Fenimore Asset Management Trust NCSR Certified annual shareholder report (management investment company)

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

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Fenimore Asset Management Trust

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(Exact name of registrant as specified in charter)

384 North Grand Street

P.O. Box 399

Cobleskill, New York 12043

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(Address of principal executive offices) (Zip code)

Thomas O. Putnam

Fenimore Asset Management Trust

384 North Grand Street

Cobleskill, New York 12043

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Name and address of agent for service

Registrant's telephone number, including area code: 1-800-453-4392

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Date of fiscal year end: December 31

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Date of reporting period:

December 31, 2013

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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

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A registrant is required to disclose the information specified by Form N-

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Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The

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Item 1. Reports to Stockholders.

The annual report to stockholders is filed herewith.

FAM Funds

In-depth research. Insightful investing.

ANNUAL REPORT

December 31, 2013

Value Fund

Equity-Income Fund

Small Cap Fund

Table of Contents

Chairman’s Commentary

Expense Data

FAM Value Fund

Letter to Shareholders

Performance Summary

Portfolio Data

Statement of Investments

FAM Equity-Income Fund

Letter to Shareholders

Performance Summary

Portfolio Data

Statement of Investments

FAM Small Cap Fund

Letter to Shareholders

Performance Summary

Portfolio Data

Statement of Investments

Statement of Assets and Liabilities

Statement of Operations

Statement of Changes in Net Assets

Notes to Financial Statements

Report of Independent Registered Public Accounting Firm

Investment Advisor Contract Renewal Disclosure

Information About Trustees and Officers

Supplemental Information

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

December 31, 2013

Dear Fellow Shareholder,

The year 2013 was a very good year in many respects. The United States economy continued

to heal from the bruising financial crisis and global economies continued down the long

path to a state of good repair. American consumers grew a bit more confident (or a bit less

nervous) about their circumstances, and investors became a bit less nervous about (or more

confident in) U.S. equities. American businesses found new ways to improve operations.

U.S. equity markets were up strongly, as were all three of our Funds. While capital preserva-

tion and growth require constancy of caution and healthy skepticism, we are optimistic

about opportunities in 2014.

First, let us take a look back. U.S. real gross domestic product (GDP) grew for the fourth

straight year despite facing significant fiscal headwinds. The U.S. added about 190,000 jobs

per month and has recovered nearly 90% of the jobs lost since the beginning of the reces-

sion. The housing, technology, automobile, and energy markets provided fuel for the expan-

sion. New home sales continued to grow from recessionary lows and existing home sales

neared long-term averages. The quantity of U.S. automobiles sold was 7.5% higher than last

year and up nearly 50% from the 2009 recession trough. American businesses expanded

margins through astute operational and capital management, aided by low interest rates,

resulting in earnings per share growth that exceeded revenue growth in the aggregate. These

elements, combined with the improvement in consumer and investor confidence (which

are both cause and effect), helped vault equity markets to new highs. The Russell Midcap

Index, an index of the 800 largest companies in the Russell 1000 Index, had a return of

34.76%. The S&P 500 Index, an index of the 500 largest companies by market capitalization,

returned 32.4% including dividends (total return). The Russell 2000 Index, an index of

small- and mid-cap companies, was up with a total return of 38.8%.

Our Funds had a very good 2013 as well. Though there is more detailed discussion of each

in the managers’ letters, let me share some highlights. The Value Fund earned a return of

33.0%, achieved 51 new net asset value highs throughout the year and, as a result, is

approaching $1 billion in assets. The Equity-Income Fund earned a return of 29.8%. The

Small Cap Fund, which launched in March of 2012, earned a return of 40.5% and ended the

year with more than $40 million in assets. It is hard to top a year like that….

This is a great segue to address the question we hear frequently, “Will this persist in 2014?”

Our long-term shareholders probably already know our answer, “We do not know what will

happen to equities in the short term.” However, after such strong performance in 2013, we

do believe that equities can continue to rise.

First, despite the talk about a stock market bubble, equities are not particularly expensive

by many traditional measures. At year-end 2013, the S&P 500 was 1848 or 17.2 times pro-

jected 2013 earnings (also called the Price to Earnings or P/E ratio). Said another way, at

Chairman’s Commentary

year-end you could buy $1 worth of S&P 500 earnings for $17.20. Historically, that dollar

would have cost you, on average, $16.30 — not too far off from today’s levels. During stock

market bubbles, like 1999, you would have paid nearly $30.00 for that dollar! Record prices

should not be confused with being expensive.

We believe that the global economy should likely continue to grow. The pace of economic

improvement in America picked up at the end of 2013 and is expected to continue into 2014.

Though not out of the woods yet, the outlook in Europe is improving. China has committed

to sustainable growth while continuing its transition away from an export-driven economy.

Japan is taking radical steps to free itself from years of deflation and stagnation. And

emerging market economies should, to varying degrees, provide new markets for U.S. com-

panies. All of these dynamics create opportunities for businesses to grow revenue and

earnings power.

Even if macroeconomic factors disappoint in 2014, the corporations in which we invest can

grow their intrinsic value. For example: Ross Stores should continue to open new stores in

new markets; our insurance brokers—A.J. Gallagher and Brown & Brown—should continue

to buy smaller agencies and improve their operations; Mohawk Industries should continue

to improve enterprise efficiency and profitability by integrating the three large companies

they bought in 2013; and Illinois Tool Works should continue to lower raw materials costs

and use their growing cash flow to repurchase shares. The list goes on. And, though we do

not know when it happens, growth in business value should eventually be reflected in their

stock prices.

With that said, after such a convincing run, bargains are harder to find. This actually feels

more “normal.” Equity valuations tend to vacillate, and it is the extremes—periods in which

they are particularly cheap or rich—which we most often remember. But, much of the time,

equities are fairly valued and companies selling for less than they are worth are scarce. This

is how we would characterize the environment now. In 2013, our seven analysts traversed

the country visiting with, or talking to, nearly 150 management teams to discover hidden

values—and our travel calendars are already filling up for 2014.

This New Year is also a special time because Fenimore Asset Management, the investment

advisor to FAM Funds, will celebrate its 40th Anniversary. Over the years, we have managed

our investors’ wealth through wars, terrorist attacks, recessions, social revolutions, technol-

ogy revolutions, asset bubbles, inflation, deflation, and every permutation of political party

control. We use a tried-and-true approach grounded in an unwavering philosophy of invest-

ing in high-quality businesses, balance sheets, and management teams at bargain prices.

Over the decades, we have built a FAM Shareholder Services Team that is second to none. In

an era when most mutual funds outsource shareholder services to call centers, when you

call FAM Funds the phone rings right here in Cobleskill. We have also assembled an

Chairman’s Commentary

Investment Research Team that is experienced, effective, and works tirelessly for results.

Additionally, we have been honored by the oversight of a strong, visionary FAM Funds Board

of Independent Trustees. What this means to our shareholders is that we have built, what

we believe is, an independent, accessible, transparent, and stable organization to last 40

more years… and beyond.

We thank you for your trust and support and look forward to serving you for a long time.

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

FAM Funds — Expense Data

December 31, 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 (7/1/2013 to 12/31/2013).

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.

FAM Funds — Expense Data continued

Six months ended December 31, 2013

FAM Value Fund

Beginning

Ending

Expenses

Account Value

Paid

7/1/2013

12/31/13

During Period

A. Ongoing Costs Based on Actual Fund

$1,000.00

$1,146.90

$6.49*

Return

B. Ongoing Costs Based on Hypothetical

$1,000.00

$1,018.95

$6.11*

5% Yearly Return

*Expenses are equal to the Fund’s annualized expense ratio of (1.20%), multiplied by the average account

value over the period, multiplied by 184/365 (to reflect the one-half year period).

FAM Equity-Income Fund

Beginning

Ending

Expenses

Account Value

Paid

7/1/2013

12/31/13

During Period

A. Ongoing Costs Based on Actual Fund

$1,000.00

$1,134.90

$7.10*

Return

B. Ongoing Costs Based on Hypothetical

$1,000.00

$1,018.35

$6.72*

5% Yearly Return

*Expenses are equal to the Fund’s annualized expense ratio of (1.32%), multiplied by the average account

value over the period, multiplied by 184/365 (to reflect the one-half year period).

FAM Small Cap Fund

Beginning

Ending

Expenses

Account Value

Paid

7/1/2013

12/31/2013

During Period

A. Ongoing Costs Based on Actual Fund

$1,000.00

$1,205.90

$8.34*

Return

B. Ongoing Costs Based on Hypothetical

$1,000.00

$1,017.44

$7.63*

5% Yearly Return

* Expenses are equal to the Fund’s net annualized expense ratio of (1.50%), multiplied by the average account

value over the period, multiplied by 184/365 (to reflect the one-half year period).

FAM Value Fund

December 31, 2013

Dear Fellow Value Fund Shareholder:

Investors entered 2013 fearful of the “fiscal cliff” and skeptical of the stock market as the

world seemed to bounce from crisis to crisis during the previous five years. We exit 2013

with better economic data and growing interest in equities as the U.S. stock market

posted a very good year. In fact, it was the best year for U.S. stocks since 1997 as measured

by the S&P 500 Index.

Performance Detail

At December 31, 2013 the net asset value of the FAM Value Fund was $61.81 per share. The

Fund’s rate of return was up 33%, including distributions, from the beginning of the year.

For comparison, the Russell Midcap Index increased 34.8%, the S&P 500 Index increased

32.4% and the Russell 2000 Index increased 38.8%.

Best Performers

The best performer for the year, on a dollar-weighted basis, was IDEX Corporation (+61%)

with a gain of more than $20 million. IDEX is an acronym that stands for innovation,

diversity, and excellence. It is best known as a manufacturer of highly-engineered fluid

handling products. IDEX also makes the well-known Jaws of Life rescue tool. The company

produced terrific results in 2013 and we expect that the year-end results could show all-

time high records for sales, profit margins, and earnings per share.

The second-best performer was Ross Stores (+40%) with a gain of almost $12 million. We

expect Ross to achieve another record fiscal year with earnings per share growth of

almost 10% over the previous year. Shoppers continue to be attracted to its offering of

brand-name clothes at discount prices. Ross’ current fiscal year (ending January 2014)

should be the ninth year in a row of positive earnings per share growth. In addition to

providing growth, the business maintains its excellent financial strength. Ross Stores

ended its last quarter with more than $400 million of cash in the bank. Management

continues to allocate profits wisely with the shareholders receiving considerable

dividends and share buybacks over the last five years.

The third-best performer was Mednax (+34%) gaining almost $11 million. Mednax is a

health care service company that runs neonatal intensive care units at hospitals and

provides anesthesia services. It has grown its earnings per share for many years through

a combination of internal growth and acquisitions. We expect that 2013 should be the

thirteenth consecutive year of earnings per share growth.

FAM Value Fund

Worst Performers

For the year ending December 31, 2013, the Fund owned only one stock that had a

negative return. So our worst performers included two stocks that actually appreciated,

but at a lesser rate.

The worst performer in the Fund, on a dollar-weighted basis, was Digital River which we

sold in the first quarter of 2013 at a slight loss to year-end 2012 value. 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 software sales

moving to The Cloud, and bypassing the download to a PC, that it would be difficult for

Digital River to grow over time.

The second-worst performer was Forest City Enterprises which was first purchased in

the third quarter. At year-end the Fund had a slight gain of $135,000 on its investment.

Forest City develops and owns commercial real estate in urban areas where land is scarce.

More than one-third of the company’s assets are in New York City and include the NY

Times headquarters building on 8th Avenue and the Barclays Center in Brooklyn. We

believe the value of the company’s real estate assets is greater than the current stock

price and that management is actively engaged in realizing that value.

The third-worst performer was Questar (+20%) with a gain of nearly $400,000. Questar is

the natural gas utility in the state of Utah. In many years a stock with a gain of 20% would

be a top performer, but given the strength of the market in 2013 and the small position

size in the Fund this stock did not contribute as much to performance.

Portfolio Activity

Purchases

We purchased three new positions—AutoZone, Inc., FLIR Systems, and Forest City

Enterprises—and purchased additional shares in five existing holdings.

AutoZone is the nation’s leading retailer of automotive replacement parts and accessories

with more than 5,000 stores. You may recognize its tagline, “Get In The Zone—AutoZone,”

from their many radio and television advertisements. The corporation has an excellent

track record of growth with earnings per share increasing by at least 18% 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.

Management’s primary use of the free cash flow has been to repurchase the company’s

stock shares. During the five years ending in August 2013 (the last reported fiscal year),

management had repurchased 43% of its outstanding shares. These repurchases make

FAM Value Fund

the remaining shares more valuable and we expect additional share buyback going

forward.

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

automotive, 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 14%. Like AutoZone, the business generates considerable amounts of excess

cash flow which has been used for acquisitions, dividends, and share buyback.

Forest City Enterprises is an owner and developer of commercial real estate. We owned

the stock in the Fund in prior years and repurchased shares after following the company

for many years; its world-class assets in cities like New York and management’s strategy

to reduce risk and increase transparency going forward are impressive. To reiterate, we

estimate its real estate assets are worth more than our purchase price and that this fact

should become more visible as management executes on their plan.

In addition to our new stocks, we made additional purchases of Loews, M&T Bank,

Microchip Technology, Protective Life, and VCA-Antech.

Sales

We sold our entire position in four stocks — Digital River, Heartland Express, Johnson &

Johnson, and Meredith Corporation — to redeploy capital into other companies with

greater future prospects. Each of these stocks was sold for different reasons.

As mentioned above under “Portfolio Detail” within “Worst Performers,” we sold Digital

River due to future growth concerns.

Heartland Express is a regional trucking business known for its exceptional profitability

and excellent on-time service. We admire management, but became disappointed by the

fact that Heartland has not been able to grow sales and earnings per share at a

satisfactory rate. While the economy has been recovering for five years now, the trucking

industry has struggled to benefit from this growth. Due to our concerns about slow

growth, we decided to sell the stock.

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

declining pharmaceutical earnings and was out of favor with investors. Despite JNJ’s

financial strength, the stock was fairly inexpensive at just 14 times future earnings per

FAM Value Fund

share. We sold the last of our shares this year after the stock moved up into the mid-80s.

While JNJ was a terrific investment for us, our strategy is to focus the Fund’s assets on

small- and mid-sized companies. Given JNJ’s large size, we decided to sell this profitable

investment.

Meredith Corporation owns magazines and television stations 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

2013 marks the fifth consecutive year of positive equity returns as measured by the S&P

500 Index. The current Bull Market was born during a time of pessimism about the

economy and doubts about the long-term return potential from owning equities. Today,

the mood is much better. Without a doubt our nation’s economy is growing. According to

The Conference Board Leading Economic Index®, in a press release dated December 19th,

the U.S. economy “…continues on a broad-based upward trend...”

A growing economy is important because the stock market should reflect the value of

corporate profits. So as an economy grows and businesses enjoy a resulting increase in

sales and profits, business values grow and should be manifested in higher stock prices.

This is exactly what has occurred over the last five years. In the recession year of 2009,

the companies in the S&P 500 reported profits of about $60 per share. For calendar year

2013, the current estimate of profits for the S&P 500 corporations is more than $105 per

share. That’s an increase of 75% in just four years.

This relationship between earnings and stock prices holds for individual businesses as

well. It is why we put our focus on the operations of the companies in which we invest.

Our investment approach is based on the belief that over time the price of a stock should

follow the value of the underlying business. We don’t know what will happen in the stock

market over the next year. However, we do believe that well-capitalized, profitable

businesses that are well-managed should increase in value over time and that value

should be reflected in their stock prices.

For example, let’s look at one of the Fund’s longtime holdings, CarMax. CarMax is a used

car superstore with the mission of making the car-buying process as simple and

transparent as possible. All the cars available for sale are shown at the selling price, with

no haggling. The company provides financing for purchase in a straightforward and clear

manner. The Fund purchased CarMax almost 10 years ago near $12 a share. At the time,

CarMax was a relatively young company with 44 retail locations and sales of a little more

FAM Value Fund

than 200,000 cars a year. Today, CarMax has 129 stores and should sell more than

500,000 cars next year. Over this period, earnings per share have grown from 55 cents

per share to an estimated $2.20 per share for the fiscal year ending in February 2014.

Concurrent with this earnings growth, the stock has appreciated to almost $50 a share.

This is just one example of how a company’s growth in earnings, and hence intrinsic

value, is reflected in its stock price over time. The Value Fund owns a strategic collection

of stocks that share some common traits and we believe their intrinsic value per share

can increase as well. The key characteristics that these enterprises share are financial

strength, the ability to generate cash profits, and an able management team that should

use that cash to create shareholder value. This last point, management’s use of the cash, is

vitally important.

The primary choices for use of cash are investing for growth, acquiring other companies,

paying dividends, or buying back the company’s own stock. Over time, with the right

management team, these actions should increase intrinsic value per share. Today, we are

seeing our holdings do good things with their excess cash. For instance, companies like

Ross Stores and YUM! Brands have used their cash flow to invest in the business by

opening new retail locations. Markel Corporation and Protective Life completed large

acquisitions in the last year that significantly increased earnings per share and returns

on equity. Stryker Corporation has increased its dividend per share from 40 cents to $1.22

in the last few years. Finally, AutoZone and White Mountains have used very intelligent

stock buybacks to increase value per share.

Our strategy is to own a portfolio of well-managed, financially strong businesses that can

increase their intrinsic value in future years. Our preference is to own these stocks for

many years in order to let the power of compounding work. Upon the purchase of a stock

we pay careful attention to the value of the company based on its assets or cash profits

compared to the current stock price. Our goal is to purchase stocks at a discount to what

we believe is their true value and hold them as management increases value over time.

After the increase in stock prices over the last few years, it is more difficult to find stocks

selling far below their intrinsic value; however, we continue to look diligently for new,

quality, undervalued investments. In the meantime, we believe the Fund owns a

collection of terrific businesses.

FAM Value Fund

Thank you for investing with us in the FAM Value Fund.

John D. Fox, CFA

Thomas O. Putnam

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 mate-

rial 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.

FAM Value Fund - Performance Summary (Unaudited)

Annual Total Investment Returns:

JANUARY 2, 1987 TO DECEMBER 31, 2013

FAM VALUE FUND RUSSELL MIDCAP INDEX

RUSSELL 2000 INDEX

S&P 500 INDEX

FISCAL YEAR

TOTAL RETURN

1987

-17.40%

0.23%

-8.77%

5.25%

1988

35.50%

19.80%

24.89%

16.61%

1989

20.32%

26.27%

16.24%

31.69%

1990

-5.36%

-11.50%

-19.50%

-3.11%

1991

47.63%

41.51%

46.05%

30.47%

1992

25.08%

16.34%

18.42%

7.60%

1993

0.21%

14.30%

18.90%

10.06%

1994

6.82%

-2.09%

-1.82%

1.31%

1995

19.71%

34.45%

28.44%

37.53%

1996

11.23%

19.00%

16.54%

22.95%

1997

39.06%

29.01%

22.37%

33.35%

1998

6.19%

10.09%

-2.55%

28.58%

1999

-4.84%

18.23%

21.26%

21.04%

2000

19.21%

8.25%

-3.03%

-9.10%

2001

15.07%

-5.62%

2.49%

-11.88%

2002

-5.33%

-16.19%

-20.48%

-22.09%

2003

24.98%

40.06%

47.25%

28.67%

2004

16.86%

20.22%

18.33%

10.88%

2005

5.56%

12.65%

4.55%

4.91%

2006

8.73%

15.26%

18.37%

15.79%

2007

-0.79%

5.60%

-1.57%

5.49%

2008

-28.68%

-41.46%

-33.79%

-37.00%

2009

22.18%

40.48%

27.17%

26.46%

2010

17.02%

25.48%

26.85%

14.76%

2011

-0.41%

-1.55%

-4.18%

2.11%

2012

11.39%

17.28%

16.35%

16.00%

2013

32.96%

34.76%

38.82%

32.44%

FAM Value Fund - Performance Summary (Unaudited)

The chart below depicts the change in value of a $10,000 investment in the FAM Value Fund since

inception on January 2, 1987, as compared with the growth of the Russell Midcap Index, the Fund’s

primary benchmark index, the Russell 2000 Index, the Fund’s previous primary benchmark index,

and the Standard and Poor’s 500 Index, an additional comparative index, during the same period.

The Fund recently changed its primary benchmark index to the Russell Midcap Index because it was

determined that this index is more reflective of the Fund’s investment style. The information as-

sumes reinvestment of dividends and capital gain distributions. The Russell Midcap Index is an un-

managed index generally representative of the market for the stocks of mid-size U.S. companies and

the Russell 2000 Index is an unmanaged index generally representative of the market for the stocks

of smaller size U.S. companies. The Standard and Poor’s 500 Index is an unmanaged index generally

representative of the market for the stocks of large size U.S. companies.

COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN FAM VALUE FUND,

THE RUSSELL MIDCAP INDEX, THE S&P 500 INDEX AND THE RUSSELL 2000 INDEX

		Value of		Value of		Value of		Value of
	S&P	10,000	Russell 2000	10,000	FAM VX	10,000	Russell	10,000
	Return	Invested	Return	Invested	Return	Invested	Midcap	Invested
1987	5.25%	10,525	-8.77%	9,123	-17.40%	8,260	0.23%	10023
1988	16.61%	12,273	24.89%	11,394	35.50%	11,192	19.80%	12008
1989	31.69%	16,163	16.24%	13,244	20.32%	13,467	26.27%	15162
1990	-3.11%	15,660	-19.50%	10,661	-5.36%	12,745	-11.50%	13418
1991	30.47%	20,432	46.05%	15,571	47.63%	18,815	41.51%	18988
1992	7.60%	21,984	18.42%	18,439	25.08%	23,534	16.34%	22091
1993	10.06%	24,196	18.90%	21,924	0.21%	23,583	14.30%	25250
1994	1.31%	24,513	-1.82%	21,525	6.82%	25,192	-2.09%	24722
1995	37.53%	33,713	28.44%	27,647	19.71%	30,157	34.45%	33239
1996	22.95%	41,450	16.54%	32,220	11.23%	33,544	19%	39554
1997	33.35%	55,273	22.37%	39,427	39.06%	46,646	29.01%	51029
1998	28.58%	71,070	-2.55%	38,422	6.19%	49,533	10.09%	56178
1999	21.04%	86,023	21.26%	46,591	-4.84%	47,136	18.23%	66419
2000	-9.10%	78,195	-3.03%	45,179	19.21%	56,191	8.25%	71899
2001	-11.88%	68,906	2.49%	46,304	15.07%	64,658	-5.62%	67858
2002	-22.09%	53,684	-20.48%	36,821	-5.33%	61,212	-16.19%	56872
2003	28.67%	69,076	47.25%	54,219	24.98%	76,503	40.06%	79655
2004	10.88%	76,591	18.33%	64,157	16.86%	89,401	20.22%	95761
2005	4.91%	80,352	4.55%	67,076	5.56%	94,372	12.65%	107875
2006	15.79%	93,039	18.37%	79,398	8.73%	102,611	15.26%	124336
2007	5.49%	98,147	-1.57%	78,151	-0.79%	101,800	5.60%	131299
2008	-37.03%	61,803	-33.79%	51,744	-28.68%	72,604	-41.46%	76863
2009	26.46%	78,156	27.17%	65,803	22.18%	88,707	40.48%	107977
2010	14.76%	89,692	26.85%	83,471	17.02%	103,805	25.48%	135489
2011	2.14%	91,612	-4.18%	79,982	-0.41%	103,380	-1.55%	133389
2012	16.00%	106,269	16.35%	93,059	11.39%	115,155	17.28%	156439
2013	32.44%	140,743	38.82%	129,184	32.96%	153,110	34.76%	210817

This information represents past performance of the FAM Value Fund and is not indicative of future

results. The investment return and the principal value of an investment will fluctuate so that an

investor’s shares, when redeemed, may be worth more or less than the original cost.

Average Annual Total Returns as of December 31, 2013

Life of Fund

1-Year

3-Year

5-Year

10-Year

(1/2/87)

FAM Value Fund

32.96%

13.83%

16.09%

7.18%

10.64%

Russell Midcap Index

34.76%

15.88%

22.36%

10.22%

11.95%

Russell 2000 Index

38.82%

15.67%

20.08%

9.07%

9.94%

S&P 500 Index

32.44%

16.19%

17.90%

7.37%

10.28%

The graph and performance table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of

Fund shares.

FAM Value Fund — Portfolio Data (Unaudited)

December 31, 2013

TOP TEN EQUITY HOLDINGS

COMPOSITION OF TOTAL INVESTMENTS

(% of Total Investments)

Property & Casualty Insurance

12.4%

Brown & Brown, Inc.

4.7%

Machinery & Equipment

9.1%

Ross Stores, Inc.

4.6%

Banking

7.9%

IDEX Corporation

4.5%

Retail Stores

7.6%

Mednax, Inc.

4.4%

Electronic Equipment

5.6%

Markel Corporation

4.0%

Money Market Fund

5.0%

White Mountains Insurance

3.9%

Insurance Agency

4.7%

Group, Ltd.

Health Care Services

4.4%

Zebra Technologies Corp. - Class A

3.7%

Real Estate Development

4.3%

Berkshire Hathaway, Inc. - Class A

3.1%

Oil & Gas Exploration

4.3%

Illinois Tool Works

3.0%

Healthcare Equipment/Devices

3.5%

Brookfield Asset Management,

3.0%

Inc. - Class A

Diversified Manufacturing

3.1%

Automotive

3.0%

Transportation

3.0%

Investment Management

2.9%

Restaurants

2.7%

Life Insurance

2.3%

Advertising Agencies

2.2%

Veterinary Diagnostics

2.2%

Health Care Distribution

2.0%

Other

7.8%

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 op-

eration 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.

FAM Value Fund — Statement of Investments

December 31, 2013

VALUE

COMMON STOCKS (95.0%)

Advertising Agencies (2.2%)

The Interpublic Group of Companies, Inc.

• provides advertising and marketing services

1,182,700

$ 20,933,790

Automotive (3.0%)

CarMax, Inc.*

• specialty retailer of used cars and light-trucks in the USA

600,000

28,212,000

Auto Parts & Equipment (1.4%)

Autozone, Inc.*

• retail and distribution of automotive replacement parts and

accessories

27,700

13,238,938

Banking (7.9%)

Bank of the Ozarks, Inc.

• retail and commercial banking services in the Southeast

253,000

14,317,270

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

18,675,000

M&T Bank Corporation

• commercial and retail banking services to individuals, businesses, cor-

porations and institutions in the Northeast and Mid-Atlantic

95,000

11,059,900

First Financial Holdings, Inc.

• operates as the holding company for SCBT that provides retail and com-

234,110

15,570,656

mercial banking services in the Carolinas

TCF Financial Corporation

• banking services to individual and corporate customers in northern and

902,163

14,660,149

central California

74,282,975

Commercial Services (1.5%)

McGrath RentCorp

• modular building and electronic test equipment rentals,

347,000

13,810,600

subsidiary classroom manufacturing

Diversified Manufacturing (3.1%)

Illinois Tool Works

• manufactures engineered products such as plastic and metal

339,950

28,582,996

components and fasteners

See Notes to Financial Statements

FAM Value Fund — Statement of Investments continued

December 31, 2013

VALUE

Electronic Equipment (5.6%)

FLIR Systems, Inc.

• designs, manufactures, and markets thermal imaging systems worldwide

564,728

$16,998,313

Zebra Technologies Corp. - Class A*

• designs, manufactures and supports bar code label printers

648,502

35,070,988

52,069,301

Health Care Distribution (2.0%)

Patterson Companies, Inc.

• operates as a distributor serving dental, companion-pet, veterinarian,

445,000

18,334,000

and rehabilitation supply markets in the USA and Canada

Health Care Equipment/Devices (3.5%)

StrykerCorp.

• operates a medical technology company offering Orthopedic Implants

266,000

19,987,240

and MedSurg Equipment

Waters Corporation*

• designs, manufactures, sells and services analytical instruments used

125,000

12,500,000

in a wide range of scientific research

32,487,240

Health Care Services (4.4%)

Mednax, Inc.*

• health care services company focused on physician services for

776,400

41,444,232

newborn, maternal-fetal and other pediatric subspecialty care

Home Furnishings (1.6%)

Mohawk Industries*

• produces floor covering products for residential and commercial applications

103,100

15,351,590

Insurance Agency (4.7%)

Brown & Brown, Inc.

• one of the largest independent general insurance agencies in the U.S.

1,409,696

44,250,357

Investment Management (2.9%)

Franklin Resources, Inc.

• provides investment management and fund administration

480,000

27,710,400

services as well as retail-banking and consumer lending services

See Notes to Financial Statements

FAM Value Fund — Statement of Investments continued

December 31, 2013

VALUE

Life Insurance (2.3%)

Protective Life Corporation

• individual and group life/health insurance and investment contracts

432,100

$ 21,890,186

Machinery & Equipment (9.1%)

Donaldson Company, Inc.

• designs, manufactures and sells filtration systems and replacement parts

642,400

27,918,704

Graco, Inc.

• supplies systems and equipment for the management of fluids in

180,550

14,104,566

industrial, commercial and vehicle lubrication applications

IDEX Corporation

• manufactures proprietary, highly engineered industrial products and pumps

576,750

42,592,987

84,616,257

Oil & Gas Exploration (4.3%)

EOG Resources, Inc.

• engages in the exploration, development, production and marketing of

161,000

27,022,240

natural gas and crude oil

Evolution Petroleum

• engages in the acquisition, exploitation, and development of properties

285,646

3,524,872

for the production of crude oil and natural gas

Southwestern Energy Co.*

• energy company that engages in the exploration, development, and

237,000

9,321,210

production of natural gas and crude oil

39,868,322

Property & Casualty Insurance (12.4%)

Berkshire Hathaway, Inc. - Class A*

• holding company for various insurance and industrial companies

163

28,997,700

Loews Corporation

• operates primarily as a commercial property and casualty insurance company

259,700

12,527,928

Markel Corporation*

• sells specialty insurance products

64,850

37,635,698

White Mountain Insurance Group, Ltd.

• personal property and casualty insurance, and reinsurance

61,693

37,205,814

116,367,140

See Notes to Financial Statements

FAM Value Fund — Statement of Investments continued

December 31, 2013

VALUE

Publishing (1.3%)

John Wiley & Sons, Inc. - Class A

• publisher of print and electronic products, specializing in scientific,

technical, professional and medical books and journals

217,000

$ 11,978,400

Real Estate Development (4.3%)

Brookfield Asset Management, Inc. - Class A

• asset management holding company that invests in property,

735,000

28,540,050

power and infrastructure

Forest City Enterprises, Inc.*

• engages in the ownership, development, management and acquisition of

600,000

11,460,000

commercial and residential real estate and land

40,000,050

Restaurants (2.7%)

YUM! Brands, Inc.

• quick service restaurants including KFC, Pizza Hut and Taco Bell

330,600

24,996,666

Retail Stores (7.6%)

Bed Bath & Beyond, Inc.*

• national chain of retail stores selling domestic merchandise such as bed

345,600

27,751,680

linens, bath items, kitchen textiles and home furnishings

Ross Stores, Inc.

• chain of off-price retail apparel and home accessories stores

572,844

42,923,201

70,674,881

Semiconductors (1.2%)

Microchip Technology, Inc.

• develops, manufactures and sells semiconductor products for various

260,000

11,635,000

embedded control applications

Specialty Chemical (0.6%)

Sigma-Aldrich Corporation

• develops, manufactures, purchases and distributes high quality

60,000

5,640,600

chemicals, biochemicals and equipment available throughout the world

See Notes to Financial Statements

FAM Value Fund — Statement of Investments continued

December 31, 2013

VALUE

Transportation (3.0%)

Forward Air Corporation

• provides surface transportation and related logistics services to the

389,233

$ 17,091,221

deferred air freight market in North America

Knight Transportation

• transportation of general commodities in the U.S.

576,900

10,580,346

27,671,567

Utilities/Gas (0.2%)

Questar Corporation

• natural gas utility in the state of Utah

73,100

1,680,569

Veterinary Diagnostics (2.2%)

VCA Antech, Inc.*

• provides veterinary services, diagnostic testing and sells diagnostic im-

aging equipment and related products/services to the veterinary market

662,200

20,766,593

Total Common Stocks (Cost $356,898,962)

$888,494,650

TEMPORARY INVESTMENTS (5.0%)

Money Market Fund (5.0%)

Invesco Short Term Treasury Fund (Institutional Class)

(0.02%)**

46,820,866

Total Temporary Investments (Cost $46,820,866)

$ 46,820,866

Total Investments (Cost $403,719,828)

$ 935,315,516

* Non-income producing securities

** The rate shown represents the effective yield at 12/31/13

See Notes to Financial Statements

FAM Equity-Income Fund

December 31, 2013

Dear Fellow FAM Equity-Income Fund Shareholder,

• On average, the Fund’s holdings increased their dividends by a 9.95% compounded annual-

ized growth rate over the past five years (as of 12/31/13), compared to 6.65% for the Russell

Midcap Index and 5.72% for the S&P 500 Index.

• 78% of the holdings in the Fund raised their dividend over the last 12 months.

Performance Detail

2013 was a very good year, for equities. The stock market started the year strongly and that

strength continued throughout 2013 with the market hitting new, all-time highs many times. The

FAM Equity-Income Fund participated nicely in this vibrant market returning nearly 30% for the

full year.

As of 12/31/2013

1 Year

3 Year

5 Year

10 Year

15 Year

FAM Equity-Income Fund (FAMEX)

29.79%

15.45%

17.03%

6.79%

7.57%

S&P 500 Index

32.44%

16.19%

17.90%

7.37%

4.68%

Russell Midcap Index

34.76%

15.88%

22.36%

10.22%

n/a

Russell 2000 Index

38.82%

15.67%

20.08%

9.07%

8.42%

FAM Equity-Income Fund’s investment objective is to provide current income as well as long-term

capital appreciation by investing primarily (at least 80% of its total assets) in income-producing

stocks that pay dividends. Many of our holdings have a history of growing their dividend over time.

Dividend strategies generally lagged the broader market in 2013. This underperformance is par-

tially due to the strong momentum of the market and investor preference for growth stocks. For

example, there was a 71% increase in the number of companies that had initial public offerings

(IPOs) during the year, with the average performance of those IPOs up 39% compared to the return

of the S&P 500 Index of 32.44%. These IPOs certainly garnered investor attention.

A second contributor to the relative underperformance of dividend strategies was the rise in inter-

est rates, which occurred in the second half of the year. Rising interest rates had a negative effect

on two specific areas—real estate investment trusts (REITs) and utilities. The MSCI US REIT Index

increased only 2.5% for the year and the iShares US Utilities increased 14.8% for the year, both well-

below the market average. As such, we limited our allocation to interest rate sensitive industries,

such as REITs and utilities, to a few specific companies where we concluded that the future growth

potential of the opportunity more than compensated for the risk. The Fund had 6.8% of its assets in

REITs and 4.4% in utilities as of December 31, 2013.

FAM Equity-Income Fund

Best Performers

The Fund’s best performer, on a dollar-weighted basis, was US Ecology which returned 59.9% for

the year and contributed $3.4 million. This was driven by higher-than-expected disposal volumes

coupled with higher prices at their hazardous waste sites. Earnings for 2013 are expected to grow

28%. Acquisitions from the last few years added nicely to results. Management completed a second-

ary offering in the fourth quarter and expects to use the proceeds to make future acquisitions. This

was the second-largest holding in the Fund at year-end.

The second-best performer, on a dollar-weighted basis, was IDEX Corporation returning 60.6% and

contributing $3.23 million to the Fund. This was driven by multiple expansion as well as 14% earn-

ings growth. IDEX is one of the top-five most profitable industrial companies in the machinery and

equipment sector. The management team is extremely talented and believes that they can increase

profitability even further. IDEX’s dividend increased 15.6% over the last 12 months and, at year-

end, it was the fourth-largest holding in the Fund.

Ross Stores was the third-best performer and returned 39.8%, contributing $2.16 million to the val-

ue of the Fund. Despite having tough comparisons against last year, the company was able to again

generate positive same-store sales as well as open additional shops. Management grew the store

base roughly 6.5% and bought back nearly 3.5% of the outstanding shares. The dividend was raised

21% this year and 258% over the last five years. Ross was the third-largest holding in the Fund.

Worst Performers

The Fund’s worst performer, on a dollar-weighted basis, was Digital Realty Trust declining -23.1%

for the year, which detracted -$1.2 million from the Fund’s value. Most of the decline was attribut-

able to management communicating poorly with investors and, to a lesser extent, subpar execution

in certain areas. While Digital Realty grew earnings, management reduced guidance a number of

times. Part of the drop was due to REITs becoming unpopular with investors as interest rates rose

in the second half of the year. We believe management is taking the necessary steps to get growth

back on track and communicate better with investors in order to establish proper expectations. We

took advantage of the downturn by adding to our position in the second, third, and fourth quarters.

This is one of the most undervalued REITs, by far, in the sector.

Winthrop Realty Trust, another REIT, was the second-worst performer declining -13% from our

cost. This position subtracted -$390,000 from the Fund’s value. The company completed a second-

ary stock offering to invest in new real estate ventures which should increase its value. In the short

term, however, the offering drove the stock price down by the amount of the dilution.

The third-worst performer was Landauer, down -10.3% for the year and subtracting -$172,000 from

the Fund’s value. Landauer is in the midst of a transformation from providing radiation measure-

ment services to healthcare institutions, to offering a full lineup of radiation products and services

to different end markets. The makeover, which began in 2009, has been implemented through

several acquisitions and has resulted in the creation of two additional business segments — Medi-

cal Physics and Medical Products. In 2013 the company faced challenges integrating and executing

strategic changes in both of the new segments. Nonetheless, we expect to see improved operations

in 2014.

FAM Equity-Income Fund

Dividend Growth Strategy

There has been extensive research conducted on the benefits of investing in companies that pay

dividends. In fact, Standard & Poors published an extensive article in 2013, “Dividend Investing

And A Look Inside The S&P Dow Jones Dividend Indices,” on how dividends contribute to investor

returns. They concluded that over the period of 1926 to 2012, dividend income contributed approxi-

mately one-third to equity returns for the S&P 500. We view these annual dividends as giving the

investor a “head start” on investment returns.

In the FAM Equity-Income Fund, every holding in the portfolio pays a dividend. We invest in a mix

of high dividend-paying companies as well as ones that are growing their dividend quickly. We

look at how dividends paid to shareholders are growing over the last five-year period. On average,

the Fund’s holdings increased their dividends by a 9.95% compounded annualized growth rate over

the past five years (as of 12/31/13). This growth is broad-based across the portfolio. In fact, 78% of

the companies represented in the Fund raised their dividend in the last 12 months.

We favor investing in businesses that are growing their dividends quickly because it means the

underlying operation is expanding. It also means that they are generating more cash than needed

to reinvest back into the company. These growing dividends contribute to the price appreciation of

a stock.

Outlook

We believe stocks should continue to do well over the coming years. Even with the strong per-

formance of the market in 2013, we are still finding investment opportunities in high-quality

companies that have the ability to increase their dividends. If interest rates continue to climb, we

estimate that companies with a growing dividend should perform better than those with static divi-

dends—this is the pattern we have seen for the past six months. We also think that because of 2013

performance, we are either in a stock pickers’ market or very close. This tends to happen when the

stock market gets close to its intrinsic value. At that point, investors need to find pockets of oppor-

tunity and look for specific investment prospects rather than just owning the entire market.

A stock-pickers’ investment landscape suits us well because we employ a bottom-up investment ap-

proach. What this means is that our Investment Research Team analyzes the companies behind the

stocks to gain unique insights. We use this firsthand knowledge and our time-tested process to help

mitigate risk and achieve our shareholders’ long-term financial goals.

As always, we continue to work diligently on your behalf and appreciate your continued support.

Paul Hogan, CFA

Thomas O. Putnam

Co-Manager

Co-Manager

FAM Equity-Income Fund

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 mate-

rial 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.

FAM Equity-Income Fund - Performance Summary (Unaudited)

Annual Total Investment Returns:

APRIL 1, 1996 TO DECEMBER 31, 2013

FAM EQUITY-INCOME FUND RUSSELL MIDCAP INDEX

RUSSELL 2000 INDEX

S&P 500 INDEX

FISCAL YEAR

TOTAL RETURN

4/1/96-12/31/96

11.84%

12.00%

10.30%

15.20%

1997

26.90%

29.01%

22.37%

33.35%

1998

4.67%

10.09%

-2.55%

28.58%

1999

-6.98%

18.23%

21.26%

21.04%

2000

17.18%

8.25%

-3.03%

-9.10%

2001

20.79%

-5.62%

2.49%

-11.88%

2002

-2.25%

-16.19%

-20.48%

-22.09%

2003

20.30%

40.06%

47.25%

28.67%

2004

14.04%

20.22%

18.33%

10.88%

2005

5.75%

12.65%

4.55%

4.91%

2006

6.57%

15.26%

18.37%

15.79%

2007

-3.64%

5.60%

-1.57%

5.49%

2008

-29.04%

-41.46%

-33.79%

-37.00%

2009

21.43%

40.48%

27.17%

26.46%

2010

17.47%

25.48%

26.85%

14.76%

2011

6.79%

-1.55%

-4.18%

2.11%

2012

11.02%

17.28%

16.35%

16.00%

2013

29.79%

34.76%

38.82%

32.44%

FAM Equity-Income Fund - Performance Summary (Unaudited)

The chart below depicts the change in value of a $10,000 investment in the FAM Equity-Income Fund

since inception on April 1, 1996, as compared with the growth of the Russell Midcap Index, the Fund’s