Letter From Cobleskill

At Fenimore, our preparation is rooted in our fundamental research, where we spend time with our companies making careful observations and continually assessing their prospects. Rather than predicting or fixating on the what-ifs, we are focused on what is happening — particularly inside the businesses we own — and invest accordingly.

As we write this letter, the cautious tone of the headlines does not fully align with what we see at the company level. Many of our holdings continue to generate solid earnings growth even as stock prices have, in some cases, lagged that reality.

THE WAR & RECENT HISTORY

Our thoughts are with our U.S. service members and their families. We hope and pray for a swift and peaceful resolution to the war.

It is natural to be concerned about how the conflict may affect your investments. For perspective, over the past six years we have experienced a global pandemic, an economic shutdown, severe supply chain disruptions, the Russia–Ukraine war (with oil touching $127 per barrel), 9% inflation, and rising interest rates.[1]

Each of these events may have seemed like a compelling reason to exit the stock market. Yet investors who stayed the course generally fared well, as markets delivered double-digit returns during that time.

AI’S FUTURE

Before the war, the main question on investors’ minds was whether the rapid gains in AI-related tech stocks were sustainable or a speculative bubble waiting to burst. Can an industry that is spending trillions of dollars in just a few years generate adequate returns? And what about industries that AI threatens to disrupt by automating, enhancing, and commoditizing their primary services?

We believe the outcome will be uneven: some AI-native firms will be winners and others will struggle to differentiate as capabilities become more prevalent. Likewise, some companies will face meaningful pressure on their business models, while others will utilize the technology to achieve higher levels of productivity and growth.

This is why AI is part of every discussion Fenimore analysts have with our holdings. So far, despite what some stock price reactions might suggest, we are not seeing widespread disruption. Instead, we hear many examples of how companies are thoughtfully deploying AI.

In many ways, this is not new. Businesses have long adapted to evolving technologies and AI is simply the latest iteration. We will continue to assess how our companies are incorporating AI and mitigating the risk of disruption.

PREPARATION: COMPANY OBSERVATIONS

While monitoring the macroeconomic environment is important, what matters most to us are firsthand observations and business fundamentals. Since early January, our investment research analysts have met, in person or virtually, with more than 50 companies we own or are evaluating.

During these meetings, we ask challenging questions to ensure that each business continues to meet our core investment criteria and to validate our thesis that these are high-quality operations capable of delivering attractive returns over time.

Overall, what we hear is encouraging. Demand is holding up, reinvestment opportunities are intact, and competitive positions are being maintained or strengthened. These businesses are far more resilient than the headlines suggest and seem well prepared for the year ahead and long term.

STAYING THE COURSE

Quarter-to-quarter market swings matter far less than long-term compounding in our opinion. We remain focused on durable businesses with leaders who can perform across economic cycles because, in our experience, stock prices eventually follow earnings. In uncertain environments, remaining disciplined and invested in what we believe are high-quality companies has been our mainstay for 52 years.

Our associates are happy to speak with you. Please do not hesitate to connect with us in our Cobleskill or Albany office, or from the comfort of your own home. Call 800-932-3271 or email us at info@fenimoreasset.com.

Thank you for your confidence in us.

Sincerely,

Fenimore Investment Research Team

Andrew F. Boord
Bryan L. Engler, CFA®
Kevin D. Gioia, CFA®
Antonio C. Goodwyn, CFA®
Paul C. Hogan, CFA®
Robert L. Peters
William W. Preston, CFA®
Marc D. Roberts, CFA®
Drew P. Wilson, CFA®

[1] FactSet as of 3/31/2026.

This letter is intended for FAM Shareholders and is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus for the FAM Value Fund, FAM Dividend Focus Fund and FAM Small Cap Fund. Past performance is not indicative of future results. Investment returns may fluctuate: the value of your investment upon redemption may be more or less than the initial amount invested. Please read the prospectus or summary prospectus for more complete details, including investment objectives, risk considerations and expenses, before you invest. FAM Funds are distributed by Fenimore Securities, Inc., Cobleskill, NY 12043, 800-932-3271. Current performance numbers are available at fenimoreasset.com.

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. Fenimore Asset Management Inc. is an SEC registered investment adviser; however, such registration does not imply a certain level of skill or training and no inference to the contrary should be made.

Letter From Cobleskill

IT HAS BEEN A GOOD YEAR

Maybe not gangbusters like we hoped, but through three quarters the stock market and economy have both performed well, overall, in a challenging environment.

Stocks and bonds are up. The current annual return on cash equivalents, like money market accounts and treasury bills, is healthy. Furthermore, publicly traded real estate investment trusts have sound performance in general.

Adding to our encouragement, as Fenimore’s research team travels the country, we are routinely hearing our holdings’ management teams talk positively about earnings growth and the reinvestments they are making ― both in their own company and through acquisitions. These businesses are the compass we primarily focus on as we navigate the always unpredictable, occasionally turbulent world of investments and they have helped guide us successfully for more than a half-century.

IMPORTANT QUESTIONS

At Fenimore, we ask ourselves big-picture questions every day as we strive to make the most informed investment decisions:

• Where are interest rates headed? What is the latest on tariffs? How is employment?
  How about inflation? Is there a recession around the corner?

However, the most important question is at the company level:

• What are the companies in which we invest doing to stay strong and keep growing
  no matter the answers to those macro questions?

Investing in what we believe are quality businesses with strong financials ― including significant free cash flow generation, high profitability, and manageable debt ― has been the foundation of Fenimore’s investment philosophy since day one. And a key factor in these businesses’ success is always an astute leadership team that anticipates and prepares for almost every possibility.

Fenimore’s research analysts are in touch with our companies, and others we are considering, on a regular basis to verify our quality assessments. Sometimes it is a phone check-in. Other times it is a lengthy visit with the C-suite or on the factory floor. In each instance, our message is the same: show us what you are doing to grow earnings, outsmart the competition, minimize debt, and create value for shareholders ― even in times of uncertainty.

We are pleased to say that we like what we are hearing and this gives us a positive long-term outlook.

LET’S TALK

Please do not hesitate to connect with us about your investments and financial goals in our Cobleskill or Albany office, or from the comfort of your own home. Call 800-932-3271 or email us at info@fenimoreasset.com.

Thank you for your confidence in us.

Sincerely,
John D. Fox, CFA^®
CHIEF INVESTMENT OFFICER

CELEBRATING A RETIREMENT

John Fox, Chief Investment Officer (CIO), is retiring in December after a successful career at Fenimore of nearly 30 years. His professional and personal contributions have made a positive impact on our investors, firm, and community. We hope that John enjoys his well-deserved retirement and express our heartfelt gratitude for his dedicated service!

FOCUSED ON YOU

Fenimore Founder and Executive Chairman Tom Putnam built the framework for a long-term succession plan years ago to ensure the continuity of our investment philosophy and investor experience for decades to come. Fenimore’s succession planning is thoughtful, enduring, and seamless ― always keeping our investors’ best interests in mind.

When associates retire, our highly collaborative process keeps operations running smoothly. Each of the three investment strategy teams (Value, Dividend Focus, and Small Cap) works together as a cohesive unit. They implement our market-tested approach in pursuit of performance excellence, just as they did during John’s time as CIO. What this means is that the teams who pick our stocks remain the same.

Fenimore’s research analysts include three astute industry veterans of more than 30 years as well as generations of talented professionals. We look forward to sustaining our collegial environment as we diligently seek to grow your assets over the long term.

This letter is intended for FAM Shareholders and is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus for the FAM Value Fund, FAM Dividend Focus Fund and FAM Small Cap Fund. Past performance is not indicative of future results. Investment returns may fluctuate: the value of your investment upon redemption may be more or less than the initial amount invested. Please read the prospectus or summary prospectus for more complete details, including investment objectives, risk considerations and expenses, before you invest. FAM Funds are distributed by Fenimore Securities, Inc., Cobleskill, NY 12043, 800-932-3271. Current performance numbers are available at fenimoreasset.com.

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. Fenimore Asset Management Inc. is an SEC registered investment adviser; however, such registration does not imply a certain level of skill or training and no inference to the contrary should be made.