February 25, 1998
Report to Fellow Shareholders:
Once again, in the past year, short-term interest rates exhibited
little volatility as the Federal Reserve Board (Fed) raised the Fed Funds
target rate by .25% to 5.50% in late March, 1997 and left it the same for the
remainder of the year. This follows a similar pattern from 1996 where the
target rate was altered just once by decreasing it .25% in January. All in
all the net effect of the 1996 decrease and the 1997 increase was to leave
the target rate at 5.50% at year end 1997, which is where it began the year
of 1996. Inflation remained in check as measured by the Consumer Price Index
rising just 1.70%, the smallest rise in more than a decade. Combined with a
healthy rise in the U.S. Gross Domestic Product the economy has continued to
expand while currently suppling optimism for more growth in 1998.
The 7-day current and effective yields for the Nicholas Money
Market Fund (the Fund) rose from 5.01% and 5.13% at December 31, 1996 to
5.40% and 5.55% respectively at December 31, 1997. The Fund's weighted
average maturity at year end 1997 was 34 days. The Fund continues to invest
mostly in high quality corporate commercial paper. Also the Fund continued
to rank above the average for total return and yield among the 874 taxable
money funds reported by IBC's Money Market Insight, a service of IBC
Financial Data, Inc.*
Yield As Of Yield As Of
12/31/97 12/31/96
---------- ------------
Current seven day* .............................. 5.40% 5.01%
Effective seven day* ............................ 5.55% 5.13%
Current one year* ............................... 5.15% 5.02%
Effective one year* ............................. 5.26% 5.14%
As of February 23, 1998 the weighted average maturity was 39
days with the seven day current and effective yields at 5.17% and 5.31%
respectively. In its initial session of 1998 the Fed left the Federal
Funds target rate at 5.50%. Currently there are few apparent indications
for large changes to short-term rates for the immediate future.
Thank you for your continued support.
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.
STATEMENT OF NET ASSETS
December 31, 1997
- ---------------------------------------------------------------------
<TABLE>
Yield to Amortized
Principal Maturity Maturity Cost
Amount Date (Note 1(b)) (Note 1(a))
- ------------- ------------- ----------- ------------------
<S> <C> <C> <C>
COMMERCIAL PAPER - 87.78%
$ 485,000 American Express Credit Corporation 01/02/98 6.34% $ 485,000
1,850,000 Chrysler Financial Corporation 01/02/98 5.73% 1,850,000
1,900,000 Ford Motor Credit Company 01/02/98 5.91% 1,900,000
1,500,000 Ford Motor Credit Company 01/05/98 5.73% 1,499,300
1,500,000 General Electric Capital Corporation 01/05/98 5.66% 1,499,313
1,900,000 Ford Motor Credit Company 01/06/98 5.67% 1,898,837
409,000 Hitachi Credit America Corporation 01/06/98 6.12% 408,727
2,400,000 IBM Credit Corporation 01/06/98 5.83% 2,398,477
700,000 Weyerhauser Real Estate Company 01/06/98 5.91% 699,549
650,000 Hitachi Credit America Corporation 01/06/98 6.50% 649,538
3,000,000 John Deere Capital Corporation 01/07/98 5.66% 2,997,704
2,500,000 IBM Credit Corporation 01/08/98 5.84% 2,497,617
1,850,000 Sears Roebuck Acceptance Corporation 01/08/98 5.68% 1,848,298
845,000 American Honda Finance Corporation 01/09/98 6.03% 844,027
2,250,000 Electronic Data Systems Corporation 01/09/98 5.71% 2,247,563
600,000 General Electric Capital Corporation 01/09/98 5.71% 599,353
550,000 Sears Roebuck Acceptance Corporation 01/09/98 5.95% 549,375
2,000,000 American Honda Finance Corporation 01/12/98 6.16% 1,996,639
1,600,000 Banta Corporation 01/12/98 5.90% 1,597,445
1,500,000 Hitachi Credit America Corporation 01/12/98 5.74% 1,497,675
2,350,000 American Express Credit Corporation 01/13/98 6.10% 2,345,692
1,700,000 American Honda Finance Corporation 01/13/98 6.03% 1,696,925
1,470,000 American Honda Finance Corporation 01/13/98 6.04% 1,467,336
2,000,000 Bayer Corporation 01/13/98 5.63% 1,996,657
1,150,000 Bayer Corporation 01/13/98 5.66% 1,148,067
1,200,000 Hitachi Credit America Corporation 01/13/98 5.99% 1,197,855
4,500,000 General Motors Acceptance Corporation 01/14/98 5.74% 4,491,630
1,600,000 General Electric Capital Corporation 01/15/98 5.86% 1,596,695
250,000 General Electric Capital Corporation 01/15/98 5.86% 249,484
1,700,000 J.C. Penny Funding Corporation 01/15/98 5.68% 1,696,611
2,350,000 John Deere Capital Corporation 01/16/98 5.68% 2,344,955
1,400,000 Rexam plc 01/16/98 5.94% 1,396,831
4,250,000 Rexam plc 01/16/98 5.94% 4,240,381
4,500,000 American General Finance Corporation 01/20/98 5.76% 4,487,400
550,000 Fiserv, Inc. 01/20/98 6.27% 548,309
900,000 General Signal Corporation 01/20/98 6.07% 897,323
1,050,000 General Electric Capital Corporation 01/21/98 5.74% 1,046,908
1,700,000 Panasonic Finance (America) Inc. 01/21/98 6.37% 1,694,392
1,100,000 Ford Motor Credit Company 01/22/98 5.82% 1,096,529
2,030,000 American Express Credit Corporation 01/23/98 5.99% 2,023,037
830,000 Fiserv, Inc. 01/23/98 6.12% 827,095
1,500,000 General Signal Corporation 01/23/98 6.32% 1,494,575
960,000 Wausau-Mosinee Paper Corporation 01/23/98 5.99% 956,724
625,000 Novartis Finance Corporation 01/23/98 6.06% 622,831
3,300,000 Sears Roebuck Acceptance Corporation 01/26/98 5.76% 3,287,680
1,695,000 Fiserv, Inc. 01/27/98 5.99% 1,688,114
1,000,000 Universal Foods Corporation 01/27/98 5.96% 995,937
2,925,000 Fiserv, Inc. 01/28/98 5.91% 2,912,853
4,400,000 Bear Stearns Companies, Inc. (The) 01/29/98 5.91% 4,380,959
225,000 Fiserv, Inc. 01/30/98 6.01% 223,976
400,000 Hitachi Credit America Corporation 01/30/98 5.79% 398,249
600,000 Wausau-Mosinee Paper Corporation 01/30/98 6.13% 597,200
1,775,000 General Motors Acceptance Corporation 02/02/98 5.88% 1,766,226
2,000,000 Wausau-Mosinee Paper Corporation 02/02/98 6.08% 1,989,753
750,000 Wausau-Mosinee Paper Corporation 02/03/98 5.99% 746,100
150,000 Hitachi Credit America Corporation 02/04/98 6.15% 149,175
130,000 Wausau-Mosinee Paper Corporation 02/04/98 6.03% 129,297
450,000 Universal Foods Corporation 02/04/98 5.98% 447,587
4,400,000 Universal Foods Corporation 02/05/98 6.14% 4,375,067
2,000,000 Banta Corporation 02/06/98 6.07% 1,988,431
2,400,000 Bayer Corporation 02/24/98 5.83% 2,379,931
200,000 Banta Corporation 02/25/98 5.99% 198,245
2,500,000 LOCAP, Inc. 02/26/98 6.12% 2,477,274
750,000 Hitachi Credit American Corporation 03/17/98 6.28% 740,596
------------------
TOTAL COMMERCIAL PAPER 103,401,329
------------------
VARIABLE RATE SECURITIES -12.74%
5,000,000 Anchor National Life Funding Agreement (1)(2) 01/02/98 6.21% 5,000,000
9,551 Johnson Controls, Inc. (1) 01/02/98 5.46% 9,551
5,000,000 Fannie Mae 01/02/98 5.62% 4,994,876
5,000,000 Morgan Stanley Group, Inc. (1) 01/15/99 6.18% 5,000,000
------------------
TOTAL VARIABLE RATE SECURITIES 15,004,427
------------------
TOTAL INVESTMENTS 118,405,756
------------------
LIABILITIES, NET OF CASH AND RECEIVABLES (0.52%) (606,947)
------------------
TOTAL NET ASSETS (Basis of percentages disclosed above) $117,798,809
==================
NET ASSET VALUE PER SHARE ($.0001 par value, 3,000,000,000
shares authorized), offering price and redemption price
($117,798,809 /117,798,809 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 year ended December 31, 1997
- ---------------------------------------------------------------------
INCOME:
Interest........................................... $7,054,149
EXPENSES:
Management fee (Note 2)............................ 373,742
Transfer agent fees................................ 106,873
Registration fees.................................. 57,165
Legal fees......................................... 27,861
Audit and tax consulting fees...................... 21,025
Postage and mailing fees........................... 16,978
Directors' fees.................................... 9,000
Custodian fees..................................... 7,097
Printing........................................... 5,962
Telephone.......................................... 4,569
Insurance.......................................... 2,817
Other operating expenses........................... 2,535
------------
635,624
------------
Net investment income.............................. $6,418,525
------------
------------
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, 1997 and 1996
- ---------------------------------------------------------------------
<TABLE>
1997 1996
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income...................................... $ 6,418,525 $ 5,660,535
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income
($0.052 and $0.050 per share, respectively).............. (6,418,525) (5,660,535)
---------- -----------
Increase in net assets
from investment activities................. -- --
------------ ------------
CAPITAL SHARE TRANSACTIONS (all at $1.00 per share):
Proceeds from shares issued................................ 107,137,781 100,165,861
Net asset value of shares issued in distributions from net
investment income........................................ 6,120,725 5,498,057
Cost of shares redeemed.................................... (114,531,769) (98,430,057)
------------ ------------
Increase (decrease) in net assets derived from
capital share transactions...................... (1,273,263) 7,233,861
------------ ------------
Total increase (decrease) in net assets........... (1,273,263) 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.......................... $117,798,809 $119,072,072
------------ ------------
------------ ------------
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout each year)
- ---------------------------------------------------------------------
<TABLE>
Year ended December 31,
---------------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<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....................... .052 .050 .055 .038 .027
----- ----- ----- ----- -----
LESS DISTRIBUTIONS:
Dividends (from net
investment income)..................... ( .052) ( .050) ( .055) ( .038) ( .027)
----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD.............. $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- -----
----- ----- ----- ----- -----
TOTAL RETURN................................ 5.26% 5.14% 5.64% 3.90% 2.71%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (millions)........ $117.8 $119.1 $111.8 $118.1 $122.5
Ratio of expenses to average net assets .51% .52% .51% .53% .54%
Ratio of net investment income
to average net assets 5.15% 5.02% 5.50% 3.83% 2.67%
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
- ---------------------------------------------------------------------
(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, 1997, 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, 1997, the
Fund owed Nicholas Company, Inc. $32,973 for advisory services.
REPORT OF INDEPENDANT 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, 1997, 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, 1997, 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, 1997, 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 22, 1998
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
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
December 31, 1997
