February 25, 1998
Report to Shareholders:
Nicholas Limited Edition returned 33.02% including distributions,
during 1997. This compares with 22.36% for the Russell 2000, a small
company index, and 21.36% for the Morningstar's small company fund
objective. This outperformance can be attributable to our philosophy of
owning quality companies with sound fundamental financial characteristics
and good management. Long-term results and comparison can be seen in the
table below:
<TABLE>
Average Annual Total Return*
----------------------------
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Nicholas Limited Edition, Inc.
(Distributions Reinvested)................................. +33.02% +28.25% +17.39% +18.53%
Morningstar Small Company Mutual Fund Objective
(Distributions Reinvested) ................................ +21.36% +22.83% +16.16% +16.40%
Russell 2000 (Dividends Reinvested) ........................ +22.36% +22.33% +16.41% +15.76%
Standard & Poor's 500 (Dividends Reinvested) ............... +33.35% +31.13% +20.25% +18.04%
Ending Value of $10,000 invested in Nicholas Limited
Edition (Distributions Reinvested) ........................ $13,302 $21,092 $22,296 $54,738
</TABLE>
By holding, for the long-term, companies with superior financial
characteristics (growth, return on equity, capital structure and margins)
to those companies in the indexes and paying lower valuations, the
long-term results can and should be superior on a relative basis to
those shown above.
Nicholas Limited's performance during 1997 was due to individual
stock selection in areas such as healthcare, financial, business services
and specialty retail. Also, the low level of technology, manufacturing
and small speculative type companies limited the funds downside during
1997's slide in these areas. Currently Nicholas Limited Edition includes
approximately 60 securities diversified in industries such as health care
products and services, business services, financials, industrial products
and services, and media and entertainment.
Looking to the future, we remain cautious as valuation levels
remain high. The lugubrious situation in Asia has caused a slowing of
growth in some large multi-national companies. This may have an affect
on valuations going forward. Our focus on small domestic companies
should help insulate the fund from Asian concerns. Long-term we feel
confident in the portfolio's ability to continue good relative
performance. I do want to remind shareholders that the returns generated
over the past 3 and 5 years have been unusually large and that these
types of returns are likely unsustainable in the future. This is not to
say that returns will be lower than normal, just that caution should
prevail. Also remember, as can be seen in the table above small company
indexes and funds have been significantly under-performing large company
indexes. This in the future may bode well for small company funds such
as Nicholas Limited Edition. All our staff here at the Nicholas Company
appreciate your continued support.
Sincerely,
/S/ David O. Nicholas
-----------------
David O. Nicholas
Portfolio Manager
*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.
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout each year)
- ---------------------------------------------------------------------
<TABLE>
Year ended December 31,
---------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR....... $20.74 $19.22 $17.09 $18.68 $18.77 $16.86 $12.03 $12.49 $11.29 $ 9.15
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.................. .00** .01 .08 .10 .09 .08 .12 .12 .15 .10
Net gains or (losses) on securities
(realized and unrealized)........... 6.82 4.14 5.07 (.68) 1.59 2.74 5.07 (.34) 1.82 2.39
----- ----- ----- ----- ----- ----- ----- ----- ----- ----
Total from investment operations.... 6.82 4.15 5.15 (.58) 1.68 2.82 5.19 (.22) 1.97 2.49
----- ----- ----- ----- ----- ----- ----- ----- ----- ----
LESS DISTRIBUTIONS:
Dividends (from net investment income). (.00)** (.01) (.08) (.10) (.09) (.08) (.12) (.12) (.15) (.10)
Distributions (from capital gains)..... (2.49) (2.62) (2.94) (.91) (1.57) (.83) (.24) (.12) (.62) (.25)
Distributions (in excess of book
realized gains)..................... -- -- -- -- (.11)*** -- -- -- -- --
----- ----- ----- ----- ----- ----- ----- ----- ----- ----
Total distributions................. (2.49) (2.63) (3.02) (1.01) (1.77) (.91) (.36) (.24) (.77) (.35)
----- ----- ----- ----- ----- ----- ----- ----- ----- ----
NET ASSET VALUE, END OF YEAR............. $25.07 $20.74 $19.22 $17.09 $18.68 $18.77 $16.86 $12.03 $12.49 $11.29
----- ----- ----- ----- ----- ----- ----- ----- ----- ----
----- ----- ----- ----- ----- ----- ----- ----- ----- ----
TOTAL RETURN............................. 33.02% 21.81% 30.18% (3.04%) 9.03% 16.78% 43.22% (1.73%) 17.36% 27.26%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (millions)....... $328.0 $232.8 $169.6 $142.6 $180.8 $190.2 $175.3 $70.9 $57.3 $33.0
Ratio of expenses to average net assets.. .86% .86% .90% .90% .88% .92% .94% 1.07% 1.12% 1.32%
Ratio of net investment income
to average net assets.................. .01% .06% .38% .52% .42% .45% 1.05% 1.10% 1.37% 1.03%
Portfolio turnover rate.................. 37.05% 32.31% 35.77% 16.29% 24.35% 24.44% 12.62% 15.15% 30.65% 30.69%
Average commission rate paid by the
Fund on portfolio investment
transactions *......................... $0.0469$0.0478 $0.0450 -- -- -- -- -- -- --
* 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.
** The amount rounds to $0.00, actual amount $0.0029.
*** 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.
</TABLE>
The accompanying notes to financial
statements are an integral part of these statements.
TOP TEN PORTFOLIO HOLDINGS
December 31, 1997 (unaudited)
- ---------------------------------------------------------------------
Pecentage of
Name Net Assets
- ---------------------- ------------
Heartland Express, Inc. ....................... 4.26%
International Speedway Corporation - Class B... 3.88%
Harborside Healthcare Corporation ............. 2.72%
Assisted Living Concepts, Incorporated......... 2.43%
DENTSPLY International, Inc. .................. 2.42%
ARM Financial Group, Inc. - Class A ........... 2.41%
Patterson Dental Company ...................... 2.38%
Res-Care, Inc. ................................ 2.37%
Poe & Brown, Inc. ............................. 2.36%
Sofamor/Danek Group, Inc....................... 2.28%
------
Total of top ten portfolio holdings 27.51%
SCHEDULE OF INVESTMENTS
December 31, 1997
- ----------------------------------------------------------------------
Shares or Quoted
Principal Market
Amount Value
- ----------- -------------
(Note 1(a))
COMMON STOCKS - 89.07%
BANKS AND FINANCE - 7.42%
174,901 Litchfield Financial Corporation 3,388,707
97,500 Marshall & Ilsley Corporation 6,057,188
162,800 National City Bancorporation * 4,802,600
93,500 Pinnacle Financial Services, Inc. 4,616,562
91,248 State Financial Services Corporation - Class A 2,452,290
432,800 Surety Capital Corporation * + 3,029,600
-----------
24,346,947
-----------
BUSINESS SERVICES - 12.07%
213,750 Analysts International Corporation 7,374,375
200,000 Checkfree Holdings Corporation * 5,400,000
176,250 DBT Online, Inc. * 4,395,234
150,000 Envoy Corporation * 4,368,750
97,150 G&K Services, Inc. - Class A 4,080,300
242,222 Interim Services, Inc. * 6,267,494
177,000 TESSCO Technologies, Incorporated * 3,451,500
195,000 Viking Office Products, Inc. * 4,253,438
-----------
39,591,091
-----------
CONSUMER PRODUCTS AND SERVICES - 2.60%
23,875 Central Parking Corporation 1,081,836
210,000 Extended Stay America, Inc. * 2,611,875
266,000 ThermoQuest Corporation * 4,821,250
-----------
8,514,961
-----------
HEALTH CARE PRODUCTS - 11.72%
213,400 Ballard Medical Products 5,174,950
260,000 DENTSPLY International Inc. 7,930,000
96,000 Elan Corporation, plc * 4,914,000
85,000 Forest Laboratories, Inc. * 4,191,563
258,500 Respironics, Inc. * 5,783,938
115,000 Sofamor/Danek Group, Inc. * 7,482,187
110,650 Thermo Cardiosystems Inc. * 2,959,887
-----------
38,436,525
-----------
HEALTH CARE SERVICES - 19.14%
177,500 American HomePatient, Inc. * 4,171,250
365,000 American Oncology Resources, Inc. * 5,840,000
404,000 Assisted Living Concepts, Incorporated * 7,979,000
120,000 Concentra Managed Care, Inc. * 4,050,000
236,000 Emeritus Corporation * 3,009,000
452,200 Harborside Healthcare Corporation * + 8,930,950
75,000 MedPartners, Inc. * 1,678,125
283,500 National Surgery Centers, Inc. * 7,441,875
172,500 Patterson Dental Company * 7,805,625
127,500 Renal Care Group, Inc. * 4,080,000
268,500 Res-Care, Inc. * 7,786,500
-----------
62,772,325
-----------
INDUSTRIAL PRODUCTS AND SERVICES - 7.86%
242,692 Anicom, Inc. * 3,852,736
105,000 Fastenal Company 4,016,250
60,000 Republic Industries, Inc. * 1,398,750
190,000 Superior Services, Inc. * 5,486,250
367,000 Thermo Optek Corporation * 5,642,625
343,580 Thermo Vision Corporation * 2,791,587
261,400 ThermoSpectra Corporation * 2,614,000
-----------
25,802,198
-----------
INSURANCE - 7.13%
300,000 ARM Financial Group, Inc. - Class A 7,912,500
167,645 Capitol Transamerica Corporation 3,572,934
173,200 Poe & Brown, Inc. 7,729,050
70,000 Protective Life Corporation 4,182,500
-----------
23,396,984
-----------
MEDIA, COMMUNICATIONS AND
ENTERTAINMENT - 7.21%
290,900 Asia Satellite Telecommunications
Holdings Limited 4,890,756
251,000 Grand Prix Association of Long Beach, Inc. * + 3,639,500
539,310 International Speedway Corporation - Class B 12,741,199
95,000 Penske Motorsports, Inc. * 2,363,125
-----------
23,634,580
-----------
REAL ESTATE - 3.04%
112,000 CCA Prison Realty Trust 4,998,000
119,000 National Health Investors, Inc. 4,983,125
-----------
9,981,125
-----------
RETAIL TRADE - 3.48%
83,000 Kohl's Corporation * 5,654,375
220,000 O'Reilly Automotive, Inc. * 5,775,000
-----------
11,429,375
-----------
TRANSPORTATION - 7.40%
165,000 C.H. Robinson Worldwide, Inc. 3,691,875
520,188 Heartland Express, Inc. * 13,980,053
237,500 Knight Transportation, Inc. * 6,590,625
-----------
24,262,553
-----------
TOTAL COMMON STOCKS
(cost $172,704,334) 292,168,664
-----------
CONVERTIBLE BONDS - 4.07%
$1,560,000 National Healthcare, L.P.
6.00%, due 7/1/00 5,742,750
5,100,000 Richey Electronics, Inc.
7.00%, due 3/1/06 5,023,500
1,000,000 Thermo Optek Corporation
5.00%, due 10/15/00 1,135,000
1,500,000 ThermoTrex Corporation
3.25%, due 11/1/07 1,445,625
-----------
TOTAL CONVERTIBLE BONDS
(cost $11,047,950) 13,346,875
----------
SHORT-TERM INVESTMENTS - 7.40%
Commercial Paper - 6.43%
6,000,000 Hertz Corporation
6.75%, due January 2, 1998 6,000,000
2,600,000 Boston Scientific Corporation
6.70%, due January 6, 1998 2,598,064
2,500,000 Conagra, Incorporated
6.44%, due January 6, 1998 2,498,211
1,000,000 Manpower, Inc.
6.20%, due January 8, 1998 998,967
4,000,000 Nabisco, Incorporated
6.75%, due January 8, 1998 3,995,500
2,500,000 Banta Corporation
6.20%, due January 12, 1998 2,495,694
2,500,000 Harnischfeger Industries, Inc.
6.35%, due January 22, 1998 2,491,181
----------
21,077,617
----------
VARIABLE RATE DEMAND NOTES - 0.97%
160,957 Pitney Bowes Credit Corporation
5.33%, due January 2, 1998 160,957
3,034,336 Warner-Lambert Company
5.49%, due January 2, 1998 3,034,336
----------
3,195,293
----------
TOTAL SHORT-TERM INVESTMENTS
(cost $24,240,296) 24,272,910
----------
TOTAL INVESTMENTS
(cost $207,992,580) 329,788,449
-----------
LIABILITIES, NET OF
CASH AND RECEIVABLES - (0.54%) (1,766,183)
-----------
TOTAL NET ASSETS
(Basis of percentages
disclosed above) $328,022,266
------------
------------
* Nondividend paying security.
+ This company is affiliated with the Fund as defined
in Section 2(a)(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, 1997
- ----------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments in securities at market value(Note 1 (a)) -
Nonaffiliated issuers (cost $198,650,633) - see accompanying schedule of investments..... $314,188,399
Affiliated issuers (cost $9,341,947) - see accompanying schedule of investments (Note 5). 15,600,050
Receivables --
Investment securities sold........................................................... 359,588
Dividends and interest............................................................... 369,206
------------
Total receivables.............................................................. 728,794
------------
Total assets................................................................... 330,517,243
------------
LIABILITIES:
Payables --
Investment securities purchased...................................................... 367,270
Management fee (Note 2).............................................................. 210,648
Dividends payable.................................................................... 1,850,377
Other payables and accrued expenses.................................................. 66,682
------------
Total liabilities.............................................................. 2,494,977
------------
Total net assets............................................................... $328,022,266
------------
------------
NET ASSETS CONSIST OF:
Fund shares issued and outstanding......................................................... $206,259,011
Net unrealized appreciation on investments (Note 3)........................................ 121,763,255
------------
$328,022,266
------------
------------
NET ASSET VALUE PER SHARE ($.01 par value, 20,000,000 shares authorized),
offering price and redemption price ($328,022,266/ 13,083,412 shares outstanding)............. $25.07
------
------
</TABLE>
The accompanying notes to financial statements
are an integral part of this statement.
STATEMENT OF OPERATIONS
For the year ended December 31, 1997
- ----------------------------------------------------------------------
<TABLE>
<S> <C>
INCOME:
Dividends ................................................................................... $1,159,587
Interest...................................................................................... 1,200,671
-----------
2,360,258
-----------
EXPENSES:
Management fee (Note 2)...................................................................... 2,039,866
Transfer agent fees.......................................................................... 124,525
Registration fees............................................................................ 58,250
Legal fees................................................................................... 33,886
Audit and tax consulting fees................................................................ 19,375
Postage...................................................................................... 15,230
Custodian fees............................................................................... 14,633
Printing..................................................................................... 7,768
Insurance.................................................................................... 6,374
Telephone.................................................................................... 3,811
Directors' fees.............................................................................. 1,200
Other operating expenses.................................................................... 848
-----------
2,325,766
-----------
Net investment income.................................................................. 34,492
-----------
NET REALIZED GAINS ON INVESTMENTS (Note 1 (b))...................................................... 29,741,180
-----------
NET INCREASE IN UNREALIZED APPRECIATION ON INVESTMENTS ............................................. 47,262,890
-----------
Net gain on investments............................................................... 77,004,070
-----------
Net increase in net assets resulting from operations................................... $77,038,562
-----------
-----------
</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, 1997 and 1996
- ----------------------------------------------------------------------
<TABLE>
<S> <C> <C>
1997 1996
------ ------
OPERATIONS:
Net investment income...................................................... $ 34,492 $ 124,492
Net realized gains on investments (Note 1 (b))............................. 29,741,180 26,204,908
Net increase in unrealized appreciation on investments..................... 47,262,890 11,558,045
------------ -----------
Net increase in net assets resulting from operations....................... 77,038,562 37,887,445
------------ -----------
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income ($ 0.0029 and $0.0124 per share,
respectively)............................................................ (34,492) (124,492)
Distributions from net realized gains on investments ($2.4886 and $2.6151
per share, respectively)................................................. (29,741,180) (26,204,908)
------------ ----------
Total distributions................................................... (29,775,672) (26,329,400)
------------ ----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares issued (2,829,418 and 2,847,668 shares, respectively)... 70,335,372 63,721,201
Net asset value of shares issued in distributions to shareholders
(1,126,020 and 1,198,162 shares, respectively)........................... 27,925,295 24,442,501
Cost of shares redeemed (2,094,015 and 1,645,480 shares, respectively)..... (50,255,447) (36,536,271)
------------ ----------
Increase in net assets derived from capital
share transactions.................................................. 48,005,220 51,627,431
------------ ----------
Total increase in net assets........................................... 95,268,110 63,185,476
------------ ----------
NET ASSETS, at the beginning of the year........................................ 232,754,156 169,568,680
------------ -----------
NET ASSETS, at the end of the year.............................................. $328,022,266 $232,754,156
------------ ------------
------------ ------------
</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 2.6151 30.7 38,031
December 31, 1997.......................... 25.07 .0029 (a) 2.4886 (a) 33.0 50,590
</TABLE>
*Date of Initial Public Offering.
**Based on latest 12 months accomplished earnings.
***Assuming reinvestment of all distributions.
(a) Paid December 31, 1997 to shareholders
of record December 29, 1997.
Range in quarter end price/earnings ratios
High 35.5 Low 13.3
September 30, 1997 June 30, 1988
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
- ----------------------------------------------------------------------
(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 equity security 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 last bid price. Most debt securities, excluding short-term
investments, are valued at current evaluated bid price. Variable rate 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 schedule of
investments and 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) Dividend income and distributions to shareholders are recorded on the
ex-dividend date. Non-cash dividends, if any, are recorded at fair market
value on date of distribution.
(e) 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,
1997, based on investment cost for Federal tax purposes is as follows:
Aggregate gross unrealized
appreciation on investments ...............$127,349,505
Aggregate gross unrealized
depreciation on investments ................ (5,586,250)
----------
Net unrealized appreciation ............$121,763,255
-----------
-----------
(4) Investment Transactions --
For the year ended December 31, 1997, the cost of purchases and the
proceeds from sales of investments, other than short-term obligations,
aggregated $98,563,927 and $95,921,681, respectively.
(5) Transactions with Affiliates --
Following is an analysis of transactions with "affiliated companies"
for the year ended December 31, 1997, as defined by the Investment
Company Act of 1940:
<TABLE>
<CAPTION>
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 12/31/96 Purchases Sales 12/31/97 1997 1997
------------- -------- --------- ----- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Surety Capital Corporation........... 432,800 --- --- 432,800 --- ---
Grand Prix Association of Long
Beach, Inc......................... 246,000 5,000 --- 251,000 --- ---
Harborside Healthcare Corporation.... 391,100 61,100 --- 452,200 --- ---
</TABLE>
REPORT OF INDEPENDANT 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, 1997, 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, 1997, 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, 1997, 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 22, 1998.
NICHOLAS FAMILY OF FUNDS
Services Offered
- ---------------------------------------------------------------------
* IRAs
*Traditional *Educational
*Roth *SEP
*Self-employed Master Retirement Plan
*Money Purchase *Profit Sharing
*Automatic Investment Plan
*Direct Deposite of Distributions
*Systematic Withdrawl Plan
*Monthly Automatic Exchange between Funds
*Telephone Redemption (Regular accounts only)
*Telephone Exchange
*24-hour Automated Account Information (800-544-6547)
Please call a shareholder representative for further information on
the above services or with any other questions you may have regarding
the Nicholas Family of Funds.
800-227-5987
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
JEFFREY T. MAY
Senior Vice President
CANDACE l. LESAK
Vice President
MARK J. GIESE
Assistant Vice President
TRACY C. EBERLEIN
Assistant Vice President
MARY C. GOSEWEHR
Treasurer
INVESTMENT ADVISOR
NICHOLAS COMPANY, INC.
414-272-6133 or 800-227-5987
CUSTODIAN AND TRANSFER AGENT
FIRSTAR TRUST COMPANY
414-276-0535 or 800-544-6547
INDEPENDANT PUBLIC ACCOUNTANTS
ARTHUR ANDERSEN LLP
Milwaukee, WI
COUNSEL
MICHAEL, BEST & FRIEDRICH
Milwaukee, WI
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.
NICHOLAS LIMITED EDITION
700 N. Water Street
Milwaukee, WIsconsin 53202
December 31, 1997
