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.
