FAM
VALUE FUND
EQUITY-INCOME FUND
SEMI-ANNUAL REPORT
June 30, 2000
100%
No-Load
Funds
FAM FUNDS
P.O. Box 399
Cobleskill, NY 12043
(800) 932-3271
www.famfunds.com
<PAGE>
Dear Fellow Shareholder:
Performance results for the six months ending June 30, 2000 for the FAM
Value Fund and the FAM Equity-Income Fund are +.80% and -1.8% respectively. Our
comparative indexes - the S&P 500 and Russell 2000 returned -1.0% and +2.4%
respectively. With barely four percentage points separating both FAM Funds and
two major indexes, one might be tempted to assume that the first half of 2000
was a fairly uneventful time for investors. Not so.
The year thus far has been both exciting and nerve-wracking. January and
February saw the euphoria which began in late 1999 for high tech and internet
stocks continue to gain momentum. By early March the technology-laden Nasdaq
index was driven to all time highs. Just when it seemed this boom would go on
forever, events took a turn that has been positive for our shareholders.
We are now experiencing a resurgence in value stocks that began during the
first week of March. We believe the catalyst for this change was that the
unrealistically low valuations of non-technology stocks were finally too
compelling to ignore. As an example of just how fast market sentiment and prices
can change, consider the price fluctuations experienced by the Value Fund. On
March 8, 2000 the Fund NAV hit a low of $26.92 per share. Then the Fund closed
the second quarter on June 30 at $31.61, up over 17% from that March low. We are
encouraged that this may mean a return to fundamentals and our value approach.
The majority of our successful stocks during the first six months came from
the financial industry. We anticipated that the repeal of Glass-Steagall would
eventually open the gates to a new wave of mergers and acquisitions in this
sector and already a number of our financial stocks have benefited. For example,
ReliaStar, a top ten holding in both funds will be acquired by ING Insurance in
September for $54.00. The stock is up 122% from its low in March and up 35%
year-to-date. Another successful holding in both funds is Waddell & Reed, a
money management firm. This stock is up 82% for the first six months of 2000 as
recent mergers in the investment management business have fueled speculation
that this company may be acquired.
Outside of the financial area, a health care company by the name of Watson
Pharmaceuticals, has helped the Value Fund. With half of its business now coming
from the lucrative branded side of the drug business, and with the shadows cast
by the FDA beginning to dissipate, Watson is up 50% year-to-date.
On the downside, both funds have been hurt by SouthTrust and New England
Business Services, down year-to-date by 39% and 32% respectively. Shareholders
may ask why we still hold these stocks after experiencing such a large decline
in stock price. Let's take a closer look at SouthTrust as an illustration of our
investment philosophy and why we continue to believe that it is still a good
investment.
SouthTrust is headquartered in Birmingham, AL. What we like about this bank
is its strategy of operating in high growth markets such as Florida, Texas,
North Carolina, and Atlanta. These regional markets are experiencing strong
population growth which will support the bank's growth in the future.
Let's do the numbers and take a look at one way we determine SouthTrust's
near-term prospects. Historically, the company has experienced healthy returns
with EPS (earnings per share) increasing at a 13% rate over the last five years.
We believe this trend will continue and expect to see EPS growth of at least 10%
over the next few years. As of June 30, the stock price was $22.63, which is
eight times this year's expected earnings per share of $2.80. If the company can
grow EPS by 10% for the next three years, it will earn $3.73 in 2003. If the
stock can trade at a reasonable price-to-earnings ratio of ten times earnings,
we will have a stock price of $37.30 in three years, or a compound return of
18%. Better still, the stock pays a dividend of $1.00 a share which is a yield
of 4.5%. The investor's total return would be the 18% price change plus the 4.5%
dividend yield for a total return over 20% per year!
-1-
<PAGE>
To make money in this stock we don't need to count on wild assumptions
about growth or unfounded expectations about the stock market. We simply need
reasonable growth in earnings and some modest recognition from the market. This
is a company that we are confident will contribute to the same strong
performance that we have seen in the past. Both our funds are filled with
similar investments. One shareholder recently asked us why we are optimistic
about the future. You may have a similar question. The simple answer is the
economic performance of the companies that we own. Below is a chart showing the
average financial performance of the companies owned by each fund.
Expected EPS Growth Dividend Yield
FAM Value 13% 1.8%
FAM Equity-Income 11% 3.4%
Over long periods of time (five to six years) the total return in a stock
should be equal to the growth in earnings plus any dividends received. As you
can see from the table above, both funds contain stocks with the strong growth
and dividend yields required to meet our objective of doubling an investment
every five to six years, or a 12% to 15% annualized return.
We do not know for certain whether the change we perceived in early March
marks the beginning of a new phase in market attitude toward investing or not.
We are sure, however, that change is inevitable and that the investment
qualities which have proven to be durable throughout all of the marketplace's
past mood swings will be recognized in the future.
Sincerely,
/s/ THOMAS O. PUTNAM /S/ JOHN D. FOX /S/ PAUL C. HOGAN
-------------------- --------------- -----------------
Thomas O. Putnam, Chairman John D. Fox, CFA Paul C. Hogan, CFA
-2-
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<TABLE>
<CAPTION>
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FAM VALUE FUND
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STATEMENT OF INVESTMENTS
June 30, 2000 (Unaudited)
SHARES VALUE
------ -----
COMMON STOCKS (95.3%)
Banking (13.5%)
<S> <C> <C>
Bank North Group .......................................................... 699,207 $10,706,607
- multi-bank holding company in Burlington, VT
Centura Banks ............................................................. 178,255 6,049,529
- bank holding company located in North Carolina
M&T Bancorp ............................................................... 17,300 7,785,000
- bank holding company located in Buffalo, NY
North Folk Bancorp ........................................................ 316,950 4,793,869
- a bank holding company located on Long Island, NY
SouthTrust Corporation .................................................... 213,000 4,819,125
- bank holding company headquartered in Alabama
TrustCo Bank Corporation NY ............................................... 373,514 4,668,925
- operates 48 bank offices in the Upstate NY region
U.S. Bancorp .............................................................. 209,747 4,037,630
- bank holding company headquartered in -----------
Minneapolis, Minnesota .................................................. 42,860,685
-----------
CHEMICAL (0.9%)
RPM, Inc. ................................................................. 275,900 2,793,488
- specialized chemical protective coatings, -----------
fabrics, and wall coverings
COMPUTER SOFTWARE & Services (3.3%)
Reynolds & Reynolds ....................................................... 569,900 10,400,675
- software for automotive dealers and business forms -----------
ELECTRICAL/ELECTRONICS (0.8%)
*American Power Conversion ................................................ 62,000 2,530,375
- a manufacturer of power protection equipment for computers -----------
FINANCIAL SERVICES (24.6%)
American Express .......................................................... 78,000 4,065,750
- financial, travel, and information services firm
Citigroup ................................................................. 68,825 4,146,706
- P &C insurance, life insurance, Smith Barney & Salomon Brothers
Financial Secs Assurance Hldgs. Ltd. ...................................... 76,800 5,827,200
- financial guaranty insurer of municipal bonds
and asset-backed securities
Franklin Resources ........................................................ 262,950 7,987,106
- investment mgmt. co.; offers Franklin Templeton
& Mutual Series Funds
H & R Block ............................................................... 155,435 5,032,208
- leader in individual and small business tax preparation
-3-
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FAM VALUE FUND
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STATEMENT OF INVESTMENTS (Cont'd)
June 30, 2000 (Unaudited)
SHARES VALUE
------ -----
FINANCIAL SERVICES (24.6%) (Cont'd)
ReliaStar Financial ....................................................... 402,250 $21,092,984
- life insurance, annuities, and mutual funds
Waddell & Reed ............................................................ 157,100 5,154,844
- an underwriter and distributor of 36 mutual fund portfolios
Waddell & Reed Class B Shares ............................................. 118,800 3,452,625
- an underwriter and distributor of 36 mutual fund portfolios
White Mountains Insurance ................................................. 133,275 21,324,000
- an underwriter and distributor of 36 mutual fund portfolios ............. ------- -----------
78,083,423
-----------
HEALTHCARE (6.6%)
*+CONMED Corporation ...................................................... 807,562 20,895,667
- advanced electrosurgical and disposable medical products -----------
INSURANCE AGENCY (4.8%)
Brown & Brown ............................................................. 295,162 15,348,424
- one of the largest independent general -----------
insurance agencies in the U.S. ..........................................
LIFE INSURANCE (4.1%)
Protective Life Corporation ............................................... 489,900 13,043,588
- individual and group life/health ins. and -----------
guaranteed investment contracts
MACHINERY & Equipment (12.0%)
IDEX Corporation .......................................................... 343,000 10,825,938
- proprietary, highly engineered industrial products & pumps
Kaydon Corporation ........................................................ 665,800 13,981,800
- custom-engineered products including bearings,
filters, and piston rings
+ MOCON ................................................................... 416,718 2,344,039
- precision measurement, process sensing,
and control instruments/systems
Regal-Beloit Corporation .................................................. 208,100 3,316,594
- supplier of power transmission equipment
and cutting tools
Tennant Corporation ....................................................... 201,400 7,552,500
- commercial and institutional floor maintenance -----------
equipment and products .................................................. 38,020,871
MISCELLANEOUS SERVICES (3.9%)
*Labor Ready, Inc. ........................................................ 323,350 2,142,194
- commercial and residential service company
ServiceMaster ............................................................. 901,025 10,249,159
- commercial and residential service company .............................. -----------
12,391,353
-----------
NUTRITIONAL PRODUCTS (1.4%)
*Whole Food Markets ....................................................... 108,475 4,481,373
- national grocery store selling organic and natural products -----------
-4-
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FAM VALUE FUND
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STATEMENT OF INVESTMENTS (Cont'd)
June 30, 2000 (Unaudited)
SHARES VALUE
------ -----
PHARMACEUTICALS (6.2%)
*Watson Pharmaceutical .................................................... 366,100 $19,677,875
- manufactures proprietary & off-patent pharmaceutical products -----------
PRINTING (3.8%)
*CSS Industries, Inc. ..................................................... 241,500 4,935,656
- giftware, bows, Halloween and Easter novelty products
Deluxe Corporation ........................................................ 66,300 1,562,194
- leading producer of checks and deposit tickets
in the U.S., banking software
New England Business Services ............................................. 333,025 5,411,656
- leading supplier of business forms/printed -----------
products to small businesses in U.S. .................................... 1,909,506
-----------
PROPERTY AND CASUALTY INSURANCE (4.8%)
*Berkshire Hathaway ....................................................... 215 11,567,000
- holding company for various insurance
and industrial companies
*Farm Family Holdings ..................................................... 122,800 3,799,125
- insurance for members of Farm Bureau .................................... -----------
15,366,125
-----------
PUBLISHING (1.5%)
Meredith Corporation ...................................................... 140,950 4,757,063
- media company involved in magazine publishing -----------
& tv broadcasting
RECREATION AND ENTERTAINMENT (0.2%)
*International Speedway Corporation ....................................... 12,000 496,500
- owns and operates auto racing tracks including Daytona -----------
REGISTERED INVESTMENT COMPANY (2.6 %)
Allied Capital Corporation ................................................ 488,891 8,311,146
- small business loan and venture capital corporation -----------
TELECOMMUNICATIONS (0.4%)
*ADC Telecommunications ................................................... 13,400 1,123,925
-----------
TOTAL COMMON STOCKS (Cost $215,657,920) ................................... $302,492,063
SHORT TERM OBLIGATIONS (4.2%) ............................................. Principal
---------
U.S. Treasury Bills, 5.7%, with maturities to
8/3/00 (Cost $14,923,000) ......................................... $15,000,000 14,923,000
-----------
TOTAL INVESTMENTS (Cost $230,580,920) ..................................... $317,415,062
============
<FN>
* Non-income producing
+ See Note 5
</FN>
</TABLE>
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<TABLE>
<CAPTION>
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FAM VALUE FUND
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STATEMENT OF ASSETS AND LIABILITIES
June 30, 2000 (Unaudited)
ASSETS
<S> <C>
Investment in securities at market value
(Cost $230,580,920) ................................. $317,415,062
Cash at interest ............................................ 10,851,159
Receivable for investment securities sold ................... 627,429
Dividends and interest receivable ........................... 319,827
------------
Total Assets ........................................ 329,213,477
------------
LIABILITIES
Payable for investment securities purchased ................. 432,690
Accrued management fees ..................................... 272,190
Accrued expenses ............................................ 61,307
------------
Total Liabilities ................................... 766,187
------------
NET ASSETS Source of Net Assets:
Net capital paid in on shares of
beneficial interest ............... $224,889,651
Undistributed net investment income ....... 1,716,872
Accumulated net realized gains ............ 15,006,625
Net unrealized appreciation ............... 86,834,142
------------
Net Assets .................................. $328,447,290
============
Net asset value per share; 10,391,524 shares of
beneficial interest outstanding (Note 3) ............ $ 31.61
============
See Notes to Financial Statements.
-6-
</TABLE>
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<TABLE>
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FAM VALUE FUND
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STATEMENT OF OPERATIONS
Six Months Ended June 30, 2000 (Unaudited)
<S> <C>
INVESTMENT INCOME
Income:
Dividends ......................................... $ 3,045,724
Interest .......................................... 716,252
------------
Total Income ...................................................... 3,761,976
------------
Expenses:
Investment advisory fee (Note 2) .................. 1,636,324
Administrative fee (Note 2) ....................... 81,816
Shareholder servicing and related expenses (Note 2) 149,542
Printing and mailing .............................. 62,307
Professional fees ................................. 36,123
Registration fees ................................. 23,615
Custodial fees .................................... 15,531
Trustees .......................................... 13,360
Other ............................................. 27,269
------------
Total Expenses .................................................... 2,045,887
------------
Net Investment Income ............................................. 1,716,089
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments .......................... 15,005,085
Unrealized depreciation of investments .................... (16,935,080)
------------
Net Loss on Investments ........................................... (1,929,995)
------------
NET DECREASE IN NET ASSETS FROM OPERATIONS ........................ $ (213,906)
============
See Notes to Financial Statements.
-7-
</TABLE>
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<TABLE>
<CAPTION>
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FAM VALUE FUND
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STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended June 30, 2000 (Unaudited)
and Year Ended December 31, 1999
SIX MONTHS YEAR ENDED
ENDED JUNE DECEMBER 31,
2000 1999
---- ----
CHANGE IN NET ASSETS FROM OPERATIONS:
<S> <C> <C>
Net investment income ........................... $ 1,716,089 $ 3,396,972
Net realized gain on investments ................ 15,005,000 12,712,000
Unrealized depreciation of investments .......... (16,935,080) (36,370,162)
------------- -------------
Net Decrease in Net Asset From Operations (213,906) (20,261,190)
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income ........................... -- (3,397,011)
Net realized gain on investments ................ -- (12,712,034)
CAPITAL SHARE TRANSACTIONS (Note 3): .................... (44,616,024) 30,378,852
------------- -------------
Total Decrease in Net Assets ............ (44,829,930) (5,991,383)
NET ASSETS:
Beginning of period ............................. 373,277,220 379,268,603
------------- -------------
End of period ................................... $ 328,447,290 $ 373,277,220
============= =============
See Notes to Financial Statements.
-8-
</TABLE>
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FAM VALUE FUND
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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 period ended June 30,
2000. 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.
-9-
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FAM VALUE FUND
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NOTES TO FINANCIAL STATEMENTS
(unaudited)
NOTE 3. SHARES OF BENEFICIAL INTEREST
At June 30, 2000, 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, 2000 December 31, 1999
------------- -----------------
Shares Amount Shares Amount
------ ------ ------ ------
<S> <C> <C> <C> <C>
Shares sold ............. 1,854,749 $ 56,024,427 4,349,591 $ 145,366,999
Shares issued on reinvestment
of dividends ............ -- -- 482,726 14,732,786
Shares redeemed ......... (3,369,804) (100,640,451) (3,938,708) (129,720,933)
---------- ------------- ---------- -------------
Net increase (decrease) . (1,515,055) ($ 44,616,024) 893,609 $ 30,378,852
========== ============= ========== =============
</TABLE>
NOTE 4. INVESTMENT TRANSACTIONS
During the period ended June 30, 2000, purchases and sales of investment
securities, other than short term obligations, were $9,606,031 and
$46,540,184. 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 ..................... $ 104,137,782
Unrealized depreciation ..................... (17,303,640)
-------------
Net unrealized appreciation ................. $ 86,834,142
=============
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, 2000, amounted to $23,239,704. For the period
ended June 30, 2000, dividend income of $43,755 was received from
affiliated companies.
-10-
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FAM VALUE FUND
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NOTES TO FINANCIAL STATEMENTS
(unaudited)
NOTE 6. FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Per share information Six Months Ended Years Ended December 31,
(For a share outstanding June 30, 2000 1999 1998 1997 1996 1995
throughout the period) ------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 31.35 $ 34.44 $ 35.76 $ 26.53 $ 24.58 $ 21.04
Income from investment operations:
Net investment income .............. 0.16 0.29 0.20 0.08 0.18 0.21
Net realized and unrealized gain
(loss) on investments ...... 0.10 (2.00) 1.94 10.29 2.58 3.94
Total from investment operations ... 0.26 (1.71) 2.14 10.37 2.76 4.15
Less distributions:
Dividends from net
investment income .......... -- (0.29) (0.20) (0.08) (0.18) (0.21)
Distributions from net
realized gains ............. -- (1.09) (3.26) (1.06) (0.63) (0.40)
Total distributions ................ -- (1.38) (3.46) (1.14) (0.81) (0.61)
Change in net asset value for
the period ................. 0.26 (3.09) (1.32) 9.23 1.95 3.54
Net asset value, end of period ..... $ 31.61 $ 31.35 $ 34.44 $ 35.76 $ 26.53 $ 24.58
Total Return ....................... 1.68% (4.84%) 6.19% 39.06% 11.23% 19.71%
Ratios/supplemental data
Net assets, end of period (000) .... $328,447 $373,277 $379,269 $333,159 $253,378 $267,158
Ratios to average net assets of:
Expenses ................... 1.25%* 1.23% 1.19% 1.24% 1.27% 1.25%
Net investment income ...... 0.52% 0.86% 0.57% 0.25% 0.64% 0.92%
Portfolio turnover rate .... 3.16% 16.16% 16.67% 9.47% 12.48% 9.67%
<FN>
* Annualized
</FN>
</TABLE>
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STATEMENT OF INVESTMENTS
June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
COMMON STOCKS (95.8%)
BANKING (14.4%)
<S> <C> <C>
Bank North Group ......................................................... 15,300 $ 234,281
- multi-bank holding company in Burlington, VT
Home Port Bank ........................................................... 8,000 184,000
- single bank holding company for Nantucket Saving
Bank North Fork Bancorp .................................................. 4,800 72,600
- bank holding company located on Long Island, NY
SouthTrust Corporation ................................................... 3,900 88,238
- bank holding companyheadquartered in Alabama
TrustCo Bank Corporation NY .............................................. 21,530 269,125
- regional bank in the upstate New York area ............................. ----------
848,244
----------
CHEMICAL (4.1%)
RPM, Inc. ................................................................ 23,625 239,203
- specialized chemical protective coatings, ----------
fabrics, and wall coverings
COMPUTER SOFTWARE & Services (5.3%)
Reynolds & Reynolds ...................................................... 17,000 310,250
- software for automotive dealers and business forms ----------
FINANCIAL SERVICES (8.7%)
H & R Block .............................................................. 6,000 194,250
- leader in individual and small business tax preparation
Waddell & Reed ........................................................... 9,750 319,922
- an underwriter and distributor of 36 mutual fund portfolios ............ ----------
514,172
----------
HEALTH CARE (2.9%)
Landauer, Inc. ........................................................... 10,900 169,631
- leader in radiation testing and personal dosimeters ----------
INSURANCE AGENCY (8.2%)
Brown & Brown, Inc. ...................................................... 9,300 483,600
- one of the largest independent general ----------
insurance agencies in the U.S. .........................................
LIFE INSURANCE (7.1%)
ReliaStar Financial ...................................................... 8,000 419,500
- life insurance, annuities, and mutual funds ----------
-12-
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FAM EQUITY-INCOME FUND
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STATEMENT OF INVESTMENTS (Cont'd)
June 30, 2000 (Unaudited)
SHARES VALUE
---------- ----------
MACHINERY & Equipment (21.5%)
IDEX Corporation ......................................................... 12,500 $ 394,531
- proprietary, highly engineered industrial
products & pumps
Kaydon Corporation ....................................................... 11,400 239,400
- custom-engineered products including bearings,
filters, and piston rings
MOCON .................................................................... 22,000 123,750
- precision measurement, process sensing, and
control instruments/systems
Regal-Beloit ............................................................. 14,000 223,125
- supplier of power transmission equipment and cutting tools
Tennant Corporation ...................................................... 7,500 281,250
- commercial and institutional floor maintenance ----------
equipment and products ................................................. 1,262,056
----------
MISCELLANEOUS SERVICES (5.2%)
ServiceMaster ............................................................ 27,000 307,125
- commercial and residential service company ----------
PRINTING (8.2%)
Deluxe Corporation ....................................................... 10,900 256,831
- leading producer of checks and deposit tickets
in the U.S., banking software
New England Business Services ............................................ 13,900 225,875
- leading supplier of business forms/printed ----------
products to small businesses in U.S. ................................... 482,706
----------
REAL ESTATE INVESTMENT TRUSTS (0.9%)
New Plan Excel Realty .................................................... 4,100 53,300
- oldest REIT specializing in apartments, ----------
strip shopping centers, factory outlets
REGISTERED INVESTMENT COMPANY (5.9%)
Allied Capital Corporation ............................................... 20,514 348,738
- venture capital corporation for entrepreneurs ----------
and management
TELECOMMUNICATIONS (3.3%)
Hickory Tech Corporation ................................................. 15,700 191,344
- a small local telephone company in Minnesota ----------
TOTAL COMMON STOCKS (cost $5,329,181) ............................ $5,629,869
----------
SHORT TERM OBLIGATIONS (4.2%) ............................................ PRINCIPAL
---------
U.S. Treasury Bills, 5.6% with maturities to
7/13/00 (cost $249,546) ..........................................$ 250,000 249,546
----------
TOTAL INVESTMENTS (Cost $5,578,727) ...................................... $5,879,415
==========
</TABLE>
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FAM EQUITY-INCOME FUND
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STATEMENT OF ASSETS AND LIABILITIES
June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
<S> <C>
ASSETS Investment in securities at market value
(Cost $5,578,727) ................................... $ 5,879,415
Cash at interest ............................................ 101,302
Dividends and interest receivable ........................... 14,639
Deferred organization costs ................................. 2,225
-----------
Total Assets ........................................ 5,997,581
-----------
LIABILITIES
Payable to investment advisor ............................... 31,408
Accrued expenses ............................................ 3,434
-----------
Total Liabilities ................................... 34,842
-----------
NET ASSETS Source of Net Assets:
Net capital paid in on shares of
beneficial interest ................$ 5,870,383
Undistributed net investment income ........ 383
Accumulated net realized gain/loss ......... (208,715)
Net unrealized appreciation ................ 300,688
-----------
Net Assets .......................................... $ 5,962,739
===========
Net asset value per share; 499,820 shares of
beneficial interest outstanding (Note 5) ............ $ 11.93
===========
</TABLE>
See Notes to Financial Statements.
-14-
<PAGE>
----------------------
FAM EQUITY-INCOME FUND
--------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
Six Months Ended June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
INVESTMENT INCOME
Income:
<S> <C>
Dividends ............................................... $ 110,809
Interest ................................................ 9,064
---------
Total Income .................................................... 119,873
---------
Expenses:
Investment advisory fee (Note 2) ........................ 30,181
Administrative fee (Note 2) ............................. 1,509
Custodian fee ........................................... 1,601
Organization costs ...................................... 1,484
Shareholder servicing and related expenses (Note 2) ..... 2,676
Registration fees ....................................... 12,308
Professional fees ....................................... 16,895
Trustees ................................................ 13,361
Printing & Mailing Costs ................................ 2,039
Other ................................................... 1,212
---------
Total Expenses .................................................. 83,266
---------
Less: Investment advisory fee and other expenses waived or
assumed by advisor (Note 2) ..................................... (37,995)
---------
Net Expenses .................................................... 45,271
---------
Net Investment Income ........................................... 74,602
---------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized loss on investments ........................ (99,249)
Unrealized depreciation of investments .................. (121,592)
---------
Net Loss on Investments ......................... (220,841)
---------
NET DECREASE IN NET ASSETS FROM OPERATIONS ...................... $(146,239)
=========
</TABLE>
See Notes to Financial Statements.
-15-
<PAGE>
----------------------
FAM EQUITY-INCOME FUND
--------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
Six Months Ended June 30, 2000 (Unaudited)
and Year Ended December 31, 1999
<TABLE>
<CAPTION>
Six Months Year Ended
Ended June December 31,
2000 1999
----------- -----------
CHANGE IN NET ASSETS FROM OPERATIONS:
<S> <C> <C>
Net investment income ........................... $ 74,602 $ 145,308
Net realized loss on investments ................ (99,249) (89,250)
Unrealized depreciation of investments .......... (121,592) (535,796)
----------- -----------
Net Decrease in Net Asset From Operations (146,239) (479,738)
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income ........................... (74,153) (145,394)
Net realized gain on investments ................ -- --
CAPITAL SHARE TRANSACTIONS (Note 3): .................... (469,880) 553,209
----------- -----------
Total Decrease in Net Assets ............ (690,272) (71,923)
NET ASSETS:
Beginning of period ............................. 6,653,011 6,724,934
----------- -----------
End of period ................................... $ 5,962,739 $ 6,653,011
=========== ===========
</TABLE>
See Notes to Financial Statements.
-16-
<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) 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 $37,995, 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.
-17-
<PAGE>
----------------------
FAM EQUITY-INCOME FUND
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Cont'd)
(Unaudited)
NOTE 3. SHARES OF BENEFICIAL INTEREST
At June 30, 2000, 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, 2000 December 31, 1999
------------- -----------------
Shares Amount Shares Amount
------ ------ ------ ------
<S> <C> <C> <C> <C>
Shares sold ............... 23,853 $ 282,662 102,315 $ 1,299,400
Shares issued on reinvestment
of dividends ........... 5,582 66,411 10,425 129,732
Shares redeemed ........... (70,199) (818,953) (69,364) (875,923)
------- ----------- -------- -----------
Net increase (decrease) (40,764) ($ 469,880) 43,376 $ 553,209
======= =========== ======== ===========
</TABLE>
NOTE 4. INVESTMENT TRANSACTIONS
During the period ended June 30, 2000, purchases and sales of investment
securities, other than short term obligations, were $436,322and
$823,964. 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 .................... $ 997,502
Unrealized depreciation .................... (696,814)
---------
Net unrealized appreciation ................ $ 300,688
=========
-18-
<PAGE>
----------------------
FAM EQUITY-INCOME FUND
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Cont'd)
(Unaudited)
NOTE 5. FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Period
Ended Years Ended April 1, 1996
June 30, December 31, (inception) to
2000 1999 1998 1997 December 31, 1996
---- ---- ---- ---- -----------------
Per share information
(For a share outstanding throughout
the period)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning year ........ $12.31 $13.53 $13.20 $10.99 $10.00
Income from investment operations:
Net investment income .......... 0.15 0.27 0.28 0.27 0.19
Net realized and unrealized gain
on investments ......... (0.38) (1.22) (0.33) 2.65 0.99
Total from investment operations (0.23) (0.95) .61 2.92 1.18
Less distributions:
Dividends from net
investment income ...... (0.15) (0.27) (0.28) (0.27) (0.19)
Distributions from net
realized gains ......... -- -- -- (.44) --
Total distributions ............ (0.15) (0.27) (0.28) (.71) (0.19)
Change in net asset value for the period (0.38) (1.22) (0.33) 2.21 0.99
Net asset value, end of period ......... $11.93 $12.31 $13.53 $13.20 $10.99
Total Return ........................... (3.77%) (6.98%) 4.67% 26.90% 15.90%
Ratios/supplemental data
Net assets, end of period (000) ........ $5,963 $6,653 $6,725 $4,386 $2,539
Ratios to average net assets of:
Expenses, total ................ 2.75%* 2.12% 2.09% 2.50% 5.04%
Expenses, net of fees waived and
expenses assumed by advisor ............ 1.50% 1.50% 1.50% 1.50% 1.50%
Net investment income .......... 1.23% 2.15% 2.17% 2.27% 3.05%
Portfolio turnover rate ................ 7.62% 13.49% 10.55% 15.63% 0.00%
<FN>
* Annualized
</FN>
</TABLE>
-19-
<PAGE>
INVESTMENT ADVISOR
------------------
Fenimore Asset Management, Inc.
Cobleskill, NY
CUSTODIAN
---------
Firstar Bank, N.A.
Cincinnati, OH
INDEPENDENT AUDITORS
--------------------
PricewaterhouseCoopers, LLP
New York, NY
TRUSTEES
--------
Joseph A. Bucci
Joseph J. Bulmer, PhD
Roger A. Hannay
David A. Hughey
Fred "Chico" Lager
C. Richard Pogue
Thomas O. Putnam
Bernard H. Zais, Emeritus
LEGAL COUNSEL
-------------
Dechert Price & Rhoads
Washington, DC
SHAREHOLDER SERVICING AGENT
FAM Shareholder Services, Inc.
Cobleskill, NY
FAM FUNDS
111 North Grand Street
[logo] P.O. Box 399
Cobleskill, NY 12043
(800) 932-3271
www.famfunds.com
<PAGE>
