(2/28/97)
February 00, 1997
Report to Fellow Shareholders:
The past year was marked by stability in short-term interest
rates as the Federal Reserve Board (Fed) lowered its Fed Funds
target rate near the end of January, 1996 by .25% to 5.25% and
kept it unchanged through 1996. The economy grew at a reasonable
pace with U.S. Gross Domestic Product increasing at an estimated
2.5% while inflation measured by the Consumer Price Index (CPI)
rose by a manageable 3.31%. Generally, most economic indicators
showed a steadily growing economy without large increases in the
prices of goods and services which may have persuaded the Fed to
maintain Fed Funds at their current rate.
Nicholas Money Market Fund's (the "Fund") weighted average
maturity at year-end December 31, 1996 was 34 days. The Fund's
7-day effective yield fell from 5.53% at December 31, 1995 to
5.13% by year end 1996. The majority of the Fund's assets are
invested in high quality short-term commercial paper. The Fund's
yieldis increased by management's aggressive stance in keeping
operating costs low. For the year ended December 31, 1996
Nicholas Money Market Fund ranked above the average for
total return among the 812 taxable money funds tracked by the
IBC's Money Market Insight, a service of IBC Financial Data,
Inc.*
Yields as of Yield as of
12/31/96 12/31/95
------------ -----------
Current 7-Day* 5.01% 5.55%
Effective 7-Day* 5.13% 5.71%
Current one year* 5.02% 5.83%
Effective one year* 5.14% 3.90%
*The current yield represents the annualized net investment
income per share for the stated time periods. The
effective yield assumes compounding. All performance and
ranking data are historical and do not represent future
results.
In the Fed's first session of 1997 the board again left the
Fed Fund rate unchanged as the CPI rose by a scant 0.10% in
January. However, recently Federal Reserve Chairman Alan
Greenspan has expressed concern about what he believes are
overvalued stock and bond markets and the "temporary" factors
which currently are holding down inflation. His perspective on
the economy suggests he is considering a preemptive tightening
(rate increase) perhaps as early as late March to combat signs
of higher inflation. Still, despite possible movement by the
Fed, we do not see any major short-term interest rate changes
for the remainder of 1997.
/S/ Albert O. Nicholas
----------------------
Albert O. Nicholas
Statement of Net Assets
December 31, 1996
- --------------------------------------------------------------------
<TABLE>
Yield to Amortized
Principal Maturity Maturity Cost
Amount Date (Note 1(b)) (Note 1(a))
- ------------- ------------- ----------- ------------------
<S> <C> <C> <C>
COMMERCIAL PAPER - 91.2%
$ 650,000 Fiserv, Inc. 01/02/97 5.74% $ 650,000
2,400,000 General Motors Acceptance Corporation 01/02/97 5.49% 2,400,000
430,000 LOCAP, Inc. 01/02/97 7.35% 430,000
2,875,000 AMCORE Financial, Inc. 01/03/97 5.57% 2,874,565
565,000 Brown-Forman Corporation 01/03/97 6.64% 564,897
2,775,000 American General Finance Corporation 01/06/97 5.43% 2,773,363
1,300,000 Rexam plc 01/06/97 5.48% 1,299,224
3,075,000 Fiserv, Inc. 01/07/97 5.63% 3,072,651
2,000,000 American Brands, Inc. 01/08/97 5.45% 1,998,220
2,900,000 Bear Stearns Companies, Inc. (The) 01/08/97 5.44% 2,897,429
268,000 American Brands, Inc. 01/09/97 5.52% 267,719
5,150,000 Hitachi Credit America Corporation 01/09/97 5.47% 5,144,653
1,000,000 Mosinee Paper Corporation 01/09/97 5.61% 998,931
2,185,000 American Express Credit Corporation 01/10/97 5.44% 2,182,417
2,750,000 American General Finance Corporation 01/10/97 5.51% 2,746,700
119,000 Frontier Corporation 01/10/97 5.70% 118,852
2,900,000 Frontier Corporation 01/10/97 5.65% 2,896,423
4,400,000 Ford Motor Credit Company 01/13/97 5.43% 4,392,861
1,800,000 American Brands, Inc. 01/14/97 5.46% 1,796,814
2,600,000 General Electric Capital Corporation 01/14/97 5.53% 2,595,303
200,000 Hitachi Credit America Corporation 01/14/97 5.70% 199,627
2,850,000 Bear Stearns Companies, Inc. (The) 01/15/97 5.51% 2,844,443
2,125,000 Fiserv, Inc. 01/15/97 5.68% 2,120,741
4,100,000 Sandoz Corporation 01/16/97 5.46% 4,091,470
1,050,000 Sears Roebuck Acceptance Corporation 01/16/97 5.47% 1,047,828
1,000,000 Mosinee Paper Corporation 01/17/97 5.63% 997,708
1,850,000 Rexam plc 01/17/97 5.46% 1,845,899
1,450,000 Sears Roebuck Acceptance Corporation 01/17/97 5.51% 1,446,738
200,000 Weyerhauser Real Estate Company 01/17/97 5.70% 199,533
3,650,000 American Express Credit Corporation 01/21/97 5.46% 3,639,771
2,500,000 Dover Corporation 01/21/97 5.60% 2,492,743
2,500,000 Coca-Cola Enterprises, Inc. 01/22/97 5.53% 2,492,472
1,500,000 General Motors Acceptance Corporation 01/22/97 5.45% 1,495,558
1,200,000 Heller Financial, Inc. 01/22/97 5.58% 1,196,360
300,000 Weyerhauser Real Estate Company 01/22/97 5.61% 299,083
3,400,000 BHP Finance (USA), Inc. 01/23/97 5.45% 3,389,429
2,400,000 BHP Finance (USA), Inc. 01/23/97 5.46% 2,392,538
1,000,000 Electronic Data Systems Corporation 01/23/97 5.49% 996,862
3,400,000 Heller Financial, Inc. 01/24/97 5.49% 3,388,842
700,000 Mosinee Paper Corporation 01/24/97 5.72% 697,604
400,000 Sandoz Corporation 01/24/97 5.51% 398,680
1,450,000 Coca-Cola Enterprises, Inc. 01/27/97 5.55% 1,444,532
2,175,000 General Electric Capital Corporation 01/27/97 5.51% 2,166,844
3,675,000 LOCAP, Inc. 01/28/97 5.53% 3,660,668
1,300,000 CS First Boston, Inc. 01/29/97 5.47% 1,294,793
2,025,000 Rexam plc 01/29/97 5.47% 2,016,920
1,750,000 Mosinee Paper Corporation 01/30/97 5.72% 1,742,378
1,550,000 Sears Roebuck Acceptance Corporation 01/30/97 5.56% 1,543,430
2,030,000 General Motors Acceptance Corporation 01/31/97 5.48% 2,021,235
4,000,000 Weyerhauser Real Estate Company 02/03/97 5.71% 3,980,089
1,400,000 Weyerhauser Real Estate Company 02/04/97 5.71% 1,392,813
350,000 Southwestern Bell Telephone Company 02/07/97 5.69% 348,050
1,550,000 Mosinee Paper Corporation 02/10/97 5.73% 1,540,597
426,000 Frontier Corporation 02/11/97 5.58% 423,420
500,000 McGraw-Hill Companies (The) 02/11/97 5.62% 496,944
1,000,000 AMCORE Financial, Inc. 02/13/97 5.82% 993,350
2,175,000 CS First Boston, Inc. 02/18/97 5.48% 2,159,808
1,000,000 B.A.T Capital Corporation 02/19/97 5.56% 992,760
461,000 Hitachi Credit America Corporation 02/27/97 5.59% 457,092
143,000 McGraw-Hill Companies (The) 03/24/97 5.61% 141,246
------------------
TOTAL COMMERCIAL PAPER 108,591,920
------------------
VARIABLE RATE SECURITIES - 9.2%
5,000,000 Anchor National Life Funding Agreement (1)(2) 01/02/97 5.86% 5,000,000
988 Johnson Controls, Inc. (1) 01/02/97 5.49% 988
1,000,000 General Electric Capital Corporation 01/07/97 5.51% 1,000,000
5,000,000 Morgan Stanley Group, Inc. (1) 01/15/98 5.75% 5,000,000
------------------
TOTAL VARIABLE RATE SECURITIES 11,000,988
------------------
TOTAL INVESTMENTS 119,592,908
------------------
LIABILITIES, NET OF CASH AND RECEIVABLES (0.4%) (520,836)
------------------
TOTAL NET ASSETS (Basis of percentages disclosed above) 119,072,072
==================
NET ASSET VALUE PER SHARE($.0001 par value, 3,000,000,000
shares authorized), offering price and redemption price
($119,072,072 / 119,072,072 shares outstanding) $1.00
==================
</TABLE>
(1) These securities are subject to a demand feature as defined by the
Securities and Exchange Commission.
(2) Not readily marketable for a 90 day period.
The accompanying notes to financial statements are an
integral part of this statement.
Statement of Operations
For the year ended December 31, 1996
- --------------------------------------------------------------------
INCOME:
Interest........................................... $6,242,539
EXPENSES:
Management fee (Note 2)............................ 338,132
Transfer agent fees................................ 101,159
Registration fees.................................. 45,035
Legal fees......................................... 24,978
Postage............................................ 19,975
Audit and tax consulting fees...................... 18,400
Custodian fees..................................... 9,267
Directors' fees.................................... 9,000
Printing........................................... 7,071
Insurance.......................................... 3,613
Telephone.......................................... 3,016
Other operating expenses........................... 2,358
------------
582,004
------------
Net investment income.............................. $5,660,535
------------
------------
The accompanying notes to financial statements are an
integral part of this statement.
Statements of Changes in Net Assets
For the years ended December 31, 1996 and 1995
- --------------------------------------------------------------------------
<TABLE>
1996 1995
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income...................................... $ 5,660,535 $ 6,083,716
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income
($0.050 and $0.055 per share, respectively).............. (5,660,535) (6,083,716)
---------- -----------
Increase in net assets
from investment activities...................... -- --
------------ ------------
CAPITAL SHARE TRANSACTIONS (all at $1.00 per share):
Proceeds from shares issued................................ 100,165,861 125,452,082
Net asset value of shares issued in distributions from net
investment income........................................ 5,498,057 5,909,339
Cost of shares redeemed.................................... (98,430,057) (137,608,434)
------------ ------------
Increase (decrease) in net assets derived from
capital share transactions...................... 7,233,861 (6,247,013)
------------ ------------
Total increase (decrease) in net assets........... 7,233,861 (6,247,013)
------------ ------------
NET ASSETS, at the beginning of the period..................... 111,838,211 118,085,224
------------ ------------
NET ASSETS, at the end of the period........................... $119,072,072 $111,838,211
------------ ------------
------------ ------------
</TABLE>
The accompanying notes to financial statements are an
integral part of these statements.
<TABLE>
Financial Highlights
(For a share outstanding throughout each year)
Year ended December 31,
---------------------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income..................... 0.050 0.055 0.038 0.027 0.033
----- ----- ----- ----- -----
LESS DISTRIBUTIONS:
Dividends (from net
investment income)..................... (0.050) (0.055) (0.038) (0.027) (0.033)
----- ----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD.............. $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- -----
----- ----- ----- ----- -----
TOTAL RETURN................................ 5.14% 5.64% 3.90% 2.71% 3.32%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (millions)........ $119.1 $111.8 $118.1 $122.5 $138.7
Ratio of expenses to average net assets .52% .51% .53% .54% .54%
Ratio of net investment income
to average net assets 5.02% 5.50% 3.83% 2.67% 3.30%
</TABLE>
The accompanying notes to financial statements are an
integral part of these statements.
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -
The Nicholas Money Market Fund, Inc. (the "Fund") is registered under the
Investment Company Act of 1940, as amended, as an open-end diversified
investment company. The primary objective of the Fund is to achieve as high a
level of current income as is consistent with preserving capital and providing
liquidity. The following is a summary of significant accounting policies
followed by the Fund.
(a) Securities held by the Fund, which are purchased at a discount or premium,
are valued on the basis of amortized cost, done on a straight line method which
is not materially different than the level yield method. Amortized cost
approximates market value and does not take into account unrealized gains or
losses or the impact of fluctuating interest rates. Variable rate instruments
purchased at par are valued at cost which approximates market value.
Investment transactions are accounted for on the trade date.
(b) Yield to maturity is calculated at date of purchase for commercial paper.
For variable rate securities, the yield to maturity is calculated based on
current interest rate and payment frequency.
(c) The Fund maintains a dollar-weighted average portfolio maturity of 90 days
or less and purchases investments which have maturities of 397 days or less.
As of December 31, 1996, the Fund's dollar-weighted average portfolio maturity
was 34 days. Days to maturity on variable rate securities are based on the
number of days until the interest reset date or demand feature, whichever is
longer.
(d) It is the Fund's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies, and to distribute
all of its taxable income to its shareholders. Therefore, no Federal income
tax or excise tax provision is required.
(e) The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from the estimates.
(2) INVESTMENT ADVISER AND MANAGEMENT AGREEMENT -
The Fund has an agreement with Nicholas Company, Inc. (with whom certain
officers and directors of the Fund are affiliated) to serve as investment
adviser and manager. Under the terms of the agreement, a monthly fee is paid
to the investment adviser at an annual rate of .30 of 1% of the daily average
net asset value of the Fund. The adviser will reimburse the Fund if total
operating expenses (other than the management fee) incurred by the Fund exceed
.50 of 1% of the average net assets for the year. At December 31, 1996, the
Fund owed Nicholas Company, Inc. $30,062 for advisory services.
Report of Independent Public Accountants
- -------------------------------------------------------------------------
To the Shareholders and Board of Directors
of Nicholas Money Market Fund, Inc.:
We have audited the accompanying statement of net assets of NICHOLAS MONEY
MARKET FUND, INC. (a Maryland corporation), as of December 31, 1996, the
related statement of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended, and
the financial highlights for the periods presented. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of December 31, 1996, by correspondence with the custodian and
brokers. As to securities purchased but not received, we requested
confirmation from brokers and, when replies were not received, we carried out
other alternative auditing procedures. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Nicholas Money Market Fund, Inc. as of December 31, 1996, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for the
periods presented, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin,
January 24, 1997.
OFFICERS AND DIRECTORS
ALBERT O. NICHOLAS
President, and Director
FREDERICK F. HANSEN
Director
JAY H. ROBERTSON
Director
MELVIN L. SCHULTZ
Director
DAVID L. JOHNSON
Executive Vice President
THOMAS J. SAEGER
Executive Vice President and Secretary
JEFFREY T. MAY
Senior Vice President and Treasurer
DAVID O. NICHOLAS
Vice President
LYNN S. NICHOLAS
Vice President
KATHLEEN A. EVANS
Vice President
CANDACE L. LESAK
Vice President
Custodian and Transfer Agent
FIRSTAR TRUST COMPANY
Milwaukee
(414) 276-0535
COUNSEL
MICHAEL, BEST & FRIEDRICH
Milwaukee
AUDITORS
ARTHUR ANDERSEN LLP
Milwaukee
Member of
100% No-Load (TM)
Mutual Fund Council
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.
