February 25, 1999
Report to Fellow Shareholders:
For the first time since early 1997 the Federal Reserve Board
("Fed") altered the Federal Funds target rate. During 1998 the
Fed lowered its' target rate by a quarter of a percent three times
in the second half of the year. This was largely in response to
sagging U.S. stock and bond markets which were in turn responding
to slumping world economics. By easing rates the Fed hoped to
stimulate financial markets by making credit more affordable.
Since short-term interest rates follow the Feds lead, interest
rates on investments such as those purchased by money markets,
declined in late 1998.
Influenced by general declines in short-term interest rates
the seven-day current and effective yields for the Nicholas Money
Market Fund (the "Fund") decreased from 5.40% and 5.55% at
December 31, 1997 to 4.92% and 5.04%, respectively, at December
31, 1998. Total return matched the previous years 5.26% partly
due to a decrease in the Funds expense ratio from 0.51% to 0.48%
of the Funds average net assets. As with all its funds, Nicholas
Company, Inc. is mindful in keeping fund operating expenses low
which helps to enhance yield and return. Net assets increased from
nearly $118 million to approximately $160 million for the year.
The Funds weighted average maturity at year-end also rose from 34
to 37 days. The majority of the Funds holdings, (91.2%) were
invested in corporate commercial paper. As in past years the Fund
ranks above the average in terms of total return and yield among
the taxable money market group. Of the 898 taxable funds reported
at December 31, 1998 by IBC's Money Market Insight, a service of
IBC Financial Data, Inc., the Funds total return for the year
ended December 31, 1998 of 5.26% surpassed the group average which
was 5.04%.
Yield As Of Yield As Of
----------- -----------
12/31/98 12/31/97
Current seven-day*............ 4.92% 5.40%
Effective seven-day*.......... 5.04% 5.55%
Current 30-day*............... 4.92% 5.36%
Effective 30-day*............. 5.03% 5.49%
As of February 22, 1999 the seven-day current and effective
yields of the Fund were 4.56% and 4.67%, respectively. The
weighted average days to maturity has increased from December 31,
1998 to 44 days, as has the percent of high quality commercial
paper to 94.0% of the Funds total net assets, which remain near
$160 million.
After declines in late 1998 and early 1999 short-term
interest rates seem to be leveling off as the Fed has left its'
target rate unchanged in its last two meetings. Combined with a
rebound in the stock market from last years downturn, lower than
expected inflation for January 1999 and a steady U.S. economy
there is no clear indication of either a decrease or increase in
the immediate future for short-term interest rates.
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, 1998
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Yield to Amortized
Principal Maturity Maturity Cost
Amount Date (Note 1(b)) (Note 1(a))
- ------------- ------------- ----------- -------------
COMMERCIAL PAPER - 91.21%
<S> <C> <C> <C> <C>
$3,700,000 Bayer Corporation 01/04/99 5.24% $ 3,700,000
2,500,000 General Motors Acceptance Corporation 01/05/99 5.45% 2,499,630
3,000,000 American Express Credit Corporation 01/06/99 5.32% 2,999,132
2,200,000 John Deere Capital Corporation 01/06/99 5.43% 2,199,351
4,225,000 Frontier Corporation 01/06/99 5.81% 4,223,662
3,950,000 General Motors Acceptance Corporation 01/07/99 5.30% 3,948,302
6,650,000 Brown-Forman Corporation 01/08/99 5.39% 6,646,084
3,000,000 Morgan Stanley Dean Witter & Co. 01/08/99 5.54% 2,998,193
3,250,000 Bear Stearns Companies Inc. (The) 01/11/99 5.43% 3,246,651
4,500,000 LOCAP, Inc. 01/12/99 5.81% 4,494,350
850,000 LOCAP, Inc. 01/12/99 5.54% 848,980
1,800,000 LOCAP, Inc. 01/12/99 5.89% 1,797,700
3,500,000 American Honda Finance Corporation 01/13/99 5.35% 3,495,450
5,150,000 Weyerhaeuser Real Estate Company 01/13/99 5.30% 5,143,305
4,700,000 American Express Credit Corporation 01/14/99 5.33% 4,693,198
875,000 LOCAP, Inc. 01/14/99 5.81% 873,627
1,100,000 Sears Roebuck Acceptance Corporation 01/14/99 5.49% 1,098,362
2,500,000 Weyerhaeuser Real Estate Company 01/14/99 5.25% 2,496,424
950,000 Fiserv, Inc. 01/15/99 5.53% 948,432
4,000,000 General Electric Capital Corporation 01/15/99 5.44% 3,993,498
4,000,000 J.C. Penney Funding Corporation 01/19/99 5.25% 3,991,450
1,500,000 Universal Foods Corporation 01/19/99 5.54% 1,496,625
1,050,000 J.C. Penney Funding Corporation 01/20/99 5.37% 1,047,555
1,140,000 Sears Roebuck Acceptance Corporation 01/20/99 5.38% 1,137,330
2,100,000 American Honda Finance Corporation 01/21/99 5.36% 2,094,813
2,000,000 Banta Corporation 01/22/99 5.48% 1,994,650
2,750,000 Sears Roebuck Acceptance Corporation 01/25/99 5.20% 2,741,883
400,000 Fiserv, Inc. 01/26/99 5.57% 398,668
1,000,000 Fiserv, Inc. 01/26/99 5.80% 996,517
4,625,000 Bear Stearns Companies Inc. (The) 01/27/99 5.41% 4,609,339
1,700,000 Banta Corporation 01/28/99 5.43% 1,693,993
1,450,000 J.C. Penney Funding Corporation 01/28/99 5.48% 1,444,809
2,400,000 American Honda Finance Corporation 01/29/99 5.19% 2,391,583
5,500,000 Coca-Cola Company (The) 02/01/99 5.18% 5,478,312
900,000 Fiserv, Inc. 02/01/99 5.48% 896,255
500,000 Wausau-Mosinee Paper Corporation 02/01/99 5.52% 497,900
3,000,000 Credit Suisse First Boston, Inc. 02/02/99 5.50% 2,987,047
650,000 Fiserv, Inc. 02/03/99 5.48% 647,102
4,975,000 American General Finance Corporation 02/04/99 5.36% 4,952,552
1,600,000 Sears Roebuck Acceptance Corporation 02/05/99 5.20% 1,592,804
1,700,000 Coca-Cola Company (The) 02/08/99 5.22% 1,691,571
1,800,000 Frontier Corporation 02/08/99 5.47% 1,790,637
2,500,000 Wausau-Mosinee Paper Corporation 02/08/99 5.42% 2,487,118
2,900,000 General Electric Capital Corporation 02/09/99 5.27% 2,885,065
250,000 Fiserv, Inc. 02/10/99 5.59% 248,600
700,000 Fiserv, Inc. 02/10/99 5.30% 696,259
4,000,000 Chrysler Financial Co. LLC 02/11/99 5.38% 3,977,875
4,300,000 Banta Corporation 02/12/99 5.47% 4,275,078
2,075,000 Universal Foods Corporation 02/16/99 5.48% 2,061,740
5,650,000 John Deere Capital Corporation 02/17/99 5.16% 5,615,265
3 250,000 American General Finance Corporation 02/18/99 5.26% 3,229,119
2,700,000 Credit Suisse First Boston, Inc. 02/19/99 5.50% 2,681,542
4,550,000 Bayer Corporation 02/25/99 5.18% 4,516,810
550,000 Fiserv, Inc. 03/08/99 5.39% 544,947
4,000,000 Torchmark Corporation 03/08/99 5.38% 3,963,250
------------
TOTAL COMMERCIAL PAPER 146,100,394
------------
</TABLE>
<TABLE>
<CAPTION>
VARIABLE RATE SECURITIES - 6.78%
<S> <C> <C> <C> <C>
5,000,000 Anchor National Life Funding Agreement (1)(2) 01/04/99 5.85% 5,000,000
12,461 General Mills, Inc. (1) 01/04/99 5.36% 12,461
409,631 Pitney Bowes Credit Corporation (1) 01/04/99 5.36% 409,631
436,975 Sara Lee Corporation (1) 01/04/99 5.36% 436,975
5,000,000 Morgan Stanley Group, Inc. (1) 01/14/00 5.43% 5,000,000
------------
TOTAL VARIABLE RATE SECURITIES 10,859,067
------------
</TABLE>
FIXED RATE SECURITIES - 2.49%
<TABLE>
<S> <C> <C> <C>
4,000,000 Chrysler Financial Corporation 02/22/99 5.35% 3,998,943
------------
TOTAL INVESTMENTS 160,958,404
------------
LIABILITIES, NET OF CASH AND RECEIVABLES (0.48%) (771,107)
------------
TOTAL NET ASSETS (Basis of percentages disclosed above) $160,187,297
------------
------------
NET ASSET VALUE PER SHARE ($.0001 par value, 3,000,000,000
shares authorized), offering price and redemption price
($160,187,297 /160,187,297 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.
<TABLE>
<CAPTION>
Statement of Operations
For the year ended December 31, 1998
- -------------------------------------------------------------------------------
<S> <C>
INCOME:
Interest........................................... $8,184,116
EXPENSES:
Management fee (Note 2)............................ 436,618
Transfer agent fees................................ 106,354
Registration fees.................................. 49,707
Legal fees......................................... 27,509
Postage and mailing fees........................... 18,177
Audit and tax consulting fees...................... 16,100
Directors' fees.................................... 12,000
Printing fees...................................... 6,708
Custodian fees..................................... 6,671
Insurance fees..................................... 3,262
Telephone fees..................................... 2,478
Other operating expenses........................... 3,542
----------
689,126
----------
Net investment income.......................... $7,494,990
----------
----------
</TABLE>
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, 1998 and 1997
- -------------------------------------------------------------------------------
<TABLE>
1998 1997
------------- ------------
<S> <C> <C>
OPERATIONS:
Net investment income...................................... $ 7,494,990 $ 6,418,525
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income
($0.052 and $0.052 per share, respectively).............. (7,494,990) (6,418,525)
------------- ------------
Increase in net assets
from investment activities................. -- --
------------- ------------
CAPITAL SHARE TRANSACTIONS (all at $1.00 per share):
Proceeds from shares issued................................ 178,021,968 107,137,781
Net asset value of shares issued in distributions from net
investment income........................................ 7,046,022 6,120,725
Cost of shares redeemed.................................... (142,679,502) (114,531,769)
------------- ------------
Increase (decrease) in net assets derived from
capital share transactions...................... 42,388,488 (1,273,263)
------------- ------------
Total increase (decrease) in net assets........... 42,388,488 (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.......................... $ 160,187,297 $ 117,798,809
------------- ------------
------------- ------------
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
Financial Highlights
(For a share outstanding throughout each period)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended December 31,
-----------------------------------------------
<S> <C> <C> <C> <C> <C>
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income..................... .052 .052 .050 .055 .038
----- ----- ----- ----- -----
LESS DISTRIBUTIONS:
Dividends (from net
investment income)..................... (.052) (.052) (.050) (.055) (.038)
----- ----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD.............. $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- -----
----- ----- ----- ----- -----
TOTAL RETURN................................ 5.26% 5.26% 5.14% 5.64% 3.90%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (millions)........ $160.2 $117.8 $119.1 $111.8 $118.1
Ratio of expenses to average net assets .48% .51% .52% .51% .53%
Ratio of net investment income
to average net assets 5.18% 5.15% 5.02% 5.50% 3.83%
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
NOTES TO FINANCIAL STATEMENTS
December 31, 1998
(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 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, 1998, the Fund's dollar-weighted
average portfolio maturity was 37 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 December 31, 1998, the
Fund owed Nicholas Company, Inc. $45,871 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, 1998, 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 and financial highlights. Our procedures included
confirmation of securities owned as of December 31, 1998, by correspondence
with the custodian and brokers. 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, 1998, 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 20, 1999
NICHOLAS FAMILY OF FUNDS
Services Offered
- ---------------------------------------------------------------------
* IRAs
*Traditional *Simple *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
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 BANK MILWAUKEE, N.A.
Milwaukee, Wisconsin
COUNSEL
MICHAEL, BEST & FRIEDRICH LLP
Milwaukee, Wisconsin
AUDITORS
ARTHUR ANDERSEN 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 MONEY MARKET FUND, INC.
700 North Water Street
Milwaukee, Wisconsin 53202
www.nicholasfunds.com
December 31, 1998
