August 27, 1997
Report to Fellow Shareholders:
The first six months of 1997 produced an unusual combination of
results relating to two important economic statistics; the Consumer Price
Index (CPI) and the Gross Domestic Product (GDP). The GDP which measures the
rise or fall in the production of goods and services increased a robust 4.9%
on an annual basis, in the first quarter of 1997. The revised second quarter
GDP rose 3.6% on an annual basis. Normally such a rise in production levels
would correlate with an increase in consumer prices (as measured by the CPI),
yet for the first six months of 1997 the CPI has risen approximately
seven-tenths of one percent (0.70%), which is low by recent historical
standards. Regardless the Federal Reserve Board (Fed) resolved in July 1997,
to retain their bias in favor of raising interest rates, if necessary, to
forestall accelerating inflation. This may be the reason the Fed raised the
Federal Funds target rate in March of 1997 by .25% to 5.50%, the only
increase or decrease so far this year.
Nicholas Money Market Fund (the "Fund") which invests primarily in
high quality short-term commercial paper had total net assets of $122 million
and a weighted average maturity of 36 days, on June 30, 1997. The Fund's
seven-day effective yield which is enhanced by management's continuous
efforts to keep operating expenses low, increased from 5.13% at December 31,
1996 to 5.37% on June 30, 1997. For the one and twelve month periods ended
June 30, 1997, the Fund ranked above the average for yield and total return
among 846 taxable money funds tracked by IBC's Money Market Insight, a
service of IBC Financial Data, Inc.*
Yield As Of Yields As Of
6/30/97 7/31/97
----------- ------------
Current seven-Day* ....................... 5.24% 5.18%
Effective seven-Day* ..................... 5.37% 5.32%
Current one year* ........................ 5.08% 5.12%
Effective one year* ...................... 5.20% 5.24%
Over the last several months, it appears the Fed is content in
letting the economy continue on its present course by not raising the Federal
Funds target rate in its last four meetings. However if market forces put
pressure on prices to increase expect the Fed to consider a hike in
short-term rates. We do not foresee large movements in short-term rates for
the remainder of 1997.
Thank you for your continued support.
Sincerely,
/S/ Albert O. Nicholas
------------------------
Albert O. Nicholas
President
STATEMENT OF NET ASSETS
June 30, 1997 (unaudited)
- -----------------------------------------------------------------------------
<TABLE>
Yield to Amortized
Principal Maturity Cost
Amount Date (Note 1 (b)) (Note 1 (a))
--------- ---------- ---------- -----------------
<S> <C> <C> <C>
COMMERCIAL PAPER - 91.40%
$1,200,000 BHP Finance (USA), Inc. 07/01/97 5.74% 1,200,000
1,400,000 Ford Motor Credit Company 07/02/97 5.71% 1,399,783
203,000 Hitachi America, Ltd. 07/02/97 5.80% 202,968
725,000 Hitachi Credit America Corporation 07/03/97 5.77% 724,774
1,450,000 Novartis Finance Corporation 07/03/97 5.71% 1,449,546
6,000,000 Bear Stearns Companies, Inc. (The) 07/07/97 5.75% 5,994,380
425,000 R.R. Donnelley & Sons Company 07/07/97 5.66% 424,605
2,400,000 American Honda Finance Corporation 07/08/97 5.74% 2,397,387
570,000 R.R. Donnelley & Sons Company 07/08/97 5.69% 569,379
3,000,000 General Signal Corporation 07/09/97 5.65% 2,996,300
3,000,000 Rexam plc 07/09/97 5.70% 2,996,287
2,000,000 Rexam plc 07/09/97 5.66% 1,997,533
1,600,000 Torchmark Corporation 07/09/97 5.76% 1,597,988
2,500,000 Heller Financial, Inc. 07/10/97 5.75% 2,496,463
500,000 Heller Financial, Inc. 07/10/97 5.76% 499,291
1,000,000 Morgan Stanley Group, Inc. 07/10/97 5.76% 998,593
3,700,000 American Honda Finance Corporation 07/11/97 5.71% 3,694,224
3,550,000 Chrysler Financial Corporation 07/11/97 5.70% 3,544,488
1,200,000 Hitachi Credit America Corporation 07/11/97 5.80% 1,198,117
390,000 Newell Company 07/11/97 5.65% 389,399
2,000,000 B.A.T Capital Corporation 07/14/97 5.73% 1,995,956
1,000,000 B.A.T Capital Corporation 07/14/97 5.75% 997,971
295,000 Fiserv, Inc. 07/14/97 5.94% 294,382
1,775,000 General Motors Acceptance Corporation 07/15/97 5.67% 1,771,169
276,000 General Signal Corporation 07/15/97 5.82% 275,391
600,000 General Signal Corporation 07/15/97 5.67% 598,703
2,210,000 American Express Credit Corporation 07/16/97 5.67% 2,204,898
2,000,000 Hitachi Credit America Corporation 07/17/97 5.81% 1,994,978
244,000 Dresser Industries, Inc. 07/18/97 5.67% 243,358
780,000 Fiserv, Inc. 07/18/97 5.94% 777,864
1,800,000 General Motors Acceptance Corporation 07/18/97 5.70% 1,795,257
1,880,000 Mosinee Paper Corporation 07/21/97 5.88% 1,873,994
3,900,000 Newell Company 07/21/97 5.68% 3,887,932
1,700,000 Newell Company 07/21/97 5.66% 1,694,749
1,950,000 General Electric Capital Corporation 07/22/97 5.67% 1,943,687
765,000 Mosinee Paper Corporation 07/22/97 5.89% 762,434
275,000 Mosinee Paper Corporation 07/22/97 5.88% 274,078
3,000,000 Heller Financial, Inc. 07/23/97 5.70% 2,989,752
1,600,000 Mosinee Paper Corporation 07/23/97 5.88% 1,594,378
3,225,000 Sears Roebuck Acceptance Corporation 07/24/97 5.70% 3,213,503
1,950,000 Sears Roebuck Acceptance Corporation 07/25/97 5.69% 1,942,759
2,350,000 B.A.T Capital Corporation 07/28/97 5.68% 2,340,183
2,675,000 General Electric Capital Corporation 07/28/97 5.67% 2,663,865
2,450,000 LOCAP, Inc. 07/29/97 6.02% 2,438,852
954,000 LOCAP, Inc. 07/29/97 5.93% 949,696
1,650,000 General Motors Acceptance Corporation 07/30/97 5.70% 1,642,583
3,800,000 American Express Credit Corporation 07/31/97 5.66% 3,782,457
2,925,000 Fiserv, Inc. 08/01/97 5.87% 2,910,517
1,140,000 Electronic Data Systems Corporation 08/04/97 5.67% 1,134,024
1,390,000 American General Finance Corporation 08/05/97 5.66% 1,382,513
1,000,000 American General Finance Corporation 08/06/97 5.67% 994,450
1,350,000 John Deere Capital Corporation 08/07/97 5.66% 1,342,313
5,150,000 Panasonic Finance, Inc. 08/08/97 5.78% 5,119,449
3,900,000 Ford Motor Credit Company 08/11/97 5.68% 3,875,349
4,425,000 Universal Foods Corporation 08/12/97 5.89% 4,395,316
1,830,000 Fiserv, Inc. 08/13/97 5.88% 1,817,431
1,035,000 Mosinee Paper Corporation 08/14/97 5.88% 1,027,726
2,900,000 Bayer Corporation 08/26/97 5.71% 2,874,918
1,025,000 Hitachi Credit America Corporation 09/18/97 5.78% 1,012,359
------------------
TOTAL COMMERCIAL PAPER (Cost $ 111,087,576) 111,602,699
------------------
VARIABLE RATE SECURITIES - 9.03%
5,000,000 Anchor National Life Funding Agreement (1)(2) 07/01/97 5.91% 5,000,000
1,000,000 General Electric Capital Corporation 07/01/97 5.44% 1,000,000
19,568 Wisconsin Electric Power Company (1) 07/01/97 5.43% 19,568
5,000,000 Morgan Stanley Group, Inc. (1) 07/15/98 6.04% 5,000,000
------------------
TOTAL VARIABLE RATE SECURITIES (Cost 11,019,568) 11,019,568
------------------
TOTAL INVESTMENTS (Cost 122,107,144) 122,622,267
------------------
LIABILITIES, NET OF CASH AND RECEIVABLES (0.43%) (523,743)
------------------
TOTAL NET ASSETS (Basis of percentages disclosed above) $122,098,524
==================
NET ASSET VALUE PER SHARE ($.0001 par value, 3,000,000,000
shares authorized), offering price and redemption price
($122,098,524 / 122,098,524 shares outstanding) $1.00
=====
(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.
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1997 (unaudited)
- -----------------------------------------------------------------------------
INCOME:
Interest............................................. $3,404,426
----------
EXPENSES:
Management fee (Note 2)............................... 182,407
Transfer agent fees................................... 52,731
Registration fees..................................... 33,076
Legal fees............................................ 16,335
Postage and mailing................................... 7,602
Audit and tax consulting fees......................... 5,250
Custodian fees........................................ 3,504
Printing.............................................. 3,209
Directors' fees....................................... 4,500
Telephone............................................. 2,647
Other operating expenses.............................. 1,879
----------
313,140
----------
Net investment income 3,091,286
==========
The accompanying notes to financial statements are
an integral part of this statement.
STATEMENTS OF CHANGES IN NET ASSETS
For the six months ended June 30, 1997 (unaudited)
and the year ended December 31, 1996
- -----------------------------------------------------------------------------
<TABLE>
1997 1996
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income.................................. $ 3,091,286 $ 5,660,535
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income
($0.025 and $0.050 per share, respectively).......... (3,091,286) (5,660,535)
------------ ------------
Increase in net assets
from investment activities ................. -- --
------------ ------------
CAPITAL SHARE TRANSACTIONS (all at $1.00 per share):
Proceeds from shares issued............................ 53,662,133 100,165,861
Net asset value of shares issued in distributions from net
investment income.................................... 2,979,253 5,498,057
Cost of shares redeemed................................ (53,614,934) (98,430,057)
Increase in net assets derived from
capital share transactions.................. 3,026,452 7,233,861
------------ ------------
Total increase in net assets.................. 3,026,452 7,233,861
------------ ------------
NET ASSETS, at the beginning of the period................. 119,072,072 111,838,211
------------ ------------
NET ASSETS, at the end of the period....................... $122,098,524 $119,072,072
============ ============
The accompanying notes to financial statements are
an ntegral part of these statements.
</TABLE>
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout each period)
- -----------------------------------------------------------------------------
<TABLE>
Six Months Year ended December 31,
Ended 6/30/97 ------------------------------------------------
(unaudited) 1996 1995 1994 1993 1992
------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........ $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income..................... 0.025 0.050 0.055 0.038 0.027 0.033
----- ----- ----- ----- ----- -----
LESS DISTRIBUTIONS:
Dividends (from net
investment income)..................... (0.025) (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 $1.00
----- ----- ----- ----- ----- -----
----- ----- ----- ----- ----- -----
TOTAL RETURN................................ 2.55 (1) 5.14 5.64 3.90 2.71 3.32
----- ----- ----- ----- ----- -----
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (millions)........ $122.1 $119.1 $111.8 $118.1 $122.5 $138.7
Ratio of expenses to average net assets..... .52% (2) .52% .51% .53% .54% .54%
Ratio of net investment income
to average net assets..................... 5.08%* (2) 5.02% 5.50% 3.83% 2.67% 3.30%
(1) Not Annualized
(2) Annualized
The accompanying notes to financial statements are
an integral part of these statements.
NOTES TO FINANCIAL STATEMENTS
June 30, 1997 (unaudited)
- -----------------------------------------------------------------------------
(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 June 30, 1997, the Fund's
dollar-weighted average portfolio maturity was 36 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 t ax
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 June 30, 1997, the Fund owed
Nicholas Company, Inc. $29,421 for advisory services.
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
Senior Vice President
LYNN S. NICHOLAS
Vice President
KATHLEEN A. EVANS
Vice President
CANDACE L. LESAK
Vice President
Custodian and Transfer Agent
INVESTMENT ADVISOR
NICHOLAS COMPANY, INC.
414-272-6133 OR 800-227-5987
FIRSTAR TRUST COMPANY
Milwaukee
(414) 276-0535
COUNSEL
MICHAEL, BEST & FRIEDRICH
Milwaukee
AUDITORS
ARTHUR ANDERSEN LLP
Milwaukee
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 MONEY MARKET FUND
700 North
Water Street
Milwaukee,
Wisconsin 53202
June 30, 1997
</TABLE>
