UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT
OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-04750
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Fenimore Asset Management Trust
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(Exact name of registrant as specified in charter)
384 North Grand Street
P.O. Box 399
Cobleskill, New York 12043
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(Address of principal executive offices) (Zip code)
Thomas O. Putnam
Fenimore Asset Management Trust
384 North Grand Street
Cobleskill, New York 12043
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(Name and address of agent for service)
Registrant's telephone number, including area code: 1-800-453-4392
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Date of fiscal year end: December 31
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Date of reporting period: June 30, 2012
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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 control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange
Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. ss. 3507.
Item 1. Reports to Stockholders.
The semi-annual report to stockholders is filed herewith.
VALUE FUND
Investor Share Class and Advisor Share Class
EQUITY-INCOME FUND
Investor Share Class and Advisor Share Class
SMALL CAP FUND
Investor Share Class
SEMI-ANNUAL REPORT
JUNE 30, 2012
THIS PAGE IS INTENTIONALLY LEFT BLANK
Table of Contents
Chairman’s Commentary
1
Expense Data
3
FAM Value Fund
Letter to Shareholders
6
Portfolio Data
11
Statement of Investments
12
FAM Equity-Income Fund
Letter to Shareholders
17
Portfolio Data
21
Statement of Investments
22
FAM Small Cap Fund
Letter to Shareholders
25
Portfolio Data
33
Statement of Investments
34
Statement of Assets and Liabilities
37
Statement of Operations
38
Statement of Changes in Net Assets
39
Notes to Financial Statements
41
Supplemental Information
55
Privacy Policy
FAM Funds has adopted a Code of Ethics that applies to its principal
executive and principal financial officers. You may obtain a copy of this Code
without charge, by calling FAM Funds at (800) 932-3271.
Chairman’s Commentary
Dear Fellow Shareholders:
When we established Fenimore Asset Management (the investment advisor to
FAM Funds) in 1974, we set out to: maximize investors’ total return on capital by
seeking quality stocks at a discount with long-term growth potential; focus on
personal relationships; and earn our investors’ trust. Over the years, Fenimore
has established additional investment options and services based upon investor
feedback and our in-house expertise while maintaining our philosophy and
process.
Today, FAM Funds offers an excellent family of funds that are available to help
you achieve your long-term financial goals. They are the FAM Value Fund, FAM
Equity-Income Fund, and FAM Small Cap Fund. I feel that each fund can play an
important role in your investment portfolio.
Here is an overview of the individual funds:
FAM Value Fund (FAMVX) • 1/2/87 Launch
We launched our flagship Fund in 1987 just before the stock market crash. This
did not deter us. In fact, in recent years the Value Fund has been recognized for its
time-tested investment approach, longevity, and consistency of portfolio managers.
For 25 years we have been working steadfastly for our shareholders through mul-
tiple economic and financial market cycles.
FAM Value Fund’s investment objective is to maximize long-term return on capital.
The Fund seeks both appreciation and, to a lesser degree, dividend income. These
constitute the two principle components of a common stock’s investment return.
FAMVX distributions are paid annually.
FAM Equity-Income Fund (FAMEX) • 4/1/96 Launch
Research shows that cash dividends can be very important to overall investment
returns. Dividends are also predictable and can provide stability during turbulent
markets. We seek high-quality, dividend-paying companies that continue to grow
their dividends over time.
FAM Equity-Income Fund’s investment objective is to provide current income as
well as long-term capital appreciation by investing primarily (at least 80% of its
total assets) in income-producing stocks that pay dividends. FAMEX distributes its
1
Chairman’s Commentary
income on a quarterly basis.
FAM Small Cap Fund (FAMFX) • 3/1/12 Launch
There are thousands of small-sized businesses. The key is to have the research
depth and expertise to discover the high-quality ones with long-term potential.
FAM Funds has invested in small-cap stocks since our beginning and we know
them well.
The FAM Small Cap Fund’s investment objective is to maximize long-term return
on capital. Under normal market conditions, the Fund invests at least 80% of its
net assets for investment purposes in securities of small-cap companies. The Fund
considers small-cap businesses to have market capitalizations of between $50
million and $1 billion, measured at the time of purchase. FAMFX distributions are
paid annually.
Throughout our history, FAM Funds has been acknowledged in the mutual fund
industry for characteristics such as our stewardship, portfolio managers’ tenure,
consistency of investment process, preservation of capital, and tax efficiency. I
encourage you to read the semi-annual letters of the three funds to gain insights
into how the portfolios fared through the first half of 2012 and understand our long-
term outlook.
If you have any questions, please call one of our in-house FAM Shareholder Ser-
vices representatives at 800-932-3271. Thank you for your enduring trust.
Sincerely,
Thomas O. Putnam
2
FAM Funds — Expense Data
As of June 30, 2012 (Unaudited)
As a shareholder of the Funds, 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 Funds and to compare these costs with the ongoing costs of invest-
ing in other mutual funds.
The Example is based on an investment of $1,000 at the beginning of the period and held for
the entire period (1/1/2012 to 6/30/2012).
Actual Expenses
Lines (A) and (B) of the following tables provide information about actual account values and
actual expenses for Investor Class Shares and Advisor Class Shares (if applicable), respec-
tively. You may use the information in this line, together with the amount you invested, to es-
timate 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 val-
ues 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 Inves-
tor 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 deter-
mine the relative costs of owning different funds. In addition, if these transactional costs were
included, your costs would have been higher.
3
FAM Funds — Expense Data continued
Six Months Ended June 30, 2012 (Unaudited)
FAM Value Fund
Beginning
Ending
Expenses
Account Value
Account Value
Paid
1/1/2012
6/30/2012
During Period
Ongoing Costs Based on Actual Fund Return
A. Investor Share Class
$1,000.00
$1,068.70
$ 6.17*
B. Advisor Share Class
$1,000.00
$1,067.40
$11.31**
Ongoing Costs Based on Hypothetical
5% Yearly Return
C. Investor Share Class
$1,000.00
$1,019.03
$ 6.02*
D. Advisor Share Class
$1,000.00
$1,014.06
$11.02**
*Expenses are equal to the Fund’s Investor Class Shares annualized expense ratio of (1.20%), multiplied by the
average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
**Expenses are equal to the Fund’s Advisor Class Shares annualized expense ratio of (2.20%), multiplied by the
average account value over the period, multiplied by 182/366 (to reflect the one-half-year period).
FAM Equity-Income Fund
Beginning
Ending
Expenses
Account Value
Account Value
Paid
1/1/2012
6/30/2012
During Period
Ongoing Costs Based on Actual Fund Return
A. Investor Share Class
$1,000.00
$1,049.20
$ 6.78*
B. Advisor Share Class
$1,000.00
$1,044.50
$11.84**
Ongoing Costs Based on Hypothetical
5% Yearly Return
C. Investor Share Class
$1,000.00
$1,018.39
$ 6.67*
D. Advisor Share Class
$1,000.00
$1,013.41
$11.66**
*Expenses are equal to the Fund’s Investor Class Shares annualized expense ratio of (1.33%), multiplied by the
average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
**Expenses are equal to the Fund’s Advisor Class Shares annualized expense ratio of (2.33%), multiplied by the
average account value over the period, multiplied by 182/366 (to reflect the one-half-year period).
4
FAM Funds — Expense Data continued
Four Months Ended June 30, 2012 (Unaudited)
FAM Small Cap Fund
Beginning
Ending
Expenses
Account Value
Account Value
Paid
3/1/2012*
6/30/2012
During Period
Ongoing Costs Based on Actual Fund Return
A. Investor Share Class
$1,000.00
$1,007.00
$5.02**
B. Advisor Share Class (Not Offered)
Ongoing Costs Based on Hypothetical
5% Yearly Return
C. Investor Share Class
$1,000.00
$1,020.00
$5.05**
D. Advisor Share Class (Not Offered)
*Inception date is 3/1/2012
**Expenses are equal to the Fund’s Investor Class Shares annualized expense ratio of (1.50%), multiplied by the
average account value over the period, multiplied by 122/366 (to reflect the four month period).
5
FAM Value Fund
Dear Fellow Value Fund Shareholder:
At June 30, 2012 the Net Asset Value of the Investor Class of the FAM Value Fund
was $48.25. This represents an increase of 6.87% from the beginning of the year.
For comparison, the S&P 500 Index increased 9.49% and the Russell 2000 Index
increased 8.53%.
2012 Review Year-to-Date
Stocks came out of the gate quickly with the S&P 500 reaching a four-year high
in April. At that time the FAM Value Fund Net Asset Value reached a new all-
time high, recouping the entire decline experienced during the financial crisis of
2008/09. Since that high point, stock prices ended the quarter about 4% below
their peak. The reason for this decline was the usual suspect – the financial
problems in Europe. Continuing a pattern of the previous two years, it seems that
the European financial problems come to a head in the springtime. As we write this
letter, the European leaders have just concluded their 19th special summit meeting
to address their problems. We suspect there will be more meetings. In addition to
the issues in Europe, it is clear that the world economy is decelerating with both
China and the United States reporting a slight slowdown. In spite of these trends,
stocks have provided a good return year-to-date with solid gains of 6% to 10%,
depending on the index used to measure results.
Portfolio Activity
With stock prices advancing earlier in the year, we were a net seller of stocks
trimming seven positions. The most significant sale was 40% of our White
Mountains Insurance position. The company initiated a tender offer for its own
shares and we took the opportunity to sell 40,000 shares to White Mountains at
$500 a share. We continue to own shares in the company.
We purchased three new ideas in the first six months of the year. The most
significant purchase was Interpublic Group (IPG). Interpublic is a global advertising
agency with headquarters in New York City. We believe that IPG is the best
bargain stock in its industry and has significant opportunity to use its cash flow
to pay down high-cost liabilities, repurchase its shares, and pay dividends. We
also purchased shares in two new companies in the energy industry, Evolution
Petroleum and Southwestern Energy.
6
FAM Value Fund
Performance Detail
Best Performers
The best performer, on a dollar-weighted basis, was Ross Stores (+32%) for a gain
of almost $9 million. Ross recently reported another record fiscal year with earnings
per share growth of 24% over the previous year. This was the fourth year in a row
where earnings grew more than 20%. Shoppers continue to be attracted to Ross’
offering of brand name clothes at discount prices.
The second best performer was Brown & Brown (+21%) for a gain of more than
$8 million. Brown & Brown is an insurance agency serving small- and mid-sized
businesses across the United States. A good first quarter earnings report and
the continuing trend of increasing insurance premium rates provided a positive
environment for the stock.
The Fund’s third best performer was White Mountains Insurance (+15%) with
a gain of $4.2 million. White Mountains is an insurance holding company with
two primary assets: OneBeacon Insurance and White Mountains Reinsurance. In
addition, the corporation has $1.5 billion in cash and investments which can be
used for future opportunities. We sold some shares during the year, but the stock
remains one the Fund’s largest holdings.
Worst Performers
The worst performer, on a dollar-weighted basis, was CarMax (-15%)
generating a loss of almost $3 million. CarMax runs a nationwide network of
used car superstores. The stock price declined as the business reported slightly
disappointing earnings growth for the current fiscal year. We believe the CarMax
model of transparent used car pricing and clear financing alternatives should
continue to be well received by consumers. CarMax continues its mission to build
more stores and be the dominant used car retailer.
The second worst performer was EOG Resources (-8%) with a loss of $1.6 million.
EOG is a domestic energy producer with significant land holdings in the largest
oil fields in the country. EOG is the biggest land owner in the Eagle Ford Shale in
Texas and a significant land owner in The Bakken in North Dakota. As a major oil
producer, EOG’s stock price moves with the price of oil which has declined about
30% from its peak price of $110 reached in February.
7
FAM Value Fund
The third worst performer was MEDNAX, Inc. (-5%) with a loss of $1.5 million.
MEDNAX is a national medical group and the leading provider of neonatal and
anesthesia services. The stock declined after the company reported slightly disap-
pointing first quarter earnings. We do expect them to continue to make acquisitions
and grow earnings for the year.
Our Investment Strategy
Over the last few years, whenever we meet with our mutual fund shareholders
we are asked numerous questions about the problems of the day. Today, investors
are focused on three areas: the European financial crisis, China’s slowing rate of
growth, and America’s political gridlock.
Over the last few years the focus has been on “macro” events, not individual com-
pany performance. While we monitor economic activity here in the U.S. and the on-
going saga in Europe, our investment strategy is focused on analyzing businesses.
We are looking to invest in companies that have three important attributes:
1. A competitive advantage. This is usually demonstrated by the business earn-
ing an above- average return on invested capital. Competitive advantage
can be based on a number of items including well-known brand names, low
costs compared to others, or distribution advantages.
2. Financial strength. We measure financial strength by the ability of a com-
pany to generate cash, earn high returns on invested capital, and maintain
a strong balance sheet. Cash generation is paramount because cash profits
allow a corporation to grow their operations, make acquisitions, and pay
dividends to their shareholders. A strong balance sheet is important because
it gives the company staying power during weak economic periods.
3. Excellent management. The people managing the business are important.
When a business generates cash profits, what management does with the
cash is critical to shareholder value. We spend considerable time talking to
the managements of the businesses we hold in the funds to evaluate how
they are investing their cash.
If we can find a company that has these three attributes we would love to invest in
it, but only at the right price. We establish a purchase price for each stock we buy
that we believe is at a discount to the company’s true intrinsic value. By being
8
FAM Value Fund
careful in the price we pay we hope to achieve two objectives. The first is by
paying a low price we should minimize the losses on holding the stock if we
are wrong in our analysis or if there is a general market downturn. The second
objective in paying a low price is to earn a higher return.
Long-Term Outlook
The stock market has performed well for the last couple of years, however many
people have exited equities. In fact, investors have put billions of dollars into bond
funds due to fear from global news.
Meanwhile, we are still bullish on stocks over the long term. What people tend
to forget is that corporate earnings ultimately drive stock prices. It might surprise
you to know that 2011 was the best year in history for earnings. Financially strong
corporations increased profitability despite economic challenges. Even though 2011
had stellar earnings growth, so far this year most of FAM Funds’ holdings are still
growing in value. We expect the majority of our holdings to grow their economic
value over time and believe that this will eventually be reflected in their stock
prices.
What makes us enthusiastic about investing in equities today is the long-term
potential of the businesses we hold. Please contact us if you would like to discuss
the status and outlook of any stock in FAM Funds.
Table of long term returns
Average Annual Total Returns as of June 30, 2012
Life of Fund
YTD
1-Year
3-Year
5-Year
10-Year
(1/2/87)
FAM Value Fund (FAMVX)
(Investor Shares)
6.87% -0.55% 13.91% 0.05%
5.36%
9.89%
(Advisor Shares)*
6.74% -1.48% 13.42% -0.84%
N/A
4.74%
S&P 500 Index
9.49%
5.45% 16.40% 0.22%
5.33%
9.45%
Russell 2000 Index
8.53% -2.08% 17.80% 0.54%
7.00%
8.85%
_____________________
*FAM Value Fund Advisor Shares were launched on July 1, 2003. The return since inception is 4.74%
The performance table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
9
FAM Value Fund
Thank you for investing with us in the FAM Value Fund.
Sincerely,
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
the report and are subject to change. There is no guarantee that any forecast made
will come to pass. This material does not constitute investment advice and is not
intended as an endorsement of any specific investment.
Performance data quoted above is historical. Past performance is no guarantee of
future results. Current performance may be higher or lower than the performance
data quoted. The principal value and investment return of an investment will
fluctuate so that your shares, when redeemed, may be worth more or less than their
original cost.
10
FAM Value Fund — Portfolio Data
As of June 30, 2012 (Unaudited)
COMPOSITION OF TOTAL INVESTMENTS
Property & Casualty Insurance
12.6%
Money Market Fund
8.8%
Machinery & Equipment
8.2%
Retail Stores
7.8%
Insurance Agency
6.7%
Transportation
5.6%
Banking
5.3%
Publishing
4.5%
Health Care Services
4.2%
Oil & Gas Exploration
3.7%
Health Care Equipment/Devices
3.4%
Real Estate Development
3.3%
Restaurants
3.1%
Electronic Equipment
3.1%
Diversified Manufacturing
2.5%
Investment Management
2.4%
Automotive
2.1%
Health Care Distribution
2.1%
Other
10.6%
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 Com-
mission for the first and third quarters of each fiscal year on Form N-Q; (ii) the Fund’s Forms
N-Q are available on the Commission’s website at http://www.sec.gov; (iii) the Fund’s Forms
N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washing-
ton, 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.
11
FAM Value Fund — Statement of Investments
June 30, 2012 (Unaudited)
SHARES
VALUE
COMMON STOCKS (91.2%)
Advertising Agencies (1.5%)
The Interpublic Group of Companies, Inc.
• provides advertising and marketing services
1,000,000 $10,850,000
Automotive (2.1%)
CarMax, Inc.*
• specialty retailer of used cars and light-trucks in the USA
600,000
15,564,000
Banking (5.3%)
Bank of the Ozarks, Inc.
• retail and commercial banking services in the Southeast
253,000
7,610,240
Home Bancshares, Inc.
• holding company for the Centennial Bank that provides various com-
250,000
7,645,000
mercial and retail banking and related financial products and services
M&T Bank Corporation
• commercial and retail banking services to individuals, businesses, cor-
75,000
6,192,750
porations and institutions in the Northeast and Mid-Atlantic
SCBT Financial Corporation
• banking services to individual and corporate customers in the Carolinas
234,110
8,252,377
TCF Financial Corporation
• banking services to individual and corporate customers in northern
802,163
9,208,831
and central California
38,909,198
Commercial Services (1.3%)
McGrath RentCorp
• modular building and electronic test equipment rentals, subsidiary
347,000
9,195,500
classroom manufacturing
Diversified Healthcare (1.9%)
Johnson & Johnson
• manufactures and sells various products in the health care field
205,000
13,849,800
See Notes to Financial Statements
12
FAM Value Fund — Statement of Investments continued
June 30, 2012 (Unaudited)
SHARES
VALUE
Diversified Manufacturing (2.5%)
Illinois Tool Works
• manufactures engineered products such as plastic and metal compo-
339,950 $17,979,955
nents and fasteners
Electronic Commerce Distribution (0.5%)
Digital River, Inc.*
• provides outsourced e-commerce solutions worldwide
200,000
3,324,000
Electronic Equipment (3.1%)
Zebra Technologies Corp. - Class A*
• designs, manufactures and supports bar code label printers
648,502
22,282,529
Health Care Distribution (2.1%)
Patterson Companies, Inc.
• operates as a distributor serving dental, companion-pet, veterinarian,
445,000
15,339,150
and rehabilitation supply markets in the USA and Canada
Health Care Equipment/Devices (3.4%)
StrykerCorp.
• operates a medical technology company offering Orthopedic Implants
266,000
14,656,600
and MedSurg Equipment
Waters Corporation*
• designs, manufactures, sells and services analytical instruments used in
125,000
9,933,750
a wide range of scientific research
24,590,350
Health Care Services (4.2%)
Mednax, Inc.*
• health care services company focused on physician services for new-
445,700
30,548,278
born, maternal-fetal and other pediatric subspecialty care
Home Furnishings (1.0%)
Mohawk Industries*
• produces floor covering products for residential and commercial applications
103,100
7,199,473
Insurance Agency (6.7%)
Brown & Brown, Inc.
• one of the largest independent general insurance agencies in the U.S.
1,779,696
48,532,310
See Notes to Financial Statements
13
FAM Value Fund — Statement of Investments continued
June 30, 2012 (Unaudited)
SHARES
VALUE
Investment Management (2.4%)
Franklin Resources, Inc.
• provides investment management and fund administration services as
160,000 $17,758,400
well as retail-banking and consumer lending services
Life Insurance (1.4%)
Protective Life Corporation
• individual and group life/health insurance and investment contracts
335,400
9,864,114
Machinery & Equipment (8.2%)
Donaldson Company, Inc.
• designs, manufactures and sells filtration systems and replacement parts
642,400
21,436,888
Graco, Inc.
• supplies systems and equipment for the management of fluids in indus-
180,550
8,319,744
trial, commercial and vehicle lubrication applications
IDEX Corporation
• manufactures proprietary, highly engineered industrial products and pumps
771,750
30,082,815
59,839,447
Media (1.6%)
Meredith Corporation
• magazine publishing and tv broadcasting
366,450
11,704,413
Oil & Gas Exploration (3.7%)
EOG Resources, Inc.*
• engages in the exploration, development, production and marketing of
191,000
17,211,010
natural gas and crude oil
Evolution Petroleum*
• engages in the acquisition, exploitation, and development of properties
100,000
834,000
for the production of crude oil and natural gas
Southwestern Energy Co.*
• energy company that engages in the exploration, development, and
237,000
7,567,410
production of natural gas and crude oil
Ultra Petroleum Corporation*
• oil and gas company that engages in the acquisition, exploration, de-
70,000
1,614,900
velopment, production and operation of oil and natural gas properties
27,227,320
See Notes to Financial Statements
14
FAM Value Fund — Statement of Investments continued
June 30, 2012 (Unaudited)
SHARES
VALUE
Property & Casualty Insurance (12.6%)
Berkshire Hathaway, Inc. - Class A*
• holding company for various insurance and industrial companies
246 $30,736,470
Markel Corporation*
• sells specialty insurance products
64,850
28,644,245
White Mountain Insurance Group, Ltd.
• personal property and casualty insurance, and
61,693
32,188,323
reinsurance
91,569,038
Publishing (4.5%)
John Wiley & Sons, Inc. - Class A
• publisher of print and electronic products, specializing in scientific,
661,700
32,416,683
technical professional and medical books and journals
Real Estate Development (3.3%)
Brookfield Asset Management, Inc. - Class A
• asset management holding company that invests in property, power
735,000
24,328,500
and infrastructure
Restaurants (3.1%)
YUM! Brands, Inc.
• quick service restaurants including KFC, Pizza Hut and Taco Bell
350,600
22,585,652
Retail Stores (7.8%)
Bed Bath & Beyond, Inc.*
• national chain of retail stores selling domestic merchandise such as bed
345,600
21,358,080
linens, bath items, kitchen textiles and home furnishings
Ross Stores, Inc.
• chain of off-price retail apparel and home accessories stores
572,844
35,785,565
57,143,645
Semiconductors (0.3%)
Microchip Technology, Inc.
• develops, manufactures and sells semiconductor products for various
60,000
1,984,800
embedded control applications
See Notes to Financial Statements
15
FAM Value Fund — Statement of Investments continued
June 30, 2012 (Unaudited)
SHARES
VALUE
Specialty Chemical (0.6%)
Sigma-Aldrich Corporation
• develops, manufactures, purchases and distributes high quality chemi-
60,000 $ 4,435,800
cals, biochemicals and equipment available throughout the world
Transportation (5.6%)
Forward Air Corporation
• provides surface transportation and related logistics services to the
389,233
12,560,549
deferred air freight market in North Americ
Heartland Express, Inc.
• short-to medium-haul truckload carrier of general commodities
1,333,333
19,079,995
Knight Transportation
• transportation of general commodities in the U.S.
576,900
9,224,631
40,865,175
Utilities/Gas (0.1%)
Questar Corporation
• natural gas utility in the state of Utah
50,000
1,043,000
Veterinary Diagnostics (0.4%)
VCA Antech, Inc.*
• provides veterinary services, diagnostic testing and sells diagnostic im-
148,900
3,272,822
aging equipment and related products/services to the veterinary market
Total Common Stocks (Cost $356,865,546)
$664,203,352
TEMPORARY INVESTMENTS (8.8%)
Money Market Fund (8.8%)
Invesco Short Term Treasury Fund ($0.02%)**
63,920,642
63,920,642
Total Temporary Investments (Cost $63,920,642)
$ 63,920,642
Total Investments (Cost $420,786,188)
$728,123,994
* Non-income producing securities
** The rate shown represents the effective yield at 6/30/12
See Notes to Financial Statements
16
FAM Equity-Income Fund
Dear Fellow Equity-Income Fund Shareholder,
• FAM Equity-Income Fund gained 4.92% in the first half of 2012 and
5.51% over one year.
• Gross dividend yield of the Fund was 2.3% at quarter end.
• Dividend growth rate of holdings currently in the Fund was 11%, in
aggregate, annualized over the last five years.
• Two-thirds of the companies in the Fund increased their dividend in
the first half of 2012.
The first quarter this year saw equities rally in hopes that the year would show
stronger growth than anticipated. After all, this is an election year and the market
statistically has done very well in election years. The market peaked on April 2nd
with the S&P 500 Index gaining nearly 13% in just three months. This optimism
began to fade in the second quarter as European financial issues flared up again.
Once equity investors began to worry, they worried about everything. If the focus
was not on Europe and the fate of its currency, it was on the slowdown in China or
the potential for numerous tax increases and forced spending cuts in the U.S. next
year. These fears began to materialize with some companies reporting slower sales
results due to weakening emerging markets, soft European demand, and a stronger
U.S. dollar which makes American exports more expensive. All of these issues
contributed to stocks losing ground in the second quarter, but they still posted a
positive return for the first half of the year.
FAM Equity-Income Results
Most holdings in the Fund continue to generate a significant amount of cash flow
which presents their management teams with a good problem – what to do with
all the cash. We consistently see the leadership reinvesting some of this cash back
into their businesses to generate future growth, but a portion of cash is also being
paid out to shareholders in the form of dividends. The growth of these dividends is
a key metric that we track over time. When a business does well, it is able to grow
its dividend faster than a company not doing as well. We use the five-year growth
in dividends as one benchmark in evaluating holdings in the Fund. To that point,
over the last five years the businesses in the Fund have increased their dividends to
shareholders, in aggregate, by 11% annualized. This compares quite favorably to
17
FAM Equity-Income Fund
the S&P 500 Index which has seen dividends actually shrink -2 % over the last five
years. The Russell 2000 Index of small companies has seen dividends grow only
1% over the last five years.
Despite most holdings in the Fund growing their cash flow and dividends, the per-
formance of the Fund was below that of both the S&P 500 and Russell 2000 indices
for the six months ending 06/30/12. The underperformance occurred entirely in the
first quarter, but the Fund performed inline or better with the indices in the second
quarter. The market was exceptionally strong from January through March and this
led to underperformance by high-quality stocks and dividend-paying companies –
the types of equities we strive to hold in the Fund. This trend reversed in the sec-
ond quarter with the market giving up about half of those first quarter gains while
higher quality names and dividend-paying companies performed better than lower
quality and non dividend-paying ones.
Best and Worst Performing Stocks
Ross Stores continued to be a standout performer in the portfolio and remains the
largest holding in the Fund. On a dollar-weighted basis, the stock rose +32% for
the period and contributed $2.343 million to the value of the Fund. The terrific
results at Ross are driven by same-store sales which have consistently run ahead
of management expectations. We believe earnings growth this year will be above
15% on top of 24% last year. Additionally, management increased the dividend
27% this year. We have owned shares in Ross Stores for more than a decade.
Flowers Foods rose +24% and contributed $0.931 million to the performance of the
Fund as management made another acquisition which further expands Flowers’
footprint in the northeast. The acquisition of Lepage Bakeries, along with their
acquisition last year of Tasty Baking, should enhance earnings growth over the next
12 to 18 months. Just one year ago Flowers served only 50% of the U.S. population,
mostly south of the Mason-Dixon Line. Today the corporation is able to serve 75%
of the nation. Management has done a terrific job of acquiring businesses in this
consolidating industry. Flowers is now the third-largest bread and snack cake
company in the country.
OneBeacon declined -12.7% over the period and detracted $-0.580 million from the
value of the Fund. Price-to-book multiple declined due to OneBeacon reporting
two quarters in a row of losses in their discontinued insurance lines. The specialty
18
FAM Equity-Income Fund
insurance lines are performing better than we expected, but the discontinued lines,
which are still held on the books, are reporting unexpected losses. OneBeacon
continues to pay an excellent dividend.
Meredith was roughly flat in the quarter, increasing just +.02%. The return to the
Fund was $-0.464 million as we sold our position during the period. Meredith, like
many of its print media peers, lagged the broader indices throughout most of the
first half of 2012. Although Meredith’s television advertising revenues grew nicely,
their magazine advertising revenues continued to decline faster than expected
creating more drag on earnings growth and more uncertainty around the long-term
earnings power of the business.
Our Strategy for Turbulent Times
We recognize that these are challenging and complicated times for investors;
however, our investment strategy is simple. Our plan for dealing with the
situations in Europe and America is to invest in financially strong companies that
generate more cash that they need to grow. This excess cash is typically paid out
to shareholders in the form of dividends throughout the year. We believe that
financially strong and cash rich companies should be able to weather any potential
storm better than businesses that are only marginally profitable and may need
financing to make it through a rough patch. We also favor enterprises where sales
to weaker European nations are a relatively small percentage of their total sales.
Finally, we have a little more cash on hand than usual in order to take advantage of
any opportunities that may arise. We stand ready to aggressively buy stocks when
investors are fearful and sell the shares of great businesses at giveaway prices.
This is exactly what we did in the second
half of 2011 and were well-rewarded as the prices of these corporations appreciated
closer to our estimate of intrinsic value.
We are guided by our long-term view that equities are currently an attractive
investment for the next decade even with the uncertainties around the world.
19
FAM Equity-Income Fund
Average Annual Total Returns as of June 30, 2012
Life of Fund
YTD
1-Year
3-Year
5-Year
10-Year
(4/1/96)
FAM Equity-Income Fund
(FAMEX)
(Investor Shares)
4.92%
5.51% 15.52% -0.15%
4.73%
7.49%
(Advisor Shares)
4.45%
4.55% 14.56% -1.14%
N/A
4.01%
S&P 500 Index
9.49%
5.45% 16.40% 0.22%
5.33%
6.59%
Russell 2000 Index
8.53% -2.08% 17.80% 0.54%
7.00%
6.97%
_________________
*FAM Equity-Income Fund Advisor Shares were launched on July 1, 2003. The return since inception is 4.01%
The performance table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
We continue to work diligently on your behalf.
Paul Hogan, CFA
Tom Putnam
Co-Manager
Co-Manager
The opinions expressed herein are those of the portfolio managers as of the date of
the report and are subject to change. There is no guarantee that any forecast made
will come to pass. This material does not constitute investment advice and is not
intended as an endorsement of any specific investment.
Performance data quoted above is historical. Past performance is no guarantee of
future results. Current performance may be higher or lower than the performance
data quoted. The principal value and investment return of an investment will
fluctuate so that your shares, when redeemed, may be worth more or less than their
original cost.
20
FAM Equity-Income Fund — Portfolio Data
As of June 30, 2012 (Unaudited)
COMPOSITION OF TOTAL INVESTMENTS
Money Market Fund
9.7%
Semiconductors
8.1%
Machinery & Equipment
7.1%
Retail Stores
5.2%
Health Care Equipment/Devices
4.6%
Healthcare Distribution
4.6%
Toys
4.6%
Hazardous Waste Disposal
4.5%
Publishing
4.1%
Investment Management
4.0%
Consumer Staples
4.0%
Insurance Agency
3.9%
Utilities/Water
3.8%
Commercial Services
3.7%
Oil & Gas Exploration
3.6%
Packaged Goods
3.4%
Utilities/Gas
3.3%
Health Care Services
3.0%
Specialty Chemical
3.0%
Technology
2.6%
Property & Casualty Insurance
2.6%
Beverage - Non Alcoholic
2.0%
Other
4.6%
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 Com-
mission for the first and third quarters of each fiscal year on Form N-Q; (ii) the Fund’s Forms
N-Q are available on the Commission’s website at http://www.sec.gov; (iii) the Fund’s Forms
N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washing-
ton, 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.
21
FAM Equity-Income Fund — Statement of Investments
June 30, 2012 (Unaudited)
SHARES
VALUE
COMMON STOCKS (88.4%)
Banking (1.6%)
SCBT Financial Corporation
• provides banking services to individual and corporate customers in the
58,000
$2,044,500
Carolinas
Beverage - Non Alcoholic (2.0%)
Dr. Pepper Snapple Group, Inc.
• integrated brand owner, manufacturer and distributor of non-alcoholic
57,000
2,493,750
beverages in the USA, Canada, and Mexico
Commercial Services (3.7%)
McGrath RentCorp
• modular building and electronic test equipment rentals, subsidiary
176,164
4,668,346
classroom manufacturing
Computer Software & Services (1.1%)
CA, Inc.
• provides enterprise information technology (IT) management software
50,000
1,354,500
and solutions
Consumer Staples (4.0%)
Flowers Foods, Inc.
• produces and markets bakery products in the USA
215,000
4,994,450
Hazardous Waste Disposal (4.5%)
U.S. Ecology, Inc.
• provides radioactive, pcb, hazardous and non-hazardous waste services
319,869
5,674,476
to commercial and government customers
Health Care Distribution (4.6%)
Patterson Companies, Inc.
• operates as a distributor serving dental, companion-pet, veterinarian,
168,000
5,790,960
and rehabilitation supply markets in the USA and Canada
Health Care Equipment/Devices (4.6%)
StrykerCorp.
• operates a medical technology company offering Orthopedic Implants
105,500
5,813,050
and MedSurg Equipment
See Notes to Financial Statements
22
FAM Equity-Income Fund — Statement of Investments continued
June 30, 2012 (Unaudited)
SHARES
VALUE
Health Care Services (3.0%)
Landauer, Inc.
• provides personal radiation dosimeters and radiation related services
65,000
$3,726,450
Insurance Agency (3.9%)
Arthur J. Gallagher & Co.
• provides insurance brokerage and risk management services to com-
137,920
4,836,854
mercial, industrial, institutional, and governmental organizations
Investment Management (4.0%)
Franklin Resources, Inc.
• provides investment management and fund administration services as
45,500
5,050,045
well as retail-banking and consumer lending services
Machinery & Equipment (7.1%)
Donaldson Company, Inc.
• designs, manufactures and sells filtration systems and replacement parts
125,600
4,191,272
IDEX Corporation
• manufactures proprietary, highly engineered industrial products and
120,984
4,715,956
pumps
8,907,228
Oil & Gas Exploration (3.6%)
EOG Resources, Inc.
• engages in the exploration, development, production and marketing of
50,000
4,505,500
natural gas and crude oil
Packaged Goods (3.4%)
McCormick & Company, Inc.
• manufactures, markets and distributes spices, seasonings, specialty
70,000
4,245,500
foods and flavorings to the entire food industry.
Property and Casualty Insurance (2.6%)
OneBeacon Insurance Group, Ltd.
• commercial, personal and specialty insurance products
244,666
3,185,551
Publishing (4.1%)
John Wiley & Sons, Inc. - Class A
• publisher of print and electronic products, specializing in scientific,
103,750
5,082,713
technical, professional and medical books and journals
See Notes to Financial Statements
23
FAM Equity-Income Fund — Statement of Investments continued
June 30, 2012 (Unaudited)
SHARES
VALUE
Retail Stores (5.2%)
Ross Stores, Inc.
• chain of off-price retail apparel and home accessories stores
103,843 $ 6,487,072
Semiconductors (8.1%)
Altera Corporation
• manufacturer of programmable logic solutions
61,000
2,064,240
Microchip Technology, Inc.
• develops, manufactures and sells semiconductor
101,000
3,341,080
products for various embedded control applications
Xilinx, Inc.
• worldwide leader of programmable logic solutions
141,414
4,747,268
10,152,588
Specialty Chemical (3.0%)
Sigma-Aldrich Corporation
• develops, manufactures, purchases and distributes high quality chemi-
50,000
3,696,500
cals, biochemicals and equipment available throughout the world
Technology (2.6%)
National Instruments Corporation
• manufactures and supplies measurement and automation products
122,000
3,276,920
Toys (4.6%)
Mattel, Inc.
• designs, manufactures, and markets various toy products
177,299
5,751,580
Utilities/Gas (3.3%)
Questar Corporation
• natural gas utility in the state of Utah
195,000
4,067,700
Utilities/Water (3.8%)
Aqua America, Inc.
• water and waste water utility
189,000
4,717,440
Total Common Stocks (Cost $83,085,949)
$110,523,673
See Notes to Financial Statements
24
FAM Equity-Income Fund — Statement of Investments continued
June 30, 2012 (Unaudited)
SHARES
VALUE
PREFERRED STOCKS (1.9%)
Life Insurance (0.8%)
Protective Life Corporation - Preferred D
• individual and group life/health insurance and
40,067 $ 1,011,692
guaranteed investment contracts
REITS - Storage (1.1%)
Public Storage - Preferred Q
• engages in the acquisition, development, ownership, and operation of
50,300 $ 1,426,005
self-storage facilities in the USA and Europe
Total Preferred Stocks (Cost $1,987,063)
$ 2,437,697
TEMPORARY INVESTMENTS (9.7%)
Money Market Fund (9.7%)
Invesco Short Term Treasury Fund (0.02%)*
12,150,100
12,150,100
Total Temporary Investments (Cost $12,150,100)
$ 12,150,100
Total Investments (Cost $97,223,112)
$125,111,470
*The rate shown represents the effective yield at 6/30/12
See Notes to Financial Statements
25
FAM Small Cap Fund
Dear Fellow Small Cap Fund Shareholder,
In this, our inaugural letter for the FAM Small Cap Fund, we would like to discuss
four key topics: 1) a brief history of Fenimore Asset Management, 2) why small-cap
stocks are attractive, 3) our process, and 4) how we plan to manage the Small Cap
Fund.
Firm History
Although many of you may be familiar with Fenimore Asset Management and FAM
Funds, we would like to address those of you who have just started a relationship
with us. For long-standing investors, please allow this to serve as a reminder.
Tom Putnam established Fenimore in 1974 – the very same Tom Putnam who
co-manages the FAM Small Cap Fund. Over time, a particular style of investing
resonated with Tom – value investing. Our firm follows the teachings of Benjamin
Graham and Warren Buffett, the writings of whom influenced Tom early in his
investment career. Despite being written many years ago, books like Security
Analysis by Benjamin Graham and David Dodd still have key principles that are
true in today’s world.
In fact, we think that more investment managers would better serve their
shareholders if they practiced these basic tenets. Why does value investing work?
Why don’t more market participants practice these principles and thereby reduce
opportunities for value investors? Although the guidelines are widely known, they
are difficult to execute. Humans are inherently emotional and this can lead to poor
decisions at exactly the wrong time. As Mr. Buffett said, “Be greedy when others
are fearful and fearful when others are greedy.”
Value investing has served Fenimore’s investors well and over time word of Tom’s
track record spread. The firm grew and in 1987, at the request of clients, Fenimore
formed its first mutual fund – the FAM Value Fund (FAMVX). This was followed
in 1996 with the FAM Equity-Income Fund (FAMEX). This March, we launched
our third mutual fund – the FAM Small Cap Fund (FAMFX). The basis for this new
Fund was a private fund that we have managed in a similar manner since October
2008.
Small-Cap Stocks
Since our beginning, Tom has been investing in small-cap securities. Small caps
are attractive for numerous reasons. First and foremost is the long-term track
26
FAM Small Cap Fund
record of small-cap securities versus that of other asset classes. The following table
summarizes the long-term results:
Compounded Annual Returns 1926-2011
Small Stocks
11.9%
Large Stocks
9.8%
Long-Term Government Bonds
5.7%
Treasury Bills
3.6%
Inflation
3.0%
Source: Morningstar Ibbotson SBBI 2012 Classic Yearbook
Small-caps stocks have been the greatest builder of wealth within these categories
over the long term – outperforming large caps by more than 2% per annum. As
indicated in the above table another interesting takeaway is the long-term return
of T-bills, just above that of inflation. At current Treasury bill yields, investors are
losing wealth since the 10-year Treasury security does not outpace today’s inflation.
Many refer to the current state of U.S. Treasury securities as generating “return-
free risk!” We prefer equities for the accumulation of wealth over the long run.
Why have small caps performed so well over the long term? We think there are
several reasons. For one, there are only so many dollars you can put to work in
a small-cap security and still have a liquid investment. This poses challenges for
firms that manage multi-billion dollar portfolios. As a result, Wall Street cares
less about small caps because they want to serve their large asset management
clientele. This creates market inefficiencies and bargain opportunities to purchase
securities that fit our criteria. Basically, the less competition there is in any given
market, the greater the opportunities.
Another attractive quality of small-cap equities is access to management. We feel
very strongly about meeting the people that we are investing with, as should you
(we encourage you to visit us). While access to the most influential CEOs at the
largest firms may be impossible, we have great access to the management teams of
small-cap firms all across the nation. Also, the ability to understand the business of
a small company is less challenging than understanding the inner workings of one
of America’s corporate titans. We believe that increased knowledge of the
27
FAM Small Cap Fund
businesses we invest in, coupled with solid management teams, is a key component
of preservation of capital and controlling risk.
Investment Process
Our target market cap range for the Fund’s investments is between $50M and
$1B. Although we are at the lower end of most small-cap classifications, we feel
this market cap range harbors the most discrepancies between stock prices and
true business worth; this translates into investment prospects. We are dedicated to
remaining a small-cap portfolio.
Once we generate a list of potential candidates, we apply strict principles that have
guided our investment selection for years:
1) Strong and ethical management teams
2) Profitable businesses generating significant free cash flow
3) Manageable debt
4) Ability to purchase at a margin of safety
Our belief is that if you can invest in high-quality businesses at below-average
valuations, then over time you should do better than average. We believe that the
management team is extremely important, especially in the small-cap space. We
are not interested in investing with “empire builders” but rather with smart, ethical
leaders who know how to allocate capital in a manner that benefits shareholders.
It is preferable if management has a significant amount of their wealth invested in
their own company (like we do in our mutual funds).
In terms of the business itself, we prefer to invest in ones that have a “moat” or
competitive advantage surrounding their enterprise. We look for businesses that
generate a high ROIC (return on invested capital) and strong free cash flow that
can be allocated wisely. We also prefer that they produce cash earnings, not just
GAAP (generally accepted accounting principles) earnings. A proxy we often use
for evaluating a company’s cash generation is Owners’ Earnings, a term Warren
Buffett popularized in the value investing community. Essentially, this represents
the cash that you could take out of the business if you owned it and still remain in
operation. After all, we do view ourselves as partial owners of the business and do
not think of our investment as just a piece of paper or blip on a screen.
28
FAM Small Cap Fund
Along with investing in profitable companies, we feel that investing in corporations
with manageable debt and strong coverage ratios mitigates risk. When times get
tough, businesses with strong balance sheets should be able to weather the storm
and sail through to the other side. Our conviction in the strength of a company’s
balance sheet reinforces our confidence to buy more shares of a great business that
may be “up for sale.” We like to increase our probability of success by investing in
dollars that can be bought for 50 cents. This is the essence of value investing. If you
pay too much, even if it is a quality company, you probably will not get an adequate
return on your investment. A key piece of the equation is to buy at a price less than
that of the company’s intrinsic value. This creates a margin of safety – an extremely
important concept of Ben Graham. We know that the future is never certain but if
we use conservative assumptions and pay a bargain price, then we still have the
ability to preserve and grow capital even if our expectations are not met.
Managing the Fund
In terms of portfolio management, we actively manage the Fund. In recent years,
investors have flocked to passively managed funds (index funds) and although
these vehicles have their benefits, we believe that we can add value as active
managers. In fact, we intend to look nothing like an index. After doing intensive
research and thinking like business owners, we want to put our capital to work in
a meaningful way in those companies that look the most attractive. We will remain
concentrated and hold a portfolio of 20 to 25 high-quality securities. However,
many believe that because small caps are more volatile it is better to be more
diversified with hundreds of holdings. We do not equate risk to volatility. We view
risk as the permanent loss of capital. We are diversified across industries and feel
that we mitigate risk by understanding a select number of high-quality businesses
that have the balance sheets and cash generating ability to survive virtually
any type of market environment. Essentially, we will stay within our circle of
competence. We believe that this is a common sense approach.
Two key benefits of our business-owner mentality are potential tax efficiency
and lower transaction expenses. Although we are constantly re-evaluating every
holding, we invest in companies with the intent of keeping them for long periods
of time. Our turnover should remain low and this deferral of taxes can help
compound capital over time.
Small caps, like any other asset class, tend to go through cycles. At certain
periods of time they may be more or less attractively valued than mid- or large-cap
securities. Right now small caps, as measured by the Russell 2000 Index, trade
29
FAM Small Cap Fund
at a premium valuation to the S&P 500 Index which is composed of larger firms.
Another advantage of our Fund is that despite small caps currently being valued
at premium prices (in general), we only have to find 20 to 25 undervalued stocks
because we maintain a concentrated portfolio. This is out of a universe of more
than 2,000 securities that are in our market cap range. We feel confident in our
ability to do this, regardless of the state of the general market.
You might notice that at certain times we may hold a considerable amount of
cash and cash equivalents. In fact, the strategy of having some cash available
may enhance returns over the long run as we are able to be opportunistic when
situations conducive to building long-term value arise. Simultaneously, we will
not hoard cash and by no means will we try to time the market. Forecasting the
market is a low-probability exercise; our probability of finding companies with
fundamentals that meet our criteria and can weather any storm is much higher. Our
current cash balance is a function of our patience as we take our time getting the
FAM Small Cap Fund invested at attractive valuations. When opportunities arise,
we can assure you that we will try to take advantage of them and put the cash to
work.
Please feel free to contact us to discuss any of these items in more detail.
FAM Small Cap Fund Results
Performance
As of 6/30/2012
Q2
Since inception
(3/1/2012)
FAM Small Cap Fund
(2.23%)
0.80%
Russell 2000 Index
(3.47%)
(1.52%)
S&P 500 Index
(2.75%)
(0.17%)
For both the second quarter and since our inception on March 1, 2012, we have
outperformed the Russell 2000 Index and S&P 500 Index. On an absolute basis
for the quarter, results were negative; however, with a strong finish to the quarter,
our since-inception figure turned slightly positive. The buy decision is of key
importance because it will affect both the preservation of capital and your future
total return. For these reasons, we only put capital to work when opportunities
present themselves.
30
FAM Small Cap Fund
In this market environment, opportunities have surfaced. While small-cap equities
tend to be more volatile than their large-cap peers, we continue to invest in high-
quality companies at prices we believe are conducive to building long-term wealth.
As of June 30th, we had 17 holdings in the Fund – all met our exacting criteria.
Best and Worst Performing Stocks
The best performing stock in the Fund, on a dollar-weighted basis, was Medidata
Solutions (+55.09%) with a gain of more than $112,000. Medidata is a global
provider of SaaS-based (software as a service) clinical development solutions
that enhance the efficiency of customers’ clinical trials. Customers include
biopharmaceutical companies, medical device and diagnostic firms, academic
and government institutions, CROs (contract research organizations), and other
research organizations. Medidata’s products are used by 20 of the top 25 global
pharmaceutical companies and it continues to take market share from its main
competitor, Phase Forward, which Oracle acquired. Medidata grew revenues at a
pace of more than 20% in its most recent quarter.
The next best performing stock, on a dollar-weighted basis, was Home BancShares
(+21.09%) with a $98,858 increase. Home is a strong regional bank with
headquarters in Conway, Arkansas. Chairman John Allison and his team have
been together for years and have been capitalizing on FDIC deals. Recently, the
company completed the acquisition of Vision Bank, adding 17 branch locations
in the Gulf Coast communities of Baldwin County, Alabama, and the Florida
Panhandle. Home BancShares is always looking for more acquisition candidates
and we expect that this could add to the company’s record earnings.
The worst performing company, on a dollar-weighted basis, was Rofin-Sinar
(-17.58%) with a loss of $129,382. Rofin is a global manufacturer of industrial
lasers. With dual headquarters in Plymouth, Michigan and Hamburg, Germany
this is truly a global enterprise. In recent years, China has become more important
to its business results. As China slowed earlier this year, Rofin was greatly affected
and due to the fixed-cost nature of its business, earnings declined -35% year-
over-year. Despite this decline, an attractive valuation, along with net cash on the
balance sheet, gives us the confidence to continue to invest in Rofin-Sinar.
The second worst performer was John Bean Technologies (-14.61%) with a decline
of $105,257. While John Bean Technologies (JBT) is not a household name, you will
31
FAM Small Cap Fund
recognize some of its products either directly or indirectly. In fact, JBT manufac-
tures 75% of all airport passenger boarding bridges in America. You probably refer
to these bridges as the “Jetway®” which is a JBT trademarked brand. In another
segment of its business, JBT produces food manufacturing equipment. How many
of you wake up each morning and have a glass of orange juice? It is estimated
that more than 75% of the world’s citrus juices are extracted using JBT equipment.
Since JBT’s equipment represents large capital purchases for its customers and with
the current global uncertainty, JBT is experiencing some delays in orders which
will hurt profits through the first half of 2012. This, along with market trepidation
regarding capital equipment manufacturers, led to a decline in the stock price. We
are glad to accumulate more shares in this high return on invested capital business
as shorter-term forces affect the stock price. As the world grows, so will the need
for JBT’s equipment.
Going Forward
It is possible that volatility will continue through 2012 if worries persist over issues such as the European sovereign debt, a slowing China, America’s deficit spending, and the upcoming U.S. elections. For value investors like us, price declines present opportunity. At times when “the crowd” sells stocks haphazardly – including those of high-quality, well-managed companies – we are prepared to take advantage of the opportunities that arise and strengthen the FAM Small Cap Fund for the long run.
Thank you for investing with us in the FAM Small Cap Fund.
Sincerely,
Marc D. Roberts, CFA
Thomas O. Putnam
Co-Manager
Co-Manager
The opinions expressed herein are those of the portfolio managers as of the date of
the report and are subject to change. There is no guarantee that any forecast made
will come to pass. This material does not constitute investment advice and is not
intended as an endorsement of any specific investment.
Performance data quoted above is historical. Past performance is no guarantee of
future results. Current performance may be higher or lower than the performance
data quoted. The principal value and investment return of an investment will
fluctuate so that your shares, when redeemed, may be worth more or less than their
original cost.
32
FAM Small Cap Fund — Portfolio Data
As of June 30, 2012 (Unaudited)
COMPOSITION OF TOTAL INVESTMENTS
Money Market Fund
25.9%
Banking
8.7%
Property & Casualty Insurance
5.7%
Retail - Automobile
5.3%
Diversified Holding Company
5.3%
Industrial Machinery
5.2%
Laser Systems/Component
5.1%
Oil & Gas Exploration
5.1%
Commercial Services
5.0%
Transportation
5.0%
Wholesale Wire & Cable
4.6%
Services - Data Processing
4.6%
Hazardous Waste Disposal
4.4%
Computer Software & Services
3.1%
Medical Information Systems
2.7%
Electronic Manufacturing
2.6%
Food Products
1.7%
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 Com-
mission for the first and third quarters of each fiscal year on Form N-Q; (ii) the Fund’s Forms
N-Q are available on the Commission’s website at http://www.sec.gov; (iii) the Fund’s Forms
N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washing-
ton, 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.
33
FAM Small Cap Fund — Statement of Investments
June 30, 2012 (Unaudited)
SHARES
VALUE
COMMON STOCKS (74.1%)
Banking (8.7%)
Home Bancshares, Inc.
• holding company for the Centennial Bank that provides various com-
mercial and retail banking and related financial products and services
18,500
to businesses, real estate developers, individuals and municipalities
$ 565,730
SCBT Financial Corporation
• provides banking services to individual and corporate customers in the
13,300
Carolinas
468,825
1,034,555
Commercial Services (5.0%)
McGrath RentCorp
• modular building and electronic test equipment rentals, subsidiary
22,500
classroom manufacturing
596,250
Computer Software & Services (3.1%)
Websense, Inc.*
• provides solutions to protect an organization’s data and users from
cyber-threats, malware attacks, information leaks, legal liability, and
19,750
productivity loss
369,918
Diversified Holding Company (5.3%)
Biglari Holdings Inc.*
• engages in the ownership, development, operation, and franchising of
1,610
622,088
restaurants
Electronic Manufacturing (2.6%)
Fabrinet*
• provides precision optical, electro-mechanical, and electronic manufac-
25,000
313,750
turing services
Food Products (1.7%)
Inventure Foods, Inc.*
• manufactures and markets healthy/natural and indulgent specialty
31,092
195,880
snack food product
See Notes to Financial Statements
34
FAM Small Cap Fund — Statement of Investments continued
June 30, 2012 (Unaudited)
SHARES
VALUE
Hazardous Waste Disposal (4.4%)
U.S. Ecology, Inc.
• provides radioactive, pcb, hazardous and non-hazardous waste services
29,300
$519,782
to commercial and government customers
Industrial Machinery (5.2%)
John Bean Technologies Corporation
• provides technology solutions for the food processing and air transpor-
45,000
610,650
tation industries
Laser Systems/Components (5.1%)
Rofin-Sinar Technology Inc.*
• engages in the design, development, engineering, manufacturing, and
32,050
606,707
marketing of laser-based products
Medical Information Systems (2.7%)
Medidata Solutions, Inc.*
• provides software-as-a-service based clinical development solutions for
9,680
316,246
life science organizations
Oil & Gas Exploration (5.1%)
Evolution Petroleum Corp.*
• engages in the acquisition, exploitation, and development of properties
72,000
600,480
for the production of crude oil and natural gas
Property and Casualty Insurance (5.7%)
Amerisafe, Inc.*
• insurance holding company that markets and underwrites workers’
25,900
672,105
compensation and general liability insurance
Retail - Automobile (5.3%)
America’s Car-Mart Inc.*
• operates as an automotive retailer
16,250
631,312
Services - Data Processing (4.6%)
Cass Information Systems Inc
• provides payment and information processing services to manufactur-
13,500
543,375
ing, distribution, and retail enterprises
Transportation (5.0%)
Patriot Transporation Holding Inc.*
• engages in the transportation and real estate businesses
25,250
594,132
See Notes to Financial Statements
35
FAM Small Cap Fund — Statement of Investments continued
June 30, 2012 (Unaudited)
SHARES
VALUE
Wholesale Wire & Cable (4.6%)
Houston Wire and Cable Company
50,250 $ 549,232
• distributor of wire and cable products in the USA
Total Common Stocks (Cost $8,805,639)
$ 8,776,462
TEMPORARY INVESTMENTS (25.9%)
Money Market Fund (25.9%)
Invesco Short Term Treasury Fund (0.02%)**
3,069,556
3,069,556
Total Temporary Investments (Cost $3,069,556)
$ 3,069,556
Total Investments (Cost $11,875,195)
$11,846,018
* Non-income producing securities
** The rate shown represents the effective yield at 6/30/12
See Notes to Financial Statements
36
FAM Funds — Statement of assets and LiabiLities June 30, 2012 (Unaudited)
Assets
Value Fund
Equity-Income Fund Small Cap Fund
Investments in securities at value (Cost $420,786,188;
$97,223,112; and $11,875,195, respectively)
$728,123,994
$125,111,470
$11,846,018
Cash
18,442
—
—
Dividends and interest receivable
249,784
155,011
50
Receivable for investment securities sold
6,723,539
—
—
Receivable from investment manager
—
—
63,107
Deferred offering costs
—
—
31,298
Total Assets
735,115,759
125,266,481
11,940,473
Liabilities
Accrued investment advisory fee
591,776
101,000
34,660
Accrued shareholder servicing and administrative fees
86,141
14,000
1,427
Accrued expenses
109,453
76,853
31,642
Accrued distribution and service fees
992
384
—
Payable for investment securities purchased
—
—
57,748
Payable for fund share distributions
—
366,465
—
Total Liabilities
788,362
558,702
125,477
Net Assets
Sources of Net Assets:
Net capital paid in on shares of beneficial interest
$407,830,836
$ 95,206,520
$11,823,097
Accumulated net investment income/(loss)
(647,330)
29,575
(34,611)
Accumulated net realized gains
19,806,085
1,583,326
55,687
Net unrealized appreciation/(depreciation)
307,337,806
27,888,358
(29,177)
Net Assets
$734,327,397
$124,707,779
$11,814,996
Investor Class Shares
Based on net assets of
$730,624,983
$123,279,096
$11,814,996
Fund shares outstanding
15,141,704
6,095,876
1,172,191
Net Asset Value, Offering and Redemption Price per
share (unlimited shares of beneficial interest autho-
rized at $.001 par value)
$48.25
$20.22
$10.08
Advisor Class Shares
Based on net assets of
$ 3,702,414
$ 1,428,683
—
Fund shares outstanding(a)
80,876
71,189
—
Net Asset Value, Offering and Redemption Price per
share (unlimited shares of beneficial interest autho-
rized at $.001 par value)
$45.78
$20.07
—
(a)A 1% redemption fee is imposed upon Advisor shares redeemed within the first 18 months of purchase. See Note 3 in the Notes to the Financial Statements
See Notes to Financial Statements
37
FAM Funds — Statement of operations
Six Months Ended June 30, 2012 (Unaudited)
Value Fund
Equity-Income Fund Small Cap Fund*
INVESTMENT INCOME
Income
Dividends
$ 3,787,286
$1,918,131
$ 17,108
Interest
6,259
1,785
271
Total Investment Income
3,793,545
1,919,916
17,379
Expenses
Investment advisory fee (Note 2)
3,671,845
764,816
34,660
Administrative fee (Note 2)
311,993
65,009
2,946
Shareholder servicing and related
expenses (Note 2)
216,576
33,459
1,440
Printing and mailing
60,410
16,391
1,786
Professional fees
34,351
4,926
11,667
Registration fees
19,203
35,655
8,448
Custodial fees
44,034
14,055
2,354
Trustees fees
21,995
21,995
4,927
Officers fees (Note 2)
19,360
19,360
6,794
Distribution and Service fees - Advisor
Class Shares (Note 2)
19,443
7,345
—
Other
21,665
47,754
34,426
Total Expenses
4,440,875
1,030,765
109,448
Less: Investment advisory fee and
other expenses waived or assumed
by advisor (Note 2)
—
—
(57,458)
Net Expenses
4,440,875
1,030,765
51,990
Net Investment Income/(Loss)
$ (647,330)
$ 889,151
$(34,611)
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS
Net realized gain on investments
19,805,726
1,617,739
55,687
Net change in unrealized appreciation/
(depreciation) of investments
29,159,522
4,951,059
(29,177)
Net Realized and Unrealized Gain
on Investments
48,965,248
6,568,798
26,510
NET INCREASE/DECREASE IN NET
ASSETS FROM OPERATIONS
$48,317,918
$7,457,949
$ (8,101)
*Small Cap Fund inception 3/1/12
See Notes to Financial Statements
38
FAM Funds — statement of Changes in net assets
Six Months Ended June 30, 2012 (Unaudited) and Year Ended December 31, 2011
Value Fund
Six Months Ended
June 30 , 2012
Year Ended
(Unaudited)
December 31, 2011
CHANGE IN NET ASSETS
FROM OPERATIONS:
Net investment income/(loss)
$
(647,330)
$
(755,725)
Net realized gain on investments
19,805,726
15,104
Unrealized appreciation/depreciation of investments
29,159,522
(2,307,084)
Net Increase/Decrease in Net Assets From Op-
erations
48,317,918
(3,047,705)
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Investor Class
—
(19,356)
Advisor Class
—
—
Net realized gain on investments
Investor Class
—
(31,280)
Advisor Class
—
(182)
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST (NOTE 3)
(16,396,470)
(36,246,659)
Total Increase/Decrease in Net Assets
31,921,448
(39,345,182)
NET ASSETS:
Beginning of Period
$702,405,949
$741,751,131
End of Period**
$734,327,397
$702,405,949
**Includes undistributed net investment income/(loss) of ($647,330), $0, $29,575, $10,472, ($34,611) and $0, respectively
See Notes to Financial Statements
39
FAM Funds — statement of Changes in net assets
Six Months Ended June 30, 2012 (Unaudited) and Year Ended December 31, 2011
Equity-Income Fund
Small Cap Fund*
Six Months Ended
Period Ended*
June 30, 2012
Year Ended
June 30, 2012
(Unaudited)
December 31, 2011
(Unaudited)
$
889,151
$ 1,413,762
$
(34,611)
1,617,739
864,340
55,687
4,951,059
4,243,746
(29,177)
7,457,949
6,521,848
(8,101)
(868,134)
(1,405,099)
—
(1,914)
(7,439)
—
—
—
—
—
—
—
(9,154,936)
34,716,192
11,823,097
(2,567,035)
39,825,502
11,814,996
$127,274,814
$ 87,449,312
—
$124,707,779
$127,274,814
$11,814,996
*Small Cap Fund inception 3/1/12
See Notes to Financial Statements
40
FAM Funds - Notes to Financial Statements (Unaudited)
Note 1 Nature of Business and Summary of Significant Accounting Policies
FAM Value Fund, FAM Equity-Income Fund and FAM Small Cap Fund are each a Series
of Fenimore Asset Management Trust, a diversified, open-end management investment
company registered under the Investment Company Act of 1940. The FAM Value Fund
and FAM Equity-Income Fund offer 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 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 FAM Small Cap Fund currently does not offer
an Advisor Class of shares for sale. The investment objective of the FAM Value Fund is to
maximize long-term return on capital. The investment objective of the FAM Equity-Income
Fund is to provide current income and long term capital appreciation from investing primar-
ily in income-producing equity securities. The investment objective of the FAM Small Cap
Fund is to maximize long-term return on capital.
The following is a summary of each Series significant accounting policies, which are in
accordance with accounting principles generally accepted in the United States of America
(“GAAP”), followed by the Funds 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. Com-
mon 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 indepen-
dent sources (observable inputs) and the Fund’s own market assumptions (unobserv-
able 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:
41
FAM Funds - Notes to Financial Statements (Unaudited)
Level 1 – quoted prices in active markets for identical securities
Level 2 – other significant observable inputs (including quoted prices for identical secu-
rities in inactive markets and quoted prices for similar securities)
Level 3 – significant unobservable inputs (including the Fund’s own assumptions in
determining 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.
The following is a summary of the inputs used to value each Series net assets as of June 30, 2012:
FAM Value Fund
Level 1
Common Stocks
$664,203,352
Temporary Investments
$ 63,920,642
Total Investments in Securities
$728,123,994
FAM Equity-Income Fund
Level 1
Common Stocks
$110,523,673
Preferred Stocks
$ 2,437,697
Temporary Investments
$ 12,150,100
Total Investments in Securities
$125,111,470
FAM Small Cap Fund
Level 1
Common Stocks
$ 8,776,462
Temporary Investments
$ 3,069,556
Total Investments in Securities
$ 11,846,018
During the period ended June 30, 2012 there were no Level 2 or 3 inputs used to value
the Funds’ net assets. Refer to the Statement of Investments to view securities segre-
gated by industry type.
42
FAM Funds - Notes to Financial Statements (Unaudited)
b) Federal Income Taxes
It is each Series policy to comply with the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute all of its taxable in-
come to its shareholders. Therefore, no provision for federal income or excise tax is
required.
GAAP requires uncertain tax positions to be recognized, measured, presented and
disclosed in the financial statements. For the period ended June 30, 2012 management
has evaluated the tax positions taken or expected to be taken in the course of prepar-
ing the Funds’ 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 liabil-
ity 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 manage-
ment to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of increases and decreases in net assets from op-
erations 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 securi-
ties 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 Funds’ record
distributions received in excess of income from underlying investments as a reduc-
tion of cost of investments and/or realized gain. Such amounts are based on estimates
if actual amounts are not available, and actual amounts of income, realized gain and
return of capital may differ from the estimated amounts. The Funds’ adjust the esti-
mated amounts of the components of distributions (and consequently its net invest-
ment 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.
43
FAM Funds - Notes to Financial Statements (Unaudited)
Note 2 Investment Advisory Fees and Other Transactions with Affiliates
Under the Investment Advisory Contract, the Funds’ pay an investment advisory fee to
Fenimore Asset Management, Inc. (the “Advisor”) equal, on an annual basis, to 1% of the
Funds’ average daily net assets. The Advisor has entered into a voluntary agreement with
the Funds’ to reduce the investment advisory fee for the Funds’ through December 31, 2012
to 0.95% of the Funds’ average daily net assets in excess of $1 billion. No such waiver was
required for the period ended June 30, 2012. Thomas Putnam is an officer and trustee of the
Funds and also an officer and director of the Advisor. The CCO is an officer of the Funds
and compensated by the Funds in the amount of $45,514 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 period ended June 30, 2012 the Advi-
sor contractually agreed to reimburse the FAM Value Fund for its expenses to the extent
such expenses exceed 1.28% and 2.28% of the average daily net assets of the Investor Class
and Advisor Class, respectively; the FAM Equity-Income Fund for its expenses to the extent
such expenses exceed 1.40% and 2.40% of the average daily net assets of the Investor Class
and Advisor Class, respectively; and the FAM Small Cap Fund for its expenses to the extent
such expenses exceed 1.50% of the average daily net assets of the Investor Class. No such
reimbursement was required for the period ended June 30, 2012 for the FAM Value and
FAM Equity-Income Fund. Reimbursement was required in the amount of $57,458 for the
period ended June 30, 2012 for the FAM Small Cap Fund.
FAM Shareholder Services, Inc. (“FSS”), a company under common control with the Advi-
sor, serves as shareholder servicing agent and receives a monthly fee of $2.33 per share-
holder account. For the period ended June 30, 2012, shareholder servicing agent fees paid
to FSS were as follows:
FAM Value Fund
$216,576
FAM Equity-Income Fund
$ 33,459
FAM Small Cap Fund
$ 1,440
Additionally, FSS serves as the Fund administrative agent and receives an annual fee of
0.085% on the first $750,000,000 of the Funds’ average daily net assets, and 0.075% thereaf-
ter. For the period ended June 30, 2012, the Funds’ administrative fees amounted to:
FAM Value Fund
$311,993
FAM Equity-Income Fund
$ 65,009
FAM Small Cap Fund
$ 2,946
44
FAM Funds - Notes to Financial Statements (Unaudited)
Fenimore Securities, Inc. (“FSI”), a company also under common control with the Advisor,
acts as distributor of the Funds’ shares. On July 1, 2003, the FAM Value Fund and FAM
Equity-Income Fund adopted a distribution plan pursuant to Rule 12b-1 under the Invest-
ment Company Act of 1940 for the Advisor Class of shares. Under the plan the FAM Value
Fund and FAM Equity-Income Fund pay FSI a total of 1.00% per annum of the Advisor
Class shares’ average daily net assets.
Note 3. Shares of Beneficial Interest
At June 30, 2012 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 period ended June 30, 2012,
redemption fees for the FAM Value Fund amounted to $394 and the FAM Equity-Income
Fund amounted to $0, these fees were credited to paid–in capital. The FAM Small Cap Fund
does not offer Advisor Class shares.
Transactions for each Fund are as follows:
FAM Value Fund
SIX MONTHS ENDED 6/30/12
YEAR ENDED 12/31/11
Shares
Amount
Shares
Amount
Shares sold
Investor Class
369,871 $17,725,246
746,774 $ 34,286,768
Advisor Class
709
33,084
1,337
56,741
Shares issued on reinvest-
ment of distributions
Investor Class
—
—
1,085
49,222
Advisor Class
—
—
4
171
Shares redeemed
Investor Class
(701,461) (33,705,159)
(1,534,944) (69,950,423)
Advisor Class
(9,832)
(449,641)
(15,665)
(689,138)
Net Decrease from Investor
Class Share Transactions
(331,590) $(15,979,913)
(787,085) $(35,614,433)
Net Decrease from Advisor
Class Share Transactions
(9,123) $ (416,557)
(14,324) $ 632,226)
45
FAM Funds - Notes to Financial Statements (Unaudited)
FAM Equity-Income Fund
SIX MONTHS ENDED 6/30/12 YEAR ENDED 12/31/11
Shares
Amount
Shares
Amount
Shares sold
Investor Class
4,261,293 $ 85,755,921
2,303,354 $43,756,503
Advisor Class
876
17,153
640
11,151
Shares issued on reinvest-
ment of distributions
Investor Class
23,135
480,989
70,384
1,322,092
Advisor Class
52
1,070
361
6,701
Shares redeemed
Investor Class
(4,677,972) (95,315,385)
(540,888) (10,100,694)
Advisor Class
(4,720)
(94,684)
(14,956)
(279,561)
Net Increase/Decrease from
Investor Class Share Transactions
(393,544) $ (9,078,475)
1,832,850 $34,977,901
Net Decrease from Advisor
Class Share Transactions
(3,792) $
(76,461)
(13,955)
$(261,709)
FAM Small Cap Fund*
PERIOD ENDED 6/30/12
Shares
Amount
Shares sold
Investor Class
1,231,741
$12,417,303
Shares issued on reinvest-
ment of distributions
Investor Class
—
—
Shares redeemed
Investor Class
(59,550)
(594,206)
Net Increase from Investor
Class Share Transactions
1,172,191
$11,823,097
*FAM Small Cap Inception date 3/1/12
46
FAM Funds - Notes to Financial Statements (Unaudited)
Note 4. Investment Transactions
During the period ended June 30, 2012, purchases and sales of investment securities, other
than short-term obligations were:
Purchases
Sales
FAM Value Fund
$18,181,764
$55,049,404
FAM Equity-Income Fund
$44,341,846
$51,100,988
FAM Small Cap Fund*
$ 9,510,484
$ 754,884
*During the period, the Advisor made a voluntary contribution to the FAM Small Cap Fund in the amount of $5,649 in order to reimburse the Fund in connection with a portfolio transaction that was placed but did not settle.
The cost of securities for federal income tax purposes is the same as shown in the statement
of investments.
Note 5. Income Taxes and Distributions to Shareholders
The components of accumulated income/(losses) on a tax basis at December 31, 2011 (the
Fund’s most recent tax year end) were as follows:
Undistributed
Undistributed
Capital loss
ordinary income
long-term gain
carry forward
FAM Value Fund
$
0
$ 359
$
0
FAM Equity-Income Fund
$10,472
$
0
$(34,413)
FAM Small Cap Fund*
N/A
N/A
N/A
*Inception date 3/1/12
As of December 31, 2011 the Equity-Income Fund has $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.
47
FAM Funds - Notes to Financial Statements (Unaudited)
The aggregate gross unrealized appreciation and depreciation of portfolio securities at
June 30, 2012, based on cost for federal income tax purposes, was as follows:
FAM Value Fund
Unrealized appreciation
$314,600,890
Unrealized depreciation
(7,263,084)
Net unrealized appreciation
$307,337,806
FAM Equity-Income Fund
Unrealized appreciation
$ 29,250,486
Unrealized depreciation
(1,362,128)
Net unrealized appreciation
$ 27,888,358
FAM Small Cap Fund
Unrealized appreciation
$
487,443
Unrealized depreciation
(516,620)
Net unrealized depreciation
$
(29,177)
The tax composition of dividends and distributions paid to shareholders for the six months
ended June 30, 2012, and year ended December 31, 2011:
FAM Value Fund
Six Months Ended
Year Ended
June 30, 2012
December 31, 2011
Ordinary income
—
$ 19,578
Long-term capital gain
—
31,240
—
$ 50,818
FAM Equity-Income Fund
Six Months Ended
Year Ended
June 30, 2012
December 31, 2011
Ordinary income
$870,048
$1,412,538
FAM Small Cap Fund*
Period Ended
Year Ended
June 30, 2012
December 31, 2011
Ordinary income
—
—
*Inception date 3/1/12
48
FAM Funds - Notes to Financial Statements (Unaudited)
Note 6. Line of Credit
The FAM Value Fund, and Equity-Income Fund each has a line of credit up to 33 1/3% of its
net assets with a maximum of $125,000,000, and $15,000,000 respectively.
Borrowings under the agreement bear interest at the prime rate as announced by the lend-
ing bank. The line of credit is available until December 1, 2012, when any advances are to
be repaid. During the period ended June 30, 2012, no amounts were drawn from the avail-
able lines.
Note 7. Commitments and Contingencies
In the normal course of business, the Funds enter into contracts that contain a variety of
representations and warranties which provide general indemnifications. The Funds’ maxi-
mum exposure under these arrangements is unknown as this would involve future claims
that might be made against the Funds that have not yet occurred. However, based on the
experience of the Advisor, the Funds expect the risk of loss to be remote.
Note 8. Subsequent Events
Management has evaluated subsequent events through the date the financial statements
were available to be issued, and has determined that there were no subsequent events re-
quiring recognition or disclosure in the financial statements.
Note 9. Recent Accounting Pronouncement
In May 2011, the Financial Accounting Standards Board issued Accounting Standards
Update (“ASU”) No. 2011-04 “Amendments to Achieve Common Fair Value Measurement
and Disclosure Requirements in U.S. GAAP and IFRSs.” ASU No. 2011-04 establishes com-
mon requirements for measuring fair value and for disclosing information about fair value
measurements in accordance with GAAP and International Financial Reporting Standards.
ASU No. 2011-04 is effective for interim and annual periods beginning after December 15,
2011 and is applied prospectively. Management is currently evaluating the impact ASU No.
2011-04 may have on financial statement disclosures.
49
FAM Funds - Notes to Financial Statements (Unaudited)
Note 10. Financial Highlights
FAM Value Fund
(Investor Class)
Years Ended December 31
Six Months
Ended
Per share information
June 30, 2012
2011
2010
2009
2008
2007
(For a share outstanding throughout each period) (Unaudited)
Net asset value, beginning of period
$45.15
$45.34
$39.32
$32.22
$45.42
$49.65
Income/Loss from investment operations:
Net investment income/(loss)†
(0.04)
(0.04)
0.09
0.05
0.18
0.25
Net realized and unrealized
gain/(loss) on investments
3.14
(0.15)
6.61
7.10
(13.21)
(0.66)
Total from investment operations
3.10
(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 period
3.10
(0.19)
6.02
7.10
(13.20)
(4.23)
Net asset value, end of period
$48.25
$45.15
$45.34
$39.32
$32.22
$45.42
Total Return
6.87%**
(0.41)%
17.02%
22.18% (28.68)%
(0.79)%
Ratios/supplemental data
Net assets, end of period (000)
$730,625
$698,546 $737,211 $659,621 $592,504 $871,090
Ratios to average net assets of:
Expenses
1.20%***
1.22%
1.23%
1.26%
1.24%
1.19%
Net investment income/(loss)
(0.17)%***
(0.10)%
0.21%
0.14%
0.44%
0.45%
Portfolio turnover rate
2.71%
7.78%
5.08%
7.55%
12.60%
8.74%
†Based on average shares outstanding.
*Per share amount is less than $0.005.
**Not Annualized
***Annualized
50
FAM Funds - Notes to Financial Statements (Unaudited)
Note 10. Financial Highlights
FAM Value Fund
(Advisor Class)
Years Ended December 31
Six Months
Ended
Per share information
June 30, 2012
2011
2010
2009
2008
2007
(For a share outstanding throughout each period) (Unaudited)
Net asset value, beginning of period
$42.89
$43.52
$37.81
$30.99
$44.39
$48.91
Income/Loss from investment operations:
Net investment income/(loss)†
(0.25)
(0.48)
(0.31)
(0.28)
(0.22)
(0.28)
Net realized and unrealized
gain/(loss) on investments
3.14
(0.15)
6.61
7.10
(13.18)
(0.67)
Total from investment operations
2.89
(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)
Return of capital
—
—
—
—
—
—
Total distributions
—
—*
(0.59)
—
—
(3.57)
Change in net asset value for the period
2.89
(0.63)
5.71
6.82
(13.40)
(4.52)
Net asset value, end of period
$45.78
$42.89
$43.52
$37.81
$30.99
$44.39
Total Return
6.74%**
(1.44)%
16.65%
22.01% (30.19)%
(1.91)%
Ratios/supplemental data
Net assets, end of period (000)
$3,702
$3,860
$4,540
$4,369
$4,294
$7,591
Ratios to average net assets of:
Expenses
2.20%***
2.22%
2.23%
2.26%
2.24%
2.19%
Net investment income/(loss)
(1.16)%***
(1.10)%
(0.79)%
(0.86)%
(0.56)%
(0.55)%
Portfolio turnover rate
2.71%
7.78%
5.08%
7.55%
12.60%
8.74%
†Based on average shares outstanding.
**Not Annualized
***Annualized
51
FAM Funds - Notes to Financial Statements (Unaudited)
Note 10. Financial Highlights
FAM Equity-Income Fund
Years Ended December 31
(Investor Class)
Six Months
Ended
Per share information
June 30, 2012
2011
2010
2009
2008
2007
(For a share outstanding throughout each period) (Unaudited)
Net asset value, beginning of period
$19.39
$18.43
$16.02
$13.34
$19.09
$21.61
Income/Loss from investment operations:
Net investment income†
0.12
0.29
0.36
0.17
0.23
0.20
Net realized and unrealized
gain/(loss) on investments
0.83
0.95
2.41
2.68
(5.73)
(0.97)
Total from investment operations
0.95
1.24
2.77
2.85
(5.50)
(0.77)
Less distributions:
Dividends from net investment income
(0.12)
(0.28)
(0.36)
(0.17)
(0.23)
(0.20)
Distributions from net realized gains
—
—
—
—
—*
(1.55)
Return of capital
—
—
—
—
(0.02)
—
Total distributions
(0.12)
(0.28)
(0.36)
(0.17)
(0.25)
(1.75)
Change in net asset value for the period
0.83
0.96
2.41
2.68
(5.75)
(2.52)
Net asset value, end of period
$20.22
$19.39
$18.43
$16.02
$13.34
$19.09
Total Return
4.92%**
6.79%
17.47%
21.43% (29.04)%
(3.64)%
Ratios/supplemental data
Net assets, end of period (000)
$123,279
$125,832
$85,824
$76,096
$68,096 $112,472
Ratios to average net assets of:
Before waivers:
Expenses
1.33%***
1.40%
1.41%
1.47%
1.41%
1.32%
Net investment income
1.16%***
1.57%
2.10%
1.11%
1.33%
0.88%
After waivers:
Expenses
1.33%***
1.40%
1.40%
1.40%
1.40%
1.32%
Net investment income
1.16%***
1.57%
2.11%
1.18%
1.34%
0.88%
Portfolio turnover rate
33.44%
17.96%
13.38%
10.51%
17.58%
16.16%
†Based on average shares outstanding.
*Per share amount is less than $0.005.
**Not Annualized
***Annualized
52
FAM Funds - Notes to Financial Statements (Unaudited)
Note 10. Financial Highlights
FAM Equity-Income Fund
Years Ended December 31
(Advisor Class)
Six Months
Ended
Per share information
June 30, 2012
2011
2010
2009
2008
2007
(For a share outstanding throughout each period) (Unaudited)
Net asset value, beginning of period
$19.24
$18.27
$15.86
$13.18
$18.86
$21.39
Income/Loss from investment operations:
Net investment income/(loss)†
0.03
0.10
0.19
0.03
0.06
(0.03)
Net realized and unrealized
gain/(loss) on investments
0.83
0.96
2.41
2.68
(5.74)
(0.95)
Total from investment operations
0.86
1.06
2.60
2.71
(5.68)
(0.98)
Less distributions:
Dividends from net investment income
(0.03)
(0.09)
(0.19)
(0.03)
—
—
Distributions from net realized gains
—
—
—
—
—
(1.55)
Total distributions
(0.03)
(0.09)
(0.19)
(0.03)
—
(1.55)
Change in net asset value for the period
0.83
0.97
2.41
2.68
(5.68)
(2.53)
Net asset value, end of period
$20.07
$19.24
$18.27
$15.86
$13.18
$18.86
Total Return
4.45%**
5.83%
16.50%
10.61% (30.12)%
(4.58)%
Ratios/supplemental data
Net assets, end of period (000)
$1,429
$1,442
$1,625
$1,646
$1,759
$3,346
Ratios to average net assets of:
Before waivers:
Expenses
2.33%***
2.40%
2.41%
2.47%
2.41%
2.32%
Net investment income
0.16%***
0.57%
1.10%
0.11%
0.33%
(0.12)%
After waivers:
Expenses
2.33%***
2.40%
2.40%
2.40%
2.40%
2.32%
Net investment income/(loss)
0.16%***
0.57%
1.11%
0.18%
0.34%
(0.12)%
Portfolio turnover rate
33.44%
17.96%
13.38%
10.51%
17.58%
16.16%
†Based on average shares outstanding.
*Per share amount is less than $0.005
**Not Annualized
***Annualized
53
FAM Funds - Notes to Financial Statements (Unaudited)
Note 10. Financial Highlights
FAM Small Cap Fund*
(Investor Class)
Period
Ended
Per share information
June 30, 2012
(For a share outstanding throughout the period)
(Unaudited)
Net asset value, beginning of period
$10.00
Income/Loss from investment operations:
Net investment income/(loss)†
(0.03)
Net realized and unrealized
gain/(loss) on investments
0.11
Total from investment operations
0.08
Less distributions:
Dividends from net investment income
—
Distributions from net realized gains
—
Return of capital
—
Total distributions
—
Change in net asset value for the period
0.08
Net asset value, end of period
$10.08
Total Return
0.80%**(a)
Ratios/supplemental data
Net assets, end of period (000)
$11,815
Ratios to average net assets of:
Before waivers:
Expenses
3.13%***
Net investment income/(loss)
(2.62)%***
After waivers:
Expenses
1.50%***
Net investment income/(loss)
(0.99)%***
Portfolio turnover rate
10.38%
†Based on average shares outstanding.
*Small Cap Fund inception 3/1/12
**Not Annualized
***Annualized
(a)Total return includes the effect of a voluntary contribution by the Advisor of $5,649. Absent this contribution, total return would
have been 0.70%. See Note 4 to the Notes to Financial Statements.
54
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.
See Notes to Financial Statements.
55
Investment Advisor
Fenimore Asset
Management, Inc.
Cobleskill, NY
Custodian
U.S. Bank, N.A.
Cincinnati, OH
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
THIS PAGE IS INTENTIONALLY LEFT BLANK
FACTS
WHAT DOES FAM FUNDS (FENIMORE ASSET MANAGEMENT TRUST)
DO WITH YOUR PERSONAL INFORMATION?
Financial companies choose how they share your personal information.
Federal law gives consumers the right to limit some but not all sharing.
Why?
Federal law also requires us to tell you how we collect, share, and protect your
personal information. Please read this notice carefully to understand what we
do.
The types of personal information we collect and share depend on the product
or service you have with us. This information can include:
Social Security number and account balances
What?
Transaction history and investment experience
Retirement assets and wire transfer instructions
When you are no longer our customer, we continue to share your information
as described in this notice.
All financial companies need to share customers’ personal information to run
their everyday business. In the section below, we list the reasons financial
How?
companies can share their customers’ personal information; the reasons FAM
Funds (Fenimore Asset Management Trust) chooses to share; and whether you
can limit this sharing.
Reasons we can share your personal
Does Fenimore Asset
information
Management, Inc.
Can you limit this
share?
sharing?
For our everyday business purposes
- such as to process your transactions,
maintain your account(s), respond to
Yes
No
court orders and legal investigations, or
report to credit bureaus
For our marketing purposes - to offer our
products and services to you
No
We don’t share
For joint marketing with other financial
companies
No
We don’t share
For our affiliates’ everyday business pur-
poses - information about your transac-
No
We don’t share
tions and experiences
For our affiliates’ everyday business
purposes - information about your credit-
No
We don’t share
worthiness
For affiliates to market to you
No
We don’t share
For nonaffiliates to market to you
No
We don’t share
Questions?
Call (800) 932-3271 or go to www. famfunds.com
Rev. 01/2012
Page 2
What We Do
To protect your personal information from
How does FAM Funds (Fenimore Asset unauthorized access and use, we use secu-
Management Trust) protect my personal infor- rity measures that comply with federal law.
mation?
These measures include computer safe-
guards and secured files and buildings.
We collect your personal information, for
example, when you:
How does FAM Funds (Fenimore Asset • open an account
Management Trust) collect my personal infor- • direct us to buy securities
mation?
• direct us to sell your securities
• make deposits or withdrawals from your
account
• tell us about your investment or retire-
ment portfolio
Federal law gives you the right to limit only
• sharing for affiliates’ everyday business
purposes - information about your credit-
worthiness
Why can’t I limit all sharing?
• affiliates from using your information to
market to you
• sharing for nonaffiliates to market to you
• State laws and individual companies
may give you additional rights to limit
sharing. See below for more on your
rights under state law.
Definitions
Companies related by common ownership or
control. They can be financial and nonfinan-
Affiliates
cial companies.
• FAM Funds (Fenimore Asset Management
Trust) does not share with our affiliates.
Companies not related by common owner-
ship or control. They can be financial and
nonfinancial companies.
Nonaffiliates
• FAM Funds (Fenimore Asset Manage-
ment Trust) does not share with nonaffili-
ates so they can market to you.
A formal agreement between nonaffiliated
financial companies that together market
Joint Marketing
financial products or services to you.
• FAM Funds (Fenimore Asset Management)
does not market jointly.
Not part of the Semi-Annual Report
Item 2. Code of Ethics.
Not applicable.
Item 3. Audit Committee Financial Expert.
Not applicable.
Item 4. Principal Accountant Fees and Services.
Not applicable.
Item 5. Audit Committee of Listed Registrants
Not Applicable.
Item 6. Schedule of Investments
This Schedule of Investments in securities of unaffiliated issuers is
included as part of the Report to Shareholders.
Item 7. Disclosure of Proxy Voting Policies and Procedures for
Closed-End Management Investment Companies
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Companies
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management
Investment Company and Affiliated Purchasers
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 11. Controls and Procedures.
(a) The registrant's principal executive officer and principal financial
officer have concluded that the registrant's disclosure controls and
procedures (as defined in Rule 30a-3(c)) under the Investment Company
Act of 1940, as amended are effective based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this document.
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the Act that occurred during the registrant's first fiscal half-year of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.
Item 12. Exhibits.
File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(a) A separate certification for each principal executive officer and
principal financial officer of the registrant as required by Rule 30a-2 under the Act (17 CFR 270.30a-2) in the exact form set forth below:
(Attached hereto).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant)
Fenimore Asset Management Trust
By (Signature and Title)*
/s/ Thomas O. Putnam
---------------------------
Thomas O. Putnam, President
Date August 10, 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 August 10, 2012
By (Signature and Title)*
/s/ Joseph A. Bucci
--------------------------
Joseph A. Bucci, Treasurer
Date August 10, 2012
* Print the name and title of each signing officer under his or her signature.
