<Page>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-04750
Fenimore Asset Management Trust
----------------------------------------------------------
(Exact name of registrant as specified in charter)
384 North Grand Street
P.O. Box 399
Cobleskill, New York 12043
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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
Date of fiscal year end: December 31
Date of reporting period: June 30, 2003
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. Section 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
The semi-annual report to stockholders is filed herewith.
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[GRAPHIC]
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Table of Contents
<Table>
Chairman's Commentary 1
FAM Value Fund 3
Letter to Shareholder 3
Statement of Investments 6
Statement of Assets and Liabilities 10
Statement of Operations 11
Statement of Changes in Net Assets 12
Notes to Financial Statements 13
FAM Equity-Income Fund 17
Letter to Shareholder 17
Statement of Investments 20
Statement of Assets and Liabilities 23
Statement of Operations 24
Statement of Changes in Net Assets 25
Notes to Financial Statements 26
</Table>
<Page>
Chairman's Commentary [FAM FUNDS LOGO]
JULY 2003
DEAR FELLOW SHAREHOLDER,
CONSIDERING RISK: LESSONS FROM THE 2000-2002 BEAR MARKET
ARE INVESTORS TODAY ASKING THEMSELVES THE RIGHT QUESTIONS ABOUT RISK?
At the annual meeting of the Investment Company Institute in May, I attended a
presentation by a speaker who researches consumer trends. He suggested that
investors today are looking at risk differently than they did in the 1990's.
During the 'irrational exuberance' of the technology driven bull market in the
late 90's, investors asked themselves questions based on efforts to maximize
gains. "How can I make sure that I get the most?" was primarily an emotional
response to activity in a market that seemed only to go up. Today, the questions
the researcher hears from investment consumers are quite different. They range
from "Will I be able to send my children to college?" to "Will there be enough
money for my retirement?" to "Can my family afford healthcare?" The shift in
questions being asked indicates a sea change in investor attitudes, the result
of experiences over the last three years, when investors discovered once again
that the market can also go down. The recent bear market experience has left
many fearful that they will be unable to fund basic needs for themselves and
their families. Is there a way for investors to take fear and greed out of the
investment equation and rationally assess the risks and rewards of investing in
the stock market?
INDUSTRY APPROACHES TO ASSESSING RISK
Throughout the investment community, risk is often equated with volatility. As
such, it is represented by the technical term 'beta' in investment jargon.
Simply, the price of a stock that has a beta of 1.0 moves in tandem, or is
correlated, to the market (often represented by the S&P 500 Index). Therefore,
the price of a stock with a beta of 1 goes up as the market/S&P 500 goes up and
declines when the market/S&P 500 declines. A stock with a beta of less than 1 is
interpreted to mean that the stock is less volatile than the market, and
therefore less risky, and a stock with a beta of more than 1 is interpreted as a
stock that is more volatile, therefore 'riskier' than the market. An investor
who sought to keep in step with an increasing market, would look therefore, for
a stock with a beta of 1.0. So far so good.
The misleading conclusions that can be drawn from this type of approach can
be illustrated with a look at two well-known stocks: White Mountains, which is
the largest holding in both the FAM Value Fund and the FAM Equity-Income Fund,
and WorldCom, a stock we have never owned. In March of 2000, WorldCom had a beta
of 1.05 - a very close correlation to the broad market - and was trading at $45
per share. In March of 2000, White Mountains had a beta of .27, quite low -
suggesting less volatility, yet had declined 33% in March, from a high of $150
per share to $101 per share. Had beta-logic been applied, WorldCom might have
seemed the preferred investment, since it was predicted to rise with the market.
Today WorldCom has been de-listed and sells for about 15 cents a share.
White Mountains,
1
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on the other hand, is selling at $395 per share. In terms of predictive use,
beta fell far short of forecasting risk.
FAM FUNDS ASSESSMENT OF RISK
Risk in our minds has little to do with price volatility and its quantitative
measure and has most to do with the probability of permanent loss of capital.
And we believe that loss of capital results most probably from companies which
suffer under excessive debt, a faulty business model, or the failure of
management to execute its business model. A quick look at a company's stock
price volatility - beta - will not provide any insights into analyzing what we
believe are more meaningful aspects of a company's health.
Investment risk can be mitigated by the consistent application of an
unemotional, disciplined investment process. Our research leads us to
understandable businesses with strong balance sheets, where excess capital is
used intelligently and where capable managers demonstrate a high degree of
integrity. The opportunities that analysis of this type uncovers can then be
realized if we purchase stock in those companies at a reasonable price, building
in a significant margin of safety. In this instance we heed one of the founders
of value investing, Benjamin Graham, who cautioned, "The (stock) market is there
to serve you, not to guide you."
Working to control risk and attain reasonable rewards are our constant
guides. While there are many factors which are beyond our control, we can assure
you that we will remain steadfast in the application of our research process. I
thank you, on behalf of our research team, for the opportunity to serve you.
I would also encourage you to read the commentary on the FAM Value Fund
prepared by John Fox, and Paul Hogan's commentary on the FAM Equity-Income Fund.
A further recommendation for your reading list is the new edition of Benjamin
Graham's THE INTELLIGENT INVESTOR. Money magazine columnist Jason Zweig has done
a superb job in updating this classic. Chapters 1, 8, 19 and 20, I believe, are
worth special note.
Sincerely,
/s/ Thomas O. Putnam
Thomas O. Putnam
CHAIRMAN
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FAM VALUE FUND
DEAR FELLOW VALUE FUND SHAREHOLDER:
Performance results for the six months ended June 30, 2003 for the FAM Value
Fund and market indexes are as follows:
<Table>
FAM Value Fund +9.6%
Russell 2000 +17.3%
Standard & Poor's 500 +11.7%
</Table>
A quick glance at the returns above might lead one to think that calendar
2003 thus far has been an enjoyable upward moving market for investors. This
couldn't be further from the truth. As 2003 got underway, investors, along with
everyone else, were focused on the possibility of war with Iraq. By mid-March
stocks had slid to double-digit declines. Once we went to war, the market seemed
to trade on any snippet of news from the battlefield, causing many pundits to
predict a fourth consecutive year of negative equity returns. Mutual fund
investors seemed to concur and withdrew over $10 billion from equity funds in
February alone.
However, since the first quarter, the stock market has posted a major
rally. Since the market bottom on March 11, the S&P 500 is up almost 22% and,
reminiscent of the 1999 bull market, the most speculative stocks are up the
most. For example, an index of leading internet stocks is up 48% from the market
bottom. In fact, after all the negativity of the first quarter, the June quarter
of 2003 was the best quarter for stocks since the fourth quarter of 1998.
BEST & WORST PERFORMERS
Like the broader market, FAM Value Fund performance has been led by our
technology holdings. Our strategy for investing in technology companies combines
three elements. First, the company has to be an established player with
management that has navigated through previous downturns. Second, the company
must have cash profits even in today's tough environment. Finally, the company
must have a strong balance sheet with cash exceeding debt. This game plan has
served us well and a number of our technology holdings had excellent
performance. Scientific Atlanta led the pack, by doubling in the first six
months of the year. Two other technology holdings that performed well were Zebra
Technologies and Littelfuse, both up over 30%.
Our property and casualty insurance companies continue to perform well
after an excellent 2002. White Mountains and Markel were both up in excess of
20%. The market for insurance remains very strong and we expect good financial
results from these two companies for the rest of the year.
The worst performing stock in the Fund was Jones Apparel Group, down 17%
for the first half-year. As a result of a dispute with long-time partner Polo
Ralph Lauren, Jones will lose some $500 million in sales beginning next year.
However, we continue to own the stock and remain positive on the company's
future prospects. Even after losing the Lauren business, Jones still has over $4
billion in sales and cash earnings of around $2.90. At the June closing price of
$29.25, the company is priced at near ten times current earnings power. This is
a very reasonable price for a strong franchise business such as Jones Apparel.
3
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OUR INVESTMENT PROCESS
"AN INVESTMENT OPERATION IS ONE WHICH, UPON THOROUGH ANALYSIS PROMISES SAFETY OF
PRINCIPAL AND AN ADEQUATE RETURN. OPERATIONS NOT MEETING THESE REQUIREMENTS ARE
SPECULATIVE."
Benjamin Graham, THE INTELLIGENT INVESTOR
This brief quote from one of our favorite books at FAM Funds, is an excellent
summary of our investment process.
UPON THOROUGH ANALYSIS
Our process begins with a thorough analysis of a company and its management. Our
checklist runs two pages and includes more than 25 items that must be completed
before we will invest in a company. We do all of our own homework and do not
rely on Wall Street research reports. A few important steps in the process
include: a review of all the company's financial statements - not just the
income statement. We believe there is over-emphasis on quarterly earnings per
share forecasts by the market. We prefer to spend more time with the cash flow
statement and balance sheet. We look for cash profits, high returns on capital
and strong balance sheets with little debt. Another critical step in our process
is interviewing management - both on the phone and in person. The corporate
scandals of the last few years have reinforced the need to invest with honest
management teams. We meet with every company that we own at least once a year so
that we can make an assessment of the people in charge of our investments. Our
process is thorough and it takes considerable time to examine a company. In many
instances we will study a company for a year or more before we purchase the
stock. We followed, for example, Ethan Allen, Markel and Commonwealth Telephone
for more than one year before our first purchase of their stock.
SAFETY OF PRINCIPAL
The primary way we try to protect our principal is to determine the value of
each company that we invest in and buy the stock at discount to that value.
Ben Graham called this concept "the margin of safety". While the market price of
the stock may move up and down, we are protected by the true intrinsic value of
the company. An additional protection is to buy companies that have low amounts
of debt. Many of the bear market disasters were companies with too much debt.
The combination of low debt and the ability to generate a large amount of cash
flow has helped many of our companies weather the recession.
AN ADEQUATE RETURN
What is an adequate return? Many people measure their return against some
external index. We believe the purpose of investing is to grow capital over a
long period of time and at a rate in excess of inflation. By growing capital
faster than inflation, money is available to meet future spending needs -
whatever they may be. This is true for an individual saving for retirement or an
institution with an endowment fund. Since the FAM Value Fund's inception in
January 1987, the Consumer Price Index has run about 3% per year versus a little
over 12% (see below) for the Fund. This means we have grown capital in a real
sense over 16 and half years.
4
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LONG TERM RESULTS
As is custom, we close this letter with a report on our long-term performance.
FAM VALUE FUND AVERAGE ANNUAL RETURNS AS OF JUNE 30, 2003
<Table>
<Caption>
SINCE INCEPTION
1-YEAR 3-YEAR 5-YEAR 10-YEAR (1/2/87)
2.33% 12.19% 5.66% 11.27% 12.24%
</Table>
Our investment process, as Ben Graham so succinctly stated it, remains a
constant regardless of the stock market environment. So whatever direction the
stock market takes, we are prepared to manage the FAM Value Fund portfolio from
a position of confidence.
Finally, we thank you for your confidence in our investment process.
Sincerely,
/s/ John D. Fox /s/ Thomas O. Putnam
John D. Fox, CFA Thomas O. Putnam
CO-MANAGER CO-MANAGER
5
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FAM VALUE FUND -- STATEMENT OF INVESTMENTS
JUNE 30, 2003 (UNAUDITED)
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (94.7%)
BANKING (9.8%)
Banknorth Group, Inc.
- MULTI-BANK HOLDING COMPANY IN PORTLAND, ME 410,507 $ 10,476,139
M&T Bank Corporation
- BANK HOLDING COMPANY LOCATED IN BUFFALO, NY 143,000 12,043,460
North Fork Bancorporation
- A BANK HOLDING COMPANY LOCATED ON LONG ISLAND, NY 245,950 8,377,057
South Trust Corporation
- BANK HOLDING COMPANY HEADQUARTERED IN ALABAMA 426,000 11,587,200
TCF Financial Corp.
- HOLDING COMPANY FOR TCF NATIONAL BANK,
OPERATING THROUGHOUT THE MIDWEST 25,000 996,000
TrustCo Bank Corp NY
- OPERATES 54 BANK OFFICES IN UPSTATE NY 233,972 2,592,410
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46,072,266
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COMMERCIAL PRODUCTS (3.8%)
New England Business Services, Inc.
- LEADING SUPPLIER OF BUSINESS FORMS/
PRINTED PRODUCTS TO SMALL BUSINESSES IN U.S. 600,025 18,000,750
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COMPUTER SOFTWARE & SERVICES (4.1%)
Reynolds & Reynolds
- SOFTWARE FOR AUTOMOTIVE DEALERS AND BUSINESS FORMS 675,400 19,289,424
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CONSTRUCTION MATERIALS (6.5%)
Florida Rock Industries
- BASIC CONSTRUCTION MATERIALS COMPANY 18,500 763,680
Martin Marietta Materials
- PRODUCES AGGREGATES FOR THE CONSTRUCTION INDUSTRY 398,443 13,391,669
Vulcan Materials Company
- PRODUCES, DISTRIBUTES AND SELLS CONSTRUCTION
MATERIALS AND INDUSTRIAL AND SPECIALTY CHEMICALS 442,665 16,409,592
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30,564,941
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CONSUMER PRODUCTS (1.2%)
CSS Industries, Inc.*
- GIFTWARE, BOWS, HALLOWEEN AND EASTER NOVELTY PRODUCTS 148,050 5,707,328
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CONSUMER SERVICES (1.5%)
H&R Block, Inc.
- LEADER IN INDIVIDUAL AND SMALL BUSINESS TAX PREPARATION 10,000 432,500
ServiceMaster Company
- COMMERCIAL AND RESIDENTIAL SERVICE COMPANY 624,225 6,679,208
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7,111,708
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</Table>
See Notes to Financial Statements.
6
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<Table>
<Caption>
SHARES VALUE
ELECTRONIC COMPONENTS (1.7%)
Littelfuse, Inc.
- MANUFACTURES FUSES AND CIRCUIT PROTECTION DEVICES 360,900 $ 8,069,724
------------
ELECTRICAL EQUIPMENT (4.1%)
American Power Conversion*
- MANUFACTURES POWER PROTECTION EQUIPMENT FOR COMPUTERS 449,055 7,000,767
Zebra Technologies Corp.
- DESIGNS, MANUFACTURES AND SUPPORTS BAR CODE LABEL
PRINTERS 159,890 12,022,129
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19,022,896
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HEALTH CARE SERVICES (1.1%)
Renal Care Group, Inc.
- PROVIDES DIALYSIS SERVICES TO PATIENTS
WITH CHRONIC KIDNEY FAILURE 150,100 5,285,021
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HOME FURNISHINGS (1.7%)
Ethan Allen Interiors, Inc.
- MANUFACTURES AND RETAILS HOME FURNISHINGS 223,175 7,846,833
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INSURANCE AGENCY (6.5%)
Brown & Brown, Inc.
- ONE OF THE LARGEST INDEPENDENT GENERAL
INSURANCE AGENCIES IN THE U.S. 939,848 30,545,060
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INVESTMENT MANAGEMENT (1.8%)
Federated Investors, Inc.
- PROVIDES INVESTMENT MANAGEMENT PRODUCTS
AND SERVICES PRIMARILY TO MUTUAL FUNDS 105,000 2,879,100
Waddell & Reed Financial, Inc.
- PROVIDES A WIDE RANGE OF INVESTMENT PRODUCTS
AND SERVICES THROUGH ITS SUBSIDIARIES, INCLUDING
MUTUAL FUNDS AND INSURANCE PRODUCTS 216,400 5,554,988
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8,434,088
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LIFE INSURANCE (2.7%)
Protective Life Corporation
- INDIVIDUAL AND GROUP LIFE/HEALTH INSURANCE
AND GUARANTEED INVESTMENT CONTRACTS 471,400 12,609,950
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MACHINERY & EQUIPMENT (8.2%)
IDEX Corporation
- MANUFACTURES PROPRIETARY, HIGHLY ENGINEERED
INDUSTRIAL PRODUCTS & PUMPS 343,000 12,430,320
Kaydon Corporation
- CUSTOM-ENGINEERS PRODUCTS INCLUDING
BEARINGS, FILTERS, AND PISTON RINGS 780,750 16,239,600
</Table>
See Notes to Financial Statements.
7
<Page>
<Table>
<Caption>
SHARES VALUE
MACHINERY & EQUIPMENT (8.2%) CONTINUED
MOCON, Inc.
- MANUFACTURES PRECISION MEASUREMENT,
PROCESS SENSING, AND CONTROL INSTRUMENTS/SYSTEMS 33,044 $ 239,569
Tennant Company
- MANUFACTURES COMMERCIAL AND INSTITUTIONAL
FLOOR MAINTENANCE EQUIPMENT AND PRODUCTS 255,075 9,374,006
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38,283,495
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MEDIA (1.0%)
Meredith Corporation
- MAGAZINE PUBLISHING & TV BROADCASTING 110,450 4,859,800
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PHARMACEUTICALS (3.2%)
Watson Pharmaceuticals* 374,900 15,134,713
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PROPERTY AND CASUALTY INSURANCE (15.4%)
Berkshire Hathaway Inc.*
- HOLDING COMPANY FOR VARIOUS INSURANCE
AND INDUSTRIAL COMPANIES 215 15,587,500
Markel Corporation*
- INSURANCE HOLDING COMPANY 65,650 16,806,400
White Mountains Ins. Grp., Ltd.
- PERSONAL PROPERTY AND CASUALTY, AND REINSURANCE 100,275 39,608,625
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72,002,525
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PUBLISHING (1.3%)
John Wiley & Sons, Inc.
- PUBLISHER OF PRINT AND ELECTRONIC PRODUCTS,
SPECIALIZING IN SCIENTIFIC, TECHNICAL PROFESSIONAL
AND MEDICAL BOOKS AND JOURNALS 226,700 5,939,540
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RECREATION AND ENTERTAINMENT (2.7%)
International Speedway Corporation
- OWNS AND OPERATES AUTO RACING
TRACKS INCLUDING DAYTONA 315,988 12,484,686
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REGISTERED INVESTMENT COMPANY (3.8%)
Allied Capital Corp
- VENTURE CAPITAL CORPORATION FOR
ENTREPRENEURS AND MANAGEMENT 779,391 18,003,932
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RESTAURANTS (3.3%)
YUM! Brands, Inc.*
- QUICK SERVICE RESTAURANTS INCLUDING
KFC, PIZZA HUT AND TACO BELL 516,800 15,276,608
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</Table>
See Notes to Financial Statements.
8
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<Table>
<Caption>
SHARES VALUE
RETAIL APPAREL (1.9%)
Jones Apparel Group, Inc.
- DESIGNS AND MARKETS APPAREL 306,000 $ 8,953,560
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RETAIL STORES (2.7%)
Cato Corp.
- OPERATES WOMEN'S FASHION SPECIALTY STORES 163,800 3,452,904
Ross Stores, Inc.
- CHAIN OF OFF-PRICE RETAIL APPAREL
AND HOME ACCESSORIES STORES 155,000 6,624,700
Whole Foods Market, Inc.
- NATIONAL GROCERY STORE SELLING ORGANIC
AND NATURAL PRODUCTS 50,000 2,376,500
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12,454,104
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TELECOMMUNICATIONS SERVICES (3.6%)
Commonwealth Telephone Enterprises, Inc.
- PROVIDES TELEPHONY AND RELATED SERVICES IN
PENNSYLVANIA MARKETS AS A RURAL LOCAL EXCHANGE CARRIER 320,250 14,081,392
Hickory Tech Corp.
- SMALL LOCAL TELEPHONE COMPANY IN MINNESOTA 258,800 2,898,560
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16,979,952
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WHOLESALE DISTRIBUTION (0.9%)
SCP Pool Corp.
- WHOLESALE DISTRIBUTOR OF SWIMMING POOL SUPPLIES 122,645 4,218,988
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TOTAL COMMON STOCKS (COST $290,571,689) $ 443,151,892
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<Caption>
SHORT TERM OBLIGATIONS (5.3%) PRINCIPAL
U.S. Treasury Bills, 1.0%, with maturities to 7/17/03
(Cost $24,992,395) $ 25,000,000 24,992,395
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TOTAL INVESTMENTS (COST $315,564,084) $ 468,144,287
=============
</Table>
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* NON-INCOME PRODUCING
See Notes to Financial Statements.
9
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FAM VALUE FUND
JUNE 30, 2003 (UNAUDITED)
STATEMENT OF ASSETS AND LIABILITIES
<Table>
ASSETS
Investment in securities at value
(Cost $315,564,084) $ 468,144,287
Cash at interest 18,921,200
Dividends and interest receivable 145,130
Receivable for investment securities sold 690,890
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TOTAL ASSETS 487,901,507
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LIABILITIES
Accrued management fees 403,799
Accrued expenses 167,168
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TOTAL LIABILITIES 570,967
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NET ASSETS
Source of Net Assets:
Net capital paid in on shares of beneficial interest $ 327,619,093
Undistributed net investment income 876,354
Accumulated net realized gains 6,254,890
Net unrealized appreciation 152,580,203
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NET ASSETS $ 487,330,540
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Net asset value per share; 13,196,620 shares
of beneficial interest outstanding (Note 3) $ 36.93
</Table>
See Notes to Financial Statements.
10
<Page>
FAM VALUE FUND
SIX MONTHS ENDED JUNE 30, 2003 (UNAUDITED)
STATEMENT OF OPERATIONS
<Table>
INVESTMENT INCOME
INCOME
Dividends $ 3,577,350
Interest 119,879
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TOTAL INCOME 3,697,229
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EXPENSES
Investment advisory fee (Note 2) 2,244,916
Administrative fee (Note 2) 168,368
Shareholder servicing and related expenses (Note 2) 157,064
Printing and mailing 54,236
Professional fees 48,420
Registration fees 46,493
Custodial fees 30,241
Trustees 19,729
Other 35,993
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TOTAL EXPENSES 2,805,460
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NET INVESTMENT INCOME 891,769
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REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments 6,253,246
Unrealized appreciation of investments 34,779,366
----------------------------------------------------------------------------
Net Gain on Investments 41,032,612
----------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 41,924,381
</Table>
See Notes to Financial Statements.
11
<Page>
FAM VALUE FUND
SIX MONTHS ENDED JUNE 30, 2003 (UNAUDITED) AND YEAR ENDED DECEMBER 31, 2002
STATEMENT OF CHANGES IN NET ASSETS
<Table>
SIX MONTHS YEAR ENDED
ENDED JUNE 30, DECEMBER 31,
2003 2002
CHANGE IN NET ASSETS
FROM OPERATIONS:
Net investment income $ 891,769 $ 1,547,344
Net realized gain on investments 6,253,246 5,997,374
Unrealized appreciation
(depreciation) of investments 34,779,366 (39,418,992)
----------------------------------------------------------------------------
Net Increase (Decrease)
in Net Assets From Operations 41,924,381 (31,874,274)
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income -- (1,545,183)
Net realized gain on investments -- (5,996,520)
CAPITAL SHARE TRANSACTIONS (NOTE 3): (23,870,912) 7,275,714
----------------------------------------------------------------------------
Total Increase (Decrease) in Net Assets 18,053,469 (32,140,263)
NET ASSETS:
Beginning of period 469,277,071 501,417,334
----------------------------------------------------------------------------
End of period $ 487,330,540 $ 469,277,071
============================================================================
</Table>
See Notes to Financial Statements.
12
<Page>
FAM VALUE FUND -- NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1. SUMMARY OF ACCOUNTING POLICIES
FAM Value Fund (the "Fund") is a series of Fenimore Asset Management Trust, a
no-load, diversified, open-end management investment company registered under
the Investment Company Act of 1940. The investment objective of the Fund is to
maximize long-term total return on capital. The following is a summary of
significant accounting policies followed in the preparation of its financial
statements.
a) VALUATION OF SECURITIES
Securities traded on a national securities exchange or admitted to trading on
NASDAQ are valued at the last reported sales price. Common stocks for which
no sale was reported, and over-the-counter securities, are valued at the last
reported bid price. Short-term securities are carried at amortized cost,
which approximates 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.
b) FEDERAL INCOME TAXES
It is the Fund's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all of its taxable income to its shareholders. Therefore, no provision for
federal income tax is required.
c) USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of increases and decreases in net assets from operations
during the reporting period. Actual results could differ from those
estimates.
d) OTHER
Securities transactions are recorded on trade date. Realized gains and losses
on securities sold are determined on the basis of identified cost. Interest
income is accrued as earned and dividend income is recorded on the
ex-dividend date. Distributions to shareholders, which are determined in
accordance with income tax regulations, are recorded on the ex-dividend date.
NOTE 2. INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Under the Investment Advisory Contract, the Fund pays an investment advisory fee
to Fenimore Asset Management, Inc. (the "Advisor") equal, on an annual basis, to
1% of the Fund's average daily net assets. Certain officers and trustees of the
Fund are also officers and directors of the Advisor. The Investment Advisory
Contract requires the Advisor to reimburse the Fund 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 ending June 30,
2003 the Advisor contractually agreed to reimburse the Value Fund for its
expenses to the extent such expenses exceed 1.28% of the average daily net
assets. No such reimbursement was required for the period ending June 30, 2003.
FAM Shareholder Services, Inc. (FSS), a company under common control with the
Advisor, serves
13
<Page>
as shareholder servicing agent and receives a monthly fee of $2.00 per
shareholder account. Additionally, FSS serves as the fund administrative agent
and receives an annual fee based upon current assets equal to 0.075% of the
Fund's average daily net assets. Fenimore Securities, Inc. (FSI), a company also
under common control with the Advisor, acts as distributor of the Fund's shares.
NOTE 3. SHARES OF BENEFICIAL INTEREST
At June 30, 2003 an unlimited number of $.001 par value shares of beneficial
interest were authorized. Transactions were as follows:
<Table>
<Caption>
SIX MONTHS ENDED 6/30/03 YEAR ENDED 12/31/02
SHARES AMOUNT SHARES AMOUNT
Shares sold 1,202,449 $ 41,236,599 5,534,797 $ 200,798,895
Shares issued on
reinvestment of dividends -- -- 207,947 6,955,805
Shares redeemed (1,935,492) (65,107,511) (5,675,483) (200,478,986)
------------------------------------------------------------------------------------------------
Net increase (decrease) (733,043) $ (23,870,912) 67,261 $ 7,275,714
------------------------------------------------------------------------------------------------
</Table>
NOTE 4. INVESTMENT TRANSACTIONS
During the period ended June 30, 2003, purchases and sales of investment
securities, other than short term obligations were $14,114,080 and $42,689,127.
The cost of securities for federal income tax purposes is substantially the same
as shown in the investment portfolio.
The aggregate gross unrealized appreciation and depreciation of portfolio
securities, based on cost for federal income tax purposes, was as follows:
<Table>
Unrealized appreciation $ 162,565,111
Unrealized depreciation (9,984,908)
--------------
Net unrealized appreciation $ 152,580,203
==============
</Table>
14
<Page>
NOTE 5. HOLDINGS OF 5% VOTING SECURITIES OF PORTFOLIO COMPANIES
Investments in portfolio companies, 5% or more of whose outstanding voting
securities are held by the Fund, are defined in the Investment Company Act of
1940 as affiliated companies. A summary of the Fund's holdings in the securities
of such issues is set forth below:
<Table>
<Caption>
NUMBER OF NUMBER OF VALUE REALIZED
SHARES HELD GROSS GROSS SHARES HELD JUNE 30, DIVIDEND GAINS/
NAME OF ISSUER DEC. 31, 2002 ADDITIONS REDUCTIONS JUNE 30, 2003 2003 INCOME (LOSSES)
MOCON, Inc. 395,844 0 362,800 33,044 $ 239,569 $ 5,787 $ 275,536
New England
Bus. Service 675,025 0 75,000 600,025 18,000,750 240,190 (421,568)
-----------------------------------------------------------------------------------------------------------------
Total $ 18,240,319 $ 245,977 $ (146,032)
</Table>
NOTE 6. LINE OF CREDIT
FAM Value Fund has a line of credit up to 33 1/3% of total net assets or a
maximum of $75,000,000. Borrowings under the agreement bear interest at the
prime rate as announced by the lending bank. The line of credit is available
until December 1, 2003 when any advances are to be repaid. During the period
ended June 30, 2003 no amounts were drawn from the available line.
15
<Page>
NOTE 7. FINANCIAL HIGHLIGHTS
FAM VALUE FUND FINANCIAL HIGHLIGHTS
<Table>
<Caption>
SIX MONTHS
PER SHARE INFORMATION ENDED JUNE 30, YEARS ENDED DECEMBER 31,
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD) 2003 2002 2001 2000 1999 1998
Net asset value, beginning of period $ 33.69 $ 36.17 $ 32.70 $ 31.35 $ 34.44 $ 35.76
--------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.07 0.11 0.17 0.36 0.29 0.20
Net realized and unrealized
gain (loss) on investments 3.17 (2.04) 4.77 5.38 (2.00) 1.94
--------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 3.24 (1.93) 4.94 5.74 (1.71) 2.14
--------------------------------------------------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment income -- (0.11) (0.17) (0.36) (0.29) (0.20)
Distributions from net realized gains -- (0.44) (1.30) (4.03) (1.09) (3.26)
--------------------------------------------------------------------------------------------------------------------------------
Total distributions -- (0.55) (1.47) (4.39) (1.38) (3.46)
--------------------------------------------------------------------------------------------------------------------------------
Change in net asset value for the period 3.24 (2.48) 3.47 1.35 (3.09) (1.32)
--------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 36.93 $ 33.69 $ 36.17 $ 32.70 $ 31.35 $ 34.44
================================================================================================================================
TOTAL RETURN 9.62% (5.33)% 15.07% 19.21% (4.84)% 6.19%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000) $ 487,331 $ 469,277 $ 501,417 $ 366,948 $ 373,277 $ 379,269
Ratios to average net assets of:
Expenses 1.25%* 1.21% 1.21% 1.26% 1.23% 1.19%
Net investment income 0.20% 0.30% 0.56% 1.08% 0.86% 0.57%
Portfolio turnover rate 3.29% 17.51% 9.62% 9.53% 16.16% 16.67%
</Table>
*Annualized
NOTE 8. SUBSEQUENT EVENT REGARDING CLASSES OF SHARES OF THE FUND
Effective July 1, 2003, the Fund began offering its shares of beneficial
interest in two separate share classes: Investor Class Shares and Advisor Class
Shares. All of the shares of the Fund that were issued and outstanding as of
July 1, 2003 have been designated as Investor Class Shares.
16
<Page>
FAM EQUITY-INCOME FUND
DEAR FELLOW EQUITY-INCOME FUND SHAREHOLDER:
For the six-month period ended June 30, 2003, the FAM Equity-Income Fund is up
8.74%; the Standard &Poor 500 and the Russell 2000 are up 11.7% and 17.3%,
respectively.
BEFORE THE WAR
Looking back over the last six months, we can identify two distinct periods:
pre-war and post-war. The debate and worry prior to armed conflict with Iraq had
a dramatic effect on the stock market - in the first two months of 2003, the
market decreased over 15%. As painful as this was on a short-term basis, the
market decline also presented us with a terrific buying opportunity, which we
did not pass up. Since we had begun the year with cash on hand and were also in
the fortunate position of seeing net inflows into the Fund, we readily bought
stock in companies that we felt were undervalued.
While it may sound easy to buy when the market is declining, in practice,
this can be very difficult. The market declines when news is bad and the outlook
is bleak, but an even stronger negative influence on the market is uncertainty.
The more uncertainty there is about world events, the more worried investors
become and the more the market falls. The difficulty in buying stocks in a
declining market is that one never knows how deep the decline will be. It can be
very frustrating for us to buy shares on one day only to see the price go lower
the next. The problem is that it is impossible to know if the shares will, in
fact, be lower in the near future.
We try to overcome this problem in a couple of ways. First, we spend a
great deal of time figuring out what the companies we invest in are worth. For
every holding, we have detailed models which forecast cash flow over the next
five years. Once we determine how much a company is worth, we set a buy price
which builds in a 10% to 30% margin of safety. We also try to determine what
events must take place in order for the stock price to double over the next five
years. We tend to favor companies where not a lot needs to happen in order for
us to make a nice return on the investment. We avoid investments in which the
only way we can make a return is if everything improves, i.e., the company
maintains exceptional revenue growth, increases margins, and trades at a
historically high multiple in the future.
In addition, we visit every company that we own in the Fund at least once a
year. This gives us a high degree of confidence that our companies can
successfully navigate through short-term uncertainty. It also helps us determine
whether the management team is truly visionary or just following the crowd.
Management's ability to increase economic value is key because it leads to
higher stock prices. We can tell very quickly which management teams understand
this process, and which ones do not.
Before the war began we were in the most favorable environment to buy great
companies at great prices since early 2000, when the tech bubble burst. During
that time we increased our position in several companies in the Fund. We even
added a company to the portfolio that we had been patiently waiting to reach our
buy price. In total, we invested half of the Fund's beginning year cash balance
and nearly all of the inflows over the period.
17
<Page>
AFTER THE WAR
The market turned on March 12th, a week before armed conflict began, similar to
the pattern we observed prior to the first Gulf war. Since the turn, the S&P 500
has rallied nearly 22% and the NASDAQ is up 28%.
The post war rally was a welcome sight after a grueling 3-year bear market.
However, many of the companies that are the best performers in the NASDAQ 100 in
this latest rally are the same companies that led the charge in the 1999-2000
technology bubble period. Logic would suggest that after the tax cut on
dividends and capital gains the stocks that would perform the best would be
those which offer the highest after-tax return, such as dividend-paying
companies and companies with steady long-term growth. This was clearly not the
case. Many of the companies that are the market darlings today experience huge
trading volumes, indicating that investors are buying and selling them at a
feverish pitch, resulting in short-term gains. These short-term gains are taxed
at a rate that is twice as high as the long-term capital gains rate.
For the Equity-Income Fund our activity slowed down dramatically once the
rally gathered momentum. In fact, some of our holdings appreciated beyond our
sell target. For example, in February Scientific Atlanta hosted its annual
analyst meeting. The stock at that time was $12 per share. By the end of June
the stock had soared to $23.84 per share, a double. We sold our entire position
based on the valuation. That is, the outlook for the year had not changed a bit
and management still does not feel confident enough about the future to give
analysts any guidance. We think Scientific Atlanta is a fantastic company with a
clean balance sheet, top notch management, and industry leading products.
However, we do not feel the company is worth more than $25 per share, which
others are willing to pay today.
BEST AND WORST PERFORMERS
Our best performing company was Scientific Atlanta (+101.2%). We sold our entire
position before just before the second quarter ended, after the stock had moved
higher than $20 per share. Waddell & Reed Financial (+31.9%), acted well once
the market started its upward trek. Since this is a money management company,
its fortunes are tied to moves in the market. Another best performer was Six
Flags Pfd. B (+26.8%). The appreciation was tied to lower interest rates and the
reduction in the dividend tax rate.
Two companies tied in the worst performing category: ServiceMaster (-1.7%)
and Protective Life (-1.7%). ServiceMaster is experiencing a slow turnaround in
its consumer base and Protective Life is being negatively affected by low
interest rates. Cato Corp. (-0.9%), is a relatively new holding for the Fund.
This apparel retailer was hurt by severe and persistent winter weather. We
believe this is one of the most undervalued companies in the portfolio.
OUTLOOK
Even though the market has rallied significantly over the last few months we are
more vigilant than ever in protecting your capital. We will not buy a company
for the Fund if we do not feel we can get a reasonable return. And we always
18
<Page>
consider risk in weighing potential returns. As stated in the Chairman's letter,
we view risk as the permanent loss of capital, not short term volatility. If we
do not have compelling opportunities to invest your money, we will keep it in
Treasuries, awaiting the perfect pitch. As stewards of your capital our first
priority in managing the Fund is to generate reasonable returns over long
periods of time - not making sure the portfolio is fully exposed to the market.
Our investment return record is found below:
FAM EQUITY-INCOME FUND AVERAGE ANNUAL RETURNS AS OF JUNE 30, 2003
<Table>
<Caption>
SINCE INCEPTION
1-YEAR 3-YEAR 5-YEAR (4/1/96)
2.19% 15.31% 6.90% 10.63%
</Table>
We believe the FAM Equity-Income Fund is made up of a collection of
wonderful companies. These companies are leaders in their markets and customers
seek out their goods and services. They are well managed and generate strong
cash flow. We have every confidence that they will be more valuable in the
future than they are today.
Thank you for your continued support and we hope you have a terrific summer.
Sincerely,
/s/ Paul Hogan /s/ Thomas O. Putnam
Paul Hogan, CFA Thomas O. Putnam
CO-MANAGER CO-MANAGER
19
<Page>
FAM EQUITY-INCOME FUND -- STATEMENT OF INVESTMENTS
JUNE 30, 2003 (UNAUDITED)
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (77.4%)
BANKING (5.4%)
Banknorth Group, Inc.
- MULTI-BANK HOLDING COMPANY IN PORTLAND, ME 42,200 $ 1,076,944
North Fork Bancorporation
- A BANK HOLDING COMPANY LOCATED ON LONG ISLAND, NY 73,000 2,486,380
South Trust Corporation
- BANK HOLDING COMPANY HEADQUARTERED IN ALABAMA 41,200 1,120,640
TrustCo Bank Corp NY
- OPERATES 54 BANK OFFICES IN UPSTATE NY 28,472 315,470
------------
4,999,434
------------
COMMERCIAL PRODUCTS (3.2%)
New England Business Services, Inc.
- LEADING SUPPLIER OF BUSINESS FORMS/PRINTED
PRODUCTS TO SMALL BUSINESSES IN U.S. 98,200 2,946,000
------------
COMMERCIAL SERVICES (2.0%)
ABM Industries, Inc.
- FACILITY SERVICES CONTRACTOR TO COMMERCIAL,
INDUSTRIAL AND INSTITUTIONAL CUSTOMERS
ACROSS NORTH AMERICA 27,100 417,340
McGrath RentCorp
- MODULAR BUILDING AND ELECTRONIC TEST EQUIPMENT
RENTALS, SUBSIDIARY CLASSROOM MANUFACTURING 53,700 1,435,938
------------
1,853,278
------------
COMPUTER SOFTWARE & SERVICES (2.8%)
Reynolds & Reynolds
- SOFTWARE FOR AUTOMOTIVE DEALERS AND BUSINESS FORMS 92,600 2,644,656
------------
CONSTRUCTION MATERIALS (5.7%)
Martin Marietta Materials
- PRODUCES AGGREGATES FOR THE CONSTRUCTION INDUSTRY 63,000 2,117,430
Vulcan Materials Company
- PRODUCES, DISTRIBUTES AND SELLS CONSTRUCTION
MATERIALS AND INDUSTRIAL AND SPECIALTY CHEMICALS 85,500 3,169,485
------------
5,286,915
------------
CONSUMER SERVICES (2.8%)
H&R Block, Inc.
- LEADER IN INDIVIDUAL AND SMALL BUSINESS TAX PREPARATION 14,000 605,500
ServiceMaster Company
- COMMERCIAL AND RESIDENTIAL SERVICE COMPANY 190,700 2,040,490
------------
2,645,990
------------
</Table>
See Notes to Financial Statements.
20
<Page>
<Table>
<Caption>
SHARES VALUE
HEALTH CARE SERVICES (0.6%)
Landauer, Inc.
- LEADER IN RADIATION TESTING AND PERSONAL DOSIMETERS 13,100 $ 547,973
------------
HOME FURNISHINGS (4.0%)
Ethan Allen Interiors, Inc.
- MANUFACTURES AND RETAILS HOME FURNISHINGS 107,000 3,762,120
------------
INSURANCE AGENCY (2.1%)
Brown & Brown, Inc.
- ONE OF THE LARGEST INDEPENDENT GENERAL
INSURANCE AGENCIES IN THE U.S. 60,600 1,969,500
------------
INVESTMENT MANAGEMENT (4.1%)
Federated Investors, Inc.
- PROVIDES INVESTMENT MANAGEMENT PRODUCTS
AND SERVICES PRIMARILY TO MUTUAL FUNDS 78,000 2,138,760
Waddell & Reed Financial, Inc.
- PROVIDES A WIDE RANGE OF INVESTMENT PRODUCTS
AND SERVICES THROUGH ITS SUBSIDIARIES, INCLUDING
MUTUAL FUNDS AND INSURANCE PRODUCTS 63,750 1,636,463
------------
3,775,223
------------
LIFE INSURANCE (4.0%)
Protective Life Corporation
- INDIVIDUAL AND GROUP LIFE/HEALTH INSURANCE
AND GUARANTEED INVESTMENT CONTRACTS 140,219 3,750,858
------------
MACHINERY & EQUIPMENT (9.8%)
IDEX Corporation
- MANUFACTURES PROPRIETARY, HIGHLY ENGINEERED
INDUSTRIAL PRODUCTS & PUMPS 89,425 3,240,762
Kaydon Corporation
- CUSTOM-ENGINEERS PRODUCTS INCLUDING
BEARINGS, FILTERS, AND PISTON RINGS 124,000 2,579,200
MOCON, Inc.
- MANUFACTURES PRECISION MEASUREMENT,
PROCESS SENSING, AND CONTROL INSTRUMENTS/SYSTEMS 24,000 174,000
Tennant Company
- MANUFACTURES COMMERCIAL AND INSTITUTIONAL
FLOOR MAINTENANCE EQUIPMENT AND PRODUCTS 84,295 3,097,841
------------
9,091,803
------------
MEDIA (2.6%)
Meredith Corporation
- MAGAZINE PUBLISHING & TV BROADCASTING 55,300 2,433,200
------------
PROPERTY AND CASUALTY INSURANCE (4.5%)
White Mountains Ins. Grp., Ltd.
- PERSONAL PROPERTY AND CASUALTY, AND REINSURANCE 10,575 4,177,125
------------
</Table>
See Notes to Financial Statements.
21
<Page>
<Table>
<Caption>
SHARES VALUE
PUBLISHING (6.2%)
Courier Corporation
- MANUFACTURES AND PUBLISHES SPECIALTY BOOKS,
INCLUDING DOVER PUBLICATIONS 32,100 $ 1,653,150
John Wiley & Sons, Inc.
- PUBLISHER OF PRINT AND ELECTRONIC PRODUCTS,
SPECIALIZING IN SCIENTIFIC, TECHNICAL PROFESSIONAL
AND MEDICAL BOOKS AND JOURNALS 155,350 4,070,170
------------
5,723,320
------------
RECREATION AND ENTERTAINMENT (4.8%)
International Speedway Corporation
- OWNS AND OPERATES AUTO RACING
TRACKS INCLUDING DAYTONA 84,800 3,350,448
Six Flags Preferred B 7.25%
- OPERATES REGIONAL THEME PARKS IN
U.S., MEXICO AND EUROPE 54,900 1,081,530
------------
4,431,978
------------
REGISTERED INVESTMENT COMPANY (3.7%)
Allied Capital Corp.
- VENTURE CAPITAL CORPORATION FOR
ENTREPRENEURS AND MANAGEMENT 147,514 3,407,573
------------
RETAIL STORES (6.5%)
Cato Corp.
- OPERATES WOMEN'S FASHION SPECIALTY STORES 192,400 4,055,792
Ross Stores, Inc.
- CHAIN OF OFF-PRICE RETAIL APPAREL
AND HOME ACCESSORIES STORES 47,200 2,017,328
------------
6,073,120
------------
TELECOMMUNICATIONS SERVICES (2.7%)
Hickory Tech Corp.
- SMALL LOCAL TELEPHONE COMPANY IN MINNESOTA 222,248 2,489,178
------------
TOTAL COMMON STOCKS (COST $66,686,223) $ 72,009,244
------------
<Caption>
PRINCIPAL
SHORT TERM OBLIGATIONS (22.6%)
U.S. Treasury Bills, 1.0%, with maturities to 7/17/03
(Cost $20,992,816) $ 21,000,000 20,992,816
------------
TOTAL INVESTMENTS (COST $87,679,039) $ 93,002,060
============
</Table>
See Notes to Financial Statements.
22
<Page>
FAM EQUITY-INCOME FUND
JUNE 30, 2003 (UNAUDITED)
STATEMENT OF ASSETS AND LIABILITIES
<Table>
ASSETS
Investment in securities at value
(Cost $87,679,039) $ 93,002,060
Cash at interest 3,278,379
Dividends and interest receivable 24,332
----------------------------------------------------------------------------
TOTAL ASSETS 96,304,771
----------------------------------------------------------------------------
LIABILITIES
Payable to investment advisor 78,644
Accrued expenses 57,311
----------------------------------------------------------------------------
TOTAL LIABILITIES 135,955
----------------------------------------------------------------------------
NET ASSETS
Source of Net Assets:
Net capital paid in on shares of beneficial interest $ 89,919,639
Undistributed net investment income 553
Accumulated net realized gains 925,603
Net unrealized appreciation 5,323,021
----------------------------------------------------------------------------
NET ASSETS $ 96,168,816
----------------------------------------------------------------------------
Net asset value per share; 5,749,679 shares
of beneficial interest outstanding (Note 3) $ 16.73
</Table>
See Notes to Financial Statements.
23
<Page>
FAM EQUITY-INCOME FUND
SIX MONTHS ENDED JUNE 30, 2003 (UNAUDITED)
STATEMENT OF OPERATIONS
<Table>
INVESTMENT INCOME
INCOME
Dividends $ 820,854
Interest 84,092
----------------------------------------------------------------------------
TOTAL INCOME 904,946
----------------------------------------------------------------------------
EXPENSES
Investment advisory fee (Note 2) 410,023
Administrative fee (Note 2) 30,752
Shareholder servicing and related expenses (Note 2) 13,842
Printing and mailing 14,935
Professional fees 14,584
Registration fees 25,067
Custodial fees 7,135
Trustees 19,755
Other 1,321
----------------------------------------------------------------------------
TOTAL EXPENSES 537,414
----------------------------------------------------------------------------
NET INVESTMENT INCOME 367,532
----------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments 925,527
Unrealized appreciation of investments 6,120,124
----------------------------------------------------------------------------
Net Gain on Investments 7,045,651
----------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 7,413,183
</Table>
See Notes to Financial Statements.
24
<Page>
FAM EQUITY-INCOME FUND
SIX MONTHS ENDED JUNE 30, 2003 (UNAUDITED) AND YEAR ENDED DECEMBER 31, 2002
STATEMENT OF CHANGES IN NET ASSETS
<Table>
<Caption>
SIX MONTHS YEAR ENDED
ENDED JUNE 30, DECEMBER 31,
2003 2002
CHANGE IN NET ASSETS FROM OPERATIONS:
Net investment income $ 367,532 $ 482,081
Net realized gain on investments 925,527 684,760
Unrealized appreciation
(depreciation) of investments 6,120,124 (4,969,651)
----------------------------------------------------------------------------
Net Increase (Decrease)
in Net Assets From Operations 7,413,183 (3,802,810)
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (362,066) (481,757)
Net realized gain on investments -- (556,807)
CAPITAL SHARE TRANSACTIONS (NOTE 3): 15,149,184 47,615,901
----------------------------------------------------------------------------
Total Increase in Net Assets 22,200,301 42,774,527
NET ASSETS:
Beginning of period 73,968,515 31,193,988
----------------------------------------------------------------------------
End of period $ 96,168,816 $ 73,968,515
============================================================================
</Table>
See Notes to Financial Statements.
25
<Page>
FAM EQUITY-INCOME FUND -- NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1. SUMMARY OF ACCOUNTING POLICIES
FAM Equity-Income Fund (the "Fund") is a series of Fenimore Asset Management
Trust, a no-load, diversified, open-end management investment company registered
under the Investment Company Act of 1940. The investment objective of the Fund
is to provide current income and long term capital appreciation from investing
primarily in income-producing equity securities. The following is a summary of
significant accounting policies followed in the preparation of its financial
statements.
a) VALUATION OF SECURITIES
Securities traded on a national securities exchange or admitted to trading on
NASDAQ are valued at the last reported sales price. Common stocks for which
no sale was reported, and over-the-counter securities, are valued at the last
reported bid price. Short-term securities are carried at amortized cost,
which approximates 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.
b) FEDERAL INCOME TAXES
It is the Fund's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all of its taxable income to its shareholders. Therefore, no provision for
federal income tax is required.
c) USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of increases and decreases in net assets from operations
during the reporting period. Actual results could differ from those
estimates.
d) OTHER
Securities transactions are recorded on trade date. Realized gains and losses
on securities sold are determined on the basis of identified cost. Interest
income is accrued as earned and dividend income is recorded on the
ex-dividend date. Distributions to shareholders, which are determined in
accordance with income tax regulations, are recorded on the ex-dividend date.
NOTE 2. INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Under the Investment Advisory Contract, the Fund pays an investment advisory fee
to Fenimore Asset Management, Inc. (the "Advisor") equal, on an annual basis, to
1% of the Fund's average daily net assets. Certain officers and trustees of the
Fund are also officers and directors of the Advisor. The Investment Advisory
Contract requires the Advisor to reimburse the Fund for its expenses to the
extent that such expenses, including the advisory fee, for the fiscal year
exceed 2% of the average daily net assets. For the period ending June 30, 2003
the Advisor contractually agreed to reimburse the Equity-Income Fund for its
expenses to the extent such expenses exceed 1.40% of the average daily net
assets. No such reimbursement was required for the period ending
26
<Page>
June 30, 2003. FAM Shareholder Services, Inc. (FSS), a company under common
control with the Advisor, serves as shareholder servicing agent and receives a
monthly fee of $2.00 per shareholder account. Additionally, FSS serves as the
fund administrative agent and receives a fee equal, on an annual basis, to
0.075% of the Fund's average daily net assets. Fenimore Securities, Inc. (FSI),
a company also under common control with the Advisor, acts as distributor of the
Fund's shares.
NOTE 3. SHARES OF BENEFICIAL INTEREST
At June 30, 2003 an unlimited number of $.001 par value shares of beneficial
interest were authorized. Transactions were as follows:
<Table>
<Caption>
SIX MONTHS ENDED 6/30/03 YEAR ENDED 12/31/02
SHARES AMOUNT SHARES AMOUNT
Shares sold 2,413,000 $ 37,707,980 5,669,584 $ 92,287,496
Shares issued on
reinvestment of dividends 20,311 322,462 60,055 937,056
Shares redeemed (1,469,766) (22,881,258) (2,887,060) (45,608,651)
------------------------------------------------------------------------------------------------
Net increase 963,545 $ 15,149,184 2,842,579 $ 47,615,901
------------------------------------------------------------------------------------------------
</Table>
NOTE 4. INVESTMENT TRANSACTIONS
During the period ended June 30, 2003, purchases and sales of investment
securities, other than short term obligations were $9,364,285 and $3,575,380.
The cost of securities for federal income tax purposes is substantially the same
as shown in the investment portfolio.
The aggregate gross unrealized appreciation and depreciation of portfolio
securities, based on cost for federal income tax purposes, was as follows:
<Table>
Unrealized appreciation $ 8,525,222
Unrealized depreciation (3,202,201)
------------
Net unrealized appreciation $ 5,323,021
============
</Table>
NOTE 5. LINE OF CREDIT
FAM Equity-Income Fund has a line of credit up to 33 1/3% of total net assets or
a maximum of $10,000,000. Borrowings under the agreement bear interest at the
prime rate as announced by the lending bank. The line of credit is available
until December 1, 2003 when any advances are to be repaid. During the period
ended June 30, 2003 no amounts were drawn from the available line.
27
<Page>
NOTE 6. FINANCIAL HIGHLIGHTS
FAM EQUITY-INCOME FUND FINANCIAL HIGHLIGHTS
<Table>
<Caption>
SIX MONTHS
ENDED JUNE 30, YEARS ENDED DECEMBER 31,
PER SHARE INFORMATION
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD) 2003 2002 2001 2000 1999 1998
NET ASSET VALUE, BEGINNING OF PERIOD $ 15.45 $ 16.05 $ 13.47 $ 12.31 $ 13.53 $ 13.20
-------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.07 0.12 0.19 0.31 0.27 0.28
Net realized and unrealized
gain (loss) on investments 1.28 (0.48) 2.58 1.76 (1.22) 0.33
-------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.35 (0.36) 2.77 2.07 (0.95) 0.61
-------------------------------------------------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment income (0.07) (0.12) (0.19) (0.31) (0.27) (0.28)
Distributions from net realized gains -- (0.12) -- (0.60) -- --
-------------------------------------------------------------------------------------------------------------------------------
Total distributions (0.07) (0.24) (0.19) (0.91) (0.27) (0.28)
-------------------------------------------------------------------------------------------------------------------------------
Change in net asset value for the period 1.28 (0.60) 2.58 1.16 (1.22) 0.33
-------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 16.73 $ 15.45 $ 16.05 $ 13.47 $ 12.31 $ 13.53
===============================================================================================================================
TOTAL RETURN 8.74% (2.25)% 20.79% 17.18% (6.98)% 4.67%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000) $ 96,169 $ 73,969 $ 31,194 $ 6,892 $ 6,653 $ 6,725
Ratios to average net assets of:
Expenses total 1.31%* 1.37% 1.56% 2.27% 2.12% 2.09%
Expenses, net of fees waived and
expenses assumed by advisor 1.31%* 1.37% 1.50% 1.50% 1.50% 1.50%
Net investment income 0.44% 0.84% 1.29% 2.33% 2.15% 2.17%
Portfolio turnover rate 5.39% 7.11% 2.79% 16.59% 13.49% 10.55%
</Table>
*Annualized
NOTE 7. SUBSEQUENT EVENT REGARDING CLASSES OF SHARES OF THE FUND
Effective July 1, 2003, the Fund began offering its shares of beneficial
interest in two separate share classes: Investor Class Shares and Advisor Class
Shares. All of the shares of the Fund that were issued and outstanding as of
July 1, 2003 have been designated as Investor Class Shares.
28
<Page>
INVESTMENT ADVISOR
Fenimore Asset
Management, Inc.
Cobleskill, NY
CUSTODIAN
U.S. Bank, N.A.
Cincinnati, OH
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers, LLP
New York, NY
TRUSTEES
Joseph A. Bucci
Joseph J. Bulmer, PhD
David A. Hughey
Fred "Chico" Lager
C. Richard Pogue
Thomas O. Putnam
LEGAL COUNSEL
Dechert, LLP
Washington, DC
SHAREHOLDER SERVICING AGENT
FAM Shareholder Services, Inc.
Cobleskill, NY
DISTRIBUTOR
Fenimore Securities, Inc.
Cobleskill, NY
[FAM FUNDS LOGO]
384 North Grand Street
PO Box 399
Cobleskill, New York 12043-0399
(800) 932-3271
www.famfunds.com
<Page>
[FAM FUNDS LOGO]
384 North Grand Street
PO Box 399
Cobleskill, New York 12043-0399
(800) 932-3271
www.famfunds.com
FINANCIAL PEACE OF MIND THROUGH A VALUE APPROACH TO INVESTING
<Page>
ITEM 2. CODE OF ETHICS.
Disclosure requirement not currently effective.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Disclosure requirement not currently effective.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Disclosure requirement not currently effective.
ITEM 5 - 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES
Not applicable.
ITEM 8. [RESERVED]
ITEM 9. 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-2) 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 significant changes in the registrant's internal controls or
in factors that could affect these controls subsequent to the date of their
evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.
ITEM 10. EXHIBITS.
File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(a) Disclosure requirement not currently effective.
(b) 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.
<Page>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Fenimore Asset Management Trust
-----------------------------------------------------------
By (Signature and Title)* /s/ Thomas O. Putnam
-----------------------------------------------
Thomas O. Putnam, President
Date August 7, 2003
-----------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ Thomas O. Putnam
--------------------------------------------
Thomas O. Putnam, President
Date August 7, 2003
------------------------------------------------------------
By (Signature and Title)* /s/ Joseph A. Bucci
--------------------------------------------
Joseph A. Bucci, Treasurer
Date August 7, 2003
------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.