FAM
VALUE FUND
EQUITY-INCOME FUND
SEMI-ANNUAL REPORT
June 30, 1999
100%
No-Load
Funds
FAM FUNDS
P.O. Box 399
Cobleskill, NY 12043
(800) 932-3271
<PAGE>
Dear Fellow Shareholder:
The first half of 1999 proved to be somewhat lackluster for both the
FAM Value Fund and the FAM Equity-Income Fund. Each posted only modest gains. As
of June 30, 1999, the FAM Value Fund appreciated 1.9% year-to-date and the FAM
Equity-Income Fund appreciated 1.1% for the same period. In comparison, the S&P
500 - an index of large companies - appreciated 12.4% while the Russell 2000 -
an unmanaged index of smaller stocks - appreciated 9.3%. Although performance
comparisons have been somewhat frustrating of late, we are increasingly
confident about the future of the companies you own.
A prime example of a company that has recently dragged FAM Value Fund
performance, but has bright future prospects, is Kaydon. A niche player in the
manufacture of bearings and slip rings, Kaydon is one of the largest holdings in
the Fund and for the first six months this year the stock price was down 16.1%.
Kaydon's actual business, however, has progressed quite nicely over the years,
as demonstrated by its 22% earnings growth rate over the last five years. Kaydon
also provides an excellent example of the strong fundamentals we look for in a
company - it has little debt and good profitability as seen in its 24% return on
equity. Return on equity (ROE) can be considered a proxy to the return one would
receive as sole owner of the entire company. We believe this company has
excellent future prospects, yet, has been sorely neglected by the marketplace
during the first six months of 1999. Centura Bancorp (-25%), ServiceMaster
(-17%) and New England Business Services (-26%) are similar examples of negative
influence on both Funds' year-to-date return; they are also healthy businesses
with great promise for the future.
The examples above were offset by the strong performance of several
other outstanding companies. One in particular, C-Cor Electronics, is up 91%.
Last year at this time, C-Cor was selling at a low price of about $10 a share.
What a difference a year makes! C-Cor has attracted much positive attention
recently due to its growing cable business and to the advances it has made in
fiber optic communication management and its growing internet prospects.
While short-term stock price fluctuations are interesting to review, we
remain focussed on long-term goals. FAM Value Fund's ten-year annualized return
of 14%, its five-year return of 17%, and its three-year return of 16% are most
representative of our overall objective to double money once every five to six
years. The FAM Equity-Income Fund has a three-year annualized return of 13.7%.
Some people may feel that the above returns are modest by today's standards. We
believe, however, that in the long run those returns will keep capital growing
more rapidly than inflation and will preserve capital in a real sense.
Today's market environment is well illustrated by the stock of
Berkshire Hathaway, a holding in the FAM Value Fund. If you have not followed
the price of this stock this year, you may surmise that the price has increased
significantly. On the contrary. Berkshire started the year off at a price of
$70,000 and was recently trading as low as $68,500. This may astound many who
are aware that Berkshire's Chairman and CEO is none other than the renown
investor, Warren Buffett. Many might question whether or not Berkshire, based
solely on a declining stock price, represents a good investment. From our way of
thinking, the more appropriate question to ask is "Does the stagnant stock price
adequately represent the future economic prospects of the business?" To answer
this question we'll use Buffett's own words:
"EVENTUALLY OUR ECONOMIC FATE WILL BE DETERMINED BY THE ECONOMIC
FATE OF THE BUSINESSES WE OWN, WHETHER OUR OWNERSHIP IS PARTIAL (IN THE
FORM OF SHARES OF STOCK) OR TOTAL.... THE MARKET MAY IGNORE BUSINESS
SUCCESS FOR AWHILE BUT IT EVENTUALLY WILL CONFIRM IT... THE SPEED AT
WHICH A BUSINESS SUCCESS IS RECOGNIZED, FURTHERMORE, IS NOT THAT
IMPORTANT AS LONG AS THE COMPANY'S INTRINSIC VALUE IS INCREASING AT A
SATISFACTORY RATE... IN FACT, DELAYED RECOGNITION CAN BE AN ADVANTAGE:
IT MAY GIVE US THE CHANCE TO BUY MORE OF A GOOD THING AT A BARGAIN
PRICE."
-1-
<PAGE>
Too often investors consider Berkshire Hathaway a mutual fund of public
holdings. However, Berkshire is much more than a conglomeration of public stock
holdings. One has only to look at some of the major acquisitions that Mr.
Buffett made last year. Two in particular, Executive Jet and General
Reinsurance, have added significant future value to the company. General
Reinsurance is the largest reinsurance company in the country. This addition
alone adds approximately $17 billion of float to Berkshire's balance sheet. In
simplified terms, this represents $17 billion that Mr. Buffett can invest to
enhance the future value of Berkshire. It is sizable acquisitions such as these
which have been given little credence in the marketplace as to what they
actually mean to Berkshire's future worth. Our analysis indicates that those
acquisitions have significantly increased the value of Berkshire Hathaway. While
we hesitate to put a number on it, we feel confident that the future intrinsic
value of Berkshire far exceeds its current market valuation.
A company held in both the FAM Value Fund and the FAM Equity-Income
Fund portfolios which also shows the potential for enhanced future intrinsic
value is ServiceMaster. ServiceMaster continues to show healthy growth in
several of its core businesses. In fact, Terminix, in the pest control business;
Merry Maids, a provider of home cleaning services; American Home Shield, which
provides home warranty insurance; and TruGreen-ChemLawn are all leaders in their
respective industries. Recent acquisitions in commercial landscaping have
created a tremendous opportunity for the company in a growth business that could
double the size of ServiceMaster today. All these positives, however, appear to
be overshadowed by the recent uncertainty surrounding the succession of the
President and CEO, Carlos Cantu, who has announced his retirement at year end
due to ill health. We see this as a temporary uncertainty, which the company is
taking steps to address. For a company that has demonstrated extraordinary
growth historically and is experiencing healthy growth in a variety of markets,
this short-term uncertainty does not adequately reflect ServiceMaster's bright
economic prospects.
In closing, in a feverish stock market such as the one we are
experiencing, it is important to keep in mind that a company is not more
valuable simply because its stock price is increasing. Nor is a company less
valuable because the price of its stock has declined. What truly makes an
investment in a company more or less valuable is the underlying growth of the
economics of the business. This is how we continue to focus on value, and how we
continue to manage the funds you have entrusted to our care. We look forward to
reporting to you in our Letter from Cobleskill at the end of the third quarter
and we thank you for the loyalty you have demonstrated to our investment
principles.
Sincerely,
/S/THOMAS O. PUTNAM /S/ DIANE VAN BUREN-MARKLEY /S/ PAUL C. HOGAN
- ------------------- --------------------------- -----------------
Thomas O. Putnam Diane Van Buren-Markley Paul C. Hogan
-2-
<PAGE>
--------------
FAM VALUE FUND
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
------ -----
COMMON STOCKS (88.0%)
BANKING (12.2%)
<S> <C> <C>
Bank North Group ...................................................... 205,730 $ 6,789,090
- - multi-bank holding company in Burlington, VT
Centura Banks ......................................................... 118,250 6,666,344
- - bank holding company located in North Carolina
First Empire Corporation .............................................. 17,300 9,515,000
- - bank holding company located in Buffalo, NY
* North Folk Bancorp .................................................. 163,550 3,495,881
- - bank holding company located on Long Island, NY
One Valley Bancorp .................................................... 36,800 1,380,000
- - largest bank holding company in West Virginia
Peoples Heritage Financial ............................................ 323,750 6,090,547
- - multi-bank holding co. operating 142 offices throughout Northeast
+ Plumas Bank ......................................................... 85,536 1,069,200
- - bank holding company located in Northern California
SouthTrust Corporation ................................................ 213,000 8,173,875
- - bank holding company headquartered in Alabama
TrustCo Bank Corporation NY ........................................... 186,757 5,019,094
- - operates 48 bank offices in the Upstate NY region
U.S. Bancorp .......................................................... 62,772 2,134,248
- - bank holding company headquartered in Minneapolis, Minnesota -----------
50,333,279
-----------
CHEMICAL (1.7%)
RPM, Inc. ............................................................. 398,600 5,655,138
- - specialized chemical protective coatings, fabrics, and wall coverings
WD-40 Company ......................................................... 50,800 1,270,000
- - manufactures and distributes lubricant products -----------
6,925,138
-----------
COMPUTER SOFTWARE & SERVICES (2.6%)
Reynolds & Reynolds ................................................... 462,200 10,775,038
- - software for automotive dealers and business forms -----------
CONSUMER SERVICES (0.2%)
* Franklin Covey Company .............................................. 110,500 814,938
- - time management products and training seminars -----------
See Notes to Financial Statements.
-3-
<PAGE>
--------------
FAM VALUE FUND
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONT'D)
June 30, 1999 (Unaudited)
Shares Value
------ -----
DIVERSIFIED MANUFACTURING (6.3%)
CLARCOR, Inc. ......................................................... 273,750 $ 5,252,578
- - manufactures filtration and container products
*+ ESSEF Corporation .................................................. 820,827 16,621,747
- - water treatment and systems, swimming pool, and spa equipment
+ Raven Industries .................................................... 274,441 4,391,056
- - manufactures plastics, electronics, and sewn products -----------
26,265,381
-----------
ELECTRICAL/ELECTRONICS (3.9%)
American Power Conversion ............................................. 72,000 1,449,000
- - a manufacturer of power protection equipment for computers
* C-COR Electronics, Inc. ............................................. 410,800 11,451,050
- - electronic equipment for cable and broadband data transmission systems
*+ IFR Systems ........................................................ 684,050 3,249,238
- - communications, test and measurement, avionics, fiber optic test
instruments -----------
16,149,288
-----------
FINANCIAL SERVICES (12.6%)
American Express ...................................................... 72,000 9,369,000
- - financial, travel, and information services firm
Citigroup, Inc. ....................................................... 168,825 8,019,188
- - P & C insurance, life insurance, Smith Barney & Salomon Brothers
Financial Security Assurance Hldgs. Ltd. .............................. 76,800 3,993,600
- - financial guaranty insurer of municipal bonds and asset-backed securities
Franklin Resources .................................................... 194,150 7,887,344
- - investment mgmt. company, offers Franklin Templeton & Mutual Series Funds
Waddell & Reed ........................................................ 141,400 3,879,663
- - an underwriter and distributor of 36 mutual fund portfolios
Waddell & Reed Class B Shares ......................................... 79,200 2,138,400
- - an underwriter and distributor of 36 mutual fund portfolios
White Mountain ........................................................ 116,275 16,918,013
- - financial guaranty, personal property and casualty, and reinsurance -----------
52,205,208
-----------
HEALTHCARE (6.0%)
*+ CONMED Corporation ................................................. 807,562 24,731,586
- - advanced electrosurgical and disposable medical products -----------
See Notes to Financial Statements.
-4-
<PAGE>
--------------
FAM VALUE FUND
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONT'D)
June 30, 1999 (Unaudited)
Shares Value
------ -----
INSURANCE AGENCY (2.6%)
Brown & Brown, Inc. ................................................... 285,162 $10,836,156
- - one of the largest independent general insurance agencies in the U.S.
LIFE INSURANCE (10.6%)
Protective Life Corporation ........................................... 334,400 11,035,200
- - individual and group life/health ins. and guaranteed investment contracts
ReliaStar Financial ................................................... 510,400 22,330,000
- - life insurance, annuities, and mutual funds
UNUM Corporation ...................................................... 194,960 10,674,060
- - leading provider of disability insurance in the U.S. and United Kingdom -----------
44,039,260
-----------
MACHINERY & EQUIPMENT (10.8%)
IDEX Corporation ...................................................... 298,500 9,813,188
- - proprietary, highly engineered industrial products & pumps
Kaydon Corporation .................................................... 636,800 21,412,400
- - custom-engineered products including bearings, filters, and piston rings
+ MOCON Inc. .......................................................... 416,718 2,448,218
- - precision measurement, process sensing, and control instruments/systems
Regal-Beloit Corporation .............................................. 199,500 4,713,188
- - supplier of power transmission equipment and cutting tools
Tennant Corporation ................................................... 201,400 6,444,800
- - commercial and institutional floor maintenance equipment and products -----------
44,831,794
-----------
MISCELLANEOUS SERVICES (2.7%)
ServiceMaster ......................................................... 594,900 11,154,375
- - commercial and residential service company -----------
Nutritional Products (1.0%)
* Natural Alternatives ................................................ 285,900 982,781
- - manufactures nutritional supplements for private label accounts
* Whole Food Markets .................................................. 65,000 3,124,063
- - national grocery store selling organic and natural products -----------
4,106,844
-----------
Pharmaceuticals (2.2%)
* Watson Pharmaceuticals .............................................. 254,875 8,936,555
- - manufactures proprietary & off-patent pharmaceutical products -----------
See Notes to Financial Statements.
-5-
<PAGE>
--------------
FAM VALUE FUND
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONT'D)
June 30, 1999 (Unaudited)
Shares Value
------ -----
PRINTING (3.6%)
* CSS Industries, Inc. ................................................ 241,500 $ 6,792,188
- - giftware, bows, Halloween and Easter novelty products
Deluxe Corporation .................................................... 25,300 985,119
- - leading producer of checks and deposit tickets in the U.S., banking software
New England Business Services ......................................... 225,200 6,953,050
- - leading supplier of business forms/printed products to small businesses -----------
14,730,357
-----------
PROPERTY AND CASUALTY INSURANCE (4.1%)
* Berkshire Hathaway .................................................. 122 8,405,800
- - holding company for various insurance & industrial companies
* Farm Family Holdings ................................................ 225,150 8,722,941
- - insurance for members of Farm Bureau -----------
17,128,741
-----------
PUBLISHING (0.5%)
Meredith Corporation .................................................. 65,000 2,250,625
- - media company involved in magazine publishing & tv broadcasting -----------
Real Estate Investment Trusts (1.2%)
New Plan Excel Realty ................................................. 193,450 3,482,100
- - oldest REIT specializing in apartments, strip shopping centers,
factory outlets
* Redwood Trust ....................................................... 101,900 1,687,719
- - acquires & manages residential real estate mortgage assets throughout U.S. -----------
5,169,819
-----------
RECREATION & ENTERTAINMENT (0.1%)
International Speedway Corporation .................................... 6,000 285,000
- - owns and operates auto racing tracks including Daytona Speedway -----------
REGISTERED INVESTMENT COMPANY (2.8%)
Allied Capital Corporation ............................................ 488,891 11,733,384
- - small business loan and venture capital corporation -----------
TELECOMMUNICATIONS (0.2%)
* ADC Telecommunications .............................................. 21,700 988,701
- - provides voice video & data systems for communications related companies -----------
See Notes to Financial Statements.
-6-
<PAGE>
--------------
FAM VALUE FUND
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONT'D)
June 30, 1999 (Unaudited)
Shares Value
------ -----
TOTAL COMMON STOCKS (Cost $216,038,350) .......................... $364,391,467
------------
Principal
SHORT TERM OBLIGATIONS (12.0%) ---------
U.S. Treasury Bills, 4.5%, with maturities to
8/5/99 (Cost $49,842,344)................................... $50,000,000 49,842,344
------------
TOTAL INVESTMENTS (Cost $265,880,694) $414,233,811
============
<FN>
* Non-income producing
+ See Note 5
</FN>
</TABLE>
See Notes to Financial Statements.
-7-
<PAGE>
--------------
FAM VALUE FUND
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999 (Unaudited)
<TABLE>
ASSETS
<S> <C>
Investment in securities at market value
(Cost $265,880,694) ................................ $ 414,233,811
Cash at interest ........................................... 18,926,654
Dividends and interest receivable .......................... 418,238
-------------
Total Assets ....................................... 433,578,703
-------------
LIABILITIES
Payable for investment securities purchased ................ 2,243,117
Accrued management fees .................................... 346,669
Accrued expenses ........................................... 63,886
-------------
Total Liabilities .................................. 2,653,672
-------------
NET ASSETS
Source of Net Assets:
Net capital paid in on shares of
beneficial interest ...........$ 281,994,242
Undistributed net investment income ... 1,726,998
Accumulated net realized losses ....... (1,149,326)
Net unrealized appreciation ........... 148,353,117
-------------
Net Assets ................................. $ 430,925,031
============
Net asset value per share; 12,277,864 shares of
beneficial interest outstanding (Note 3) ........... $35.10
======
</TABLE>
See Notes to Financial Statements.
-8-
<PAGE>
--------------
FAM VALUE FUND
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
Six Months Ended June 30, 1999 (Unaudited)
<TABLE>
INVESTMENT INCOME
Income:
<S> <C>
Dividends ......................................... $ 2,475,617
Interest .......................................... 1,605,158
-----------
Total Income ................................... 4,080,775
-----------
Expenses:
Investment advisory fee (Note 2) .................. 1,932,617
Administrative fee (Note 2) ....................... 96,631
Shareholder servicing and related expenses (Note 2) 168,580
Printing and mailing .............................. 49,038
Professional fees ................................. 27,288
Registration fees ................................. 39,633
Custodial fees .................................... 21,985
Trustees .......................................... 14,844
Other ............................................. 3,984
-----------
Total Expenses ................................. 2,354,600
-----------
Net Investment Income .......................... 1,726,175
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized loss on investments .................. (1,150,900)
Unrealized appreciation of investments ............ 8,213,733
-----------
Net Gain on Investments ........................ 7,062,833
-----------
NET INCREASE IN NET ASSETS FROM OPERATIONS .................... $ 8,789,008
===========
</TABLE>
See Notes to Financial Statements.
-9-
<PAGE>
--------------
FAM VALUE FUND
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
Six Months Ended June 30, 1999 (Unaudited)
and Year Ended December 31, 1998
<TABLE>
<CAPTION>
SIX MONTHS YEAR
ENDED ENDED
JUNE 30, DECEMBER 31,
1999 1998
----------- ------------
CHANGE IN NET ASSETS FROM OPERATIONS:
<S> <C> <C>
Net investment income ............................... $ 1,726,175 $ 1,996,085
Net realized (loss) gain on investments ............. (1,150,900) 32,029,307
Unrealized appreciation (depreciation) of investments 8,213,733 (10,390,510)
------------- -------------
Net Increase in Net Asset From Operations ... 8,789,008 23,634,882
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income ............................... -- (1,995,464)
Net realized gain on investments .................... -- (32,028,673)
CAPITAL SHARE TRANSACTIONS (Note 3): ........................ 42,867,420 56,499,164
------------- -------------
Total Increase in Net Assets ................ 51,656,428 46,109,909
NET ASSETS:
Beginning of period ................................. 379,268,603 333,158,694
------------- -------------
End of period ....................................... $ 430,925,031 $ 379,268,603
============= =============
</TABLE>
See Notes to Financial Statements.
-10-
<PAGE>
--------------
FAM VALUE FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 1. SUMMARY OF ACCOUNTING POLICIES
FAM Value Fund (the "Fund") is a series of Fenimore Asset Management
Trust, a no-load, diversified, open-end management investment company
registered under the Investment Company Act of 1940. The investment
objective of the Fund is to seek a high long term total return,
consisting of appreciation and dividend income from investments in
equity related securities. The following is a summary of significant
accounting policies followed in the preparation of its 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 sales price.
Common stocks for which no sale was reported, and over-the-counter
securities, are valued at the last reported bid price. Short-term
securities are carried at amortized cost, which approximates market
value.
b) FEDERAL INCOME TAXES
It is the Fund's policy to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies
and to distribute all of its taxable income to its shareholders.
Therefore, no provision for federal income tax is required.
c) USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
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 the trade date basis.
Interest income is accrued as earned and dividend income is recorded
on the ex-dividend date. Distributions to shareholders, which are
determined in accordance with income tax regulations, are recorded
on the ex-dividend date.
NOTE 2. INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Under the Investment Advisory Contract, the Fund pays an investment
advisory fee to Fenimore Asset Management, Inc. (the "Advisor") equal,
on an annual basis, to 1% of the Fund's average daily net assets.
Certain officers and trustees of the Fund are also officers and
directors of the Advisor. The Advisor is required to reimburse the Fund
for its expenses to the extent that such expenses, including the
advisory fee, for any fiscal year exceed 2% of the average daily net
assets. No such reimbursement was required for the six months ended
June 30, 1999. FAM Shareholder Services, Inc. (FSS), a company under
common control with the Advisor, serves as a shareholder servicing
agent for which it received a monthly fee of $2.00 per shareholder
account. Additionally, FSS serves as the fund administrative agent for
which it received a fee equal, on an annual basis, to .050% of the
Fund's average daily net assets.
-11-
<PAGE>
--------------
FAM VALUE FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 3. SHARES OF BENEFICIAL INTEREST
At June 30, 1999, an unlimited number of $.001 par value shares of
beneficial interest were authorized. Transactions were as follows:
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 1999 December 31, 1998
---------------- -----------------
Shares Amount Shares Amount
------ ------ ------ ------
<S> <C> <C> <C> <C>
Shares sold 2,990,279 $100,313,634 3,874,977 $140,367,004
Shares issued on
reinvestment of
dividends -- -- 938,933 31,689,009
Shares redeemed (1,725,385) (57,446,214) (3,118,717) (115,556,849)
------------------------ -------------------------
Net increase 1,264,894 $42,867,420 1,695,193 $56,499,164
======================== =========================
</TABLE>
NOTE 4. INVESTMENT TRANSACTIONS
During the period ended June 30, 1999, purchases and sales of
investment securities, other than short term obligations, were
$59,928,190 and $10,658,142. The cost of securities for federal income
tax purposes is the same as shown in the investment portfolio. Realized
gains and losses are reported on an identified cost basis.
The aggregate gross unrealized appreciation and depreciation of
portfolio securities, based on cost for federal income tax purposes,
was as follows:
Unrealized appreciation $159,524,875
Unrealized depreciation (11,171,758)
------------
Net unrealized appreciation $148,353,117
============
NOTE 5. HOLDINGS OF 5% VOTING SECURITIES OF PORTFOLIO COMPANIES
Investments in portfolio companies, 5% or more of whose outstanding
voting securities are held by the Fund, are defined in the Investment
Company Act of 1940 as affiliated companies. Investments in affiliated
companies as of June 30, 1999, amounted to $52,511,045. For the period
ended June 30, 1999, dividend income of $196,212 was received from
affiliated companies.
-12-
<PAGE>
--------------
FAM VALUE FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 6. SELECTED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
PER SHARE INFORMATION SIX MONTHS ENDED YEARS ENDED DECEMBER 31,
(For a share outstanding June 30, 1999 1998 1997 1996 1995 1994
throughout the period) ---------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period .......... $ 34.44 $ 35.76 $ 26.53 $ 24.58 $ 21.04 $ 20.40
Income from investment operations:
Net investment income ................. 0.15 0.20 0.08 0.18 0.21 0.12
Net realized and unrealized gain (loss)
on investments ................ 0.51 1.94 10.29 2.58 3.94 1.27
Total from investment operations ...... 0.66 2.14 10.37 2.76 4.15 1.39
Less distributions:
Dividends from net
investment income ............. -- (0.20) (0.08) (0.18) (0.21) (0.12)
Distributions from net
realized gains ................ -- (3.26) (1.06) (0.63) (0.40) (0.63)
Total distributions ................... -- (3.46) (1.14) (0.81) (0.61) (0.75)
Change in net asset value for the period ...... 0.66 (1.32) 9.23 1.95 3.54 0.64
Net asset value, end of period ................ $ 35.10 $ 34.44 $ 35.76 $ 26.53 $ 24.58 $ 21.04
Total Return .................................. 3.87%** 6.19% 39.06% 11.23% 19.71% 6.82%
Ratios/supplemental data
Net assets, end of period (000) ............... $430,925 $379,269 $333,159 $253,378 $267,158 $210,579
Ratios to average net assets of:
Expenses .............................. 1.22%** 1.19% 1.24% 1.27% 1.25% 1.39%
Net investment income ................. 0.44%** 0.57% 0.25% 0.64% 0.92% 0.58%
Portfolio turnover rate ...................... 3.31% 16.67% 9.47% 12.48% 9.67% 2.15%
<FN>
** Annualized
</FN>
</TABLE>
-13-
<PAGE>
----------------------
FAM EQUITY-INCOME FUND
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
COMMON STOCKS (97.1%) Shares Value
------ -----
BANKING (13.2%)
<S> <C> <C>
Home Port Bank ........................................................ 8,000 $191,000
- - single bank holding company for Nantucket Saving Bank
Peoples Heritage Financial ............................................ 15,300 287,831
- - multi-bank holding co. operating 142 offices throughout Northeast
SouthTrust Corporation ................................................ 3,900 149,663
- - bank holding company headquartered in Alabama
TrustCo Bank Corporation NY ........................................... 10,765 289,309
- - regional bank in the upstate New York area --------
917,803
--------
CHEMICAL (8.1%)
RPM, Inc. ............................................................. 23,625 335,180
- - specialized chemical protective coatings, fabrics, and wall coverings
WD-40 Company ......................................................... 9,000 225,000
- - manufactures and distributes lubricant products --------
560,180
--------
COMPUTER SOFTWARE & SERVICES (6.0%)
Reynolds & Reynolds ................................................... 18,000 419,625
- - software for automotive dealers and business forms --------
DIVERSIFIED MANUFACTURING (4.6%)
CLARCOR, Inc. ......................................................... 6,300 120,881
- - manufactures industrial filtration and container products
Raven Industries ...................................................... 12,400 198,400
- - manufactures plastics, electronics, and sewn products --------
319,281
--------
FINANCIAL SERVICES (5.9%)
Waddell & Reed ........................................................ 15,000 411,563
- - an underwriter and distributor of 36 mutual fund portfolios --------
HEALTH CARE (4.6%)
Landauer, Inc. ........................................................ 10,900 321,550
- - leader in radiation testing and personal dosimeters --------
INSURANCE AGENCY (5.1%)
Brown & Brown, Inc. ................................................... 9,300 353,400
- - one of the largest independent general insurance agencies in the U.S. --------
See Notes to Financial Statements.
-14-
<PAGE>
----------------------
FAM EQUITY-INCOME FUND
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONT'D)
June 30, 1999 (Unaudited)
Shares Value
------ -----
LIFE INSURANCE (5.0%)
ReliaStar Financial ................................................... 8,000 $ 350,000
- - life insurance, annuities, and mutual funds --------
MACHINERY & EQUIPMENT (15.7%)
IDEX Corporation ...................................................... 12,500 410,938
- - proprietary, highly engineered industrial products & pumps
MOCON ................................................................. 60,000 352,500
- - precision measurement, process sensing, and control
instruments/systems
Regal Beloit .......................................................... 14,000 330,750
- - supplier of power transmission equipment and cutting tools ----------
1,094,188
----------
MISCELLANEOUS SERVICES (4.3%)
ServiceMaster ......................................................... 16,000 300,000
- - venture capital corporation for entrepreneurs and management ----------
PRINTING (8.9%)
Deluxe Corporation .................................................... 8,400 327,075
- - leading producer of checks and deposit tickets in the U.S.,
banking software
New England Business Services ......................................... 9,400 290,225
- - leading supplier of business forms/printed products to small
businesses ----------
617,300
----------
REAL ESTATE INVESTMENT TRUSTS (5.9%)
New Plan Excel Realty ................................................. 17,100 307,800
- - oldest REIT specializing in apartments, strip shopping centers,
factory outlets
* Redwood Trust ....................................................... 6,000 99,374
- - acquires & manages residential real estate mortgage assets
throughout U.S. ----------
407,174
----------
REGISTERED INVESTMENT COMPANY (5.9%)
Allied Capital Corporation ............................................ 17,014 408,336
- - venture capital corporation for entrepreneurs and management ----------
TELECOMMUNICATIONS (4.0%)
Hickory Tech Corporation .............................................. 24,700 274,788
- - a small local telephone company in Minnesota ----------
TOTAL COMMON STOCKS (Cost $5,627,255) ................................. $6,755,189
==========
See Notes to Financial Statements.
-15-
<PAGE>
----------------------
FAM EQUITY-INCOME FUND
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONT'D)
June 30, 1999 (Unaudited)
Principal Value
--------- -----
SHORT TERM OBLIGATIONS (2.9%)
U.S. Treasury Bills, 4.5% with maturities to
8/5/99 (cost $199,179) ........................................ $200,000 $ 199,179
----------
TOTAL INVESTMENTS (Cost $5,826,434) ................................... $6,954,367
==========
<FN>
* Non-income producing
</FN>
</TABLE>
See Notes to Financial Statements.
-16-
<PAGE>
----------------------
FAM EQUITY-INCOME FUND
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999 (Unaudited)
<TABLE>
ASSETS
<S> <C>
Investment in securities at market value
(Cost $5,826,434) ................................... $ 6,954,367
Cash at interest ............................................ 324,488
Dividends and interest receivable ........................... 19,243
Deferred organization costs ................................. 11,127
-----------
Total Assets ........................................ 7,309,225
-----------
LIABILITIES
Payable to investment advisor ............................... 29,252
Accrued expenses ............................................ 3,710
-----------
Total Liabilities ................................... 32,962
-----------
NET ASSETS
Source of Net Assets:
Net capital paid in on shares of
beneficial interest .............$ 6,295,549
Undistributed net investment income ..... (107)
Accumulated net realized gain ........... (147,082)
Net unrealized appreciation ............. 1,127,933
-----------
Net Assets .................................. $ 7,276,263
===========
Net asset value per share; 537,251 shares of
beneficial interest outstanding (Note 3) ............ $ 13.54
===========
</TABLE>
See Notes to Financial Statements.
-17-
<PAGE>
----------------------
FAM EQUITY-INCOME FUND
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
STATEMENT OF OPERATIONS
Six Months Ended June 30, 1999 (Unaudited)
<TABLE>
INVESTMENT INCOME
INCOME:
<S> <C>
Dividends ......................................... $ 107,439
Interest .......................................... 13,261
---------
Total Income .................................. 120,700
---------
Expenses:
Investment advisory fee (Note 2) .................. 32,814
Administrative fee (Note 2) ....................... 1,633
Custodian fee ..................................... 1,208
Organization costs ................................ 1,484
Shareholder servicing and related expenses (Note 2) 2,864
Registration fees ................................. 12,698
Professional fees ................................. 15,536
Trustees .......................................... 14,480
Printing and mailing .............................. 1,617
Other ............................................. 1,060
---------
Total Expenses ................................ 85,394
---------
Less: Investment advisory fee and other expenses
waived or assumed by advisor (Note 2) .... (36,173)
---------
Net Expenses .................................. 49,221
---------
Net Investment Income ......................... 71,479
---------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized loss on investments .......................... (126,866)
Unrealized appreciation of investments .................... 169,856
---------
Net Gain on Investments ....................... 42,990
---------
NET INCREASE IN NET ASSETS FROM OPERATIONS ........................ $ 114,469
=========
</TABLE>
-18-
<PAGE>
----------------------
FAM EQUITY-INCOME FUND
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
Six Months Ended June 30, 1999 (Unaudited)
and Year Ended December 31, 1998
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
June 30, December 31,
1999 1998
----------- -------------
CHANGE IN NET ASSETS FROM OPERATIONS:
<S> <C> <C>
Net investment income ............................ $ 71,479 $ 126,135
Net realized loss on investments ................. (126,866) (20,165)
Unrealized appreciation of investments ........... 169,856 147,358
----------- -----------
Net Increase in Net Assets From Operations 114,469 253,328
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income ............................ (71,607) (126,135)
Net realized gain on investments ................. -- --
CAPITAL SHARE TRANSACTIONS (Note 3): ..................... 508,467 2,211,959
----------- -----------
Total Increase in Net Assets ............. 551,329 2,339,152
NET ASSETS:
Beginning of period .............................. 6,724,934 4,385,782
----------- -----------
End of period .................................... $ 7,276,263 $ 6,724,934
=========== ===========
</TABLE>
See Notes to Financial Statements.
-19-
<PAGE>
----------------------
FAM EQUITY-INCOME FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 1. SUMMARY OF ACCOUNTING POLICIES
FAM Equity-Income Fund (the "Fund") is a series of Fenimore Asset
Management Trust, a no-load, diversified, open-end management
investment company registered under the Investment Company Act of 1940.
The investment objective of the Fund is to provide current income and
long term capital appreciation from investing primarily in
income-producing equity securities. The following is a summary of
significant accounting policies followed in the preparation of its
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 sales price.
Common stocks for which no sale was reported, and
over-the-counter securities, are valued at the last reported bid
price. Short-term securities are carried at amortized cost, which
approximates market value.
b) FEDERAL INCOME TAXES
It is the Fund's policy to comply with the requirements of the
Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to its
shareholders. Therefore, no provision for federal income tax is
required.
c) USE OF ESTIMATES
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of increases and decreases in net assets from
operations during the reporting period. Actual results could
differ from those estimates.
d) ORGANIZATION COSTS
Organization costs have been capitalized and are being amortized
on a straight-line basis over five years.
e) OTHER
Securities transactions are recorded on the trade date basis.
Interest income is accrued as earned and dividend income is
recorded on the ex-dividend date. Distributions to shareholders,
which are determined in accordance with income tax regulations,
are recorded on the ex-dividend date.
NOTE 2. INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Under the Investment Advisory Contract, the Fund pays an investment
advisory fee to Fenimore Asset Management, Inc. (the "Advisor") equal,
on an annual basis, to 1% of the Fund's average daily net assets.
Certain officers and trustees of the Fund are also officers and
directors of the Advisor. The Advisor is required to reimburse the Fund
for its expenses to the extent that such expenses, including the
advisory fee, for any fiscal year exceed 2% of the average daily net
assets. Although not required to do so, the Advisor further waived fees
and assumed expenses, aggregating $36,173, so as to reduce the Fund's
expense ratio to 1.5% of average daily net assets. FAM Shareholder
Services, Inc. (FSS), a company under common control with the Advisor,
serves as a shareholder servicing agent for which it received a monthly
fee of $2.00 per shareholder account. Additionally, FSS serves as the
fund administrative agent for which it received a fee equal, on an
annual basis, to .050% of the Fund's average daily net assets.
-20-
<PAGE>
----------------------
FAM EQUITY-INCOME FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 3. SHARES OF BENEFICIAL INTEREST
At June 30, 1999, an unlimited number of $.001 par value shares of
beneficial interest were authorized. Transactions were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1999 DECEMBER 31, 1998
---------------- -----------------
Shares Amount Shares Amount
------ ------ ------ ------
<S> <C> <C> <C> <C>
Shares sold ................. 72,414 $ 921,246 213,214 $2,838,703
Shares issued on reinvestment
of dividends ........ 5,070 64,278 8,310 109,718
Shares redeemed ............. (37,441) (477,057) (56,490) (736,462)
--------------------- ------- ----------
Net increase ........ 40,043 $ 508,467 165,034 $2,211,959
===================== =====================
</TABLE>
NOTE 4. INVESTMENT TRANSACTIONS
During the period ended June 30, 1999, purchases and sales of
investment securities, other than short term obligations, were
$1,032,831and $249,109. The cost of securities for federal income tax
purposes is the same as shown in the investment portfolio. Realized
gains and losses are reported on an identified cost basis.
The aggregate gross unrealized appreciation and depreciation of
portfolio securities, based on cost for federal income tax purposes,
was as follows:
Unrealized appreciation $ 1,321,326
Unrealized depreciation (193,393)
-----------
Net unrealized appreciation $ 1,127,933
-21-
<PAGE>
----------------------
FAM EQUITY-INCOME FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
<TABLE>
<CAPTION>
NOTE 5. SELECTED FINANCIAL INFORMATION
April 1, 1996
PER SHARE INFORMATION Six Months Ended Years Ended December 31, (inception) to
(For a share outstanding June 30, 1999 1998 1997 December 31, 1996
throughout the period) ---------------- ------------------------ -----------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period ........ $ 13.53 $ 13.20 $ 10.99 $ 10.00
Income from investment operations:
Net investment income ............... 0.14 0.28 0.27 0.19
Net realized and unrealized gain
on investments .............. 0.01 0.33 2.65 0.99
Total from investment operations .... 0.15 0.61 2.92 1.18
Less distributions:
Dividends from net investment income (0.14) (0.28) (0.27) (0.19)
Distributions from net realized gains -- -- (.44) --
Total distributions ................. (0.14) (0.28) (0.71) (0.19)
Change in net asset value for the period .... 0.01 0.33 2.21 0.99
Net asset value, end of period .............. $ 13.54 $ 13.53 $ 13.20 $ 10.99
TOTAL RETURN ................................ 2.15%** 4.67% 26.90% 15.90%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000) ............. $ 7,276 $ 6,725 $ 4,386 $ 2,539
Ratios to average net assets of:
Expenses, total ..................... 2.56%** 2.09% 2.50% 5.04%
Expenses, net of fees waived and
expenses assumed by advisor . 1.50% 1.50% 1.50% 1.50%
Net investment income ............... 2.16%** 2.17% 2.27% 3.05%
Portfolio turnover rate ..................... 4.09% 10.55% 15.63% 0.00%
<FN>
** Annualized
</FN>
</TABLE>
See Notes to Financial Statements.
<PAGE>
INVESTMENT ADVISOR
- ------------------
Fenimore Asset Management, Inc.
Cobleskill, NY
TRUSTEES
- --------
Joseph J. Bulmer, PhD
Roger A. Hannay
John W. Krueger, CLU
Fred "Chico" Lager
Thomas O. Putnam
Diane C. Van Buren
Bernard H. Zais, CLU
SHAREHOLDER SERVICING AGENT
- ---------------------------
FAM Shareholder Services, Inc.
Cobleskill, NY
Fam Funds
111 North Grand Street
P.O. Box 399
Cobleskill, NY 12043
(800) 932-3271
www.famfunds.com
