTAL CONVERTIBLE BONDS
(cost $8,841,075)..................... 10,463,913
------------

SHORT-TERM INVESTMENTS - 3.6%
Commercial Paper - 2.0%
2,000,000 AMCORE Financial, Inc.
5.60%, due January 2, 1997................. 2,000,000
1,000,000 Houston Industries, Inc.,
5.70%, due January 2, 1997................. 1,000,000
1,700,000 Hertz Corporation
6.35%, due January 3, 1997................. 1,699,700
------------
4,699,700
------------
Variable Demand Notes - 1.6%
493,760 Johnson Controls, Inc.
5.36%, due January 2, 1997................. 493,760
3,227,192 Sara Lee Corporation
5.32%, due January 2, 1997................. 3,227,192
------------
3,720,952
------------

TOTAL SHORT-TERM INVESTMENTS
(Cost $8,410,341)........................ 8,420,652
------------
TOTAL INVESTMENTS......................... 234,289,876
------------
LIABILITIES, NET OF
CASH AND RECEIVABLES - (0.7%)............. (1,535,720)
------------

TOTAL NET ASSETS
(Basis of percentages
disclosed above)....................... $232,754,156
------------
------------

* Nondividend paying security
+ This company is affiliated with the Fund as defined in Section 2(a)(2)-(3)
of the Investment Company Act of 1940, in that the Fund holds 5% or more of
its outstanding voting securities. (Note 5)

The accompanying notes to financial statements
are an integral part of this schedule.

Statement of Assets and Liabilities
December 31, 1996
- -------------------------------------------------------------------------
<TABLE>
<S>
ASSETS:
Investments in securities at market value (Note 1 (a)) - <C>
Nonaffiliated issuers (cost $155,859,168) - see accompanying schedule of investments..... 230,071,410
Affiliated issuers (cost $3,920,032) - see accompanying schedule of investments (Note 5). 4,218,466
Cash....................................................................................... 1,770
Receivables --
Investment securities sold........................................................... 309,721
Dividends and interest............................................................... 255,401
------------
Total receivables.............................................................. 565,122
------------
Total assets................................................................... 234,856,768
------------
LIABILITIES:
Payables --
Management fee (Note 2).............................................................. 145,502
Dividends payable.................................................................... 1,886,899
Other payables and accrued expenses.................................................. 70,211
------------
Total liabilities.............................................................. 2,102,612
------------
Total net assets............................................................... $232,754,156
------------
------------

NET ASSETS CONSIST OF:
Fund shares issued and outstanding......................................................... $158,253,791
Net unrealized appreciation on investments (Note 3)........................................ 74,500,365
------------
$232,754,156
------------
------------

NET ASSET VALUE PER SHARE ($.01 par value, 14,000,000 shares authorized),
offering price and redemption price ($232,754,156 / 11,221,989 shares outstanding)............. $20.74
------
</TABLE>

The accompanying notes to financial statements are
an integral part of this statement.

Statement of Operations
For the year ended December 31, 1996
- ------------------------------------------------------------------------
<TABLE>
<S> <C>
INCOME:
Dividends ................................................................................... $1,113,568
Interest..................................................................................... 838,383
Miscellaneous................................................................................ 9,786
-----------
1,961,737
-----------

EXPENSES:
Management fee (Note 2)...................................................................... 1,596,133
Transfer agent fees.......................................................................... 108,278
Registration fees............................................................................ 32,789
Legal fees................................................................................... 29,964
Audit and tax consulting fees................................................................ 21,775
Custodian fees............................................................................... 13,703
Postage...................................................................................... 13,488
Printing..................................................................................... 8,280
Insurance.................................................................................... 6,089
Telephone.................................................................................... 3,203
Directors' fees.............................................................................. 1,200
Other operating expenses.................................................................... 2,343
-----------
1,837,245
-----------
Net investment income.................................................................. 124,492
-----------

NET REALIZED GAINS ON INVESTMENTS (Note 1 (b)):..................................................... 26,204,908
-----------

NET INCREASE IN UNREALIZED APPRECIATION ON INVESTMENTS ............................................. 11,558,045
-----------

Net gain on investments............................................................... 37,762,953
-----------

Net increase in net assets resulting from operations................................... $37,887,445
-----------
-----------
</TABLE>

The accompanying notes to financial statements are an
integral part of this statement.

Statements of Changes in Net Assets
For the years ended December 31, 1996 and 1995
- --------------------------------------------------------------------------
<TABLE>
1996 1995
------ ------
<S> <C> <C>
OPERATIONS:
Net investment income...................................................... $ 124,492 $ 585,213
Net realized gains on investments (Note 1 (b))............................. 26,204,908 22,569,855
Net increase in unrealized appreciation on investments..................... 11,558,045 17,738,854
------------ -----------
Net increase in net assets resulting from operations....................... 37,887,445 40,893,922
------------ -----------

DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income ($0.0124 and $0.0761 per share,
respectively)............................................................ (124,492) (585,213)
Distributions from net realized gains on investments ($2.6151 and $2.9353
per share, respectively)................................................. (26,204,908) (22,569,855)
------------ ----------
Total distributions................................................... (26,329,400) (23,155,068)
------------ ----------

CAPITAL SHARE TRANSACTIONS:
Proceeds from shares issued (2,847,668 and 912,733 shares, respectively)... 63,721,201 17,514,151
Net asset value of shares issued in distributions to shareholders
(1,198,162 and 1,127,739 shares, respectively)........................... 24,442,501 21,562,367

Cost of shares redeemed (1,645,480 and 1,561,078 shares, respectively)..... (36,536,271) (29,849,025)
------------ ----------
Increase in net assets derived from capital
share transactions.................................................. 51,627,431 9,227,493
------------ -----------
Total increase in net assets........................................... 63,185,476 26,966,347
------------ ----------
NET ASSETS, at the beginning of the year........................................ 169,568,680 142,602,333
------------ -----------
NET ASSETS, at the end of the year.............................................. $232,754,156 $169,568,680
------------ ------------
------------ ------------
</TABLE>
The accompanying notes to financial statements are an
integral part of these statements.

Historical Record (unaudited)
- ----------------------------------------------------------------------
<TABLE>
Net Investment Dollar Growth of
Net Income Capital Gain Weighted An Initial
Asset Value Distributions Distributions Price/Earnings $10,000
Per Share Per Share Per Share Ratio** Investment***
----------- ------------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
May 18, 1987 *............................. $10.00 $ -- $ -- -- $10,000
December 31, 1987 ......................... 9.15 .0900 -- 13.9 times 9,242
December 31, 1988.......................... 11.29 .0969 .2527 14.1 11,762
December 31, 1989.......................... 12.49 .1453 .6151 16.3 13,804
December 31, 1990.......................... 12.03 .1207 .1213 14.2 13,566
December 31, 1991.......................... 16.86 .1228 .2407 21.9 19,429
December 31, 1992.......................... 18.77 .0815 .8275 18.8 22,690
December 31, 1993.......................... 18.68 .0867 1.6782 20.4 24,738
December 31, 1994.......................... 17.09 .1031 .9065 18.3 23,985
December 31, 1995.......................... 19.22 .0761 2.9353 25.2 31,223
December 31, 1996.......................... 20.74 .0124 (a) 2.6151 (a) 30.7 38,031

*Date of Initial Public Offering
**Based on latest 12 months accomplished earnings
***Assuming reinvestment of all distributions (a) Paid December 31, 1996 to shareholders
of record December 27, 1996.
</TABLE>
Range in quarter end price/earnings ratios
High 32.0 Low 13.3
June 30, 1996 June 30, 1988

Financial Highlights
(For a share outstanding throughout each year)
- ----------------------------------------------------------------------
<TABLE>
Year ended December 31,
---------------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987**
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR....... $19.22 $17.09 $18.68 $18.77 $16.86 $12.03 $12.49 $11.29 $ 9.15 $10.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.................. .01 .08 .10 .09 .08 .12 .12 .15 .10 .09
Net gains or (losses) on securities
(realized and unrealized)........... 4.14 5.07 (.68) 1.59 2.74 5.07 (.34) 1.82 2.39 (.85)
----- ----- ----- ----- ----- ----- ----- ----- ---- -----
Total from investment operations.... 4.15 5.15 (.58) 1.68 2.82 5.19 (.22) 1.97 2.49 (.76)
----- ----- ----- ----- ----- ----- ----- ----- ---- -----

LESS DISTRIBUTIONS:
Dividends (from net investment income). (.01) (.08) (.10) (0.09) (.08) (.12) (.12) (.15) (.10) (.09)
Distributions (from capital gains)..... (2.62) (2.94) (.91) (1.57) (.83) (.24) (.12) (.62) (.25) --
Distributions (in excess of book
realized gains (Note 1 (d))......... -- -- -- (0.11) -- -- -- -- -- --
----- ----- ----- ----- ----- ----- ----- ----- ---- -----

Total distributions................. (2.63) (3.02) (1.01) (1.77) (.91) (.36) (.24) (.77) (.35) (.09)
----- ----- ----- ----- ----- ----- ----- ----- ---- -----

NET ASSET VALUE, END OF YEAR............. $20.74 $19.22 $17.09 $18.68 $18.77 $16.86 $12.03 $12.49 $11.29 $ 9.15
----- ----- ----- ----- ----- ----- ----- ----- ---- -----
----- ----- ----- ----- ----- ----- ----- ----- ---- -----

TOTAL RETURN............................. 21.81% 30.18% (3.04%) 9.03% 16.78% 43.22% (1.73%) 17.36% 27.26% (7.58%)

RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (millions)....... $232.8 $169.6 $142.6 $180.8 $190.2 $175.3 $70.9 $57.3 $33.0 $19.3
Ratio of expenses to average net assets.. .86% .90% .90% .88% .92% .94% 1.07% 1.12% 1.32% 1.48%*
Ratio of net investment income
to average net assets.................. .06% .38% .52% .42% .45% 1.05% 1.10% 1.37% 1.03% 2.21%*
Portfolio turnover rate.................. 32.31% 35.77% 16.29% 24.35% 24.44% 12.62% 15.15% 30.65% 30.69% 0%
Average commission rate paid by the
Fund on portfolio investment
transactions ***....................... $0.048 $0.045 -- -- -- -- -- -- -- --

* Annualized
** For the period from May 18, 1987 (date of initial public offering) through December 31,1987.
*** Disclosure of this rate is required by the Securities and Exchange Commission on a prospective
basis beginning with the Fund's 1996 fiscal year end. The Fund has chosen to disclose this rate
beginning in fiscal 1995.
</TABLE>
The accompanying notes to financial statements are an
integral part of these statements.

Notes to Financial Statements
December 31, 1996

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

(1) Summary of Significant Accounting Policies --
Nicholas Limited Edition, Inc. (the "Fund"): is an open-end, diversified
management investment company registered under the Investment Company Act of
1940, as amended. The primary objective of the Fund is long-term growth.
Current income is a small factor in considering the selection of investments.
The following is a summary of the significant accounting policies of the Fund.

(a) Each security, excluding short-term investments, is valued at the last
sale price reported by the principal security exchange on which the issue is
traded, or if no sale is reported, the latest bid price. Variable demand notes
are valued at cost which approximates market value. U.S. Treasury Bills and
commercial paper are stated at market value with the resultant difference
between market value and original purchase price being recorded as interest
income. Investment transactions are recorded no later than the first business
day after the trade date. Cost amounts, as reported on the statement of assets
and liabilities, are the same for Federal income tax purposes.

(b) Net realized gains and losses on common stocks were computed on the
basis of specific certificates.

(c) Provision has not been made for Federal income taxes or excise taxes
since the Fund has elected to be taxed as a "regulated investment company" and
intends to distribute substantially all taxable income to its shareholders and
otherwise comply with the provisions of the Internal Revenue Code applicable to
regulated investment companies.

(d) Excess distributions of book realized gains is the result of different
accounting treatment for book and tax purposes and should not be treated as a
return of capital for income tax reporting. The Fund is required to distribute
at least 98 percent of realized gains through October 31 to avoid paying a
federal excise tax. The excess distribution in 1993 generally represents
losses on the sale of portfolio securities in the months of November and
December. The losses were used to offset future gains.

(e) Dividend income and distribution to shareholders are recorded on the
ex-dividend date. Non-cash dividends, if any, are recorded at fair market
value on date of distribution.

(f) The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from the estimates.

(2) Investment Adviser and Management Agreement --
The Fund has an agreement with Nicholas Company, Inc. (with whom certain
officers and directors of the Fund are affiliated) to serve as investment
adviser and manager. Under the terms of the agreement, a monthly fee is paid
to the investment adviser based on 1/16th of 1% (.75 of 1% on an annual basis)
of the average net asset value. Also, the investment adviser may be reimbursed
for clerical and administrative services rendered by its personnel. The
advisory agreement is subject to an annual review by the Directors of the Fund.

(3) Net Unrealized Appreciation --
Aggregate gross unrealized appreciation (depreciation) as of December 31,
1996, based on investment cost for Federal tax purposes is as follows:
Aggregate gross unrealized
appreciation on investments ................$84,337,080
Aggregate gross unrealized
depreciation on investments ................ (9,836,715)
----------
Net unrealized appreciation ............ $74,500,365
-----------
-----------

(4) Investment Transactions --
For the year ended December 31, 1996, the cost of purchases and the
proceeds from sales of investments, other than short-term obligations,
aggregated $88,211,595 and $65,795,099, respectively.

(5) Transactions with Affiliates --
Following is an analysis of 1996 transactions with "affiliated
companies" as defined by the Investment Company Act of 1940:

<TABLE>
Amount of
Capital
Amount of Gain
Dividends Realized
Share Activity Credited on Sale
to Income of Shares
Balance Balance in Fiscal in Fiscal
Security Name 12/31/95 Purchases Sales 12/31/96 1996 1996
------------- -------- --------- ----- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Surety Capital Corporation........... -- 432,800 -- 432,800 -- --
Grand Prix Association of Long
Beach, Inc......................... -- 246,000 -- 246,000 -- --

</TABLE>

Report of Independent Public Accountants
- --------------------------------------------------------------------------

To the Shareholders and Board of Directors
of Nicholas Limited Edition, Inc.:

We have audited the accompanying statement of assets and liabilities of
NICHOLAS LIMITED EDITION, INC. (a Maryland corporation), including the schedule
of investments, as of December 31, 1996, the related statement of operations
for the year then ended, the statements of changes in net assets for each of
the two years in the period then ended, and the financial highlights for the
periods presented. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of December 31, 1996, by correspondence with the custodian and
brokers. As to securities purchased but not received, we requested
confirmation from brokers and, when replies were not received, we carried out
other alternative auditing procedures. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Nicholas Limited Edition, Inc. as of December 31, 1996, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for the
periods presented, in conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Milwaukee, Wisconsin,
January 24, 1997.
OFFICERS AND DIRECTORS

ALBERT O. NICHOLAS
President and Director

THOMAS J. SAEGER
Executive Vice President, Secretary and Director

MELVIN L. SCHULTZ
Director

DAVID L. JOHNSON
Executive Vice President

LYNN S. NICHOLAS
Senior Vice President

DAVID O. NICHOLAS
Senior Vice President

CANDACE l. LESAK
Vice President

JEFFREY T. MAY
Vice President

JOHN J. O'HARE II
Assistant Vice President

MARY C. GOSEWEHR
Treasurer

INVESTMENT ADVISOR

NICHOLAS COMPANY, INC.
Milwaukee

CUSTODIAN AND TRANSFER AGENT

FIRSTAR TRUST COMPANY
Milwaukee 414/276-0535

INDEPENDANT PUBLIC ACCOUNTANTS

ARTHUR ANDERSEN LLP
Milwaukee

COUNSEL

MICHAEL, BEST & FRIEDRICH
Milwaukee

Member of
100% No-Load (TM)
Mutual Fund Council

of the This report is submitted for the information of shareholders of the
Fund. It is not authorized for distribution to prospective investors unless
preceded or accompanied by an effective prospectus.

April 28, 1997

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

Gentlemen:

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

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

1. The Fund is validly 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 fourteen
million (14,000,000) shares of Common Stock, par value $.01 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. 10 to the Registration Statement and compliance
with applicable federal and state securities laws and
regulations, when sold, issued (within the limits authorized
under the Articles of Incorporation of the Fund) and paid
for as contemplated in the Registration Statement, such shares
will have been validly and legally issued, fully paid and
non-assessable.

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

Very truly yours,

MICHAEL BEST & FRIEDRICH

/s/ David E. Leichtfuss
__________________________
DEL/ljg David E. Leichtfuss

Compound and Total Return Calculation NICHOLAS LIMITED EDITION 12/31/95 THRU 12/31/96

Starting date: 12/31/95 future value 1,218.07
Ending date: 12/31/96 present valu 1,000.00

Total Return 21.8069% # years 1
Average annual return 21.8069% # days 366.00

Investment Redemption
Lump sum Lump sum
Annuity Annuity

</TABLE>

Compound and Total Return Calculation NICHOLAS LIMITED EDITION 12/31/91 THRU 12/31/96

Starting date: 12/31/91 future value 1,957.46
Ending date: 12/31/96 present valu 1,000.00

Total Return 95.7459% # years 5
Average annual return 14.3770% # days 1827.00

Investment Redemption
Lump sum Lump sum
Annuity Annuity

</TABLE>

Compound and Total Return Calculation NICHOLAS LIMITED EDITION 05/18/87 THRU 12/31/96

Starting date: 05/18/87 future value 3,803.13
Ending date: 12/31/96 present valu 1,000.00

Total Return 280.3132% # years 9.6219178082
Average annual return 14.8930% # days 3515.00

Investment Redemption
Lump sum Lump sum
Annuity Annuity

PRICE INV INC CAP GAIN # of SHARES REINVESTED REINVESTED CUM TOTAL
DATE /SHARE /SHARE /SHARE INVEST PURCHASED INV INC CAP GAIN SHARES MARKET VALUE
- ----------- ------------- ----------- ----------- ------------- ---------- ----------- ---------- ---------- ------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
05/18/87 D 10.00 1000 100.000 100.000 $1,000.00
12/16/87 D 8.94 0.0900 1.007 101.007 $903.00
12/31/87 A 9.15 101.007 $924.21
12/29/88 D 11.14 0.3087 0.0409 2.799 0.371 104.177 $1,160.53
12/31/88 A 11.29 104.177 $1,176.15
12/29/89 D 12.49 0.2160 0.5444 1.802 4.541 110.519 $1,380.38
12/31/89 A 12.49 110.519 $1,380.38
12/28/90 D 11.91 0.1899 0.0521 1.762 0.483 112.765 $1,343.03
12/31/90 A 12.03 112.765 $1,356.56
12/30/91 D 16.58 0.1228 0.2407 0.835 1.637 115.237 $1,910.63
12/31/91 A 16.86 115.237 $1,942.89
12/30/92 D 18.55 0.5488 0.3602 3.409 2.238 120.884 $2,242.39
12/31/92 A 18.77 120.884 $2,268.99
12/30/93 D 18.48 0.0867 1.6782 0.567 10.978 132.428 $2,447.28
12/31/93 A 18.68 132.428 $2,473.76
12/29/94 D 16.89 0.1031 0.9065 0.808 7.108 140.344 $2,370.42
12/31/94 A 17.09 140.344 $2,398.49
12/28/95 D 19.12 0.3004 2.7110 2.205 19.899 162.449 $3,106.02
12/31/95 A 19.22 162.449 $3,122.26
12/30/96 D 20.40 0.5282 2.0993 4.206 16.717 183.372 $3,740.79
12/31/96 A 20.74 183.372 $3,803.13

</TABLE>

<ARTICLE> 6
<CURRENCY> US DOLLARS

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-1-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 159779200
<INVESTMENTS-AT-VALUE> 234289876
<RECEIVABLES> 565122
<ASSETS-OTHER> 1770
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 234856768
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2102612
<TOTAL-LIABILITIES> 2102612
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 158253791
<SHARES-COMMON-STOCK> 11221989
<SHARES-COMMON-PRIOR> 8821639
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 74500365
<NET-ASSETS> 232754156
<DIVIDEND-INCOME> 1113568
<INTEREST-INCOME> 838383
<OTHER-INCOME> 9786
<EXPENSES-NET> 1837245
<NET-INVESTMENT-INCOME> 124492
<REALIZED-GAINS-CURRENT> 26204908
<APPREC-INCREASE-CURRENT> 11558045
<NET-CHANGE-FROM-OPS> 37887445
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 124492
<DISTRIBUTIONS-OF-GAINS> 26204908
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2847668
<NUMBER-OF-SHARES-REDEEMED> 1645480
<SHARES-REINVESTED> 1198162
<NET-CHANGE-IN-ASSETS> 63185476
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1596133
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1837245
<AVERAGE-NET-ASSETS> 212635877
<PER-SHARE-NAV-BEGIN> 19.22
<PER-SHARE-NII> 0.01
<PER-SHARE-GAIN-APPREC> 4.14
<PER-SHARE-DIVIDEND> 0.01
<PER-SHARE-DISTRIBUTIONS> 2.62
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 20.74
<EXPENSE-RATIO> 0.86
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>