N-Q 1 conestoganq200808.htm UNITED STATES

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549



FORM N-Q


QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED

 MANAGEMENT INVESTMENT COMPANY


Investment Company Act file number 811-21120


Conestoga Funds

(Exact name of registrant as specified in charter)


Conestoga Capital Advisors

259 N. Radnor-Chester Road

Radnor Court, Suite 120

Radnor, PA 19087

 (Address of principal executive offices)

(Zip code)


Conestoga Capital Advisors

259 N. Radnor-Chester Road

Radnor Court, Suite 120

Radnor, PA 19087

 (Name and address of agent for service)


With Copy To:

Carl Frischling, Esq.

Kramer Levin Naftalis & Frankel LLP

919 Third Avenue

New York, NY 10022


Registrant's telephone number, including area code: (800) 320-7790


Date of fiscal year end: September 30


Date of reporting period: June 30, 2008


Form N-Q is to be used by management investment companies, other than small business investment companies registered on Form N-5 (ss.ss. 239.24 and 274.5 of this chapter), to file reports with the Commission, not later than 60 days after the close of the first and third fiscal quarters, pursuant to rule 30b1-5 under the Investment Company Act of 1940 (17 CFR 270.30b1-5).  The Commission may use the information provided on Form N-Q in its regulatory, disclosure review, inspection, and policymaking roles.

A registrant is required to disclose the information specified by Form N-Q, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-Q 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 the Secretary, Securities and Exchange Commission, and 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. SCHEDULE OF INVESTMENTS.


CONESTOGA SMALL CAP FUND

 

 

    
   

Schedule of Investments

 

 

June 30, 2008 (Unaudited)

 Shares

 

 Market Value

% of Total Net Assets

 COMMON STOCKS

  
    

AUTO AND TRANSPORTATION

  
    

Truckers

   

41,501

Knight Transportation, Inc.

759,468

1.81%

    

 

AUTO AND TRANSPORTATION SECTOR TOTAL

759,468

1.81%

    

CONSUMER DISCRETIONARY

  
    

Consumer Electronics

  

41,000

Lojack Corp. *

326,360

0.78%

    

Educational Services

  

12,675

Capella Education Co. *

756,064

1.80%

    

Services Commercial

  

20,000

Costar Group, Inc. *

889,000

2.12%

58,000

Ritchie Bros Auctioneers, Inc.

1,573,540

3.76%

70,001

Rollins, Inc.

1,037,415

2.48%

27,000

The Advisory Board Co. *

1,061,910

2.54%

             Services Commercial Industry Total

4,561,865

10.90%

    

Shoes

   

43,500

Iconix Brand Group, Inc. *

525,480

1.26%

    

                    CONSUMER DISCRETIONARY SECTOR TOTAL

6,169,769

14.74%

    

FINANCIAL SERVICES

  
    

Banks

   

27,850

PrivateBancorp, Inc.

846,083

2.02%

    

Finance Companies

  

21,375

World Acceptance Corp. *

719,696

1.72%

    

Financial Information Services

  

14,000

Factset Research Systems, Inc.

789,040

1.88%

    

Investment Management Companies

  

29,980

Westwood Holdings Group, Inc.

1,193,204

2.85%

    
    

Financial Miscellaneous

  

34,500

Financial Federal Corp.

757,620

1.81%

10,000

TMX Group, Inc. (Canada)

412,334

0.98%

             Financial Miscellaneous Industry Total

1,169,954

2.79%

    

Financial Data Processing Services & Systems

  

38,000

Advent Software, Inc. *

1,371,040

3.29%

    

 

FINANCIAL SERVICES SECTOR TOTAL

6,089,017

14.55%

    

HEALTHCARE

   
    

Bio-Technology Research and Production

  

20,000

Integra Lifesciences Holdings Co. *

              889,600

2.12%

13,950

Kensey Nash Corp. *

447,098

1.07%

             Bio-Technology Research and Production Industry Total

1,336,698

3.19%

    

Electronics Medical Systems

  

31,000

Quality Systems, Inc.

907,680

2.17%

61,275

Somanetrics Corp. *

1,299,030

3.10%

             Electronics Medical Systems Industry Total

2,206,710

5.27%

    

Healthcare Management Services

  

20,050

Computer Programs & Systems, Inc.

347,467

0.83%

    

Healthcare Services

  

30,000

Psychemedics Corp.

492,000

1.18%

    

Medical and Dental Instruments and Supplies

 

 

38,500

Abaxis, Inc. *

929,005

2.22%

25,000

Landauer, Inc.

1,406,000

3.36%

14,250

Mentor Corp.

396,435

0.95%

23,025

Meridian Bioscience, Inc.

619,833

1.48%

37,501

Neogen Corp. *

858,398

2.05%

31,000

Surmodics, Inc. *

1,390,040

3.32%

6,000

TECHNE Corp. *

464,340

1.11%

             Medical and Dental Instruments and Supplies Industry Total

6,064,051

14.49%

    

 

HEALTHCARE SECTOR TOTAL

10,446,926

24.96%

    

MATERIALS AND PROCESSING

  
    

Building Materials

  

39,000

Simpson Manufacturing Co., Inc.

              925,860

2.21%

    

                        MATERIALS AND PROCESSING SECTOR TOTAL

              925,860

2.21%

    

OTHER ENERGY

  
    

Oil: Crude Producers

  

13,500

St. Mary Land & Exploration Co.

872,640

2.08%

    

Machinery: Oil Well Equipment & Service

  

26,676

Carbo Ceramics, Inc.

           1,556,545

3.72%

38,000

Tesco Corp. *

1,214,100

2.90%

  

           2,770,645

6.62%

    

 

OTHER ENERGY SECTOR TOTAL

           3,643,285

8.70%

    

PRODUCER DURABLES

  
    

Machinery: Industrial/Specialty

  

20,000

Sun Hydraulics Corp.

              645,400

1.54%

    

Electrical Equipment & Components

  

18,500

Franklin Electric Co., Inc.

              717,430

1.71%

5,000

K-Tron International, Inc. *

              648,000

1.55%

  

1,365,430

3.26%

    

                       PRODUCER DURABLES SECTOR TOTAL

2,010,830

4.80%

    

TECHNOLOGY

   
    

Communications Technology

  

46,650

Digi International, Inc. *

              366,202

0.88%

    

Computer Technology

  

29,500

Rimage Corp. *

              365,505

0.87%

    

Computer Services Software & Systems

  

19,450

Ansys, Inc. *

916,484

2.19%

57,500

Blackbaud, Inc.

1,230,500

2.94%

37,500

Blackboard, Inc. *

1,433,625

3.42%

75,000

Tyler Technologies, Inc. *

1,017,750

2.42%

              Computer Services Software & Systems Total

4,598,359

10.97%

    

Electronics: Technology

  

15,000

Curtiss-Wright Corp.

671,100

1.60%

49,500

Innovative Solutions &Support, Inc.*

319,275

0.76%

17,500

NVE Corp. *

554,050

1.33%

  

1,544,425

3.69%

Electronics

   

34,400

II-VI, Inc. *

1,201,248

2.88%

    

 

TECHNOLOGY SECTOR TOTAL

8,075,739

19.29%

    

OTHER

   
    

Multisector Companies

  

47,975

Raven Industries, Inc.

1,572,620

 
    

 

TOTAL OTHER

1,572,620

3.76%

TOTAL COMMON STOCKS

  

 

(Cost $37,501,879)

         39,693,514

94.82%

    
    

 SHORT-TERM INVESTMENTS  

  

          2,466,859

UMB Bank Money Market Fiduciary (Cost $2,466,859) 0.98% **

2,466,859

5.89%

    

TOTAL INVESTMENTS

  

 

(Cost $39,968,738)

42,160,373

100.71%

    
 

Liabilities in excess of other assets

(297,481)

-0.71%

 

 

 

 

 

TOTAL NET ASSETS

$41,862,892

100.00%

* Non-income producing.

** Variable rate security; the coupon rate represents the rate at June 30, 2008

(a) Purchased with cash colateral from securities on loan.

 

 NOTES TO FINANCIAL STATEMENTS

  

Conestoga Small Cap Fund

  

1. SECURITY TRANSACTIONS

  

At June 30, 2008 the net unrealized appreciation on investments, based on cost for federal income

 

tax purposes of $39,968,738 amounted to $2,191,635 which consisted of aggregate gross unrealized appreciation of

 $5,691,174 and aggregate gross unrealized depreciation of $3,499,539.

  
    

2. NEW ACCOUNTING PRONOUNCEMENTS

  

The  Fund  adopted Financial Accounting Standards Board Statement of Financial Accounting  

 

Standards  No. 157, Fair Value Measurements ("FAS 157"), effective January 1, 2008. In  accordance  

 

with  FAS 157,  fair value is defined as the price  that  the Fund would receive to sell an asset or pay

 

to transfer a liability  in  an orderly transaction between market participants at the measurement date.

 

FAS 157 also establishes a framework for measuring fair value, and a three-level  hierarchy  for fair

 

value measurements based upon the transparency  of  inputs  to  the valuation of an asset or liability.

 

Inputs may be observable  or  unobservable  and refer broadly to the assumptions that market

 

participants  would  use  in pricing the asset or liability. Observable inputs reflect the assumptions

 

market participants would use in pricing the asset or liability  based on market data obtained from

 

sources independent of the Fund. Unobservable inputs reflect the Fund's own assumptions about the

 

assumptions that market participants would use in pricing the asset or liability developed based  on the

 

best information available in the circumstances. Each investment is assigned a level based upon the

 

observability of the inputs which are significant  to  the  overall valuation. The three-tier hierarchy of

 

inputs is summarized below:

  
    

Level 1 - quoted prices in active markets for identical investments

  
    

Level 2 - other significant observable inputs (including quoted prices for similar investments, interest

 

rates, prepayment speeds, credit risk, etc.)

  
    

Level 3 - significant unobservable inputs (including the Fund's own assumptions in determining the

 

fair value of investments)

  
    

The  inputs  or methodology used for valuing securities are not necessarily an indication of  the risk  

 

associated with investing in those securities. Money market securities are valued using amortized

 

cost, in accordance with rules under  the  Investment Company Act of 1940. Generally, amortized

 

cost approximates the current fair value of a security, but since the value is not obtained  from a

 

quoted price in an active market, such securities are reflected as Level 2.

  
    

The following table summarizes the valuation of the Fund's investments by the above fair value

 

hierarchy levels as of June 30, 2008:

  
    
  

INVESTMENT

OTHER

  

IN

FINANCIAL

  

SECURITIES

INSTRUMENTS*

======================================================================================================

Level 1 - Quoted prices

 $             39,693,514

 $                   -

Level 2 - Other significant observable inputs

                  2,466,859

                      -

Level 3 - Significant unobservable inputs

                                  -

                      -

Total                                      

 $             42,160,373

 $                   -

    

*Other  financial  instruments are derivative instruments not reflected in the Portfolio  of Investments,

  

such as futures forwards and swap contracts, which  are valued at the unrealized appreciation/

  

depreciation on the instrument.

  






ITEM 2. CONTROLS AND PROCEDURES.


(a)

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES. The Registrant maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Registrant's filings under the Securities Exchange Act of 1934 and the Investment Company Act of 1940 is recorded, processed, summarized and reported within the periods specified in the rules and forms of the Securities and Exchange Commission. Such information is accumulated and communicated to the Registrant's management, including its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. The Registrant's management, including the principal executive officer and the principal financial officer, recognizes that any set of controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

Within 90 days prior to the filing date of this Quarterly Schedule of Portfolio Holdings on Form N-Q, the Registrant had carried out an evaluation, under the supervision and with the participation of the Registrant's management, including the Registrant's principal executive officer and the Registrant's principal financial officer, of the effectiveness of the design and operation of the Registrant's disclosure controls and procedures. Based on such evaluation, the Registrant's principal executive officer and principal financial officer concluded that the Registrant's disclosure controls and procedures are effective.

(b)

CHANGES IN INTERNAL CONTROLS. There have been no significant changes in the Registrant's internal controls or in other factors that could significantly affect the internal controls subsequent to the date of their evaluation in connection with the preparation of this Quarterly Schedule of Portfolio Holdings on Form N-Q.


ITEM 3. EXHIBITS.


Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.


SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


Conestoga Funds


By /s/W. Christopher Maxwell

* W. Christopher Maxwell

   Chairman and Chief Executive Officer


Date August 20, 2008


Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


By /s/W. Christopher Maxwell

* W. Christopher Maxwell

   Chairman and Chief Executive Officer


Date August 20, 2008


By /s/Robert M. Mitchell

* Robert M. Mitchell

  Treasurer and Chief Financial Officer


Date August 20, 2008


* Print the name and title of each signing officer under his or her signature.