UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-04750 -------------
Fenimore Asset Management Trust - ------------------------------------------------------------------------------ (Exact name of registrant as specified in charter)
384 North Grand Street P.O. Box 399 Cobleskill, New York 12043 - ------------------------------------------------------------------------------ (Address of principal executive offices) (Zip code)
Thomas O. Putnam Fenimore Asset Management Trust 384 North Grand Street Cobleskill, New York 12043 - ------------------------------------------------------------------------------ (Name and address of agent for service)
Registrant's telephone number, including area code: 1-800-453-4392 ------------------
Date of fiscal year end: December 31 ---------------
Date of reporting period: June 30, 2013 ---------------------
Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. ss. 3507.
Item 1. Reports to Stockholders. The semi-annual report to stockholders is filed herewith.
Converted by EDGARwiz
FAM Funds
2013 Semi Annual Report
FAM Value Fund
FAM Equity-Income Fund
FAM Small Cap Fund
Table of Contents
Chairman’s Commentary
1
Expense Data
4
FAM Value Fund
Letter to Shareholders
6
Portfolio Data
11
Statement of Investments
12
FAM Equity-Income Fund
Letter to Shareholders
17
Portfolio Data
23
Statement of Investments
24
FAM Small Cap Fund
Letter to Shareholders
29
Portfolio Data
34
Statement of Investments
35
Statement of Assets and Liabilities
38
Statement of Operations
39
Statement of Changes in Net Assets
40
Notes to Financial Statements
42
Supplemental Information
53
Privacy Policy
FAM Funds has adopted a Code of Ethics that applies to its principal
executive and principal financial officers. You may obtain a copy of this Code
without charge, by calling FAM Funds at (800) 932-3271.
Chairman’s Commentary
June 30, 2013
Dear Fellow Shareholder,
U.S. equity markets were strong out of the gate this year. For most of the first half of 2013,
the S&P 500 Index rose impressively and with scant volatility. Then, like a sprinter pulling
a hamstring mid-stride, markets seized before limping to the second-quarter close. Despite
the inauspicious finish, the S&P 500 ended the first half up an impressive 13.8%; its best
start since 1998. As you will read in the letters that follow, our Funds performed very well
too—both on an absolute and relative basis—and we are excited about the prospects of the
businesses in which we invest.
There were a number of explanations for stocks’ strong start, including: relief over the lim-
ited effects of Sequestration; signs of consumers’ resiliency despite a material payroll tax
hike; a dearth of drama in the Eurozone; better-than-expected corporate earnings; a rever-
sal of equity fund outflows; and the belief that the Federal Reserve would not be closing the
monetary spigot anytime soon. It was this last factor that proved to be the Achilles heel of
heady equity markets late in the second quarter.
Twice in the second quarter Federal Reserve Chairman Ben Bernanke (re)iterated that con-
tingent on further strengthening in the U.S. economy, the Federal Reserve would methodi-
cally reduce the amount of bonds it was buying—part of a process known as Quantitative
Easing (QE). In a routine news conference on June 19th, Bernanke posited the “tapering”
process could begin as soon as the end of 2013 and last six to eight months. This was sooner
than many had hoped or expected, and the notion that the sun was beginning to set on this
era of unprecedented monetary stimulus created anxiety in financial markets. We are fre-
quently asked if we are anxious about the end of “easy money” and if this affects our invest-
ment approach. The answer to both is quite simply, “No.”
We are bottom-up value investors, so macro factors have a limited bearing on our long-term
investment approach. Nevertheless, we do contemplate the context in which we are invest-
ing. The Fed’s looming actions are significant and complex, but they will be precipitated by
an improving economy. In our view—contrarian in today’s equity markets—higher growth
and lower unemployment are reasons for optimism.
Besides, low rates are not a universal good. Just ask the millions of retirees trying to live off
a small fraction of the interest income they had planned on, or the millions of savers whose
purchasing power is dwindling and glide path to retirement is getting longer and longer.
Many institutions, including banks, insurance companies and any entity that sponsors a
pension plan, will actually benefit from higher interest rates. The converse is also true—
higher interest rates will not necessarily be injurious. Individuals and institutions have
1
Chairman’s Commentary
reduced their debt load and/or refinanced at lower, fixed interest rates. We believe that
housing will still be affordable relative to historical standards and many capital projects or
acquisitions will still be economical. And we would argue that the pricing of many asset
classes, including U.S. equities, already presume a higher interest rate environment.
That is our thought on QE, for what it is worth, but they are not the source of our optimism.
Our holdings are. Our Investment Research Team has more than 130 collective years in the
investment business. Over this time, we have invested through many geo-political threats,
economic risks, secular evolutions, and market mood swings—many of them “unprece-
dented” as have been the Fed’s actions. And, we steadfastly believe that the best way to
protect and grow capital amidst omnipresent, macro uncertainty is to invest in a small
number of carefully researched, carefully selected, high-quality businesses that are profit-
able, growing, well-capitalized, well-run, and competitively-advantaged. We liken our hold-
ings to a fleet of sturdy ships worthy of both calm and stormy seas. We do not know what
the near- to mid-term effects of the Fed’s actions will be, but believe our: insurance brokers
should be profitably writing more policies over the next five years; housing-related busi-
nesses should be supplying more homes built over the next five years; retailers should be
selling more wares from more stores over the next five years; and banks should be writing
more loans at wider net-interest margins over the next five years. The list goes on…
Additionally, we think that many of the companies in our portfolios have the potential to:
grow revenues by taking market share, obviating the need for strong growth in their respec-
tive industries; fortify their competitive positions even if their markets are challenging;
grow earnings irrespective of revenue gains by operating more efficiently; and use capital
more effectively and return the excesses to us, their owners. These factors will have a
greater impact on wealth creation over the long haul than lead stories in the financial
media—of this we are certain.
It is possible that market volatility will continue—or escalate—as this plays out. This does
not worry us. We are intently focused on the earnings power of the businesses in which we
invest—their primary source of value—and not stock price fluctuations. We feel great about
the businesses we hold and will feel even better if we are able to add new names or increase
existing positions at bargain prices.
Speaking of good feelings, we are proud of the FAM Small Cap Fund which celebrated its
one-year anniversary on March 1st and, as of that date, was up 18.9%. That is quite a differ-
ent start from the FAM Value Fund which opened just before the stock market crash of 1987.
After its first year, it was down -17.2%. And yet, we are still going strong having celebrated
the 25th Anniversary of its launch in 2012. We believe a long-term focus to investing should
continue to benefit investors in all three of our mutual funds.
2
Chairman’s Commentary
Thank you for entrusting us with your assets. We wish you a safe and happy summer.
Thomas O. Putnam, Chairman
Research Team
Andrew F. Boord
John D. Fox, CFA
Kevin D. Gioia
Paul C. Hogan, CFA
Marc D. Roberts, CFA
Drew P. Wilson, CFA
3
FAM Funds —Expense Data
As of June 30, 2013 (Unaudited)
As a shareholder of the Funds, you incur ongoing costs, including management fees, and
other Fund expenses. This Example is intended to help you understand your ongoing costs
(in dollars) of investing in the Funds and to compare these costs with the ongoing costs of
investing in other mutual funds.
The Example is based on an investment of $1,000 at the beginning of the period and held
for the entire period (1/1/2013 to 6/30/2013).
Actual Expenses
Line (A) of the following tables provides information about actual account values and ac-
tual expenses. You may use the information in this line, together with the amount you in-
vested, to estimate the expenses that you paid over the period. Simply divide your account
value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then mul-
tiply the result by the number in the line for your share class under the heading entitled
“Expenses Paid During Period” to estimate the expenses you paid on your account during
this period.
Hypothetical Example for Comparison Purposes
Line (B) of the following table provides information about hypothetical account values and
hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of re-
turn of 5% per year before expenses, which is not the Fund’s actual return. The hypotheti-
cal account values and expenses may not be used to estimate the actual ending account
balance or expenses you paid for the period. You may use this information to compare the
ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypo-
thetical example with the 5% hypothetical examples that appear in the shareholder reports
of other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs
only. Therefore, line (B) of the table is useful in comparing ongoing costs only, and will not
help you determine the relative costs of owning different funds.
4
FAM Funds —Expense Data continued
Six months ended June 30, 2013 (Unaudited)
FAM Value Fund
Beginning
Ending
Expenses
Account Value
Account Value
Paid
1/1/2013
6/30/13
During Period
A. Ongoing Costs Based on Actual Fund
$1,000.00
$1,159.40
$6.37*
Return
B. Ongoing Costs Based on Hypothetical
$1,000.00
$1,018.89
$5.96*
5% Yearly Return
*Expenses are equal to the Fund’s annualized expense ratio of (1.19%), multiplied by the average account
value over the period, multiplied by 181/365 (to reflect the one-half year period).
FAM Equity-Income Fund
Beginning
Ending
Expenses
Account Value
Account Value
Paid
1/1/2013
6/30/13
During Period
A. Ongoing Costs Based on Actual Fund
$1,000.00
$1,143.60
$6.70*
Return
B. Ongoing Costs Based on Hypothetical
$1,000.00
$1,018.55
$6.31*
5% Yearly Return
*Expenses are equal to the Fund’s annualized expense ratio of (1.26%), multiplied by the average account
value over the period, multiplied by 181/365 (to reflect the one-half year period).
FAM Small Cap Fund
Beginning
Ending
Expenses
Account Value
Account Value
Paid
1/1/2013
6/30/2013
During Period
A. Ongoing Costs Based on Actual Fund
$1,000.00
$1,165.00
$5.53*
Return
B. Ongoing Costs Based on Hypothetical
$1,000.00
$1,019.69
$5.16*
5% Yearly Return
* Expenses are equal to the Fund’s net annualized expense ratio of (1.03%), multiplied by the average account
value over the period, multiplied by 181/365 (to reflect the one-half year period).
5
FAM Value Fund
June 30, 2013
Dear Fellow FAM Value Fund Shareholder,
To the surprise of many investors, it’s been a good six months for U.S. stocks. In the years
following the financial crisis investors, large and small, have been selling domestic stocks
to invest in global stocks, bonds, gold, or other alternatives. However, our very own stock
market has proven to be the one of the best places to invest in 2013 with most stock indices
up in the mid-teens at June 30th.
The ride in stocks was mostly smooth with the S&P 500 Index hitting an all-time high of
1,669 on May 21st and the Dow Jones Industrial Average following with its all-time high of
15,409 on May 28th. The market limped into the finish line with a small correction in June,
but overall provided an excellent return for stock investors. Although we are pleased with
the previous six months, we maintain our long-term focus. Our stance is that earnings ul-
timately drive stock prices over the long haul so we continue to fervently seek high-quality
businesses in which to invest.
Performance Detail
At June 30, 2013 the net asset value of the FAM Value Fund was $56.67 per share. This rep-
resents an increase of 15.9% from the beginning of the year. For comparison, the S&P 500
Index increased 13.8% and the Russell 2000 Index increased 15.9%.
Best Performers
The best performer, on a dollar-weighted basis, wasBrown&Brown (+27%) for a gain of
almost $12 million. Brown & Brown is an insurance agency serving small- and mid-sized
businesses across America. Increasing insurance premium rates, good first quarter earn-
ings, and the announcement of a significant acquisition have moved the stock higher in
2013.
The Fund’s second-best performer wasBerkshireHathaway (+26%), with a gain of more
than $8 million. Berkshire is the well-known investment vehicle of legendary investor
Warren Buffett. At FAM Funds, we are long-time admirers of Mr. Buffett and some of us
have traveled to the Berkshire annual meeting since the 1980s. In spite of the company’s
size, book value per share continues to grow at an acceptable rate. For the 12 months end-
ing March 31, 2013, the company’s book value per share increased 13%. Using a longer-
term view, book value grew at 9% per year for the five years ending March 31, 2013. Mr.
Buffett continues to be active in the current year announcing two acquisitions in excess of
$10 billion—Heinz and NV Energy.
6
FAM Value Fund
The third-best performer wasRossStores (+20%) for a gain of $6 million. Ross achieved
another record fiscal year with earnings per share growth of 23% over the previous year.
Shoppers continue to be attracted to Ross’ offering of brand name clothes at discount pric-
es. The last fiscal year (January 2013) was the eighth year in a row of positive earnings per
share growth. In addition to providing growth, the business maintains its paramount fi-
nancial strength. Ross Stores ended the fiscal year with more than $600 million of cash in
the bank. Management continues to allocate profits wisely with the shareholders receiving
significant dividends and share buybacks over the last five years.
Worst Performers
In the six months ending June 30, 2013, the Fund owned only one stock that had a negative
return. So our worst performers include one stock that actually appreciated, but at a lesser
rate.
The Fund’s worst performer, on a dollar-weighted basis, wasDigitalRiver (-0.64%) for a
loss of $16,000. As described below we sold our remaining shares in Digital River this year.
The second-worst performer wasJohnWiley&Sons (+4%) with a small gain of $359,000.
Wiley experienced a difficult fiscal year with a decline in sales and earnings per share. The
decline is primarily due to lower sales in Wiley’s education division. This business has his-
torically sold college textbooks to students. The advent of digital books and textbook rental
services have reduced its profits.
Portfolio Activity
Purchases
We purchased two new positions—AutoZone, Inc. and FLIR Systems—and purchased ad-
ditional shares in four existing holdings.
AutoZone is the nation’s leading retailer of automotive replacement parts and accesso-
ries with more than 5,000 stores. You may recognize its tagline, “Get Into The Zone—Au-
toZone,” from their many radio and television advertisements. The corporation has an ex-
cellent track record of growth with earnings per share increasing by at least 20% per year
over the last 5 and 10 years. The key to AutoZone’s successes is modest single-digit growth
in the retail business coupled with very intelligent use of the cash flow it generates. Man-
agement’s primary use of the free cash flow has been to repurchase the company’s shares.
During the five years ending in August 2012 (the last reported fiscal year), management
repurchased 44% of its stock shares. These repurchases make the remaining shares more
valuable and we expect additional share buyback going forward.
7
FAM Value Fund
FLIR Systems is the world leader in the design, manufacture, and marketing of thermal
imaging infrared cameras. Infrared cameras have a wide variety of uses including auto-
motive, fire & rescue, military, and facility security. FLIR produces more cameras than any
company in the world giving it a cost advantage over its competitors. FLIR is extremely
profitable with operating margins in excess of 20% and a return on equity of more than
25%. Like AutoZone, the business generates significant amounts of excess cash flow which
has been used for acquisitions, dividends, and share buyback.
In addition to our new stocks, we made additional purchases of Loews, M&T Bank, Protec-
tive Life, and VCA-Antech.
Sales
We sold our entire position in three stocks: Digital River, Johnson & Johnson, and Meredith
Corporation. Each of these stocks was sold for different reasons.
Digital River is a technology company that handles the sale and distribution of software
and game downloads from the Internet. We became concerned that with the trend in soft-
ware sales moving to The Cloud, and bypassing the download to a PC, that it would be dif-
ficult for Digital River to grow over time.
We originally purchased Johnson & Johnson in late 2007 because of its superior financial
strength and global business growth. At the time, the company was struggling with de-
clining pharmaceutical earnings and was out of favor with investors. Despite JNJ’s finan-
cial strength, the stock was fairly inexpensive at just 14 times future earnings per share.
We sold the last of our shares this year after the stock moved up into the mid-80s. While
JNJ was a very good investment for the Fund, our strategy is to focus the Fund’s assets on
small- and mid-sized companies.
Our final full-sale was Meredith Corporation. Meredith owns magazines and television sta-
tions across America. With the continued growth of digital advertising and potential for
declines in print media over the next few years, we decided to sell our remaining shares in
Meredith.
Outlook
“People may wonder what the Japanese are doing and what the Koreans are doing, but ul-
timately the earnings will decide the fate of the stock.” – Peter Lynch
This quote is from the bookOne Up on Wall Street by Peter Lynch, the legendary manager
of the Fidelity Magellan Fund. While the book was published more than 20 years ago, we
were struck by how current this quote would sound today if you change the countries to
Greece and Spain.
8
FAM Value Fund
When an investor asks a fund manager about their outlook, they are usually looking for
some predictions on the economy, stock prices, or the answer to the latest debate in Wash-
ington, DC.
We don’t believe anyone can predict the short-term moves in stock prices and prefer to
focus on the fundamental values of individual companies. We agree with the above quote
that stock prices should follow the earnings, cash flows, and asset values/net worth of
companies over time.
Here are a couple of examples of this relationship:
Mednax
We first purchased the stock of Mednax in 2004 when it was called Pediatrix Medical. At
the time, the company operated neonatal intensive care units in hospitals. Total sales were
$620 million and the business reported earnings of $1.99 per share. Over the last nine
years, Mednax has continued to grow its neonatal division and has expanded into a new
business—anesthesiology. This expansion has allowed them to grow sales to more than
$2 billion and earnings to over $5 per share. If Mednax achieves the estimated earnings
results for this calendar year, earnings will have grown at a compound rate of almost 12%
per year for nine years. As a result, the stock price will have also increased significantly
from our original cost of $26 in 2004 to more than $90 today. However, owning the stock
has not always been a smooth ride. There have been numerous periods over the last nine
years when the stock declined 15% or more from its peak before starting to move up again.
Markel
Markel is a specialty insurance company whose stock we first purchased in 2001 at $186
per share. We value insurance companies based on their net worth per share, not earn-
ings per share. In the calendar year that we first purchased Markel’s stock, the business
had a net worth of $110 per share. Over the last 11 years ending December 31, 2012, that
net worth per share had increased from $110 to more than $400. This growth in net worth
per share is the result of management’s actions over the years. These actions included in-
troducing new products, acquiring other companies, and investing their billions of assets
wisely. As a result, Markel’s stock price has also increased from our original $186 purchase
price to $527 at June 30, 2013.
As these examples show, when corporate managers can increase the value of their compa-
nies over time the price of the stock should follow. We select stocks where we think there
is a high probability of this happening by focusing on well-managed businesses that are
growing, profitable, and generate excess cash. We also interview the managers of these
corporations to determine if they have integrity and are skilled at allocating operational
resources. If we can find a good company that is financially strong and managed appro-
priately, we will invest in that business if we can purchase the stock at a price below what
9
FAM Value Fund
we think the enterprise is worth. When we invest in the right companies at the right price,
their earnings should ultimately drive stock prices over the long term.
Table of long term returns
Average Annual Total Returns as of June 30, 2013
Life of Fund
YTD
1-Year 3-Year 5-Year 10-Year
(1/2/87)
FAM Value Fund (FAMVX) 15.94% 20.84% 14.75%
8.15%
7.12%
10.28%
Russell 2000 Index
15.86% 24.21% 18.67%
8.77%
9.53%
9.39%
S&P 500 Index
13.82% 20.60% 18.45
7.01
7.30%
9.88%
The performance table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
Thank you for investing with us in the FAM Value Fund.
John D. Fox, CFA
Thomas O. Putnam
Co-Manager
Co-Manager
The opinions expressed herein are those of the portfolio managers as of the date of the
report and are subject to change. There is no guarantee that any forecast made will come
to pass. This material does not constitute investment advice and is not intended as an
endorsement of any specific investment.
Performance data quoted above is historical. Past performance is no guarantee of future
results. Current performance may be higher or lower than the performance data quoted.
The principal value and investment return of an investment will fluctuate so that your
shares, when redeemed, may be worth more or less than their original cost.
10
FAM Value Fund —Portfolio Data (Unaudited)
As of June 30, 2013 (Unaudited)
COMPOSITION OF TOTAL INVESTMENTS
Property & Casualty Insurance
14.4%
Machinery & Equipment
9.2%
Retail Stores
7.4%
Banking
7.1%
Money Market Fund
6.4%
Insurance Agency
5.5%
Electronic Equipment
4.7%
Oil & Gas Exploration
4.5%
Health Care Services
4.3%
Health Care Equipment/Devices
3.6%
Automotive
3.3%
Transportation
3.3%
Real Estate Development
3.2%
Restaurants
2.9%
Diversified Manufacturing
2.8%
Investment Management
2.6%
Veterinary Diagnostics
2.1%
Advertising Agencies
2.1%
Health Care Distribution
2.0%
Life Insurance
2.0%
Other
6.6%
Statement Regarding Availability of Quarterly Portfolio Schedule. Please note that (i) the Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q; (ii) the Fund’s Forms N-Q are available on the Commission’s website at http://www.sec.gov; (iii) the Fund’s Forms N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC, and information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330; and (iv) the Fund makes the information on Form N-Q available to shareholders, upon request, by calling FAM Funds at 1-800-932-3271.
11
FAM Value Fund —Statement of Investments
June 30, 2013 (Unaudited)
SHARES
VALUE
COMMON STOCKS (93.6%)
Advertising Agencies (2.1%)
The Interpublic Group of Companies, Inc.
• provides advertising and marketing services
1,182,700
$ 17,208,285
Automotive (3.3%)
CarMax, Inc.*
• specialty retailer of used cars and light-trucks in the USA
600,000
27,696,000
Auto Parts & Equipment (1.4%)
Autozone, Inc.*
• retail and distribution of automotive replacement parts and
accessories
27,700
11,736,213
Banking (7.1%)
Bank of the Ozarks, Inc.
• retail and commercial banking services in the Southeast
253,000
10,962,490
Home Bancshares, Inc.
• holding company for the Centennial Bank that provides various com-
mercial and retail banking and related financial products and services
500,000
12,985,000
M&T Bank Corporation
• commercial and retail banking services to individuals, businesses, cor-
porations and institutions in the Northeast and Mid-Atlantic
95,000
10,616,250
SCBT Financial Corporation
• banking services to individual and corporate customers in the Carolinas
234,110
11,796,803
TCF Financial Corporation
• banking services to individual and corporate customers in northern and
902,163
12,792,671
central California
59,153,214
Commercial Services (1.4%)
McGrath RentCorp
• modular building and electronic test equipment rentals,
347,000
11,853,520
subsidiary classroom manufacturing
Diversified Manufacturing (2.8%)
Illinois Tool Works
• manufactures engineered products such as plastic and metal
339,950
23,514,342
components and fasteners
See Notes to Financial Statements
12
FAM Value Fund —Statement of Investments continued
• personal property and casualty insurance, and reinsurance
61,693
35,469,773
119,276,761
See Notes to Financial Statements
14
FAM Value Fund —Statement of Investments continued
June 30, 2013 (Unaudited)
SHARES
VALUE
Publishing (1.1%)
John Wiley & Sons, Inc. - Class A
• publisher of print and electronic products, specializing in scientific,
technical, professional and medical books and journals
217,000
$ 8,699,530
Real Estate Development (3.2%)
Brookfield Asset Management, Inc. - Class A
• asset management holding company that invests in property,
735,000
26,474,700
powerand infrastructure
Restaurants (2.9%)
YUM! Brands, Inc.
• quick service restaurants including KFC, Pizza Hut and Taco Bell
350,600
24,310,604
Retail Stores (7.4%)
Bed Bath & Beyond, Inc.*
• national chain of retail stores selling domestic merchandise such as bed
345,600
24,503,040
linens, bath items, kitchen textiles and home furnishings
Ross Stores, Inc.
• chain of off-price retail apparel and home accessories stores
572,844
37,126,020
61,629,060
Semiconductors (0.3%)
Microchip Technology, Inc.
• develops, manufactures and sells semiconductor products for various
60,000
2,235,000
embedded control applications
Specialty Chemical (0.6%)
Sigma-Aldrich Corporation
• develops, manufactures, purchases and distributes high quality
60,000
4,821,600
chemicals, biochemicals and equipment available throughout the world
Transportation (3.3%)
Forward Air Corporation
• provides surface transportation and related logistics services to the
389,233
14,899,839
deferred air freight market in North America
Heartland Express, Inc.
• short-to medium-haul truckload carrier of general commodities
183,891
2,550,568
See Notes to Financial Statements
15
FAM Value Fund —Statement of Investments continued
June 30, 2013 (Unaudited)
SHARES
VALUE
Transportation (continued)
Knight Transportation
• transportation of general commodities in the U.S.
576,900
$ 9,703,458
27,153,865
Utilities/Gas (0.4%)
Questar Corporation
• natural gas utility in the state of Utah
123,100
2,935,935
Veterinary Diagnostics (2.1%)
VCA Antech, Inc.*
• provides veterinary services, diagnostic testing and sells diagnostic im-
aging equipment and related products/services to the veterinary market
662,200
17,276,798
Total Common Stocks (Cost $344,127,336)
$774,869,346
TEMPORARY INVESTMENTS (6.4%)
Money Market Fund (6.4%)
Invesco Short Term Treasury Fund(Institutional Class)
($0.02%)**
53,117,290
53,117,290
Total Temporary Investments (Cost $53,117,290)
$ 53,117,290
Total Investments (Cost $397,244,626)
$827,986,636
* Non-income producing securities
** The rate shown represents the effective yield at 6/30/13
See Notes to Financial Statements
16
FAM Equity-Income Fund
June 30, 2013
Dear Fellow FAM Equity-Income Fund Shareholder,
Highlights
•
FAM Equity-Income Fund posted a 14.36% return for the first half of year.
•
The 5-year annualized growth rate in dividends for the individual holdings in the
Fund was 12% as of 6/30/2013.
This summer is the 100th Tour de France where bicycle riders battle it out during 21 days of
racing, covering more than 2,100 miles. It is often referred to as the most grueling sport-
ing event on the planet. During each stage of the race, teams try to get their riders into a
position so they might win the stage. Each win gives the lead rider a few-second advantage
over the rest of the field. This may not sound like much, but over the course of the race
these few seconds add up to a few minutes which is enough for victory.
While FAM Funds and the Tour de France are an ocean apart, some of the racers’ winning
strategies are similar to how we try to build long-term wealth. We focus on the fundamen-
tals every day—the fundamentals of our investment process and the companies in which
we invest. We do extensive, exhaustive research—what other investors may call grueling—
because we know the little things add up and our goal is to put the Equity-Income Fund in
a position to perform well over the long term.
The Fund’s dividend-growth strategy is to invest in well-managed, high-quality companies
that can grow their dividend over time. The object is to get a larger and larger dividend
check every year. Investing in companies that grow their dividends is no different from
working for a business and getting an annual raise. We then take that growing stream of
dividends and reinvest it into attractive investment opportunities.
Below are the Fund’s holdings that have increased their quarterly dividend considerably
in 2013 (as of 6/30/13):
17
FAM Equity-Income Fund
Company
Dividend Increase
Tupperware Brands
+72%
Altera
+50%
Donaldson
+30%
Stryker
+25%
Mattel
+16%
IDEX
+15%
Performance Detail
The FAM Equity-Income Fund is off to a very good start for the year, rising more than 14%
through the end of June. The Fund outperformed the S&P 500 Index for the first half of
2013 as well as one and five years. The Fund has trailed the Russell 2000 Index slightly
as small capitalization stocks have generally performed better than larger capitalization
stocks over the time periods listed below.
Average Annual Total Returns as of June 30, 2013
Life of Fund
YTD
1-Year 3-Year 5-Year 10-Year
(4/1/96)
FAM Equity-Income Fund 14.36% 21.02% 16.85% 8.39%
6.52%
8.23%
(FAMEX)
Russell 2000 Index
15.86% 24.21% 18.67%
8.77%
9.53%
7.90%
S&P 500 Index
13.82% 20.60% 18.45% 7.01%
7.30%
7.29%
The performance table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
The best performing sectors in the Fund were Consumer Discretionary, Financials, Con-
sumer Staples and Industrials. The sectors contributing the least to performance were
Materials and Energy. There were no sectors that detracted from performance.
Best Performers
FlowersFoods returned 43.5% and was the best performer, on a dollar-weighted basis, con-
tributing $1.95 million to the Fund’s value. Flowers is a bread and snack cake company
serving the lower half of America. They serve just over 50% of the U.S. population and have
a goal of reaching 75% in the next few years. They have been successful in expanding their
18
FAM Equity-Income Fund
territory through a number of acquisitions. Flowers’ best known brands include Nature’s
Own, Whitewheat, and TastyKake.
The company is aggressively accumulating market share in the bread and snack cake mar-
ket as Hostess Brands filed for bankruptcy late last year. After Hostess went into bankrupt-
cy, there was an auction for their brands and facilities. Flowers was the winning bidder for
the bread brands which include Wonder, Nature’s Pride, and Butternut. Flowers will also
get 20 bakeries with the purchase. The transaction is currently undergoing the regulatory
review process and is expected to close later this year. Until then, Flowers should continue
to benefit from a major competitor being out of the market and tighter manufacturing
capacity in the industry.
We trimmed our position in Flowers as the stock marched higher. It is a very well-man-
aged company, but we believe there is some execution risk as management integrates the
Hostess assets.
Mattel was the second-best performer and returned 25.7% while contributing $1.35 million
to the Fund’s value. Mattel continues to benefit from strong sales of their girl-oriented
brands such as Monster High and American Girl products. International sales continue to
grow faster than domestic. Management is also making progress integrating the HIT En-
tertainment acquisition which is known for the Thomas the Tank Engine characters. The
Fisher Price brand continues to struggle; we view this as an opportunity for future sales
growth and higher profitability. As noted above, Mattel increased their cash dividend to
shareholders by 16% this year.
Worst Performers
DigitalRealtyTrust declined the most on a dollar-weighted basis, -7.9%, and reduced the
Fund’s value by $-0.365 million. Digital is the largest owner and operator of data centers
in the U.S. They also have data centers in Europe, Australia, and Asia. These buildings are
highly specialized because they require a large amount of electricity to power computer
servers as well as cooling systems. The facilities also have huge generators capable of pro-
ducing the same amount of backup power in order to keep the data center running 24/7.
They also need high speed connectivity to the outside world via fiber optic cables. Addi-
tionally, these buildings are expensive to construct. This acts as a significant barrier to
entry for potential competition.
We like Digital because the drivers of their business are accelerating. The amount of data
being generated each year is tremendous and needs to be warehoused somewhere. The
most cost-effective place to store data is a data center. On the other side of the coin, the
amount of data we consume is growing at an exponential rate. For example, a person try-
ing to decide what movie to watch looks at movie trailers online and is able to see at what
19
FAM Equity-Income Fund
theaters and times the movie is playing. All this data is housed at a data center and must
be available when the consumer needs it and on any device including iPads, iPhones, or
laptop computers.
Another positive aspect of the business is the length of the contracts. Typically, a customer
signs a contract for 5 to 10 years with built-in annual rental rate escalators. Customers
are willing to sign long-term contracts because the switching costs are extremely high.
If a customer wanted to move to a competing data center they couldn’t just shut down
their computers on a Friday, move the equipment, and then restart on Sunday night. The
customer computer applications require 100% uptime and availability. The only feasible
way to make a switch is to buy all new equipment and then change over after the new site
is live—this is costly and a huge undertaking. IT professionals are already stretched with
just daily operations. It’s inconceivable that they would switch data centers just to save a
few dollars on rent.
Since we are confident in Digital’s long-term prospects, we took advantage of its weak
stock price near the quarter’s end and added to our position.
Landauer shares reversed course this year after they reported poor results for the first
quarter and it was the Fund’s second-worst performer. Year-to-date the total return on
the stock is -19.3%, but this only brought down the Fund’s value by $-0.256 million. The
reason the impact of the stock price decline wasn’t larger is because we sold the vast
majority of our shares last year at much higher prices. While the price looks much more
attractive today, the business is struggling to grow. We also have some unresolved ques-
tions regarding some of their new business endeavors. Landauer is the leader in personal
radiation dosimetry for those working around radiation. This includes X-ray technicians,
nuclear medicine technicians, and even some TSA workers. However, their years of
expertise in the dosimetry area doesn’t mean they are experts in all radiation areas. We
are concerned that management made some acquisitions that may be outside their circle
of competency and are closely evaluating Landauer’s future business prospects.
Portfolio Activity
During the first half of the year we were mostly sellers of stock. As the stock market hit
new highs, we took a hard look at the holdings in the Fund and trimmed certain positions
which either experienced significant appreciation or grew to a larger weight in the portfo-
lio than we desired. We trimmed our positions in EOG, Dr. Pepper Snapple Group, Flowers
Foods, Questar, US Ecology, and more. We still like all of these companies and would buy
back the shares at lower prices; however, all these positions are currently trading above
our trim prices.
20
FAM Equity-Income Fund
We did purchase a few new names for the Fund which strike us as being undervalued. In
February we purchased Garmin, the GPS manufacturers. Garmin has a huge war chest of
cash on the balance sheet and no debt. When we adjust for cash, the stock trades at only
8 times earnings. This is a significant discount to the market which trades at 14 times.
By our math we paid only 2 times cash for the entire business, or fifty cents on the dollar.
We acknowledge their auto GPS business is shrinking as more people use the GPS on their
Smartphones, but the other segments of their operation are growing and more profitable.
Another new purchase for the Fund is Western Union. This stock is under some pressure
because they lowered rates in one of their businesses to be more competitive. The real as-
set of Western Union is their network to transport cash—it’s the largest in the world. We
think the business is interesting because there are very few ways to transport actual cash
around the globe. For people who don’t have a checking account and want to send money
to a relative in another country, there are only a few options and Western Union is, by far,
the leader with the most offices worldwide.
Finally, we took a position in Winthrop Realty Trust. This business invests in real estate in
many ways. They will acquire properties at a discount and then sell them for a significant
gain. They will also invest in various parts of the capital structure for buildings or develop-
ment projects. Management at Winthrop has a terrific track record of generating investor
returns. The team is economically minded and disciplined in the investments they under-
take. As we started building our position, the stock cooperated and went down.
Outlook
The Fund is off to a great start this year. We don’t know what is in store for the remain-
der of 2013, but we do believe that many factors are pointing to higher stock prices in the
future. Real interest rates remain near zero. They may rise as the Federal Reserve begins
to taper its Quantitative Easing, but rates are still dramatically lower than a decade ago.
The economic data continues to improve—housing is improving, consumer confidence is
stronger, and employment is growing (albeit slowly). Perhaps the most powerful force
pointing to higher stock prices in the future is American ingenuity. As a society, we per-
petually reinvent ourselves. We have a strong desire to innovate. Some examples include
the laptop transforming into the tablet, and cell phones morphing into Smartphones like
the iPhone. Even the way we make coffee has evolved from the percolator to the automatic
drip maker and now we have the Keurig machine.
Our strategy is to invest in financially strong companies that generate more cash than
they need to grow. We like to see this excess cash paid out to shareholders in the form of
dividends throughout the year. It’s our belief that financially strong and cash-rich busi-
nesses will not only be able to weather any potential future storm, but also take advantage
21
FAM Equity-Income Fund
of future growth trends. We stand ready to aggressively buy stocks when investors are
fearful and selling the shares of great enterprises.
Like the riders in the Tour de France, we are working to gain a long-term advantage.
Paul Hogan, CFA
Thomas O. Putnam
Co-Manager
Co-Manager
The opinions expressed herein are those of the portfolio managers as of the date of the
report and are subject to change. There is no guarantee that any forecast made will come
to pass. This material does not constitute investment advice and is not intended as an
endorsement of any specific investment.
Performance data quoted above is historical. Past performance is no guarantee of future
results. Current performance may be higher or lower than the performance data quoted.
The principal value and investment return of an investment will fluctuate so that your
shares, when redeemed, may be worth more or less than their original cost.
22
FAM Equity-Income Fund —Portfolio Data
As of June 30, 2013 (Unaudited)
COMPOSITION OF TOTAL INVESTMENTS
Semiconductors
8.7%
Machinery & Equipment
8.4%
Toys
5.4%
Retail - Department Stores
5.3%
Hazardous Waste Disposal
5.3%
Health Care Equipment/Devices
5.2%
Money Market Fund
5.0%
Health Care Distribution
4.7%
Insurance Agency
4.6%
Oil & Gas Exploration
4.0%
Consumer Staples
3.9%
Utilities/Water
3.8%
Commercial Services
3.6%
Banking
3.5%
Property & Casualty Insurance
3.5%
REITS - Data Center
3.1%
Specialty Chemical
3.1%
Technology
2.6%
Household Durables
2.4%
Investment Management
2.3%
REITS - Diversified
2.2%
Other
9.4%
Statement Regarding Availability of Quarterly Portfolio Schedule. Please note that (i) the Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q; (ii) the Fund’s Forms N-Q are available on the Commission’s website at http://www.sec.gov; (iii) the Fund’s Forms N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC, and information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330; and (iv) the Fund makes the information on Form N-Q available to shareholders, upon request, by calling FAM Funds at 1-800-932-3271.
23
FAM Equity-Income Fund —Statement of Investments
June 30, 2013 (Unaudited)
SHARES
VALUE
COMMON STOCKS (94.0%)
Banking (3.5%)
M&T Bank Corporation
• commercial and retail banking services to individuals, businesses, corpora-
15,000
$ 1,676,250
tions and other institutions in the Northeast and Mid-Atlantic
SCBT Financial Corporation
• provides banking services to individual and corporate customers in the
58,000
2,922,620
Carolinas
4,598,870
Beverage - Non Alcoholic (1.1%)
Dr. Pepper Snapple Group, Inc.
• integrated brand owner, manufacturer and distributor of non-alcoholic
30,800
1,414,644
beverages in the USA, Canada, and Mexico
Commercial Services (3.6%)
McGrath RentCorp
• modular building and electronic test equipment rentals, subsidiary class-
136,264
4,654,778
room manufacturing
Computer Software & Services (1.1%)
CA, Inc.
• provides enterprise information technology (IT) management software and
50,000
1,431,500
solutions
Consumer Electronics (1.0%)
Garmin Ltd.
• provides navigation, communication, and information devices and
34,600
1,251,136
applications that are enabled by global positioning system technology
Consumer Staples (3.9%)
Flowers Foods, Inc.
• produces and markets bakery products in the USA
231,750
5,110,087
Data Processing & Outsourcing (1.3%)
The Western Union Company
• leader in global money movement and payment services, providing people
100,000
1,711,000
and businesses with fast, reliable and convenient ways to send money and
make payments around the world
See Notes to Financial Statements
24
FAM Equity-Income Fund —Statement of Investments continued
June 30, 2013 (Unaudited)
SHARES
VALUE
Hazardous Waste Disposal (5.3%)
U.S. Ecology, Inc.
• provides radioactive, pcb, hazardous and non-hazardous waste services to
249,869
$ 6,856,405
commercial and government customers
Health Care Distribution (4.7%)
Patterson Companies, Inc.
• operates as a distributor serving dental, companion-pet, veterinarian, and
162,000
6,091,200
rehabilitation supply markets in the USA and Canada
Health Care Equipment/Devices (5.2%)
Stryker Corp.
• operates a medical technology company offering Orthopedic Implants and
105,500
6,823,740
MedSurg Equipment
Health Care Services (0.7%)
Landauer, Inc.
• provides personal radiation dosimeters and radiation related services
20,000
966,200
Household Durables (2.4%)
Tupperware Brands Corporation
• manufacture and sales of preparation, storage, and serving solutions for
40,000
3,107,600
the kitchen and home
Insurance Agency (4.6%)
Arthur J. Gallagher & Co.
• provides insurance brokerage and risk management services to
137,920
6,025,725
commercial, industrial, institutional, and governmental organizations
Investment Management (2.3%)
Franklin Resources, Inc.
• provides investment management and fund administration
22,300
3,033,246
services as well as retail-banking and consumer lending services
Machinery & Equipment (8.4%)
Donaldson Company, Inc.
• designs, manufactures and sells filtration systems and replacement parts
125,600
4,478,896
See Notes to Financial Statements
25
FAM Equity-Income Fund —Statement of Investments continued
June 30, 2013 (Unaudited)
SHARES
VALUE
Machinery & Equipment (continued)
IDEX Corporation
• manufactures proprietary, highly engineered industrial products and
120,984
$ 6,510,149
pumps
10,989,045
Oil & Gas Exploration (4.0%)
EOG Resources, Inc.
• engages in the exploration, development, production and marketing of
39,000
5,135,520
natural gas and crude oil
Packaged Goods (1.5%)
McCormick & Company, Inc.
• manufactures, markets and distributes spices, seasonings, specialty
27,000
1,899,720
foods and flavorings to the entire food industry.
Property and Casualty Insurance (3.5%)
OneBeacon Insurance Group, Ltd.
• commercial, personal and specialty insurance products
314,666
4,556,364
Publishing (0.3%)
John Wiley & Sons, Inc. - Class A
• publisher of print and electronic products, specializing in scientific,
8,350
334,752
technical, professional and medical books and journals
REITS - Data Center (3.1%)
Digital Realty Trust Inc.
• engages in the ownership, acquisition, development, redevelopment and
67,000
4,087,000
management of technology-related real estate
REITS - Diversified (2.2%)
Winthrop Realty Trust
• real estate investment trust that engages in the ownership and manage-
232,450
2,796,373
ment of real property and real estate-related assets
Retail - Department Stores (5.3%)
Destination Maternity Corporation
• designing and retail of maternity clothing in the United States
7,800
191,880
See Notes to Financial Statements
26
FAM Equity-Income Fund —Statement of Investments continued
June 30, 2013 (Unaudited)
SHARES
VALUE
Retail - Department Stores (continued)
Ross Stores, Inc.
• chain of off-price retail apparel and home accessories stores
103,843
$ 6,730,065
6,921,945
Semiconductors (8.7%)
Altera Corporation
• manufacturer of programmable logic solutions
61,000
2,012,390
Microchip Technology, Inc.
• develops, manufactures and sells semiconductor
101,000
3,762,250
products for various embedded control applications
Xilinx, Inc.
• worldwide leader of programmable logic solutions
141,414
5,601,409
11,376,049
Specialty Chemical (3.1%)
Sigma-Aldrich Corporation
• develops, manufactures, purchases and distributes high quality
50,000
4,018,000
chemicals, biochemicals and equipment available throughout the world
Technology (2.6%)
National Instruments Corporation
• manufactures and supplies measurement and automation products
122,000
3,408,680
Toys (5.4%)
Mattel, Inc.
• designs, manufactures, and markets various toy products
155,299
7,036,598
Utilities/Gas (1.4%)
Questar Corporation
• natural gas utility in the state of Utah
77,800
1,855,530
Utilities/Water (3.8%)
Aqua America, Inc.
• water and waste water utility
159,000
4,975,110
Total Common Stocks (Cost $80,063,135)
$ 122,466,817
See Notes to Financial Statements
27
FAM Equity-Income Fund —Statement of Investments continued
June 30, 2013 (Unaudited)
SHARES
VALUE
PREFERRED STOCKS (1.0%)
REITS - Storage (1.0%)
Public Storage - (6.5%) Preferred Q
• engages in the acquisition, development, ownership, and
50,300
$ 1,293,213
operation of self-storage facilities in the USA and Europe
Total Preferred Stocks (Cost $1,393,838)
$ 1,293,213
TEMPORARY INVESTMENTS (5.0%)
Money Market Fund (5.0%)
Invesco Short Term Treasury Fund(Institutional Class)
(0.02%)*
6,472,231
6,472,231
Total Temporary Investments (Cost $6,472,231)
$ 6,472,231
Total Investments (Cost $87,929,204)
$130,232,261
*The rate shown represents the effective yield at 6/30/13
See Notes to Financial Statements
28
FAM Small Cap Fund
June 30, 2013
Dear Fellow FAM Small Cap Fund Shareholder,
Recent market chatter has focused on commentary from Federal Reserve Chairman Ben
Bernanke and the timing of “tapering” or the reduction in the pace of monthly purchases
of $40 billion of agency mortgage-backed securities and $45 billion of long-term Treasury
securities. Uncertainty surrounding the market effect, timing of tapering, and the eventual
end of Quantitative Easing has led to movements in interest rates, interest sensitive securi-
ties, and the stock market.
As Warren Buffett reminded us at this year’s Berkshire Hathaway Annual Meeting, nobody
quite knows how it will all play out. One possible scenario is that we may see the return of
more volatility in the markets. For long-term investors, this may play to our advantage if
we have the opportunity to put capital to work in high-quality businesses at discounted
prices.
Furthermore, there are several attributes of small-cap stocks that can create these buying
opportunities in any market environment. For example, in many instances, small-cap secu-
rities remain under-the-radar purely due to their size. Larger asset management firms
cannot put enough capital to work in these names to make them meaningful to their port-
folios. Additionally, with lower trading volumes than larger companies, Wall Street stands
to benefit less from covering small-cap stocks compared to large-cap stocks. Less competi-
tion and interest from others means more opportunities for us to find bargain securities.
Performance Detail
The FAM Small Cap Fund is off to a solid start as shown by our outperformance of our pri-
mary benchmark, the Russell 2000 Index, and the S&P 500 Index over all time periods pre-
sented in the following table:
Average Annual Total Returns as of June 30, 2013
Life of Fund
YTD
1-Year
(3/1/2012)
FAM Small Cap Fund
16.50% 27.61%
20.72%
(FAMFX)
Russell 2000 Index
15.86% 24.21%
16.36%
S&P 500 Index
13.82% 20.60%
14.95%
The performance table does not reflect the deduction of taxes that a shareholder would pay on Fund
distributions or the redemption of Fund shares.
29
FAM Small Cap Fund
While encouraging, we are focused on building wealth over long periods of time. Short-term
results will ebb and flow. Although we have outperformed over shorter-term periods thus
far, even the best investors sustain both short- and medium-term periods of underperfor-
mance throughout their careers. This may materialize even though the underlying intrin-
sic values of the portfolio’s companies may be increasing in value. Patience is key and over
time stock prices reflect a company’s earnings power.
Additionally, there were announcements that two of the Fund’s holdings would be taken
private—Websense (WBSN) and a new holding, rue21 (RUE). Both companies received sub-
stantial premiums to their trading ranges pre-announcement and our cost.
Best Performers
The Fund’s best performer, on a dollar-weighted basis, wasHomeBancshares (+58.5%) with
a gain of $350,020. While the stock was already having a solid year, late in the quarter Home
announced a major acquisition that is expected to be highly accretive. The market reacted
strongly sending shares sharply higher. Home will acquire Liberty Bancshares, a privately
held Arkansas bank, for $280M in stock and cash. Expectations are that the transaction may
bring Home $2.9B in total assets, $1.9B in loans, and $2.2B in total deposits. Home expects
to be able to significantly improve Liberty’s return on assets.
The second-best performing stock wasEvolutionPetroleum (+34.2%) with a gain of
$322,480. Production continues to grow in the Delhi Field, the company’s main asset. By
the end of the year it is expected that Evolution will retain an increased ownership in this
field after certain key milestones are reached by operator Denbury Resources. Following
this, cash flow to Evolution is expected to increase considerably—adding to an already
superb balance sheet that features a net cash position.
Worst Performers
The worst performing stock, on a dollar-weighted basis, was Gordmans (-9.4%) with a loss
of $22,017. The road has been bumpy since we first bought the stock in the fourth quarter
of last year. The weakness in comparable store sales that created a buying opportunity for
us has persisted due to merchandising missteps. While 2013 will be challenging for
Gordmans, longer term its store and earnings growth potential remains. As we were disci-
plined and purchased shares with a margin of safety, our losses were minimal at the end of
the second quarter with shares trading just below our average cost.
The second-worst performing stock wasWinthropRealtyTrust (+11.8%), with a loss of
$21,164 due to a share price drop after we significantly added to our position toward the
end of the second quarter. REITs and other high-yielding securities fell late in the quarter
as interest rates moved higher following comments from Federal Reserve Chairman Ben
30
FAM Small Cap Fund
Bernanke, generating our loss in the security. Winthrop is not your typical REIT as shown
by their willingness to be a net-seller of assets in this low interest rate environment. CEO
Michael Ashner characterizes himself as a value investor and could be described as a con-
trarian. We believe that this mentality should serve us well over time as he finds opportuni-
ties to invest capital at attractive rates of return.
Portfolio Activity
We have purchased four new names this year and re-added one that we owned in the past.
New purchases included two specialty retailers, Destination Maternity and rue21, after we
attended their presentations at an investor retail conference early this year. Subsequent to
our purchase of rue21, the company received a takeout offer at a price considerably above
our purchase price. Other new purchases included U.S. Physical Therapy, a developer and
operator of outpatient physical and occupational therapy clinics nationwide, and MTS
Systems Corporation, an industry-leading testing and sensing solutions developer and
manufacturer. We also re-added Winthrop Realty Trust to the portfolio.
Two holdings were completely removed from the Fund during this year. Medidata Solutions
was sold as it reached a price far above our assessment of its fair value. In just over a year,
shares rose more than 100%. Also, the completion of the acquisition of Websense happened
late in June at a substantial premium to our purchase price.
We’ve also added substantially to several existing names in the portfolio.
Outlook
Utilizing our time-tested investment philosophy and process, we continue to seek finan-
cially strong, durable businesses with high returns on capital that also exhibit long-term
growth potential. We like established, niche companies that have been in operation for many
years. These small-cap businesses have to meet our stringent criteria, which includes pur-
chasing the stocks at bargain prices.
Here is an example:
John Bean Technologies (JBT)
Although you probably haven’t heard of JBT, its products affect your life every day and the
company is a leader in its industries. The roots of the company trace back to 1884 when John
Bean set out to solve the problem of battling the devastating San Jose scale (a fruit tree pest)
affecting California’s orchards. The result was the creation of the continuous spray pump.
In the early 1900s, the business began large-scale manufacturing. During the 1920s, they
31
FAM Small Cap Fund
added to their product portfolio through mergers, John Bean stock was introduced on the
San Francisco Stock Exchange, and the company came to be known as Food Machinery
Corporation (FMC). Over the years, they continued to introduce new food machinery to their
lineup including continuous freezers and citrus juicers. Today, more than 75% of the world’s
citrus juices are processed using JBT equipment.
In the early 1960s with the commercialization of the airline industry, the corporation was
able to adapt its John Bean Spray Pump technology to become an aircraft deicer. This, along
with a cargo handling system for the new containerized generation of jet aircraft, led their
foray into the aircraft support industry (AeroTech). Later on they would acquire Jetway
Systems which manufactures the Jetway® passenger boarding bridge. Today, 75% of the
time you board a plane in America you are walking on a Jetway®.
In 2007, FMC decided to spin-off two of its businesses. They were the original food machin-
ery equipment business (FoodTech) and AeroTech featuring the Jetway®. Together,
FoodTech and AeroTech became JBT Corporation in 2008.
Why do we find JBT attractive today?
As you may know we adhere to key investment criteria at Fenimore Asset Management (the
We believe the company has a first-rate leadership team. We also like their longevity with
CEO Charlie Cannon joining the business in 1982 and CFO Ron Mambu in 1974. Management
is seasoned and has a deep knowledge of the industries they serve. Our visits with them
have given us confidence that this is a very capable and appropriately conservative team.
Profitable Business & Free Cash Flow
While focused on different industries JBT’s two divisions, FoodTech and AeroTech, have a
couple of overlapping characteristics. The key trait in our evaluation is that they both gen-
erate substantial amounts of free cash flow. This free cash flow can then be redeployed to
invest in the business, make acquisitions, buy back stock, pay out dividends, or pay down
32
FAM Small Cap Fund
debt. In the past few years, management has prudently allocated capital to each one of these
avenues. Beyond generating a lot of free cash flow, both businesses have grown their prof-
itability over time.
Manageable Debt
In regard to the balance sheet, while JBT does have some debt, we think it is very manageable
given the high amount of free cash flow the company generates. Furthermore, management
has been prudent in reducing their net-debt levels since the spin-off in 2008.
Margin of Safety
This piece of the equation is critical, as even the best companies can be bad stocks if you pay
too much for them. On several occasions last year, we felt that we could buy JBT stock “on
sale.” It’s our position that over the long run stock prices should follow earnings power—we
believe JBT has the potential to continue to increase its earnings power for years to come.
So far results have been encouraging and we feel JBT’s outlook is favorable.
We continue to seek and discover high-quality, under-the-radar businesses in the small-cap
space. Although the future is always uncertain, remember that when the stock market has
downward fluctuations we are ready to act and invest in companies like JBT at discounted
prices. It’s our experience that purchasing the right company’s stock at the right price is
what builds real wealth over the long term.
Thank you for investing with us in the FAM Small Cap Fund.
Marc D. Roberts, CFA
Thomas O. Putnam
Co-Manager
Co-Manager
The opinions expressed herein are those of the portfolio managers as of the date of the
report and are subject to change. There is no guarantee that any forecast made will come
to pass. This material does not constitute investment advice and is not intended as an
endorsement of any specific investment.
Performance data quoted above is historical. Past performance is no guarantee of future
results. Current performance may be higher or lower than the performance data quoted.
The principal value and investment return of an investment will fluctuate so that your
shares, when redeemed, may be worth more or less than their original cost.
33
FAM Small Cap Fund —Portfolio Data
As of June 30, 2013 (Unaudited)
COMPOSITION OF TOTAL INVESTMENTS
Money Market Fund
11.6%
Retail - Department Stores
9.7%
Banking
9.0%
Electronic Manufacturing
6.9%
Diversified Holding Company
6.2%
Investment Management
6.0%
REITS - Diversified
5.3%
Oil & Gas Exploration
4.9%
Transportation
4.6%
Wholesale Wire & Cable
4.6%
Property & Casualty Insurance
4.5%
Industrial Machinery
4.4%
Commercial Services
4.2%
Retail - Automobile
4.1%
Health Care Facilities
3.5%
Laser Systems/Components
3.4%
Hazardous Waste Disposal
3.3%
Services - Data Processing
2.8%
Food Products
1.0%
Statement Regarding Availability of Quarterly Portfolio Schedule. Please note that (i) the Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q; (ii) the Fund’s Forms N-Q are available on the Commission’s website at http://www.sec.gov; (iii) the Fund’s Forms N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC, and information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330; and (iv) the Fund makes the information on Form N-Q available to shareholders, upon request, by calling FAM Funds at 1-800-932-3271.
34
FAM Small Cap Fund —Statement of Investments
June 30, 2013 (Unaudited)
SHARES
VALUE
COMMON STOCKS (88.4%)
Banking (9.0%)
Home Bancshares, Inc.
• holding company for the Centennial Bank that provides various com-
mercial and retail banking and related financial products and services
37,000
$ 960,890
to businesses, real estate developers, individuals and municipalities
Pinnacle Financial Partners, Inc.*
• holding company for Pinnacle National Bank that provides commercial
banking services to individuals, small to mid-size businesses and profes-
26,500
681,315
sional entities
SCBT Financial Corporation
• provides banking services to individual and corporate customers in the
13,300
670,187
Carolinas
2,312,392
Commercial Services (4.2%)
McGrath RentCorp
• modular building and electronic test equipment rentals, subsidiary
24,500
836,920
classroom manufacturing
MTS Systems Corporation
• supplies test systems and industrial position sensors
4,000
226,400
1,063,320
Diversified Holding Company (6.2%)
Biglari Holdings Inc.*
• engages in the ownership, development, operation, and franchising of
3,885
1,594,404
restaurants
Electronic Manufacturing (6.9%)
Fabrinet*
• provides precision optical, electro-mechanical, and electronic manufac-
126,750
1,774,500
turing services
Food Products (1.0%)
Inventure Foods, Inc.*
• manufactures and markets healthy/natural and indulgent
31,092
259,929
specialty snack food products
See Notes to Financial Statements
35
FAM Small Cap Fund —Statement of Investments continued
June 30, 2013 (Unaudited)
SHARES
VALUE
Hazardous Waste Disposal (3.3%)
U.S. Ecology, Inc.
• provides radioactive, pcb, hazardous and non-hazardous waste services
30,800
$
845,152
to commercial and government customers
Health Care Facilities (3.5%)
U.S. Physical Therapy, Inc.
• through its subsidiaries, operates outpatient physical therapy clinics
32,700
903,828
Industrial Machinery (4.4%)
John Bean Technologies Corporation
• provides technology solutions for the food processing and air
53,000
1,113,530
transportation industries
Investment Management (6.0%)
Westwood Holdings Group Inc.
• manages investment assets and provides services for its clients
35,487
1,523,102
Laser Systems/Components (3.4%)
Rofin-Sinar Technology Inc.*
• engages in the design, development, engineering,
35,050
874,147
manufacturing, and marketing of laser-based products
Oil & Gas Exploration (4.9%)
Evolution Petroleum Corp.*
• engages in the acquisition, exploitation, and development of properties
116,000
1,265,560
for the production of crude oil and natural gas
Property and Casualty Insurance (4.5%)
Amerisafe, Inc.
• insurance holding company that markets and underwrites workers’
35,500
1,149,845
compensation and general liability insurance
REITS - Diversified (5.3%)
Winthrop Realty Trust
• real estate investment trust that engages in the ownership and manage-
112,850
1,357,585
ment of real property and real estate-related assets
Retail - Automobile (4.1%)
America’s Car-Mart Inc.*
• operates as an automotive retailer
24,023
1,038,755
See Notes to Financial Statements
36
FAM Small Cap Fund —Statement of Investments continued
June 30, 2013 (Unaudited)
SHARES
VALUE
Retail - Department Stores (9.7%)
Destination Maternity Corporation
• designing and retail of maternity clothing in United States
43,950
$ 1,081,170
Gordman Stores Inc.*
• operates department stores selling apparel, footwear, home fashions
34,000
462,740
products, and accessories including fragrances
rue21, Inc.*
• specialty retailer of junior girls and young mens apparel and accessories
22,250
925,823
2,469,733
Services - Data Processing (2.8%)
Cass Information Systems Inc
• provides payment and information processing services to
15,675
722,617
manufacturing, distribution, and retail enterprises
Transportation (4.6%)
Patriot Transporation Holding Inc.*
• engages in the transportation and real estate businesses
39,555
1,188,232
Wholesale Wire & Cable (4.6%)
Houston Wire and Cable Company
• distributor of wire and cable products in the USA
85,250
1,179,860
Total Common Stocks (Cost $18,714,189)
$ 22,636,491
TEMPORARY INVESTMENTS (11.6%)
Money Market Fund (11.6%)
Invesco Short Term Treasury Fund(Institutional Class)
(0.02%)**
2,968,065
2,968,065
Total Temporary Investments (Cost $2,968,065)
$ 2,968,065
Total Investments (Cost $21,682,254)
$ 25,604,556
* Non-income producing securities
** The rate shown represents the effective yield at 6/30/13
See Notes to Financial Statements
37
FAM Funds — Statement of Assets and Liabilities
June 30, 2013 (Unaudited)
Value Fund Equity-IncomeFund SmallCapFund
Assets
Investments in securities at value (Cost
$397,244,626; $87,929,204; and $21,682,254,
$827,986,636
$130,232,261
$25,604,556
respectively)
Cash
291,028
12,500
736,252
Dividends and interest receivable
310,464
121,859
31,281
Receivable for investment securities sold
1,356,106
—
—
Receivable from investment manager
—
—
59,339
Total Assets
829,944,234
130,366,620
26,431,428
Liabilities
Accrued investment advisory fee
681,055
107,105
104,945
Accrued shareholder servicing and administrative fees
91,630
15,069
2,884
Accrued trustee fees
5,400
5,400
5,400
Accrued expenses
74,549
26,702
19,541
Payable for investment securities purchased
—
—
528,106
Total Liabilities
852,634
154,276
660,876
Net Assets
$829,091,600
$130,212,344
$25,770,552
Net Assets Consist Of:
Net capital paid in on shares of beneficial interest $376,359,163
$85,427,235
$21,358,298
Accumulated net investment income/(loss)
(1,089,653)
6,235
10,238
Accumulated net realized gains
23,080,080
2,475,817
479,714
Net unrealized appreciation
430,742,010
42,303,057
3,922,302
Net Assets
$829,091,600
$130,212,344
$25,770,552
Fund shares outstanding
14,630,333
5,699,092
2,005,212
Net Asset Value, Offering and Redemption Price per
share (unlimited shares of beneficial interest autho-
rized at $0.001 par value)
$56.67
$22.85
$12.85
See Notes to Financial Statements
38
FAM Funds — Statement of Operations
Six Months Ended June 30, 2013 (Unaudited)
Value Fund Equity-IncomeFund SmallCapFund
Investment Income
Income
Dividends
$ 3,666,367
$ 1,436,897
$ 118,551
Interest
4,938
692
324
Total Investment Income
3,671,305
1,437,589
118,875
Expenses
Investment advisory fee (Note 2)
3,980,884
619,177
104,945
Administrative fee (Note 2)
335,749
52,630
8,920
Shareholder servicing and related
expenses (Note 2)
206,973
33,356
5,954
Printing and mailing
77,809
13,747
3,320
Professional fees
51,110
8,729
1,668
Registration fees
9,091
10,166
5,812
Custodial fees
46,366
8,402
2,685
Trustee’s fees
19,205
19,205
19,205
Officer’s fees (Note 2)
14,222
14,222
14,222
Other
19,549
9,262
1,246
Total Expenses
4,760,958
788,896
167,977
Less: Investment advisory fee and
other expenses waived or assumed by
advisor (Note 2)
—
—
59,340
Net Expenses
4,760,958
788,896
108,637
Net Investment Income/(Loss)
(1,089,653)
648,693
10,238
RealizedandUnrealizedGainonInvestments
Net realized gain on investments
23,080,080
2,475,817
479,714
Net change in unrealized appreciation of
investments
93,803,325
13,013,847
2,633,939
Net Realized and Unrealized Gain on
Investments
116,883,405
15,489,664
3,113,653
NetIncreaseInNetAssetsFromOperations
$115,793,752
$16,138,357
$3,123,891
See Notes to Financial Statements
39
FAM Funds — Statement of Changes in Net Assets
Six Months Ended June 30, 2013 (Unaudited) and Year Ended December 31, 2012
Value Fund
Six Months Ended
June 30, 2013
Year Ended
(Unaudited)
December 31, 2012
Change in Net Assets
From operations
Net investment income/(loss)
$ (1,089,653)
$
971,170
Net realized gain on investments
23,080,080
19,357,803
Net change in unrealized appreciation of
investments
93,803,325
58,760,401
Net increase in net assets from operations
115,793,752
79,089,374
Distributions to shareholders from:
Net investment income
Investor Class
—
(971,662)
Advisor Class*
—
—
Net realized gain on investments
—
(19,357,670)
Return of capital distributions
—
(82,944)
Total distributions
—
(20,412,276)
Capital share transactions (Note 3)
(18,685,224)
(29,099,975)
Total increase/(decrease) in net assets
97,108,528
29,577,123
Net Assets
Beginning of period
731,983,072
702,405,949
End of period**
$829,091,600
$731,983,072
*Advisor Share Class was terminated on 8/31/2012. On that date all outstanding Advisor Class shares were
converted to Investor Class Shares.
**Includes Accumulated net investment income/(loss) of $(1,089,653), $0, $6,235, $0, $10,238 and $0, respectively.
See Notes to Financial Statements
40
FAM Funds — Statement of Changes in Net Assets
Six Months Ended June 30, 2013 (Unaudited) and Year Ended December 31, 2012
Equity-Income Fund
Small Cap Fund†
Six Months Ended
Six Months Ended
June 30, 2013
Year Ended
June 30, 2013
Period Ended
(Unaudited)
December 31, 2012
(Unaudited)
December 31, 2012
$
648,693
$ 1,581,386
$
10,238
$
(58,821)
2,475,817
6,082,242
479,714
55,782
13,013,847
6,351,910
2,633,939
1,288,363
16,138,357
14,015,538
3,123,891
1,285,324
(642,458)
(1,590,250)
—
—
—
(1,914)
—
—
—
(6,047,523)
—
—
—
(144,220)
—
—
(642,458)
(7,783,907)
—
—
1,776,199
(20,566,199)
5,805,480
15,555,857
17,272,098
(14,334,568)
8,929,371
16,841,181
112,940,246
$127,274,814
16,841,181
—
$130,212,344
$112,940,246
$25,770,552
$16,841,181
†Small Cap Fund inception 3/1/12
See Notes to Financial Statements
41
FAM Funds - Notes to Financial Statements (Unaudited)
Note 1 Nature of Business and Summary of Significant Accounting Policies
FAM Value Fund, FAM Equity-Income Fund and FAM Small Cap Fund are each a series of
Fenimore Asset Management Trust, a diversified, open-end management investment
company registered under the Investment Company Act of 1940. Each Fund offers a
single class of shares. The investment objective of the FAM Value Fund is to maximize
long-term return on capital. The investment objective of the FAM Equity-Income Fund is
to provide current income and long term capital appreciation from investing primarily in
income-producing equity securities. The investment objective of the FAM Small Cap Fund
is to maximize long-term return on capital.
The following is a summary of each Fund’s significant accounting policies, which are in
accordance with accounting principles generally accepted in the United States of Ameri-
ca (“GAAP”), followed by the Funds in the preparation of their financial statements.
a) Valuation of Securities
Securities traded on a national securities exchange or admitted to trading on NASDAQ are valued at the last reported sale price or the NASDAQ official closing price. Common stocks for which no sale was reported, and over-the-counter securities, are valued at the last reported bid price. Short-term securities are carried at amortized cost, which approximates value. Securities for which market quotations are not readily available or have not traded are valued at fair alue as determined by procedures established by the Board of Trustees. Investments in Invesco Short Term Treasury Fund are valued aat that fund's net asset value.
GAAP establishes a three-tier framework for measuring fair value based on a hier-
archy of inputs. The hierarchy distinguishes between market data obtained from
independent sources (observable inputs) and the Funds’ own market assumptions
(unobservable inputs). These inputs are used in determining the value of the Funds’
investments. These inputs are summarized in the three broad levels listed below:
Level 1 – quoted prices in active markets for identical securities
Level 2 – other significant observable inputs (including quoted prices for identical
securities in inactive markets and quoted prices for similar securities)
Level 3 – significant unobservable inputs (including the Funds’ own assumptions in
determining the fair value of investments)
The inputs or methodology used for valuing securities are not necessarily an indica-
tion of the risk associated with investing in those securities.
42
FAM Funds -Notes to Financial Statements (Unaudited)
The following is a summary of the inputs used to value each Series’ net assets as of
June 30, 2013:
FAM Value Fund
Level 1
Common Stocks
$774,869,346
Temporary Investments
53,117,290
Total Investments in Securities
$827,986,636
FAM Equity-Income Fund
Level 1
Common Stocks
$122,466,817
Preferred Stocks
1,293,213
Temporary Investments
6,472,231
Total Investments in Securities
$130,232,261
FAM Small Cap Fund
Level 1
Common Stocks
$22,636,491
Temporary Investments
2,968,065
Total Investments in Securities
$25,604,556
During the period ended June 30, 2013 there were no Level 2 or 3 inputs used to value
the Funds’ net assets. Refer to the Statement of Investments to view securities segre-
gated by industry type.
b) Federal Income Taxes
It is each Fund’s policy to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of its tax-
able income to its shareholders. Therefore, no provision for federal income or excise
tax is required.
GAAP requires uncertain tax positions to be recognized, measured, presented and
disclosed in the financial statements. For the period ended June 30, 2013 manage-
ment has evaluated the tax positions taken or expected to be taken in the course of
43
FAM Funds - Notes to Financial Statements (Unaudited)
preparing the Funds’ tax returns to determine whether the tax positions are “more-
likely-than-not” of being sustained upon review by the applicable tax authority.
Tax positions not deemed to meet the “more-likely-than-not” threshold would be
recorded as a tax expense in the current year. Based on the evaluation, management
has determined that no liability for unrecognized tax expense is required. Tax years
2009 through present remain subject to examination by U.S. and New York taxing
authorities. No examination of the Fund’s tax filings is presently in progress.
c) Use of Estimates
The preparation of financial statements in conformity with GAAP requires manage-
ment 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 increases and decreases in net
assets from operations during the reporting period. Actual results could differ from
those estimates.
d) Other
Securities transactions are recorded on trade date. Realized gains and losses on
securities sold are determined on the basis of identified cost. Interest income is ac-
crued as earned and dividend income is recorded on the ex-dividend date. The Funds
record distributions received in excess of income from underlying investments as
a reduction of cost of investments and/or realized gain. Such amounts are based on
estimates if actual amounts are not available, and actual amounts of income, real-
ized gain and return of capital may differ from the estimated amounts. The Funds
adjust the estimated amounts of the components of distributions (and consequently
its net investment income) as an increase to unrealized appreciation/(deprecia-
tion) and realized gain/(loss) on investments as necessary once the issuers provide
information about the actual composition of the distributions. Distributions to
shareholders are recorded on the ex-dividend date. Distributions to shareholders are
determined in accordance with income tax regulations and may differ from those
determined for financial statement purposes. To the extent these differences are
permanent such amounts are reclassified within the capital accounts.
Note 2 Investment Advisory Fees and Other Transactions with Affiliates
Under each Investment Advisory Contract, each series pays an investment advisory fee to
Fenimore Asset Management, Inc. (the “Advisor”) equal, on an annual basis, to 1% of each
series average daily net assets. The Advisor has entered into a voluntary agreement with
each series to reduce the investment advisory fee for each series through December 31,
2013 to 0.95% of the Funds’ average daily net assets in excess of $1 billion. No such waiver
was required for the period ended June 30, 2013. Thomas Putnam is an officer and trustee
of the Funds and also an officer and director of the Advisor. The Chief Compliance Officer
44
FAM Funds -Notes to Financial Statements (Unaudited)
is an officer of the Funds and compensated by the Funds in the amount of $42,666 as well
as an officer of the Advisor and compensated additionally by the Advisor.
The Investment Advisory Contract requires the Advisor to reimburse the Fund’s its ex-
penses to the extent that such expenses, including the advisory fee, for the fiscal year ex-
ceed 2.00% of the average daily net assets. For the period ended June 30, 2013 the Advisor
contractually agreed to reimburse the FAM Value Fund for its expenses to the extent such
expenses exceeded 1.28% of the average daily net assets; the FAM Equity-Income Fund for
its expenses to the extent such expenses exceeded 1.40% of the average daily net assets;
and the FAM Small Cap Fund for its expenses to the extent such expenses exceed 1.50% of
the average daily net assets. No such reimbursement was required for the period ended
June 30, 2013 for the FAM Value and FAM Equity-Income Fund. Reimbursement was re-
quired in the amount of $59,340 for the period ended June 30, 2013 for the FAM Small Cap
Fund.
FAM Shareholder Services, Inc. (“FSS”), a company under common control with the Advi-
sor, serves as shareholder servicing agent and receives a monthly fee of $2.33 per share-
holder account. For the period ended June 30, 2013, shareholder servicing agent fees paid
to FSS were as follows:
FAM Value Fund
$206,973
FAM Equity-Income Fund
$ 33,356
FAM Small Cap Fund
$ 5,954
Additionally, FSS serves as the Fund administrative agent and receives an annual fee
of 0.085% on the first $750,000,000 of the Funds’ average daily net assets, and 0.075%
thereafter. For the period ended June 30, 2013, the Funds’ administrative fees paid to FSS
amounted to:
FAM Value Fund
$335,749
FAM Equity-Income Fund
$ 52,630
FAM Small Cap Fund
$ 8,920
Fenimore Securities, Inc. (“FSI”), a company also under common control with the Advisor,
acts as distributor of the Funds’ shares.
45
FAM Funds - Notes to Financial Statements (Unaudited)
Note 3. Shares of Beneficial Interest
At June 30, 2013 an unlimited number of $0.001 par value of beneficial interest were
authorized.
Transactions for each Fund are as follows:
SIX MONTHS ENDED 6/30/13
YEAR ENDED 12/31/12
FAM Value Fund
Shares
Amount
Shares
Amount
Shares sold
Investor Class
299,465
$16,291,067
763,781 $ 37,441,359
Advisor Class*
—
—
729
33,984
Shares issued on reinvest-
ment of distributions
—
—
410,952
19,857,175
(Investor Class only)
Shares redeemed
Investor Class
(644,947) (34,976,291)
(1,672,212)
(82,009,909)
Advisor Class*
—
—
(90,728)
(4,422,584)
Net Decrease
(345,482) ($18,685,224)
(587,478) $(29,099,975)
FAM Equity-Income Fund
Shares sold
Investor Class
424,184
$9,476,909
4,705,497 $95,082,351
Advisor Class*
—
—
891
17,453
Shares issued on reinvest-
ment of distributions
Investor Class
25,986
592,520
377,602
7,519,150
Advisor Class*
—
—
81
1,662
Shares redeemed
Investor Class
(375,038)
(8,293,230)
(5,948,559) (121,533,579)
Advisor Class*
—
—
(75,953)
(1,653,237)
Net Increase/Decrease
75,132
$1,776,199
(940,441) $(20,566,199)
*Advisor Share Class was terminated on 8/31/2012.
46
FAM Funds -Notes to Financial Statements (Unaudited)
SIX MONTHS ENDED 6/30/13
YEAR ENDED 12/31/12
FAM Small Cap Fund
Shares sold
504,612
$6,123,001
1,593,844 $16,226,902
Shares issued on reinvest-
ment of distributions
—
—
—
—
Shares redeemed
(26,354)
(317,521)
(66,890)
(671,045)
Net Increase
478,258
$5,805,480
1,526,954
$15,555,857
Note 4. Investment Transactions
During the period ended June 30, 2013, purchases and sales of investment securities,
other than short-term obligations were:
Purchases
Sales
FAM Value Fund
$41,836,879
$71,944,039
FAM Equity-Income Fund
$ 8,223,238
$ 6,840,164
FAM Small Cap Fund
$ 6,695,858
$ 1,133,223
The cost of securities for federal income tax purposes is the same as shown in the state-
ment of investments.
Note 5. Income Taxes and Distributions to Shareholders
The components of accumulated income/(losses) on a tax basis at December 31, 2012 (the
Funds’ most recent tax year end) were as follows:
Undistributed
Undistributed
Unrealized
ordinary income
long-term gain
Appreciation
FAM Value Fund
—
—
$336,938,685
FAM Equity-Income Fund
—
—
$ 29,385,938
FAM Small Cap Fund
—
—
$ 1,288,363
The aggregate gross unrealized appreciation and depreciation of portfolio securities at
June 30, 2013, based on cost for federal income tax purposes, was as follows:
FAM Value Fund
Unrealized appreciation
$432,433,004
Unrealized depreciation
(1,690,994)
Net unrealized appreciation
$430,742,010
47
FAM Funds - Notes to Financial Statements (Unaudited)
FAM Equity-Income Fund
Unrealized appreciation
$ 43,683,603
Unrealized depreciation
(1,380,546)
Net unrealized appreciation
$ 42,303,057
FAM Small Cap Fund
Unrealized appreciation
$ 4,025,154
Unrealized depreciation
(102,852)
Net unrealized depreciation
$ 3,922,302
The tax composition of dividends and distributions paid to shareholders for the six
months ended June 30, 2013, and the year ended 2012:
Six Months Ended
Year Ended
June 30, 2013
December 31, 2012
FAM Value Fund
Ordinary income
—
$
971,662
Long-term capital gain
—
19,357,670
Return of capital
—
82,944
—
$20,412,276
FAM Equity-Income Fund
Ordinary income
$642,458
$ 3,595,354
Long-term capital gain
—
4,044,333
Return of capital
—
44,220
$642,458
$ 7,783,907
FAM Small Cap Fund
Ordinary income
—
—
Long-term capital gain
—
—
Return of capital
—
—
—
—
48
FAM Funds -Notes to Financial Statements (Unaudited)
Note 6. Line of Credit
The FAM Value Fund, Equity-Income Fund, and Small Cap Fund each has a line of credit
up to 33 1/3% of its net assets with a maximum of $125,000,000, $20,000,000, and
$3,000,000, respectively.
Borrowings under the agreement bear interest at the prime rate as announced by the
lending bank. The line of credit is available until December 1, 2013, when any advances
are to be repaid. During the period ended June 30, 2013, no amounts were drawn from
the available lines.
Note 7. Commitments and Contingencies
In the normal course of business, the Funds enter into contracts that contain a variety
of representations and warranties which provide general indemnifications. The Funds’
maximum exposure under these arrangements is unknown as this would involve future
claims that might be made against the Funds that have not yet occurred. However, based
on the experience of the Advisor, the Funds expect the risk of loss to be remote.
Note 8. Subsequent Events
Management has evaluated subsequent events through the date the financial statements
were available to be issued, and has determined that there were no subsequent events
requiring recognition or disclosure in the financial statements.
49
FAM Funds - Notes to Financial Statements (Unaudited)
Note 9. Financial Highlights
FAM Value Fund
Years Ended December 31,
Per share information
Six Months
Ended
(For a share outstanding throughout each
June 30, 2013
2012
2011
2010
2009
2008
period)
(Unaudited)
Net asset value, beginning of period
$48.88
$45.15
$45.34
$39.32
$32.22
$45.42
Income/Loss from investment operations:
Net investment income/(loss)†
(0.07)
0.06
(0.04)
0.09
0.05
0.18
Net realized and unrealized
gain/(loss) on investments
7.86
5.07
(0.15)
6.61
7.10
(13.21)
Total from investment operations
7.79
5.13
(0.19)
6.70
7.15
(13.03)
Less distributions:
Dividends from net investment income
—
(0.07)
—*
(0.09)
(0.05)
(0.17)
Distributions from net realized gains
—
(1.32)
—*
(0.59)
—
—*
Return of capital
—
(0.01)
—
—
—
—*
Total distributions
—
(1.40)
—*
(0.68)
(0.05)
(0.17)
Change in net asset value for the period
7.79
3.73
(0.19)
6.02
7.10
(13.20)
Net asset value, end of period
$56.67
$48.88
$45.15
$45.34
$39.32
$32.22
TotalReturn
15.94%**
11.39%
(0.41)%
17.02%
22.18%(28.68)%
Ratios/supplementaldata
Net assets, end of period (000)
$829,092
$731,983
$698,546 $737,211 $659,621 $592,504
Ratios to average net assets of:
Expenses
1.19%***
1.21%
1.22%
1.23%
1.26%
1.24%
Net investment income/(loss)
(0.27)%***
0.13%
(0.10)%
0.21%
0.14%
0.44%
Portfolio turnover rate
5.58%**
4.41%
7.78%
5.08%
7.55%
12.60%
†Basedonaveragesharesoutstanding.
*Pershareamountislessthan$0.005.
**NotAnnualized
***Annualized
50
FAM Funds -Notes to Financial Statements (Unaudited)
Note 9. Financial Highlights
FAM Equity-Income Fund
Years Ended December 31,
Per share information
Six Months
Ended
(For a share outstanding throughout each
June 30, 2013
2012
2011
2010
2009
2008
period)
(Unaudited)
Net asset value, beginning of period
$20.08
$19.39
$18.43
$16.02
$13.34
$19.09
Income/Loss from investment operations:
Net investment income†
0.12
0.24
0.29
0.36
0.17
0.23
Net realized and unrealized
2.76
gain/(loss) on investments
1.88
0.95
2.41
2.68
(5.73)
Total from investment operations
2.88
2.12
1.24
2.77
2.85
(5.50)
Less distributions:
Dividends from net investment income
(0.11)
(0.26)
(0.28)
(0.36)
(0.17)
(0.23)
Distributions from net realized gains
—
(1.14)
—
—
—
—*
Return of capital
—
(0.03)
—
—
—
(0.02)
Total distributions
(0.11)
(1.43)
(0.28)
(0.36)
(0.17)
(0.25)
Change in net asset value for the period
2.77
0.69
0.96
2.41
2.68
(5.75)
Net asset value, end of period
$22.85
$20.08
$19.39
$18.43
$16.02
$13.34
TotalReturn
14.36%**
11.02%
6.79%
17.47%
21.43% (29.04)%
Ratios/supplementaldata
Net assets, end of period (000)
$130,212
$112,940
$125,832
$85,824
$76,096
$68,096
Ratios to average net assets of:
Before waivers:
Expenses
1.26%***
1.31%
1.40%
1.41%
1.47%
1.41%
Net investment income
1.04%***
1.17%
1.57%
2.10%
1.11%
1.33%
After waivers:
Expenses
1.26%***
1.31%
1.40%
1.40%
1.40%
1.40%
Net investment income
1.04%***
1.17%
1.57%
2.11%
1.18%
1.34%
Portfolio turnover rate
5.81%**
43.1%
17.96%
13.38%
10.51%
17.58%
†Basedonaveragesharesoutstanding.
*Pershareamountislessthan$0.005.
**NotAnnualized
***Annualized
51
FAM Funds - Notes to Financial Statements (Unaudited)
Note 9. Financial Highlights
FAM Small Cap Fund
Six Months
For the Period
Ended
Ended December 31,
Per share information
June 30, 2013
2012*
(For a share outstanding throughout the period)
(Unaudited)
Net asset value, beginning of period
$11.03
$10.00
Income/Loss from investment operations:
Net investment income/(loss)†
0.01
(0.04)
Net realized and unrealized gain on investments
1.81
1.07
Total from investment operations
1.82
1.03
Less distributions:
Dividends from net investment income
—
—
Distributions from net realized gains
—
—
Return of capital
—
—
Total distributions
—
—
Change in net asset value for the period
1.82
1.03
Net asset value, end of period
$12.85
$11.03
TotalReturn
16.50%**
10.30%**(a)
Ratios/supplementaldata
Net assets, end of period (000)
$25,771
$16,841
Ratios to average net assets of:
Before waivers:
Expenses
1.58%
2.79%***
Net investment income/(loss)
(0.46)%***
(1.89)%***
After waivers:
Expenses
1.03%***
1.46%***
Net investment income/(loss)
0.10%***
(0.56)%***
Portfolio turnover rate
6.23%**
7.59%**
†Basedonaveragesharesoutstanding.
*Small Cap Fund inception 3/1/12
** Not Annualized
*** Annualized
(a)Total return includes the effect of a voluntary contribution by the Advisor of $5,649. Absent this contribution, total return
would have been 10.26%.
52
FAM Funds —Supplemental Information (Unaudited)
Statement Regarding Availability of Proxy Voting Policies and Procedures.
Please note that a description of the policies and procedures the Funds use to determine how to vote proxies relating to portfolio securities is available (i) without charge, upon request, by calling FAM Funds at 1-800-932-3271; (ii) and on the Securities and Exchange Commission’s website at http://www.sec.gov.
Statement Regarding Availability of Proxy Voting Record.
Please note that information regarding how the Funds voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available (i) without charge, upon request, by calling FAM Funds at 1-800-932-3271; or on the FAM Fund’s Website at http://famfunds.com (ii) and on the Securities and Exchange Commission’s website at http://www.sec.gov.
See Notes to Financial Statements
53
Investment Advisor
Fenimore Asset
Management, Inc.
Cobleskill, NY
Custodian
U.S. Bank, N.A.
Cincinnati, OH
Trustees
Donald J. Boteler
Paul Keller, CPA
Fred “Chico” Lager
John J. McCormack, Jr.,
Independent Chairman
Kevin J. McCoy, CPA
Thomas O. Putnam
Barbara V. Weidlich
Legal Counsel
Dechert, LLP
Washington, DC
Shareholder Servicing Agent
FAM Shareholder Services, Inc.
Cobleskill, NY
Distributor
Fenimore Securities, Inc.
Cobleskill, NY
384 North Grand Street
PO Box 399
Cobleskill, New York
12043-0399
(800) 932-3271
www.famfunds.com
THIS PAGE IS INTENTIONALLY LEFT BLANK
FACTS
WHAT DOES FAM FUNDS (FENIMORE ASSET MANAGEMENT TRUST)
DO WITH YOUR PERSONAL INFORMATION?
Why?
Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.
What?
The types of personal information we collect and share depend on the product or service you have with us. This information can include:
Social Security number and account balances
Transaction history and investment experience
Retirement assets and wire transfer instructions
When you are no longer our customer, we continue to share your information as described in this notice.
How?
All financial companies need to share customers’ personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers’ personal information; the reasons FAM Funds (Fenimore Asset Management Trust) chooses to share; and whether you can limit this sharing.
Reasons we can share your personal
Does Fenimore Asset
information
Management, Inc.
Can you limit this
share?
sharing?
For our everyday business purposes
- such as to process your transactions,
maintain your account(s), respond to
Yes
No
court orders and legal investigations, or
report to credit bureaus
For our marketing purposes - to offer our
products and services to you
No
We don’t share
For joint marketing with other financial
companies
No
We don’t share
For our affiliates’ everyday business pur-
poses - information about your transac-
No
We don’t share
tions and experiences
For our affiliates’ everyday business
purposes - information about your credit-
No
We don’t share
worthiness
For affiliates to market to you
No
We don’t share
For nonaffiliates to market to you
No
We don’t share
Questions?
Call (800) 932-3271 or go to www. famfunds.com
Rev. 01/2013
Page 2
What We Do
To protect your personal information from
How does FAM Funds (Fenimore Asset unauthorized access and use, we use
Management Trust) protect my personal infor- security measures that comply with federal law.
mation?
These measures include computer safe-
guards and secured files and buildings.
We collect your personal information, for
example, when you:
How does FAM Funds (Fenimore Asset • open an account
Management Trust) collect my personal infor- • direct us to buy securities
mation?
• direct us to sell your securities
• make deposits or withdrawals from your
account
• tell us about your investment or retire-
ment portfolio
Federal law gives you the right to limit only
• sharing for affiliates’ everyday business
purposes - information about your credit-
worthiness
• affiliates from using your information to
Why can’t I limit all sharing?
market to you
• sharing for nonaffiliates to market to you
State laws and individual companies may
give you additional rights to limit sharing.
See below for more on your rights under
state law.
Definitions
Companies related by common ownership or
control. They can be financial and nonfinan-
Affiliates
cial companies.
• FAM Funds (Fenimore Asset Management
Trust) does not share with our affiliates.
Companies not related by common owner-
ship or control. They can be financial and
nonfinancial companies.
Nonaffiliates
• FAM Funds (Fenimore Asset Manage-
ment Trust) does not share with nonaffili-
ates so they can market to you.
A formal agreement between nonaffiliated
financial companies that together market
Joint Marketing
financial products or services to you.
• FAM Funds (Fenimore Asset Management)
does not market jointly.
Not part of the Semi-Annual Report
Item 2. Code of Ethics.
Not applicable.
Item 3. Audit Committee Financial Expert.
Not applicable.
Item 4. Principal Accountant Fees and Services.
Not applicable.
Item 5. Audit Committee of Listed Registrants
Not Applicable.
Item 6. Schedule of Investments
This Schedule of Investments in securities of unaffiliated issuers is included as part of the Report to Shareholders.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Companies
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 11. Controls and Procedures.
(a) The registrant's principal executive officer and principal financial officer have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c)) under the Investment Company Act of 1940, as amended (the "Act") are effective based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this document.
(b) There were no changes in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Act that occurred during the registrant's first fiscal half-year of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.
Item 12. Exhibits.
File the exhibits listed below as part of this Form. Letter or number the exhibits in the sequence indicated.
(a) A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2 under the Act (17 CFR 270.30a-2) in the exact form set forth below:
(Attached hereto).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Fenimore Asset Management Trust
By (Signature and Title)* /s/ Thomas O. Putnam --------------------------- Thomas O. Putnam, President
Date August 10, 2013
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By (Signature and Title)* /s/ Thomas O. Putnam --------------------------- Thomas O. Putnam, President
Date August 10, 2013
By (Signature and Title)* /s/ Joseph A. Bucci -------------------------- Joseph A. Bucci, Treasurer
Date August 10, 2013
* Print the name and title of each signing officer under his or her signature.
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