April 29, 1999
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. 11
Registration Statement on Form N-1A
To whom it may concern:
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 a copy of Post-
Effective Amendment No. 12 to the Registration Statement.
As indicated in the Exhibit Index certain exhibits will follow
in subsequent filing(s) as well as other pertinent financial data.
Very truly yours,
NICHOLAS COMPANY, INC.
/s/ Jeffery T. May
--------------------
JEFFREY T. MAY
Senior Vice President and Treasurer
Enclosure
As filed with the Securities and Exchange Commission on April 29, 1999
File No. 33-11420
FORM N-1A
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
PRE-EFFECTIVE AMENDMENT NO. __
POST-EFFECTIVE AMENDMENT NO. 12 X
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
AMENDMENT NO. 12 X
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:
TERESA M. LEVY
MICHAEL BEST & FRIEDRICH LLP
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 April 30, 1999 pursuant to paragraph (a)(1)
_ 75 days after filing pursuant to paragraph (a)(2)
_ on __________ pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
This post-effective amendment designates a new effective
date for a previously filed post-effective amendment.
Title of Securities Being Registered: Common Stock, $0.01 par
value per share Pursuant to Rule 24f-2, the Registrant hereby
registers an indefinite amount of securities. On April 1, 1999,
Registrant filed the necessary Rule 24f-2 Notice and filing fee
with the Commission for its fiscal year ended December 31, 1998.
Nicholas Limited Edition, Inc.
Form N-1A
PART A: PROSPECTUS
NICHOLAS LIMITED EDITION, INC.
Prospectus
April 30, 1999
The Fund's investment objective is long-term growth. To
achieve its objective, the Fund will invest in a diversified
group of common stocks having growth potential.
This Prospectus gives vital information about the Fund. For
your benefit and protection, please read it before you invest,
and keep it on hand for future reference.
You should be aware that the Fund is restricted in size to
ten million shares (without taking into account shares
outstanding as a result of capital gain and dividend
distributions). As a result, at times the Fund may be closed to
new investors, including additions to existing accounts, other
than through reinvestment of capital gain and dividend
distributions.
Investment Adviser
NICHOLAS COMPANY, INC.
Minimum Initial Investment - $2,000
As with all mutual funds, the
Securities and Exchange Commission has not approved or disapproved
of the Fund's shares or determined whether this
prospectus is truthful or complete. Anyone
who tells you otherwise is committing a crime.
700 North Water Street Suite 1010
Milwaukee, Wisconsin 53202
414-272-6133 800-227-5987
TABLE OF CONTENTS
Page
AN OVERVIEW OF THE FUND................................. __
SHARE LIMITATION........................................ __
FUND INVESTMENTS........................................ __
INVESTMENT RISKS........................................ __
FINANCIAL HIGHLIGHTS.................................... __
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE............. __
THE FUND'S INVESTMENT ADVISER........................... __
PRICING OF FUND SHARES.................................. __
PURCHASE OF FUND SHARES................................. __
REDEMPTION OF FUND SHARES............................... __
EXCHANGE BETWEEN FUNDS.................................. __
TRANSFER OF FUND SHARES................................. __
DIVIDENDS, DISTRIBUTIONS AND FEDERAL TAX STATUS......... __
DIVIDEND AND DISTRIBUTION REINVESTMENT PLAN............. __
SYSTEMATIC WITHDRAWAL PLAN.............................. __
INDIVIDUAL RETIREMENT ACCOUNTS.......................... __
MASTER RETIREMENT PLAN.................................. __
YEAR 2000 ISSUES........................................ __
FOR MORE INFORMATION ABOUT THE FUND..................... Back Cover
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, 1999 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, or a
solicitation of an offer to buy, shares of the Fund to any person
in any state or jurisdiction where it is unlawful to make such an
offer. 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.
AN OVERVIEW OF THE FUND
Goals
The Fund seeks long-term growth.
Principal Investment Strategies
To pursue the Fund's goal of long-term growth, the Fund primarily
invests in a diversified portfolio of common stocks of U.S. small- and
medium-sized companies having growth potential. The Fund believes a
company's annual sales volume and market capitalization (the number of
shares outstanding multiplied by the per share price) are the factors
most illustrative of a company's size. In distinguishing company size in
terms of sales volume, the Fund considers a company's sales volume
relative to peer companies in the company's industry. In terms of market
capitalization, the Fund generally considers companies with market
capitalizations up to $2.0 billion as "small," between $2.0 billion and
$7.5 billion as "medium," and greater than $7.5 billion as "large." To a
lesser extent, the Fund may invest in companies with large market
capitalizations. The Fund looks for established companies with the
potential for superior growth in sales and earnings in a diversified
group of industries. The Fund's investment philosophy is basically a
long-term growth philosophy, based upon the assumption that if a company
achieves superior growth in sales and earnings, eventually the company's
stock will achieve superior performance.
A major portion of the Fund's portfolio generally will be invested
in common stocks of the types of companies, and in the manner, as
described above, at all times. The Fund does not have a pre-set asset
allocation strategy which would require that the Fund maintain a specific
percentage of its assets in equity-related securities (i.e., stocks) and
income-related securities (i.e., bonds). Income is not a significant
factor in selecting the Fund's investments. In addition, there is no
minimum or maximum percentage of the Fund's assets which is required to
be invested in the securities of companies in any particular industry or
group of industries.
For further information on the Fund's principal investment
strategies and how the Fund invests, see "Fund Investments" starting on
page 5.
Principal Risks of Investing
As with any mutual fund, there can be no guarantee that the Fund
will meet its goals or that the Fund's performance will be positive over
any period of time. Value changes in the Fund's investments and
consequently, your Fund shares may occur because a particular stock
market is falling. At other times, there may be specific factors that
may affect the value of a particular investment of the Fund. If the
value of the Fund shares or the value of the Fund's investments go down,
you may lose money.
In addition, because the Fund will invest most of its assets in the
securities of small- and medium-sized companies, the Fund will be subject
to additional risks. Small- to medium-sized companies often have a
limited market for their securities and limited financial resources, and
are usually more affected by changes in the economy. Securities of small-
to medium-sized companies also often fluctuate in price more than common
stocks of larger companies, such as many of those included in the Dow
Jones Industrial Average. Therefore, during the history of the Fund, its
price per share has often been more volatile than the Dow Jones
Industrial Average. If the value of the Fund's investments in small- to
medium-sized companies decreases, the value of the Fund's shares also may
go down.
The Fund also is subject to selection risk, which is the risk that
the stocks the Fund's adviser selects will underperform markets or other
mutual funds with similar investment objectives and strategies.
Due to the Fund's share limitation noted on the cover page of this
prospectus, the Fund may be forced to sell securities in its portfolio to
meet redemption requests in adverse market conditions which could have a
negative impact on the value of Fund shares. In addition, the Fund may
close to new investments (including additions to existing accounts other
than through reinvestment of capital gain and dividend distributions) at
any time. In such event, you may not be able to acquire additional Fund
shares should you desire to do so.
In addition, although the Fund primarily will invest in the common
stocks of small- and medium-sized companies, and to a lesser extent,
large companies, certain investments by the Fund and certain investment
techniques the Fund may use entail other risks, as described in further
detail herein. In view of the risks inherent in all investments in
securities, there is no assurance that the Fund's objectives will be
achieved. Before you invest, please read "Investment Risks" starting on
page 7.
Who May Want to Invest
The Fund may be appropriate for investors who:
Have longer time horizons
Are willing to accept higher short-term risk
Want to diversify their portfolios
Are seeking a fund for the growth portion of an asset
allocation portfolio
Are investing with long-term goals in mind, such as
retirement or to fund a child's future education
The Fund may NOT be appropriate if you:
Are investing with a shorter time horizon in mind
Are uncomfortable with an investment that will go up and
down in value
Are looking for current income
Performance Information
Mutual fund performance is commonly measured as total return. Total
return measures the price change in a share assuming reinvestment of all
dividend income and capital gain distributions. All mutual funds must
use the same formula to calculate total return. The total returns that
follow are based on historical results and do not reflect the effect of
taxes.
The bar chart and table shown below indicate the risks of investing
in the Fund, by showing the variability of the Fund's total return over
time and by showing how the Fund's historical performance compares with a
broad measure of market performance.
The bar chart below shows changes in the Fund's calendar year total
return for the following ten years.
<TABLE>
<CAPTION>
BAR CHART PLOT POINTS
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
17.36% (1.73)% 43.22% 16.78% 9.03% (3.04)% 30.18% 21.81% 33.02% 1.67%
</TABLE>
During the ten calendar year period shown in the above bar chart,
the highest quarterly return was 21.86% (for the quarter ended March 31,
1991) and the lowest quarterly return was (18.45)% (for the quarter ended
September 30, 1990).
The table below shows how the Fund's average annual returns for the
one, five and ten calendar year periods ending on December 31, 1998 (the
Fund's most recently completed calendar year), compare to the returns of
the Russell 2000 Index and the
One Five Ten
Year Years Years
------- ------ ------
The Fund 1.67% 15.77% 15.90%
Russell 2000 Index (2.55)% 11.86% 12.92%
The Russell 2000 Index is an unmanaged index that represents the
average performance of a group of stocks of approximately 2000
companies and is a widely used benchmark for small-capitalization
U.S. stocks.
Of course, the Fund's past performance is no guarantee of its future returns.
FEES AND EXPENSES OF THE FUND
Fund investors pay various expenses, either directly or indirectly.
The table below describes the fees and expenses that you may pay if you
buy and hold shares of the Fund.
Shareholder Fees
(fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases................ None
Maximum Deferred Sales Charge (Load)............................ None
Maximum Sales Charge (Load) Imposed on Reinvested Dividends..... None
Redemption Fee.................................................. (1)
Exchange Fee.................................................... (2)
Maximum Account Fee............................................. None
Annual Fund Operating Expenses(3) (as a percentage of average net assets)
(expenses that are deducted from Fund assets)
Management Fees................................................. 0.75%
Distribution [and/or Service] (12b-1) Fees(4)................... None
Other Expenses.................................................. 0.10%
Total Annual Fund Operating Expenses............................ 0.85%
__________
(1) A fee of $12.00 is charged for each wire redemption.
(2) A fee of $5.00 is charged for each telephone exchange.
(3) Annual Fund Operating Expenses are based on expenses incurred for the
fiscal year ended December 31, 1998.
(4) Some mutual funds charge these fees to pay for advertising and other
costs of selling shares.
Example: This example is intended to help you compare the costs of
investing in the Fund with the cost of investing in other mutual
funds.(1)
One Three Five Ten
Year Years Years Years
The Example assumes that you ---- ----- ----- -----
invest $10,000 in the Fund for the
time periods indicated and then
redeem all of your shares at the
end of those periods. The
Example also assumes that your
investment has a 5% return
each year and that the Fund's
operating expenses remain
the same. Although your
actual costs may be higher or
lower, based on these
assumptions, your costs would be: $ 87 $ 272 $ 472 $1,049
__________
(1) This example should not be considered a representation of past or
future expenses. Actual expenses may be greater or lesser than
those shown.
For a further description of the fees paid to the Fund's adviser,
the Nicholas Company, Inc., see "The Fund's Investment Adviser" on page
___.
PORTFOLIO MANAGEMENT
Mr. David O. Nicholas is 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. David O. Nicholas is President and
Chief Investment Officer of the Adviser, and has been employed by the
Adviser since 1985. For a further discussion of Mr. David O. Nicholas'
experience, see "The Fund's Investment Adviser."
SHARE LIMITATION
The Fund is restricted in size to a maximum of 20 million
shares of common stock outstanding. A maximum of ten million
shares (net of redemptions) are available for purchase by
investors and ten 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. In addition, the Fund may close
to new investments at any time in the sole discretion of the
Fund. However, redemptions of shares will continue to be
received. Should the number of outstanding shares decline
through redemptions, or at other appropriate times, 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.
FUND INVESTMENTS
The Fund's main goal is long-term growth through investments
primarily in a diversified portfolio of equity securities of U.S.
small- and medium-sized companies which the Fund believes have
growth potential.
The Fund believes a company's annual sales volume and market
capitalization (the number of shares outstanding multiplied by
the per share price) are the factors most illustrative of a
company's size. In distinguishing company size in terms of sales
volume, the Fund considers a company's sales volume relative to
peer companies in the company's industry. In terms of market
capitalization, the Fund uses the following standard:
MARKET CAPITALIZATION
---------------------
Small........................ 0 to $2.0 Billion
Medium....................... $2.0 Billion to $7.5 Billion
Large........................ Over $7.5 Billion
To pursue the Fund's goal of long-term growth, the Fund
primarily invests in common stocks of small- and medium-sized
companies. To a lesser extent, the Fund may invest in companies
with large capitalizations. The Fund believes the stocks of
successful, well-run, small- and medium-sized companies have
superior appreciation potential because their revenues and
earnings often are growing more rapidly than those of larger
companies. The Fund also believes small- and medium-sized
companies often have the potential for more rapid and greater,
long-term growth because of newer and more innovative products.
The Fund's investment philosophy is basically a long-term growth
philosophy, based upon the assumption that if a company achieves
superior growth in sales and earnings, eventually the company's
stock will achieve superior performance.
The Fund looks for established companies with the potential
for superior growth in sales and earnings. The Fund seeks
companies that are well positioned to take advantage of emerging,
long-term social and economic trends, and have ample financial
resources to sustain their growth. The Fund considers a number
of factors in assessing a company's value, including the
following:
* a company's strategic position in its industry
* sales and earnings growth
* product development
* quality of management
* overall business prospects
* a company's price to earnings ratio
(including an analysis of such ratio in relation
to the company's growth rate and industry trends)
The Fund does not have a pre-set asset allocation strategy
which would require that the Fund maintain a specific percentage
of its assets in equity-related securities (i.e., stocks) and
income-related securities (i.e., bonds). Income is not a
significant factor in selecting the Fund's investments. In
addition, there is no minimum or maximum percentage of the Fund's
assets which is required to be invested in the securities of
companies in any particular industry or group of industries.
However, the Fund may not invest more than 5% of its total net
assets in the securities of any one issuer, and not more than 25%
of the value of the Fund's total net assets may be concentrated
in companies in any particular industry or group of related industries.
In addition, the Fund may not hold more than 10% of the voting
securities of any one issuer.
The Fund has no stated minimum holding period for
investments, and will buy or sell securities whenever the Fund
sees an appropriate opportunity. Securities are not purchased
with a view toward rapid turnover or to obtain short-term trading
profits (defined as profits on assets held less than twelve
months). The Fund may reduce or sell investments in companies if
there is an actual or perceived deterioration in the fundamentals
of a company (including the company's financial condition or
performance, management-related problems, product-line or service-
line issues, or industry problems). The Fund also may reduce or
sell investments in companies if a company's market
capitalization grows to a point that it is clearly no longer a
small- or medium-capitalization stock or if a company's stock
price appreciates excessively in relation to its fundamental
prospects. Investments in companies also may be sold if they
fail to realize their growth potential or if there are other more
attractive opportunities elsewhere.
It is anticipated that a major portion of the Fund's
portfolio will be invested in common stocks of the types of
companies, and in the manner, as described above at all times.
However, subject to specific limits discussed further herein, the
Fund also may invest in the securities of unseasoned companies
(companies with a record of less than three years of continuous
operation). The Fund also may invest in debt securities, debt
securities and preferred stock convertible into common stock,
securities of other investment companies (up to 10% of the Fund's
total assets) and securities offered in private placements. The
Fund also may invest in certain higher-risk securities and engage
in other investment practices.
For liquidity or flexibility, the Fund also may invest in
cash, investment grade and non-investment grade fixed income
securities, and repurchase agreements. 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 usually will not invest more than
5% of its total assets (at the time of purchase) in non-
investment grade fixed-income securities.
As a temporary defensive tactic because of adverse market,
economic, political or other conditions, the Fund also may invest
in cash, investment grade and non-investment grade fixed income
securities and repurchase agreements. In the event the Fund
employs such a temporary defensive tactic the Fund may not
achieve its investment objective during the period in which
the Fund maintains such defensive position.
Investment Restrictions Which May Be Changed Without Shareholder
Approval
The Fund's Board of Directors has adopted the following
investment restrictions which may be changed by the Board without
shareholder approval:
* Not more than 15% of the Fund's total assets may
be invested in equity securities which are not readily
marketable and in securities of unseasoned companies
(companies which have a record of less than three
years' continuous operation)
* No investments in interests in oil, gas or other
mineral exploration programs are permitted (but
investments in securities of companies engaged in oil,
gas or mineral activities are permitted)
* No investments in puts, calls, straddles, spreads
or any combinations thereof are permitted
* No investments in securities of other open-end
management-type investment companies are permitted
Any Board imposed change to the above-noted investment
restrictions will be made only upon advance notice to
shareholders in the form of an amended Statement of Additional
Information filed with the SEC.
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 the 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.
The Fund may use many different investment strategies in
seeking its investment objectives, and it has certain investment
restrictions. These strategies and certain of the restrictions
and policies governing the Fund's investments are explained in
detail in the Fund's Statement of Additional Information, which
is incorporated by reference herein. If you would like to learn
more about how the Fund may invest, you should request a copy of
the Statement of Additional Information. To learn how to obtain
a copy of the Statement of Additional Information, see the back
cover page of this Prospectus.
INVESTMENT RISKS
THIS SECTION CONTAINS A SUMMARY DESCRIPTION OF THE GENERAL
RISKS OF INVESTING IN THE FUND. AS WITH ANY MUTUAL FUND, THERE
CAN BE NO GUARANTEE THAT THE FUND WILL MEET ITS GOALS OR THAT YOU
WON'T LOSE MONEY ON YOUR INVESTMENT. THERE IS NO GUARANTEE THE
FUND'S PERFORMANCE WILL BE POSITIVE OVER ANY PERIOD OF TIME.
Because of the following risks, you could lose money on
your investment in the Fund over the short- or long- term:
MARKET RISK. The value of the Fund's investments, and
therefore, the value of your Fund shares, may go up or down.
Value changes in the Fund's investments and consequently, your
Fund shares may occur because a particular stock market is rising
or falling. Stock markets tend to run in cycles, with periods
when stock prices generally go up, known as "bull markets," and
periods when stock prices generally go down, referred to as "bear
markets." Stock prices in general may decline over short or
extended periods. Thus, there is a possibility that the value of
the Fund's investments will decrease because of declines in the stock
market, regardless of the success or failure of the operations of
the Fund's portfolio companies. At other times, there are
specific factors that may adversely affect the value of a
particular investment of the Fund.
PORTFOLIO-SPECIFIC RISK. Because the Fund will invest most
of its assets in the securities of small- and medium-sized
companies and to a lesser extent, the securities of large
companies, the Fund will be subject to additional risks. Small-
to medium-sized companies often have a limited market for their
securities and limited financial resources, and are usually more
affected by changes in the economy. Securities of small- to
medium-sized companies also often fluctuate in price more than
common stocks of larger companies, such as many of those included
in the Dow Jones Industrial Average. Therefore, during the
history of the Fund, its price per share has often been more
volatile than the Dow Jones Industrial Average. If the value of
the Fund's investments in small- to medium-sized companies
decreases, the value of the Fund's shares also may go down.
SELECTION RISK. The Fund also is subject to selection risk,
which is the risk that the stocks the Fund's adviser selects will
underperform the markets or other mutual funds with similar
investment objectives and strategies.
RISKS RELATED TO THE FUND'S SHARE LIMITATION. The Fund is
restricted in size to ten million shares (without taking into
account shares outstanding as a result of capital gain and
dividend distributions) As a result, at times the Fund may be
closed to new investments, including additions to existing
accounts, other than through reinvestment of capital gain and
dividend distributions. In such event, you may not be able to
acquire additional Fund shares should you desire to do so.
However, even if the Fund is closed to new investments,
redemptions of shares will continue to be received. Due
to the limitation on size, the Fund may be forced to sell
securities to meet redemption requests in adverse market
conditions which could have a negative impact on the value of
your Fund shares.
OTHER RISKS RELATED TO CERTAIN PORTFOLIO INVESTMENTS and
Strategies. Although the Fund generally will invest in the
common stocks of small- and medium-sized companies, certain
investments the Fund may acquire and certain investment
techniques the Fund may use entail other risks:
LIQUIDITY, INFORMATION AND VALUATION RISKS OF CERTAIN
PORTFOLIO INVESTMENTS
From time to time, the Fund may acquire the securities
of unseasoned companies (i.e., companies which have a record
of less than three years continuous operation) and
securities issued in private placements (i.e., securities
not registered for purchase and sale by the public under the
Securities Act of 1933, as amended). Securities of
unseasoned companies and securities issued in private
placements may be illiquid or volatile making it potentially
difficult or impossible to sell them at the time and at the
price the Fund would like. In addition, important
information about these types of companies, securities or
the markets in which they trade, may be inaccurate or
unavailable. Consequently, it may be difficult to value
accurately these securities as well.
These types of investments are made by the Fund when
the Adviser believes such investments offer the possibility
of capital appreciation. The Fund may not invest more than
15% of its total assets in equity securities which are not
readily marketable and in securities of unseasoned companies
(however, as previously noted, the Fund's Board may amend this
restriction without shareholder approval). In addition, the
Fund may not invest more than 5% of the Fund's total assets
in bonds, debentures or other debt securities distributed in
private placements.
DEBT SECURITIES AND PREFERRED STOCK
From time to time, the Fund may acquire debt securities
and preferred stock that are convertible into or carry
rights to acquire common stock, and other debt securities,
such as those selling at substantial discounts.
Debt securities, such as bonds, involve credit risk,
which is the risk that the borrower will not make timely
payments of principal and interest. Debt securities also
are subject to interest rate risk, which is the risk that
the value of the security may fall when interest rates rise.
In general, the market price of debt securities with longer
maturities will go up or down more in response to changes in
interest rates than shorter term securities. The Fund may
invest in both short-term and long-term debt securities.
The Fund is not limited as to the maturities of the debt
securities in which it invests.
These types of investments are made by the Fund when
the Adviser believes such investments offer the possibility
of appreciation in value.
Not more than 20% of the Fund's total net assets, taken
at market, may be invested in repurchase agreements;
provided, however, that repurchase agreements maturing in
more than seven days, when combined with certain debt
securities acquired in private placements, may not
constitute more than 5% of the Fund's total net assets,
taken at market.
CREDIT QUALITY OF FIXED INCOME INVESTMENTS
The Fund may invest in investment grade and non-
investment grade fixed income securities. "Investment grade
fixed income securities" refers to fixed income securities
ranked in one of the top four debt security rating
categories of any of the nationally recognized statistical
rating organizations ("NRSROs"), or unrated but deemed by
the Adviser to be comparable in quality to instruments so
rated on the date of purchase. The Fund usually will not
invest more than 5% of its total assets (at the time of
purchase) in non-investment grade fixed income securities.
However, this policy does not prohibit the Fund from
retaining a security if its credit quality is downgraded to
a non-investment grade level after purchase.
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. The market for lower rated
securities may be thinner and less active than for higher
rated securities. Consequently, there may be market price
volatility for these securities and limited liquidity in the
resale market. To the extent the Fund invests in non-
investment grade fixed income securities, the Fund may be
subject to greater risk of a decline in the value of the
Fund's investments.
REPURCHASE AGREEMENTS
The Fund may only enter into repurchase agreements with
a member bank of the Federal Reserve System or a primary
dealer in U.S. Government securities. Under such
agreements, the Fund buys U.S. Government securities from
the bank or primary dealer and simultaneously agrees to sell
the securities back to the bank or primary dealer at a
mutually agreed upon time and price. While the underlying
obligation is a U.S. Government security, the obligation of
the seller to repurchase the security is not guaranteed by
the U.S. Government. Delays or losses could result if the
bank or primary dealer defaults on its repurchase obligation
or becomes insolvent, which could adversely impact the
Fund's net asset value.
BORROWINGS
The use of borrowings can increase the Fund's exposure
to market risk. If the Fund borrows money to make more
investments than it otherwise could or to meet redemptions,
the Fund's share price may be subject to greater fluctuation
until the borrowing is paid off. 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.
INVESTMENTS IN OTHER INVESTMENT COMPANIES
The Fund may invest generally up to 10% of its total
assets in securities of other investment companies.
Investments in these securities will involve duplication of
advisory fees and certain other expenses.
In view of the risks inherent in all investments in
securities, there is no assurance that the Fund's objectives will
be achieved.
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout each year)
The financial highlights table below is intended to help you
understand the Fund's financial performance for the past five
fiscal years. Certain information reflects financial results for
a single Fund share. The total returns in the table represent
the rate that an investor would have earned (or lost) on an
investment in the Fund (assuming reinvestment of all dividends
and distributions). The following Financial Highlights of the
Fund for the five years ended December 31, 1998, 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, 1998. The table should be read in
conjunction with the financial statements and related notes
included in the Fund's Annual Report, which are incorporated by
reference into the Statement of Additional Information and which
may be obtained without charge by writing or calling the Fund.
<TABLE>
<CAPTION>
Year ended December 31,
----------------------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR...... $25.07 $20.74 $19.22 $17.09 $18.68
INCOME FROM INVESTMENT OPERATIONS:
Net investment income................. .01 .00* .01 .08 .10
Net gains (losses) on securities
(realized and unrealized).......... .38 6.82 4.14 5.07 (.68)
----- ----- ----- ----- -----
Total from investment operations... 0.39 6.82 4.15 5.15 (.58)
----- ----- ----- ----- -----
LESS DISTRIBUTIONS:
Dividends (from net investment income) (.01) (.00)* (.01) (.08) (.10)
Distributions (from capital gains).... (1.25) (2.49) (2.62) (2.94) (.91)
Distributions (in excess of book
realized gains) ***................ (.00)** -- -- -- --
----- ----- ----- ----- -----
Total distributions................. (1.26) (2.49) (2.63) (3.02) (1.01)
----- ----- ----- ----- -----
NET ASSET VALUE, END OF YEAR............. $24.20 $25.07 $20.74 $19.22 $17.09
----- ----- ----- ----- -----
----- ----- ----- ----- -----
TOTAL RETURN............................. 1.67% 33.02% 21.81% 30.18% (3.04%)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (millions)....... $367.2 $328.0 $232.8 $169.6 $142.6
Ratio of expenses to average net assets.. .85% .86% .86% .90% .90%
Ratio of net investment income
to average net assets.................. .06% .01% .06% .38% .52%
Portfolio Turnover Rate.................. 30.06% 37.05% 32.31% 35.77% 16.29%
</TABLE>
* The amount rounds to $0.00, actual amount $0.0029.
** The amount rounds to $(0.00), actual amount $(0.0020).
*** See Note 1(d) to the Fund's financial statements for the
fiscal year ended December 31, 1998 included in the Fund's
Annual Report for fiscal 1998.
Please consider the performance information above in light
of the Fund's investment objectives and policies, and market
conditions during the reported time periods. Again, you must
remember that historical performance does not necessarily
indicate what will happen in the future. The value of your Fund
shares may go up and down.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
The Fund's primary objective is long-term growth. In an
effort to achieve this objective, the Adviser purchases stocks
for the Fund in small- and medium-sized 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
herein. It also is 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.
At December 31, 1998, the Fund's portfolio consisted of
equity holdings in 60 companies, representing 98.07% of the
Fund's total net assets, a convertible bond holding of one
company, representing 0.38% of the Fund's total net assets, and
short-term investments representing 2.03% of the Fund's total net
assets. The Fund's performance in 1998 was driven primarily by
individual holdings in health care companies along with business
product and service companies. The Fund's performance was
adversely affected by industrial products and service companies
as well as companies with exposure to international markets.
In terms of overall portfolio mix, the Fund continues to
have significant positions in health care service companies
(19.19% of the Fund's total net assets at December 31, 1998);
business products and service companies (17.40%); media,
communications and entertainment companies (11.83%); health care
products (10.44%); industrial products and service companies
(9.29%); and banks and finance (8.24%). During 1998, the Fund
significantly increased its relative percentage holdings in
business products and service companies and media, communications
and entertainment companies, and modestly increased its relative
percentage holdings in consumer product and service companies
and industrial products and service companies. In addition, the
Fund significantly decreased its relative percentage holdings in
insurance companies and modestly decreased its relative
percentage holdings in health care product companies.
The Fund will continue to follow its conservative investment
philosophy of investing for a full market cycle in order to limit
the potential downside risk. Although this approach can hold
back performance if the market continues to focus on speculative
issues, such as initial public offerings and Internet-related
stocks, the Fund will maintain its investment approach to balance
risk and return.
Set forth below are two line graphs showing a comparison of
the initial account value and subsequent account values at the
end of each of the most recently completed ten 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 two different sets of peer group indices.
The peer group in the first graph includes the Russell 2000
Index and the Standard & Poor's 500 Composite Stock Price Index.
This peer group is consistent with the peer group used in the
performance graph which appeared in the Fund's Prospectus, dated
April 30, 1998. The peer group in the second graph only includes
the Russell 2000 Index. The Fund intends to use the peer group
index in the second graph in its performance graph in Fund
prospectuses in future years. The Fund believes the Russell 2000
Index is more representative of the performance of small- and
medium-capitalization companies which are the types of companies
in which the Fund primarily invests (as compared to the Standard
& Poor's 500 Index). Therefore, the Fund believes the Russell
2000 Index alone provides a more meaningful and representative
basis of comparison for Fund investors.
<TABLE>
<CAPTION>
Nicholas Limited Russell 2000r Standard &
Edition, Inc. Index Poor's 500
---------------- ---------- ------------
<S> <C> <C> <C>
December 31, 1988 10,000 10,000 10,000
December 31, 1989 11,736 11,624 13,143
December 31, 1990 11,533 9,356 12,724
December 31, 1991 16,518 13,665 16,611
December 31, 1992 19,289 16,180 17,887
December 31, 1993 21,031 19,240 19,675
December 31, 1994 20,392 18,890 19,937
December 31, 1995 26,546 24,262 27,431
December 31, 1996 32,335 28,263 33,729
December 31, 1997 43,013 34,583 44,984
December 31, 1998 43,731 33,701 57,840
</TABLE>
<TABLE>
<CAPTION>
Nicholas Limited Russell 2000r
Edition, Inc. Index
---------------- ----------
<S> <C> <C>
December 31, 1988 10,000 10,000
December 31, 1989 11,736 11,624
December 31, 1990 11,533 9,356
December 31, 1991 16,518 13,665
December 31, 1992 19,289 16,180
December 31, 1993 21,031 19,240
December 31, 1994 20,392 18,890
December 31, 1995 26,546 24,262
December 31, 1996 32,335 28,263
December 31, 1997 43,013 34,583
December 31, 1998 43,731 33,701
</TABLE>
The Fund's average annual total returns for the one, five
and ten year periods ended on the last day of the most recent
fiscal year are as follows:
<TABLE>
<CAPTION>
One Year Five Years Ten Years
Ended Ended Ended
December 31, 1998 December 31, 1998 December 31, 1998
----------------- ----------------- -----------------
<S> <C> <C> <C>
Average Annual
Total Return 1.67% 15.77% 15.90%
</TABLE>
PAST PERFORMANCE IS NOT PREDICATIVE OF FUTURE PERFORMANCE
THE FUND'S INVESTMENT ADVISER
Nicholas Company, Inc. located at 700 North Water Street,
Suite 1010, Milwaukee, Wisconsin, is the Fund's investment
adviser. The Adviser 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 five
other mutual funds and to approximately
25 institutions and individuals with substantial
investment portfolios. The Adviser acts as investment adviser to
the following additional mutual funds: Nicholas Fund, Inc.,
Nicholas Income Fund, Inc., Nicholas II, Inc., Nicholas Money
Market Fund, Inc. and Nicholas Equity Income Fund, Inc. As of
December 31, 1998, the Adviser had approximately $8 billion in
assets under management.
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.
Under an Investment Advisory Agreement with the Fund, 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.
The Fund pays all of its operating expenses. Included as
"operating expenses" 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, legal fees and
expenses, printing, fees and expenses of any custodian or trustee
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 certain other costs related to the aforementioned
items.
Albert 0. Nicholas is President and a Director of the Fund
and Chief Executive Officer and a Director of the Adviser, and is
a controlling person of the Adviser through his ownership of 91%
of the outstanding voting securities of the Adviser.
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
President and Chief Investment Officer, 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.
PRICING OF FUND SHARES
When you buy shares of the Fund, the price per share you pay
is the net asset value per share of the Fund. The net asset
value of a share of the Fund is determined by dividing the total
value in U.S. dollars of the Fund's total net assets 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
the total assets of the Fund. The net asset value is determined
as of the close of trading on the New York Stock Exchange
("NYSE") on each day the NYSE is open for unrestricted trading.
PURCHASE OF FUND SHARES
MINIMUM To Open An Account......... $2,000
INVESTMENTS To Add To An Account....... $100
[ICON] Minimum Balance............ $2,000
The Fund's Automatic Investment Plan has
a minimum monthly investment of $50. Due to
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 investment
required 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 will give advance
written notice of at least 30 days to the
accounts below such minimum.
APPLICATION You may apply to purchase shares of
INFORMATION the Fund by submitting an application to
[ICON] Nicholas Limited Edition, Inc., c/o
Firstar Mutual Funds Services, LLC
("Firstar"), P.0. Box 2944, Milwaukee,
Wisconsin 53201-2944. See the back cover
page of this Prospectus for information on
how to contact the Fund. The Fund also has
available an Automatic Investment Plan for
shareholders. Anyone interested should
contact the Fund for additional information.
When you make a purchase, your purchase
price per share will be the net asset value
("NAV") per share next determined after the
time the Fund receives your application in
proper order. The NAV is calculated once a
day based on the closing market price for
each security held in the Fund's portfolio.
The determination of NAV for a particular day
is applicable to all purchase applications
received by the close of trading on the
(NYSE) on that day (usually 4:00 p.m., New
York time).
Applications to purchase Fund shares
received in proper order on a day
the NYSE is open for trading, prior
to the close of trading on that day,
will be based on the NAV as of the
close of trading on that day.
Applications to purchase Fund shares
received in proper order after the
close of trading on the NYSE will be
based on the NAV as determined as
of the close of trading on the next
day the NYSE is open.
Purchase of shares will be made in full
and fractional shares computed to three
decimal places.
You should be aware that DEPOSIT in the
U.S. mail or with other independent delivery
services, or receipt at Firstar's Post Office
Box, of purchase applications DOES NOT
constitute receipt by Firstar or the Fund. Do
not mail letters by overnight courier to the
post office box address. OVERNIGHT COURIER
DELIVERY SHOULD BE SENT TO FIRSTAR MUTUAL
FUNDS SERVICES, LLC, THIRD FLOOR, 615 EAST
MICHIGAN STREET, MILWAUKEE, WISCONSIN 53202.
All applications to purchase Fund shares
are subject to acceptance or rejection by
the Fund and are not binding until accepted.
Your application must be in proper order to
be accepted and may only be accepted by the
Fund or an authorized agent of the Fund.
Applications will not be accepted unless they
are accompanied by payment in U.S. funds.
Payment should be made by check drawn on a
U.S. bank, savings and loan or credit union.
Checks are accepted subject to collection at
full face value in U.S. funds. The transfer agent
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 transfer agent for insufficient funds. The
Fund will not accept applications under
circumstances or in amounts considered
disadvantageous for shareholders. Any
account (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.
WIRE PAYMENTS You also may purchase Fund shares via the
[ICON] Federal Reserve wire system. If a wire purchase
is to be an initial purchase, please call
Firstar (414-276-0535 or 800-544-6547) with
the appropriate account information prior to
sending the wire. Firstar will provide you
with a confirmation number for the wire
purchase which will ensure the prompt and
accurate handling of funds. To purchase
shares of the Fund by federal wire transfer,
instruct your bank to use the following
instructions:
Wire To: Firstar Bank Milwaukee, N.A.
ABA 075000022
Credit: Firstar Mutual Funds Services, LLC
Account 112-952-137
Further
Credit: Nicholas Limited Edition, Inc.
(shareholder account number)
(shareholder registration)
The Fund and its transfer agent
are not responsible for the consequences of
delays resulting from the banking or Federal
Reserve wire system, or from incomplete
wiring instructions.
CERTIFICATES Certificates representing Fund shares
[ICON] purchased will not be issued unless the shareholder
specifically requests certificates by written
notice 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. Where
certificates are not requested, the Fund's
transfer agent, Firstar, will credit the
shareholder's account with the number of
shares purchased. Written confirmations are
issued for all purchases of Fund shares.
THIRD PARTY USE OF A PROCESSING INTERMEDIARY TO PURCHASE
PURCHASES FUND SHARES. Shares of the Fund may be purchased
[ICON] through certain broker-dealers, financial
institutions or other service providers
("Processing Intermediaries"). When shares
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.
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 or other charges for the services
they provide to their customers. Such
charges may vary among Processing
Intermediaries, but in all cases will be
retained by the Processing Intermediary and
not remitted to the Fund or the Adviser.
Investors who do not wish to use
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 of
shares of the Fund may be made without a
sales charge.
The Fund also may enter into an
arrangement with some Processing
Intermediaries authorizing them to process
purchase orders on behalf of the Fund on an
expedited basis (an "authorized agent").
Receipt of a purchase order by an authorized
agent will be deemed to be received by the
Fund for purposes of determining the NAV of
the Fund shares to be purchased. For
purchase orders placed through an authorized
agent, a shareholder will pay the Fund's NAV
per share next computed after the receipt by
the authorized agent of such purchase order,
plus any applicable transaction charge
imposed by the agent.
REDEMPTION OF FUND SHARES
REDEMPTION You may redeem Fund shares in whole or in
PRICE part by any of the methods described below. All
$ redemptions will be processed immediately upon receipt
[ICON] and written confirmations will be issued for
redemptions of Fund shares. The redemption
price will be the Fund's NAV next computed
after the time of receipt by Firstar (or by
an authorized agent of the Fund) of the
certificate(s), or written request in the
proper order as described below, or pursuant
to proper telephone instructions as described
below.
* Requests for redemption of Fund shares
received in proper order on a day the NYSE
is open for trading, prior to the close of
trading on that day, will be based on
the NAV as of the close of trading on
that day.
* Requests for redemption of Fund shares
received in proper order after the close of
trading on the NYSE will be based on the NAV as
determined as of the closing of trading
on the next day the NYSE is open.
REDEMPTION REQUESTS THAT CONTAIN
RESTRICTIONS AS TO THE TIME OR DATE
REDEMPTIONS ARE TO BE EFFECTED WILL BE
RETURNED AND WILL NOT BE PROCESSED.
If any portion of the shares to be redeemed
represents an investment made by personal or certified
check, the fund reserves the right to hold a payment up
to 15 days or until notified that investments made by
check have been collected, at which time a redemption
request will be processed and payment made.
REDEMPTIONS If you redeem in writing, you must ensure
BY MAIL that the redemption request is signed by each
[ICON] shareholder in the exact manner as the Fund account is
registered and includes the redemption amount
and the shareholder account number.
WHEN SHARES ARE REPRESENTED BY CERTIFICATES,
you may redeem by delivering to the Fund, c/o
Firstar Mutual Funds Services, LLC, 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," which is 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,
you may redeem by delivering an original
signed written request for redemption
addressed to Nicholas Limited Edition, Inc.,
c/o Firstar Mutual Funds Services, LLC,
P.O. Box 2944, Milwaukee, Wisconsin
53201-2944. If the account registration is
individual, joint tenants, sole
proprietorship, custodial (Uniform
Transfer to Minors Act), or general
partners, the written request must be
signed exactly as the account is
registered. If the account is owned
jointly, all owners must sign.
FACSIMILE TRANSMISSION OF REDEMPTION REQUESTS IS NOT ACCEPTABLE.
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 must 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 IN WRITING, PLEASE
WRITE OR CALL FIRSTAR (414-276-0535 OR 800-
544-6547), PRIOR TO SUBMITTING A WRITTEN
REDEMPTION REQUEST. A WRITTEN REDEMPTION
REQUEST WILL NOT BECOME EFFECTIVE UNTIL ALL
DOCUMENTS HAVE BEEN RECEIVED IN PROPER ORDER
BY FIRSTAR.
Shareholders who have an
individual retirement account ("IRA"), a
master retirement plan or other retirement
plan must indicate on their written
redemption requests whether or not to
withhold federal income tax. Redemption
requests lacking an election not to have
federal income tax withheld will be subject
to withholding. Please consult your current
Disclosure Statement for any applicable fees.
OVERNIGHT The Fund does not consider the U.S. Postal
DELIVERY Service or other independent delivery services to
[ICON] be its agents. Therefore, You should be aware
that DEPOSIT in the mail or with other independent
delivery services or receipt at Firstar's Post Office
Box of redemption requests DOES NOT
constitute receipt by Firstar or the Fund.
DO NOT mail letters by overnight courier to
the Post Office Box address. OVERNIGHT
COURIER DELIVERY SHOULD BE SENT TO THE
FIRSTAR MUTUAL FUNDS SERVICES, LLC, THIRD
FLOOR, 615 EAST MICHIGAN STREET, MILWAUKEE,
WISCONSIN 53202.
TELEPHONE Telephone redemption is automatically
REDEMPTIONS extended to all accounts in the Fund unless this
[ICON] privilege is declined in writing.This option does not
apply to IRA accounts and master retirement
plans for which Firstar acts as custodian. Telephone
redemptions can only be made by calling Firstar at
800-544-6547 or 414-276-0535. In addition to the
account registration, you will be required to
provide the account number and social
security number. Telephone calls will be
recorded.
Telephone redemption requests
must be received prior to the closing of the
NYSE (usually 4:00 p.m., New York time) to
receive that day's NAV. There will be no
exceptions due to market activity. During
periods of substantial economic or market
changes, telephone transactions may be
difficult to implement. If a shareholder is
unable to contact Firstar by telephone,
shares also may be redeemed by delivering the
redemption request in person or by mail. The
maximum telephone redemption is $50,000 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. Neither the Fund nor
Firstar will be responsible for the
authenticity of redemption instructions
received by telephone which they reasonably
believe to be genuine, even if such
instructions prove to be unauthorized or
fraudulent. The Fund and Firstar will employ
reasonable procedures to confirm that
instructions received by telephone are
genuine, and if they do not, they may be
liable for losses due to unauthorized or
fraudulent instructions.
TAX EFFECT OF For federal income tax purposes, a
REDEMPTIONS redemption generally is treated as a sale of
[ICON] 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 basis for the shares being
redeemed. See "Dividends, Distributions and
Federal Tax Status" for further tax information.
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 to be wired also
ordinarily will be wired within seven days
after receipt of the request, and normally
will be wired on the next business day after
a NAV is determined. The Fund reserves the
right to hold payment up to 15 days or until
satisfied that investments made by check have
been collected.
You may instruct Firstar 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 charges a wire redemption fee of
$12.00. Please contact the Fund for the
appropriate form if you are interested in
setting your account up with wiring
instructions.
SIGNATURE A signature guarantee of each owner
GUARANTEES is required to redeem shares in the following
[ICON] situations, for all size transactions:
* if you change the ownership on your account
* upon redemption of shares when certificates
have been issued for your account
* when you want the redemption proceeds sent to a
different address than is registered on
the account
* for both certificated and uncertificated shares,
if the proceeds are to be made payable
to someone other than the account owner(s)
* any redemption transmitted by federal wire transfer
to your bank not previously set up with the
Fund
* if a change of address request has been received
by the Fund or Firstar within 15 days of a
redemption request
In addition, signature guarantees
will be 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.
THIRD PARTY USE OF A PROCESSING INTERMEDIARY TO REDEEM FUND SHARES.
REDEMPTIONS As with the purchase of Fund shares, shares of the Fund
[ICON] may be sold through certain broker-dealers,
financial institutions and other service
providers ("Processing Intermediaries"). An
investor intending to redeem Fund shares
through his or her Processing Intermediary
should read the program materials provided by
the Processing Intermediary and follow the
instructions and procedures outlined therein.
Processing Intermediaries may
charge fees or other charges for the services
they provide to their customers. Such
charges vary among Processing Intermediaries,
but in all cases will be retained by the
Processing Intermediary and not remitted to
the Fund or the Adviser.
Investors who do not wish to use
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. IF YOU HOLD FUND
SHARES THROUGH A PROCESSING INTERMEDIARY, YOU
MUST REDEEM YOUR SHARES THROUGH SUCH
PROCESSING INTERMEDIARY. IN SUCH EVENT, YOU
SHOULD CONTACT THE PROCESSING INTERMEDIARY
FOR INSTRUCTIONS ON HOW TO REDEEM. If an
investor has originally invested directly
with the Fund, direct sale of Fund shares
through the Fund (and not the Processing
Intermediary) may be made without a
redemption charge.
The Fund also may enter into an
arrangement with some Processing
Intermediaries authorizing them to process
redemption requests on behalf of the Fund on
an expedited basis (an "authorized agent").
Receipt of a redemption request by an
authorized agent will be deemed to be
received by the Fund for purposes of
determining the NAV of Fund shares to be
redeemed. For redemption orders placed
through an authorized agent, a shareholder
will receive redemption proceeds which
reflect net asset value per share next
computed after the receipt by the authorized
agent of the redemption order, less any
redemption fees imposed by the agent.
EXCHANGE BETWEEN NICHOLAS FAMILY OF FUNDS
You may exchange Fund shares for shares of other
mutual funds for which Nicholas Company, Inc.
serves as the investment adviser.
GENERAL Nicholas Company, Inc. also is
adviser to the following funds which have
investment objectives and net assets as noted
below:
<TABLE>
<CAPTION>
NET ASSETS AT
FUND INVESTMENT OBJECTIVE DECEMBER 31, 1998
---- -------------------- ------------------
<S> <C> <C>
Nicholas Fund, Inc. Capital appreciation; Income as
a secondary consideration $5,823,474,514
Nicholas II, Inc. Long-term growth; Income as a
secondary consideration $1,109,497,195
Nicholas Equity Reasonable income; Moderate
Income Fund, Inc. long-term growth as a secondary
Consideration $ 26,813,593
Nicholas Income High current income consistent
Fund, Inc. with the preservation and
conservation of capital value $ 239,419,855
Nicholas Money High level of current income as
Market Fund, Inc. as is consistent with preserving
capital and liquidity $ 160,187,297
____________
</TABLE>
If you choose to exercise the exchange
privilege, the shares will be exchanged at
their next determined NAV. When
an exchange into the Nicholas Money Market
Fund, Inc. would involve investment of the
exchanged amount on a day when the NYSE
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
business 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.
An exchange constitutes a sale for
federal tax purposes and a capital gain or
loss generally will be recognized upon
the exchange, depending upon whether the NAV
at the time is more or less than the
shareholder's cost basis. An exchange between
the funds involving master retirement plans
and IRA accounts generally will not
constitute a taxable transaction for federal
tax purposes. See "Dividends, Distributions
and Federal Tax Status" for further tax
information.
EXCHANGE The exchange privilege is available
BY only in States where shares of the fund being
MAIL acquired may legally be sold, and the privilege
[ICON] may be terminated or modified only upon 60
days advance notice to shareholders. You may
exchange shares of the Fund for
shares of other available Nicholas mutual funds
directly through Nicholas Company, Inc.
without cost by written request.
If you are interested in exercising the
exchange by mail privilege, you may obtain the
appropriate prospectus from Nicholas Company, Inc.
Signatures required are the same as previously
explained under "Redemption of Fund Shares."
EXCHANGE You may exchange by telephone among
BY all funds for which the Nicholas Company, Inc.
TELEPHONE serves as investment adviser. Only exchanges of
[ICON] $500 or more may be executed using the telephone
exchange privilege. Firstar 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.
Neither the Fund nor Firstar will be
responsible for the authenticity of exchange
instructions received by telephone. Telephone
exchanges can only be made by calling Firstar
at 414-276-0535 or 800-544-6547. You will be
required to provide pertinent information
regarding your account. Calls will be
recorded.
TRANSFER OF FUND SHARES
You may transfer Fund shares 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 necessary to transfer capital
stock can be obtained by writing or calling Firstar (414-276-0535
or 800-544-6547) or Nicholas Company, Inc. (414-272-6133 or 800-
227-5987) prior to submitting any transfer requests.
DIVIDENDS, DISTRIBUTIONS AND FEDERAL TAX STATUS
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 gains.
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. The maximum tax rate on
long-term capital gains for sales of securities held greater than
twelve months is 20%. Income distributed from the Fund's net
investment income and net realized short-term capital gains are
taxable to shareholders as ordinary income, whether distributed
in cash or additional shares. Distributions will be made annually
in December. The Fund will provide information to shareholders
concerning the character and federal tax treatment of all dividends
and distributions.
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. Therefore, 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 (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 or she 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
tax aspects of an investment in the Fund.
DIVIDEND AND DISTRIBUTION REINVESTMENT PLAN
Unless you elect 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. You may elect to accept cash 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 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.
You 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 ("Plan") and receive monthly or
quarterly checks for any designated amount. Firstar 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 upon written
notice mailed to the shareholders. Please contact Nicholas
Company, Inc. for copies of the Plan documents.
INDIVIDUAL RETIREMENT ACCOUNTS
Individuals may be able to establish a traditional IRA, a Roth
IRA and/or an Education IRA. The Fund offers prototype IRA plans
for adoption by individuals who qualify. 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 IRS requires to be furnished to
individuals who are considering adopting an IRA. It is important
you obtain up-to-date information from the Fund before opening an
IRA.
Individuals who receive compensation, including earnings from
self-employment, may be entitled to establish and make
contributions to a traditional IRA. Taxation of the income and
gains paid to a traditional IRA by the Fund is deferred until
distribution from the IRA.
Contributions to a Roth IRA are not currently deductible.
However, the amounts within the accounts accumulate tax-free and
qualified distributions will not be included in a shareholder's
taxable income. The contribution limit is $2,000 annually ($4,000
for joint returns) in aggregate with contributions to traditional
IRAs. Certain income phaseouts apply.
Like the Roth IRA, contributions to an Education IRA are non-
deductible, but the investment earnings accumulate tax-free, and
distributions used for higher education expenses are not taxable.
Contribution limits are $500 per account and certain income
phaseouts apply.
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.
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 an IRA may result in adverse tax
consequences. Consultation with a tax adviser regarding tax
consequences is recommended.
MASTER RETIREMENT PLAN
The Fund has available a master retirement 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.
YEAR 2000 ISSUES
The "Year 2000" issue presents a significant technological
challenge for the securities industry. Due to the limited memory
and the high cost of storage space associated with early computer
equipment, the century was implied rather than actually stored.
As a result, many computer systems are unable to interpret dates
beyond 1999. Software and hardware which is not designed to work
across centuries may potentially malfunction on January 1, 2000.
Because dates are part of every securities transaction, accurate
date calculations are critical.
The Fund has focused on the Year 2000 computer conversion
issue and management believes that there should be a smooth
transition on the part of suppliers of services to the Fund. The
Fund's custodian bank and transfer agent has reported that the
necessary conversion process is in progress, and it appears to
have dedicated the appropriate level of resources to solve the
problem.
The Adviser has identified and is taking steps it believes are
reasonably designed to resolve potential problems and address the
Year 2000 issue, although there can be no assurances that these
steps will be sufficient. The Adviser, which performs the Fund's
internal accounting and pricing functions, is in the process of re-
engineering its hardware to handle the century date, and has
identified and is taking steps to resolve potential software
problems. Some systems are currently compliant. Internal testing
is ongoing, and the Fund expects that all systems will have been
converted by mid-1999.
In addition, there can be no assurances that the Year 2000
issue will not have an adverse effect on issuers whose securities
are held by the Fund or on global markets generally.
PROSPECTUS
APRIL 30, 1999
NICHOLAS LIMITED EDITION, INC.
FOR MORE INFORMATION ABOUT THE FUND:
The Fund's Statement of Additional Information ("SAI"), dated
April 30, 1999, contains more detailed information on all aspects
of Nicholas Limited Edition, Inc., and is incorporated by
reference in this Prospectus. Additional information about the
Fund also is available in the Fund's Annual and Semi-Annual Report
to Shareholders.
To request a free copy of the current Annual/Semi-Annual Report
or SAI, or to make shareholder inquiries, please write or call:
Nicholas Limited Edition, Inc., 700 North Water Street, Milwaukee,
Wisconsin 53202, 800-227-5987 (toll-free). Additional
information about the Fund also can be obtained from the Fund's
Internet website at www.nicholasfunds.com.
In addition, you can review the Fund's reports and SAIs at the
Public Reference Room of the Securities and Exchange Commission in
Washington, D.C. Information on the operation of the Public
Reference Room may be obtained by calling the Commission at 800-
SEC-0330. Reports and other information about the Fund also are
available on the Commission's Internet website at www.sec.gov.
For a DUPLICATING fee, copies of such information may be obtained
by writing the Public Reference Section of the Commission, Washington,
D.C. 20549-6000.
For the most current price and return information for the
Fund, you may call the Fund at 800-227-5987 (toll-free) or 414-
272-6133 or check the Fund's website at www.nicholasfunds.com.
You also can find the most current price of the Fund's shares in
the business section of your newspaper in the mutual fund section
under the heading "Nicholas Group" and "NchLt." If you prefer to
obtain this information from an on-line computer service, you can
do so by using the ticker symbol "NCLEX" or cusip number 653738104.
Investment Adviser
NICHOLAS COMPANY, INC.
Milwaukee, Wisconsin
414-272-6133 or 800-227-5987
Custodian
FIRSTAR BANK MILWAUKEE, N.A.
Milwaukee, Wisconsin
Transfer Agent
FIRSTAR MUTUAL FUND SERVICES, LLC
Milwaukee, Wisconsin
414-276-0535 or 800-544-6547
Independent Public Accountants
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin
Counsel
MICHAEL BEST & FRIEDRICH LLP
Milwaukee, Wisconsin
414-276-0535 or 800-544-6547
NICHOLAS LIMITED EDITION, INC.
700 NORTH WATER STREET SUITE 1010
MILWAUKEE, WISCONSIN 53202
www.nicholasfunds.com
NO LOAD FUND - NO SALES CHARGE
Investment Company Act File No. 811-4993
Nicholas Limited Edition, Inc.
Form N-1A
PART B: STATEMENT OF ADDITIONAL INFORMATION
STATEMENT OF ADDITIONAL INFORMATION
700 North Water Street, Suite 1010
Milwaukee, Wisconsin 53202
414-272-6133
800-227-5987
This Statement of Additional Information, which is not a
prospectus and contains information in addition to and more
detailed than that set forth in the current Prospectus of
Nicholas Limited Edition, Inc. (the "Fund"), dated April 30,
1999. It is intended to provided you with additional information
regarding the activities and operations of the Fund, should be read
in conjunction with the Fund's current Prospectus and the Fund's
Annual Report for the fiscal year ended December 31, 1998,
which is incorporated herein by reference, as they may be revised
from time to time. The Fund's Prospectus provides the basic
information you should know before investing in the Fund.
To obtain a free 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, 1999
TABLE OF CONTENTS
Page
INTRODUCTION............................................... -
SHARE LIMITATION........................................... -
INVESTMENT OBJECTIVES AND PRINCIPAL INVESTMENT STRATEGIES.. -
INVESTMENT RESTRICTIONS.................................... -
INVESTMENT RISKS........................................... -
THE FUND'S INVESTMENT ADVISER.............................. -
MANAGEMENT - DIRECTORS, EXECUTIVE OFFICERS
AND PORTFOLIO MANAGER OF THE FUND........................ -
PRINCIPAL SHAREHOLDERS..................................... -
PRICING OF FUND SHARES..................................... -
PURCHASE OF FUND SHARES.................................... -
REDEMPTION OF FUND SHARES.................................. -
EXCHANGE BETWEEN FUNDS..................................... -
TRANSFER OF FUND SHARES.................................... -
DIVIDENDS, DISTRIBUTIONS AND FEDERAL TAX STATUS............ -
DIVIDEND AND DISTRIBUTION REINVESTMENT PLAN................ -
SYSTEMATIC WITHDRAWAL PLAN................................. -
INDIVIDUAL RETIREMENT ACCOUNTS............................. -
MASTER RETIREMENT PLAN..................................... -
BROKERAGE.................................................. -
PERFORMANCE DATA........................................... -
CAPITAL STRUCTURE.......................................... -
STOCK CERTIFICATES......................................... -
ANNUAL MEETING............................................. -
SHAREHOLDER REPORTS........................................ -
YEAR 2000 ISSUES........................................... -
CUSTODIAN AND TRANSFER AGENT............................... -
INDEPENDENT ACCOUNTANTS AND LEGAL COUNSEL.................. -
FINANCIAL INFORMATION...................................... -
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 (the "1940
Act). As an open-end investment company, it obtains its assets
by continuously selling shares of its Common Stock, $0.01 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 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 20
million shares of common stock outstanding. A maximum of ten
million shares (net of redemptions) are available for purchase by
investors and ten 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. IN ADDITION, THE FUND MAY CLOSE
TO NEW INVESTMENTS AT ANY TIME IN THE SOLE DISCRESION OF THE FUND.
However, redemptions of shares will continue to be received even
if the Fund is closed. Should the number of outstanding shares
decline through redemptions, or at other appropriate times, 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
PRINCIPAL INVESTMENT STRATEGIES
The Fund's main goal is long-term growth through
investments primarily in a diversified portfolio of equity
securities of U.S. small- and medium-sized companies which the
fund believes has growth potential.
The Fund believes a company's annual sales volume and market
capitalization (the number of shares outstanding multiplied by
the per share price) are the factors most illustrative of a
company's size. In distinguishing company size in terms of sales
volume, the Fund considers a company's sales volume relative to
peer companies in the company's industry. In terms of market
capitalization, the Fund uses the following standard:
MARKET CAPITALIZATION
---------------------
Small........................ 0 to $2.0 Billion
Medium....................... $2.0 Billion to $7.5 Billion
Large........................ Over $7.5 Billion
To pursue the Fund's goal of long-term growth, the Fund
primarily invests in common stocks of small- and medium-sized
companies. To a lesser extent, the Fund may invest in companies
with large capitalizations. The Fund believes the stocks of
successful, well-run, small- and medium-sized companies have
superior appreciation potential because their revenues and
earnings often are growing more rapidly than those of larger
companies. The Fund also believes small- or medium-sized
companies often have the potential for more rapid, and greater,
long-term growth because of newer and more innovative products.
The Fund's investment philosophy is basically a long-term growth
philosophy, based upon the assumption that if a company achieves
superior growth in sales and earnings, eventually the company's
stock will achieve superior performance.
The Fund looks for established companies with the potential
for superior growth in sales and earnings. The Fund seeks
companies that are well positioned to take advantage of emerging,
long-term social and economic trends, and have ample financial
resources to sustain their growth. The Fund considers a number
of factors in assessing a company's value, including the
following:
* a company's strategic position in its industry
* sales and earnings growth
* product development
* quality of management
* overall business prospects
* a company's price to earnings ratio
(including an analysis of such ratio in relation
to the company's growth rate and industry trends)
The Fund does not have a pre-set asset allocation strategy
which would require that the Fund maintain a specific percentage
of its assets in equity-related securities (i.e., stocks) and
income-related securities (i.e., bonds). Income is not a
significant factor in selecting the Fund's investments. In
addition, there is no minimum or maximum percentage of the Fund's
assets which is required to be invested in the securities of
companies in any particular industry or group of related industries.
However, the Fund may not invest more than 5% of its total net
assets in the securities of any one issuer, and not more than 25%
of the value of the Fund's total net assets may be concentrated
in companies in any particular industry or group of related industries.
In addition, the Fund may not hold more than 10% of the voting
securities of any one issuer.
The Fund has no stated minimum holding period for
investments, and will buy or sell securities whenever the Fund
sees an appropriate opportunity. Securities are not purchased
with a view toward rapid turnover or to obtain short-term trading
profits (defined as profits on assets held less than twelve
months). The Fund may reduce or sell investments in companies if
there is an actual or perceived deterioration in the fundamentals
of a company (including the company's financial condition or
performance, management-related problems, product-line or service-
line issues, or industry problems). The Fund also may reduce or
sell investments in companies if a company's market
capitalization grows to a point that it is clearly no longer a
small- or medium-capitalization stock or if a company's stock
price appreciates excessively in relation to its fundamental
prospects. Investments in companies also may be sold if they
fail to realize their growth potential or if there are other more
attractive opportunities elsewhere.
It is anticipated that a major portion of the Fund's
portfolio will be invested in common stocks of the types of
companies, and in the manner, as described above at all times.
However, subject to specific limits discussed further herein, the
Fund also may invest in the securities of unseasoned companies
(companies with a record of less than three years of continuous
operation). The Fund also may invest in debt securities, debt
securities and preferred stock convertible into common stock,
securities of other investment companies (up to 10% of the Fund's
total assets) and securities offered in private placements. The
Fund also may invest in certain higher-risk securities and engage
in other investment practices.
For liquidity or flexibility, the Fund also may invest in
cash, investment grade and non-investment grade fixed income
securities, and repurchase agreements. 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 usually will not invest more than
5% of its total assets (at the time of purchase) in non-
investment grade fixed-income securities.
As a temporary defensive tactic because of adverse market,
economic, political or other conditions, the Fund also may invest
in cash, investment grade and non-investment grade fixed income
securities and repurchase agreements. In the event the Fund
employs such a temporary defensive tactic in response to abnormal
market or other conditions, the Fund may not achieve its
investment objective during the period in which the Fund
maintains such defensive position.
INVESTMENT RESTRICTIONS WHICH MAY BE CHANGED WITHOUT SHAREHOLDER
APPROVAL
The Fund's Board of Directors has adopted the following
investment restrictions which may be changed by the Board without
shareholder approval:
* Not more than 15% of the Fund's total assets may
be invested in equity securities which are not readily
marketable and in securities of unseasoned companies
(companies which have a record of less than three
years' continuous operation)
* No investments in interests in oil, gas or other
mineral exploration programs are permitted (but
investments in securities of companies engaged in oil,
gas or mineral activities are permitted)
* No investments in puts, calls, straddles, spreads
or any combinations thereof are permitted
* No investments in securities of other open-end
management-type investment companies are permitted
Any Board imposed change to the above-noted investment
restrictions will be made only upon advance notice to
shareholders in the form of an amended Statement of Additional
Information filed with the SEC.
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 the 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 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 total net
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 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 total net 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 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 1940 Act. 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 net assets of the
Fund, taken at market value, will be invested in the
securities of any one issuer (not including U.S.
Government securities).
7. Not more than 25% of the value 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, 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.
INVESTMENT RISKS
This section contains a summary description of the general
risks of investing in the Fund. As with any mutual fund, there
can be no guarantee that the Fund will meet its goals or that the
Fund's performance will be positive over any period of time.
MARKET RISK. The value of the Fund's investments, and
therefore, the value of your Fund shares, may go up or down.
Value changes in the Fund's investments and consequently, your
Fund shares may occur because a particular stock market is rising
or falling. Stock markets tend to run in cycles, with periods
when stock prices generally go up, known as "bull markets," and
periods when stock prices generally go down, referred to as "bear
markets." Stock prices in general may decline over short or
extended periods. Thus, there is a possibility that the value of
the Fund's investments will decrease because of declines in the stock
market, regardless of the success or failure of the operations of
the Fund's portfolio companies. At other times, there are
specific factors that may adversely affect the value of a
particular investment of the Fund.
PORTFOLIO-SPECIFIC RISK. Because the Fund will invest most
of its assets in the securities of small- and medium-sized
companies and to a lesser extent, the securities of large
companies, the Fund will be subject to additional risks. Small-
to medium-sized companies often have a limited market for their
securities and limited financial resources, and are usually more
affected by changes in the economy. Securities of small- to
medium-sized companies also often fluctuate in price more than
common stocks of larger companies, such as many of those included
in the Dow Jones Industrial Average. Therefore, during the
history of the Fund, its price per share has often been more
volatile than the Dow Jones Industrial Average. If the value of
the Fund's investments in small- to medium-sized companies
decreases, the value of the Fund's shares also may go down.
SELECTION RISK. The Fund also is subject to selection risk,
which is the risk that the stocks the Fund's adviser selects will
underperform the markets or other mutual funds with similar
investment objectives and strategies.
RISKS RELATED TO THE FUND'S SHARE LIMITATION. The Fund is
restricted in size to ten million shares (without taking into
account shares outstanding as a result of capital gain and
dividend distributions). As a result, at times the Fund may be
closed to new investments, including additions to existing
accounts, other than through reinvestment of capital gain and
dividend distributions. However, even if the Fund is closed to
new investments, redemptions of shares will continue to be
received. Due to the limitation on size, the Fund may be forced
to sell securities to meet redemption requests in adverse market
conditions which could have a negative impact on the value of
your Fund shares.
OTHER RISKS RELATED TO CERTAIN PORTFOLIO INVESTMENTS and
Strategies. Although the Fund generally will invest in the
common stocks of small- and medium-sized companies, certain
investments the Fund may acquire and certain investment
techniques the Fund may use entail other risks:
LIQUIDITY, INFORMATION AND VALUATION RISKS OF CERTAIN
PORTFOLIO INVESTMENTS
From time to time, the Fund may acquire the securities
of unseasoned companies (i.e., companies which have a record
of less than three years continuous operation) and
securities issued in private placements (i.e., securities
not registered for purchase and sale by the public under the
Securities Act of 1933, as amended). Securities of
unseasoned companies and securities issued in private
placements may be illiquid or volatile making it potentially
difficult or impossible to sell them at the time and at the
price the Fund would like. In addition, important
information about these types of companies, securities or
the markets in which they trade, may be inaccurate or
unavailable. Consequently, it may be difficult to value
accurately these securities as well.
These types of investments are made by the Fund when
the Adviser believes such investments offer the possibility
of capital appreciation. The Fund may not invest more than
15% of its total assets in equity securities which are not
readily marketable and in securities of unseasoned companies
(however, as previously noted, the Fund's Board may amend this
restriction without shareholder approval). In addition, the
Fund may not invest more than 5% of the Fund's total assets
in bonds, debentures or other debt securities distributed in
private placements.
DEBT SECURITIES AND PREFERRED STOCK
From time to time, the Fund may acquire debt securities
and preferred stock that are convertible into or carry
rights to acquire common stock, and other debt securities,
such as those selling at substantial discounts.
Debt securities, such as bonds, involve credit risk,
which is the risk that the borrower will not make timely
payments of principal and interest. Debt securities also
are subject to interest rate risk, which is the risk that
the value of the security may fall when interest rates rise.
In general, the market price of debt securities with longer
maturities will go up or down more in response to changes in
interest rates than shorter term securities. The Fund is not
limited as to the maturities of the debt securities in which
it invests.
The value of preferred stock and debt securities
convertible into common stock generally will be affected
by its stated dividend rate or interest rate, as
applicable, and the value of the underlying common stock.
As a result of the conversion feature, the dividend
rate or interest rate on convertible
preferred stock or convertible debt securities generally is
less than would be the case if the security were not
convertible. Therefore, the value of convertible preferred
stock and debt securities will be affected by the factors
that affect both equity securities (such as stock market
movements generally) and debt securities (such as interest
rates). Some convertible securities might require the Fund
to sell the securities back to the issuer or a third party
at a time that is disadvantageous to the Fund.
These types of investments are made by the Fund when
the Adviser believes such investments offer the possibility
of appreciation in value.
REPURCHASE AGREEMENTS
The Fund may only enter into repurchase agreements with
a member bank of the Federal Reserve System or a primary
dealer in U.S. Government securities. Under such
agreements, the Fund buys U.S. Government securities from
the bank or primary dealer and simultaneously agrees to sell
the securities back to the bank or primary dealer at a
mutually agreed upon time and price. While the underlying
obligation is a U.S. Government security, the obligation of
the seller to repurchase the security is not guaranteed by
the U.S. Government. Delays or losses could result if the
bank or primary dealer defaults on its repurchase obligation
or becomes insolvent, which could adversely impact the
Fund's net asset value.
Not more than 20% of the Fund's total net assets, taken
at market, may be invested in repurchase agreements;
provided, however, that repurchase agreements maturing in
more than seven days, when combined with certain debt
securities acquired in private placements, may not
constitute more than 5% of the Fund's total net assets,
taken at market.
FIXED INCOME SECURITIES
The Fund may invest in investment grade and non-
investment grade fixed income securities. "Investment grade
fixed income securities" refers to fixed income securities
ranked in one of the top four debt security rating
categories of any of the nationally recognized statistical
rating organization ("NRSROs"), or unrated but deemed by the
Adviser to be comparable in quality to instruments so rated
on the date of purchase. The Fund usually will not invest
more than 5% of its total assets (at the time of purchase)
in non-investment grade fixed income securities. However,
this policy does not prohibit the Fund from retaining a
security if its credit quality is downgraded to a non-
investment grade level after purchase.
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. The market for lower rated
securities may be thinner and less active than for higher
rated securities. Consequently, there may be market price
volatility for these securities and limited liquidity in the
resale market. To the extent the Fund invests in non-
investment grade fixed income securities, the Fund may be
subject to greater risk of a decline in the value of the
Fund's investments.
BORROWINGS
The use of borrowings can increase the Fund's exposure
to market risk. If the Fund borrows money to make more
investments than it otherwise could or to meet redemptions,
the Fund's share price may be subject to greater fluctuation
until the borrowing is paid off. 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.
INVESTMENTS IN OTHER INVESTMENT COMPANIES
The Fund may invest generally up to 10% of its total
assets in securities of other investment companies.
Investments in these securities will involve duplication of
advisory fees and certain other expenses.
In view of the risks inherent in all investments in
securities, there is no assurance that the Fund's objectives will
be achieved.
THE FUND'S INVESTMENT ADVISER
Nicholas Company, Inc., located at 700 North Water Street, Suite
1010, Milwaukee, Wisconsin, is the Fund's investment adviser.
The Adviser 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 25
institutions and individuals with substantial investment
portfolios and to the following five mutual funds which are sold
without sales charge:. The five other mutual funds for which the
Adviser serves as investment adviser are Nicholas Fund, Inc.,
Nicholas II, Inc., Nicholas Money Market Fund, Inc., Nicholas
Equity Income Fund, Inc. and Nicholas Income Fund, Inc., with
primary investment objectives and net assets as set forth below.
<TABLE>
<CAPTION>
NET ASSETS AT
FUND INVESTMENT OBJECTIVE DECEMBER 31, 1998
---- -------------------- --------------
<S> <C> <C>
Nicholas Fund, Inc. Capital appreciation $5,823,474,514
Nicholas II, Inc. Long-term growth $1,109,497,195
Nicholas Equity
Income Fund, Inc. Reasonable income $ 26,813,593
Nicholas Income
Fund, Inc. High Current Income $ 239,419,855
Nicholas Money
Market Fund, Inc. Current income $ 160,187,593
</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. For the fiscal year ended December
31, 1998, total net assets of the Fund were $367,191,042.
Under an Investment Advisory Agreement with the Fund, 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. 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 and the
1940 Act, 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 certain other costs
and costs related to the aforementioned items.
During the fiscal years ended December 31, 1997 and 1996,
the Fund paid the Adviser an aggregate of $2,659,090, $2,039,866
and $1,596,133, respectively, in fees.
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 1940 Act, cast in
person at a meeting called for the purpose of voting for such
approval.
Albert O. Nicholas is President and a Director of both the
Fund, and Chairman, Chief Executive Officer and Director of the
Adviser, and is a controlling person of the Adviser through his
ownership of 91% of the outstanding voting securities of 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 O. Nicholas.
David O. Nicholas, Senior Vice President and Portfolio Manager of
the Fund, is President and Chief Investment Officer and a
Director of the Adviser. Lynn S. Nicholas is a Senior Vice
Presidents of the Fund and of the Adviser. David and Lynn are
the son and daughter, 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. Mark J. Giese, is a Vice President of
the Fund, also is a Vice President of the Adviser. Tracy C.
Eberlein is an Assistant Vice President of the Fund and an
employee of the Adviser. David E. Leichtfuss, a Director of the
Adviser, is a partner in the law firm of Michael Best & Friedrich
LLP, 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. Daniel J. 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 Board of Directors governs the Fund and is
responsible for protecting the interests of shareholders. The
Board of Directors consists of individuals who meet periodically
throughout the year to oversee the Fund's activities and review
the Fund's performance. The following table sets forth the
pertinent information about the Fund's officers and directors as
of December 31, 1998:
Name, Age and Positions Principal Occupations
Address Held During Past
with Fund Five Years
------------------- ------------- -------------------------
* Albert O. Nicholas, President and Chairman and Chief Executive
67 Director Officer, Nicholas Company
700 N. Water Street Inc since 1998.
Milwaukee, WI 53202 Director of Nicholas Company
Inc. since 1967, and President
of Nicholas Company, Inc.
From 1967 to 1998. 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 Nicholas
Company, Inc. has served
as investment adviser
for such funds. He is a
Chartered Financial Analyst.
Melvin L. Schultz, 65 Director Director and Management
3636 N 124th Street Consultant, Professional
Wauwatosa, WI 53222 Management of Milwaukee,
Inc. He offers
financial advice to
members of the medical
and dental professions
and is a Certified
Professional Business
Consultant.
*Thomas J. Saeger, 54 Executive Vice Executive Vice President
700 N. Water Street President and and Assistant Secretary,
Milwaukee, WI 53202 Secretary Nicholas Company, Inc.,
the Adviser to the Fund,
and employed by the
Adviser since 1969. He
is a Certified Public
Accountant.
David L. Johnson, 57 Executive Vice Executive Vice
700 N. Water Street President President, Nicholas
Milwaukee, WI 53202 Company, Inc., the
Adviser to the Fund, and
employed by the Adviser
since 1980. He is a
Chartered Financial
Analyst.
David O. Nicholas, 37 Senior Vice President and Chief
700 N. Water Street President and Investment Officer of
Milwaukee, WI 53202 Portfolio Manager Nicholas Company, Inc.,
the Adviser to the Fund,
since 1998. Director
of the Advisor since
December 1997,
and employed by the
Adviser since December
1985. He has been
Portfolio Manager for,
and primarily
responsible for the day-
to-day management of,
the portfolios of
Nicholas II, Inc. and
Nicholas Limited
Edition, Inc. since
March 1993. He also has
been Co-Portfolio
Manager of Nicholas
Fund, Inc. since
November 1996. He also
is a Chartered Financial
Analyst.
Lynn S. Nicholas, 42 Senior Vice Senior Vice President,
700 N. Water Street President Nicholas Company, Inc.,
Milwaukee, WI 53202 the Adviser to the Fund,
and employed by the
Adviser since September
1983. She is a
Chartered Financial
Analyst.
Jeffrey T. May, 42 Senior Vice Senior Vice President
700 N. Water Street President and and Treasurer, Nicholas
Milwaukee, WI 53202 Treasurer Company, Inc., the
Adviser to the Fund, and
employed by the Adviser
since July 1987. He is
a Certified Public
Accountant.
Candace L. Lesak, 41 Vice President Employee, Nicholas
700 N. Water Street Company, Inc., the
Milwaukee, WI 53202 Adviser to the Fund,
since February 1983.
She is a Certified
Financial Planner.
Mark J. Giese, 28 Vice President Vice President, Nicholas
700 N. Water Street Company, Inc., the
Milwaukee, WI 53202 Adviser to the Fund,
and employed by the advisor
since July 1994. He
graduated from the
University of Wisconsin
- Madison with a Masters
of Science degree in
Finance in May of 1994.
He is a Certified Public
Accountant and a
Chartered Financial
Analyst.
Mary C. Gosewehr, 38 Treasurer Employee, Nicholas Company,
700 N. Water Street Inc., the Adviser to the
Milwaukee, WI 53202 Fund, since April 1985.
Tracy C. Eberlein, 38 Assistant Vice Employee, Nicholas
700 N. Water Street President Company, Inc., the
Milwaukee, WI 53202 Adviser to the Fund,
since January 1985. She
is a Certified Financial
Planner.
____________________
* Messrs. Albert O. Nicholas and Saeger are "interested
persons" of the Adviser, as that term is defined in the 1940
Act. Mr. Nicholas is Chief Executive Officer and
a director of the Adviser and owns 91% of the outstanding
voting securities of the Adviser.
Reference is made to the section "The Fund's 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.
The aggregate remuneration paid by the Fund during
1998 to all Fund directors as a group amounted to $ 2,000
No remuneration is paid by the Fund to officers of the Fund
or directors of the Fund who are "interested persons" of the
Adviser.
The table below sets forth the aggregate compensation
received by all directors of the Fund during the year ended
December 31, 1998. 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.
<TABLE>
Pension or Estimated Total Compensation
Aggregate Retirement Annual From Fund and Fund
Compensation Benefits Benefits Complex Paid to
From the Accrued As Upon Directors (1)
Name Fund Part of Fund Retirement
Expenses
--------- ------------- ------------ ---------- -------------------
<S> <C> <C> <C> <C>
Albert O. Nicholas (2) $ 0 $ 0 $ 0 $ 0
Melvin L. Schultz (2) $ 2,000 $ 0 $ 0 $ 21,200
Thomas J. Saeger $ $ 0
</TABLE>
(1) During the fiscal year ended December 31, 1998, the Fund and
other funds in the Nicholas 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,
the Fund compensated the disinterested directors at a rate
of $500 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, . All other directors and
officers of the Fund were compensated by the Adviser in
accordance with its investment advisory agreement.
(2) Messers. Albert O. Nicholas and Melvin L. Schultz also are
members 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
Charles Schwab & Company, Inc., 101 Montgomery Street, San
Francisco, California 94104-4122, beneficially owned
1,335,250 shares of the Fund, or 9.12%, as of March 31, 1999.
The registered shareholder for this account is Charles Schwab &
Company, Inc., SPL Custody A/C for EXEL BNFT Customers.
No other 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, 1999. All directors and executive officers of the Fund
as a group (eleven in number) own approximately 5.99% of the full
shares of the Fund as of March 31, 1999.
PRICING OF FUND SHARES
When shares of the Fund are purchased, the purchase price
per share is the NET ASSET VALUE ("NAV") per share of the Fund.
The NET ASSET VALUE of a share is determined by dividing the
total value in U.S. dollars of the Fund's total net assets 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 the total assets of the Fund. The NAV is determined as of
the close of trading on the New York Stock Exchange ("NYSE") on
each day the NYSE is open for trading. The NYSE is open for
trading Monday through Friday except New Year's Day, President's
Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Martin Luther King Day, Thanksgiving Day and Christmas Day.
Additionally, if any of the aforementioned holidays falls on a
Saturday, the NYSE will not be open for trading on the preceding
Friday, and when any such holiday falls on a Sunday, the NYSE
will not be open for trading on the succeeding Monday, unless
unusual business conditions exist (such as the ending of a
monthly or yearly accounting period).
Equity securities traded on a stock exchange will ordinarily
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. Most debt securities, excluding short-term
investments, are valued at current evaluated 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 Fund's 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 using
methods determined in good faith by the Fund's Board of
Directors.
PURCHASE OF FUND SHARES
Minimum Investments. The minimum initial purchase is $2,000
and the minimum for any subsequent purchase is $100, except in
the case of reinvestment of distributions. The Automatic
Investment Plan has a minimum monthly investment of $50. Due to
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 will give advance written notice of at least 30 days to the
accounts below such minimum.
Application Information. Applications for the purchase of
shares are made to Nicholas Limited Edition, Inc., c/o Firstar
Mutual Funds Services, LLC, P.0. Box 2944, Milwaukee, Wisconsin
53201-2944. The Fund also has available an Automatic Investment
Plan for shareholders. Anyone interested should contact the Fund
for additional information.
When shares of the Fund are purchased, the purchase price
per share will be the NAV per share next determined after the
time the Fund receives the application to purchase Fund shares in
proper form. The determination of the NAV for a particular day
is applicable to all applications for the purchase of shares
received at or before the close of trading on the NYSE on that
day (usually 4:00 p.m., New York time).
* Applications to purchase Fund shares received in
proper order on a day the NYSE is open for trading,
prior to the close of trading on that day, will be
based on the NAV as of the close of trading on that
day.
* Applications to purchase Fund shares received in
proper order after the close of trading on the NYSE will
be based on the NAV as determined as of the close of
trading on the next day the NYSE is open.
Purchase of shares will be made in full and fractional shares
computed to three decimal places.
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
Mutual Funds Services, LLC's ("Firstar") Post Office Box, of
purchase applications DOES NOT constitute receipt by Firstar or
the Fund. Do not mail letters by overnight courier to the post
office box address. OVERNIGHT COURIER DELIVERY SHOULD BE SENT TO
FIRSTAR MUTUAL FUNDS SERVICES, LLC, THIRD FLOOR, 615 EAST
MICHIGAN STREET, MILWAUKEE, WISCONSIN 53202-5207.
All applications to purchase Fund shares are subject to
acceptance or rejection by the Fund and are not binding until
accepted. Applications must be in proper order to be accepted
and may only be accepted by the Fund or an authorized agent of
the Fund. Applications will not be accepted unless they are
accompanied by payment in U.S. funds. Payment should be made by
check drawn on a U.S. bank, savings & loan or credit union.
Checks are accepted subject to collection at full face value in
U.S. funds. The transfer agent 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 transfer agent for
insufficient funds. The Fund will not accept applications under
circumstances or in amounts considered disadvantageous for
shareholders. Any account (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.
Wire Payments. If a wire purchase is to be an initial purchase,
please call Firstar (414-276-0535 or 800-544-6547) with the
appropriate account information prior to sending the wire. To
purchase shares of the Fund by federal wire transfer, instruct
your bank to use the following instructions:
Wire To: Firstar Bank Milwaukee, N.A.
ABA 075000022
Credit: Firstar Mutual Funds Services, LLC
Account 112-952-137
Further Credit: Nicholas Limited Edition, Inc.
(shareholder account number)
(shareholder registration)
Please call Firstar at 414-276-0535 or 800-544-6547 prior
to sending the wire in order to obtain a confirmation number and
to ensure prompt and accurate handling of funds. The Fund and
its transfer agent are not responsible for the consequences of
delays resulting from the banking or Federal Reserve wire system,
or from incomplete wiring instructions.
Certificates. Certificates representing Fund shares
purchased will not be issued unless the shareholder specifically
requests certificates by written notice to the Fund.
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.
Where certificates are not requested, the Fund's transfer agent,
Firstar, will credit the shareholder's account with the number of
shares purchased. Written confirmations are issued for all
purchases of Fund shares.
Third Party Purchases - Use of a Processing Intermediary to
Purchase Fund Shares. Shares of of the Fund may be purchased
through certain broker-dealers, financial institutions or other
service providers ("Processing Intermediaries"). When shares 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. 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 Statement of Additional
Information.
Processing Intermediaries may charge fees or other charges
for the services they provide to their customers. Such charges
may vary among Processing Intermediaries, but in all cases will
be retained by the Processing Intermediary and not remitted to
the Fund or the Adviser.
Investors who do not wish to use 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 of shares of the Fund may be made without
a sales charge.
The Fund also may enter into arrangements with some
Processing Intermediaries authorizing them to process purchase
orders on behalf of the Fund on an expedited basis (an
"authorized agent"). Receipt of a purchase order by an
authorized agent will be deemed to be received by the Fund for
purposes of determining the NAV of Fund shares to be
purchase. For purchase orders placed through an authorized
agent, a shareholder will pay the Fund's net asset value per
share next computed after the receipt by the authorized agent of
such purchase order, plus any applicable transaction charge
imposed by the agent.
REDEMPTION OF FUND SHARES
Redemption Price. A shareholder may redeem Fund shares in whole
or in part by any of the methods described below. All
redemptions will be processed immediately upon receipt and
written confirmations will be issued for all redemptions of Fund
shares. The redemption price will be the Fund's NAV next
computed after the time of receipt by Firstar (or by an
authorized agent of the Fund) of the certificate(s), or written
request in the proper order and described below, or pursuant to
proper telephone instructions as described below.
* Requests for redemption of Fund shares received in
proper order on a day the NYSE is open for trading,
prior to the close of trading on that day, will be
based on the NAV as of the close of trading on that
day.
* Requests for redemption of Fund shares received in
proper order after the close of trading on the NYSE will
be based on the NAV as determined as of the closing of
trading on the next day the NYSE is open.
Redemption requests that contain restrictions as to the
time or date redemptions are to be effected will be returned and
will not be processed.
If any portion of the shares to be redeemed represents an
investment made by personal or certified check, the fund reserves the
right to hold a payment up to 15 days or until notified that investments
made by check have been collected, at which time a redemption request
will be processed and payment made.
Written Redemptions. If you redeem in writing, you must
ensure that the redemption request is signed by each shareholder
in the exact manner as the Fund account is registered and
includes the amount of redemption and the shareholder account
number.
* When shares are represented by certificates, you
may redeem by delivering to the Fund, c/o Firstar
Mutual Funds Services, LLC, 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," which is 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, you may
redeem by delivering an original signed written request
for redemption addressed to Nicholas Limited Edition,
Inc., c/o Firstar Mutual Funds Services, LLC, P.O. Box
2944, Milwaukee, Wisconsin 53201-2944. Facsimile
transmission of redemption requests is NOT acceptable.
If the account registration is individual, joint
tenants, sole proprietorship, custodial (Uniform
Transfer to Minors Act), or general partners, the
written request must be signed exactly as the account
is registered. If the account is owned jointly, all
owners must sign.
FACSIMILE TRANSMISSIONS OF REDEMPTION REQUESTS IS NOT ACCEPTABLE
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 must 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 in writing, please write or
call Firstar (414-276-0535 or 800-544-6547), prior to submitting
a written redemption request. A written redemption request will
not become effective until all documents have been received in
proper order by Firstar.
Shareholders who have an individual retirement account
("IRA"), a master retirement plan or other retirement plan must
indicate on their written redemption requests whether or not to
withhold federal income tax. Redemption requests lacking an
election not to have federal income tax withheld will be subject
to withholding. Please consult your current Disclosure Statement
for any applicable fees.
A shareholder should be aware that DEPOSIT in the mail or
with other independent delivery services or receipt at Firstar's
Post Office Box of redemption requests DOES NOT constitute
receipt by Firstar or the Fund. DO NOT mail letters by overnight
courier to the Post Office Box address. OVERNIGHT COURIER
DELIVERY SHOULD BE SENT TO THE FIRSTAR MUTUAL FUNDS SERVICES,
LLC, THIRD FLOOR, 615 EAST MICHIGAN STREET, MILWAUKEE, WISCONSIN
53202.
TELEPHONE REDEMPTIONS. 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 acts
as custodian. Telephone redemptions can only be made by calling
Firstar at 800-544-6547 or 414-276-0535. In addition to the
account registration, you will be required to provide the account
number and social security number. Telephone calls will be
recorded.
Telephone redemption requests must be received prior to the
closing of the NYSE (usually 4:00 p.m., New York time) to receive
that day's NAV. There will be no exceptions due to market
activity. During periods of substantial economic or market
changes, telephone transactions may be difficult to implement.
If a shareholder is unable to contact Firstar by telephone,
shares also may be redeemed by delivering the redemption request
in person or by mail. The maximum telephone redemption is
$50,000 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 . Neither the Fund nor Firstar will
be responsible for the authenticity of redemption instructions
received by telephone which they reasonably believe to be
genuine, even if such instructions prove to be unauthorized or
fraudulent. The Fund and Firstar will employ reasonable
procedures to confirm that instructions received by telephone are
genuine, and if they do not, they may be liable for losses due to
unauthorized or fraudulent instructions.
EFFECT OF REDEMPTION. 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 basis for the shares being redeemed. See
"Dividends, Distributions and Federal Tax Status" for further tax
information.
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 to be wired also ordinarily will
be wired within seven days after receipt of the request, and
normally will be wired on the next business day after a net asset
value is determined. The Fund reserves the right to hold payment
up to 15 days or until satisfied that investments made by check
have been collected.
The shareholder may instruct Firstar 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 charges a wire redemption fee of $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.
Signature Guarantees. A signature guarantee of each owner
is required to redeem shares in the following situations, for all
size transactions:
* if you change the ownership on your account
* upon redemption of shares when certificates have
been issued for your account
* when you want the redemption proceeds sent to a
different address than is registered on the account
* for both certificated and uncertificated shares,
if the proceeds are to be made payable to someone other
than the account owner(s)
* any redemption transmitted by federal wire
transfer to your bank not previously set up with the
Fund
* if a change of address request has been received
by the Fund or Firstar within 15 days of a redemption
request
In addition, signature guarantees will be 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.
Third Party Redemptions - Use of a Processing Intermediary
to Redeem Fund Shares. As with the purchase of Fund shares,
shares of the Fund may be sold through certain broker-dealers,
financial institutions and other service providers ("Processing
Intermediaries"). An investor intending to redeem Fund shares
through his or her Processing Intermediary should read the
program materials provided by the Processing Intermediary and
follow the instructions and procedures outlined therein.
Processing Intermediaries may charge fees or other charges
for the services they provide to their customers. Such charges
vary among Processing Intermediaries, but in all cases will be
retained by the Processing Intermediary and not remitted to the
Fund or the Adviser.
Investors who do not wish to use 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. If you hold Fund shares through a Processing Intermediary,
you must redeem your shares through such Processing Intermediary.
In such event, you should contact the Processing Intermediary for
instructions on how to redeem. If an investor has originally
invested directly with the Fund, direct sale of Fund shares
through the Fund (and not the Processing Intermediary) may be
made without a redemption charge.
The Fund also may enter into an arrangement with some
Processing Intermediaries authorizing them to process redemption
requests on behalf of the Fund on an expedited basis (an
"authorized agent"). Receipt of a redemption request by an
authorized agent will be deemed to be received by the Fund for
purposes of determining the net asset value of Fund shares to be
redeemed. For redemption orders placed through an authorized
agent, a shareholder will receive redemption proceeds which
reflect net asset value per share next computed after the receipt
by the authorized agent of the redemption order, less any
redemption fees imposed by the agent.
EXCHANGE BETWEEN NICHOLAS FAMILY OF FUNDS
Shares of the Fund which have been outstanding at least 15
days may be exchanged for shares of other mutual funds for which
Nicholas Company, Inc. serves as the investment adviser.
Nicholas Company, Inc. is also the investment adviser to the
following funds which have investment objectives and net assets
as noted below:
<TABLE>
<CAPTION>
NET ASSETS AT
FUND INVESTMENT OBJECTIVE DECEMBER 31, 1998
---- -------------------- ------------------
<S> <C> <C>
Nicholas Fund, Inc. Capital appreciation; Income as
a secondary consideration $5,823,474,514
Nicholas II, Inc. Long-term growth; Income as a
secondary consideration $1,109,497,195
Nicholas Equity Reasonable income; Moderate
Income Fund, Inc. long-term growth as a secondary
Consideration $ 26,813,593
Nicholas Income High current income consistent
Fund, Inc. with the preservation and
conservation of capital value $ 239,419,855
Nicholas Money High level of current income as
Market Fund, Inc. as is consistent with preserving
capital and liquidity $ 160,187,297
</TABLE>
If a shareholder chooses to exercise the exchange privilege,
the shares will be exchanged at their next determined NAV. When
an exchange into the Nicholas Money Market Fund, Inc. would
involve investment of the exchanged amount on a day when the NYSE
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 business
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.
The 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 only upon 60 days advance
notice to shareholders. You may exchange shares of the Fund for
shares of other available Nicholas mutual funds directly through
Nicholas Company, Inc. without cost by written request. The
exchange privilege may be terminated or modified only upon 60
days advance notice to shareholders; however, procedures for
exchanging Fund shares by telephone may be modified or
terminated at any time by the Fund or Firstar.
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 directly
through Nicholas Company, Inc. 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 Fund Shares"
Exchange by Telephone. Shareholders may exchange by
telephone among all funds for which the Nicholas Company,
Inc. serves as investment adviser. Only exchanges of $500
or more may be executed using the telephone exchange
privilege. Firstar 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 .
Neither the Fund nor Firstar will be responsible for the
authenticity of exchange instructions received by telephone.
Telephone exchanges can only be made by calling Firstar 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 FUND SHARES
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 (414-276-0535 or 800-544-6547) or Nicholas Company, Inc.
(414-272-6133 or 800-227-5987) prior to submitting any transfer
requests.
DIVIDENDS, DISTRIBUTIONS AND FEDERAL TAX STATUS
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 ensure
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. 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 net investment income, with certain
adjustments, for such calendar year, plus 98% of the Fund's
capital gains for the one-year period ending on October 31 of
such calendar year. In addition, an amount equal to any
undistributed net investment taxable income or capital gains from
the previous calendar year also must 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.
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. The maximum tax rate on
long-term capital gains (for sales of securities held greater
than 12 months) is 20%. Income distributed from the Fund's net
investment income and net realized short-term
capital gains are taxable to shareholders as ordinary income.
Distributions generally will be made annually. The Fund will
provide information to shareholders concerning the character and
the treatment of all dividends and distributions.
Dividends paid by the Fund to individual shareholders
will not qualify for any dividends received exclusion;
however, corporate shareholders will be eligible for a
dividends received deduction, subject to a reduction for
various reasons, including the fact that the total of
dividends received from domestic corporations in any year
are less than 100% of the Fund's gross income.
At the time of purchase of shares, the Fund may have
undistributed income or capital gains included in the computation
of the NAV per share,. Therefore, 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%
back-up withholding on reportable dividends, capital gain
distributions (if any) and redemption payments. Generally,
shareholders subject to back-up 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, or (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 or she is not subject to back-up withholding.
The foregoing tax discussion relates to federal taxes ONLY
and is not intended to be a complete discussion of all
federal tax consequences. Shareholders should consult with a tax
adviser concerning federal, state and local tax aspect of an
investment in the fund.
DIVIDEND AND DISTRIBUTION 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. A shareholder may elect to accept cash on an
application to purchase shares or by separate written
notification or by telephone. All reinvestments are at the NAV per
share in effect on the dividend or the distribution 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 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 ("Plan") and receive monthly or
quarterly checks for any designated amount. Firstar 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 upon
written notice mailed to the shareholders. Please contact
Nicholas Company, Inc. for copies of the Plan documents.
INDIVIDUAL RETIREMENT ACCOUNTS
Individuals may be able to establish a traditional IRA, a
Roth IRA and/or an Education IRA. The Fund offers prototype IRA
plans for adoption by individuals who qualify. 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 IRS requires to be furnished to
individuals who are considering adopting an IRA. It is important
you obtain up-to-date information from the Fund before opening an
IRA.
Individuals who receive compensation, including earnings
from self-employment, may be entitled to establish and make
contributors to a traditional IRA. Taxation of the income and
gains paid to a traditional IRA by the Fund is deferred until
distribution from the IRA.
Contributions to a Roth IRA are not currently deductible,
the amounts within the accounts accumulate tax-free and qualified
distributions will not be included in a shareholder's taxable
income. The contribution limit is $2,000 annually ($4,000 for
joint returns) in aggregate with contributions to traditional
IRAs. Certain income phaseouts apply.
Like the Roth IRA, contributions to an Education IRA are
non-deductible, but the investment earnings accumulate tax-free,
and distributions used for higher education expenses are not
taxable. Contribution limits are $500 per account and certain
income phaseouts apply.
As long as the aggregate IRA contributions meet the Fund's
minimum investment requirement of $500, the Fund will accept any
allocation of such contribution 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.
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 Fund
Shares" and "Redemption of Fund Shares." Consultation with a tax
adviser regarding the tax consequences is recommended.
MASTER RETIREMENT PLAN
The Fund has available a master retirement 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 is responsible for decisions to buy and sell
securities for the Fund and for the placement of the Fund's
investment business and the negotiations of the commissions to be
paid on such transactions. The Adviser 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 Fund and the Adviser are not
affiliated with any broker.
Section 28(e) of the Securities Exchange Act of 1934
("Section 28(e)") permits an investment adviser, under certain
circumstances, to cause an account to pay a broker or dealer a
commission for effecting a transaction in recognition of the
value of the brokerage and research service provided by the
broker or dealer. Brokerage and research services include (i)
furnishing advice as to the value of securities, the advisability
of investing in, purchasing or selling securities, and the
availability of securities or purchasers or sellers of
securities; (ii) furnishing analyses and reports concerning
issuers, industries, securities, economic factors and trends,
portfolio strategy and the performance of accounts; and (iii)
effecting securities transactions and performing functions
incidental thereto.
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 brokerage
and research services. The Adviser may cause the Fund to pay a
broker, which provides brokerage and research services to the
Adviser, a commission for effecting a securities transaction in
excess of the amount another broker would have charged for
effecting the transaction. The Adviser believes it is important
to its investment decision-making process to have access to
independent research. The Adviser understands that since the
brokers and dealers rendering such services are compensated
through 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.
Higher commissions may be paid by the Fund, provided (i) the
Adviser determines in good faith that the amount is reasonable in
relation to the services in terms of the particular transaction
or in terms of the Adviser's overall responsibilities with
respect to the accounts as to which it exercises investment
discretion; (ii) such payment is made in compliance with the
provisions of Section 28(e) and other applicable state and
federal law; and (iii) in the Adviser's opinion, the total
commissions paid by the Fund will be reasonable in relation to
the benefits to the Fund over the long term.
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 following table shows the dollar amount of brokerage
commissions paid to firms by the Fund for certain research
services provided and the approximate dollar amount of the
transactions involved for the fiscal year ended December 31,
1998.
Amount of Commissions
Paid to Firms that Amount of
Provided Research Brokerage Transactions
Services(1) Involved(1)
------------------- -----------------------
The Fund $13,552 $7,078,883
(1) The provision of such research services was not the
only factor considered in the placement of all noted
business with such firms. In addition, the amounts
disclosed do not include commissions paid to firms who
provided unsolicited research services as well as research
customarily provided by brokerage firms in the normal
course of business.
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.
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 $234,643, $156,751 and $165,936 in
fiscal 1998, 1997 and 1996, respectively. The increase in the
amount of brokerage commissions paid by the Fund in fiscal 1998
relative to fiscal 1997 and 1996 primarily is attributable to
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+T) = ERV
or
Total Return = ERV - 1
---
P
n
Average Annual Total Return = the nth root of ERV - 1
-----
P
where:
P = a hypothetical initial payment of $1000.
T = average annual total return.
n = number of years from initial investment to the end of the period.
ERV = at the end of the stated period, the ending
redeemable value of a hypothetical $1,000 payment made at
the beginning of the stated period.
For the Periods Ended December 31, 1998
---------------------------------------
One Year Five Years Ten Years
-------- ---------- ---------
Total Return 1.67% 107.93% 337.32%
Average Annual
Total Return 1.67% 15.77% 15.90%
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 $1,000 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 $1,000 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 Dow Jones Industrial
Average, the Standard & Poor's 500 Index, NASDAQ, 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,
Barron's, Lipper Analytical Services Mutual Fund Performance
Analysis, Morningstar, Inc., CDA Investment Technologies Inc. and
Value Line, Inc.
CAPITAL STRUCTURE
Nicholas Limited Edition, Inc. is authorized to issue
20,000,000 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 ten 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.
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 , and direct
that his account be credited with the shares. A shareholder may
in writing direct Firstar at any time to issue a certificate for
his shares without charge.
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 1940 Act. 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
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 1940.
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, Arthur Andersen LLP, will be sent to
shareholders.
YEAR 2000 ISSUES
The "Year 2000" issue presents a significant technological
challenge for the securities industry. Due to the limited memory
and the high cost of storage space associated with early computer
equipment, the century was implied rather than actually stored.
As a result, many computer systems are unable to interpret dates
beyond 1999. Software and hardware which is not designed to work
across centuries may potentially malfunction on January 1, 2000.
Because dates are part of every securities transaction, accurate
date calculations are critical.
The Fund has focused on the Year 2000 computer conversion
issue and management believes that there should be a smooth
transition on the part of suppliers of services to the Fund. The
Fund's custodian bank and transfer agent has reported that the
necessary conversion process is in progress, and it appears to
have dedicated the appropriate level of resources to solve the
problem.
The Adviser has identified and is taking steps it believes
are reasonably designed to resolve potential problems and address
the Year 2000 issue, although there can be no assurances that
such steps will be sufficient. The Adviser, which performs the
Fund's internal accounting and pricing functions, is in the
process of re-engineering its hardware to handle the century
date, and has identified and is taking steps to resolve potential
software problems. Some systems are currently compliant.
Internal testing is ongoing, and the Fund expects that all
systems will have been converted by mid-1999.
In addition, there can be no assurances that the Year 2000
issue will not have an adverse effect on issuers whose securities
are held by the Fund or on global markets or economies generally.
CUSTODIAN AND TRANSFER AGENT
Firstar Bank Milwaukee, N.A. (Firstar Bank") acts as
Custodian of the Fund. Firstar, 615 East Michigan Street,
Milwaukee, Wisconsin 53202, acts as Transfer Agent and Dividend
Disbursing Agent of the Fund. As such, Firstar Bank 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 Bank and Firstar do
not exercise any supervisory function over the management of the
Fund, the purchase and sale of securities or the payment of
distributions to shareholders.
INDEPENDENT ACCOUNTANTS AND LEGAL COUNSEL
Arthur Andersen LLP, 100 East Wisconsin Avenue, Milwaukee,
Wisconsin 53202, are the independent accountants for the Fund.
Michael Best & Friedrich LLP, 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 31,1999, are incorporated herein by reference.
Nicholas Limited Edition, Inc.
Form N-1A
PART C: OTHER INFORMATION
PART C. OTHER INFORMATION
Item 24. Exhibits
All exhibits required to be filed pursuant to Item 23
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 Securities and Exchange
Commission, as indicated in such Exhibit Index.
Item 25. Persons Controlled by or Under Common Control with the
FundRegistrant
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 25. 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. In addition,
Registrant maintains a joint errors and omissions insurance
policy with a $2.0 million limit of liability under which the
Registrant, the Adviser and the other funds advised by the
Adviser, and each of their respective directors and officers, are
named insureds.
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 26. Business and Other Connections of the Investment Adviser
Incorporated by reference to pages __-__ of the Statement of
Additional Information pursuant to Rule 411 under the Securities
Act of 1933, as amended.
Item 27. Principal Underwriters
None.
Item 28. 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 , 615 East Michigan Street, Milwaukee,
Wisconsin 53202.
Item 29. Management Services
None.
Item 30. 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, as
amended; 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 18th day February, 1999.
NICHOLAS LIMITED EDITION, INC.
By: /s/ Thomas J. Saeger
---------------------
Thomas J. Saeger, Executive
Vice President,
Secretary, Chief Financial
Officer 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
February 18, 1999.
/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.
EXHIBIT INDEX
Sequential
Exhibit No. Description Page No.
- ----------- ----------- ----------
(a) Articles of Incorporation of Registrant (as amended) *
(b) By-Laws of Registrant *
(c) Specimen certificate evidencing common stock, $.01
par value per share, of Registrant *
(d) Investment Advisory Agreement between Registrant
and Nicholas Company, Inc *
(e) Custodian Agreement between Registrant and First
Trust Company *
(f) Opinion of Michael Best & Friedrich LLP, counsel
to the Registrant, concerning the legality of
Registrant's common stock, including consent to
the use thereof. **
(g) Consent of Arthur Andersen LLP, independent public
accountants. **
(h) Financial Data Schedule --
(*) Powers of Attorney *
* Incorporated by reference to previous filings with the
Securities and Exchange Commission.
** Filed herewith.
LIST OF CONSENTS
1. Consent of Michael Best & Friedrich LLP
(filed herewith and included in Exhibit (i))
2. Consent of Arthur Andersen LLP
(filed herewith and included as Exhibit (j))
April 12, 1999
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 twenty
million (20,000,000) 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. 11 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
David E. Leichtfuss
DEL/kls
<letterhead>
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.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin,
April 23, 1999.
