NICHOLAS LIMITED EDITION, INC.
February 25, 2000
Report to Fellow Shareholders:
The stock market in 1999 exhibited a casino-like atmosphere. Huge
moves by speculative internet, technology and telecommunication stocks led
the market averages to strong gains. These strong gains, however, masked
an underlying weak market for traditional, money making companies.
Inexpensive online trading accounts and "hot" IPOs contributed to a
gambler's mentality among investors hoping for quick gains. In many cases
it worked, fueling an appetite for more.
The divergence of performance between old economy and new economy
(digital revolution) stocks can be seen in the divergence of performance
between the Russell 2000 Growth Index and the Russell 2000 Value Index.
The Russell 2000 Growth Index returned 43.09% compared to the Russell 2000
Value Index which declined 1.48% in 1999. The Russell 2000 Growth Index
contains many new economy stocks while the Russell 2000 Value Index is
concentrated in old economy stocks. Furthermore, within the Russell 2000
Index, companies which are expected by a consensus of analysts to have
negative earnings in the year 2000, returned on average 96.5% in 1999 on an
unweighted basis. Many of last year's high-flying issues were new economy
stocks which were "bid up" in the hope of becoming the next Microsoft,
Amgen or Cisco Systems.
Returns for Nicholas Limited Edition and selected indices are provided
in the chart below for the periods ended December 31, 1999.
Average Annual
Total Return*
1 3 5 10
Year Years Years Years
Nicholas Limited Edition, Inc. (4.09 9.06% 15.52 13.58
(Distributions Reinvested)......... )% % %
Russell 2000 Index (Dividends Reinvested) 21.26 13.08 16.69 13.40
............ % % % %
Standard & Poor's Smallcap 600 Index 12.40 11.68 17.04 13.04
(Dividends Reinvested).... % % % %
Consumer Price Index 2.68% 1.99% 2.36% 2.93%
......................
Ending value of $10,000 invested in
Nicholas Limited Edition, Inc. $9,59 $12,9 $20,5 $35,7
(Distributions 1 72 68 38
Reinvested)....................
As mentioned above, Nicholas Limited Edition's underperformance
stemmed from a lack of speculative internet, technology and biotech issues.
In other words, a lack of high risk stocks hurt our performance in 1999.
The Fund, however, did have a 14% technology position at the beginning of
the year. The only problem was that many of these stocks made money but
were not the "story stocks" the market favored. The Fund was also hurt by
its overweighting in healthcare services and financials which were weak
performing sectors in 1999. Our exposure to traditional media helped
performance as these stocks benefited from the media blitz of the "dot
coms".
1999 was one of the strangest markets I have witnessed in my 15 years
of experience. As Charles Dickens wrote in A Tale of Two Cities, "It was
the best of times, it was the worst of times." The range of performance
among stocks and among funds was the widest I have ever seen. Fund
performance ranged from a loss in excess of 20% to gains of over 200%.
Companies with only a business plan went public and instantly had multi-
billion dollar valuations. Twenty year olds became billionaires overnight
while many seasoned owner/managers saw the value of their businesses cut in
half for no apparent business reason. Success in 1999 meant taking high
risk and avoiding concerns of valuation in determining investment
consideration. That mentality does not coincide with our philosophy of
growth at a reasonable price.
Going forward many have asked us what we are doing to address the
current market conditions. My response is that we are diligently looking
at ways to make prudent investments in new economy companies; more
specifically, companies whose fundamentals will benefit from the growth of
the new economy. We will continue to make careful judgements about the
valuations of these businesses in an attempt to ensure the valuation
matches the potential and that there is not excessive downside risk should
the psychology change from the current casino mentality.
Sincerely,
David O. Nicholas
* Total returns are historical and include change in share price and
reinvestment of dividend and capital gain distributions. Past
performance is no guarantee of future results. Principal value and
return will fluctuate so an investment, when redeemed, may be worth more
or less than original cost.
Financial Highlights
(For a share outstanding throughout each year)
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended December 31,
-------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
NET ASSET VALUE, BEGINNING OF YEAR ....... $24.20 $25.07 $20.74 $19.22 $17.09 $18.68 $18.77 $16.86 $12.03 $12.49
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .................. .05 .01 .00* .01 .08 .10 .09 .08 .12 .12
Net gains (losses) on securities
(realized and unrealized) ........... (1.05) .38 6.82 4.14 5.07 (.68) 1.59 2.74 5.07 (.34)
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Total from investment operations .... (1.00) 0.39 6.82 4.15 5.15 (.58) 1.68 2.82 5.19 (.22)
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
LESS DISTRIBUTIONS:
From net investment income ............. (.05) (.01) (.00)* (.01) (.08) (.10) (.09) (.08) (.12) (.12)
From capital gains ..................... (.54) (1.25) (2.49) (2.62) (2.94) (.91) (1.57) (.83) (.24) (.12)
In excess of book
realized gains ..................... -- (.00)** -- -- -- -- (.11) -- -- --
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Total distributions ................. (.59) (1.26) (2.49) (2.63) (3.02) (1.01) (1.77) (.91) (.36) (.24)
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
NET ASSET VALUE, END OF YEAR ............. $22.61 $24.20 $25.07 $20.74 $19.22 $17.09 $18.68 $18.77 $16.86 $12.03
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
TOTAL RETURN ............................. (4.09)% 1.67% 33.02% 21.81% 30.18% (3.04%) 9.03% 16.78% 43.22% (1.73%)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (millions) ....... $278.8 $367.2 $328.0 $232.8 $169.6 $142.6 $180.8 $190.2 $175.3 $70.9
Ratio of expenses to average net assets .. .87% .85% .86% .86% .90% .90% .88% .92% .94% 1.07%
Ratio of net investment income
to average net assets .................. .21% .06% .01% .06% .38% .52% .42% .45% 1.05% 1.10%
Portfolio turnover rate .................. 36.01% 30.06% 37.05% 32.31% 35.77% 16.29% 24.35% 24.44% 12.62% 15.15%
</TABLE>
* The amount rounds to $0.00, actual amount $0.0029.
** The amount rounds to $(0.00), actual amount $(0.0020).
The accompanying notes to financial statements
are an integral part of these statements.
Top Ten Portfolio Holdings
December 31, 1999 (unaudited)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Percentage of
Name Net Assets
- ---- -----------
<C> <C>
Renal Care Group, Inc. ........................ 4.08%
International Speedway Corporation - Class B .. 3.93%
Brown & Brown, Inc. ........................... 3.57%
Thermo BioAnalysis Corporation ................ 3.57%
DBT Online, Inc. .............................. 3.29%
C.H. Robinson Worldwide, Inc................... 3.06%
Heartland Express, Inc. ....................... 3.00%
Asia Satellite Telecommunications
Holdings Limited ............................. 2.77%
CONMED Corporation ............................ 2.74%
Knight Transportation, Inc. ................... 2.45%
------
Total of top ten .............................. 32.46%
------
------
</TABLE>
Schedule of Investments
December 31, 1999
- ---------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares or Quoted
Principal Market
Amount Value
- ----------- ------------
<C> <C>
(Note 1(a))
COMMON STOCKS -- 98.73%
Consumer Cyclicals - Products -- 4.61%
420,000 Thermo Optek Corporation * ....................... $ 4,777,500
408,580 Thermo Vision Corporation * + .................... 2,834,524
508,700 ThermoQuest Corporation * ........................ 5,245,969
------------
12,857,993
------------
Consumer Cyclicals - Retail -- 4.18%
140,000 Fastenal Company ................................. 6,291,250
250,000 O'Reilly Automotive, Inc. * ...................... 5,375,000
------------
11,666,250
------------
Consumer Cyclicals - Services -- 2.51%
107,150 G & K Services, Inc. - Class A ................... 3,468,981
142,222 Interim Services Inc. * .......................... 3,519,995
------------
6,988,976
------------
Consumer Staples -
Media & Entertainment -- 10.77%
201,180 Dover Downs Entertainment, Inc. .................. 3,772,125
17,400 Emmis Communications Corporation * ............... 2,168,746
62,500 Entercom Communications Corp. * .................. 4,125,000
104,000 International Speedway Corporation -
Class A ......................................... 5,239,000
219,310 International Speedway Corporation -
Class B ......................................... 10,965,500
165,740 Salem Communications Corporation * ............... 3,749,868
------------
30,020,239
------------
Financial - Banks & Diversified Financials -- 9.84%
95,000 Commerce Bancorp, Inc. ........................... 3,841,562
296,500 Community First Bankshares, Inc. ................. 4,669,875
150,000 FirstMerit Corporation ........................... 3,450,000
97,500 Marshall & Ilsley Corporation .................... 6,124,219
315,000 Medallion Financial Corp. ........................ 5,650,313
221,580 National City Bancorporation ..................... 3,711,465
------------
27,447,434
------------
Financial - Insurance -- 6.61%
259,800 Brown & Brown, Inc. .............................. 9,953,587
140,000 Protective Life Corporation ...................... 4,453,750
160,000 StanCorp Financial Group, Inc. ................... 4,030,000
------------
18,437,337
------------
Financial - Real Estate Investment Trusts -- 0.91%
170,800 National Health Investors, Inc. .................. 2,540,650
------------
Health Care - Products -- 14.53%
295,000 CONMED Corporation * ............................. 7,633,125
92,000 Elan Corporation, plc * .......................... 2,714,000
68,400 Forest Laboratories, Inc. * ...................... 4,202,325
274,838 Osteotech, Inc. * ................................ 3,675,958
145,000 Shire Pharmaceuticals Group PLC * ................ 4,223,125
270,000 Sybron International Corporation * ............... 6,665,625
263,200 Thermedics Inc. * ................................ 1,431,150
542,100 Thermo BioAnalysis Corporation * ................. 9,961,088
------------
40,506,396
------------
Health Care - Services -- 13.43%
285,000 Health Management Associates, Inc. - Class A * ... 3,811,875
497,589 PSS World Medical, Inc. * ........................ 4,695,996
153,750 Patterson Dental Company * ....................... 6,553,594
335,000 Province Healthcare Company * .................... 6,365,000
486,250 Renal Care Group, Inc. * ......................... 11,366,094
365,250 Res-Care, Inc. * ................................. 4,656,937
------------
37,449,496
------------
Technology - Products -- 5.76%
305,000 Artesyn Technologies, Inc. * ..................... 6,405,000
80,000 Plantronics, Inc. * .............................. 5,725,000
165,000 SunGard Data Systems Inc. * ...................... 3,918,750
------------
16,048,750
------------
Technology - Services -- 17.07%
220,800 Asia Satellite Telecommunications
Holdings Limited ............................... 7,728,000
221,250 Concord EFS, Inc. * .............................. 5,697,188
376,250 DBT Online, Inc. * ............................... 9,171,094
110,000 ITC/\DeltaCom, Inc. * ............................ 3,038,750
82,500 Keane, Inc. * .................................... 2,619,375
189,000 Metro Information Services, Inc. * ............... 4,536,000
210,000 NOVA Corporation * ............................... 6,628,125
237,000 TESSCO Technologies Incorporated * + ............. 4,414,125
75,000 Time Warner Telecom Inc. * ....................... 3,745,312
------------
47,577,969
------------
Transportation -- 8.51%
214,500 C. H. Robinson Worldwide, Inc. ................... 8,526,375
530,188 Heartland Express, Inc. * ........................ 8,350,461
399,250 Knight Transportation, Inc. * .................... 6,837,156
------------
23,713,992
------------
TOTAL COMMON STOCKS
(cost $199,407,052) ........................ 275,255,482
------------
SHORT-TERM INVESTMENTS -- 0.43%
Variable Rate Demand Note -- 0.43%
1,212,476 Firstar Bank U.S.A., N.A.
6.16%, due January 3, 2000
(cost $1,212,476) ............................. 1,212,476
------------
TOTAL INVESTMENTS
(cost $200,619,528) ........................ 276,467,958
------------
CASH AND RECEIVABLES,
NET OF LIABILITIES -- 0.84% ................. 2,328,402
------------
TOTAL NET ASSETS
(Basis of percentages
disclosed above) ........................... $278,796,360
------------
------------
</TABLE>
* Nondividend paying security.
+ This company is affiliated with the Fund as defined in Section 2(a)(3) of
the Investment Company Act of 1940, in that the Fund holds 5% or more of
its outstanding voting securities. (Note 5)
The accompanying notes to financial statements
are an integral part of this schedule.
Statement of Assets and Liabilities
December 31, 1999
- -------------------------------------------------------------------------------
<TABLE>
<C> <C>
ASSETS:
Investments in securities at market value (Note 1 (a)) -
Nonaffiliated issuers (cost $192,950,702) - see accompanying schedule of investments .... $269,219,309
Affiliated issuers (cost $7,668,826) - see accompanying schedule of investments (Note 5) 7,248,649
------------
Total investments ............................................................. 276,467,958
------------
Receivables --
Investment securities sold .......................................................... 2,303,286
Dividends and interest .............................................................. 297,110
------------
Total receivables ............................................................. 2,600,396
------------
Total assets .................................................................. 279,068,354
------------
LIABILITIES:
Payables --
Management fee (Note 2) ............................................................. 187,463
Other payables and accrued expenses ................................................. 84,531
------------
Total liabilities ............................................................. 271,994
------------
Total net assets .............................................................. $278,796,360
------------
------------
NET ASSETS CONSIST OF:
Fund shares issued and outstanding ........................................................ $197,227,157
Net unrealized appreciation on investments ................................................ 75,848,430
Accumulated undistributed net realized gains on investments ............................... 5,714,301
Accumulated undistributed net investment income ........................................... 6,472
------------
$278,796,360
------------
------------
NET ASSET VALUE PER SHARE ($.01 par value, 20,000,000 shares authorized),
offering price and redemption price ($278,796,360/12,332,180 shares outstanding) ............... $22.61
------
------
</TABLE>
The accompanying notes to financial statements
are an integral part of this statement.
Statement of Operations
For the year ended December 31, 1999
- -------------------------------------------------------------------------------
<TABLE>
<C> <C>
INCOME:
Dividends ................................................. $ 2,304,853
Interest .................................................. 1,035,965
------------
3,340,818
------------
EXPENSES:
Management fee (Note 2) ................................... 2,321,160
Transfer agent fees ....................................... 166,154
Legal fees ................................................ 65,542
Registration fees ......................................... 43,354
Postage and mailing ....................................... 23,577
Audit and tax consulting fees ............................. 18,500
Printing .................................................. 18,015
Custodian fees ............................................ 15,443
Insurance ................................................. 3,570
Telephone ................................................. 3,222
Directors' fees ........................................... 2,000
Other operating expenses .................................. 4,583
------------
2,685,120
------------
Net investment income ............................... 655,698
------------
NET REALIZED GAINS ON INVESTMENTS ................................ 13,362,496
------------
NET DECREASE IN UNREALIZED APPRECIATION ON INVESTMENTS ........... (31,899,463)
------------
Net loss on investments ............................. (18,536,967)
------------
Net decrease in net assets resulting from operations $(17,881,269)
------------
------------
<\TALBE>
The accompanying notes to financial statements
are an integral part of this statement.
Statements of Changes in Net Assets
For the years ended December 31, 1999 and 1998
- -------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION> 1999 1998
------ ------
<C> <C> <C>
OPERATIONS:
Net investment income ..................................................... $ 655,698 $ 206,250
Net realized gains on investments ......................................... 13,362,496 18,041,115
Net (decrease) in unrealized appreciation on investments .................. (31,899,463) (14,015,362)
------------- -------------
Net increase (decrease) in net assets resulting from operations ........... (17,881,269) 4,232,003
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income ($0.0538 and $0.0142 per share,
respectively) ........................................................... (649,226) (206,250)
Distributions from net realized gains on investments ($0.5439 and $1.2470
per share, respectively) ................................................ (6,563,457) (18,041,115)
Distributions in excess of book realized gains
($0.0020 per share in 1998) ............................................. -- (29,198)
------------- -------------
Total distributions .................................................. (7,212,683) (18,276,563)
------------- -------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares issued (3,704,511 and 5,541,251 shares, respectively) 83,315,928 136,879,599
Net asset value of shares issued in distributions to shareholders
(290,709 and 713,706 shares, respectively) ............................ 6,543,850 16,921,966
Cost of shares redeemed (6,834,229 and 4,167,180 shares, respectively) .... (153,160,855) (100,587,882)
------------- -------------
Increase (decrease) in net assets derived from capital
share transactions ................................................. (63,301,077) 53,213,683
------------- -------------
Total increase (decrease) in net assets ............................... (88,395,029) 39,169,123
------------- -------------
NET ASSETS, at the beginning of the year ....................................... 367,191,389 328,022,266
------------- -------------
NET ASSETS, at the end of the year (including undistributed net investment
income of $6,472 in 1999) ................................................... $ 278,796,360 $ 367,191,389
------------- -------------
------------- -------------
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
Historical Record (unaudited)
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Investment Dollar Growth of
Net Income Capital Gain Weighted An Initial
Asset Value Distributions Distributions Price/Earnings $10,000
Per Share Per Share Per Share Ratio** Investment***
----------- ------------- ------------- -------------- -------------
<C> <C> <C> <C> <C> <C>
May 18, 1987 * ............................ $10.00 $ -- $ -- -- $10,000
December 31, 1987 ......................... 9.15 .0900 -- 13.9 times 9,242
December 31, 1988 ......................... 11.29 .0969 .2527 14.1 11,762
December 31, 1989 ......................... 12.49 .1453 .6151 16.3 13,804
December 31, 1990 ......................... 12.03 .1207 .1213 14.2 13,566
December 31, 1991 ......................... 16.86 .1228 .2407 21.9 19,429
December 31, 1992 ......................... 18.77 .0815 .8275 18.8 22,690
December 31, 1993 ......................... 18.68 .0867 1.6782 20.4 24,738
December 31, 1994 ......................... 17.09 .1031 .9065 18.3 23,985
December 31, 1995 ......................... 19.22 .0761 2.9353 25.2 31,223
December 31, 1996 ......................... 20.74 .0124 2.6151 30.7 38,031
December 31, 1997 ......................... 25.07 .0029 2.4886 33.0 50,590
December 31, 1998 ......................... 24.20 .0142 1.2490 30.3 51,436
December 31, 1999 ......................... 22.61 .0538 (a) .5439 (a) 23.4 49,333
</TABLE>
*Date of Initial Public Offering.
**Based on latest 12 months accomplished earnings.
***Assuming reinvestment of all distributions.
(a) Paid December 30, 1999 to shareholders
of record December 29, 1999.
Range in quarter end price/earnings ratios
High Low
- -------------------------- --------------------
September 30, 1997 35.5 June 30, 1988 13.3
Notes to Financial Statements
December 31, 1999
- ------------------------------------------------------------------------------
(1) Summary of Significant Accounting Policies --
Nicholas Limited Edition, Inc. (the "Fund") is an open-end, diversified
management investment company registered under the Investment Company Act of
1940, as amended. The primary objective of the Fund is long-term growth. The
following is a summary of the significant accounting policies of the Fund.
(a) Each equity security is valued at the last sale price reported by
the principal security exchange on which the issue is traded, or
if no sale is reported, the last bid price. Most debt securities,
excluding short-term investments, are valued at current evaluated
bid price. Variable rate demand notes are valued at cost which
approximates market value. U.S. Treasury Bills and commercial
paper are stated at market value with the resultant difference
between market value and original purchase price being recorded as
interest income. Investment transactions are generally recorded
no later than the first business day after the trade date.
(b) Net realized gains and losses on portfolio securities were
computed on the basis of specific certificates.
(c) Provision has not been made for federal income taxes or excise
taxes since the Fund has elected to be taxed as a "regulated
investment company" and intends to distribute substantially all
taxable income to its shareholders and otherwise comply with the
provisions of the Internal Revenue Code applicable to regulated
investment companies.
(d) The amount of dividends and distributions from net investment
income and net realized capital gains are determined in accordance
with federal income tax regulations, which may differ from
generally accepted accounting principles. To the extent these
book and tax differences are permanent in nature, such amounts are
reclassified among fund shares issued and outstanding, accumulated
undistributed net realized gains on investments and accumulated
undistributed net investment income. The Fund also utilizes
earnings and profits distributed to shareholders on redemption of
shares as a part of the dividends paid deduction for income tax
purposes. Accordingly, at December 31, 1999, reclassifications
were recorded to decrease accumulated net realized gains on
investments and increase fund shares outstanding by $1,055,540.
The Fund hereby designates approximately $14,389,000 as long-term
capital gain for the purposes of the dividends paid deduction.
For the year ended December 31, 1999, 66.32% of the dividends from
taxable income qualify for the dividends received deduction
available to corporate shareholders.
(e) Dividend income and distributions to shareholders are recorded on
the ex-dividend date. Non-cash dividends, if any, are recorded at
fair market value on date of distribution.
(f) The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements, and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from estimates.
(2) Investment Adviser and Management Agreement --
The Fund has an agreement with Nicholas Company, Inc. (with whom certain
officers and directors of the Fund are affiliated) to serve as investment
adviser and manager. Under the terms of the agreement a monthly fee is paid to
the investment adviser based on .75 of 1% on an annual basis of the average net
asset value. Also, the investment adviser may be reimbursed for clerical and
administrative services rendered by its personnel. The advisory agreement is
subject to an annual review by the Directors of the Fund.
(3) Net Unrealized Appreciation --
Aggregate gross unrealized appreciation (depreciation) as of December 31, 1999,
based on investment cost for federal tax purposes of $201,675,075 is as follows:
Aggregate gross unrealized appreciation on investments .... $ 87,078,525
Aggregate gross unrealized depreciation on investments .... (12,285,642)
------------
Net unrealized appreciation .......................... $ 74,792,883
------------
------------
(4) Investment Transactions --
For the year ended December 31, 1999, the cost of purchases and the proceeds
from sales of investments, other than short-term obligations, aggregated
$104,596,560 and $172,307,702, respectively.
(5) Transactions with Affiliates --
Following is an analysis of transactions with "affiliated companies" for the
year ended December 31, 1999, as defined by the Investment Company Act of 1940:
<TABLE>
<CAPTION>
Share Activity
------------------------------------------
Balance Balance
Security Name 12/31/98 Purchases Sales 12/31/99
------------- -------- --------- ----- --------
<C> <C> <C> <C> <C>
TESSCO Technologies Incorporated ..... 237,000 --- --- 237,000
Thermo Vision Corporation ............ 408,580 --- --- 408,580
</TABLE>
There were no dividends or realized gains/losses from affiliated companies for
the year ended December 31, 1999.
Report of Independent Public Accountants
- -------------------------------------------------------------------------------
To the Shareholders and Board of Directors
of Nicholas Limited Edition, Inc.:
We have audited the accompanying statement of assets and liabilities of
NICHOLAS LIMITED EDITION, INC. (a Maryland corporation), including the schedule
of investments, as of December 31, 1999, the related statement of operations
for the year then ended, the statements of changes in net assets for each of
the two years in the period then ended, and the financial highlights for the
periods presented. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of December 31, 1999, by correspondence with the custodian and
brokers. As to securities purchased but not received, we requested
confirmation from brokers and, when replies were not received, we carried out
other alternative auditing procedures. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Nicholas Limited Edition, Inc. as of December 31, 1999, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for the
periods presented, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin,
January 21, 2000.
OFFICERS AND DIRECTORS
ALBERT O. NICHOLAS, President and Director
THOMAS J. SAEGER, Executive Vice President, Secretary and Director
MELVIN L. SCHULTZ, Director
DAVID L. JOHNSON, Executive Vice President
DAVID O. NICHOLAS, Senior Vice President
LYNN S. NICHOLAS, Senior Vice President
JEFFREY T. MAY, Senior Vice President
CANDACE L. LESAK, Vice President
MARK J. GIESE, Vice President
TRACY C. EBERLEIN, Assistant Vice President
MARY C. GOSEWEHR, Treasurer
Investment Adviser
NICHOLAS COMPANY, INC.
Milwaukee, Wisconsin
414-272-6133 or 800-227-5987
Transfer Agent
FIRSTAR MUTUAL FUND SERVICES, LLC
Milwaukee, Wisconsin
414-276-0535 or 800-544-6547
Custodian
FIRSTAR INSTITUTIONAL CUSTODY SERVICES
Milwaukee, Wisconsin
Auditors
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin
Counsel
MICHAEL, BEST & FRIEDRICH LLP
Milwaukee, Wisconsin
This report is submitted for the information of shareholders of the
Fund. It is not authorized for distribution to prospective investors unless
preceded or accompanied by an effective prospectus.
NICHOLAS LIMITED EDITION
700 North Water Street
Milwaukee, Wisconsin 53202
www.nicholasfunds.com
December 31, 1999
