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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT

OF REGISTERED MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number 811-04750

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Fenimore Asset Management Trust

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(Exact name of registrant as specified in charter)

384 North Grand Street

P.O. Box 399

Cobleskill, New York 12043

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(Address of principal executive offices) (Zip code)

Thomas O. Putnam

Fenimore Asset Management Trust

384 North Grand Street

Cobleskill, New York 12043

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(Name and address of agent for service)

Registrant's telephone number, including area code: 1-800-453-4392

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Date of fiscal year end: December 31

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Date of reporting period: June 30, 2012

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Form N-CSR is to be used by management investment companies to file reports with

the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1).

The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.

A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange

Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. ss. 3507.

Item 1. Reports to Stockholders.

The semi-annual report to stockholders is filed herewith.

VALUE FUND

Investor Share Class and Advisor Share Class

EQUITY-INCOME FUND

Investor Share Class and Advisor Share Class

SMALL CAP FUND

Investor Share Class

SEMI-ANNUAL REPORT

JUNE 30, 2012

THIS PAGE IS INTENTIONALLY LEFT BLANK

Table of Contents

Chairman’s Commentary

Expense Data

FAM Value Fund

Letter to Shareholders

Portfolio Data

Statement of Investments

FAM Equity-Income Fund

Letter to Shareholders

Portfolio Data

Statement of Investments

FAM Small Cap Fund

Letter to Shareholders

Portfolio Data

Statement of Investments

Statement of Assets and Liabilities

Statement of Operations

Statement of Changes in Net Assets

Notes to Financial Statements

Supplemental Information

FAM Funds has adopted a Code of Ethics that applies to its principal

executive and principal financial officers. You may obtain a copy of this Code

without charge, by calling FAM Funds at (800) 932-3271.

Chairman’s Commentary

Dear Fellow Shareholders:

When we established Fenimore Asset Management (the investment advisor to

FAM Funds) in 1974, we set out to: maximize investors’ total return on capital by

seeking quality stocks at a discount with long-term growth potential; focus on

personal relationships; and earn our investors’ trust. Over the years, Fenimore

has established additional investment options and services based upon investor

feedback and our in-house expertise while maintaining our philosophy and

process.

Today, FAM Funds offers an excellent family of funds that are available to help

you achieve your long-term financial goals. They are the FAM Value Fund, FAM

Equity-Income Fund, and FAM Small Cap Fund. I feel that each fund can play an

important role in your investment portfolio.

Here is an overview of the individual funds:

FAM Value Fund (FAMVX) • 1/2/87 Launch

We launched our flagship Fund in 1987 just before the stock market crash. This

did not deter us. In fact, in recent years the Value Fund has been recognized for its

time-tested investment approach, longevity, and consistency of portfolio managers.

For 25 years we have been working steadfastly for our shareholders through mul-

tiple economic and financial market cycles.

FAM Value Fund’s investment objective is to maximize long-term return on capital.

The Fund seeks both appreciation and, to a lesser degree, dividend income. These

constitute the two principle components of a common stock’s investment return.

FAMVX distributions are paid annually.

FAM Equity-Income Fund (FAMEX) • 4/1/96 Launch

Research shows that cash dividends can be very important to overall investment

returns. Dividends are also predictable and can provide stability during turbulent

markets. We seek high-quality, dividend-paying companies that continue to grow

their dividends over time.

FAM Equity-Income Fund’s investment objective is to provide current income as

well as long-term capital appreciation by investing primarily (at least 80% of its

total assets) in income-producing stocks that pay dividends. FAMEX distributes its

Chairman’s Commentary

income on a quarterly basis.

FAM Small Cap Fund (FAMFX) • 3/1/12 Launch

There are thousands of small-sized businesses. The key is to have the research

depth and expertise to discover the high-quality ones with long-term potential.

FAM Funds has invested in small-cap stocks since our beginning and we know

them well.

The FAM Small Cap Fund’s investment objective is to maximize long-term return

on capital. Under normal market conditions, the Fund invests at least 80% of its

net assets for investment purposes in securities of small-cap companies. The Fund

considers small-cap businesses to have market capitalizations of between $50

million and $1 billion, measured at the time of purchase. FAMFX distributions are

paid annually.

Throughout our history, FAM Funds has been acknowledged in the mutual fund

industry for characteristics such as our stewardship, portfolio managers’ tenure,

consistency of investment process, preservation of capital, and tax efficiency. I

encourage you to read the semi-annual letters of the three funds to gain insights

into how the portfolios fared through the first half of 2012 and understand our long-

term outlook.

If you have any questions, please call one of our in-house FAM Shareholder Ser-

vices representatives at 800-932-3271. Thank you for your enduring trust.

Sincerely,

Thomas O. Putnam

FAM Funds — Expense Data

As of June 30, 2012 (Unaudited)

As a shareholder of the Funds, you incur two types of costs: (1) transaction costs, including

redemption fees on the Advisor Class Shares; and (2) ongoing costs, including management

fees; distribution (and/or service) (12b-1 fees on the Advisor Class Shares only) fees; and

other Fund expenses. This Example is intended to help you understand your ongoing costs (in

dollars) of investing in the Funds and to compare these costs with the ongoing costs of invest-

ing in other mutual funds.

The Example is based on an investment of $1,000 at the beginning of the period and held for

the entire period (1/1/2012 to 6/30/2012).

Actual Expenses

Lines (A) and (B) of the following tables provide information about actual account values and

actual expenses for Investor Class Shares and Advisor Class Shares (if applicable), respec-

tively. You may use the information in this line, together with the amount you invested, to es-

timate the expenses that you paid over the period. Simply divide your account value by $1,000

(for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the

number in the line for your share class under the heading entitled “Expenses Paid During

Period” to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

Lines (C) and (D) of the following table provide information about hypothetical account val-

ues and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate

of return of 5% per year before expenses, which is not the Fund’s actual return for the Inves-

tor Class Shares and Advisor Class Shares, respectively. The hypothetical account values and

expenses may not be used to estimate the actual ending account balance or expenses you

paid for the period. You may use this information to compare the ongoing costs of investing

in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5%

hypothetical examples that appear in the shareholder reports of other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs

only and do not reﬂect any transactional costs, such as redemptions fees. Therefore, lines (C)

and (D) of the table are useful in comparing ongoing costs only, and will not help you deter-

mine the relative costs of owning different funds. In addition, if these transactional costs were

included, your costs would have been higher.

FAM Funds — Expense Data continued

Six Months Ended June 30, 2012 (Unaudited)

FAM Value Fund

Beginning

Ending

Expenses

Account Value

Paid

1/1/2012

6/30/2012

During Period

Ongoing Costs Based on Actual Fund Return

A. Investor Share Class

$1,000.00

$1,068.70

$ 6.17*

B. Advisor Share Class

$1,000.00

$1,067.40

$11.31**

Ongoing Costs Based on Hypothetical

5% Yearly Return

C. Investor Share Class

$1,000.00

$1,019.03

$ 6.02*

D. Advisor Share Class

$1,000.00

$1,014.06

$11.02**

*Expenses are equal to the Fund’s Investor Class Shares annualized expense ratio of (1.20%), multiplied by the

average account value over the period, multiplied by 182/366 (to reﬂect the one-half year period).

**Expenses are equal to the Fund’s Advisor Class Shares annualized expense ratio of (2.20%), multiplied by the

average account value over the period, multiplied by 182/366 (to reﬂect the one-half-year period).

FAM Equity-Income Fund

Beginning

Ending

Expenses

Account Value

Paid

1/1/2012

6/30/2012

During Period

Ongoing Costs Based on Actual Fund Return

A. Investor Share Class

$1,000.00

$1,049.20

$ 6.78*

B. Advisor Share Class

$1,000.00

$1,044.50

$11.84**

Ongoing Costs Based on Hypothetical

5% Yearly Return

C. Investor Share Class

$1,000.00

$1,018.39

$ 6.67*

D. Advisor Share Class

$1,000.00

$1,013.41

$11.66**

*Expenses are equal to the Fund’s Investor Class Shares annualized expense ratio of (1.33%), multiplied by the

average account value over the period, multiplied by 182/366 (to reﬂect the one-half year period).

**Expenses are equal to the Fund’s Advisor Class Shares annualized expense ratio of (2.33%), multiplied by the

average account value over the period, multiplied by 182/366 (to reﬂect the one-half-year period).

FAM Funds — Expense Data continued

Four Months Ended June 30, 2012 (Unaudited)

FAM Small Cap Fund

Beginning

Ending

Expenses

Account Value

Paid

3/1/2012*

6/30/2012

During Period

Ongoing Costs Based on Actual Fund Return

A. Investor Share Class

$1,000.00

$1,007.00

$5.02**

B. Advisor Share Class (Not Offered)

Ongoing Costs Based on Hypothetical

5% Yearly Return

C. Investor Share Class

$1,000.00

$1,020.00

$5.05**

D. Advisor Share Class (Not Offered)

*Inception date is 3/1/2012

**Expenses are equal to the Fund’s Investor Class Shares annualized expense ratio of (1.50%), multiplied by the

average account value over the period, multiplied by 122/366 (to reﬂect the four month period).

FAM Value Fund

Dear Fellow Value Fund Shareholder:

At June 30, 2012 the Net Asset Value of the Investor Class of the FAM Value Fund

was $48.25. This represents an increase of 6.87% from the beginning of the year.

For comparison, the S&P 500 Index increased 9.49% and the Russell 2000 Index

increased 8.53%.

2012 Review Year-to-Date

Stocks came out of the gate quickly with the S&P 500 reaching a four-year high

in April. At that time the FAM Value Fund Net Asset Value reached a new all-

time high, recouping the entire decline experienced during the financial crisis of

2008/09. Since that high point, stock prices ended the quarter about 4% below

their peak. The reason for this decline was the usual suspect – the financial

problems in Europe. Continuing a pattern of the previous two years, it seems that

the European financial problems come to a head in the springtime. As we write this

letter, the European leaders have just concluded their 19th special summit meeting

to address their problems. We suspect there will be more meetings. In addition to

the issues in Europe, it is clear that the world economy is decelerating with both

China and the United States reporting a slight slowdown. In spite of these trends,

stocks have provided a good return year-to-date with solid gains of 6% to 10%,

depending on the index used to measure results.

Portfolio Activity

With stock prices advancing earlier in the year, we were a net seller of stocks

trimming seven positions. The most significant sale was 40% of our White

Mountains Insurance position. The company initiated a tender offer for its own

shares and we took the opportunity to sell 40,000 shares to White Mountains at

$500 a share. We continue to own shares in the company.

We purchased three new ideas in the first six months of the year. The most

significant purchase was Interpublic Group (IPG). Interpublic is a global advertising

agency with headquarters in New York City. We believe that IPG is the best

bargain stock in its industry and has significant opportunity to use its cash ﬂow

to pay down high-cost liabilities, repurchase its shares, and pay dividends. We

also purchased shares in two new companies in the energy industry, Evolution

Petroleum and Southwestern Energy.

FAM Value Fund

Performance Detail

Best Performers

The best performer, on a dollar-weighted basis, was Ross Stores (+32%) for a gain

of almost $9 million. Ross recently reported another record fiscal year with earnings

per share growth of 24% over the previous year. This was the fourth year in a row

where earnings grew more than 20%. Shoppers continue to be attracted to Ross’

offering of brand name clothes at discount prices.

The second best performer was Brown & Brown (+21%) for a gain of more than

$8 million. Brown & Brown is an insurance agency serving small- and mid-sized

businesses across the United States. A good first quarter earnings report and

the continuing trend of increasing insurance premium rates provided a positive

environment for the stock.

The Fund’s third best performer was White Mountains Insurance (+15%) with

a gain of $4.2 million. White Mountains is an insurance holding company with

two primary assets: OneBeacon Insurance and White Mountains Reinsurance. In

addition, the corporation has $1.5 billion in cash and investments which can be

used for future opportunities. We sold some shares during the year, but the stock

remains one the Fund’s largest holdings.

Worst Performers

The worst performer, on a dollar-weighted basis, was CarMax (-15%)

generating a loss of almost $3 million. CarMax runs a nationwide network of

used car superstores. The stock price declined as the business reported slightly

disappointing earnings growth for the current fiscal year. We believe the CarMax

model of transparent used car pricing and clear financing alternatives should

continue to be well received by consumers. CarMax continues its mission to build

more stores and be the dominant used car retailer.

The second worst performer was EOG Resources (-8%) with a loss of $1.6 million.

EOG is a domestic energy producer with significant land holdings in the largest

oil fields in the country. EOG is the biggest land owner in the Eagle Ford Shale in

Texas and a significant land owner in The Bakken in North Dakota. As a major oil

producer, EOG’s stock price moves with the price of oil which has declined about

30% from its peak price of $110 reached in February.

FAM Value Fund

The third worst performer was MEDNAX, Inc. (-5%) with a loss of $1.5 million.

MEDNAX is a national medical group and the leading provider of neonatal and

anesthesia services. The stock declined after the company reported slightly disap-

pointing first quarter earnings. We do expect them to continue to make acquisitions

and grow earnings for the year.

Our Investment Strategy

Over the last few years, whenever we meet with our mutual fund shareholders

we are asked numerous questions about the problems of the day. Today, investors

are focused on three areas: the European financial crisis, China’s slowing rate of

growth, and America’s political gridlock.

Over the last few years the focus has been on “macro” events, not individual com-

pany performance. While we monitor economic activity here in the U.S. and the on-

going saga in Europe, our investment strategy is focused on analyzing businesses.

We are looking to invest in companies that have three important attributes:

1. A competitive advantage. This is usually demonstrated by the business earn-

ing an above- average return on invested capital. Competitive advantage

can be based on a number of items including well-known brand names, low

costs compared to others, or distribution advantages.

2. Financial strength. We measure financial strength by the ability of a com-

pany to generate cash, earn high returns on invested capital, and maintain

a strong balance sheet. Cash generation is paramount because cash profits

allow a corporation to grow their operations, make acquisitions, and pay

dividends to their shareholders. A strong balance sheet is important because

it gives the company staying power during weak economic periods.

3. Excellent management. The people managing the business are important.

When a business generates cash profits, what management does with the

cash is critical to shareholder value. We spend considerable time talking to

the managements of the businesses we hold in the funds to evaluate how

they are investing their cash.

If we can find a company that has these three attributes we would love to invest in

it, but only at the right price. We establish a purchase price for each stock we buy

that we believe is at a discount to the company’s true intrinsic value. By being

FAM Value Fund

careful in the price we pay we hope to achieve two objectives. The first is by

paying a low price we should minimize the losses on holding the stock if we

are wrong in our analysis or if there is a general market downturn. The second

objective in paying a low price is to earn a higher return.

Long-Term Outlook

The stock market has performed well for the last couple of years, however many

people have exited equities. In fact, investors have put billions of dollars into bond

funds due to fear from global news.

Meanwhile, we are still bullish on stocks over the long term. What people tend

to forget is that corporate earnings ultimately drive stock prices. It might surprise

you to know that 2011 was the best year in history for earnings. Financially strong

corporations increased profitability despite economic challenges. Even though 2011

had stellar earnings growth, so far this year most of FAM Funds’ holdings are still

growing in value. We expect the majority of our holdings to grow their economic

value over time and believe that this will eventually be reﬂected in their stock

prices.

What makes us enthusiastic about investing in equities today is the long-term

potential of the businesses we hold. Please contact us if you would like to discuss

the status and outlook of any stock in FAM Funds.

Table of long term returns

Average Annual Total Returns as of June 30, 2012

Life of Fund

YTD

1-Year

3-Year

5-Year

10-Year

(1/2/87)

FAM Value Fund (FAMVX)

(Investor Shares)

6.87% -0.55% 13.91% 0.05%

5.36%

9.89%

(Advisor Shares)*

6.74% -1.48% 13.42% -0.84%

N/A

4.74%

S&P 500 Index

9.49%

5.45% 16.40% 0.22%

5.33%

9.45%

Russell 2000 Index

8.53% -2.08% 17.80% 0.54%

7.00%

8.85%

_____________________

*FAM Value Fund Advisor Shares were launched on July 1, 2003. The return since inception is 4.74%

The performance table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

FAM Value Fund

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

Sincerely,

John D. Fox, CFA

Thomas O. Putnam

Co-Manager

The opinions expressed herein are those of the portfolio managers as of the date of

the report and are subject to change. There is no guarantee that any forecast made

will come to pass. This material does not constitute investment advice and is not

intended as an endorsement of any specific investment.

Performance data quoted above is historical. Past performance is no guarantee of

future results. Current performance may be higher or lower than the performance

data quoted. The principal value and investment return of an investment will

ﬂuctuate so that your shares, when redeemed, may be worth more or less than their

original cost.

FAM Value Fund — Portfolio Data

As of June 30, 2012 (Unaudited)

COMPOSITION OF TOTAL INVESTMENTS

Property & Casualty Insurance

12.6%

Money Market Fund

8.8%

Machinery & Equipment

8.2%

Retail Stores

7.8%

Insurance Agency

6.7%

Transportation

5.6%

Banking

5.3%

Publishing

4.5%

Health Care Services

4.2%

Oil & Gas Exploration

3.7%

Health Care Equipment/Devices

3.4%

Real Estate Development

3.3%

Restaurants

3.1%

Electronic Equipment

3.1%

Diversified Manufacturing

2.5%

Investment Management

2.4%

Automotive

2.1%

Health Care Distribution

2.1%

Other

10.6%

Statement Regarding Availability of Quarterly Portfolio Schedule. Please note that (i) the

Fund files its complete schedule of portfolio holdings with the Securities and Exchange Com-

mission for the first and third quarters of each fiscal year on Form N-Q; (ii) the Fund’s Forms

N-Q are available on the Commission’s website at http://www.sec.gov; (iii) the Fund’s Forms

N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washing-

ton, DC, and information on the operation of the Public Reference Room may be obtained by

calling 1-800-SEC-0330; and (iv) the Fund makes the information on Form N-Q available to

shareholders, upon request, by calling FAM Funds at 1-800-932-3271.

FAM Value Fund — Statement of Investments

June 30, 2012 (Unaudited)

VALUE

COMMON STOCKS (91.2%)

Advertising Agencies (1.5%)

The Interpublic Group of Companies, Inc.

• provides advertising and marketing services

1,000,000 $10,850,000

Automotive (2.1%)

CarMax, Inc.*

• specialty retailer of used cars and light-trucks in the USA

600,000

15,564,000

Banking (5.3%)

Bank of the Ozarks, Inc.

• retail and commercial banking services in the Southeast

253,000

7,610,240

Home Bancshares, Inc.

• holding company for the Centennial Bank that provides various com-

250,000

7,645,000

mercial and retail banking and related financial products and services

M&T Bank Corporation

• commercial and retail banking services to individuals, businesses, cor-

75,000

6,192,750

porations and institutions in the Northeast and Mid-Atlantic

SCBT Financial Corporation

• banking services to individual and corporate customers in the Carolinas

234,110

8,252,377

TCF Financial Corporation

• banking services to individual and corporate customers in northern

802,163

9,208,831

and central California

38,909,198

Commercial Services (1.3%)

McGrath RentCorp

• modular building and electronic test equipment rentals, subsidiary

347,000

9,195,500

classroom manufacturing

Diversified Healthcare (1.9%)

Johnson & Johnson

• manufactures and sells various products in the health care field

205,000

13,849,800

See Notes to Financial Statements

FAM Value Fund — Statement of Investments continued

June 30, 2012 (Unaudited)

VALUE

Diversified Manufacturing (2.5%)

Illinois Tool Works

• manufactures engineered products such as plastic and metal compo-

339,950 $17,979,955

nents and fasteners

Electronic Commerce Distribution (0.5%)

Digital River, Inc.*

• provides outsourced e-commerce solutions worldwide

200,000

3,324,000

Electronic Equipment (3.1%)

Zebra Technologies Corp. - Class A*

• designs, manufactures and supports bar code label printers

648,502

22,282,529

Health Care Distribution (2.1%)

Patterson Companies, Inc.

• operates as a distributor serving dental, companion-pet, veterinarian,

445,000

15,339,150

and rehabilitation supply markets in the USA and Canada

Health Care Equipment/Devices (3.4%)

StrykerCorp.

• operates a medical technology company offering Orthopedic Implants

266,000

14,656,600

and MedSurg Equipment

Waters Corporation*

• designs, manufactures, sells and services analytical instruments used in

125,000

9,933,750

a wide range of scientific research

24,590,350

Health Care Services (4.2%)

Mednax, Inc.*

• health care services company focused on physician services for new-

445,700

30,548,278

born, maternal-fetal and other pediatric subspecialty care

Home Furnishings (1.0%)

Mohawk Industries*

• produces floor covering products for residential and commercial applications

103,100

7,199,473

Insurance Agency (6.7%)

Brown & Brown, Inc.

• one of the largest independent general insurance agencies in the U.S.

1,779,696

48,532,310

See Notes to Financial Statements

FAM Value Fund — Statement of Investments continued

June 30, 2012 (Unaudited)

VALUE

Investment Management (2.4%)

Franklin Resources, Inc.

• provides investment management and fund administration services as

160,000 $17,758,400

well as retail-banking and consumer lending services

Life Insurance (1.4%)

Protective Life Corporation

• individual and group life/health insurance and investment contracts

335,400

9,864,114

Machinery & Equipment (8.2%)

Donaldson Company, Inc.

• designs, manufactures and sells filtration systems and replacement parts

642,400

21,436,888

Graco, Inc.

• supplies systems and equipment for the management of fluids in indus-

180,550

8,319,744

trial, commercial and vehicle lubrication applications

IDEX Corporation

• manufactures proprietary, highly engineered industrial products and pumps

771,750

30,082,815

59,839,447

Media (1.6%)

Meredith Corporation

• magazine publishing and tv broadcasting

366,450

11,704,413

Oil & Gas Exploration (3.7%)

EOG Resources, Inc.*

• engages in the exploration, development, production and marketing of

191,000

17,211,010

natural gas and crude oil

Evolution Petroleum*

• engages in the acquisition, exploitation, and development of properties

100,000

834,000

for the production of crude oil and natural gas

Southwestern Energy Co.*

• energy company that engages in the exploration, development, and

237,000

7,567,410

production of natural gas and crude oil

Ultra Petroleum Corporation*

• oil and gas company that engages in the acquisition, exploration, de-

70,000

1,614,900

velopment, production and operation of oil and natural gas properties

27,227,320

See Notes to Financial Statements

FAM Value Fund — Statement of Investments continued

June 30, 2012 (Unaudited)

VALUE

Property & Casualty Insurance (12.6%)

Berkshire Hathaway, Inc. - Class A*

• holding company for various insurance and industrial companies

246 $30,736,470

Markel Corporation*

• sells specialty insurance products

64,850

28,644,245

White Mountain Insurance Group, Ltd.

• personal property and casualty insurance, and

61,693

32,188,323

reinsurance

91,569,038

Publishing (4.5%)

John Wiley & Sons, Inc. - Class A

• publisher of print and electronic products, specializing in scientific,

661,700

32,416,683

technical professional and medical books and journals

Real Estate Development (3.3%)

Brookfield Asset Management, Inc. - Class A

• asset management holding company that invests in property, power

735,000

24,328,500

and infrastructure

Restaurants (3.1%)

YUM! Brands, Inc.

• quick service restaurants including KFC, Pizza Hut and Taco Bell

350,600

22,585,652

Retail Stores (7.8%)

Bed Bath & Beyond, Inc.*

• national chain of retail stores selling domestic merchandise such as bed

345,600

21,358,080

linens, bath items, kitchen textiles and home furnishings

Ross Stores, Inc.

• chain of off-price retail apparel and home accessories stores

572,844

35,785,565

57,143,645

Semiconductors (0.3%)

Microchip Technology, Inc.

• develops, manufactures and sells semiconductor products for various

60,000

1,984,800

embedded control applications

See Notes to Financial Statements

FAM Value Fund — Statement of Investments continued

June 30, 2012 (Unaudited)

VALUE

Specialty Chemical (0.6%)

Sigma-Aldrich Corporation

• develops, manufactures, purchases and distributes high quality chemi-

60,000 $ 4,435,800

cals, biochemicals and equipment available throughout the world

Transportation (5.6%)

Forward Air Corporation

• provides surface transportation and related logistics services to the

389,233

12,560,549

deferred air freight market in North Americ

Heartland Express, Inc.

• short-to medium-haul truckload carrier of general commodities

1,333,333

19,079,995

Knight Transportation

• transportation of general commodities in the U.S.

576,900

9,224,631

40,865,175

Utilities/Gas (0.1%)

Questar Corporation

• natural gas utility in the state of Utah

50,000

1,043,000

Veterinary Diagnostics (0.4%)

VCA Antech, Inc.*

• provides veterinary services, diagnostic testing and sells diagnostic im-

148,900

3,272,822

aging equipment and related products/services to the veterinary market

Total Common Stocks (Cost $356,865,546)

$664,203,352

TEMPORARY INVESTMENTS (8.8%)

Money Market Fund (8.8%)

Invesco Short Term Treasury Fund ($0.02%)**

63,920,642

Total Temporary Investments (Cost $63,920,642)

$ 63,920,642

Total Investments (Cost $420,786,188)

$728,123,994

* Non-income producing securities

** The rate shown represents the effective yield at 6/30/12

See Notes to Financial Statements

FAM Equity-Income Fund

Dear Fellow Equity-Income Fund Shareholder,

• FAM Equity-Income Fund gained 4.92% in the first half of 2012 and

5.51% over one year.

• Gross dividend yield of the Fund was 2.3% at quarter end.

• Dividend growth rate of holdings currently in the Fund was 11%, in

aggregate, annualized over the last five years.

• Two-thirds of the companies in the Fund increased their dividend in

the first half of 2012.

The first quarter this year saw equities rally in hopes that the year would show

stronger growth than anticipated. After all, this is an election year and the market

statistically has done very well in election years. The market peaked on April 2nd

with the S&P 500 Index gaining nearly 13% in just three months. This optimism

began to fade in the second quarter as European financial issues ﬂared up again.

Once equity investors began to worry, they worried about everything. If the focus

was not on Europe and the fate of its currency, it was on the slowdown in China or

the potential for numerous tax increases and forced spending cuts in the U.S. next

year. These fears began to materialize with some companies reporting slower sales

results due to weakening emerging markets, soft European demand, and a stronger

U.S. dollar which makes American exports more expensive. All of these issues

contributed to stocks losing ground in the second quarter, but they still posted a

positive return for the first half of the year.

FAM Equity-Income Results

Most holdings in the Fund continue to generate a significant amount of cash ﬂow

which presents their management teams with a good problem – what to do with

all the cash. We consistently see the leadership reinvesting some of this cash back

into their businesses to generate future growth, but a portion of cash is also being

paid out to shareholders in the form of dividends. The growth of these dividends is

a key metric that we track over time. When a business does well, it is able to grow

its dividend faster than a company not doing as well. We use the five-year growth

in dividends as one benchmark in evaluating holdings in the Fund. To that point,

over the last five years the businesses in the Fund have increased their dividends to

shareholders, in aggregate, by 11% annualized. This compares quite favorably to

FAM Equity-Income Fund

the S&P 500 Index which has seen dividends actually shrink -2 % over the last five

years. The Russell 2000 Index of small companies has seen dividends grow only

1% over the last five years.

Despite most holdings in the Fund growing their cash ﬂow and dividends, the per-

formance of the Fund was below that of both the S&P 500 and Russell 2000 indices

for the six months ending 06/30/12. The underperformance occurred entirely in the

first quarter, but the Fund performed inline or better with the indices in the second

quarter. The market was exceptionally strong from January through March and this

led to underperformance by high-quality stocks and dividend-paying companies –

the types of equities we strive to hold in the Fund. This trend reversed in the sec-

ond quarter with the market giving up about half of those first quarter gains while

higher quality names and dividend-paying companies performed better than lower

quality and non dividend-paying ones.

Best and Worst Performing Stocks

Ross Stores continued to be a standout performer in the portfolio and remains the

largest holding in the Fund. On a dollar-weighted basis, the stock rose +32% for

the period and contributed $2.343 million to the value of the Fund. The terrific

results at Ross are driven by same-store sales which have consistently run ahead

of management expectations. We believe earnings growth this year will be above

15% on top of 24% last year. Additionally, management increased the dividend

27% this year. We have owned shares in Ross Stores for more than a decade.

Flowers Foods rose +24% and contributed $0.931 million to the performance of the

Fund as management made another acquisition which further expands Flowers’

footprint in the northeast. The acquisition of Lepage Bakeries, along with their

acquisition last year of Tasty Baking, should enhance earnings growth over the next

12 to 18 months. Just one year ago Flowers served only 50% of the U.S. population,

mostly south of the Mason-Dixon Line. Today the corporation is able to serve 75%

of the nation. Management has done a terrific job of acquiring businesses in this

consolidating industry. Flowers is now the third-largest bread and snack cake

company in the country.

OneBeacon declined -12.7% over the period and detracted $-0.580 million from the

value of the Fund. Price-to-book multiple declined due to OneBeacon reporting

two quarters in a row of losses in their discontinued insurance lines. The specialty

FAM Equity-Income Fund

insurance lines are performing better than we expected, but the discontinued lines,

which are still held on the books, are reporting unexpected losses. OneBeacon

continues to pay an excellent dividend.

Meredith was roughly flat in the quarter, increasing just +.02%. The return to the

Fund was $-0.464 million as we sold our position during the period. Meredith, like

many of its print media peers, lagged the broader indices throughout most of the

first half of 2012. Although Meredith’s television advertising revenues grew nicely,

their magazine advertising revenues continued to decline faster than expected

creating more drag on earnings growth and more uncertainty around the long-term

earnings power of the business.

Our Strategy for Turbulent Times

We recognize that these are challenging and complicated times for investors;

however, our investment strategy is simple. Our plan for dealing with the

situations in Europe and America is to invest in financially strong companies that

generate more cash that they need to grow. This excess cash is typically paid out

to shareholders in the form of dividends throughout the year. We believe that

financially strong and cash rich companies should be able to weather any potential

storm better than businesses that are only marginally profitable and may need

financing to make it through a rough patch. We also favor enterprises where sales

to weaker European nations are a relatively small percentage of their total sales.

Finally, we have a little more cash on hand than usual in order to take advantage of

any opportunities that may arise. We stand ready to aggressively buy stocks when

investors are fearful and sell the shares of great businesses at giveaway prices.

This is exactly what we did in the second

half of 2011 and were well-rewarded as the prices of these corporations appreciated

closer to our estimate of intrinsic value.

We are guided by our long-term view that equities are currently an attractive

investment for the next decade even with the uncertainties around the world.

FAM Equity-Income Fund

Average Annual Total Returns as of June 30, 2012

Life of Fund

YTD

1-Year

3-Year

5-Year

10-Year

(4/1/96)

FAM Equity-Income Fund

(FAMEX)

(Investor Shares)

4.92%

5.51% 15.52% -0.15%

4.73%

7.49%

(Advisor Shares)

4.45%

4.55% 14.56% -1.14%

N/A

4.01%

S&P 500 Index

9.49%

5.45% 16.40% 0.22%

5.33%

6.59%

Russell 2000 Index

8.53% -2.08% 17.80% 0.54%

7.00%

6.97%

_________________

*FAM Equity-Income Fund Advisor Shares were launched on July 1, 2003. The return since inception is 4.01%

The performance table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

We continue to work diligently on your behalf.

Paul Hogan, CFA

Tom Putnam

Co-Manager

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 Equity-Income Fund — Portfolio Data

As of June 30, 2012 (Unaudited)

COMPOSITION OF TOTAL INVESTMENTS

Money Market Fund

9.7%

Semiconductors

8.1%

Machinery & Equipment

7.1%

Retail Stores

5.2%

Health Care Equipment/Devices

4.6%

Healthcare Distribution

4.6%

Toys

4.6%

Hazardous Waste Disposal

4.5%

Publishing

4.1%

Investment Management

4.0%

Consumer Staples

4.0%

Insurance Agency

3.9%

Utilities/Water

3.8%

Commercial Services

3.7%

Oil & Gas Exploration

3.6%

Packaged Goods

3.4%

Utilities/Gas

3.3%

Health Care Services

3.0%

Specialty Chemical

3.0%

Technology

2.6%

Property & Casualty Insurance

2.6%

Beverage - Non Alcoholic

2.0%