<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT
OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-04750
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Fenimore Asset Management Trust
- ------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
384 North Grand Street
P.O. Box 399
Cobleskill, New York 12043
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(Address of principal executive offices) (Zip code)
Thomas O. Putnam
Fenimore Asset Management Trust
384 North Grand Street
Cobleskill, New York 12043
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(Name and address of agent for service)
Registrant's telephone number, including area code: 1-800-453-4392
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Date of fiscal year end: December 31
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Date of reporting period: December 31, 2011
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Form N-CSR is to be used by management investment companies to file reports
with the Commission not later than 10 days after the transmission to
stockholders of any report that is required to be transmitted to stockholders
under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1).
The Commission may use the information provided on Form N-CSR in its
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.
<PAGE>
Item 1. Reports to Stockholders.
The annual report to stockholders is filed herewith.
VALUE FUND
EQUITY-INCOME FUND
Investor Share Class and Advisor Share Class
A N N U A L R E P O R T
December 31, 2011
Table of Contents
Chairman’s Commentary
1
FAM Value Fund
3
Letter to Shareholders
3
Performance Summary
7
Portfolio Data
9
Expense Data
10
Statement of Investments
12
Statement of Assets and Liabilities
18
Statement of Operations
19
Statement of Changes in Net Assets
20
Notes to Financial Statements
21
Report of Independent Registered Public Accounting Firm
29
Investment Advisor Contract Renewal Disclosure
30
FAM Equity-Income Fund
34
Letter to Shareholders
34
Performance Summary
38
Portfolio Data
40
Expense Data
41
Statement of Investments
43
Statement of Assets and Liabilities
49
Statement of Operations
50
Statement of Changes in Net Assets
51
Notes to Financial Statements
52
Report of Independent Registered Public Accounting Firm
60
Investment Advisor Contract Renewal Disclosure
61
Information About Trustees and Officers
65
Supplemental Information
67
FAM Funds has adopted a Code of Ethics that applies to its principal
executive and principal financial officers. You may obtain a copy of this Code
without charge, by calling FAM Funds at (800) 932-3271.
Chairman’s Commentary
December 31, 2011
Dear Fellow Shareholder,
We established Fenimore Asset Management, the investment advisor to FAM Funds, in 1974
as a means to manage family money after we sold Fenimore Fabrics, a textile company
named after famous local author James Fenimore Cooper. After managing separate portfo-
lios for several years, in 1987 we launched our first mutual fund – the FAM Value Fund. We
were one of less than 400 equity mutual funds at the time; and of those few hundred, just a
small percentage employed value investing. Our contrarian investment approach certainly
was not mainstream – we have always felt that following the crowd is not effective for build-
ing wealth over the long term.
As we celebrate the 25th Anniversary of the FAM Value Fund this year, we continue to buck
the trends. Let me share with you a couple of examples:
• Tenure of Fund Managers – John Fox and I have managed the FAM Value Fund as a
team for 12 years. I have managed it since its inception in 1987. Industry-wide, the aver-
age tenure for a mutual fund manager is about five years.
• Tax-Efficient – our average annual turnover ratio for the past five years through 12/31/11
is 8.35%, which is very low compared to other mutual funds and it may reduce capital
gains taxation for shareholders.
It has also been 16 years since we launched the FAM Equity-Income Fund in 1996. Large-
cap growth stocks were in vogue back then – not the small- and mid-cap, dividend-paying
stocks on which we focus. This, plus the longevity of our Fund managers and low turnover,
distinguishes the Equity-Income Fund:
• Tenure of Fund Managers – Paul Hogan and I have co-managed the FAM Equity-Income
Fund for 16 years.
• Tax-Efficient – our average annual turnover ratio for the past five years through 12/31/11
is 15.19%, which is also very low compared to our peers.
• Fund Asset Flows – during 2011, when many equity mutual funds saw net outflows, the
Equity-Income Fund saw considerable positive net inflows.
As a company, FAM Funds also has unique characteristics. They include:
• Time-Tested Philosophy & Process – our value-oriented investment approach remains
steadfast as we seek financially strong, durable companies with high returns on capital
that can endure economic downturns. You can feel confident knowing that our process is
consistent and understandable.
1
Chairman’s Commentary
• FAM Shareholder Services Team – of the thousands of mutual funds that exist, a small
number have an in-house transfer agency or customer service team to handle shareholder
account services. When you phone FAM, a person from our Cobleskill office greets you.
Shareholders have told us that this personal touch, and the longevity and continuity of
this team, gives them comfort.
FAM Funds began modestly, but thanks to your trust in us and referrals we now manage
more than $800 million in our two Funds. This is an awesome responsibility that we take
very seriously. Since the inception of both Funds, we have been proud of our performance.
However, the latter part of the last decade was strained with financial distress and ended in a
severe Bear Market. Few, if any, investors or investment managers were immune to this and
the downturn impacted performance, especially over the short term. However, it was during
these days of adversity, including volatile days this past August, that we seized opportunity
and invested in several quality companies at what we estimated to be discounted prices. We
believe your current Fund portfolio holdings should provide a positive contribution over the
next few years and even more so over a longer-term horizon of five to 10 years.
As always, thank you for your ongoing trust. If you have any questions, please call one
of our in-house FAM Shareholder Services representatives at 800-932-3271. On behalf of
FAM Funds, I wish you and yours a Happy and Healthy New Year!
Sincerely,
Thomas O. Putnam, Chairman
Research Team
Andrew F. Boord
John D. Fox, CFA
Kevin D. Gioia
Paul C. Hogan, CFA
Marc D. Roberts, CFA
Drew P. Wilson, CFA
2
FAM Value Fund
December 31, 2011
Dear Fellow FAM Value Fund Shareholder,
At December 31st, the net asset value of the Investor Class of the FAM Value Fund was
$45.15. This represents a decrease of -0.41% from the beginning of the year. For compari-
son, the S&P 500 Index increased +2.11% and the Russell 2000 Index decreased -4.18%.
2011 in Review
2011 was not an awful year for investors, but it certainly felt that way. The stock market fell
modestly, but had wide swings during the year which created anxiety for investors. The main
story was the European financial crisis. This report first surfaced during calendar 2010, but
returned with a vengeance in 2011. There were a series of European government announce-
ments claiming a solution to the crisis, only the markets found the solutions inadequate.
This pattern resulted in a very volatile stock market with large fluctuations, both positive
and negative. Another important story was the inability of our own government to deal with
America’s long-term financial problems. Given that 2012 will be an important election year,
we expect the dysfunction from Washington, D.C. to continue. Despite the inaction of gov-
ernments, the U.S. economy seems to be continuing on a slow recovery from the recession of
2008/2009.
Portfolio Activity
We exited five positions during the year selling all of our shares in Federated Investors, Joy
Global, MICROS Systems, Strayer Education, and Westamerica Bank. We sold Federated
Investors due to concerns about an extended period of low interest rates and the fact that the
money market fund industry has a large exposure to the debt of European financial institu-
tions. Joy Global was a terrific holding for the Fund. We originally purchased the stock dur-
ing the global financial crisis in the fall of 2008. Our average cost was less than $40 a share.
We sold the stock this year near $100 a share, doubling our money in less than three years.
Joy Global is a great company, but we felt the high valuation reflected the company’s good
prospects. MICROS Sytems, Strayer Education, and Westamerica Bank were small positions
in the Fund that were sold to pursue other opportunities.
During the sharp market decline in August and September, we were fairly active purchasing
both new and existing holdings. From July 29 to September 30, 2011, the stock market de-
clined more than 12%. This decline created lower prices and we believe some good bargains
in the market. We purchased shares in 12 different companies, including five new ideas: Mi-
crochip Technology, NBT Bancorp, Questar, Sigma-Aldrich, and Waters Corporation.
3
FAM Value Fund
Performance Detail
Best Performers
The Fund’s best performer, on a dollar-weighted basis, was longtime holding White Moun-
tains Insurance (+35.4%) with a gain of $12.103 million. White Mountains is an insurance
holding company with three primary assets: OneBeacon Insurance, Esurance, and White
Mountains Reinsurance. In May the business announced the sale of the Esurance division to
Allstate for $1.1 billion. This sale is a great transaction and will unlock $600 million of ad-
ditional value for shareholders. While the shares have had a strong year, the stock price still
sells at a significant discount to the company’s book value.
The second-largest contributor to positive performance was Ross Stores (+52.7%) gaining
$9.111 million. Ross has been an amazing story over the last five years. In the five years
ending January 2011, the corporation grew its earnings per share from $1.36 to $4.62, a
compound growth rate of 28% per year. The Ross Stores retailing formula of selling designer
clothing at a discounted price has been a big hit with consumers. Ross Stores is one of the
best stocks we have owned over the last 10 years. The current price is almost nine times the
original price we paid for the stock in 2001.
The third-best performing stock was YUM! Brands up +22.4% (gaining $4.895 million) at
year-end. YUM! Brands is a global restaurant enterprise with three well-recognized brands –
KFC, Pizza Hut, and Taco Bell. YUM! is a leader in international restaurant locations with a
fast-growing business in China and other Asian nations.
Worst Performers
The worst performer, on a dollar-weighted basis, was Ultra Petroleum (-38%) with a $6.395
million loss. Ultra Petroleum is a natural gas company with significant assets in Wyoming
and Pennsylvania. The business is a low-cost producer of natural gas and has high margins
and returns on equity. The stock has declined in tandem with the 24% decline in natural gas
prices over the last year.
The second-worst performer was TCF Financial (-29%) with a loss of $5.915 million. TCF is
a bank with headquarters in Minneapolis, MN. The company’s profits were impacted by the
passage of the Durbin amendment which reduced the amount of fees that banks can charge
on debit card purchases. While TCF is not a large bank, they are one of the 20-largest debit
card issuers in the country. Even with this change, the corporation remains more profitable
than the average bank.
The Fund’s third-worst performer was Protective Life (-13%) generating a loss of $5.519
million. Protective is a life insurance company with headquarters in Birmingham, AL. Given
the fears about Greece and the European debt crisis, many financial stocks declined during
the year including Protective.
4
FAM Value Fund
Our Investment Strategy
At our 25th Annual Shareholder Informational Meetings in October someone asked the
question, “What will it take to improve the economy?” Implied in this question is some
amount of impatience about the current rate of improvement. We will address the question
and outline some strategies that can be successful in this environment.
The recession that occurred in 2008/2009 was not a normal recession, but a recession ac-
companied by a financial crisis. While this is unusual, it is not as rare as you might think.
There have been 17 countries around the world that have had a similar event since 1991.
This subject, a recession with a financial crisis, has been studied by two finance professors
who have published their findings in a book entitled, This Time Is Different.1 The book is a
definitive study of this type of recession and the authors describe the sequence of events. First,
the seeds of the crisis are a sharp and unsustainable increase in home prices. Next, housing
prices decline by 35% from their peak; stock prices decline by 50% from peak-to-trough;
unemployment increases and stays elevated for a considerable time; and government debt
increases, on average, by 86% from pre-crisis levels.
Does this sound familiar? This is exactly what is happening in the United States today. So
what does the textbook say about what happens next? The net result of these financial events
is that a country’s economic growth is slower-than-average for a number of years following
the recession. While improvements have been made slowly over the last two years, and we
think this pace will continue in 2012, we cannot simply rely upon the economy to help our
investments grow.
If this is the case, what can investors do to earn a positive return? We have three ideas that
we are using in managing the Fund today.
1. Own the Winners. Invest in companies that are currently doing well; they do not need a
better environment. We invest in many companies that will report record earnings this
year. These businesses have grown their earnings through the recession and are now earn-
ing all-time high profits. These corporations do not need a better environment – they are
winning now. Companies that we expect to report record-high earnings in 2011 include:
Bed Bath & Beyond, Donaldson Company, Ross Stores, and IDEX Corporation.
2. Go Global. While the USA may be experiencing a period of slow-growth, over the long
term the world is growing and American companies expanding overseas can benefit. The
Fund currently invests in 15 companies that derive more than one-third of their sales
from abroad. Examples include: John Wiley & Sons, Microchip Technology, Waters
Corporation, and YUM! Brands.
1 Carmen M. Reinhart & Kenneth S. Rogoff, Authors.
5
FAM Value Fund
3. Buy Dividend-Paying Stocks. Today, you can own a portfolio of dividend-paying stocks
that generate more current income than many long-term bonds. Dividends have been a
significant portion of stock returns over time and provide investors with a cash return on
their investment. The Fund holds 14 stocks that have a current dividend yield of at least
2%. Given the strong cash flows of these companies, we expect many of them to increase
their dividends over time.
We would like to add an insight from Benjamin Graham, the father of value investing. He
said, “Investment is most intelligent when it is most businesslike.” We could not agree more.
A core tenet of our investment philosophy is focusing our efforts on great corporations with
underlying economic growth potential. The challenge in the short term is to separate stock
price fluctuation from perceived “value.” Just because a stock’s price goes down in value
does not mean that the company is performing poorly, nor does an increasing stock price
equate to strong economic expansion of the business – remember Enron, WorldCom, and the
Tech Bubble. This is where our research and investment discipline play a key role in removing
the emotion from investing. Over the long term and through various economic calamities, we
have had success staying the course and buying stocks of financially sound businesses.
This remains true today. The enterprises that we are targeting for investment have the follow-
ing attributes in common:
1. They are highly profitable.
2. The balance sheets are strong with little or no debt.
3. They generate more cash than they need which can be used for dividends, investment for
future growth, and stock buyback.
4. They have strong management teams that, in many cases, are delivering record results.
With the overall stock market trading at 20-year low valuation levels, we are confident that
a portfolio of stocks from high-quality businesses with considerable future economic growth
potential can produce attractive results for investors. Remember that it takes time for the true
value of a company to be reflected in its stock price.
Thank you for investing with us in the FAM Value Fund.
John D. Fox, CFA
Thomas O. Putnam
Co-Manager
Co-Manager
The opinions expressed herein are those of the portfolio managers as of the date of this 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.
6
FAM Value Fund — Performance Summary
Annual Total Investment Returns:
JANUARY 2, 1987 TO DECEMBER 31, 2011
FAM VALUE FUND
INVESTOR SHARES ADVISOR SHARES* RUSSELL 2000 INDEX
S&P 500 INDEX
FISCAL YEAR
TOTAL RETURN
TOTAL RETURN
TOTAL RETURN
1987
-17.40%
—
-8.77%
5.25%
1988
35.50%
—
24.89%
16.61%
1989
20.32%
—
16.24%
31.69%
1990
-5.36%
—
-19.50%
-3.11%
1991
47.63%
—
46.05%
30.47%
1992
25.08%
—
18.42%
7.60%
1993
0.21%
—
18.90%
10.06%
1994
6.82%
—
-1.82%
1.31%
1995
19.71%
—
28.44%
37.53%
1996
11.23%
—
16.54%
22.95%
1997
39.06%
—
22.37%
33.35%
1998
6.19%
—
-2.55%
28.58%
1999
-4.84%
—
21.26%
21.04%
2000
19.21%
—
-3.03%
-9.10%
2001
15.07%
—
2.49%
-11.88%
2002
-5.33%
—
-20.48%
-22.09%
2003
24.98%
12.99%
47.25%
28.67%
2004
16.86%
15.91%
18.33%
10.88%
2005
5.56%
4.62%
4.55%
4.91%
2006
8.73%
7.96%
18.37%
15.79%
2007
-0.79%
-1.91%
-1.57%
5.49%
2008
-28.68%
-30.19%
-33.79%
-37.00%
2009
22.18%
22.01%
27.17%
26.46%
2010
17.02%
16.65%
26.85%
14.76%
2011
-0.41%
-1.44%
-4.18%
2.11%
*FAM Value Fund Advisor Shares were launched on July 1, 2003.
7 7
FAM Value Fund — Performance Summary
The chart below depicts the change in the value of a $10,000 investment in Investor Shares of the FAM
Value Fund, since inception on January 2, 1987, as compared with the growth of the Standard & Poor’s
500 Index and the Russell 2000 Index during the same period. The information assumes reinvestment
of dividends and capital gain distributions. The Standard & Poor’s 500 Index is an unmanaged index
generally representative of the market for the stocks of large size U.S. companies. The Russell 2000 Index
is an unmanaged index generally representative of the market for the stocks of smaller size U.S.
companies.
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
FAM VALUE FUND, THE S&P 500 INDEX AND THE RUSSELL 2000 INDEX
$120
FAM Value Fund
$100
S&P 500
$103,380
Russell 2000
$ 91,612
$80
$ 79,982
$60
$40
$20
$0
This information represents past performance of Investor Shares of the FAM Value Fund and is not indicative of future
results. The investment return and the principal value of an investment will fluctuate so that an investor’s shares, when
redeemed, may be worth more or less than the original cost.
An investment of $10,000 in the Advisor Shares of the FAM Value Fund since the inception date of this share class, July 1,
2003, would have changed in value to $14,210 by December 31, 2011.
Average Annual Total Returns as of December 31, 2011
Life of Fund/Class
1-Year
3-Year
5-Year
10-Year
(1/2/87)
FAM Value Fund
(Investor Shares)
-0.41%
12.50%
0.15%
4.81%
9.80%
(Advisor Shares)*
-1.44%
11.94%
-0.80%
N/A
4.22%
S&P 500 Index
2.11%
14.11%
-0.25%
2.92%
8.68%
Russell 2000 Index
-4.18%
15.63%
0.15%
5.62%
9.25%
__________
*FAM Value Fund Advisor Shares were launched on July 1, 2003. The return since inception is 4.22%.
The graph and performance table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
8 8
FAM Value Fund — Portfolio Data (Unaudited)
December 31, 2011
TOP TEN EQUITY HOLDINGS
COMPOSITION OF TOTAL INVESTMENTS
(% of Total Investments)
Property & Casualty Insurance
14.6%
White Mountains Insurance Group Ltd.
6.6%
Machinery & Equipment
8.2%
Brown & Brown, Inc.
6.1%
Retail Stores
6.7%
Mednax, Inc.
5.6%
Insurance Agency
6.1%
John Wiley & Sons, Inc. - Class A
4.2%
Transportation
5.8%
Berkshire Hathaway, Inc. - Class A
4.2%
Health Care Services
5.6%
IDEX Corporation
4.1%
Banking
5.0%
Ross Stores, Inc.
3.9%
Oil & Gas Exploration
4.8%
Markel Corporation
3.8%
Publishing
4.2%
YUM! Brands, Inc.
3.8%
Restaurants
3.8%
Zebra Technologies Corporation - Class A
3.3%
Electronic Equipment
3.3%
Health Care Equipment/Devices
3.2%
Real Estate Development
2.9%
Diversified Healthcare
2.8%
Automotive
2.6%
Diversified Manufacturing
2.3%
Investment Management
2.2%
Other
8.7%
Money Market Fund
7.2%
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 Form 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.
9 9
FAM Value Fund — Expense Data (Unaudited)
December 31, 2011
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including redemption
fees on the Advisor Class Shares; and (2) ongoing costs, including management fees; distribution (and/
or service) (12b-1 fees on the Advisor Class Shares only) fees; and other Fund expenses. This Example
is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to com-
pare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 at the beginning of the period and held for the entire
period (7/1/2011 to 12/31/2011).
Actual Expenses
Lines (A) and (B) of the following table provide information about actual account values and actual
expenses for Investor Class Shares and Advisor Class Shares, respectively. 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
Lines (C) and (D) of the following table provide information about hypothetical account values and
hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5%
per year before expenses, which is not the Fund’s actual return for the Investor Class Shares and
Advisor Class Shares, respectively. The hypothetical 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 and
do not reflect any transactional costs, such as redemptions fees. Therefore, lines (C) and (D) of the
table are useful in comparing ongoing costs only, and will not help you determine the relative costs of
owning different funds. In addition, if these transactional costs were included, your costs would have
been higher.
10 10
FAM Value Fund — Expense Data (Unaudited)
December 31, 2011
S I X M O N T H S E N D E D D E C E M B E R 3 1 , 2 0 1 1
Beginning
Ending
Expenses
Account Value Account Value
Paid
7/1/2011
12/31/2011
During Period
Ongoing Costs Based on Actual Fund Return
A. Investor Share Class
$1,000.00
$930.60
$ 5.99*
B.
Advisor Share Class
$1,000.00
$923.00
$10.81**
Ongoing Costs Based on Hypothetical
5% Yearly Return
C. Investor Share Class
$1,000.00
$1,018.80
$ 6.26*
D. Advisor Share Class
$1,000.00
$1,013.76
$11.32**
*Expenses are equal to the Fund’s Investor Class Shares annualized expense ratio of (1.23%), multiplied by the average account
value over the period, multiplied by 184/365 (to reflect the one-half-year period).
**Expenses are equal to the Fund’s Advisor Class Shares annualized expense ratio of (2.23%), multiplied by the average account
value over the period, multiplied by 184/365 (to reflect the one-half-year period).
11 11
FAM Value Fund — Statement of Investments
December 31, 2011
SHARES
VALUE
COMMON STOCKS (92.8%)
Automotive (2.6%)
CarMax, Inc.*
• specialty retailer of used cars and light-trucks in the
USA
600,000
$18,288,000
Banking (5.0%)
Bank of the Ozarks, Inc.
• holding company that provides a range of retail and
commercial banking services in the Southeast
253,000
7,496,390
Home Bancshares, Inc.
• holding company for the Centennial Bank that provides
various commercial and retail banking and related
financial products and services to businesses, real estate
developers, individuals and municipalities
250,000
6,477,500
M&T Bank Corporation
• bank holding company that provides commercial and
retail banking services to individuals, businesses, corpo-
rations and institutions in the Northeast and
Mid-Atlantic
75,000
5,725,500
NBT Bancorp, Inc.
• provides commercial banking and financial services to
individuals, corporations and municipalities in New
York, Vermont and Pennsylvania
10,000
221,300
SCBT Financial Corporation
• provides banking services to individual and corporate
customers in the Carolinas
234,110
6,791,531
TCF Financial Corporation
• holding company that offers various banking services
to individual and corporate customers in northern and
central California
802,163
8,278,322
34,990,543
Commercial Services (1.4%)
McGrath RentCorp
• modular building and electronic test equipment rentals,
subsidiary classroom manufacturing
347,000
10,059,530
See Notes to Financial Statements
12
FAM Value Fund — Statement of Investments continued
December 31, 2011
SHARES
VALUE
Diversified Healthcare (2.8%)
Johnson & Johnson
• manufactures and sells various products in the health
care field
305,000
$20,001,900
Diversified Manufacturing (2.3%)
Illinois Tool Works, Inc.
• manufactures engineered products such as plastic and
metal components and fasteners and speciality systems
which consist of machinery and consumable products
339,950
15,879,065
Electronic Commerce Distribution (0.4%)
Digital River, Inc.*
• provides outsourced e-commerce solutions worldwide
200,000
3,004,000
Electronic Equipment (3.3%)
Zebra Technologies Corp. - Class A*
• designs, manufactures and supports bar code label printers
648,502
23,203,402
Health Care Distribution (1.9%)
Patterson Companies, Inc.
• operates as a distributor serving dental, companion-pet,
veterinarian, and rehabilitation supply markets in the
USA and Canada
445,000
13,136,400
Health Care Equipment/Devices (3.2%)
Stryker Corp.
• operates a medical technology company offering
Orthopedic Implants and MedSurg Equipment
266,000
13,222,860
Waters Corporation*
• designs, manufactures, sells and services analytical
instruments used in a wide range of scientific research
125,000
9,256,250
22,479,110
Health Care Services (5.6%)
Mednax, Inc.*
• health care services company focused on physician
services for newborn, maternal-fetal and other pediatric
subspecialty care
545,700
39,295,857
See Notes to Financial Statements
13
FAM Value Fund — Statement of Investments continued
December 31, 2011
SHARES
VALUE
Home Furnishing (0.9%)
Mohawk Industries, Inc.*
• produces floor covering products for residential and
commercial applications
103,100
$ 6,170,535
Insurance Agency (6.1%)
Brown & Brown, Inc.
• one of the largest independent general insurance
agencies in the U.S.
1,879,696
42,537,520
Investment Management (2.2%)
Franklin Resources, Inc.
• provides investment management and fund administra-
tion services as well as retail-banking and consumer
lending services
160,000
15,369,600
Life Insurance (1.1%)
Protective Life Corporation
• individual and group life/health insurance and
guaranteed investment contracts
335,400
7,566,624
Machinery & Equipment (8.2%)
Donaldson Company, Inc.
• designs, manufactures and sells filtration systems and
replacement parts
321,200
21,867,296
Graco, Inc.
• supplies systems and equipment for the management of
fluids in industrial, commercial and vehicle lubrication
applications
180,550
7,382,689
IDEX Corporation
• manufactures proprietary, highly engineered industrial
products and pumps
771,750
28,639,643
57,889,628
Media (1.7%)
Meredith Corporation
• magazine publishing and tv broadcasting
366,450
11,964,592
See Notes to Financial Statements
14
FAM Value Fund — Statement of Investments continued
December 31, 2011
SHARES
VALUE
Oil and Gas Exploration (4.8%)
EOG Resources, Inc.
• engages in the exploration, development, production
and marketing of natural gas and crude oil
216,000
$ 21,278,160
Ultra Petroleum Corporation*
• independent oil and gas company that engages in the
acquisition, exploration, development, production and
operation of oil and natural gas properties
415,000
12,296,450
33,574,610
Property and Casualty Insurance (14.6%)
Berkshire Hathaway, Inc. - Class A*
• holding company for various insurance and industrial
companies
256
29,377,280
Markel Corporation*
• sells specialty insurance products
64,850
26,891,349
White Mountain Insurance Group, Ltd.
• personal property and casualty insurance, and
reinsurance
102,693
46,567,168
102,835,797
Publishing (4.2%)
John Wiley & Sons, Inc. - Class A
• publisher of print and electronic products, specializing
in scientific, technical professional and medical books
and journals
661,700
29,379,480
Real Estate Development (2.9%)
Brookfield Asset Management, Inc. - Class A
• asset management holding company that invests in
property, power and infrastructure
735,000
20,197,800
Restaurants (3.8%)
YUM! Brands, Inc.
• quick service restaurants including KFC, Pizza Hut and
Taco Bell
450,600
26,589,906
See Notes to Financial Statements
15
FAM Value Fund — Statement of Investments continued
December 31, 2011
SHARES
VALUE
Retail Stores (6.7%)
Bed Bath & Beyond, Inc.*
• national chain of retail stores selling domestic
merchandise such as bed linens, bath items, kitchen
textiles and home furnishings
345,600
$20,034,432
Ross Stores, Inc.
• chain of off-price retail apparel and home accessories
stores
572,844
27,227,275
47,261,707
Semiconductors (0.3%)
Microchip Technology, Inc.
• develops, manufactures and sells semiconductor
products for various embedded control applications
60,000
2,197,800
Specialty Chemical (0.5%)
Sigma-Aldrich Corporation
• develops, manufactures, purchases and distributes high
quality chemicals, biochemicals and equipment available
throughout the world
60,000
3,747,600
Transportation (5.8%)
Forward Air Corporation
• provides surface transportation and related logistics ser-
vices to the deferred air freight market in North America
389,233
12,474,918
Heartland Express, Inc.
• short-to medium-haul truckload carrier of general
commodities
1,333,333
19,053,329
Knight Transportation, Inc.
• transportation of general commodities in the U.S.
576,900
9,022,716
40,550,963
Utilities/Gas (0.1%)
Questar Corporation
• natural gas utility in the state of Utah
50,000
993,000
See Notes to Financial Statements
16
FAM Value Fund — Statement of Investments continued
December 31, 2011
SHARES
VALUE
Veterinary Diagnostics (0.4%)
VCA Antech, Inc.*
• provides veterinary services and diagnostic testing to
support veterinary care and sells diagnostic imaging
equipment and other medical technology products and
related services to the veterinary market
148,900
$ 2,940,775
Total Common Stocks (Cost $373,927,460)
$652,105,744
TEMPORARY INVESTMENTS (7.2%)
Money Market Fund (7.2%)
Invesco Short Term Treasury Fund (0.02%)**
50,895,025
50,895,025
Total Temporary Investments (Cost $50,895,025)
$ 50,895,025
Total Investments (Cost $424,822,485) (100%)
$703,000,769
*Non-income producing securities.
**The rate shown represents the effective yield at 12/31/11.
See Notes to Financial Statements
17
FAM Value Fund
December 31, 2011
STATEMENT OF ASSETS AND LIABILITIES
Assets
Investments in securities at value (Cost $424,822,485)
$703,000,769
Cash
149,483
Dividends and interest receivable
312,042
Receivable for fund shares purchased
237,435
Total Assets
703,699,729
Liabilities
Payable for fund shares redeemed
451,009
Accrued investment advisory fee
591,211
Accrued shareholder servicing and administrative fees
86,773
Accrued expenses
163,625
Accrued distribution and service fees
1,162
Total Liabilities
1,293,780
Net Assets
Sources of Net Assets:
Net capital paid in on shares of beneficial interest
$424,227,306
Accumulated net realized gains
359
Net unrealized appreciation
278,178,284
Net Assets
$702,405,949
Net Asset Value, Offering and Redemption Price
per share (unlimited shares of beneficial interest
authorized at $.001 par value)
Investor Class Shares — based on net assets of
$698,545,583 and 15,473,294 shares outstanding
$45.15
Advisor Class Shares — based on net assets of
$3,860,366 and 89,999 shares outstanding(a)
$42.89
(a)A 1% redemption fee is imposed upon Advisor shares redeemed within the first
18 months of purchase. See Note 4 in the Notes to the Financial Statements.
See Notes to Financial Statements
18
FAM Value Fund
Year Ended December 31, 2011
STATEMENT OF OPERATIONS
INVESTMENT INCOME
Income
Dividends
$8,147,501
Interest
12,601
Total Investment Income
8,160,102
Expenses
Investment advisory fee (Note 2)
7,279,908
Administrative fee (Note 2)
617,841
Shareholder servicing and related expenses (Note 2)
440,058
Printing and mailing
121,057
Professional fees
103,562
Registration fees
60,337
Custodial fees
88,614
Trustees fees
60,262
Officers fees (Note 2)
39,570
Distribution and Service fees - Advisor Class Shares (Note 2)
42,079
Other
63,493
Total Expenses
8,916,781
Expenses Paid Indirectly (Note 3)
(954)
Net Expenses
8,915,827
Net Investment Loss
(755,725)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investments
15,104
Net change in unrealized appreciation of investments
(2,307,084)
Net Realized and Unrealized Loss on Investments
(2,291,980)
NET DECREASE IN NET ASSETS FROM OPERATIONS
$(3,047,705)
See Notes to Financial Statements
19
FAM Value Fund
Years Ended December 31, 2011 and 2010
STATEMENTS OF CHANGES IN NET ASSETS
2011
2010
CHANGE IN NET ASSETS
FROM OPERATIONS:
Net investment income/(loss)
$ (755,725)
$ 1,397,398
Net realized gain on investments
15,104
9,857,404
Net change in unrealized appreciation
(2,307,084)
98,340,520
of investments
Net Increase/Decrease in Net Assets From Operations
(3,047,705)
109,595,322
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Investor Class
(19,356)
(1,392,952)
Net realized gain on investments
Investor Class
(31,280)
(9,484,271)
Advisor Class
(182)
(61,081)
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST (NOTE 4)
(36,246,659)
(20,896,319)
Total Increase/Decrease in Net Assets
(39,345,182)
77,760,699
NET ASSETS
Beginning of Year
$741,751,131
$663,990,432
End of Year
$702,405,949
$741,751,131
Undistributed net investment income
$
—
$
19,578
See Notes to Financial Statements
20
FAM Value Fund — Notes to Financial Statements
Note 1. Nature of Business and Summary of Significant Accounting Policies
FAM Value Fund (the “Fund”) is a series of Fenimore Asset Management Trust, a diversified, open-
end management investment company registered under the Investment Company Act of 1940. The
Fund offers two classes of shares (Investor Class and Advisor Class since January 2, 1987 and July 1,
2003, respectively). Each class of shares has equal rights as to earnings and assets except the Advisor
Class bears its own distribution and service fee expenses. Each class of shares has exclusive voting
rights with respect to matters that affect just that class. Income, expenses (other than expenses attrib-
utable to a specific class), and realized and unrealized gains or losses on investments are allocated to
each class of shares based on its relative net assets. The investment objective of the Fund is to maximize
long-term total return on capital. The following is a summary of significant accounting policies, which
are in accordance with accounting principles generally accepted in the United States of America
(“GAAP”), followed by the Fund 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 sale price or the NASDAQ official closing price. Common stocks for which no
sale was reported, and over-the-counter securities, are valued at the last reported bid price. Short-
term securities are carried at amortized cost, which approximates value. Securities for which market
quotations are not readily available or have not traded are valued at fair 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 hierarchy of inputs.
The hierarchy distinguishes between market data obtained from independent sources (observable
inputs) and the Fund’s own market assumptions (unobservable inputs). These inputs are used in
determining the value of the Fund’s 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 Fund’s own assumptions in determin-
ing the fair value of investments)
The inputs or methodology used for valuing securities are not necessarily an indication of the
risk associated with investing in those securities.
21
FAM Value Fund — Notes to Financial Statements
The following is a summary of the inputs used to value the Fund’s net assets as of December 31,
2011:
Valuation Inputs
Investments in Securities
Level 1 Quoted prices
Common Stocks
$652,105,744
Temporary Investments
$ 50,895,025
Level 2 Other significant observable inputs
$
—
Level 3 Significant unobservable inputs
$
—
Total
$703,000,769
During the year ended December 31, 2011 there were no Level 2 or 3 inputs used to value the
Fund’s net assets. Refer to the Statement of Investments to view securities segregated by industry
type.
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 or excise tax is required.
GAAP requires uncertain tax positions to be recognized, measured, presented and disclosed in the
financial statements. For the year ended December 31, 2011 management has evaluated the tax
positions taken or expected to be taken in the course of preparing the Fund’s tax returns to
determine whether the tax positions are “more-likely-than-not” of being sustained 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 2008 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 management to make
estimates and assumptions that affect the reported amounts of assets and liabilities and disclosureof 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 accrued as earned and dividend income
is recorded on the ex-dividend date. The Fund records distributions received in excess of income from
22
FAM Value Fund — Notes to Financial Statements
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 Fund adjusts 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 regulations and may differ from those determined for financial statement
purposes. To the extent these differences are permanent such amounts are reclassified within the
capital accounts.
Note 2. Investment Advisory Fees and Other Transactions with Affiliates
Under 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. The Advisor has entered into a voluntary agreement with the Fund to reduce the investment
advisory fee for the Fund through December 31, 2012 to 0.95% of the Fund’s average daily net assets
in excess of $1 billion. No such waiver was required for the year ended December 31, 2011. Thomas
Putnam is an officer and trustee of the Fund and also an officer and director of the Advisor. The CCO
is an officer of the Fund and compensated by the Fund in the amount of $39,570 as well as an officer
of the Advisor and compensated additionally by the Advisor.
The Investment Advisory Contract requires the Advisor to reimburse the Investor Class for its expenses
to the extent that such expenses, including the advisory fee, for the fiscal year exceed 2.00% of the
average daily net assets. For the year ended December 31, 2011 the Advisor contractually agreed to
reimburse the Fund for its expenses to the extent such expenses exceed 1.28% and 2.28% of the aver-
age daily net assets of the Investor Class and Advisor Class, respectively. No such reimbursement was
required for the year ended December 31, 2011.
FAM Shareholder Services, Inc. (“FSS”), a company under common control with the Advisor, serves
as shareholder servicing agent and receives a monthly fee of $2.33 per shareholder account. For the
year ended December 31, 2011, shareholder servicing agent fees paid to FSS amounted to $440,058.
Additionally, FSS serves as the Fund administrative agent and receives an annual fee of 0.085% on the
first $750,000,000 of the Fund’s average daily net assets, and 0.075% thereafter. For the year ended
December 31, 2011, Fund administrative fees amounted to $617,841.
Fenimore Securities, Inc. (“FSI”), a company also under common control with the Advisor, acts as
distributor of the Fund’s shares. On July 1, 2003, the Fund adopted a distribution plan pursuant to
Rule 12b-1 under the Investment Company Act of 1940 for the Advisor Class of shares. Under the
plan the Fund pays FSI a total of 1.00% per annum of the Advisor Class shares’ average daily net
assets.
23
FAM Value Fund — Notes to Financial Statements
Note 3. Indirect Expenses
The Fund’s custodian bank has also agreed to reduce its fees when the Fund maintains cash on deposit
in the non-interest bearing custody account. For the year ended December 31, 2011, these
arrangements reduced the Fund’s custodian fees by $954.
Note 4. Shares of Beneficial Interest
At December 31, 2011 an unlimited number of $.001 par value shares of beneficial interest were
authorized. The Advisor Class of shares that are redeemed within the first eighteen months of purchase
are subject to a 1.00% redemption fee. For the years ended December 31, 2011 and 2010, redemption
fees amounted to $64 and $1, respectively, and were credited to paid–in capital. Transactions were as
follows:
YEAR ENDED 12/31/11
YEAR ENDED 12/31/10
Shares
Amount
Shares
Amount
Shares sold
Investor Class
746,774
$ 34,286,768
1,005,347
$ 41,988,442
Advisor Class
1,337
56,741
1,298
51,230
Shares issued on
reinvestment of distributions
Investor Class
1,085
49,222
232,077
10,591,998
Advisor Class
4
171
1,325
58,091
Shares redeemed
Investor Class
(1,534,944)
(69,950,423) (1,753,362)
(73,032,090)
Advisor Class
(15,665)
(689,138)
(13,851)
(553,990)
Net Decrease from Investor Class
Share Transactions
(787,085) $(35,614,433)
(515,938) $(20,451,650)
Net Decrease from Advisor Class
Share Transactions
(14,324) $ (632,226)
(11,228) $ (444,669)
Note 5. Investment Transactions
During the year ended December 31, 2011, purchases and sales of investment securities, other than
short-term obligations were $52,598,875 and $70,204,403, respectively.
24
FAM Value Fund — Notes to Financial Statements
Note 6. Income Taxes and Distribution to Shareholders
The components of accumulated income/losses on a tax basis at December 31, 2011 were as
follows:
Undistributed ordinary income
$ —
Undistributed long-term capital gain
$ 359
The aggregate gross unrealized appreciation and depreciation of portfolio securities, based on cost
for federal income tax purposes of $424,822,485, was as follows;
Unrealized appreciation
$293,332,553
Unrealized depreciation
(15,154,269)
Net unrealized appreciation
$278,178,284
The tax composition of dividends and distributions paid to shareholders for the years ended
December 31, 2011 and 2010 were as follows:
2011
2010
Ordinary income
$19,578
$ 1,392,952
Long-term capital gain
31,240
9,545,352
$50,818
$10,938,304
In accordance with GAAP, FAM Value Fund has recorded reclassifications in its capital accounts.
These reclassifications have no impact on the net asset value of the Fund and are designed generally
to present undistributed net investment income and accumulated realized gains on a tax basis which
is considered to be more informative to shareholders. As of December 31, 2011, the Fund recorded
the following reclassifications to increase (decrease) the accounts listed below:
Net Capital Paid in on Shares
Accumulated Net Investment
Accumulated Net Realized
of Beneficial Interest
Income
Gain (Loss)
$(755,725)
$755,503
$222
Note 7. Line of Credit
FAM Value Fund has a line of credit up to 33 1/3% of total net assets or a maximum of $125,000,000.
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, 2012, when any advances are to be repaid. During the
year ended December 31, 2011, no amounts were drawn from the available line. Fees paid to the
lending bank amounted to $893.
25
FAM Value Fund — Notes to Financial Statements
Note 8. Commitments and Contingencies
In the normal course of business, the Fund enters into contracts that contain a variety of
representations and warranties which provide general indemnifications. The Fund’s maximum
exposure under these arrangements is unknown as this would involve future claims that might be
made against the Fund that have not yet occurred. However, based on experience of the Advisor, the
Fund expects the risk of loss to be remote.
Note 9. New Accounting Pronouncement
In May 2011, the FASB issued ASU No. 2011-04 “Amendments to Achieve Common Fair Value
Measurement and Disclosure Requirements” in GAAP and the International Financial Reporting
Standards (“IFRSs”). ASU No. 2011-04 amends FASB ASC Topic 820, Fair Value Measurements and
Disclosures, to establish common requirements for measuring fair value and for disclosing information
about fair value measurements in accordance with GAAP and IFRSs. ASU No. 2011-04 is effective
for fiscal years beginning after December 15, 2011 and for interim periods within those fiscal years.
Management is currently evaluating the impact these amendments may have on the Fund’s financial
statements.
Note 10. 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.
26
FAM Value Fund — Notes to Financial Statements
Note 11. Financial Highlights
F A M V A L U E F U N D - I N V E S T O R C L A S S S H A R E S
Per share information
Years Ended December 31,
(For a share outstanding throughout the year)
2011
2010
2009
2008
2007
Net asset value, beginning of year
$45.34
$39.32
$32.22
$45.42
$49.65
Income/Loss from investment operations:
Net investment income/(loss)†
(0.04)
0.09
0.05
0.18
0.25
Net realized and unrealized
gain/(loss) on investments
(0.15)
6.61
7.10
(13.21)
(0.66)
Total from investment operations
(0.19)
6.70
7.15
(13.03)
(0.41)
Less distributions:
Dividends from net investment income
—*
(0.09)
(0.05)
(0.17)
(0.25)
Distributions from net realized gains
—*
(0.59)
—
—*
(3.57)
Return of capital
—
—
—
—*
—
Total distributions
—*
(0.68)
(0.05)
(0.17)
(3.82)
Change in net asset value for the year
(0.19)
6.02
7.10
(13.20)
(4.23)
Net asset value, end of year
$45.15
$45.34
$39.32
$32.22
$45.42
Total Return
(0.41)%
17.02%
22.18%
(28.68)%
(0.79)%
Ratios/supplemental data
Net assets, end of year (000)
$698,546
$737,211
$659,621
$592,504
$871,090
Ratios to average net assets of:
Expenses
1.22%
1.23%
1.26%
1.24%
1.19%
Net investment income/(loss)
(0.10)%
0.21%
0.14%
0.44%
0.45%
Portfolio turnover rate
7.78%
5.08%
7.55%
12.60%
8.74%
†
*Per share amount is less than $0.005.Based on average shares outstanding.
27
FAM Value Fund — Notes to Financial Statements
Note 11. Financial Highlights (continued)
F A M V A L U E F U N D - A D V I S O R C L A S S S H A R E S
Per share information
Years Ended December 31,
(For a share outstanding throughout the year)
2011
2010
2009
2008
2007
Net asset value, beginning of year
$43.52
$37.81
$30.99
$44.39
$48.91
Income/Loss from investment operations:
Net investment loss†
(0.48)
(0.31)
(0.28)
(0.22)
(0.28)
Net realized and unrealized
gain (loss) on investments
(0.15)
6.61
7.10
(13.18)
(0.67)
Total from investment operations
(0.63)
6.30
6.82
(13.40)
(0.95)
Less distributions:
Dividends from net investment income
—
—
—
—
—
Distributions from net realized gains
—*
(0.59)
—
—
(3.57)
Total distributions
—*
(0.59)
—
—
(3.57)
Change in net asset value for the year
(0.63)
5.71
6.82
(13.40)
(4.52)
Net asset value, end of year
$42.89
$43.52
$37.81
$30.99
$44.39
Total Return
(1.44)%
16.65%
22.01%
(30.19)%
(1.91)%
Ratios/supplemental data
Net assets, end of year (000)
$3,860
$4,540
$4,369
$4,294
$7,591
Ratios to average net assets of:
Expenses
2.22%
2.23%
2.26%
2.24%
2.19%
Net investment loss
(1.10)%
(0.79)%
(0.86)%
(0.56)%
(0.55)%
Portfolio turnover rate
7.78%
5.08%
7.55%
12.60%
8.74%
†
*Per share amount is less than $0.005.Based on average shares outstanding.
28
FAM Value Fund —
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Fenimore Asset Management Trust
and Shareholders of FAM Value Fund
We have audited the accompanying statement of assets and liabilities, including the state-
ment of investments, of FAM Value Fund, a series of shares of beneficial interest of Feni-
more Asset Management Trust, as of December 31, 2011, and the related statement of op-
erations for the year then ended, the statements of changes in net assets for each of the two
years in the period then ended and the financial highlights for each of the five years in the
period then ended. These financial statements and financial highlights are the responsibility
of the Fund’s management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Ac-
counting Oversight Board (United States). Those standards require that we plan and per-
form the audits to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial statements.
Our procedures included confirmation of securities owned as of December 31, 2011,
by correspondence with the custodian. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present
fairly, in all material respects, the financial position of FAM Value Fund, as of December
31, 2011, the results of its operations for the year then ended, the changes in its net assets
for each of the two years in the period then ended and its financial highlights for each of
the five years in the period then ended, in conformity with accounting principles generally
accepted in the United States of America.
BBD, LLP
Philadelphia, Pennsylvania
February 15, 2012
29 29
FAM Value Fund (Unaudited)
Board Consideration of the Continuation of the Investment Advisory Agreements for the
Funds
In accordance with the Investment Company Act of 1940, the Board of Trustees of the Funds
is required, on an annual basis, to consider the continuation of the Investment Advisory
Agreements (the "Agreements") with the Advisor, and this must take place at an in-person
meeting of the Board. The relevant provisions of the Investment Company Act of 1940
specifically provide that it is the duty of the Board to request and evaluate such information
as the Board determines is necessary to allow them to properly consider the continuation of
the Agreements, and it is the duty of the Advisor to furnish the Trustees with such informa-
tion that is responsive to their request.
Accordingly, in determining whether to renew the Agreements between the Funds and the
Advisor, the Board of Trustees requested, and the Advisor provided, information and data
relevant to the Board's consideration. This included materials prepared by the Advisor and
materials prepared by an independent mutual fund industry consulting firm that produced
materials specifically for the Board that provided them with information regarding the
investment performance of the Funds and information regarding the fees and expenses of
the Funds, compared to other similar mutual funds. As part of its deliberations, the Board
also considered and relied upon the information about the Funds and the Advisor that had
been provided to them throughout the year in connection with their regular Board meetings
at which they engage in the ongoing oversight of the Funds and their operations.
The Board engaged in a thorough review process to determine whether or not to continue
the Agreements with the Advisor. After receiving the materials they had requested to assist
them with their review, the Board had a preliminary meeting by conference call on November
14, 2011, with representatives of the Advisor in order to discuss the proposed continuation
of the Agreements and to review the materials that had been presented. The Board then
requested certain additional information which the Advisor provided and the Board also
met separately on November 9, 2011 and then with representatives of the Advisor on two
occasions on November 9 and 10, 2011 prior to their required in-person meeting in order
to further consider and discuss the proposed continuation of the Agreements.
The Board then met to consider the continuation of the Agreements at an in-person meeting
of the Board held on November 10, 2011. Among the factors the Board considered was the
overall performance of the Funds relative to the performance of other similar mutual funds
on a long-term basis (five years and longer) and over shorter time periods (less than five
years). In connection with its review of the performance results achieved for the Funds, the
Board discussed with management the fact that the Advisor maintains a particular focus on
long-term investment performance results and they reviewed the reasons why this may, from
time to time, cause the longer-term performance results and the shorter-term performance
30
FAM Value Fund (Unaudited)
results to under-perform when compared to other funds for similar time periods. In connec-
tion with this, the Board took note of management's stated position that achieving favorable
long-term investment results is a primary objective of the firm. The Board also considered
and discussed with the Advisor their focus on "value investing" which may result in short-
term performance that lags the performance results achieved by other managers, especially
those managers that emphasize other types of investment strategies, such as "growth invest-
ing." The Board also took into consideration the Advisor's stated objective of attaining
investment results with less risk and less volatility than other funds. The Board determined
that it was beneficial to shareholders that the Advisor has continued to invest on behalf of
the Funds in a manner that is consistent with its long-term investment objectives due to the
fact that the Advisor has been able to achieve favorable long-term performance results for
the Funds and when performance is adjusted for risk, it shows even more favorable results.
The Board also took note of the long-term relationship between the Advisor and the Funds
and the efforts that have been undertaken by the Advisor to foster the growth and develop-
ment of the Funds since the inception of each of the Funds. In connection with this, the
Board took note of the fact that Thomas Putnam, the Chairman and founder of the Advisor
and the co-manager of each of the Funds, has been advising each of the Funds since their
inception, during which time the Funds have experienced favorable long-term investment
results on a comparative basis. The Board also noted that the Advisor has continued to retain
and develop additional portfolio managers and investment analysts to work with Mr.
Putnam in an effort to provide for the continued long-term management and oversight of
the Funds and their portfolios.
In addition, the Board compared expenses of each Fund to the expenses of other similar
mutual funds, noting that the expenses for each of the Funds compare favorably with indus-
try averages for other funds of similar size and investment objective. They noted the range
of investment advisory and administrative services provided by the Advisor and its affiliates
to the Funds and the level and quality of these services, and in particular, they considered
the quality of the personnel providing these services noting that they were of a high caliber.
The Board considered that the Funds receive administrative and accounting services from
an affiliate of the Advisor, FAM Shareholder Services, Inc. ("FSS"), and the Board reviewed
the fees paid to FSS and the services provided to the Funds and their shareholders by FSS
during the past year and determined that the fees were fair and reasonable and that the
services provided are useful and beneficial to the ongoing operations of the Funds given that
the services provided by FSS are separate and distinct services apart from the investment
advisory services provided to the Funds by the Advisor. The Board also considered that the
Funds are distributed by an affiliate of the Advisor, Fenimore Securities, Inc., ("FSI"), and
the Board reviewed the distribution related services provided by FSI, the distribution fees
received by FSI in connection with its distribution of the Advisor Class of shares of the
Funds, and they determined that the fees were fair and reasonable and that the distribution
services provided by FSI are useful and beneficial to the ongoing operations of the Funds.
31
FAM Value Fund (Unaudited)
The Board also reviewed financial information concerning the Advisor and its affiliates
relating to the operation of the Funds, noting the overall profitability of the relationship
with the Funds to the Advisor and the financial soundness of the Advisor and its affiliates
as demonstrated by the financial information provided. The Board also took note of the
fact that the Advisor bears the costs associated with the Funds' participation in various
"mutual fund supermarket" programs out of its own resources, noting that this is beneficial
to the Funds because it allows them to be held by a wide array of shareholders in a conve-
nient manner. The Board also considered the extent to which the Advisor uses its own
resources to support sales and marketing efforts on behalf of the Funds. In reviewing the
profitability of the Advisor relating to its management of the Funds, the Board reviewed the
level of profitability taking into consideration these various marketing expenses that are
borne directly by the Advisor and they considered the level of profitability both before and
after the impact of these marketing costs.
The Board reviewed the Advisor's brokerage practices and best-execution procedures, and
noted that these were reasonable and consistent with standard industry practice. In con-
nection with this review, the Board considered the fact that the Advisor does not have any
express arrangements in place with respect to "soft dollar" arrangements with brokers or
other similar parties relating to the direct use of Fund brokerage commissions to obtain
research or execution services. With respect to the Advisor's brokerage practices, the Board
also took into consideration the fact that the Advisor has maintained low portfolio turnover
rates for the Funds that are substantially lower than industry averages for equity-type funds,
which the Board determined is beneficial to shareholders due to the reduced brokerage
expenses that are attributable to low portfolio turnover rates.
The Board also considered information regarding the fees that the Advisor charges other
clients, including privately managed accounts and a privately offered investment fund, for
investment advisory services that are similar to the advisory services provided to the Funds
and noted that the Funds' fees were reasonable when compared to the relevant circumstances
of the types of accounts involved.
In connection with the Board's consideration of the ways in which economies of scale are
reflected with respect to the Agreements, the Board took note of the fact that the Advisor
has, since January 1, 2005, maintained voluntary expense limitation arrangements with the
Funds pursuant to which the investment advisory fees payable to the Advisor by each of the
Funds is reduced on assets in excess of $1 billion from the stated contractual rate of 1.00%
of the average daily net assets of each respective Fund to 0.95% of the average daily net
assets of those assets in each Fund in excess of $1 billion, and it was further noted by the
Board that the Advisor had agreed to extend the term of the voluntary expense limitation
agreements for the one-year period from January 1, 2012 through December 31, 2012. This
limitation on the amount of the investment advisory fees payable under the Agreements is
32
FAM Value Fund (Unaudited)
in addition to the contractual arrangement in place with respect to each of the Funds pursu-
ant to which the Advisor has previously agreed to limit the total operating expenses of each
class of shares of the Funds and is reviewed by the Board each year in connection with the
further continuation of the Agreements. The Board discussed with the Advisor the nature
and extent of the current expense limitation arrangements that are applicable to the Funds
and it was determined that it was advisable to continue to maintain these expense limitation
arrangements at their current levels.
In reaching their conclusion with respect to the continuation of the Agreements, the Trustees
did not identify any one single factor as being controlling, rather, the Board took note of a
combination of factors that influenced their decision making process. The Board did, how-
ever, identify the overall favorable investment performance of the Funds on a long-term
basis, the commitment of the Advisor to the successful operation of the Funds, and the level
of expenses of the Funds, as well as the Advisor's willingness to enter into agreements to
reduce the overall operating expenses of the Funds and the investment advisory fees payable
by the Funds, as being important elements of their consideration. Based upon their review
and consideration of these factors and other matters deemed relevant by the Board in reach-
ing an informed business judgment, the Board of Trustees, including all of the Independent
Trustees, unanimously concluded that the terms of the Investment Advisory Agreements are
fair and reasonable and the Board voted to renew the Agreements for an additional one-year
period, subject to the applicable limitations on the total operating expenses of the Funds
and the investment advisory fees payable by the Funds as considered and approved at the
meeting.
33
FAM Equity-Income Fund
December 31, 2011
Dear Fellow FAM Equity-Income Fund Shareholder,
2011 was a terrific year for the Fund! Here are some of the highlights:
• FAM Equity-Income Fund Investor Shares posted +6.79% return for 2011 on top of
+17.47% return in 2010.
• Fund returns have beaten the S&P 500 Index over 1, 3, 5, 10, and 15 years.
• Zero realized capital gains passed onto shareholders for the fourth consecutive year.1
• Wall Street Transcript publishes interview with Fund Co-Manager.
• SmartMoney featured the Fund in an article, “Funds That Fought Volatility – and Won.”
The Fund’s Investor Shares gained +6.79% for the year, ahead of the S&P 500 Index which
was up +2.11%. The Fund also outpaced the Russell 2000 Index which lost -4.18%. We
are gratified that the Fund has beaten the return of the S&P 500 over 1, 3, 5, 10, and 15
years. Additionally, the Fund has outperformed the Russell 2000 over all the same time
periods, except for the 3 and 10-year numbers.
1 Yr. (2011) 3 Year
5 Year
10 Year
15 Year
FAM Equity- Income Fund
+6.79%
+15.06% +0.82%
+4.64%
+6.98%
S&P 500 Index
+2.11%
+14.11% -0.25%
+2.92%
+5.45%
Russell 2000 Index
-4.18%
+15.63% +0.15%
+5.62%
+6.30%
The greatest positive impact on performance during the year resulted from building a cash
balance in June immediately after some weak U.S. economic data was released. We trimmed
a number of names and completely sold some others that we did not want to hold in the
event the economy slowed down further. Shortly thereafter, the market went into a tailspin
on the U.S. debt-ceiling debate which resulted in debt downgrade and fears of Europe split-
ting apart, as well as worries of a global slowdown. We used that severe decline in stock
prices to aggressively deploy that cash into high-quality companies that were then selling at
what we considered to be bargain-basement prices.
The best sectors of the market (S&P 500 Index) in 2011 were Utilities, Heath Care, and
Consumer Staples. The one thing that all these sectors have in common is that they are
generally considered to be defensive. Conversely, the top-contributing sectors in the FAM
Equity-Income Fund were Industrials, Consumer Discretionary, and Energy. These sectors
tend to be leveraged in improving American and growing global economies. We have gone
to great lengths to invest the assets of the Fund into companies that are succeeding in the
current economy. Many of these corporations are taking advantage of growth trends in the
1 In 2008 the Fund paid out a fraction of one cent in capital gain related to a REIT investment.
34
FAM Equity-Income Fund
U.S. and abroad. Others are bringing out new and innovative products which allow them
to take market share. Still others are transitioning their business model to take advantage
of the shift from print to digital content.
The other common theme of the investments in the Fund is that every single holding gener-
ates more cash than is needed to reinvest in the businesses to fuel future growth. The excess
cash is available to pay dividends, buy back stock, or make acquisitions.
Dividends
Research has shown that since 1926, dividends have contributed approximately one-third
of total investment returns.2 Given the importance of dividends to long-term investment
returns, the Fund seeks to invest in dividend-paying companies. Every holding in the Fund
pays a dividend. Additionally, we believe it is important for corporations to increase their
dividends over time. To illustrate this point, in 2011 dividend-paying businesses in the S&P
500 Index which grew their dividends greater than 10% over the last five years, returned
+5.9% for the year on average. Companies that paid dividends but grew them less than
10% over the last five years, gained only +1.9% on average. Non-dividend paying corpora-
tions in the S&P 500 returned a meager +1.7%, on average, for the year. Faster growth in
dividends has a correlation to higher stock returns. The reason these enterprises performed
so well is because they were able to grow in the current economy. They are investing in their
operations and still have enough extra cash to increase the dividends paid to shareholders.
This is the type of business in which we prefer to invest.
The FAM Equity-Income Fund stacks up favorably to both the S&P 500 Index and the Rus-
sell 2000 Index regarding dividends. The Fund has a higher gross dividend yield and, more
importantly, the holdings in the Fund have grown their dividends at an annualized rate of
12% over the last five years (see table).
The following table highlights the dividend characteristics of the FAM Equity-Income Fund’s
portfolio of companies.
Gross Dividend Yield/
5 Year Dividend Growth
Treasury Yield
(Annualized)
FAM Equity-Income Fund3
+3.10%
+12%
S&P 500 Index
+2.10%
-3%
Russell 2000 Index
+1.40%
0%
10 Year Treasury Note
+1.88%
N/A
5 Year Treasury Note
+2.90%
N/A
Source: Thomson Reuters Baseline
2 S&P Indices - Research Insights, January 2010; “S&P 500 Dividend Aristocrats.”
3 Gross Dividend Yield = average dividend yield on portfolio holdings before expenses.
35
FAM Equity-Income Fund
Best and Worst Performing Companies
For the second year in a row the best-performing company in the Fund was Ross Stores
(+52.7%), which added $2.769 million to the value of the portfolio. Ross continues to ex-
ecute well which has driven same-store sales growth beyond Wall Street expectations. The
business will likely grow earnings by more than 20% this fiscal year, on top of 31% growth
in the previous year. Also, management continues to use free cash flow to buy back shares.
We have owned shares in Ross for a decade and our initial purchase per share, split adjusted,
was $5.42. As of December 31, 2011, the stock was trading at $47.53. We believe the stock
still has room to grow and is a compelling investment.
The second-largest contributor in the Fund was EOG Resources (+8.5%) adding $1.021
million to the portfolio. EOG posted excellent earnings growth in 2011 driven by oil pro-
duction and new oil finds. We took advantage of the volatility in the stock market in Au-
gust and October and more than doubled our position at very attractive prices.
The worst-performing company in the Fund was Courier Corp. (-19.0%), which negatively
impacted the value of the Fund by $1.021 million. Courier continues to struggle in this
economy which was exacerbated by the bankruptcy of Borders Group. As the stock price
has come down over the last few years, we have purchased shares at lower-and-lower prices.
Our thinking was that earnings would eventually rebound and the value of the business
would ultimately be recognized. The most recent quarterly earnings for Courier were pretty
good and beat analysts’ expectations by a wide margin. The stock was up 100% at year-end
from its lows set in October.
The second-worst investment in the Fund was Protective Life (-13%), which hurt the value
of the Fund by $0.810 million. We liquidated this position during the year in order to up-
grade the portfolio. Over the summer, we had terrific opportunities to invest in corporations
that are growing faster and are more profitable than Protective. Reinvesting the proceeds
of the sale into these companies helped the performance of the Fund for the remainder of
the year.
Thoughts for 2012
As we do every year, we do our best to visit every company in the portfolio and sit down
with management to make sure the investment is tracking to our expectations. We want
shareholders in the Fund to earn an adequate return over time while taking below-average
risk. We also want to ensure that the people running these corporations are honest and ethi-
cal. We hold ourselves to the highest standards of honesty and integrity and expect nothing
less from the management teams of the holdings in the portfolio.
Regarding the investment environment, we have seen slight but steady improvement in the
U.S. economy for the last 18 months. We expect this trend to continue. We have no way
of handicapping events in Europe or their impact on stock prices. We do know that stock
36
FAM Equity-Income Fund
valuations are not far above historical lows reached after the crash of 1987 and the financial
crisis of 2008. That makes us bullish on the potential for above-average equity returns for
the rest of the decade.
We believe it is easier and more productive to focus on our holdings and their strategies for
growing their businesses, rather than getting bogged down by macro worries and fear. If we
make the right investments, everything else should fall into place. The majority of the com-
panies in the Fund are growing through these turbulent and uncertain economic times. We
have no reason to believe this will change over 2012. As for the upcoming U.S. presidential
election, we predict that it will indeed happen and that there will be a winning candidate.
Just like our stock picks, we don’t like to speculate.
Once again, we thank you for your investment in the Fund. We are working diligently on
your behalf.
Sincerely,
Paul C. Hogan
Thomas O. Putnam
Co-Manager
Co-Manager
The opinions expressed herein are those of the portfolio managers as of the date of this 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.
37
FAM Equity-Income Fund — Performance Summary
Annual Total Investment Returns:
APRIL 1, 1996 TO DECEMBER 31, 2011
FAM EQUITY-INCOME FUND
INVESTOR SHARES ADVISOR SHARES* RUSSELL 2000 INDEX
S&P 500 INDEX
FISCAL YEAR
TOTAL RETURN
TOTAL RETURN
TOTAL RETURN
4/1/96-12/31/96
11.84%
—
10.30%
15.20%
1997
26.90%
—
22.37%
33.35%
1998
4.67%
—
-2.55%
28.58%
1999
-6.98%
—
21.26%
21.04%
2000
17.18%
—
-3.03%
-9.10%
2001
20.79%
—
2.49%
-11.88%
2002
-2.25%
—
-20.48%
-22.09%
2003
20.30%
9.83%
47.25%
28.67%
2004
14.04%
13.05%
18.33%
10.88%
2005
5.75%
4.76%
4.55%
4.91%
2006
6.57%
5.73%
18.37%
15.79%
2007
-3.64%
-4.58%
-1.57%
5.49%
2008
-29.04%
-30.12%
-33.79%
-37.00%
2009
21.43%
20.61%
27.17%
26.46%
2010
17.47%
16.50%
26.85%
14.76%
2011
6.79%
5.83%
-4.18%
2.11%
*FAM Equity-Income Fund Advisor Shares were launched on July 1, 2003.
38
FAM Equity-Income Fund — Performance Summary
The chart below depicts the change in the value of a $10,000 investment in Investor Shares of the FAM
Equity-Income Fund, since inception on April 1, 1996, as compared with the growth of the Russell 2000
Index and the Standard & Poor’s 500 Index during the same period. The information assumes
reinvestment of dividends and capital gain distributions. The Russell 2000 Index is an unmanaged index
generally representative of the market for the stocks of smaller size U.S. companies. The Standard &
Poor’s 500 Index is an unmanaged index generally representative of the market for the stocks of large
size U.S. companies.
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
FAM EQUITY-INCOME FUND, THE RUSSELL 2000 INDEX, AND THE S&P 500 INDEX
$35
FAM Equity-Income Fund
$30
Russell 2000
$30,789
S&P 500
$27,381
$25
$25,461
$20
$15
$10
$5
$0
This information represents past performance of Investor Shares of the FAM Equity-Income Fund and is not indicative of
future results. The investment return and the principal value of an investment will fluctuate so that an investor’s shares,
when redeemed, may be worth more or less than the original cost.
An investment of $10,000 in the Advisor Shares of the FAM Equity-Income Fund since the inception date of this share
class, July 1, 2003, would have changed in value to $13,636 by December 31, 2011.
Average Annual Total Returns as of December 31, 2011
Life of Fund/Class
1-Year
3-Year
5-Year
10-Year
(4/1/96)
FAM Equity-Income Fund
(Investor Shares)
6.79%
15.06%
0.82%
4.64%
7.40%
(Advisor Shares)*
5.83%
14.14%
-0.17%
N/A
3.72%
S&P 500 Index
2.11%
14.11%
-0.25%
2.92%
6.21%
Russell 2000 Index
-4.18%
15.63%
0.15%
5.62%
6.68%
__________
*FAM Equity-Income Fund Advisor Shares were launched on July 1, 2003. The return since inception is 3.72%
The graph and performance table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
39
FAM Equity-Income Fund — Portfolio Data (Unaudited)
December 31, 2011
TOP TEN EQUITY HOLDINGS
COMPOSITION OF TOTAL INVESTMENTS
(% of Total Investments)
Publishing
7.3%
Ross Stores, Inc.
6.1%
Machinery & Equipment
6.9%
John Wiley & Sons, Inc. - Class A
4.8%
Semiconductors
6.2%
EOG Resources, Inc.
4.5%
Retail Stores
6.1%
McGrath RentCorp
4.4%
Oil & Gas Exploration
5.4%
IDEX Corporation
4.0%
Commercial Services
4.4%
U.S. Ecology, Inc.
3.8%
Hazardous Waste Disposal
3.8%
Meredith Corporation
3.8%
Media
3.8%
Stryker Corporation
3.5%
Health Care Equipment/Devices
3.5%
Xilinx, Inc.
3.4%
Insurance Agency
3.3%
Arthur J. Gallagher & Co.
3.3%
Diversified Healthcare
3.1%
Property & Casualty Insurance
2.9%
Utilities - Water
2.8%
Consumer Staples
2.6%
Investment Management
2.6%
Health Care Services
2.5%
Banking
2.5%
Health Care Distribution
2.5%
Life Insurance
2.2%
Utilities - Gas
2.0%
Other
9.6%
Money Market Fund
14.0%
Statement Regarding Availability of Quarterly Portfolio Schedule. Please note that (i) the Fund
files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third
quarters of each fiscal year on Form N-Q; (ii) the Fund’s Forms N-Q are available on the Commission’s website at
http://www.sec.gov; (iii) the Fund’s Form 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.
40
FAM Equity-Income Fund — Expense Data (Unaudited)
December 31, 2011
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including redemption
fees on the Advisor Class Shares; and (2) ongoing costs, including management fees; distribution (and/
or service) (12b-1 fees on the Advisor Class Shares only) fees; and other Fund expenses. This Example
is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 at the beginning of the period and held for the entire
period (7/1/2011 to 12/31/2011).
Actual Expenses
Lines (A) and (B) of the following table provide information about actual account values and actual
expenses for Investor Class Shares and Advisor Class Shares, respectively. 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
Lines (C) and (D) of the following table provide information about hypothetical account values and
hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5%
per year before expenses, which is not the Fund’s actual return for the Investor Class Shares and
Advisor Class Shares, respectively. The hypothetical 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 and do
not reflect any transactional costs, such as redemptions fees. Therefore, lines (C) and (D) of the table
are useful in comparing ongoing costs only, and will not help you determine the relative costs of own-
ing different funds. In addition, if these transactional costs were included, your costs would have been
higher.
41
FAM Equity-Income Fund — Expense Data (Unaudited)
December 31, 2011
S I X M O N T H S E N D E D D E C E M B E R 3 1 , 2 0 1 1
Beginning
Ending
Expenses
Account Value Account Value
Paid
7/1/2011
12/31/2011
During Period
Ongoing Costs Based on Actual Fund Return
A. Investor Share Class
$1,000.00
$1,005.60
$ 7.08*
B.
Advisor Share Class
$1,000.00
$1,001.00
$12.10**
Ongoing Costs Based on Hypothetical
5% Yearly Return
C. Investor Share Class
$1,000.00
$1,017.94
$ 7.12*
D. Advisor Share Class
$1,000.00
$1,012.90
$12.18**
*Expenses are equal to the Fund’s Investor Class Shares annualized expense ratio of (1.40%), multiplied by the average account
value over the period, multiplied by 184/365 (to reflect the one-half-year period).
**Expenses are equal to the Fund’s Advisor Class Shares annualized expense ratio of (2.40%), multiplied by the average account
value over the period, multiplied by 184/365 (to reflect the one-half-year period).
42
FAM Equity-Income Fund — Statement of Investments
December 31, 2011
SHARES
VALUE
COMMON STOCKS (81.2%)
Banking (2.5%)
M&T Bank Corporation
• bank holding company that provides commercial and
retail banking services to individuals, businesses,
corporations and institutions in the Northeast and
Mid-Atlantic
9,000
$ 687,060
NBT Bancorp, Inc.
• provides commercial banking and financial services to
individuals, corporations and municipalities in New
York, Vermont and Pennsylvania
103,000
2,279,390
SCBT Financial Corporation
• provides banking services to individual and corporate
customers in the Carolinas
10,000
290,100
3,256,550
Beverage - Non Alcoholic (1.2%)
Dr. Pepper Snapple Group, Inc.
• integrated brand owner, manufacturer and distributor
of non-alcoholic beverages in the USA, Canada, and
Mexico
40,000
1,579,200
Commercial Services (4.4%)
McGrath RentCorp
• modular building and electronic test equipment rentals,
subsidiary classroom manufacturing
199,400
5,780,606
Consumer Staples (2.6%)
Flowers Foods, Inc.
• produces and markets bakery products in the USA
180,000
3,416,400
Diversified Healthcare (3.1%)
Johnson & Johnson
• manufactures and sells various products in the health
care field
62,500
4,098,750
Diversified Manufacturing (1.1%)
General Electric Company
• diversified industrial manufacturer
79,221
1,418,848
See Notes to Financial Statements
43
FAM Equity-Income Fund — Statement of Investments continued
December 31, 2011
SHARES
VALUE
Education Services (1.2%)
Strayer Education
• provides various academic programs through traditional
classrooms and Internet
16,000
$1,555,040
Food-Meat Products (0.2%)
Hormel Foods Corporation
• multinational manufacturer and marketer of consumer-
branded food and meat products
10,000
292,900
Hazardous Waste Disposal (3.8%)
U.S. Ecology, Inc.
• provides radioactive, pcb, hazardous and non-hazardous
waste services to commercial and government customers
266,800
5,010,504
Health Care Distribution (2.5%)
Patterson Corporation
• operates as a distributor serving dental, companion-pet,
veterinarian, and rehabilitation supply markets in the
USA and Canada
110,000
3,247,200
Health Care Equipment/Devices (3.5%)
Stryker Corporation
• operates a medical technology company offering
Orthopedic Implants and MedSurg Equipment
93,000
4,623,030
Health Care Services (2.5%)
Landauer, Inc.
• provides personal radiation dosimeters and radiation
related services
65,000
3,347,500
Insurance Agency (3.3%)
Arthur J. Gallagher & Co.
• provides insurance brokerage and risk management
services to commercial, industrial, institutional, and
governmental organizations
127,920
4,277,645
See Notes to Financial Statements
44
FAM Equity-Income Fund — Statement of Investments continued
December 31, 2011
SHARES
VALUE
Investment Management (2.6%)
Franklin Resources, Inc.
• provides investment management and fund administra-
tion services as well as retail-banking and consumer
lending services
35,500
$3,410,130
Machinery & Equipment (6.9%)
Donaldson Company, Inc.
• designs, manufactures and sells filtration systems and
replacement parts
57,800
3,935,024
IDEX Corporation
• manufactures proprietary, highly engineered industrial
products and pumps
140,205
5,203,008
9,138,032
Media (3.8%)
Meredith Corporation
• magazine publishing and tv broadcasting
151,373
4,942,328
Oil and Gas Exploration (4.5%)
EOG Resources, Inc.
• engages in the exploration, development, production
and marketing of natural gas and crude oil
60,000
5,910,600
Packaged Goods (1.9%)
McCormick & Company, Inc.
• manufactures, markets and distributes spices,
seasonings, specialty foods and flavorings to the
entire food industry.
50,000
2,521,000
Property and Casualty Insurance (2.9%)
OneBeacon Insurance Group, Ltd.
• commercial, personal and specialty insurance products
244,666
3,765,410
See Notes to Financial Statements
45
FAM Equity-Income Fund — Statement of Investments continued
December 31, 2011
SHARES
VALUE
Publishing (7.3%)
Courier Corporation
• manufactures and publishes specialty books, including
Dover Publications
279,188
$3,274,875
John Wiley & Sons, Inc. - Class A
• publisher of print and electronic products, specializing
in scientific, technical, professional and medical books
and journals
142,750
6,338,100
9,612,975
Retail Stores (6.1%)
Ross Stores, Inc.
• chain of off-price retail apparel and home accessories
stores
168,282
7,998,443
Semiconductors (6.2%)
Altera Corporation
• manufacturer of programmable logic solutions
20,000
742,000
Microchip Technology, Inc.
• develops, manufactures and sells semiconductor
products for various embedded control applications
80,000
2,930,400
Xilinx, Inc.
• worldwide leader of programmable logic solutions
141,414
4,533,733
8,206,133
Technology (1.6%)
National Instruments Corporation
• manufactures and supplies measurement and
automation products
82,000
2,127,900
Utilities/Gas (2.0%)
Questar Corporation
• natural gas utility in the state of Utah
135,000
2,681,100
See Notes to Financial Statements
46
FAM Equity-Income Fund — Statement of Investments continued
December 31, 2011
SHARES
VALUE
Utilities/Water (2.8%)
Aqua America, Inc.
• water and waste water utility
169,000
$ 3,726,450
Wholesale Wire & Cable (0.7%)
Houston Wire and Cable Company
• distributor of wire and cable products in the USA
63,700
880,334
Total Common Stocks (Cost $84,678,480)
$106,825,008
PREFERRED STOCKS (4.8%)
Banking (0.0%)
M&T Capital Trust - Preferred A
• banking holding company that provides commercial and
retail banking services to individuals, businesses,
corporations and institutions in the Northeast and
Mid-Atlantic
800
20,776
Life Insurance (2.2%)
Protective Life Corporation - Preferred D
• individual and group life/health insurance and
guaranteed investment contracts
116,107
2,918,930
Oil and Gas Exploration (0.9%)
Magnum Hunter Resources Corporation - Preferred C
• independent oil and gas company that engages in the
acquisition, development and production of oil and
natural gas
40,000
1,010,000
Magnum Hunter Resources Corporation - Preferred D
• independent oil and gas company that engages in the
acquisition, development and production of oil and
natural gas
5,000
222,600
1,232,600
See Notes to Financial Statements
47
FAM Equity-Income Fund — Statement of Investments continued
December 31, 2011
SHARES
VALUE
REITS - Diversified (0.8%)
Winthrop Realty Trust - Preferred D
• engages in the ownership and management of real
property and real estate-related assets
40,000
$ 1,026,000
REITS - Storage (0.9%)
Public Storage - Preferred Q
• engages in the acquisition, development, ownership,
and operation of self-storage facilities in the USA and
Europe
40,300
1,128,400
Total Preferred Stocks (Cost $5,535,935)
$ 6,326,706
TEMPORARY INVESTMENTS (14.0%)
Money Market Fund (14.0%)
Invesco Short Term Treasury Fund (0.02%)*
18,416,132
18,416,132
Total Temporary Investments (Cost $18,416,132)
$ 18,416,132
Total Investments (Cost $108,630,547) (100%)
$131,567,846
*The rate shown represents the effective yield at 12/31/11
See Notes to Financial Statements
48
FAM Equity-Income Fund
December 31, 2011
STATEMENT OF ASSETS AND LIABILITIES
Assets
Investments in securities at value (Cost $108,630,547)
$131,567,846
Cash
12,461
Dividends and interest receivable
182,869
Receivable for fund shares sold
375,824
Total Assets
132,139,000
Liabilities
Payable for investment securities purchased
4,648,665
Payable for fund shares redeemed
36,341
Accrued investment advisory fee
98,125
Accrued shareholder servicing and administrative fees
13,206
Accrued expenses
67,399
Accrued distribution and service fees
450
Total Liabilities
4,864,186
Net Assets
Sources of Net Assets:
Net capital paid in on shares of beneficial interest
$104,361,456
Undistributed net investment income
10,472
Accumulated net realized losses
(34,413)
Net unrealized appreciation
22,937,299
Net Assets
$127,274,814
Net Asset Value, Offering and Redemption Price
per share (unlimited shares of beneficial interest
authorized at $.001 par value)
Investor Class Shares — based on net assets of
$19.39
$125,832,430 and 6,489,420 shares outstanding
Advisor Class Shares — based on net assets of
$19.24
$1,442,384 and 74,981 shares outstanding(a)
(a)A 1% redemption fee is imposed upon Advisor shares redeemed within the first
18 months of purchase. See Note 4 in the Notes to the Financial Statements.
See Notes to Financial Statements
49
FAM Equity-Income Fund
Year Ended December 31, 2011
STATEMENT OF OPERATIONS
INVESTMENT INCOME
Income
Dividends
$2,701,275
Interest
2,285
Total Investment Income
2,703,560
Expenses
Investment advisory fee (Note 2)
909,935
Administrative fee (Note 2)
77,345
Shareholder servicing and related expenses (Note 2)
55,098
Printing and mailing
20,952
Professional fees
40,378
Registration fees
43,521
Custodial fees
13,564
Trustees fees
60,262
Officers fees (Note 2)
39,570
Distribution and Service fees - Advisor Class Shares (Note 2)
15,460
Other
13,826
Total Expenses
1,289,911
Expenses Paid Indirectly (Note 3)
(113)
Net Expenses
1,289,798
Net Investment Income
1,413,762
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments
864,340
Net change in unrealized appreciation of investments
4,243,746
Net Realized and Unrealized Gain on Investments
5,108,086
NET INCREASE IN NET ASSETS FROM OPERATIONS
$6,521,848
See Notes to Financial Statements
50
FAM Equity-Income Fund
Years Ended December 31, 2011 and 2010
STATEMENTS OF CHANGES IN NET ASSETS
2011
2010
CHANGE IN NET ASSETS
FROM OPERATIONS:
Net investment income
$ 1,413,762
$ 1,702,397
Net realized gain on investments
864,340
1,086,508
Net change in unrealized appreciation
of investments
4,243,746
10,400,862
Net Increase in Net Assets From Operations
6,521,848
13,189,767
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Investor Class
(1,405,099)
(1,684,387)
Advisor Class
(7,439)
(17,762)
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST (NOTE 4)
34,716,192
(1,779,673)
Total Increase in Net Assets
39,825,502
9,707,945
NET ASSETS
Beginning of Year
87,449,312
77,741,367
End of Year
$127,274,814
$87,449,312
Undistributed net investment income
$
10,472
$
9,248
See Notes to Financial Statements
51
FAM Equity-Income Fund — Notes to Financial Statements
Note 1. Nature of Business and Summary of Significant Accounting Policies
FAM Equity-Income Fund (the “Fund”) is a series of Fenimore Asset Management Trust, a diversi-
fied, open-end management investment company registered under the Investment Company Act of
1940. The Fund offers two classes of shares (Investor Class and Advisor Class since April 1, 1996
and July 1, 2003, respectively). Each class of shares has equal rights as to earnings and assets except
the Advisor Class bears its own distribution and service fee expenses. Each class of shares has exclu-
sive voting rights with respect to matters that affect just that class. Income, expenses (other than
expenses attributable to a specific class), and realized and unrealized gains or losses on investments
are allocated to each class of shares based on its relative net assets. 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,
which are in accordance with accounting principles generally accepted in the United States of America
(“GAAP”), followed by the Fund 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 sale price or the NASDAQ official closing price. Common stocks for which no
sale was reported, and over-the-counter securities, are valued at the last reported bid price. Short-
term securities are carried at amortized cost, which approximates value. Securities for which market
quotations are not readily available or have not traded are valued at fair 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 hierarchy of inputs. The
hierarchy distinguishes between market data obtained from independent sources (observable inputs)
and the Fund’s own market assumptions (unobservable inputs). These inputs are used in determining
thevalueof theFund’sinvestments. Theseinputsare summarizedin thethreebroad levels listedbelow:
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 Fund’s own assumptions in determin-
ing the fair value of investments)
The inputs or methodology used for valuing securities are not necessarily an indication of the
risk associated with investing in those securities.
52
FAM Equity-Income Fund — Notes to Financial Statements
The following is a summary of the inputs used to value the Fund’s net assets as of December 31,
2011:
Valuation Inputs
Investments in Securities
Level 1 Quoted prices
Common Stocks
$106,825,008
Preferred Stocks
$ 6,326,706
Temporary Investments
$ 18,416,132
Level 2 Other significant observable inputs
$
—
Level 3 Significant unobservable inputs
$
—
Total
$131,567,846
During the year ended December 31, 2011 there were no Level 2 or 3 inputs used to value the
Fund’s net assets. Refer to the Statement of Investments to view securities segregated by industry
type.
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 or excise tax is required.
GAAP requires uncertain tax positions to be recognized, measured, presented and disclosed in the
financial statements. For the year ended December 31, 2011 management has evaluated the tax
positions taken or expected to be taken in the course of preparing the Fund’s tax returns to
determine whether the tax positions are “more-likely-than-not” of being sustained 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 2008 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 management to make
estimates and assumptions that affect the reported amounts of assets and liabilities and disclosureof 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 accrued as earned and dividend income
is recorded on the ex-dividend date. The Fund records distributions received in excess of income from
53
FAM Equity-Income Fund — Notes to Financial Statements
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 Fund adjusts 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 regulations and may differ from those determined for financial statement
purposes. To the extent these differences are permanent such amounts are reclassified within the
capital accounts.
Note 2. Investment Advisory Fees and Other Transactions with Affiliates
Under 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. The Advisor has entered into a voluntary agreement with the Fund to reduce the investment
advisory fee for the Fund through December 31, 2012 to 0.95% of the Fund’s average daily net assets
in excess of $1 billion. No such waiver was required for the year ended December 31, 2011. Thomas
Putnam is an officer and trustee of the Fund and also an officer and director of the Advisor. The CCO
is an officer of the Fund and compensated by the Fund in the amount of $39,570 as well as an officer
of the Advisor and compensated additionally by the Advisor.
The Investment Advisory Contract requires the Advisor to reimburse the Investor Class for its expenses
to the extent that such expenses, including the advisory fee, for the fiscal year exceed 2.00% of the
average daily net assets. For the year ended December 31, 2011 the Advisor contractually agreed to
reimburse the Fund for its expenses to the extent such expenses exceed 1.40% and 2.40% of the aver-
age daily net assets of the Investor Class and Advisor Class, respectively. No such reimbursement was
required for the year ended December 31, 2011.
FAM Shareholder Services, Inc. (“FSS”), a company under common control with the Advisor, serves
as shareholder servicing agent and receives a monthly fee of $2.33 per shareholder account. For the
year ended December 31, 2011, shareholder servicing agent fees paid to FSS amounted to $55,098.
Additionally, FSS serves as the Fund administrative agent and receives an annual fee of 0.085% on the
first $750,000,000 of the Fund’s average daily net assets, and 0.075% thereafter. For the year ended
December 31, 2011, Fund administrative fees amounted to $77,345.
Fenimore Securities, Inc. (“FSI”), a company also under common control with the Advisor, acts as
distributor of the Fund’s shares. On July 1, 2003, the Fund adopted a distribution plan pursuant to
Rule 12b-1 under the Investment Company Act of 1940 for the Advisor Class of shares. Under the
plan the Fund pays FSI a total of 1.00% per annum of the Advisor Class shares’ average daily net
assets.
54
FAM Equity-Income Fund — Notes to Financial Statements
Note 3. Indirect Expenses
The Fund’s custodian bank has also agreed to reduce its fees when the Fund maintains cash on deposit
in the non-interest bearing custody account. For the year ended December 31, 2011, these
arrangements reduced the Fund’s custodian fees by $113.
Note 4. Shares of Beneficial Interest
At December 31, 2011 an unlimited number of $.001 par value shares of beneficial interest were
authorized. The Advisor Class of shares that are redeemed within the first eighteen months of purchase
are subject to a 1.00% redemption fee. For the years ended December 31, 2011 and 2010, redemption
fees amounted to $28 and $25, respectively. Transactions were as follows:
YEAR ENDED 12/31/11
YEAR ENDED 12/31/10
Shares
Amount
Shares
Amount
Shares sold
Investor Class
2,303,354
$43,756,503
428,096
$ 7,285,344
Advisor Class
640
11,151
471
8,150
Shares issued on
reinvestment of distributions
Investor Class
70,384
1,322,092
91,289
1,568,099
Advisor Class
361
6,701
963
16,387
Shares redeemed
Investor Class
(540,888)
(10,100,694)
(612,421)
(10,383,076)
Advisor Class
(14,956)
(279,561)
(16,238)
(274,577)
Net Increase/Decrease from
Investor Class
Share Transactions
1,832,850
$34,977,901
(93,036)
$(1,529,633)
Net Decrease from Advisor Class
Share Transactions
(13,955)
$ (261,709)
(14,804)
$ (250,040)
Note 5. Investment Transactions
During the year ended December 31, 2011, purchases and sales of investment securities, other than
short-term obligations were $44,263,352 and $14,891,749, respectively.
55
FAM Equity-Income Fund — Notes to Financial Statements
Note 6. Income Taxes and Distribution to Shareholders
The components of accumulated income/losses on a tax basis at December 31, 2011 were as
follows:
Undistributed ordinary income
$ 10,472
Capital loss carry forward
$(34,413)
The aggregate gross unrealized appreciation and depreciation of portfolio securities, based on cost
for federal income tax purposes of $108,630,547, was as follows:
Unrealized appreciation
$26,082,689
Unrealized depreciation
(3,145,390)
Net unrealized appreciation
$22,937,299
The tax composition of dividends and distributions paid to shareholders for the years ended De-
cember 31, 2011 and 2010 were as follows:
2011
2010
Ordinary income
$1,412,538
$1,702,149
As of December 31, 2011 the Fund had $34,413 in net capital loss carry forwards which are available
to offset future realized gains, if any. To the extent the carry forward is used to offset future gains,
the amount offset will not be distributed to shareholders. The capital loss carry forward of $34,413
expires in 2017.
Note 7. Line of Credit
FAM Equity-Income Fund has a line of credit up to 33 1/3% of total net assets or a maximum of
$15,000,000. 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, 2012, when any advances are to be
repaid. During the year ended December 31, 2011, no amounts were drawn from the available line.
Fees paid to the lending bank amounted to $107.
56
FAM Equity-Income Fund — Notes to Financial Statements
Note 8. Commitments and Contingencies
In the normal course of business, the Fund enters into contracts that contain a variety of representa-
tions and warranties which provide general indemnifications. The Fund’s maximum exposure under
these arrangements is unknown as this would involve future claims that might be made against the
Fund that have not yet occurred. However, based on experience of the Advisor, the Fund expects the
risk of loss to be remote.
Note 9. New Accounting Pronouncement
In May 2011, the FASB issued ASU No. 2011-04 “Amendments to Achieve Common Fair Value
Measurement and Disclosure Requirements” in GAAP and the International Financial Reporting
Standards (“IFRSs”). ASU No. 2011-04 amends FASB ASC Topic 820, Fair Value Measurements
and Disclosures, to establish common requirements for measuring fair value and for disclosing
information about fair value measurements in accordance with GAAP and IFRSs. ASU No. 2011-04
is effective for fiscal years beginning after December 15, 2011 and for interim periods within those
fiscal years. Management is currently evaluating the impact these amendments may have on the
Fund’s financial statements.
Note 10. Subsequent Events
Management has evaluated subsequent events through the date the financial statements were avail-
able to be issued, and has determined that there were no subsequent events requiring recognition or
disclosure in the financial statements.
57
FAM Equity-Income Fund — Notes to Financial Statements
Note 11. Financial Highlights
F A M E Q U I T Y- I N C O M E F U N D - I N V E S T O R C L A S S S H A R E S
Per share information
Years Ended December 31,
(For a share outstanding throughout the year)
2011
2010
2009
2008
2007
Net asset value, beginning of year
$18.43
$16.02
$13.34
$19.09
$21.61
Income/Loss from investment operations:
Net investment income†
0.29
0.36
0.17
0.23
0.20
Net realized and unrealized
gain (loss) on investments
0.95
2.41
2.68
(5.73)
(0.97)
Total from investment operations
1.24
2.77
2.85
(5.50)
(0.77)
Less distributions:
Dividends from net investment income
(0.28)
(0.36)
(0.17)
(0.23)
(0.20)
Distributions from net realized gains
—
—
—
—*
(1.55)
Return of capital
—
—
—
(0.02)
—
Total distributions
(0.28)
(0.36)
(0.17)
(0.25)
(1.75)
Change in net asset value for the year
0.96
2.41
2.68
(5.75)
(2.52)
Net asset value, end of year
$19.39
$18.43
$16.02
$13.34
$19.09
Total Return
6.79%
17.47%
21.43%
(29.04)%
(3.64)%
Ratios/supplemental data
Net assets, end of year (000)
$125,832
$85,824
$76,096
$68,096
$112,472
Ratios to average net assets of:
Before waivers:
Expenses
1.40%
1.41%
1.47%
1.41%
1.32%
Net investment income
1.57%
2.10%
1.11%
1.33%
0.88%
After waivers:
Expenses
1.40%
1.40%
1.40%
1.40%
1.32%
Net investment income
1.57%
2.11%
1.18%
1.34%
0.88%
Portfolio turnover rate
17.96%
13.38%
10.51%
17.58%
16.16%
†
*Per share amount is less than $0.005.Based on average shares outstanding.
58
FAM Equity-Income Fund — Notes to Financial Statements
Note 11. Financial Highlights (continued)
F A M E Q U I T Y- I N C O M E F U N D - A D V I S O R C L A S S S H A R E S
Per share information
Years Ended December 31,
(For a share outstanding throughout the year)
2011
2010
2009
2008
2007
Net asset value, beginning of year
$18.27
$15.86
$13.18
$18.86
$21.39
Income/Loss from investment operations:
Net investment income/(loss)†
0.10
0.19
0.03
0.06
(0.03)
Net realized and unrealized
gain (loss) on investments
0.96
2.41
2.68
(5.74)
(0.95)
Total from investment operations
1.06
2.60
2.71
(5.68)
(0.98)
Less distributions:
Dividends from net investment income
(0.09)
(0.19)
(0.03)
—
—
Distributions from net realized gains
—
—
—
—
(1.55)
Total distributions
(0.09)
(0.19)
(0.03)
—
(1.55)
Change in net asset value for the year
0.97
2.41
2.68
(5.68)
(2.53)
Net asset value, end of year
$19.24
$18.27
$15.86
$13.18
$18.86
Total Return
5.83%
16.50%
20.61%
(30.12)%
(4.58)%
Ratios/supplemental data
Net assets, end of year (000)
$1,442
$1,625
$1,646
$1,759
$3,346
Ratios to average net assets of:
Before waivers:
Expenses
2.40%
2.41%
2.47%
2.41%
2.32%
Net investment income/(loss)
0.57%
1.10%
0.11%
0.33%
(0.12)%
After waivers:
Expenses
2.40%
2.40%
2.40%
2.40%
2.32%
Net investment income/(loss)
0.57%
1.11%
0.18%
0.34%
(0.12)%
Portfolio turnover rate
17.96%
13.38%
10.51%
17.58%
16.16%
†
Based on average shares outstanding.
59
FAM Equity-Income Fund —
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Fenimore Asset Management Trust
and Shareholders of FAM Equity-Income Fund
We have audited the accompanying statement of assets and liabilities, including the state-
ment of investments, of FAM Equity-Income Fund, a series of shares of beneficial interest
of Fenimore Asset Management Trust, as of December 31, 2011, and the related statement
of operations for the year then ended, the statements of changes in net assets for each of
the two years in the period then ended and the financial highlights for each of the five
years in the period then ended. These financial statements and financial highlights are the
responsibility of the Fund’s management. Our responsibility is to express an opinion on
these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Ac-
counting Oversight Board (United States). Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial statements
and financial highlights are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the financial state-
ments. Our procedures included confirmation of securities owned as of December 31,
2011, by correspondence with the custodian and brokers. An audit also includes assessing
the accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present
fairly, in all material respects, the financial position of FAM Equity-Income Fund, as of
December 31, 2011, the results of its operations for the year then ended, the changes in its
net assets for each of the two years in the period then ended and its financial highlights for
each of the five years in the period then ended, in conformity with accounting principles
generally accepted in the United States of America.
BBD, LLP
Philadelphia, Pennsylvania
February 15, 2012
60
FAM Equity-Income Fund (Unaudited)
Board Consideration of the Continuation of the Investment Advisory Agreements for the
Funds
In accordance with the Investment Company Act of 1940, the Board of Trustees of the Funds
is required, on an annual basis, to consider the continuation of the Investment Advisory
Agreements (the "Agreements") with the Advisor, and this must take place at an in-person
meeting of the Board. The relevant provisions of the Investment Company Act of 1940
specifically provide that it is the duty of the Board to request and evaluate such information
as the Board determines is necessary to allow them to properly consider the continuation of
the Agreements, and it is the duty of the Advisor to furnish the Trustees with such informa-
tion that is responsive to their request.
Accordingly, in determining whether to renew the Agreements between the Funds and the
Advisor, the Board of Trustees requested, and the Advisor provided, information and data
relevant to the Board's consideration. This included materials prepared by the Advisor and
materials prepared by an independent mutual fund industry consulting firm that produced
materials specifically for the Board that provided them with information regarding the
investment performance of the Funds and information regarding the fees and expenses of
the Funds, compared to other similar mutual funds. As part of its deliberations, the Board
also considered and relied upon the information about the Funds and the Advisor that had
been provided to them throughout the year in connection with their regular Board meetings
at which they engage in the ongoing oversight of the Funds and their operations.
The Board engaged in a thorough review process to determine whether or not to continue
the Agreements with the Advisor. After receiving the materials they had requested to assist
them with their review, the Board had a preliminary meeting by conference call on November
14, 2011, with representatives of the Advisor in order to discuss the proposed continuation
of ��the Agreements and to review the materials that had been presented. The Board then
requested certain additional information which the Advisor provided and the Board also
met separately on November 9, 2011 and then with representatives of the Advisor on two
occasions on November 9 and 10, 2011 prior to their required in-person meeting in order
to further consider and discuss the proposed continuation of the Agreements.
The Board then met to consider the continuation of the Agreements at an in-person meeting
of the Board held on November 10, 2011. Among the factors the Board considered was the
overall performance of the Funds relative to the performance of other similar mutual funds
on a long-term basis (five years and longer) and over shorter time periods (less than five
years). In connection with its review of the performance results achieved for the Funds, the
Board discussed with management the fact that the Advisor maintains a particular focus on
long-term investment performance results and they reviewed the reasons why this may, from
time to time, cause the longer-term performance results and the shorter-term performance
61
FAM Equity-Income Fund (Unaudited)
results to under-perform when compared to other funds for similar time periods. In connec-
tion with this, the Board took note of management's stated position that achieving favorable
long-term investment results is a primary objective of the firm. The Board also considered
and discussed with the Advisor their focus on "value investing" which may result in short-
term performance that lags the performance results achieved by other managers, especially
those managers that emphasize other types of investment strategies, such as "growth invest-
ing." The Board also took into consideration the Advisor's stated objective of attaining
investment results with less risk and less volatility than other funds. The Board determined
that it was beneficial to shareholders that the Advisor has continued to invest on behalf of
the Funds in a manner that is consistent with its long-term investment objectives due to the
fact that the Advisor has been able to achieve favorable long-term performance results for
the Funds and when performance is adjusted for risk, it shows even more favorable results.
The Board also took note of the long-term relationship between the Advisor and the Funds
and the efforts that have been undertaken by the Advisor to foster the growth and develop-
ment of the Funds since the inception of each of the Funds. In connection with this, the
Board took note of the fact that Thomas Putnam, the Chairman and founder of the Advisor
and the co-manager of each of the Funds, has been advising each of the Funds since their
inception, during which time the Funds have experienced favorable long-term investment
results on a comparative basis. The Board also noted that the Advisor has continued to retain
and develop additional portfolio managers and investment analysts to work with Mr.
Putnam in an effort to provide for the continued long-term management and oversight of
the Funds and their portfolios.
In addition, the Board compared expenses of each Fund to the expenses of other similar
mutual funds, noting that the expenses for each of the Funds compare favorably with indus-
try averages for other funds of similar size and investment objective. They noted the range
of investment advisory and administrative services provided by the Advisor and its affiliates
to the Funds and the level and quality of these services, and in particular, they considered
the quality of the personnel providing these services noting that they were of a high caliber.
The Board considered that the Funds receive administrative and accounting services from
an affiliate of the Advisor, FAM Shareholder Services, Inc. ("FSS"), and the Board reviewed
the fees paid to FSS and the services provided to the Funds and their shareholders by FSS
during the past year and determined that the fees were fair and reasonable and that the
services provided are useful and beneficial to the ongoing operations of the Funds given that
the services provided by FSS are separate and distinct services apart from the investment
advisory services provided to the Funds by the Advisor. The Board also considered that the
Funds are distributed by an affiliate of the Advisor, Fenimore Securities, Inc., ("FSI"), and
the Board reviewed the distribution related services provided by FSI, the distribution fees
received by FSI in connection with its distribution of the Advisor Class of shares of the
Funds, and they determined that the fees were fair and reasonable and that the distribution
services provided by FSI are useful and beneficial to the ongoing operations of the Funds.
62
FAM Equity-Income Fund (Unaudited)
The Board also reviewed financial information concerning the Advisor and its affiliates
relating to the operation of the Funds, noting the overall profitability of the relationship
with the Funds to the Advisor and the financial soundness of the Advisor and its affiliates
as demonstrated by the financial information provided. The Board also took note of the
fact that the Advisor bears the costs associated with the Funds' participation in various
"mutual fund supermarket" programs out of its own resources, noting that this is beneficial
to the Funds because it allows them to be held by a wide array of shareholders in a conve-
nient manner. The Board also considered the extent to which the Advisor uses its own
resources to support sales and marketing efforts on behalf of the Funds. In reviewing the
profitability of the Advisor relating to its management of the Funds, the Board reviewed the
level of profitability taking into consideration these various marketing expenses that are
borne directly by the Advisor and they considered the level of profitability both before and
after the impact of these marketing costs.
The Board reviewed the Advisor's brokerage practices and best-execution procedures, and
noted that these were reasonable and consistent with standard industry practice. In con-
nection with this review, the Board considered the fact that the Advisor does not have any
express arrangements in place with respect to "soft dollar" arrangements with brokers or
other similar parties relating to the direct use of Fund brokerage commissions to obtain
research or execution services. With respect to the Advisor's brokerage practices, the Board
also took into consideration the fact that the Advisor has maintained low portfolio turnover
rates for the Funds that are substantially lower than industry averages for equity-type funds,
which the Board determined is beneficial to shareholders due to the reduced brokerage
expenses that are attributable to low portfolio turnover rates.
The Board also considered information regarding the fees that the Advisor charges other
clients, including privately managed accounts and a privately offered investment fund, for
investment advisory services that are similar to the advisory services provided to the Funds
and noted that the Funds' fees were reasonable when compared to the relevant circumstances
of the types of accounts involved.
In connection with the Board's consideration of the ways in which economies of scale are
reflected with respect to the Agreements, the Board took note of the fact that the Advisor
has, since January 1, 2005, maintained voluntary expense limitation arrangements with the
Funds pursuant to which the investment advisory fees payable to the Advisor by each of the
Funds is reduced on assets in excess of $1 billion from the stated contractual rate of 1.00%
of the average daily net assets of each respective Fund to 0.95% of the average daily net
assets of those assets in each Fund in excess of $1 billion, and it was further noted by the
Board that the Advisor had agreed to extend the term of the voluntary expense limitation
agreements for the one-year period from January 1, 2012 through December 31, 2012. This
limitation on the amount of the investment advisory fees payable under the Agreements is
63
FAM Equity-Income Fund (Unaudited)
in addition to the contractual arrangement in place with respect to each of the Funds pursu-
ant to which the Advisor has previously agreed to limit the total operating expenses of each
class of shares of the Funds and is reviewed by the Board each year in connection with the
further continuation of the Agreements. The Board discussed with the Advisor the nature
and extent of the current expense limitation arrangements that are applicable to the Funds
and it was determined that it was advisable to continue to maintain these expense limitation
arrangements at their current levels.
In reaching their conclusion with respect to the continuation of the Agreements, the Trustees
did not identify any one single factor as being controlling, rather, the Board took note of a
combination of factors that influenced their decision making process. The Board did, how-
ever, identify the overall favorable investment performance of the Funds on a long-term
basis, the commitment of the Advisor to the successful operation of the Funds, and the level
of expenses of the Funds, as well as the Advisor's willingness to enter into agreements to
reduce the overall operating expenses of the Funds and the investment advisory fees payable
by the Funds, as being important elements of their consideration. Based upon their review
and consideration of these factors and other matters deemed relevant by the Board in reach-
ing an informed business judgment, the Board of Trustees, including all of the Independent
Trustees, unanimously concluded that the terms of the Investment Advisory Agreements are
fair and reasonable and the Board voted to renew the Agreements for an additional one-year
period, subject to the applicable limitations on the total operating expenses of the Funds
and the investment advisory fees payable by the Funds as considered and approved at the
meeting.
64
FAM Funds — Information About Trustees and Officers (Unaudited)
The business and affairs of the Funds are managed under the direction of the Funds’ Board of
Trustees. Information pertaining to the Trustees and Officers of the Funds is set forth below.
Independent Trustees**
Number of
Position(s)
Principal
Portfolios in
Held With Fund Occupation(s)
Fund Complex*
Name, Address, and
and Length of
During Past
Overseen by
Other Directorships
Age
Time Served
5 Years
Trustee
Held by Trustee
Fred “Chico” Lager
Trustee since
Business Consultant;
2
None
384 North Grand St.
1996
Retired President and
Cobleskill, NY 12043
Chief Executive Officer
Age: 57
of Ben & Jerry’s Home-
made, Inc.
C. Richard Pogue
Trustee since
Retired Executive Vice
2
None
384 North Grand St.
2000
President, Investment
Cobleskill, NY 12043
Company Institute
Age: 75
John J. McCormack, Jr. Trustee since
Retired Group Presi-
2
None
384 North Grand St.
2004; Chairman dent, TIAA-Cref Enter-
Cobleskill, NY 12043
since 2007
prises
Age: 67
Barbara V. Weidlich
Trustee since
Retired President,
2
None
384 North Grand St.
2004
National Investment
Cobleskill, NY 12043
Company Service
Age: 67
Association
Kevin J. McCoy, CPA
Trustee since
Principal, Marvin and
2
None
384 North Grand St.
2007
Company, P.C., certi-
Cobleskill, NY 12043
fied public accounting
Age: 59
firm
Paul A. Keller, CPA
Retired Assurance Part-
384 North Grand St.
Trustee since
ner, PricewaterhouseC-
Cobleskill, NY 12043
2010
oopers, LLP Investment
2
None
Age: 57
Management Services
Group
65
FAM Funds — Information About Trustees and Officers (Unaudited)
Independent Trustees and Officers***
Number of
Position(s)
Principal
Portfolios in
Held With Fund Occupation(s)
Fund Complex*
Name, Address, and
and Length of
During Past
Overseen by
Other Directorships
Age
Time Served
5 Years
Trustee
Held by Trustee
Thomas O. Putnam**** President since
Chairman, Fenimore
2
None
384 North Grand St.
1986; Chairman Asset Management,
Cobleskill, NY 12043
from 1986-
Inc.
Age: 67
November 2004
Joseph A. Bucci
Secretary and
Chief Financial Officer,
N/A
N/A
384 North Grand St.
Treasurer since
Fenimore Asset
Cobleskill, NY 12043 2000
Management, Inc.
Age: 58
Charles Richter, Esq.
Chief Compliance March 2005 to Present,
N/A
N/A
384 North Grand St.
Officer and
Chief Compliance
Cobleskill, NY 12043 Anti-Money
Officer, Fenimore Asset
Age: 55
Laundering
Management Trust.
Compliance
November 2004 to
Officer since
Present, Chief Compliance
2005
Officer, Fenimore Asset
Management, Inc.,
Fenimore Securities, Inc.
*”Fund Complex” includes the two series of the Trust, FAM Value Fund and FAM Equity-Income Fund.
**The “Independent Trustees” are those Trustees that are not considered “interested persons” of the Trust, as that term is defined in the
1940 Act.
***Mr. Putnam, by virtue of his employment with Fenimore Asset Management, Inc., the Trust’s investment advisor is considered an
“interested person” of the Trust.
****Mr. Putnam was Chairman of the Board through October 2004.
66
FAM Funds — Supplemental Information (Unaudited)
Statement Regarding Availability of Proxy Voting Policies and Procedures. Please note that a description
of the policies and procedures the Funds use to determine how to vote proxies relating to portfolio
securities is available (i) without charge, upon request, by calling FAM Funds at 1-800-932-3271; (ii) and
on the Securities and Exchange Commission’s website at http://www.sec.gov.
Statement Regarding Availability of Proxy Voting Record. Please note that information regarding
how the Funds voted proxies relating to portfolio securities during the most recent 12-month period
ended June 30 is available (i) without charge, upon request, by calling FAM Funds at 1-800-932-3271;
or on the FAM Fund’s Website at http://famfunds.com (ii) and on the Securities and Exchange
Commission’s website at http://www.sec.gov.
SPECIAL 2011 TAX INFORMATION FOR FAM FUNDS
This information for the fiscal year ended December 31, 2011, is included pursuant to provisions of the Internal
Revenue Code.
The Value Fund distributed $9,545,352, or the maximum amount available, as capital gain dividends
(from net long-term capital gains) to shareholders during the fiscal year.
The Equity-Income Fund distributed $0, or the maximum amount available, as capital gain dividends
(from net long-term capital gains) to shareholders during the fiscal year.
For Value Fund taxable non-corporate shareholders, 100% of the Fund’s income represents qualified
dividend income subject to the 15% rate category.
For Equity-Income Fund taxable non-corporate shareholders, 100% of the Fund’s income represents
qualified dividend income subject to the 15% rate category.
For Value Fund corporate shareholders, 100% of investment income (dividend income plus short-term
gains, if any) qualifies for the dividends-received deduction.
For Equity-Income Fund corporate shareholders, 100% of investment income (dividend income plus
short-term gains, if any) qualifies for the dividends-received deduction.
67
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Investment Advisor
Fenimore Asset
Management, Inc.
Cobleskill, NY
Custodian
U.S. Bank, N.A.
Cincinnati, OH
Independent Registered
Public Accounting Firm
BBD, LLP
Philadelphia, PA
Trustees
Paul Keller, CPA
Fred “Chico” Lager
John J. McCormack, Jr.
Independent Chairman
Kevin J. McCoy, CPA
C. Richard Pogue
Thomas O. Putnam
Barbara V. Weidlich
Legal Counsel
Dechert, LLP
Washington, DC
Shareholder Servicing Agent
FAM Shareholder Services, Inc.
Cobleskill, NY
Distributor
Fenimore Securities, Inc.
Cobleskill, NY
384 North Grand Street
PO Box 399
Cobleskill, New York
12043-0399
(800) 932-3271
www.famfunds.com
Item 2. Code of Ethics.
The Registrant has adopted a code of ethics that applies to the Registrant's principal
executive officer, principal financial officer, principal accounting officer or controller, or
persons performing similar functions, regardless of whether these individuals are employed
by the Registrant or a third party. The Registrant has undertaken in this report filed on Form
N-CSR to provide to any person without charge, upon request by calling 1-(800) 932-3271, a
copy of such code of ethics.
Item 3. Audit Committee Financial Expert.
The Registrant's Board of Trustees has determined that Fred Lager, Paul A. Keller and Kevin
J. McCoy are each an "audit committee financial expert" and are "independent", as these
terms are defined in this Item 3.
Item 4. Principal Accountant Fees and Services.
(a) Audit Fees 2011 - $70,500.; Audit Fees 2010 - $69,500.
(b) Audit-Related Fees - None.
(c) Tax Fees 2011 - $10,000.; Tax Fees 2010 - $10,000.; - Tax Preparation
Expenses
(d) All Other Fees –2011 – None; 2010 - None-
(e)(1) Audit Committee Pre-Approval Policy. All services to be performed for the Registrant
by BBD, LLP must be pre-approved by the audit committee. All services performed
during 2011 and 2010 were pre-approved by the committee.
(e)(2) 100 percent.
(f) Not applicable.
(g) The aggregate fees paid to BBD, LLP for professional services to Registrant's affiliated
broker-dealer for 2011 were $12,000. and 2010 were $12,000. respectively. The
aggregate fees paid to BBD, LLP for professional services to Registrant's affiliated
Private Offering-Limited Liability Company for 2011 were $18,000 and for 2010 were
$18,000 respectively.
(h) 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 second fiscal
half-year of the period covered by this report that has materially affected, or is easonably
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 February 28, 2012
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 February 28, 2012
By (Signature and Title)*
/s/ Joseph A. Bucci
--------------------------
Joseph A. Bucci, Treasurer
Date February 28, 2012
* Print the name and title of each signing officer under his or her signature.
