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, 2015
---------------------
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.
FAM Funds
In-depth research. Insightful investing
Semi-Annual Report
June 30, 2015
Value Fund
Equity-Income Fund
Small Cap Fund
Table of Contents
Chairman’s Commentary
1
FAM Value Fund
Letter to Shareholders
4
Portfolio Data
10
Statement of Investments
11
FAM Equity-Income Fund
Letter to Shareholders
16
Portfolio Data
22
Statement of Investments
23
FAM Small Cap Fund
Letter to Shareholders
27
Portfolio Data
31
Statement of Investments
32
Statement of Assets and Liabilities
36
Statement of Operations
37
Statement of Changes in Net Assets
38
Notes to Financial Statements
40
Expense Data
51
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, 2015
Dear Fellow Shareholder,
One of the silver linings of a long, hard winter is that it makes you appreciate the summer
all the more. Take a look at the number of families along the shores and boats in the water
at Lake George this summer and you’ll know it was another one of those winters here in
the Northeast. Across the Atlantic, Europeans are just beginning their summer holiday
season. One group — the citizens of Greece — is experiencing a holiday of a different
kind: a bank holiday. The showdown between Greece and its neighbors was just one of
many factors influencing the financial markets in the first half of 2015. However, while
various world economies, including our own, are certainly facing challenges, there are
plenty of silver linings for long-term patient investors.
The S&P 500 Index, an index of stock prices of the largest 500 corporations in the United
States by market capitalization, was essentially flat for the first half of 2015. Including
dividends, the S&P 500 Index returned 1.23%. Stock prices of smaller company stocks, rep-
resented by the Russell 2000 Index, rose 4.75%. The S&P 500 began 2015 on a down note,
falling 2.3% in January. Then, in February, it rebounded and remained in a range between
flat and up 3.5% until it fell at the end of June. We said at the beginning of this year that
we thought it improbable that the broad U.S. stock markets would repeat the double-digit
returns of 2012 to 2014 and so far this notion seems to be correct. Against this market
backdrop, our three mutual funds all had positive returns (please read the details pro-
vided in the Fund letters that follow).
We still characterize U.S. stocks as “fairly” priced meaning stock prices are in line with
what we think the businesses are worth. Bargains are as scarce as they were at the begin-
ning of the year, maybe more so. This does not deter us, it energizes us! Markets tend to be
fairly priced (often overpriced) over time. So, from this perspective, the environment
feels more “normal” than it has in some time.
Our focus on being long-term investors in a small number of high-quality companies that
possess solid balance sheets and skilled management means we don’t need a multitude of
bargains to preserve and grow your wealth over the long term — just a handful. We roll up
our sleeves and diligently analyze operations thoroughly, company-by-company, looking
for great ones that happen to be unloved, misunderstood, or undiscovered at the moment.
This is what we love to do! We believe that our patient pursuit of capital preservation and
growth is well-suited for all environments, but even more so for this one.
We unearthed a few of these bargains in the first half of the year, investing in six new
companies among the three mutual funds. Our new holdings are diverse, including an
industrial gas supplier (Airgas, Inc.), a watchmaker (Fossil Group, Inc.), a manufacturer of
specialty materials and chemicals (Ferro Corporation), and a couple of small banks. We
1
Chairman’s Commentary
sold five holdings that had either appreciated beyond what we felt they were worth or, in
one case, turned out to be a mistake (Rosetta Stone, Inc.). With these, along with other
portfolio actions, we believe we improved both the return potential of the Funds and the
aggregate quality of our holdings.
The stock market was relatively calm for most of the first six months of the year until
problems in the Eurozone climaxed and the S&P 500 Index dropped 2.1% on June 29.
Stocks hadn’t moved +/-2% all year before this event occurred. Greece versus Germany
wasn’t the only spectacle that mesmerized investors. The focus on when and how fast the
Federal Reserve would raise interest rates, the fluctuation of oil prices, the pace of U.S.
economic recovery, and the slowing growth of the BRICs (Brazil, Russia, India, and China)
also stirred emotions and moved markets. These, and other as of yet unknown issues, will
continue to be factors in the coming months. We wouldn’t be surprised if stock prices
become more volatile as a result. For bargain hunters, volatility has a silver lining —
opportunity.
We are often asked about global macroeconomic and geopolitical events and how they
might affect our investment strategy. Of course we are always happy to give our view, for
what it’s worth. But our answer to the second part is some form of “they don’t.” Those
who do not know us well are sometimes incredulous. They assume that investors’ strate-
gies must be contingent on these events since they dominate the headlines. The key is,
“What type of investor are you?”
I liken it to boating. To say one is a boater is ambiguous. There is a vast difference
between, say, a sailor and a powerboater. Sailors assess the strength and direction of the
prevailing wind and position their sails in an attempt to harness it; the winds will deter-
mine where they go and how fast they reach their destination. A powerboater’s focus is
on their motor. Winds and conditions are a factor, but a strong and reliable motor will
carry them to their destination. Investors who “own the market” by being widely diversi-
fied in hundreds of stocks are like sailors. Their returns over a typical holding period will
be largely determined by environmental factors like Greece, Federal Reserve movements,
and oil prices. It is no wonder they monitor these events like a sailor does the wind. By
contrast, we are more like powerboaters. Our potential returns over our investment hori-
zon will be determined by the collective growth in value of the relatively small number of
businesses in which we invest. We spend much less time on deck assessing the wind, and
much more time in the engine room fine-tuning our engines. We spend hours examining
SEC filings, visiting our holdings, and checking in with their competitors to try to ensure
that our portfolios have the horsepower to carry us through all conditions.
For the patient, long-term investor there are silver linings amidst the often gloomy finan-
cial headlines. The situation in Europe is unprecedented and its outcome uncertain. We
are sympathetic to the hardships borne by the Greeks. For U.S. companies, the stronger
2
Chairman’s Commentary
dollar resulting from unrest in the Eurozone is a headwind to real and reported revenue
growth. However, many enterprises, including our portfolio holdings, are using the
strong dollar to make value-enhancing acquisitions overseas (similar to European vaca-
tions, European businesses have recently become much cheaper). So far, the drop in oil
prices has created a headwind for U.S. economic and corporate earnings growth, but has
made high-quality energy-related names much cheaper. We are building a list of these
great companies and plan to invest in them should they hit our buy prices. Higher interest
rates may be a headwind for some corporations, but not the cash-generating, low-lever-
age operations in which we invest. Higher rates, in fact, may weaken their competitors.
Moreover, higher rates should improve the earnings power of our financial holdings. The
bottom line is, even with these challenges, the managements we have invested in con-
tinue to grow their businesses and find new ways to create value.
So this summer we hope you remember that while there are certainly challenges world-
wide, there are plenty of silver linings for long-term patient investors. Thank you very
much for your ongoing trust in us.
Thomas O. Putnam, Founder & Chairman
Research Team
Andrew F. Boord
John D. Fox, CFA
Kevin D. Gioia, CFA
Paul C. Hogan, CFA
Marc D. Roberts, CFA
Drew P. Wilson, CFA
3
FAM Value Fund
June 30, 2015
Dear Fellow Value Fund Shareholder,
The S&P 500 Index hit several new highs during the first half of the year, but declined from
the most recent peak in late May to finish up slightly at June 30, 2015. The last few days of the second quarter were particularly weak after the government in Greece could not come to an agreement with its creditors for loan payments due at the end of the month. While there is turmoil in Europe, the economy in the United States looks good despite some weather-induced slowdowns during a long winter earlier this year. American business continues to do well with 2015 projected to be another year of record profits for companies represented in the S&P 500 Index.
Performance Detail
At June 30, 2015 the net asset value of the FAM Value Fund was $67.25. This represents an increase of 1.01% from the beginning of the year. For comparison, the S&P 500 Index increased 1.23% and the Russell Midcap Index increased 2.35%.
Best Performers
The best performer, on a dollar-weighted basis, for the six months ended June 30, 2015 was Markel Corporation with more than $7.64 million in gains. Markel writes specialty insurance and reinsurance globally. Financial results for the six months ended March 31, 2015 were quite strong, propelling the stock price up 17% year-to-date. Longer-term results have also been terrific. The main way to evaluate an insurance company’s performance is growth in book value per share over time. Book value is the net worth of the business and in order to do well that net worth must grow. Since our first purchase of Markel stock in March 2001, it has compounded its book value at 12.25% per year for 14 years.
The second-best performer was MEDNAX, Inc. with a gain of $6.21 million. MEDNAX is a health care service company that runs neonatal intensive care units at hospitals and provides anesthesia services. In May of 2015, MEDNAX announced the acquisition of vRad which will allow them to enter into the radiology market, their third business segment. We estimate that this acquisition should add $200 million of new sales over the next 12 months and have a positive impact on earnings per share. MEDNAX’s core business continues to perform well with the most recently reported quarter showing double-digit earnings per share growth.
The third-best performer was YUM! Brands, Inc. with a gain of almost $5.70 million. While
YUM! continues to rebound from an earnings decline brought on by food quality issues in
4
FAM Value Fund
China, the large gain in the stock this year is due to the disclosure that a number of activist
investors have taken a position in YUM!. Activist investors buy shares of a company that they think can be managed better or can increase shareholder value by making changes to the structure of the operation. In this case it is being suggested to YUM! management that they spin out their fast growing operation in China into a separate business. The idea is that the stock prices for two distinct YUM! Brands, one in China and one everywhere else in the world, should be worth more than the current form of having them as one company.
Worst Performers
The worst performer, on a dollar-weighted basis, with a loss of almost -$4.00 million was Knight Transportation, Inc. While the stock price is down from a peak reached in March, we expect 2015 to be a good year for Knight Transportation with sales and earnings expected to grow 15% and 20%, respectively.
The second-worst performer was Berkshire Hathaway Inc. with a loss of more than -$3.50
million. Berkshire is the holding company managed by world-renowned investor Warren Buffett. The stock price has declined 9% year-to-date, but the fundamentals of the business remain very strong. The company has unmatched financial strength with $258 billion in net worth and $58 billion in cash. Berkshire owns franchise businesses in the insurance, railroad, and utility industries and continues to search for acquisitions around the globe.
The third-worst performer was Franklin Resources, Inc. with a loss -$3.04 million. Frank-
lin Resources is an investment management company. The firm’s brands include Franklin
Funds and Templeton Funds. The stock price has been relatively flat for the last two years
as the net sales of their mutual funds have been weak. Franklin has a fantastic balance sheet with $8 billion of cash and considerable earnings power even in this slow period.
Portfolio Activity
Purchases
We purchased three new companies during the first half of the year: Fossil Group, Inc., Keysight Technologies, Inc., and Xilinx, Inc.
Fossil Group designs, markets, and distributes fashion accessories, primarily watches. It has an extremely diverse product and distribution portfolio. The company’s watch brands include Fossil, Michael Kors, Kate Spade, Burberry, and many others. Their products are sold in Fossil stores, department stores, jewelry stores, and online. The financial profile is excellent with high profit margins, returns on equity in excess of 25%, and a strong balance sheet. The stock price has declined around 30% in the last year due to some weak sales
5
FAM Value Fund
results in some of its distribution points, particularly department stores. In addition, Fossil’s international sales have been impacted by the strong U.S. dollar. The combination of these recent reports and concern about a new entrant into the watch market has hurt the stock. We believe these events are temporary and that Fossil has significant growth opportunity to add additional brands and grow in Asia. Finally, we find ourselves aligned with the CEO who takes no salary and owns 12% of the company stock.
Keysight Technologies, Inc. provides electronic measurement solutions to the communications and electronics industries. The test equipment business was the original operation of the Hewlett-Packard Corporation in Palo Alto, CA. While Hewlett-Packard has been around for more than 50 years, Keysight is relatively new as a public company. Keysight became an independent business in October, 2014. We believe that as an independent, management should be able to focus their resources on product development and growth. Keysight meets our financial criteria with 20% operating margins, considerable free cash flow generation, and a strong balance sheet.
Xilinx, Inc. is a semiconductor company that designs and markets programmable circuits
and chips. We purchased a position for the Fund in January 2015 after a disappointing earnings report caused the stock to decline below what we thought it was worth. Xilinx is an extremely profitable business with a gross profit margin of almost 70%. It generates significant free cash flow which has been used to pay dividends and reduce the shares outstanding. Additionally, Xilinx has an extremely strong balance sheet with cash balances in excess of $3 billion. It is one of two companies that specialize in programmable chips. The other, Altera, was recently acquired by Intel Corporation and we would not be surprised to
see another business purchase Xilinx.
Sales
We exited our entire position in two holdings during the year: Bed Bath & Beyond Inc. and
Protective Life Corporation.
Bed Bath & Beyond is a well-known retailer that specializes in merchandise for the home. The company’s brands include Bed Bath & Beyond, Christmas Tree Shops, and buybuy Baby. We owned Bed Bath & Beyond stock for many years. We originally liked the company’s strong balance sheet and management’s skill at merchandising in the stores. In recent years, we have become concerned about the long-term profitability of the business due to increased competition from online retailers. Not only are online retailers taking sales from physical stores, but the increased competition is requiring retailers, like Bed Bath & Beyond, to invest in their own online capabilities. We believe the combination of these two forces will reduce profit margins over time.
Protective Life was acquired by a Japanese insurance company on February 1, 2015 and the
Fund received $70 a share in cash for its shares.
6
FAM Value Fund
Outlook
While preparing to write this letter, we read some of our letters from years past. We were
struck by the June 30, 2012 letter that listed the then current problems in the world as American political gridlock, a slowdown in China, and a debt crisis in Europe. Of course we were amazed by the similarities of this short list to some of today’s problems. Some things
never change. We also note that it would have been a mistake to dwell on these problems and stay out of the stock market until “things looked better.”
In fact, the last three years have been a positive period for U.S. stock investors. Over this time, the S&P 500 Index has increased about 50% in price. This is due to growth in earnings over the last three years and a significant increase in the multiple that investors are willing to put on those earnings. The table below shows: the closing price of the S&P 500 Index, the last 12 months (LTM) trailing earnings per share, and the price-to-earnings multiple that investors were willing to pay for those earnings.
Closing
Price to
Price
S&P 500
Earnings
S&P 500
LTM EPS
Multiple
30-June-12
1,362
102
13.4x
30-June-15
2,063
117
17.6x
Change
51%
15%
32%
While corporate earnings did grow over this period, the majority of investors’ return was due to the change in the price-to-earnings multiple from 13.4 times to 17.6 times earnings. We would view the current multiple as in line with the long-term average (29 years) and conclude that future stock returns will be lower than the last three years and closer to long-term averages.
While the increase in prices over the last few years has made it more difficult to find bar-
gains, we do see corporations increasing their value in a number of ways. Many of the companies that we follow are growing their sales 3% to 6% per year. Overall, the Fund’s holdings are using their substantial cash profits to expand their enterprises. These expansions can take the form of internal investments like building a plant or opening new stores, or external investments like making an acquisition. Many of the Fund’s holdings have completed acquisitions so far this year and we expect this trend to continue. As businesses grow, invest, and generate cash profits they generally become more valuable. It is this value growth that leads to increasing stock prices over time.
7
FAM Value Fund
In order to improve our odds of success of having a portfolio of businesses that can increase their value over time, we focus on companies that meet certain principles. Our most important principle is that the business be financially strong as reflected by a sturdy balance sheet, above-average profitability, and the ability to generate cash profits. We also want these organizations to be well-managed by people who have both skill and integrity. Finally, we like to purchase the stock at a reasonable price compared to what we think the
business is worth.
We have found that companies meeting these criteria can compound wealth over long pe-
riods of time and tend to perform better in market downturns. Once we have found an exceptional business that meets our criteria, our preference is to own that stock for many years — this has two advantages. First, it allows the management to create value over time,
thus increasing the price of the stock. Second, it reduces or defers capital gains taxes that
may be due on the sale of an investment. We believe this long-term, tax-efficient approach
to investing is a great way to build wealth over time.
Table of Long-Term Returns
Average Annual Total Returns as of June 30, 2015
Since
Inception
YTD
1-Year 3-Year
5-Year 10-Year
(1/2/87)
FAM Value Fund (FAMVX)
1.01%
7.77%
16.66% 14.70%
6.79%
10.58%
Russell Midcap Index
2.35%
6.63%
19.26% 18.23%
9.40%
11.87%
S&P 500 Index
1.23%
7.42%
17.31%
17.34%
7.89%
10.18%
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 your partnership with us in FAM Value Fund.
John D. Fox, CFA
Thomas O. Putnam
Co-Manager
Co-Manager
8
FAM Value 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 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.
9
FAM Value Fund — Portfolio Data (Unaudited)
As of June 30, 2015 (Unaudited)
COMPOSITION OF TOTAL INVESTMENTS
Property & Casualty Insurance
13.5%
Machinery & Equipment
8.2%
Money Market Fund
6.6%
Health Care Services
5.8%
Banking
5.7%
Real Estate Development
5.2%
Insurance Agency
4.6%
Retail Stores
4.6%
Health Care Equipment/Devices
4.2%
Investment Management
3.8%
Automotive
3.7%
Transportation
3.6%
Oil & Gas Exploration
3.2%
Diversified Manufacturing
3.1%
Restaurants
3.0%
Computer Software & Services
2.9%
Auto Parts & Equipment
2.8%
Advertising Agencies
2.3%
Health Care Distribution
2.2%
Semiconductors
2.1%
Home Furnishings
2.0%
Other
6.9%
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.
10
FAM Value Fund — Statement of Investments
June 30, 2015 (Unaudited)
SHARES
VALUE
COMMON STOCKS (93.4%)
Advertising Agencies (2.3%)
Interpublic Group of Companies, Inc.
• provides advertising and marketing services
1,182,700
$ 22,790,629
Automotive (3.7%)
CarMax, Inc.*
• specialty retailer of used cars and light-trucks in the USA
550,000
36,415,500
Auto Parts & Equipment (2.8%)
AutoZone, Inc.*
• retail and distribution of automotive replacement parts and accessories
41,700
27,809,730
Banking (5.7%)
Bank of the Ozarks, Inc.
• retail and commercial banking services in the Southeast
506,000
23,149,500
M&T Bank Corporation
• commercial and retail banking services to individuals, businesses, cor-
porations and institutions in the Northeast and Mid-Atlantic
125,000
15,616,250
South State Corporation+
• banking services to individual and corporate customers in the Carolinas
234,110
17,790,019
+Name changed 6/30/14 from First Financial Holdings, Inc.
56,555,769
Commercial Services (1.1%)
McGrath RentCorp
• modular building and electronic test equipment rentals,
347,000
10,559,210
subsidiary classroom manufacturing
Computer Software & Services (2.9%)
CDW Corporation
• provides information technology (IT) solutions
858,000
29,412,240
Diversified Manufacturing (3.1%)
Illinois Tool Works, Inc.
• manufactures engineered products such as plastic and metal
339,950
31,204,010
components and fasteners
See Notes to Financial Statements
11
FAM Value Fund — Statement of Investments continued
June 30, 2015 (Unaudited)
SHARES
VALUE
Electronic Equipment (1.7%)
FLIR Systems, Inc.
• designs, manufactures, and markets thermal imaging systems worldwide
564,728
$ 17,404,917
Health Care Distribution (2.2%)
Patterson Companies, Inc.
• operates as a distributor serving dental, companion-pet, veterinarian,
445,000
21,649,250
and rehabilitation supply markets in the USA and Canada
Health Care Equipment/Devices (4.2%)
Stryker Corporation
• operates a medical technology company offering Orthopedic Implants
266,000
25,421,620
and MedSurg Equipment
Waters Corporation*
• designs, manufactures, sells and services analytical instruments used
125,000
16,047,500
in a wide range of scientific research
41,469,120
Health Care Services (5.8%)
MEDNAX, Inc.*
• health care services company focused on physician services for
776,400
57,539,004
newborn, maternal-fetal and other pediatric subspecialty care
Home Furnishings (2.0%)
Mohawk Industries, Inc.*
• produces floor covering products for residential and commercial applications
103,100
19,681,790
Hotels (1.0%)
Starwood Hotels & Resorts Worldwide Inc.
• operates as a hotel and leisure company
121,000
9,811,890
Insurance Agency (4.6%)
Brown & Brown, Inc.
• one of the largest independent general insurance agencies in the U.S.
1,409,696
46,322,611
See Notes to Financial Statements
12
FAM Value Fund — Statement of Investments continued
June 30, 2015 (Unaudited)
SHARES
VALUE
Investment Management (3.8%)
Franklin Resources, Inc.
• provides investment management and fund administration
480,000
$23,534,400
services as well as retail-banking and consumer lending services
T. Rowe Price Group, Inc.
• asset managment holding company providing its services to individual
190,000
14,768,700
and institutional investors, retirement plans, and financial intermediar-
ies
38,303,100
Machinery & Equipment (8.2%)
Donaldson Company, Inc.
• designs, manufactures and sells filtration systems and replacement parts
642,400
22,997,920
Graco, Inc.
• supplies systems and equipment for the management of fluids in
180,550
12,824,466
industrial, commercial and vehicle lubrication applications
IDEX Corporation
• manufactures proprietary, highly engineered industrial products and pumps
576,750
45,321,015
81,143,401
Oil & Gas Exploration (3.2%)
EOG Resources, Inc.
• engages in the exploration, development, production and marketing of
305,000
26,702,750
natural gas and crude oil
Evolution Petroleum Corporation
• engages in the acquisition, exploitation, and development of properties
185,646
1,223,407
for the production of crude oil and natural gas
Southwestern Energy Company*
• energy company that engages in the exploration, development, and
178,000
4,045,940
production of natural gas and crude oil
31,972,097
Property & Casualty Insurance (13.5%)
Berkshire Hathaway, Inc. - Class A*
• holding company for various insurance and industrial companies
163
33,390,550
Loews Corporation
• operates primarily as a commercial property and casualty insurance company
269,700
10,386,147
See Notes to Financial Statements
13
FAM Value Fund — Statement of Investments continued
June 30, 2015 (Unaudited)
SHARES
VALUE
Property & Casualty Insurance (continued)
Markel Corporation*
• sells specialty insurance products
64,850
$ 51,924,098
White Mountain Insurance Group, Ltd.
• personal property and casualty insurance, and reinsurance
58,693
38,440,393
134,141,188
Publishing (1.2%)
John Wiley & Sons, Inc. - Class A
• publisher of print and electronic products, specializing in scientific,
technical, professional and medical books and journals
217,000
11,798,290
Real Estate Development (5.2%)
Brookfield Asset Management, Inc. - Class A
• asset management holding company that invests in property,
1,102,500
38,510,325
power and infrastructure
Forest City Enterprises Inc. - Class A*
• acquires, owns, develops, and manages commercial and residential real
600,000
13,260,000
estate and land in the United States
51,770,325
Restaurants (3.0%)
YUM! Brands, Inc.
• quick service restaurants including KFC, Pizza Hut and Taco Bell
330,600
29,780,448
Retail (1.0%)
Fossil Group, Inc.*
• designs, develops, markets, and distributes consumer fashion accessories
150,000
10,404,000
Retail Stores (4.6%)
Ross Stores, Inc.
• chain of off-price retail apparel and home accessories stores
939,688
45,678,234
See Notes to Financial Statements
14
FAM Value Fund — Statement of Investments continued
June 30, 2015 (Unaudited)
SHARES
VALUE
Semiconductors (2.1%)
Microchip Technology, Inc.
• develops, manufactures and sells semiconductor products for various
260,000
$ 12,330,500
embedded control applications
Xilinx, Inc.
• worldwide leader of programmable logic solutions
200,000
8,832,000
21,162,500
Technology (0.9%)
Keysight Technologies, Inc.*
• provides electronic measurement solutions to the communications and
300,000
9,357,000
electronics industries in the United States and internationally
Transportation (3.6%)
Forward Air Corporation
• provides surface transportation and related logistics services to the
389,233
20,341,317
deferred air freight market in North America
Knight Transportation, Inc.
• transportation of general commodities in the U.S.
576,900
15,426,306
35,767,623
Total Common Stocks (Cost $369,201,077)
$929,903,876
TEMPORARY INVESTMENTS (6.6%)
Money Market Fund (6.6%)
Invesco Short Term Treasury Fund (Institutional Class)
(0.02%)**
65,427,893
65,427,893
Total Temporary Investments (Cost $65,427,893)
$ 65,427,893
Total Investments (Cost $434,628,970)
$995,331,769
* Non-income producing securities
** The rate shown represents the effective yield at 6/30/15
See Notes to Financial Statements
15
FAM Equity-Income Fund
June 30, 2015
Dear Fellow FAM Equity-Income Fund Shareholder,
Highlights
•
FAM Equity-Income Fund posted a return of 0.68% for the first half of 2015.
•
The 5-Year compounded annualized growth rate of the dividends for the Fund’s
holdings was 11.6% as of 6/30/2015.
The strategy of the Fund is to invest in high-quality companies that pay solid dividends
and we like these dividends to grow over time. This can be a great advantage to sharehold-
ers because the dividend yield, based on the original cost basis of the investment, grows
as well. Our team handpicks each investment in the Fund through our active research
process. Due to the fact that we spend so much time getting to know these investments,
we want them to contribute to the performance of the Fund for many years. We have no
interest in selling holdings just to make a few percentage points of return before moving
on to the next short-term trade. We are looking for investments that can compound over
the long term. This has been the Fund’s philosophy since its inception in 1996.
Performance Detail
Performance
YTD
1 Year
3 Year
5 Year
10
Years
FAM Equity-Income Fund
0.68%
2.92%
14.25%
14.48%
5.90%
Russell Midcap Index
2.35%
6.63%
19.26%
18.23%
9.40%
S&P 500 Index
1.23%
7.42%
17.31%
17.34%
7.89%
For the first half of the year the Fund lagged behind the Russell Midcap Index as well as
the S&P 500 Index. This is partially due to dividend-paying stocks not keeping up with
stocks that don’t pay a dividend as well as some larger holdings reporting disappointing
results. Information Technology was the best performing sector as merger and acquisi-
tion activity drove those stocks higher. Industrials and Consumer Staples also turned in
solid performance. Our investments in the Consumer Discretionary, Utilities, and Finan-
cial sectors were the worst performing sectors.
Best Performers
US Ecology, Inc. was the best performing company in the portfolio, on a dollar-weighted
basis, for the first half of the year with a gain of $1.28 million. US Ecology is a hazard-
16
FAM Equity-Income Fund
ous waste treatment and disposal firm that owns irreplaceable landfill assets. In today’s
world it is nearly impossible to open a new hazardous waste landfill due to the regulatory
and environmental permitting process. In addition, the “not in my backyard” phenom-
enon creates an additional hurdle. Last year, US Ecology made a large acquisition of the
Environmental Quality Company (EQ). Management did a terrific job integrating EQ and
results have been solid since the transaction. US Ecology reported good fourth quarter
results and issued guidance that was above expectations for the full year of 2015. First
quarter results were also solid. This stock was the cheapest in the portfolio at year-end
and we added to the name in November, again making it a top position going into this
year.
Altera Corporation was the second-best performer with a gain of $0.98 million as they
agreed to be acquired by Intel Corporation. Altera is a semiconductor specializing in Field
Programmable Gate Arrays (FPGAs). Two companies command the lion’s share of the
market, Altera and Xilinx, both of which are held in the Fund. We expect that another
company may make an offer to acquire Xilinx at some point since they are the “last man
standing” in the FPGA marketplace.
Flowers Foods, Inc. was the third-best performer with a gain of $0.74 million. Flowers
Foods is digesting the acquisition of Hostess Bread which significantly grew their geo-
graphic reach in the United States. During this process there were duplicate costs that
put pressure on margins in the near term, but they are beginning to abate. The company
is still managing through the reintroduction of Hostess Snack Cakes to the market by a
competitor. Additionally, Flowers Foods is nearing the end of systems upgrades at their
LePage Bakery which they acquired a few years ago. Management continues to use free
cash flow to pay down long-term debt from the Hostess Bread acquisition. We expect
there could be more acquisitions to come as the industry continues to consolidate. Flow-
ers Foods also has a long tradition of paying increasing dividends to shareholders and
this year hiked the dividend again by 15.8%.
Worst Performers
Mattel, Inc. was the worst performer, on a dollar-weighted basis, with a loss of -$1.33
million for the first half of the year. The stock sold off after the company reported poor
holiday sales. Mattel missed in three areas of the Holiday Season: brand communication
was ineffective, innovation was subpar, and their tactic of shifting marketing dollars
more toward the Holiday Season didn’t generate the desired impact on sales.
After two poor years of sales results, the Mattel board felt compelled to replace their CEO.
They named Christopher Sinclair as the permanent CEO. Sinclair has served on the Mattel
board since 1996 and had a successful career as a senior executive for Pepsi Co. Sinclair’s
plan focuses on their core brands, strengthening the supply chain, ramping up in-store
17
FAM Equity-Income Fund
execution, capitalizing on emerging market growth, and continuous cost improvements.
The first quarter results were better than anticipated, however the company will now
have to execute on their current plan in order to build on this early success.
We reduced our position in Mattel after enduring two painful years of poor execution and
stock price declines. We believe the stock is worth more than the current price if the new
CEO is successful, however Mattel doesn’t merit being in the Fund’s Top 10 Holdings. Ad-
ditionally, we believe the dividend may not be increased for quite some time as the busi-
ness undergoes a turnaround. Unfortunately, it is a company where the majority of its
sales are tied to the Holiday Season. If something goes wrong, we have to wait a full year
for the next Holiday Season to come around again to see earnings growth.
McGrath RentCorp was the second-worst performer with a loss of -$0.79 million. The
stock traded down after reporting poor first quarter results as earnings declined 13%
against an easy comparison over the first quarter of 2014. The shortfall was in the TRS
Rentelco business where test and measurement equipment used in deploying next gen-
eration communications networks was sluggish. This type of equipment is rented out at a
high price so any drop-off negatively impacts earnings. Overall, utilization in TRS Rent-
elco has declined for the last three years. Depreciation is the largest expense item for TRS
representing 70%+ of total operational expenses. As a result, management is selling some
equipment to reduce depreciation expense.
The second problem area is Adler Tanks’ sizeable rental rates for large fracking tanks
which have plummeted due to oversupply and lower activity levels in the Exploration
& Production sector. Management expects this situation to persist for the foreseeable
future. They are trying to sell some of these tanks to reduce the bite from depreciation
expense.
The Modular buildings business segment had a terrific quarter and is seeing nice growth
in utilization, although it still remains well below pre-recession levels. Despite the
strength in this business, it wasn’t enough to overcome the weakness in TRS Rentelco and
Adler Tanks.
Management is maintaining their earnings guidance for the year and will put cost-cut-
ting measures in place if they don’t see any improvement in coming quarters. The first
quarter is always their smallest quarter which means the company could recover some
earnings growth as the year progresses. The dividend was increased over the prior year,
but only by a modest 2%.
DSW Inc. was the third-worst performer declining -$0.52 million despite reporting very
good results for their fiscal first quarter that were ahead of Wall Street expectations. In
addition, DSW opened 18 new stores. We had admired DSW for a number of years as a
18
FAM Equity-Income Fund
great retailer with a long runway for growth; however, the stock always looked too expen-
sive so we never bought shares. That changed last year when DSW stumbled and retailers
in general were under pressure from harsh winter weather which caused widespread
store closings. These factors led to an earnings decline which drove the stock price down
to an attractive valuation. We took a position in the company last July with an average
cost of $26.80 per share. At June 30, 2015 the stock price was $33.37, representing a 25%
appreciation in the investment, which includes the decline noted above. For the sake of
comparison, the S&P 500 Index only appreciated 7.4% over the past 12 months.
We believe DSW is capable of sustaining positive same-store sales while adding a signifi-
cant number of new stores. Furthermore, management increased the dividend more than
6% over the prior year and may increase the dividend as cash flow grows.
Portfolio Activity
Purchases
During the first half of the year, we added considerably to our OneBeacon Insurance
Group, Ltd. position. The stock traded down after rumors that OneBeacon was going to be
sold to a Chinese company were not substantiated. Further pressure on the stock came
from fears of future interest rate hikes which tend to drive down the price of higher divi-
dend yielding stocks. At the end of June, the dividend yield on OneBeacon was 5.8%.
We also started buying shares in Airgas Inc., an industrial gas and welding equipment
supplier. You may have noticed their trucks driving on the road. The company provides
gases in both large bulk form as well as smaller cylinders. As the industrial economy in
the United States continues to improve and commercial construction increases, Airgas
should benefit. There is also a significant opportunity to buy other industrial gas compa-
nies because the market is highly fragmented.
Sales
We sold our entire positions of Questar Corp., The Western Union Company, and Physi-
cians Realty Trust because they had performed well and were trading at high valuations.
We trimmed a small percentage of our shares in Altera Corporation after the stock ran
up on speculation that Intel Corporation was in talks to acquire the business. We still hold
the majority of our shares to take full advantage of the generous purchase price from
Intel which materialized several weeks after the rumor.
We also trimmed our position in Digital Realty Trust, Inc. as the stock price moved higher
and it became an outsized position in the portfolio. Over the previous two years, we
19
FAM Equity-Income Fund
increased our position several times after Digital Realty reported disappointing results
quarter after quarter. We were convinced the company was worth more than investors
were willing to pay at the time so we increased our shares substantially at lower and
lower prices. Once Digital Realty started executing better, the share price appreciation
combined with our larger share ownership contributed nicely to the performance of the
Fund.
The position in Mattel, Inc. was trimmed to reduce the exposure of the Fund to any future
declines in the stock price. We still hold shares in Mattel to participate in the turnaround
when it materializes. This remaining position is on a short leash.
Smaller sales include the full sale of Destination Maternity Corporation, as well as trim-
ming positions in Ross Stores, Inc., Sigma Aldrich Corporation, Winthrop Realty Trust,
and Xilinx, Inc.
Outlook
We believe that the underperformance of dividend investing strategies in the recent past
could reverse, which may lead to a period of outsized returns for dividend strategies rela-
tive to the S&P 500 Index. Although past performance is not indicative of future results,
there are a number of examples of reversion to the mean where an underperforming
group of stocks embarked on a period of outperformance and vice versa. For instance:
small-cap underperformance relative to the S&P 500 Index in the late ‘90s; brick and
mortar old economy stock relative to dot.com companies also in the late ‘90s; and the U.S.
stock market relative to emerging markets in the middle part of the last decade.
The majority of holdings in the Fund have a long history of growing their dividends. They
have increased their dividends in both good and bad economic environments, although
growth slowed a bit in more challenging times. Today, we see the companies in the Fund
growing their cash flow which allows them to not only reinvest in their own businesses,
but also increase the dividends paid to shareholders. We believe that stocks are trading
at fair value so future returns should come from the growth of businesses and dividends.
This is why growing dividends is so important.
We continue to work diligently on your behalf.
Paul Hogan, CFA
Thomas O. Putnam
Co-Manager
Co-Manager
20
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 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.
21
FAM Equity-Income Fund — Portfolio Data
As of June 30, 2015 (Unaudited)
COMPOSITION OF TOTAL INVESTMENTS
Retail - Apparel Stores
10.5%
Semiconductors
9.7%
Health Care Equipment/Devices
7.6%
Money Market Fund
6.8%
Machinery & Equipment
6.2%
Consumer Staples
5.2%
Computer Software & Services
4.9%
Hazardous Waste Disposal
4.7%
Oil & Gas Exploration
4.5%
Insurance Agency
4.3%
Banking
4.1%
Property & Casualty Insurance
4.0%
REITS - Data Center
3.8%
Utilities/Water
3.2%
Health Care Distribution
3.1%
Commercial Services
2.9%
Household Durables
2.8%
Technology
2.3%
Toys
2.2%
Investment Management
2.1%
Other
5.1%
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.
22
FAM Equity-Income Fund — Statement of Investments
June 30, 2015 (Unaudited)
SHARES
VALUE
COMMON STOCKS (93.2%)
Banking (4.1%)
M&T Bank Corporation
• commercial and retail banking services to individuals, businesses, corpora-
15,000
$ 1,873,950
tions and other institutions in the Northeast and Mid-Atlantic
South State Corporation+
• banking services to individual and corporate customers in the Carolinas
58,000
4,407,420
+Name changed 6/30/14 from First Financial Holdings, Inc.
6,281,370
Commercial Services (2.9%)
McGrath RentCorp
• modular building and electronic test equipment rentals, subsidiary class-
146,264
4,450,814,
room manufacturing
Computer Software & Services (4.9%)
CDW Corporation
• provides information technology (IT) solutions
217,000
7,438,760
Consumer Staples (5.2%)
Flowers Foods, Inc.
• produces and markets bakery products in the USA
378,850
8,012,677
Hazardous Waste Disposal (4.7%)
U.S. Ecology, Inc.
• provides radioactive, pcb, hazardous and non-hazardous waste services to
148,569
7,238,282
commercial and government customers
Health Care Distribution (3.1%)
Patterson Companies, Inc.
• operates as a distributor serving dental, companion-pet, veterinarian, and
96,000
4,670,400
rehabilitation supply markets in the USA and Canada
See Notes to Financial Statements
23
FAM Equity-Income Fund — Statement of Investments continued
June 30, 2015 (Unaudited)
SHARES
VALUE
Health Care Equipment/Devices (7.6%)
Meridian Bioscience, Inc.
• life science company that manufactures, markets and distributes a broad
78,000
$ 1,453,920
range of innovative diagnostic test kits
Stryker Corporation
• operates a medical technology company offering Orthopedic Implants and
105,500
10,082,635
MedSurg Equipment
11,536,555
Health Care Services (1.2%)
Landauer, Inc.
• provides personal radiation dosimeters and radiation related services
50,000
1,782,000
Household Durables (2.8%)
Tupperware Brands Corporation
• manufacture and sales of preparation, storage, and serving solutions for
66,000
4,259,640
the kitchen and home
Industrial Gases (0.3%)
Airgas, Inc.
• supplies industrial, medical, and specialty gases; and welding equipment
4,000
423,120
and related products
Insurance Agency (4.3%)
Arthur J. Gallagher & Co.
• provides insurance brokerage and risk management services to
137,920
6,523,616
commercial, industrial, institutional, and governmental organizations
Investment Management (2.1%)
Franklin Resources, Inc.
• provides investment management and fund administration
66,900
3,280,107
services as well as retail-banking and consumer lending services
Machinery & Equipment (6.2%)
Donaldson Company, Inc.
• designs, manufactures and sells filtration systems and replacement parts
125,600
4,496,480
IDEX Corporation
• manufactures proprietary, highly engineered industrial products and pumps
62,984
4,949,283
9,445,763
See Notes to Financial Statements
24
FAM Equity-Income Fund — Statement of Investments continued
June 30, 2015 (Unaudited)
SHARES
VALUE
Oil & Gas Exploration (4.5%)
EOG Resources, Inc.
• engages in the exploration, development, production and marketing of
78,000
$ 6,828,900
natural gas and crude oil
Packaged Goods (1.4%)
McCormick & Company, Inc.
• manufactures, markets and distributes spices, seasonings, specialty
27,000
2,185,650
foods and flavorings to the entire food industry.
Property & Casualty Insurance (4.0%)
OneBeacon Insurance Group, Ltd.
• commercial, personal and specialty insurance products
425,866
6,179,316
Publishing (0.3%)
John Wiley & Sons, Inc. - Class A
• publisher of print and electronic products, specializing in scientific,
8,350
453,989
technical, professional and medical books and journals
REITS - Data Center (3.8%)
Digital Realty Trust Inc.
• engages in the ownership, acquisition, development, redevelopment and
87,000
5,801,160
management of technology-related real estate
REITS - Diversified (0.9%)
Winthrop Realty Trust
• real estate investment trust that engages in the ownership and manage-
95,350
1,444,553
ment of real property and real estate-related assets
Retail - Apparel Stores (10.5%)
American Eagle Outfitters, Inc.
• specialty retailer of clothing, accessories, and personal care products
114,000
1,963,080
DSW Inc.
• operates as a branded footwear and accessories retailer
133,201
4,444,917
Ross Stores, Inc.
• chain of off-price retail apparel and home accessories stores
197,686
9,609,517
16,017,514
See Notes to Financial Statements
25
FAM Equity-Income Fund — Statement of Investments continued
June 30, 2015 (Unaudited)
SHARES
VALUE
Semiconductors (9.7%)
Altera Corporation
• manufacturer of programmable logic solutions
61,000
$ 3,123,200
Microchip Technology, Inc.
• develops, manufactures and sells semiconductor
101,000
4,789,925
products for various embedded control applications
Xilinx, Inc.
• worldwide leader of programmable logic solutions
156,414
6,907,242
14,820,367
Specialty Chemical (1.0%)
Sigma-Aldrich Corporation
• develops, manufactures, purchases and distributes high quality
11,000
1,532,850
chemicals, biochemicals and equipment available throughout the world
Technology (2.3%)
National Instruments Corporation
• manufactures and supplies measurement and automation products
122,000
3,594,120
Toys (2.2%)
Mattel, Inc.
• designs, manufactures, and markets various toy products
128,299
3,296,001
Utilities/Water (3.2%)
Aqua America, Inc.
• water and waste water utility
198,750
4,867,387
Total Common Stocks (Cost $83,241,331)
$142,364,911
TEMPORARY INVESTMENTS (6.8%)
Money Market Fund (6.8%)
Invesco Short Term Treasury Fund (Institutional Class)
(0.02%)*
10,315,253
10,315,253
Total Temporary Investments (Cost $10,315,253)
$ 10,315,253
Total Investments (Cost $93,556,584)
$152,680,164
*The rate shown represents the effective yield at 6/30/15
See Notes to Financial Statements
26
FAM Small Cap Fund
June 30, 2015
Dear Fellow FAM Small Cap Fund Shareholder,
Over the last year, while interest rates have fluctuated, they have remained low. This low interest rate environment has hurt “savers,” as they have earned next to nothing in checking/savings accounts, and reduced income from CDs and fixed income securities. Although
interest rates have moved higher from a low in January, we cannot predict when or how much they may rise going forward.
Many of our portfolio companies are akin to the “savers” of the economy as they feature strong balance sheets with excess cash. In fact, many of our holdings have zero debt to accompany this excess cash. While this may be prudent and/or conservative, these companies have been punished on a relative basis compared to those businesses that have been more aggressive with their balance sheets. In particular, aggressive growth stocks that consume capital have benefited disproportionately from this environment of low interest rates and “easy money.”
As a result, over the last year, there has been a large discrepancy between the performance
of growth and value stocks. While all of this difference surely cannot be accounted for by low interest rates and easy money, we doubt that the discrepancy would be quite as large if this environment had not persisted.
As for us, we will stick to what we do best. We seek to invest in prudently-managed compa-
nies, that can weather any environment, at a discount to what we estimate to be their true
economic worth. So far this year, these companies’ stock prices may not have been rewarded
as much as their growth counterparts; however, from the changes in their intrinsic value,
in many cases, you cannot tell the difference. In total, the intrinsic value of our portfolio holdings continues to grow at a healthy rate.
Performance Detail
The FAM Small Cap Fund has lagged its benchmark (Russell 2000 Index) year-to-date (YTD),
while outperforming over the 1 Year, 3 Year, and Since Inception time periods. It has out- performed the S&P 500 Index over all time periods listed in the table below.
27
FAM Small Cap Fund
Since Inception
As of 6/30/2015
3 Year
3/1/2012
YTD
1 Year
(annualized)
(annualized)
FAM Small Cap Fund
3.20%
8.23%
18.80%
17.03%
Russell 2000 Index
4.75%
6.49%
17.81%
15.37%
S&P 500 Index
1.23%
7.42%
17.31%
15.40%
As previously mentioned, growth stocks have been outperforming value. The disparity is
striking YTD. The Russell 2000 Growth Index is up 8.74% while the Russell 2000 Value
Index is up just 0.76%. In fact, growth has outperformed value in each one of the listed
time periods mentioned above.
Best Performers
The Fund’s best performer, on a dollar-weighted basis, was Diamond Hill Investment
Group, Inc. with a gain of $0.78 million for the six months ended June 30, 2015. This is a
business that we understand very well, the investment management business. Based out
of Columbus, Ohio, they have fostered a unique culture of firm ownership and long-term
oriented thinking. Furthermore, their distribution reach is not only broad, but diversified
by channel. As the bulk of their assets are weighted toward the equity markets, assets
under management have grown quite significantly in recent years; as a result, so has cash
flow. We believe that the company may pay out a special dividend before year-end, which
it has done in each of the last seven years.
The second-best performing stock was Pinnacle Financial Partners, Inc. with a gain of
$0.40 million. Pinnacle is a regional bank headquartered in Nashville, TN. The company
has built a great presence in Nashville and Knoxville, and is now entering the Memphis
market through a couple of recent acquisitions. Credit results continue to improve, loans
are growing double-digits, and the bank remains highly profitable. If we get into a sus-
tained rising interest rate environment, Pinnacle may benefit further from an improved
net interest margin as the rate they can charge to customers may increase faster than the
rate paid on deposits.
Worst Performers
The worst performing stock, on a dollar-weighted basis, was Destination Maternity
Corporation with a loss of -$0.61 million for the six months ended June 30, 2015.
Unfortunately, this is not the first time that we have mentioned the company in this
28
FAM Small Cap Fund
worst performing section. Not long after we wrote about Destination Maternity last year,
a CEO change was made. New CEO Tony Romano is fast approaching his one-year anni-
versary with the firm. Although we cannot argue with the approach he has taken, like all
transformations, it is likely to take some time before we can reap the fruits of his labor.
The second-worst performing stock was McGrath RentCorp with a loss of -$0.24 million.
Despite a rebound in their modular building business, McGrath has seen weakness in
their electronic test and measurement rental equipment and Adler Tank rental busi-
nesses. Adler Tank has particularly been affected by the decline in oil and gas prices as
their tanks are used by exploration and production companies. Any rebound in these
commodity prices should conversely benefit McGrath.
Portfolio Activity
This year we sold Physician’s Realty Trust and US Physical Therapy, Inc. completely as
they became fully valued. We also exited our position in Rosetta Stone Inc. as it no longer
met our investment criteria.
We have purchased three new names this year including two regional banks: Stonegate
Bank, which is headquartered in Fort Lauderdale, Florida and National Commerce
Corporation, which is headquartered in Birmingham, Alabama. The third new holding is
Ferro Corporation, a manufacturer of specialty materials.
We have also trimmed and added to existing positions as we deemed appropriate.
Our cash balance currently stands at just over 9%.
Third Anniversary
On March 1, 2015 the Fund reached its Third Anniversary. As shareholders ourselves, we
are pleased with our 3 Year and Since Inception performance on both an absolute and rel-
ative basis. Going forward, we feel it is prudent to temper your expectations. Although we
hope to continue to outperform on a relative basis, we find it difficult to believe that U.S.
equities are priced to see the same gains on an absolute basis over the next three years.
Outlook
While macro-oriented headlines continue to dominate the news, we adhere to our strat-
egy of holding high-quality, small-cap securities that allow us to sleep at night. Our ongo-
ing conversations with management lead us to believe that the intrinsic values of our
portfolio companies continue to head in the right direction.
29
FAM Small Cap Fund
We expect that the high-quality value stocks that we own should once again come back
into favor, as opposed to levered and growth companies that have dominated the top of
recent performance charts. Overpaying for growth is not the way to long-term value cre-
ation.
We continue to search diligently to find quality bargain opportunities on your behalf.
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.
30
FAM Small Cap Fund — Portfolio Data
As of June 30, 2015 (Unaudited)
COMPOSITION OF TOTAL INVESTMENTS
Banking
20.4%
Transportation
10.1%
Property & Casualty Insurance
9.9%
Money Market Fund
9.0%
Investment Management
6.1%
Electronic Manufacturing
6.0%
Commercial Services
6.0%
Diversified Holding Company
5.2%
Computer Software & Services
3.6%
Oil & Gas Exploration
3.6%
Wholesale Wire & Cable
3.3%
Health Care Services
2.7%
Hazardous Waste Disposal
2.6%
Industrial Machinery
2.6%
Real Estate Mgmt. & Development
2.5%
Retail - Apparel Stores
2.3%
Other
4.1%
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.
31
FAM Small Cap Fund — Statement of Investments
June 30, 2015 (Unaudited)
SHARES
VALUE
COMMON STOCKS (91.0%)
Banking (20.4%)
First NBC Bank Holding Company*
• holding company for First NBC Bank that provides various financial
services for businesses, institutions, and individuals
121,000
$ 4,356,000
Hudson Valley Holding Corporation
• operates as the bank holding company for Hudson Valley Bank, N.A.
that provides banking and related services to businesses, professionals,
municipalities, not-for-profit organizations, and individuals in New York
State
114,500
3,230,045
National Commerce Corporation*
• holding company for National Bank of Commerce and United Legacy
Bank that provides various financial services
135,397
3,493,243
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
1,440,805
sional entities
South State Corporation
• banking services to individual and corporate customers in the Carolinas
13,300
1,010,667
Stonegate Bank
• banking services to individual and corporate customers in Tampa and
76,000
2,254,920
Southeast and Southwest Florida.
15,785,680
Commercial Services (6.0%)
McGrath RentCorp
• modular building and electronic test equipment rentals, subsidiary
49,500
1,506,285
classroom manufacturing
Mistras Group, Inc.*
• provides technology-enabled asset protection solutions
166,100
3,152,578
4,658,863
Computer Software & Services (3.6%)
PC Connection, Inc.*
• operates as a direct marketer of a range of information technology (IT)
114,100
2,822,834
solutions.
See Notes to Financial Statements
32
FAM Small Cap Fund — Statement of Investments continued
June 30, 2015 (Unaudited)
SHARES
VALUE
Diversified Holding Company (5.2%)
Biglari Holdings Inc.*
• engages in the ownership, development, operation, and franchising of
9,733
$ 4,027,029
restaurants
Electronic Manufacturing (6.0%)
Fabrinet*
• provides precision optical, electro-mechanical, and electronic manufac-
250,150
4,685,309
turing services
Hazardous Waste Disposal (2.6%)
U.S. Ecology, Inc.
• provides radioactive, pcb, hazardous and non-hazardous waste services
41,800
2,036,496
to commercial and government customers
Health Care Equipment/Devices (1.0%)
Meridian Bioscience, Inc.
• life science company that manufactures, markets and distributes a broad
40,000
745,600
range of innovative diagnostic test kits
Health Care Services (2.7%)
Landauer, Inc.
• provides personal radiation dosimeters and radiation related services
58,578
2,087,720
Industrial Machinery (2.6%)
John Bean Technologies Corporation
• provides technology solutions for the food processing and air
53,000
1,992,270
transportation industries
Investment Management (6.1%)
Diamond Hill Investment Group Inc.*
• provides investment management services to institutions and individuals
12,250
2,445,835
Westwood Holdings Group Inc.
• manages investment assets and provides services for its clients
38,987
2,322,456
4,768,291
Oil & Gas Exploration (3.6%)
Evolution Petroleum Corp.
• engages in the acquisition, exploitation, and development of properties
422,300
2,782,957
for the production of crude oil and natural gas
See Notes to Financial Statements
33
FAM Small Cap Fund — Statement of Investments continued
June 30, 2015 (Unaudited)
SHARES
VALUE
Property & Casualty Insurance (9.9%)
Amerisafe, Inc.
• insurance holding company that markets and underwrites workers’
33,500
$ 1,576,510
compensation and general liability insurance
Hallmark Financial Services, Inc.*
• insurance holding company that markets, distributes, underwrites,
304,647
3,466,883
and services property/casualty insurance products to businesses
and individuals
Infinity Property and Casualty Corporation
• provides personal automobile insurance with a focus on nonstandard
34,265
2,598,657
auto insurance
7,642,050
Real Estate Management & Development (2.5%)
Consolidated-Tomoka Land Company
• operates as a diversified real estate operating company
33,200
1,913,648
REITS - Diversified (1.8%)
Winthrop Realty Trust
• real estate investment trust that engages in the ownership and manage-
90,750
1,374,862
ment of real property and real estate-related assets
Retail - Apparel Stores (2.3%)
Destination Maternity Corporation
• designing and retail of maternity clothing in United States
150,000
1,749,000
Specialty Chemical (1.3%)
Ferro Corporation*
• produces specialty materials in the United States and internationally
60,000
1,006,800
Transportation (10.1%)
Echo Global Logistics, Inc.*
• provides technology-enabled transportation and supply chain manage-
102,200
3,337,852
ment solutions
FRP Holdings Inc.*
• engages in the transportation and real estate businesses
112,335
3,643,024
Patriot Transportation Holding, Inc.*
• operates as a tank truck carrier in North America
35,944
886,020
7,866,896
See Notes to Financial Statements
34
FAM Small Cap Fund — Statement of Investments continued
June 30, 2015 (Unaudited)
SHARES
VALUE
Wholesale Wire & Cable (3.3%)
Houston Wire and Cable Company
• distributor of wire and cable products in the U.S.
256,167
$ 2,541,177
Total Common Stocks (Cost $57,334,339)
$ 70,487,482
TEMPORARY INVESTMENTS (9.0%)
Money Market Fund (9.0%)
Invesco Short Term Treasury Fund (Institutional Class)
(0.02%)**
6,975,295
6,975,295
Total Temporary Investments (Cost $6,975,295)
$ 6,975,295
Total Investments (Cost $64,309,634)
$ 77,462,777
* Non-income producing securities
** The rate shown represents the effective yield at 6/30/15
See Notes to Financial Statements
35
FAM Funds — Statement of Assets and Liabilities
June 30, 2015 (Unaudited)
Value Fund Equity-IncomeFund Small Cap Fund
Assets
Investments in securities at value (Cost
$434,628,970; $93,556,584; $64,309,634
$995,331,769
$152,680,164
$77,462,777
respectively)
Cash
741,079
112,446
316,991
Dividends and interest receivable
438,404
181,398
35,652
Total Assets
996,511,252
152,974,008
77,815,420
Liabilities
Accrued investment advisory fee
836,592
127,249
62,893
Accrued shareholder servicing and administrative fees
103,302
16,287
8,475
Accrued trustee fees
6,000
6,000
6,000
Accrued expenses
89,101
28,016
12,765
Total Liabilities
1,034,995
177,552
90,133
Net Assets
$995,476,257
$152,796,456
$77,725,287
Net Assets Consist Of:
Net capital paid in on shares of beneficial interest $381,846,681
$ 91,040,285
$63,299,135
Accumulated net investment income/(loss)
(839,041)
124,934
(13,050)
Accumulated net realized gains
53,765,818
2,507,657
1,286,059
Net unrealized appreciation
560,702,799
59,123,580
13,153,143
Net Assets
$995,476,257
$152,796,456
$77,725,287
Fund shares outstanding
14,803,337
5,973,759
4,916,094
Net Asset Value, Offering and Redemption Price per
share (unlimited shares of beneficial interest autho-
rized at $0.001 par value)
$67.25
$25.58
$15.81
See Notes to Financial Statements
36
FAM Funds — Statement of Assets and Liabilities
June 30, 2015 (Unaudited)
Value Fund Equity-Income Fund Small Cap Fund
Investment Income
Income
Dividends
$5,066,299
$1,836,579
$466,117
Interest
11,518
1,348
1,067
Total Investment Income
5,077,817
1,837,927
467,184
Expenses
Investment advisory fee (Note 2)
5,066,285
776,227
356,125
Administrative fee (Note 2)
417,636
65,980
30,271
Shareholder servicing and related
expenses (Note 2)
206,413
33,384
17,736
Printing and mailing
70,935
12,167
6,349
Professional fees
34,963
4,801
1,832
Registration fees
23,438
15,842
23,226
Custodial fees
36,909
6,675
5,235
Trustee’s fees
20,047
20,047
20,047
Officer’s fees (Note 2)
14,736
14,736
14,736
Other
25,496
11,893
4,677
Total Expenses
5,916,858
961,752
480,234
Net Investment Income/(Loss)
(839,041)
876,175
(13,050)
Realized and Unrealized Gain on Investments
Net realized gain on investments
53,765,345
2,507,657
1,286,059
Net change in unrealized appreciation/de-
preciation of investments
(41,893,585)
(2,222,808)
1,202,447
Net Realized and Unrealized Gain on
Investments
11,871,760
284,849
2,488,506
Net Increase In Net Assets From Operations
$11,032,719
$1,161,024
$2,475,456
See Notes to Financial Statements
37
FAM Funds — Statement of Changes in Net Assets
Six Months Ended June 30, 2015 (Unaudited) and Year Ended December 31, 2014
Value Fund
Six Months Ended
June 30, 2015
Year Ended
(Unaudited)
December 31, 2014
Change in Net Assets
From operations
Net investment income/(loss)
(839,041)
$ (2,317,895)
Net realized gain on investments
53,765,345
50,506,610
Net change in unrealized appreciation/(deprecia-
tion of investments
(41,893,585)
71,000,696
Net increase in net assets from operations
11,032,719
119,189,411
Distributions to shareholders from:
Net investment income
—
—
Net realized gain on investments
—
(50,506,137)
Return of capital distributions
—
—
Total distributions
—
(50,506,137)
Capital share transactions (Note 3)
(10,791,487)
(15,213,144)
Total increase/(decrease) in net assets
241,232
53,470,130
Net Assets
Beginning of period
995,235,025
941,764,895
End of period*
$995,476,257
$995,235,025
*Includes accumulated net investment income/(loss) of $(839,041), $0, $124,923, $0, $(13,050) $0, respectively.
See Notes to Financial Statements
38
FAM Funds — Statement of Changes in Net Assets
Six Months Ended June 30, 2015 (Unaudited) and Year Ended December 31, 2014
Equity-Income Fund
Small Cap Fund
Six Months Ended
Six Months Ended
June 30, 2015
Year Ended
June 30, 2015
Year Ended
(Unaudited)
December 31, 2014
(Unaudited)
December 31, 2014
876,175
$
1,157,486
(13,050)
$
(47,747)
2,507,657
5,232,174
1,286,059
838,067
(2,222,808)
5,340,279
1,202,447
3,133,832
1,161,024
11,729,939
2,475,456
3,924,152
(751,241)
(1,157,486)
—
—
—
(5,232,174)
—
(788,736)
—
(876,582)
—
(388,333)
(751,241)
(7,266,242)
—
(1,177,069)
(9,134,818)
10,489,363
8,344,949
21,483,442
(8,725,035)
14,953,060
10,820,405
24,230,525
161,521,491
146,568,431
66,904,882
42,674,357
$152,796,456
$161,521,491
$77,725,287
$66,904,882
See Notes to Financial Statements
39
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 securi-
ties, 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 value as determined by
procedures established by the Board of Trustees. Investments in Invesco Short Term
Treasury Fund are valued at 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.
40
FAM Funds - Notes to Financial Statements (Unaudited)
The following is a summary of the inputs used to value each Fund’s net assets as of
June 30, 2015:
FAM Value Fund
Level 1
Common Stocks
$929,903,876
Temporary Investments
65,427,893
Total Investments in Securities
$995,331,769
FAM Equity-Income Fund
Level 1
Common Stocks
$142,364,911
Temporary Investments
10,315,253
Total Investments in Securities
$152,680,164
FAM Small Cap Fund
Level 1
Common Stocks
$ 70,487,482
Temporary Investments
6,975,295
Total Investments in Securities
$ 77,462,777
During the period ended June 30, 2015 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, 2015 manage-
ment has evaluated the tax positions taken or expected to be taken in the course of
preparing the Funds’ tax returns to determine whether the tax positions are “more-
41
FAM Funds - Notes to Financial Statements (Unaudited)
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
2011 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. Non-cash
dividends are included in dividends on the ex-dividend date at the fair market value
of the shares received. 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, realized 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/(depreciation) 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 regula-
tions 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 Fund pays an investment advisory fee
to Fenimore Asset Management, Inc. (the “Advisor”) equal, on an annual basis, to 1% of
each Fund’s average daily net assets. The Advisor has entered into a voluntary agreement
with each Fund to reduce the investment advisory fee for each Fund through December
31, 2015 to 0.95% of a Fund’s average daily net assets in excess of $1 billion. No such fee
reduction was required for the FAM Equity-Income Fund nor for the FAM Small Cap Fund
for the period ended June 30, 2015. With respect to the FAM Value Fund, as a result of
42
FAM Funds - Notes to Financial Statements (Unaudited)
the voluntary fee reduction agreement with the Advisor, the advisory fee payable to the
Advisor by the FAM Value Fund was reduced by $6,343 as a result of the assets of the FAM
Value Fund being in excess of $1 billion for a portion of the period ended June 30, 2015.
Thomas Putnam is an officer and trustee of the Funds and also an officer and director of
the Advisor. The Chief Compliance Officer is an officer of the Funds and compensated by
the Funds in the amount of $44,208 as well as an officer of the Advisor and compensated
additionally by the Advisor.
The Investment Advisory Contract requires the Advisor to reimburse the Funds their 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, 2015 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, 2015 for the FAM Value, FAM Equity-Income Fund and 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, 2015, shareholder servicing agent fees paid
to FSS were as follows:
FAM Value Fund
$206,413
FAM Equity-Income Fund
$ 33,384
FAM Small Cap Fund
$ 17,736
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, 2015, the Funds’ administrative fees paid to FSS
amounted to:
FAM Value Fund
$417,636
FAM Equity-Income Fund
$ 65,980
FAM Small Cap Fund
$ 30,271
Fenimore Securities, Inc. (“FSI”), a company also under common control with the Advi-
sor, acts as distributor of the Funds’ shares. FSI receives no compensation for providing
distribution services to the Funds.
43
FAM Funds - Notes to Financial Statements (Unaudited)
Note 3. Shares of Beneficial Interest
At June 30, 2015 an unlimited number of $0.001 par value of beneficial interest were
authorized.
Transactions for each Fund are as follows:
SIX MONTHS ENDED 6/30/15
YEAR ENDED 12/31/14
FAM Value Fund
Shares
Amount
Shares
Amount
Shares sold
794,147 $ 53,050,272
649,597 $41,866,671
Shares issued on reinvest-
ment of distributions
—
—
716,244
48,031,304
Shares redeemed
(939,472)
(63,841,759)
(1,653,946) (105,111,119)
Net Increase/Decrease
(145,325) $(10,791,487)
(288,105) $(15,213,144)
FAM Equity-Income Fund
Shares sold
192,065 $ 4,953,180
722,585
$18,261,703
Shares issued on reinvest-
ment of distributions
27,611
712,665
243,320
6,249,652
Shares redeemed
(573,328) (14,800,663)
(556,848) (14,021,992)
Net Increase
(353,652) $ (9,134,818)
409,057 $10,489,363
FAM Small Cap Fund
Shares sold
725,537 $ 11,037,851
1,657,490 $24,023,657
Shares issued on reinvest-
ment of distributions
—
—
76,153
1,168,953
Shares redeemed
(175,625)
(2,692,902)
(256,337)
(3,709,168)
Net Increase
549,912 $ 8,344,949
1,477,306
$21,483,442
44
FAM Funds - Notes to Financial Statements (Unaudited)
Note 4. Investment Transactions
During the period ended June 30, 2015, purchases and sales of investment securities,
other than short-term obligations were:
Purchases
Sales
FAM Value Fund
$33,957,136
$70,735,964
FAM Equity-Income Fund
$ 3,536,620
$16,336,449
FAM Small Cap Fund
$12,055,340
$ 7,243,543
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, 2014 (the
Funds’ most recent tax year end) were as follows:
Undistributed
Undistributed
Unrealized
Ordinary
Long-Term
Appreciation
Income
Gain
FAM Value Fund
—
$473
$602,596,384
FAM Equity-Income Fund
—
—
$ 61,346,388
FAM Small Cap Fund
—
—
$ 11,950,696
The aggregate gross unrealized appreciation and depreciation of portfolio securities at
June 30, 2015, based on cost for federal income tax purposes, was as follows:
FAM Value Fund
Unrealized appreciation
$565,527,030
Unrealized depreciation
(4,809,962)
Net unrealized appreciation
$560,717,068
FAM Equity-Income Fund
Unrealized appreciation
$ 59,015,265
Unrealized depreciation
(1,280,662)
Net unrealized appreciation
$ 57,734,603
FAM Small Cap Fund
Unrealized appreciation
$ 16,195,930
Unrealized depreciation
(3,441,235)
Net unrealized appreciation
$ 12,754,695
45
FAM Funds - Notes to Financial Statements (Unaudited)
The tax composition of dividends and distributions paid to shareholders for the six
months ended June 30, 2015, and the year ended 2014:
Six Months Ended
Year Ended
June 30, 2015
December 31, 2014
FAM Value Fund
Ordinary income
—
—
Long-term capital gain
—
$50,506,137
Return of capital
—
—
—
$50,506,137
FAM Equity-Income Fund
Ordinary income
$751,241
$ 1,157,486
Long-term capital gain
—
5,232,174
Return of capital
—
876,582
$751,241
$7,266,242
FAM Small Cap Fund
Ordinary income
—
$ 454,776
Long-term capital gain
—
333,960
Return of capital
—
388,333
—
$1,177,069
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, 2015, when any advances
are to be repaid. During the period ended June 30, 2015, no amounts were drawn from
the available lines.
46
FAM Funds - Notes to Financial Statements (Unaudited)
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.
47
FAM Funds - Notes to Financial Statements (Unaudited)
Note 9. Financial Highlights
FAM Value Fund
Years Ended December 31,
Six Months
Per share information
Ended
(For a share outstanding throughout each
June 30, 2015
period)
(Unaudited)
2014
2013
2012
2011
2010
Net asset value, beginning of period
$66.58
$61.81
$48.88
$45.15
$45.34
$39.32
Income/Loss from investment operations:
Net investment income/(loss)†
(0.06)
(0.16)
(0.18)
0.06
(0.04)
0.09
Net realized and unrealized
gain/(loss) on investments
0.73
8.47
16.28
5.07
(0.15)
6.61
Total from investment operations
0.67
8.31
16.10
5.13
(0.19)
6.70
Less distributions:
Dividends from net investment income
—
—
—
(0.07)
—*
(0.09)
Distributions from net realized gains
—
(3.54)
(3.16)
(1.32)
—*
(0.59)
Return of capital
—
—
(0.01)
(0.01)
—
—
Total distributions
—
(3.54)
(3.17)
(1.40)
—*
(0.68)
Change in net asset value for the period
0.67
4.77
12.93
3.73
(0.19)
6.02
Net asset value, end of period
$67.25
$66.58
$61.81
$48.88
$45.15
$45.34
Total Return
1.01%**
13.41%
32.96%
11.39%
(0.41)%
17.02%
Ratios/supplemental data
Net assets, end of period (000)
$995,476
$995,235
$941,765
$731,983
$698,546 $737,211
Ratios to average net assets of:
Expenses
1.16%***
1.18%
1.19%
1.21%
1.22%
1.23%
Net investment income/(loss)
(0.16)%***
(0.25)%
(0.24)%
0.13%
(0.10)%
0.21%
Portfolio turnover rate
3.61%**
6.08%
8.38%
4.41%
7.78%
5.08%
†Based on average shares outstanding.
*Per share amount is less than $0.005.
**Not Annualized
***Annualized
48
FAM Funds - Notes to Financial Statements (Unaudited)
Note 9. Financial Highlights
FAM Equity-Income Fund
Years Ended December 31,
Six Months
Per share information
Ended
(For a share outstanding throughout each
June 30, 2015
2014
2013
2012
2011
2010
period)
(Unaudited)
Net asset value, beginning of period
$25.53
$24.77
$20.08
$19.39
$18.43
$16.02
Income/Loss from investment operations:
Net investment income†
0.14
0.19
0.17
0.24
0.29
0.36
Net realized and unrealized
gain on investments
0.04
1.75
5.79
1.88
0.95
2.41
Total from investment operations
0.18
1.94
5.96
2.12
1.24
2.77
Less distributions:
Dividends from net investment income
(0.13)
(0.19)
(0.18)
(0.26)
(0.28)
(0.36)
Distributions from net realized gains
—
(0.85)
(1.03)
(1.14)
—
—
Return of capital
—
(0.14)
(0.06)
(0.03)
—
—
Total distributions
(0.13)
(1.18)
(1.27)
(1.43)
(0.28)
(0.36)
Change in net asset value for the period
0.05
0.76
4.69
0.69
0.96
2.41
Net asset value, end of period
$25.58
$25.53
$24.77
$20.08
$19.39
$18.43
Total Return
0.68%**
7.85%
29.79%
11.02%
6.79%
17.47%
Ratios/supplemental data
Net assets, end of period (000)
$152,796
$161,521
$146,568
$112,940
$125,832
$85,824
Ratios to average net assets of:
Before waivers:
Expenses
1.23%***
1.26%
1.29%
1.31%
1.40%
1.41%
Net investment income
1.12%***
0.76%
0.71%
1.17%
1.57%
2.10%
After waivers:
Expenses
1.23%***
1.26%
1.29%
1.31%
1.40%
1.40%
Net investment income
1.12%***
0.76%
0.71%
1.17%
1.57%
2.11%
Portfolio turnover rate
2.41%**
10.73%
10.33%
43.0%
17.96%
13.38%
† Based on average shares outstanding.
**Not Annualized
***Annualized
49
FAM Funds - Notes to Financial Statements (Unaudited)
Note 9. Financial Highlights
FAM Small Cap Fund
Six Months
For the Period
Ended
Ended
Per share information
June 30, 2015
2014
2013
December 31, 2012*
(For a share outstanding throughout each period)
(Unaudited)
Net asset value, beginning of period
$15.32
$14.77
$11.03
$10.00
Income/Loss from investment operations:
Net investment income/(loss)†(a)
0.00
(0.01)
0.04
(0.04)
Net realized and unrealized gain on
0.49
0.83
4.43
1.07
investments
Total from investment operations
0.49
0.82
4.47
1.03
Less distributions:
Dividends from net investment income
—
—
(0.03)
—
Distributions from net realized gains
—
(0.18)
(0.70)
—
Return of capital
—
(0.09)
(0.00)(a)
—
Total distributions
—
(0.27)
(0.73)
—
Change in net asset value for the period
0.49
0.55
3.74
1.03
Net asset value, end of period
$15.81
$15.32
$14.77
$11.03
Total Return
3.20%**
5.58%
40.49%
10.30%**
Ratios/supplemental data
Net assets, end of period (000)
$77,725
$66,905
$42,674
$16,841
Ratios to average net assets of:
Before waivers:
Expenses
1.34%***
1.42%
1.57%
2.79%***
Net investment income/(loss)
(0.04)%***
(0.09)%
0.05%
(1.89)%***
After waivers:
Expenses
1.34%***
1.42%
1.35%
1.46%***
Net investment income/(loss)
(0.04)%***
(0.09)%
0.27%
(0.56)%***
Portfolio turnover rate
11.26%**
13.40%
19.65%
7.59%**
† Based on average shares outstanding.
* Small Cap Fund inception 3/1/12
** Not Annualized
*** Annualized
(a) Amount is less than $0.01 per share.
50
FAM Funds — Expense Data
As of June 30, 2015 (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 (1/1/2015 to 6/30/2015).
Actual Expenses
Line (A) of the following tables provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, 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 multiply 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% hypothetical 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.
51
FAM Funds — Expense Data continued
Six months ended June 30, 2015 (Unaudited)
FAM Value Fund
Beginning
Ending
Expenses
Account Value
Account Value
Paid
1/1/2015
6/30/15
During Period
A. Ongoing Costs Based on Actual Fund
$1,000.00
$1,010.10
$5.78*
Return
B. Ongoing Costs Based on Hypothetical
$1,000.00
$1,019.25
$5.81*
5% Yearly Return
*Expenses are equal to the Fund’s annualized expense ratio of (1.16%), 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
1/1/2015
6/30/15
During Period
A. Ongoing Costs Based on Actual Fund
$1,000.00
$1,006.80
$6.12*
Return
B. Ongoing Costs Based on Hypothetical
$1,000.00
$1,018.90
$6.16*
5% Yearly Return
*Expenses are equal to the Fund’s annualized expense ratio of (1.23%), 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
1/1/2015
6/30/2015
During Period
A. Ongoing Costs Based on Actual Fund
$1,000.00
$1,032.00
$6.75*
Return
B. Ongoing Costs Based on Hypothetical
$1,000.00
$1,018.36
$6.71*
5% Yearly Return
* Expenses are equal to the Fund’s net annualized expense ratio of (1.34%), multiplied by the average account
value over the period, multiplied by 181/365 (to reflect the one-half year period).
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 se-
curities 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
FAM Funds
384 North Grand Street
PO Box 399
Cobleskill, New York
12043-0399
(800) 932-3271
www.famfunds.com
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 7, 2015
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 7, 2015
By (Signature and Title)* /s/ Joseph A. Bucci
--------------------------
Joseph A. Bucci, Treasurer
Date August 7, 2015
* Print the name and title of each signing officer under his or her signature.
