Fenimore Asset Management Trust N-CSRCertified annual shareholder report (management investment company)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT

INVESTMENT COMPANIES

Michael F. Balboa

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. § 3507.

TABLE OF CONTENTS

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.

FAM VALUE FUND

December 31, 2021

Dear Fellow Value Fund Shareholder,

The year 2021 was a fantastic year in U.S. equity markets in our view. The S&P 500, an index of the largest U.S. companies, returned 28.7% while the Russell Midcap Index, our stated benchmark, returned 22.6%.¹ We believe it was also a fantastic year for the FAM Value Fund. Not only did we achieve benchmark-beating returns of 25.6% for the year, but we made a tremendous addition to the Value Fund’s management team in October (more on this later).

It is often said, “The stock market is not the economy.” Indeed, this was true in 2020 when the S&P 500 returned 18.4% despite a 3.4% decline in U.S. Real Gross Domestic Product (GDP) and one of the deepest recessions on record.² This year, however, strong equity returns were driven by a vaccine-fueled rebound in economic activity. Though the final numbers aren’t in as of this writing, the U.S. economy (as measured by real GDP) is expected to have grown 5.6% (the fastest rate since 1984). Of course, this is in comparison to 2020’s decline; but if you zoom out, we’re nearly back on track with our pre-covid trendline of economic growth.

GDP relates to the “sales” of American companies and while sales growth is great, as owners of businesses we’re keenly interested in the earnings those sales produce. From that perspective, we could not be more pleased with the performance of our portfolio companies. Granted, growing earnings is easier when sales are growing, but many U.S. firms, including many of our holdings, faced tremendous cost pressures. For many reasons, inflation in everything including raw materials, transportation, and labor created profitability headwinds this year. Despite these pressures, our portfolio companies, collectively, grew earnings much faster than sales through adept strategic decisions, stringent management of costs, productivity improvements and, occasionally, price increases. A skilled management team is often crucial to a good investment experience. The last couple of years have confirmed that we’ve invested in what we believe are some of the best in American business.

While growth in meme stocks, SPACs, cryptocurrencies, and non-fungible tokens (NFTs) garnered many financial headlines, the Value Fund’s returns came from an increase in:

We’ve owned many of these businesses for several years and some for more than a decade. The year 2021 was a reminder that, despite the fascination with new, esoteric assets, wealth can be grown owning solid, durable, well-run and, by some people’s measure, boring businesses.

Portfolio Activity

In this year’s semi-annual letter, we characterized our trading activity in the first half of the year as “quiet.” Extending that metaphor, you could hear a pin drop in the second half as valuations continued to rise and volatility remained very low.

FAM VALUE FUND

Purchases

We purchased one new security, Clarivate (CLVT) , and added to two existing positions, Fidelity National Information Services (FIS) and Black Knight (BKI), in the Value Fund during the second half of the year.

Clarivate (CLVT) is an information services company that provides database and workflow solutions to end markets that focus on the creation and protection of new ideas and products such as academia, life sciences, intellectual property law, and other innovation-intensive fields. Their products range from the leading citation database for scientific journals to the most comprehensive database detailing patents in the world. Most of their products are #1 or #2 in their markets, are subscription-based (80% of CLVT’s revenue is recurring), and are deeply ingrained in the workflow of their clients as evidenced by a retention rate of 91%. Most experts and users of their products that we talked to could not imagine a workday without them. These are all qualities we love in an information business.

But we’re not just betting on a great horse, we’re betting on a great jockey too. CEO Jerre Stead has had a long and successful career of buying high- quality, but undermanaged, businesses and vastly improving their earnings power through a combination of internal fixes and strategic acquisitions. His most recent such endeavor prior to Clarivate was IHS Markit and he is using the same playbook at Clarivate that did so well at IHS.

We also added substantially to our Fidelity National Information Services (FIS) position throughout the year. FIS is essentially a financial technology company that provides software critical to running banks and investment firms (~70% of revenue). It also processes payments, including credit and debit card transactions, for more than one million businesses throughout the world (~30% of revenue). It has one of the highest quality rankings in the Value Fund according to our internal scoring system. FIS was a performance detractor in 2021 despite impressive earnings growth and improving prospects.

The primary reason for this divergence is that some investors fear that new ways of paying for goods and services (e.g., buy-now-pay-later and cryptocurrencies) will significantly reduce the amount spent with credit and debit cards. Indeed, many firms in the “payments” industry, including Visa and Mastercard (not Value Fund holdings), performed poorly in 2021 on these fears. We feel that these fears are overblown. There has always been innovation in payment methods and we estimate that there is plenty of growth left for traditional formats for years to come as cash and check continue to convert to electronic forms of payment. Also, the 70% of FIS revenue tied to enabling the critical infrastructure of banks and investment firms continues to grow impressively and take market share from competitors. We like FIS and will look for opportunities to continue to build our position.

Sales

In the first half of the year, we sold all our shares of First Hawaiian Bank (FHB), Heico Corporation (HEI.A), STERIS (STE), The Hanover Insurance Group (THG), and White Mountains Insurance Group (WTM). Please see our discussion of these sales in our semi-annual letter as of June 30, 2021. During the second half of 2021, we sold all our shares of stock in Landstar (LSTR) and Home BancShares (HOMB) while trimming our holding of Berkshire Hathaway (BRK.A).

We started buying Landstar (LSTR) in August of 2017 and added to it opportunistically over the past four years. It was a terrific holding from our viewpoint. Landstar is a leading trucking company that owns no trucks and employs no drivers, which is why we like it. The business has been able to grow impressively without spending owner earnings on expensive tractors or having to recruit and keep drivers, a notoriously difficult endeavor. Instead, they lease the trucks of a growing fleet of independent owner/operators. These owner/operators agree to drive only for Landstar during their lease in exchange for access to the firm’s long list of available loads to haul. They love driving for Landstar because they can pick load combinations that optimize their income and quality of life. 

FAM VALUE FUND

Landstar is earning record profits in an environment of supply chain disruptions and increasing demand for goods. We feel this supply/demand imbalance will moderate over time causing LSTR’s earnings growth to slow — or even reverse — making it difficult to earn attractive returns from these levels. That said, this was our second time owning the company and perhaps there may be a third.

We sold our very small stake in Home BancShares (HOMB) to fund purchases of other businesses. Home is a great bank, in our opinion, with a dynamic, skilled leader in John Allison. We like the bank and think it will continue to take share in its served communities.

We trimmed our Berkshire Hathaway (BRK.A) position to fund purchases of securities we thought had better return prospects. We think Warren Buffett and his partner Charlie Munger have built a business that will compound value well beyond their years, but the size of the company and the mix of businesses will likely be a governor on that growth.

Closing Thoughts

In our 2021 semi-annual letter, we said the year was “unfolding very much as we expected” with the resumption of a pre-COVID way of life; however, we included the cautionary reminder that, of course, “no one knows.” One risk we were watching at that time was the emergence of the Delta variant. Here we are a half-year later and Delta has come and mostly gone, but now the Omicron variant is rapidly sweeping the nation. No one knows. We think, however, that the underpinnings of the economic recovery from the COVID recession remain in place: unemployment is low, jobs are plentiful, wages are rising, consumer confidence is high, business confidence is strong, interest rates are historically low, and personal and corporate balance sheets are in good shape. If initial indications that the new variant will be significantly less harmful than past variants, the economic engine should continue to power corporate earnings growth in 2022. That said, we are keeping an eye on inflation and interest rates. If either get too high, it could dampen both economic growth and investment returns.

Finally, as you may already know, in October Marc Roberts joined the management team of the FAM Value Fund. Marc was co-manager of the FAM Small Cap Fund from 2012 to 2016 before relocating to Chicago. During the intervening time, we stayed in close contact with him, both as friends and as peers. He is a very skilled analyst and portfolio manager and adds a fresh perspective to our team. We couldn’t be happier to have him back in the fold.

Thank you for investing with us in the FAM Value Fund.

TOP 5 CONTRIBUTORS AND DETRACTORS*

12/31/2020 TO 12/31/2021

Top 5 Contributors 

This reflects the FAM Value Fund’s best and worst performers, in descending order, based on individual stock performance and portfolio weighting. Past performance does not indicate future results. 

FAM VALUE FUND

Top 5 Detractors

Past performance does not indicate future results.

John D. Fox, CFA	Drew P. Wilson, CFA	Marc D. Roberts, CFA
Portfolio Manager	Portfolio Manager	Portfolio 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.

FAM VALUE FUND — Performance Summary Continued

December 31, 2021 (Unaudited)

The chart below depicts the change in value of a $10,000 investment in the Investor Shares of the FAM Value Fund since inception on January 2, 1987, as compared with the growth of the Russell Midcap Index, the Fund’s primary benchmark index, and the Standard & Poor’s 500 Index, an additional comparative index, during the same period. The information assumes reinvestment of dividends and capital gain distributions. The Russell Midcap Index is an unmanaged index generally representative of the market for the stocks of mid-size U.S. companies. The Standard &   Poor’s 500 Index is an unmanaged index generally representative of the market for the stocks of large size U.S. companies. Investors cannot invest directly in an index.

COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN FAM VALUE FUND,

THE RUSSELL MIDCAP INDEX AND THE S&P 500 INDEX

This information represents past performance of the FAM Value Fund and is not indicative of future results. The investment return and the principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. 

FAM VALUE FUND — Performance Summary Continued

December 31, 2021 (Unaudited)

AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2021

The performance data quoted represents past performance.

Past performance is not indicative of future results, current performance may be lower or higher than the performance date quoted. Investment returns may fluctuate; the value of your investment upon redemption may be more or less than the initial amount invested.

Please consider a fund’s investment objectives, risks, charges and expenses carefully before investing. The FAM Funds prospectus or summary prospectus contains this and other important information about the FAM Value Fund and should be read carefully before you invest or send money. The principal risks of investing in the Funds are: stock market risk (stocks fluctuate in response to the activities of individual companies and to general stock market and economic conditions), stock selection risk (Fenimore utilizes a value approach to stock selection and there is risk that the stocks selected may not realize their intrinsic value, or their price may go down over time), and small-cap risk (prices of small-cap companies can fluctuate more than the stocks of larger companies and may not correspond to changes in the stock market in general).

To obtain a prospectus or summary prospectus and performance data that is current to the most recent month-end for each fund as well as other information on the FAM Value Fund, please go to famfunds.com or call (800) 932-3271.

This presentation was prepared by Fenimore Asset Management, Inc. (“Fenimore”). Neither this presentation nor any of its contents may be distributed or used for any other purpose without the prior written consent of Fenimore.

In part, the purpose of this presentation is to provide investors with an update on financial market conditions. The description of certain aspects of the market herein is a condensed summary only. This summary does not purport to be complete and no obligation to update or otherwise revise such information is being assumed. These materials are provided for informational purposes only and are not otherwise intended as an offer to sell, or the solicitation of an offer to purchase, any security or other financial instrument. This summary is not advice, a recommendation or an offer to enter into any transaction with Fenimore or any of their affiliated funds

This presentation may contain statements based on the current beliefs and expectations of Fenimore’s management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements.

Any references herein to any of Fenimore’s past or present investments, portfolio characteristics, or performance, have been provided for illustrative purposes only. It should not be assumed that these investments were or will be profitable or that any future investments will be profitable or will equal the performance of these investments. There can be no guarantee that the investment objectives of Fenimore will be achieved. Any investment entails a risk of loss. Unless otherwise noted, information included herein is presented as of the date indicated on the cover page and may change at any time without notice.

FAM VALUE FUND — Portfolio Data

December 31, 2021 (Unaudited)

TOP 10 HOLDINGS

AS OF 12/31/2021

The portfolios are actively managed and current holdings may be different.

FAM VALUE FUND — Portfolio Data Continued

December 31, 2021 (Unaudited)

Statement Regarding Availability of Quarterly Portfolio Schedule. Please note that (i) the Fund files its complete schedule of portfolio holdings with the U.S. Securities and Exchange Commission (the “Commission”) as of the end of the first and third quarters of each fiscal year as an exhibit to Form N-PORT; (ii) the complete listing is available on the Commission’s website at www.sec.gov; and (iii) the Fund makes the exhibit to Form N-PORT available to shareholders at fenimoreasset.com, or upon request, by calling FAM FUNDS at 1-800-932-3271.

FAM VALUE FUND — Schedule of Investments

December 31, 2021

See Notes to Financial Statements

FAM VALUE FUND — Schedule of Investments Continued

December 31, 2021

See Notes to Financial Statements

FAM DIVIDEND FOCUS FUND

December 31, 2021

Dear Fellow Dividend Focus Fund Shareholder,

2021 Highlights

The Dividend Focus Fund posted strong results for the year returning 25.57%, which was well ahead of the Russell Midcap Index. The main contributor to performance was our commitment to letting the compounders compound.

The investment environment over the last 12 months was characterized by a multitude of crosscurrents and shifting investment themes. Investor sentiment bounced between optimism over the reopening of the economy following vaccinations to worries about supply chain disruptions and runaway inflation — and then back to a new COVID variant that could shut down world economies again.

The other side of the coin was the strong economic backdrop as the U.S. economy continued to strengthen throughout the year and companies grew more confident in their outlook. This confidence came from strong demand that translated into record sales and earnings for many businesses. This was also true of our overall portfolio holdings which showed nice earnings growth throughout the year. In most cases, our holdings were on track to have generated record earnings in 2021. We also saw businesses go on the offensive and make acquisitions to grow and bolster their competitive position. More than two-thirds of our portfolio companies made at least one acquisition in 2021. In total, our holdings announced 87 deals, which includes 42 deals by Arthur J. Gallagher alone. Companies have also returned to opening new stores, increasing share buybacks, and growing their dividends.

Dividends

Investing in dividend-paying companies that have a long track record of growing their dividend is a hallmark of the Dividend Focus Fund. In fact, every holding pays a dividend. We view management’s willingness to pay a dividend and raise that dividend each year as a sign of confidence in their company’s future prospects. We also believe that a growing dividend makes a firm’s management team extra sharp on their capital allocation since there is less room for error in making growth investments or acquisitions.

During the early months of the pandemic, many dividend-paying companies held their dividends constant in order to conserve cash due to the uncertain environment. Over the past year, the Dividend Focus Fund’s holdings developed greater confidence in the future and resumed their normal dividend growth.

For 2021, the average growth rate in dividends of each holding in the portfolio was 10.2%, which is up approximately 3 points over the 7% growth the previous year (this excludes Ross Stores due to no comparison the previous year and Digital Realty Trust which is being sold). Over the last five years, the portfolio holdings have increased their dividends by 13.4% annually¹ — again, we view this as tangible evidence of managements’ confidence in their future growth.

Performance Contributors and Detractors

Performance continues to be led by the largest holdings in the Dividend Focus Fund. A holding gets to be large by performing well and appreciating its way to becoming a top holding. We like to think of the Top 10 Holdings as a performance meritocracy. A company has to perform in order to make it into a top position and it has to continue to perform to maintain its spot on the list.

FAM DIVIDEND FOCUS FUND

Our three largest contributors to performance in 2021 were CDW Corporation (CDW), Trane Technologies (TT), and Arthur J. Gallagher & Co. (AJG).

CDW is expected to grow earnings more than 18% for the year and announced a large acquisition of Sirius Computer Solutions. Overall, the company announced 3 deals over the last 12 months. The dividend was increased 10% in 2021 and has grown 29% annually for the last 5 years.

Trane Technologies’ earnings are expected to grow 35% for the year setting a new record. The company has benefited from higher demand of HVAC equipment as well as higher prices, which are passed on to offset higher costs. The business increased their dividend by 11% during the year.

Arthur J. Gallagher & Co. is an insurance broker that has a long history of acquiring smaller firms and tucking them into their operations. In 2021, the company continued its strong earnings growth and made 42 acquisitions during the year. AJG increased its dividend by 7% over the previous year.

Our three largest detractors were Ross Stores (ROST), McCormick & Company (MKC), and Jack Henry & Associates (JKHY).

Ross Stores posted a massive increase in sales and strong same-store sales; however, higher transportation costs, COVID -related expenses, and wage inflation ate into their margins. We believe that the off -price retail concept is alive and well and Ross should be able to expand their margins over the next few years. During the year, Ross reinitiated their dividend at the pre-pandemic level and resumed their share buyback program.

While McCormick is competitively advantaged, there is uncertainty about what the baseline growth in their consumer spice businesses will be now that we are past the virus lockdowns when the company saw huge spikes in demand. McCormick is also spending a considerable amount on an ERP (Enterprise Resource Planning) system which is muting earnings (likely for the next year or so). We trimmed this position previously based on our muted outlook for near-term earnings growth. As the company’s growth profile ideally returns to historical rates, we plan to add to the position. McCormick raised their dividend 10% during the year.

Jack Henry & Associates turned in a good financial performance for the year, but the valuation contracted from previous levels. We are pleased with the firm’s operating results as well as their future growth prospects. Based on our research of their competitive position, we believe they can continue to grow their operation mid to high single digits going forward. Jack Henry raised the dividend 7% during the year.

Portfolio Activity

Portfolio changes in the Dividend Focus Fund were modest for the year after taking advantage of many opportunities in 2020 during the pandemic and adding 7 new names.

Purchases

In 2021, there were no new positions initiated. The only trades were mostly small additions to 11 holdings. The most significant additions were to Republic Services (RSG), Jack Henry & Associates, and STERIS (STE). The other trades were primarily putting cash inflows to work at various points throughout the year.

Sales

We trimmed five positions — Digital Realty Trust (DLR), Microchip Technology (MCHP), Entegris (ENTG), Avery Dennison Corporation (AVY), and T. Rowe Price Group (TROW). The most significant trim was Digital Realty as we are slowly exiting the position for better opportunities.

FAM DIVIDEND FOCUS FUND

Outlook

We believe the outlook for the portfolio is solid and that we own a collection of businesses that punch higher than their weight class (to use a boxing analogy). We like all the holdings in the FAM Dividend Focus Fund and expect them to continue to grow their earnings and dividends for many years to come.

As always, we are diligently working on your behalf. Thank you for investing with us.

TOP 5 CONTRIBUTORS AND DETRACTORS*

12/31/2020 TO 12/31/2021

Top 5 Contributors

This reflects the FAM Dividend Focus Fund’s best and worst performers, in descending order, based on individual stock performance and portfolio weighting. Past performance does not indicate future results.

Top 5 Detractors

Past performance does not indicate future results.

Paul C. Hogan, CFA	William W. Preston, CFA
Portfolio Manager	Portfolio 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.

FAM DIVIDEND FOCUS FUND

The Morningstar Rating^TM is a quantitative assessment of a fund’s past performance — both return and risk — as measured from 1 to 5 stars. It uses focused comparison groups to better measure fund manager skill. As always, the Morningstar Rating^TM is intended for use as the first step in the fund evaluation process. A high rating alone is not a sufficient basis for investment decisions.

The Morningstar Rating^TM for funds, or “star rating”, is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three -year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product’s monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10 -year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods.

The FAM Dividend Focus Fund received a 5-Star Overall Morningstar RatingTM as well as a 5-Star Morningstar Rating^TM for the 3-Year, a 5-Star Morningstar Rating^TM for the 5-Year, and a 5-Star Morningstar Rating^TM for the 10-Year periods ending 12/31/2021 among 352, 308, and 203 Mid-Cap Blend funds, respectively.

©   2022 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.

FAM DIVIDEND FOCUS FUND — Performance Summary Continued

December 31, 2021 (Unaudited)

The chart below depicts the change in value of a $10,000 investment in the FAM Dividend Focus Fund since inception on April 1, 1996, as compared with the growth of the Russell Midcap Index, the Fund’s primary benchmark index, and the Standard and Poor’s 500 Index, an additional comparative index, during the same period. The information assumes reinvestment of dividends and capital gain distributions. The Russell Midcap Index is an unmanaged index generally representative of the market for the stocks of mid-size U.S. companies. The Standard and Poor’s 500 Index is an unmanaged index generally representative of the market for the stocks of large size U.S. companies. Investors cannot invest directly in an index.

COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN FAM DIVIDEND FOCUS FUND,
THE RUSSELL MIDCAP INDEX AND THE S&P 500 INDEX

This information represents past performance of the FAM Dividend Focus Fund and is not indicative of future results. The investment return and the principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost.

FAM DIVIDEND FOCUS FUND — Performance Summary Continued

December 31, 2021 (Unaudited)

AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2021

The performance data quoted represents past performance.

Past performance is not indicative of future results, current performance may be lower or higher than the performance date quoted. Investment returns may fluctuate; the value of your investment upon redemption may be more or less than the initial amount invested.

Please consider a fund’s investment objectives, risks, charges and expenses carefully before investing. The FAM Funds prospectus or summary prospectus contains this and other important information about the FAM Dividend Focus Fund and should be read carefully before you invest or send money. The principal risks of investing in the Funds are: stock market risk (stocks fluctuate in response to the activities of individual companies and to general stock market and economic conditions), stock selection risk (Fenimore utilizes a value approach to stock selection and there is risk that the stocks selected may not realize their intrinsic value, or their price may go down over time), and small-cap risk (prices of small-cap companies can fluctuate more than the stocks of larger companies and may not correspond to changes in the stock market in general).

To obtain a prospectus or summary prospectus and performance data that is current to the most recent month-end for each fund as well as other information on the FAM Dividend Focus Fund, please go to famfunds.com or call (800) 932-3271.

This presentation was prepared by Fenimore Asset Management, Inc. (“Fenimore”). Neither this presentation nor any of its contents may be distributed or used for any other purpose without the prior written consent of Fenimore.

In part, the purpose of this presentation is to provide investors with an update on financial market conditions. The description of certain aspects of the market herein is a condensed summary only. This summary does not purport to be complete and no obligation to update or otherwise revise such information is being assumed. These materials are provided for informational purposes only and are not otherwise intended as an offer to sell, or the solicitation of an offer to purchase, any security or other financial instrument. This summary is not advice, a recommendation or an offer to enter into any transaction with Fenimore or any of their affiliated funds.

This presentation may contain statements based on the current beliefs and expectations of Fenimore’s management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements.

Any references herein to any of Fenimore’s past or present investments, portfolio characteristics, or performance, have been provided for illustrative purposes only. It should not be assumed that these investments were or will be profitable or that any future investments will be profitable or will equal the performance of these investments. There can be no guarantee that the investment objectives of Fenimore will be achieved. Any investment entails a risk of loss. Unless otherwise noted, information included herein is presented as of the date indicated on the cover page and may change at any time without notice. 

FAM DIVIDEND FOCUS FUND — Portfolio Data

December 31, 2021 (Unaudited)

TOP 10 HOLDINGS

AS OF 12/31/2021

The portfolios are actively managed and current holdings may be different. 

FAM DIVIDEND FOCUS FUND — Portfolio Data Continued 

December 31, 2021 (Unaudited)

Statement Regarding Availability of Quarterly Portfolio Schedule. Please note that (i) the Fund files its complete schedule of portfolio holdings with the U.S. Securities and Exchange Commission (the “Commission”) as of the end of the first and third quarters of each fiscal year as an exhibit to Form N-PORT; (ii) the complete listing is available on the Commission’s website at www.sec.gov; and (iii) the Fund makes the exhibit to Form N-PORT available to shareholders at fenimoreasset.com, or upon request, by calling FAM FUNDS at 1-800-932-3271.

FAM DIVIDEND FOCUS FUND — Schedule of Investments 

December 31, 2021

See Notes to Financial Statements

FAM DIVIDEND FOCUS FUND — Schedule of Investments Continued

December 31, 2021

See Notes to Financial Statements

FAM SMALL CAP FUND

December 31, 2021

Dear Fellow Small Cap Fund Shareholder,

For 2021, the FAM Small Cap Fund achieved a total return of 27.72% for Investor Shares and 27.82% for Institutional Shares. These returns are net-of-fees and represent outperformance of 12.90% and 13.00%, respectively, compared to the total return of 14.82% for the Russell 2000 Index (the benchmark we use for performance comparisons). Since its inception on March 1, 2012, the Small Cap Fund has returned 12.96% for Investor Shares and 13.04% for Institutional Shares versus the Russell 2000’s 12.35%.

As a reminder, we focus exclusively on what we consider to be quality companies with strong leadership and a solid financial position. These businesses usually have some competitive advantage which allows them to be more profitable and/or grow faster than their peers. Furthermore, we want to invest in these potential jewels at reasonable, if not attractive, valuations. This typically means that the business is “under a cloud” (i.e., temporarily stumbling) or “under a rock” (i.e., unknown by many investors) at the time of purchase. Our hope is that if we get all this right, then our holdings should be much larger and more profitable in the future. This in turn should lead to healthy returns for us shareholders.

Our focus on quality means we ignore certain industries and numerous companies. Of the roughly 2,000 businesses in our investable universe, many are average in our opinion. Many others are hopelessly tied to an unpredictable commodity price, which makes any predictions of future earnings extremely difficult and thus hard to invest in from our viewpoint. Others are on the wrong side of disruption and face a highly uncertain future as newer, and often technology-enabled, competitors chip away at their customer base.

We also avoid speculation. A speculator buys a stock just because it has been going up and hopes it will continue to increase so they can sell it to some other over-excited investor. Or they buy shares in a young, exciting company that promises to disrupt an established industry, yet they don’t bother to do the work to understand the sustainability of any competitive advantages or the underlying unit economics of the business. Other speculators, usually with no real unique insights, bet on unproven, development-stage drugs with the hope that they will “win the lottery” and the drug makes it through a multi-year process and ultimately wins FDA approval.

There will be times when the stock prices of what we consider to be lower quality firms boom, such as when commodity prices rise and there are regular waves of speculation.

We have certainly seen quite a lot of this the past few years. However, we believe the path to long-term success is best served by owning a portfolio of quality businesses that, on average, can be much larger and more valuable in the future under a variety of economic and political conditions.

Sure, our holdings may be temporarily impacted by the macro events of the day, but we believe that most control their own destinies and we find great comfort knowing that most are regularly adding to their earnings power. For example, our retailers systematically add more stores (each a potential profit center). Our banks consistently add more depositors and borrowers, often by out serving what we believe are bloated and sluggish “megabanks.” Our software firms keep adding customers who wish to displace manual processes and use data to eliminate costs. If our businesses keep adding the building blocks of new customers, new products and services, and more, then they should ultimately be considerably larger and more profitable in the future.

Finally, we like the recurring nature of many of our holdings. While not true in every case, many have fairly consistent revenue streams. A quick glance at the Small Cap Fund’s portfolio should find many steady and ideally growing businesses in food, water, funerals, taxes, insurance, auto and home repairs, healthcare, software subscriptions, etc. While recurring revenue businesses are not always as exciting during economic booms, they can be much easier to own under challenging conditions. Additionally, the lower volatility in earnings makes predicting the future much simpler, thus hopefully leading to fewer analytical mistakes. 

FAM SMALL CAP FUND

Performance Contributors and Detractors

Our five largest contributors to performance in 2021 were ExlService Holdings (EXLS), Carriage Services (CSV), Colliers International Group (CIGI), Trisura Group (TSU), and CBIZ (CBZ). These five are a nice demonstration of much of what we try to do as investors. All have grown profits at a healthy clip and we think should continue to do so. Each was initially purchased when they were either under a cloud or under a rock. For example, we bought our first shares in ExlService Holdings in 2016 after they reported a disappointing quarter. We bought shares in Trisura in 2020 when the world was emerging from the worst days of COVID-19 and few investors knew about this small Toronto company developing an impressive insurance services business.

Additionally, we added to our positions in four of the five companies during the last two years when the stock prices declined for a variety of reasons.

Our five largest detractors were Ollie’s Bargain Outlet Holdings (OLLI), Paya Holdings (PAYA), Frontdoor (FTDR), Healthcare Services Group (HCSG), and US Physical Therapy (USPH). The well-known supply chain issues and related explosion in shipping costs impacted both Ollie’s, a discount retailer, and Frontdoor, a home warranty company that struggled to source both repair parts and appliances.

Furthermore, the “sellers’ market” in existing housing meant fewer sellers provided home warranty plans as an inducement to attract buyers. In both cases, we think these short-term issues should eventually abate and that they have great long-term outlooks. We added to both positions in 2021.

Paya got caught up in a broad sell-off in payments stocks just after our initial purchase at what we estimated was a reasonable valuation. Investor concerns have many subtexts, but they seem to be primarily concerned that disrupters are seeking to route payments away from the traditional Visa and Mastercard systems (not held in the Small Cap Fund). After much research, we concluded that Paya seems largely insulated from such a risk and thus added to our position.

As you might expect during a global pandemic, the healthcare services industry has been facing considerable challenges. Healthcare Services Group provides housekeeping, laundry, and food services to senior housing operators. Between years of suboptimal changes in Medicare reimbursement levels and then virus-reducing occupancy levels, many senior housing operators are facing severe financial distress. Some are unable to pay their suppliers. Ultimately, we decided that despite our admiration for Healthcare Services Group, the easier path was to sell the stock and move on. It is hard to build a good business when your customers are regularly distressed.

The last name on the detractors’ list, US Physical Therapy, partners with physical therapists to build practices. Early on during COVID, volumes declined as fewer people had surgeries (e.g., hip replacements) or sports injuries. Volumes have rebounded nicely, but the stock has been under pressure seemingly because a competitor has repeatedly posted disappointing results, there are concerns about upcoming Medicare rate cuts, and there are fears that the new Omicron variant will impact volumes. We continue to believe US Physical Therapy has a bright future and are comfortable holding our shares.

Portfolio Activity

We entered the year with, in our opinion, a fine collection of quality businesses run by impressive leadership teams. So, we did not feel much pressure to find many new ideas. However, ultimately, we believe that our team did find opportunities to upgrade the portfolio.

Purchases

During 2021, we purchased five new ideas and added to several of our favorite positions. While perhaps not considered as “exciting” as finding new ideas, experience has shown us that adding shares to companies we know very well can be quite rewarding. Even in years of exceptional overall returns, individual stocks can show considerable price volatility, giving us opportunities to buy shares at an attractive price. Our largest addition in 2021 was the purchase of more shares in Ollie’s Bargain Outlet Holdings (OLLI). 

FAM SMALL CAP FUND

Our five new positions in 2021 were:

Dream Finders Homes (DFH) is a home builder run by what we believe is a dynamic leadership team with a bit of an unorthodox approach to home building. Most builders use debt to buy land in bulk and then gradually sell lots as homes are built, which has two drawbacks. First, growth requires spending ever-increasing amounts to buy raw land so many home builders generate little real cash flows over the years. More significantly, whenever recessions hit, traditional home builders often get stuck with vast tracts of unsold land and scary levels of unpaid debt.

By using options, Dream Finders works with land developers and purchases one lot at a time, but typically only when a customer has agreed to buy the home. This does cost a bit more, but by better matching the timing of cash inflows (from the customer) to cash outflows (to the land developer), Dream Finders is an “asset-light” business generating considerable amounts of free cash flow and industry-leading returns on equity. With more free cash flow, Dream Finders should be able to grow faster than a typical home builder. The current environment of good demand, but cost inflation and delays from component shortages, is definitely tricky; however, management seems to be adapting well and we believe that the company should be much larger and significantly more profitable in the future.

Cass Information Systems (CASS) is a mix of both a large payments processor and a modest-sized bank. We owned stock in CASS during 2012 and 2013, but sold it after a significant and rapid return. During and after the virus-induced economic slowdown and decline in short-term interest rates, Cass returned to what we estimated was a more reasonable valuation. We believe our attractive entry point should allow us to earn fine returns even if interest rates remain low, with potentially even better returns if short- term interest rates rise.

On the payments side, Cass takes all the shipping and utility bills for many large businesses, searches for errors, pays the bills, and provides customers with useful data to better manage these costs. Through expertise and economies of scale, Cass can usually do this cheaper and better than in-house operations. Cass earns both processing fees and “float” income (interest income from holding the payments from their clients for a few days before paying the individual vendors). Processing should grow from adding new customers as well as from the underlying growth at existing customers.

On the bank side, Cass uses both traditional bank deposits and the float from the processing business to invest in bonds and loans. Cass has been an excellent lender with immaterial credit losses over at least the past 20 years — in part by focusing on loans to megachurches, fast food franchises, trucking companies they know from processing payments, and small businesses around St. Louis.

Our third new investment was Paya Holdings (PAYA), an electronic payments gateway integrated in more than 2,000 business-to-business software packages. Once a payments gateway is integrated, software vendors can then offer remote card and ACH payments to their end users, typically small businesses and nonprofits. Paya connects these payments to the major transaction networks and provides value-added services such as generating invoices, establishing recurring payments, and flowing the data back into the customer’s other software systems to eliminate manual reconciliations. Paya favors industries where domain expertise is valuable such as doctors’ offices, municipalities, schools, churches, and political campaigns. Growth results from a combination of factors including the growth at existing merchants, adding new merchants, and adding new software system partners serving additional industries.

Ryan Specialty Group (RYAN) is a wholesale insurance broker and managing underwriter that provides distribution, underwriting, product development, administration, and risk management services. Revenue is generated primarily through commissions and fees. For retail insurance brokers, the firm assists in the placement of complex or otherwise hard-to-place risks. For insurance carriers, the company works with retail and wholesale insurance brokers to source, onboard, underwrite, and service these same risks. While there will undoubtedly be some insurance cycles to contend with, we really like the long-term growth picture of more underlying demand for insurance from economic growth, inflation, and newer types of risk (e.g., cyber insurance) combined with a consolidating market where the strong players like Ryan should only get stronger. 

FAM SMALL CAP FUND

Chemed (CHE) is a bit of an oddity. It is a holding company with what we believe are two impressive but unrelated businesses — Vitas, the largest hospice care operator in the U.S., and Roto -Rooter, known primarily for emergency plumbing repairs. Both units grow modestly with, ordinarily, little cyclicality while generating significant amounts of free cash flow. One of the keys to the story, in our opinion, is management’s excellent capital allocation skills. While Chemed will make acquisitions, they avoid large, expensive, and risky deals. Instead, they focus on a combination of occasional low-risk purchases of Roto-Rooter franchises and significant repurchases of outstanding shares. The combination of solid but modest revenue growth, expanding profit margins, bolt-on acquisitions, and a shrinking share count led to impressive earnings per share growth. For example, adjusted earnings per share rose from $4.17 in 2010 to $18.08 in 2020.¹

We have long admired Chemed and its leadership team, but finding an attractive valuation to purchase shares was difficult. Finally, in 2021, the stock declined primarily on fears that the aftereffects of COVID will depress earnings in the hospice business and this afforded us what we considered an attractive entry price. It is undeniably true that the coronavirus led to fewer people entering nursing homes and nursing homes tend to identify patients in need of hospice care earlier than primary care physicians and families. As a result, this led to fewer hospice patients and thus lower earnings for the Vitas division. However, it seems likely to us that in time patterns should return to normal and hospice-related profits should rebound. Additionally, it helps that the Roto- Rooter business continues to grow swiftly and management continues to repurchase shares.

Sales

We trimmed five holdings in 2021, mostly because we thought the valuations were high enough that doing so made sense. Experience has taught us that unless valuations are quite extreme, selling shares in what we believe are wonderful businesses often leads to disappointment and regret. Therefore, our goal is to trim positions only when the odds are highly in our favor. Usually, we only trim small amounts and look to repurchase the shares later at better prices if possible.

Furthermore, we sold eight entire positions. Generally speaking, these sales fell into two categories:

Closing Thoughts

Although there are many things to worry about as we exit 2021 such as inflation, supply chain troubles, and the potential for higher interest rates, we feel very comfortable with the FAM Small Cap Fund’s portfolio. Undoubtedly, while we could witness positive or disappointing surprises in several investments, we believe, on average, they should prove to be quality businesses run by first-class leaders that operate with a safe financial condition and have the potential to be much larger in 5 to 10 years.

FAM SMALL CAP FUND

Our plans for 2022 are similar to past years. We have several projects under way to dig even deeper into our existing holdings; this includes finding additional industry experts to speak with about these operations. We are not “buy-and-hold” investors, but more “buy-and-keep-learning” investors. Our team is also studying some potentially interesting opportunities. However, our best opportunities are usually to keep picking up additional shares in existing positions when they go “on sale.”

As always, we are grateful and honored that you trust us with your hard-earned capital. Thank you for investing with us in the FAM Small Cap Fund.

TOP 5 CONTRIBUTORS AND DETRACTORS* 

12/31/2020 TO 12/31/2021

Top 5 Contributors

This reflects the FAM Small Cap Fund’s best and worst performers, in descending order, based on individual stock per-formance and portfolio weighting. Past performance does not indicate future results.

Top 5 Detractors

Past performance does not indicate future results.

Andrew F. Boord	Kevin D. Gioia, CFA
Portfolio Manager	Portfolio 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.

FAM SMALL CAP FUND

every holding’s contribution to the overall fund’s performance during the time period shown, please call (800) 932-3271 or visit the fund’s website at famfunds.com. Portfolio composition will change due to ongoing management of the fund. References to individual securities are for informational purposes only and should not be construed as an offer or a recommendation, by the fund, the portfolio managers, or the fund’s distributor, to purchase or sell any security or other financial instrument. The summary is not advice, a recommendation or an offer to enter into any transaction with Fenimore or any of its affiliated funds. The portfolio holdings as of the most recent quarter most recent quarter.

FAM SMALL CAP FUND — Performance Summary Continued

December 31, 2021 (Unaudited)

The chart below depicts the change in the value of a $10,000 investment in the Investor Shares of the FAM Small Cap Fund, since inception on March 1, 2012 as compared with the growth of the Russell 2000 Index, the Fund’s primary benchmark index, and the Standard & Poor’s 500 Index, an additional comparative index, during the same period. The information assumes reinvestment of dividends and capital gain distributions. The Russell 2000 Index is an unmanaged index generally representative of the market for the stocks of smaller size U.S. companies. The Standard & Poor’s 500 Index is an unmanaged index generally representative of the market for the stocks of large size U.S. companies. Investors cannot invest directly in an index.

COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN 

FAM SMALL CAP FUND, THE RUSSELL 2000 INDEX AND THE S&P 500 INDEX

This information represents past performance of the FAM Small Cap Fund and is not indicative of future results. The investment return and the principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. 

FAM SMALL CAP FUND — Performance Summary Continued 

December 31, 2021 (Unaudited)

AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2021 

The performance data quoted represents past performance.

Past performance is not indicative of future results, current performance may be lower or higher than the performance date quoted. Investment returns may fluctuate; the value of your investment upon redemption may be more or less than the initial amount invested.

Please consider a fund’s investment objectives, risks, charges and expenses carefully before investing. The FAM Funds prospectus or summary prospectus contains this and other important information about the FAM Small Cap Fund and should be read carefully before you invest or send money. The principal risks of investing in the Funds are: stock market risk (stocks fluctuate in response to the activities of individual companies and to general stock market and economic conditions), stock selection risk (Fenimore utilizes a value approach to stock selection and there is risk that the stocks selected may not realize their intrinsic value, or their price may go down over time), and small-cap risk (prices of small-cap companies can fluctuate more than the stocks of larger companies and may not correspond to changes in the stock market in general).

To obtain a prospectus or summary prospectus and performance data that is current to the most recent month-end for each fund as well as other information on the FAM Small Cap Fund, please go to famfunds.com or call (800) 932-3271.

This presentation was prepared by Fenimore Asset Management, Inc. (“Fenimore”). Neither this presentation nor any of its contents may be distributed or used for any other purpose without the prior written consent of Fenimore.

In part, the purpose of this presentation is to provide investors with an update on financial market conditions. The description of certain aspects of the market herein is a condensed summary only. This summary does not purport to be complete and no obligation to update or otherwise revise such information is being assumed. These materials are provided for informational purposes only and are not otherwise intended as an offer to sell, or the solicitation of an offer to purchase, any security or other financial instrument. This summary is not advice, a recommendation or an offer to enter into any transaction with Fenimore or any of their affiliated funds

This presentation may contain statements based on the current beliefs and expectations of Fenimore’s management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements.

Any references herein to any of Fenimore’s past or present investments, portfolio characteristics, or performance, have been provided for illustrative purposes only. It should not be assumed that these investments were or will be profitable or that any future investments will be profitable or will equal the performance of these investments. There can be no guarantee that the investment objectives of Fenimore will be achieved. Any investment entails a risk of loss. Unless otherwise noted, information included herein is presented as of the date indicated on the cover page and may change at any time without notice. 

FAM SMALL CAP FUND — Portfolio Data 

December 31, 2021 (Unaudited)

TOP 10 HOLDINGS 

AS OF 12/31/2021

The portfolios are actively managed and current holdings may be different. 

FAM SMALL CAP FUND — Portfolio Data Continued

December 31, 2021 (Unaudited)

Statement Regarding Availability of Quarterly Portfolio Schedule. Please note that (i) the Fund files its complete schedule of portfolio holdings with the U.S. Securities and Exchange Commission (the “Commission”) as of the end of the first and third quarters of each fiscal year as an exhibit to Form N-PORT; (ii) the complete listing is available on the Commission’s website at www.sec.gov; and (iii) the Fund makes the exhibit to Form N-PORT available to shareholders at fenimoreasset.com, or upon request, by calling FAM FUNDS at 1-800-932-3271. 

FAM SMALL CAP FUND — Schedule of Investments

December 31, 2021

See Notes to Financial Statements 

FAM SMALL CAP FUND — Schedule of Investments Continued

December 31, 2021

See Notes to Financial Statements

See Notes to Financial Statements

See Notes to Financial Statements

FAM FUNDS — Statements of Changes in Net Assets

See Notes to Financial Statements

FAM FUNDS — Statements of Changes in Net Assets

See Notes to Financial Statements

FAM FUNDS — Statements of Changes in Net Assets

See Notes to Financial Statements

Note 1.  Nature of Business and Summary of Significant Accounting Policies

FAM Value Fund, FAM Dividend Focus Fund and FAM Small Cap Fund (individually a “Fund”, and collectively, the “Funds”) are each a series of Fenimore Asset Management Trust, a diversified, open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”).

Each Fund is authorized to issue two classes of shares: Investor Shares and Institutional Shares. The Investor Shares and the Institutional Shares represent interests in the same portfolio of investments in each Fund, however, each class of shares is subject to different expenses and have different investment minimums. Each share class has exclusive voting rights with respect to matters that affect just that class of shares. As of the date of this report, Institutional Shares of the FAM Dividend Focus Fund are not currently offered.

The investment objective of the FAM Value Fund is to maximize long-term return on capital. The investment objective of the FAM Dividend Focus Fund is to provide current income and long-term capital appreciation from investing primarily in income-producing equity securities. The investment objective of the FAM Small Cap Fund is to maximize long-term return on capital.

Each Fund is an investment company and accordingly follows accounting and reporting guidance of the Financial Accounting Standards Board Accounting Standards Codification Topic 946 “Financial Services – Investment Companies.” The following is a summary of each Fund’s significant accounting policies, which are in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and followed by the Funds in the preparation of their financial statements.

Each Fund values its portfolio securities at market value as of the close of regular trading on the New York Stock Exchange, Inc. (the “NYSE”) (normally 4:00 p.m. Eastern time) on each business day that the NYSE is open for business. 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. Securities for which no sale was reported, over-the-counter securities, and 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 other open-end investment companies, including money market funds, are valued at their net asset value (“NAV”) as reported by such companies.

GAAP establishes a three-tier framework for measuring fair value based on a hierarchy of inputs. The hierarchy distinguishes between market data obtained from independent sources (observable inputs) and the Funds’ own market assumptions (unobservable inputs).

These inputs are used in determining the value of each Fund’s investments. These inputs are summarized in the three broad levels listed below:

Level 1 – quoted prices in active markets for identical securities

Level 2 – other significant observable inputs (including quoted prices for identical securities in inactive markets and quoted prices for similar securities)

Level 3 – significant unobservable inputs (including each Fund’s own assumptions in determining the fair value of investments)

The inputs or methods used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety is determined based on the lowest level input that is significant to the fair value measurement.

The following is a summary of each Fund’s investments and the inputs used to value the investments as of December 31, 2021:

The Funds did not hold any derivative instruments or any assets or liabilities that were measured at fair value on a recurring basis using significant unobservable inputs (Level 3) as of or during the year ended December 31, 2021.

Refer to each Fund’s Schedule of Investments to view securities segregated by industry type.

Investment transactions are recorded on trade date. Realized gains and losses on investments sold are determined on the basis of identified cost.

Interest income, if any, is accrued as earned, and dividend income is recorded on the ex-dividend date. Withholding taxes on foreign dividends have been recorded in accordance with the Trust’s understanding of the applicable country’s tax rules and tax rates. Non-cash dividends are included in dividend income on the ex-dividend date at the fair market value of the shares received. The Funds record distributions received in excess of income from underlying investments as a reduction of cost of investments and/ or realized gain. Such amounts are based on estimates if actual amounts are not available, and actual amounts of income, realized gain and return of capital may differ from the estimated amounts. The Funds adjust the estimated amounts of the components of distributions (and consequently its net investment income) as an increase to unrealized appreciation (depreciation) and realized gain (loss) on investments as necessary once the issuers provide information about the composition of the distributions.

The NAV per share of each class of shares of each Fund is calculated daily by dividing the total value of a Fund’s assets attributable to that class, less liabilities attributable to that class, by the number of shares of that class outstanding.

Dividends from net investment income are declared and paid quarterly by the FAM Dividend Focus Fund, if applicable. Dividends from net investment income, if any, are declared and paid on an annual basis by each of the FAM Value Fund and FAM Small Cap Fund. Dividends are declared separately for each share class. No share class has preferential dividend rights; differences in per share rates are due to differences in the expenses of each share class. Net realized capital gains, if any, are distributed at least annually. Distributions from net investment income and from net realized capital gains are determined in accordance with U.S. income tax regulations, which may differ from GAAP. Permanent book and tax basis differences, if any, are reclassified among the components of net assets. Dividends and distributions to shareholders are recorded on the ex-dividend date.

It is each Fund’s policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income to its shareholders. Therefore, no provision for federal income or excise tax is required.

GAAP requires uncertain tax positions to be recognized, measured, presented and disclosed in the financial statements. For the year ended December 31, 2021, management has evaluated the tax positions taken or expected to be taken in the course of preparing each Fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained upon review 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 its evaluation, management has determined that no liability for unrecognized tax expense is required. All open tax years (generally, three years) remain subject to examination by U.S. and New York taxing authorities. No examination of the Funds’ tax filings is presently in progress.

Expenses of the Trust not attributable solely to one of the Funds are allocated among the Funds based on relative net assets of each Fund or the nature of the expense and the relative applicability to each Fund.

Investment income earned, realized capital gains and losses, and unrealized appreciation and depreciation are allocated daily to each Class of a Fund based upon its proportionate share of total net assets of that Fund. Class-specific expenses are charged directly to the Class incurring the expense. Common expenses which are not attributable to a specific Class are allocated daily to each Class of shares of a Fund based upon its proportionate share of total net assets of that Fund.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and 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.

Note 2.  Investment Advisory Fees and Other Transactions with Affiliates

Investment Advisory Agreement

Under an Investment Advisory Agreement, each Fund pays an investment advisory fee to Fenimore Asset Management, Inc. (the “Advisor”) equal, on an annual basis, to 0.90% of its average daily net assets. In addition, under a Business Management Agreement, each Fund pays a business management fee to the Advisor equal, on an annual basis, to 0.03% of its average daily net assets. During the year ended December 31, 2021, the Adviser earned $14,418,653, $5,264,511 and $2,641,193 of fees under the Investment

Advisory Agreement for FAM Value Fund, FAM Dividend Focus Fund and FAM Small Cap Fund, respectively and earned $480,777, $175,583 and $88,090 of fees under the Business Management Agreement for FAM Value Fund, FAM Dividend Focus Fund and FAM Small Cap Fund, respectively.

Expense Limitation Agreement

Pursuant to an Expense Limitation Agreement (the “ELA”) entered into between the Advisor and the Trust, on behalf of each Fund, the Advisor has contractually agreed, until May 1, 2022, to reduce its fees and/or reimburse certain expenses (excluding interest, taxes, brokerage costs, Acquired Fund Fees and Expenses, dividend expense, litigation, indemnification or extraordinary expenses) to the extent necessary to maintain annual operating expenses of each class of shares of each of the Funds as follows: for the Investor Shares: 1.18% for FAM Value Fund, 1.26% for FAM Dividend Focus Fund and 1.42% for FAM Small Cap Fund; and for the Institutional Shares: 0.99% for FAM Value Fund, 1.10% for FAM Dividend Focus Fund and 1.20% for FAM Small Cap Fund.

During the year ended December 31, 2021, pursuant to the terms of the ELA, the Advisor reduced its fees for FAM Value Fund in the amount of $59,466. The FAM Dividend Focus Fund and the FAM Small Cap Fund did not have any advisory fee reductions during the year ended December 31, 2021.

The Advisor may be reimbursed by the Funds for any fees waived pursuant to the ELA if such payment is made within three years of the fee waiver and does not cause the total annual Fund operating expenses after fee waiver (excluding interest, taxes, brokerage costs, Acquired Fund Fees and Expenses, dividend expense, litigation, indemnification or extraordinary expenses) of the Funds to exceed the lesser of (i) the then-current expense limit and (ii) the expense limit in place at the time the waiver. During the year ended December 31, 2021, the Advisor recouped $25,000 of prior years’ investment advisory fee reductions from the Investor Class of the FAM Value Fund. As of December 31, 2021, the amounts of previously reduced fees that the Advisor may recoup from the FAM Value Fund are shown below, along with the expiration dates of such recoupments:

Shareholder Administration Services

The Funds have adopted Shareholder Administrative Services Plans (the “Plans”) for each class of shares pursuant to which each Fund may pay shareholder administrative servicing fees to the Advisor and to financial intermediaries for providing, or arranging for the provision of, certain types of shareholder administrative services to shareholders of each respective class of shares that are serviced by the Advisor, affiliates of the Advisor or the financial intermediary. Pursuant to the Shareholder Administrative Services Plan for Investor Shares, the Investor Shares of each Fund may pay shareholder administrative servicing fees of up to 0.25% per annum of the average daily net assets allocable to Investor Shares of each respective Fund; and pursuant to the Shareholder Administrative Services Plan for Institutional Shares, the Institutional Shares of each Fund may pay shareholder administrative servicing fees of up to 0.15% per annum of the average daily net assets allocable to Institutional Shares of each respective Fund.

For the year ended December 31, 2021, shareholder administrative fees incurred pursuant to the Plans were as follows:

Shareholder Account Services

Pursuant to the terms of the Shareholder Account Services Agreement between the Funds and the Advisor, for the purpose of providing or procuring shareholder account services, with respect to the Investor Shares of the Funds, the Advisor receives a fee at the annual rate of 0.11% of the average daily net assets allocable to the Investor Shares of each Fund, and, pursuant to the terms of the Shareholder Account Services Agreement between the Funds and the Advisor with respect to the Institutional Shares of the Funds, the Advisor receives a fee at the annual rate of 0.03% of the average daily net assets allocable to the Institutional Shares of each Fund. For the year ended December 31, 2021, shareholder account servicing fees incurred by the Funds to the Advisor were as follows:

Fund Accounting

The Advisor serves as the fund accounting agent and receives a fee at the annual rate of 0.07% on each Fund’s average daily net assets. For the year ended December 31, 2021, the Funds’ fund accounting fees incurred to the Advisor amounted to:

Distribution Agreement

Fenimore Securities, Inc. (“FSI”), a company also under common control with the Advisor, acts as distributor of the Funds’ shares. FSI receives no compensation for providing distribution services from the Funds.

Compliance

Ultimus Fund Solutions, LLC (“Ultimus”) provides the Chief Compliance Officer to the Funds, as well as certain additional compliance support functions. The Funds pay Ultimus fees in accordance with the agreement for such services. During the year ended December 31, 2021, the fee paid by each Fund for such services was $20,000.

Other

The Advisor has entered into a Master Services Agreement with Ultimus, pursuant to which Ultimus provides day-to-day operational services to each Fund including, but not limited to, accounting, administrative, co-transfer agency services and recordkeeping services. The fees payable to Ultimus are paid by the Advisor (not the Funds).

A Trustee and certain officers of the Trust are also officers or employees of the Advisor, FIS, or Ultimus, as applicable.

Note 3.  Shares of Beneficial Interest

At December 31, 2021, an unlimited number of shares of beneficial interest ($0.001 par value) of each Fund were authorized.

Transactions for each Fund are as follows: