August 28, 1998
Report to Fellow Shareholders:
During its most recent meeting in August of 1998 the Federal Reserve
Board (Fed) left the Federal funds target rate unchanged at 5.50%. In fact,
for the past 17 months, the target rate has remained unchanged at 5.50%. This
indicates the Fed believes by keeping the rate steady the economy won't expand
too fast; which could trigger inflation or cool down too much which could
precede a recession.
The first quarter of 1998 displayed signs of a healthy U.S. economy with
the Gross Domestic Products (GDP) rising at an annualized rate of 5.50%. After
the July 1998 meeting the Fed left it's target rate unchanged and kept its bias
towards raising rates to possibly slow down the ongoing strong U.S. economy.
However, recent developments, particularly slumping economies around the world,
have dampened enthusiasm in the U.S. stock market especially for those
companies with large overseas interests. Combined with an estimated second
quarter annualized GDP of approximately 1.6% (which is much less than 1998's
first quarter) and benign inflation numbers as indicated by the Consumer Price
Index (CPI) which rose just less than 0.90% for the first seven months of 1998;
many forecasters are guessing the Fed will keep the Fed funds rate at its
current level in the near future.
Currently, in late August 1998, Nicholas Money Market Fund (the Fund) has
achieved an all time high in total net assets by increasing over 33% from the
beginning of the year. This bodes well for yield investors such as those in a
money market fund because a larger fund size should dilute expenses thus
increasing total return. The 7-day current and effective yields of the Fund
fell from 5.40% and 5.55% at December 31, 1997 to 5.19% and 5.32% at June 30,
1998. The Fund's weighted average maturity at June 30, 1998 was 41 days and
its portfolio was invested at 93% in high quality commercial paper. Of 885
taxable money funds tracked by IBC's Money Market Insight, a service of IBC
Financial Data, Inc., Nicholas Money Market ranked in the top half for yield
and total return for the one and 12 month periods ended June 30, 1998.
<TABLE>
Yield As Of Yield As Of
6/30/98 7/31/98
----------- -----------
<S> <C> <C>
Current 7-day* ............................................................. 5.19% 5.19%
Effective 7-day* ........................................................... 5.32% 5.32%
Current 12-month* .......................................................... 5.20% 5.18%
Effective 12-month* ........................................................ 5.32% 5.30%
</TABLE>
Since Fed fund rate changes directly effect the economy it will be
interesting to see, after a long period of constant levels, whether the Fed
will react to the volatility in current U.S. and world stock and bond markets
by altering the target Fed funds rate in their continuing effort to balance
economic growth versus price level increases.
Sincerely,
/S/ Albert O. Nicholas
----------------------
Albert O. Nicholas
President
*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 is historical and does not represent future
results. An investment in the Fund is neither insured nor guaranteed by the
United States Government and there can be no assurance that the Fund will be
able to maintain a stable net asset value of $1.00 per share.
Financial Highlights
(For a share outstanding throughout each period)
- -------------------------------------------------------------------------------
<TABLE>
Six Months Year ended December 31,
Ended 6/30/98 ------------------------------------------------
(unaudited) 1997 1996 1995 1994 1993
------------- ---- ---- ---- ---- ----
<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 0.026 0.052 0.050 0.055 0.038 0.027
----- ----- ----- ----- ----- -----
LESS DISTRIBUTIONS:
Dividends (from net
investment income) (0.026) (0.052) (0.050) (0.055) (0.038) (0.027)
----- ----- ----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- ----- -----
----- ----- ----- ----- ----- -----
TOTAL RETURN 2.61% 5.26% 5.14% 5.64% 3.90% 2.71%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (millions) $138.9 $117.8 $119.1 $111.8 $118.1 $122.5
Ratio of expenses to average net assets 0.51%* .51% .52% .51% .53% .54%
Ratio of net investment income
to average net assets 5.12%* 5.15% 5.02% 5.50% 3.83% 2.67%
*Annualized
</TABLE>
The accompanying notes to financial statements are an
integral part of these statements.
NICHOLAS FAMILY OF FUNDS
Services Offered
- ---------------------------------------------------------------------
* IRAs
*Traditional *Educational
*Roth *SEP
*Self-employed Master Retirement Plan
*Money Purchase *Profit Sharing
*Automatic Investment Plan
*Direct Deposite of Distributions
*Systematic Withdrawl Plan
*Monthly Automatic Exchange between Funds
*Telephone Redemption (Regular accounts only)
*Telephone Exchange
*24-hour Automated Account Information (800-544-6547)
Please call a shareholder representative for further information on
the above services or with any other questions you may have regarding
the Nicholas Family of Funds.
800-227-5987
Statement of Net Assets
June 30, 1998 (unaudited)
- -------------------------------------------------------------------------------
<TABLE>
Yield to Amortized
Principal Maturity Maturity Cost
Amount Date (Note 1 (b)) (Note 1 (a))
--------- ---------- ---------- -----------------
COMMERCIAL PAPER - 93.25%
<S> <C> <C> <C>
$1,000,000 Fiserv, Inc. 07/01/98 5.80% 1,000,000
2,400,000 Fiserv, Inc. 07/02/98 5.83% 2,399,620
2,750,000 Sears Roebuck Acceptance Corporation 07/06/98 5.66% 2,747,892
431,000 LOCAP, Inc. 07/06/98 6.09% 430,641
2,400,000 Bear Stearns Companies, Inc. (The) 07/07/98 5.65% 2,397,792
1,175,000 Panasonic Finance America, Inc. 07/07/98 5.61% 1,173,921
4,710,000 General Motors Acceptance Corporation 07/08/98 5.64% 4,704,935
1,300,000 CS First Boston, Inc. 07/09/98 5.64% 1,298,414
300,000 LOCAP, Inc. 07/09/98 5.85% 299,617
625,000 Chrysler Financial Corporation 07/10/98 5.64% 624,137
1,550,000 Newell Company 07/10/98 5.62% 1,547,861
3,000,000 Torchmark Corporation 07/10/98 5.74% 2,995,762
1,500,000 Newell Company 07/13/98 5.64% 1,497,230
1,175,000 Sears Roebuck Acceptance Corporation 07/13/98 5.65% 1,172,834
3,450,000 Chrysler Financial Corporation 07/14/98 5.64% 3,443,123
4,250,000 American General Corporation 07/15/98 5.63% 4,240,877
1,660,000 American Honda Finance Corporation 07/16/98 5.65% 1,656,175
600,000 Dover Corporation 07/16/98 5.65% 598,613
2,475,000 General Signal Corporation 07/16/98 5.65% 2,469,277
500,000 Hitachi Credit America Corporation 07/17/98 5.70% 498,767
1,600,000 Newell Company 07/17/98 5.63% 1,596,075
3,250,000 American Honda Finance Corporation 07/20/98 5.66% 3,240,515
3,900,000 Rexam plc . 07/21/98 5.67% 3,888,040
2,200,000 Weyerhauser Real Estate Company 07/21/98 5.62% 2,193,253
2,120,000 Novartis Finance Corporation 07/22/98 5.62% 2,113,198
925,000 Universal Foods Corporation 07/23/98 5.83% 921,778
3,000,000 Wausau-Mosinee Paper Corporation 07/23/98 5.82% 2,989,550
2,000,000 American Honda Finance Corporation 07/24/98 5.63% 1,992,959
975,000 Ford Motor Credit Company 07/24/98 5.64% 971,580
2,500,000 Bear Stearns Company, Inc. (The) 07/27/98 5.67% 2,490,033
3,000,000 Rexam plc 07/28/98 5.64% 2,987,580
1,445,000 Stanley Works (The) 07/28/98 5.66% 1,439,029
1,940,000 Stanley Works (The) 07/28/98 5.65% 1,931,939
2,175,000 Sears Roebuck Acceptance Corporation 07/29/98 5.66% 2,165,645
500,000 Ford Motor Credit Company 07/30/98 5.63% 497,781
3,500,000 Weyerhauser Real Estate Company 07/30/98 5.66% 3,484,352
1,225,000 Weyerhauser Real Estate Company 07/30/98 5.66% 1,219,523
1,340,000 General Electric Capital Corporation 07/31/98 5.63% 1,333,847
425,000 Hitachi Credit America Corporation 08/03/98 5.70% 422,838
1,500,000 Novartis Finance Corporation 08/03/98 5.63% 1,492,424
750,000 Sears Roebuck Acceptance Corporation 08/03/98 5.66% 746,184
2,000,000 Fiserv, Inc. 08/04/98 5.84% 1,989,233
2,200,000 Wausau-Mosinee Paper Corporation 08/04/98 5.82% 2.188.157
5,000,000 CS First Boston, Inc. 08/05/98 5.67% 4,973,215
1,075,000 Bear Stearns Company, Inc. (The) 08/06/98 5.66% 1,069,055
1,650,000 Wausau-Mosinee Paper Corporation 08/06/98 5.82% 1,640,595
3,100,000 Deere & Company 08/07/98 5.64% 3,082,445
1,500,000 Banta Corporation 08/10/98 5.83% 1,490,500
4,675,000 Universal Foods Corporation 08/10/98 5.87% 4,645,132
3,000,000 Banta Corporatin 08/11/98 5.83% 2,980,525
2,250,000 Hitachi Credit America Corporation 08/12/98 5.70% 2,235,431
5,475,000 Ford Motor Credit Company 08/13/98 5.65% 5,438,902
1,130,000 Norwest Financial, Inc. 08/14/98 5.65% 1,122,376
3,850,000 Deere & Company 08/17/98 5.65% 3,822,254
600,000 Fiserv, Inc. 08/17/98 5.85% 595,535
2,000,000 American Express Credit Corporation 08/18/98 5.65% 1,985,280
200,000 Hitachi Credit America Corporation 08/20/98 5.70% 198,456
746,000 Hitachi Credit America Corporation 08/20/98 5.70% 740,239
1,000,000 General Electric Capital Corporation 08/21/98 5.67% 992,223
440,000 Novartis Finance Corporation 08/24/98 5.68% 436,337
1,075,000 Banta Corporation 08/26/98 5.84% 1,065,468
2,700,000 American General Finance Corporation 08/27/98 5.67% 2,676,359
1,025,000 Hitachi Credit America Corporation 08/28/98 5.71% 1,015,818
650,000 McGraw-Hill Companies 08/28/98 5.70% 644,167
950,000 Fiserv, Inc. 09/01/98 5.84% 940,674
4,275,000 General Electric Capital Corporation 09/02/98 5.66% 4,233,704
------------------
TOTAL COMMERCIAL PAPER 129,517,691
------------------
VARIABLE RATE SECURITIES - 7.21%
5,000,000 Anchor National Life Funding Agreement (1)(2) 07/01/98 5.88% 5,000,000
5,540 Johnson Controls Inc. (1) 07/01/98 5.39% 5,540
1,485 Pitney Bowes Credit Corporation (1) 07/01/98 5.39% 1,485
5,000,000 Morgan Stanley Group, Inc. (1) 07/15/99 5.91% 5,000,000
------------------
TOTAL VARIABLE RATE SECURITIES 10,007,025
------------------
TOTAL INVESTMENTS 139,524,716
------------------
LIABILITIES, NET OF CASH AND RECEIVABLES (0.46%) (637,167)
------------------
TOTAL NET ASSETS (Basis of percentages disclosed above) $138,887,549
==================
NET ASSET VALUE PER SHARE ($.0001 par value, 3,000,000,000
shares authorized), offering price and redemption price
($138,887,549 / 138,887,549 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.
Statement of Operations
For the six months ended June 30, 1998 (unaudited)
- -------------------------------------------------------------------------------
INCOME:
Interest...................................... $3,607,850
----------
EXPENSES:
Management fee (Note 2)....................... 189,699
Transfer agent fees........................... 51,860
Registration fees............................. 38,255
Legal fees.................................... 15,895
Postage and mailing fees...................... 9,107
Directors' fees............................... 6,000
Printing fees................................. 5,043
Audit and tax consulting fees................. 3,000
Custodian fees................................ 2,730
Communication fees............................ 1,687
Other operating expenses...................... 2,371
----------
325,647
----------
Net investment income......................... 3,282,203
==========
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, 1998 (unaudited)
and the year ended December 31, 1997
- -------------------------------------------------------------------------------
</TABLE>
<TABLE>
1998 1997
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 3,282,203 $ 6,418,525
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income
($0.026 and $0.052 per share, respectively) (3,282,203) (6,418,525)
------------ ------------
Increase in net assets
from investment activities -- --
------------ -----------
CAPITAL SHARE TRANSACTIONS (all at $1.00 per share):
Proceeds from shares issued 69,974,799 107,137,781
Net asset value of shares issued in distributions from net
investment income 3,182,872 6,120,725
Cost of shares redeemed (52,068,931) (114,531,769)
Increase (decrease) in net assets derived from ------------ ------------
capital share transactions 21,088,740 (1,273,263)
------------ ------------
Total increase (decrease) in net assets 21,088,740 (1,273,263)
------------ ------------
NET ASSETS, at the beginning of the period 117,798,809 119,072,072
------------ ------------
NET ASSETS, at the end of the period $138,887,549 $117,798,809
============ ============
The accompanying notes to financial statements are an
integral part of these statements.
NOTES TO FINANCIAL STATEMENTS
June 30, 1998 (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 generally accounted for on
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, 1998, the Fund's dollar-weighted
average portfolio maturity was 41 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 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, 1998, the Fund owed Nicholas
Company, Inc. $34,161 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, WI
(414) 276-0535
COUNSEL
MICHAEL, BEST & FRIEDRICH
Milwaukee, WI
AUDITORS
ARTHUR ANDERSEN LLP
Milwaukee, WI
This report is submitted for the information of shareholders of
the Fund. It is not authorized for distribution to prospective
investors unless preceded or accompanied by an effective
prospectus.
NICHOLAS MONEY MARKET FUND
700 North Water Street
Milwaukee, Wisconsin 53202
www.nicholasfunds.com
JUNE 30, 1998
</TABLE>
