N-Q 1 conestoganq200902.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: December 31, 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

 

 

 

December 31, 2008 (Unaudited)

 Shares

  

 Market Value

% of Total Net Assets

 COMMON STOCKS

   
     

CONSUMER DISCRETIONARY

  
     

Educational Services

   

22,000

 

Capella Education Co. *

1,292,720

3.88%

     

Services Commercial

   

31,925

 

Advisory Board Co. *

711,927

2.14%

27,000

 

Costar Group, Inc. *

889,380

2.67%

30,000

 

Phase Forward, Inc. *

375,600

1.13%

53,225

 

Ritchie Bros Auctioneers, Inc.

1,140,080

3.43%

85,001

 

Rollins, Inc.

1,536,818

4.62%

             Services Commercial Industry Total

4,653,805

13.99%

     

Shoes

    

45,000

 

Iconix Brand Group, Inc. *

440,100

1.32%

     

                    CONSUMER DISCRETIONARY SECTOR TOTAL

6,386,625

19.19%

     

FINANCIAL SERVICES

   
     

Banks

    

28,500

 

PrivateBancorp, Inc.

925,110

2.78%

     

Finance Companies

   

21,375

 

World Acceptance Corp. *

422,370

1.27%

     

Financial Data Processing Services & Systems

  

46,850

 

Advent Software, Inc. *

935,594

2.81%

     

Financial Information Services

  

14,000

 

Factset Research Systems, Inc.

619,360

1.86%

14,050

 

Morningstar, Inc. *

498,775

1.50%

             Financial Information Services Industry Total

1,118,135

3.36%

     

Investment Management Companies

  

29,980

 

Westwood Holdings Group, Inc.

851,732

2.56%

     
     

Financial Miscellaneous

   

34,500

 

Financial Federal Corp.

802,815

2.41%

10,000

 

TMX Group, Inc. (Canada)

209,366

0.63%

             Financial Miscellaneous Industry Total

1,012,181

3.04%

     

 

 

FINANCIAL SERVICES SECTOR TOTAL

5,265,122

15.82%

     

HEALTHCARE

    
     

Bio-Technology Research and Production

  

25,000

 

Integra Lifesciences Holdings Co. *

              889,250

2.67%

13,950

 

Kensey Nash Corp. *

270,770

0.81%

             Bio-Technology Research and Production Industry Total

1,160,020

3.49%

     

Electronics Medical Systems

  

31,000

 

Quality Systems, Inc.

1,352,220

4.06%

61,375

 

Somanetrics Corp. *

1,013,301

3.05%

             Electronics Medical Systems Industry Total

2,365,521

7.11%

     

Medical and Dental Instruments and Supplies

 

 

50,000

 

Abaxis, Inc. *

801,500

2.41%

19,475

 

Landauer, Inc.

1,427,518

4.29%

36,800

 

Meridian Bioscience, Inc.

937,296

2.82%

37,501

 

Neogen Corp. *

936,775

2.82%

31,000

 

Surmodics, Inc. *

783,370

2.35%

6,000

 

TECHNE Corp.

387,120

1.16%

             Medical and Dental Instruments and Supplies Industry Total

5,273,579

15.85%

     

 

 

HEALTHCARE SECTOR TOTAL

8,799,120

26.44%

     

MATERIALS AND PROCESSING

  
     

Building Materials

   

44,500

 

Simpson Manufacturing Co., Inc.

           1,235,320

3.71%

     

                        MATERIALS AND PROCESSING SECTOR TOTAL

           1,235,320

3.71%

     

OTHER ENERGY

   
     

Oil: Crude Producers

   

12,000

 

St. Mary Land & Exploration Co.

243,720

0.73%

     

Machinery: Oil Well Equipment & Service

  

25,001

 

Carbo Ceramics, Inc.

              888,286

2.67%

66,900

 

Tesco Corp. *

477,666

1.44%

   

           1,365,952

4.11%

     

 

 

OTHER ENERGY SECTOR TOTAL

           1,609,672

4.84%

     

PRODUCER DURABLES

   
     

Machinery: Industrial/Specialty

  

54,075

 

Sun Hydraulics Corp.

           1,018,773

3.06%

     

Electrical Equipment & Components

  

17,500

 

Franklin Electric Co., Inc.

              491,925

1.48%

8,000

 

K-Tron International, Inc.

              639,200

1.92%

   

1,131,125

3.40%

     

                       PRODUCER DURABLES SECTOR TOTAL

2,149,898

6.46%

     

TECHNOLOGY

    
     

Communications Technology

  

16,800

 

EMS Technologies, Inc. *

              434,616

1.31%

     

Computer Technology

   

26,550

 

Rimage Corp. *

              356,035

1.07%

     

Computer Services Software & Systems

  

25,200

 

Ansys, Inc. *

702,828

2.11%

62,500

 

Blackbaud, Inc.

843,750

2.54%

37,500

 

Blackboard, Inc. *

983,625

2.96%

81,000

 

Tyler Technologies, Inc. *

970,380

2.92%

              Computer Services Software & Systems Total

3,500,583

10.52%

     

Electronics: Technology

   

12,500

 

Curtiss-Wright Corp.

417,375

1.25%

41,000

 

NVE Corp. *

1,071,330

3.22%

   

1,488,705

4.47%

Electronics

    

34,400

 

II-VI, Inc. *

656,696

1.97%

     

 

 

TECHNOLOGY SECTOR TOTAL

6,436,635

19.34%

     

OTHER

    
     

Multisector Companies

   

30,775

 

Raven Industries, Inc.

741,677

 
     

 

 

TOTAL OTHER

741,677

2.23%

TOTAL COMMON STOCKS

  

 

 

(Cost $37,727,497)

         32,624,069

98.04%

     
     

 SHORT-TERM INVESTMENTS  

  

             890,911

 

UMB Bank Money Market Fiduciary (Cost $890,911) 0.21% **

890,911

2.68%

     

TOTAL INVESTMENTS

   

 

 

(Cost $38,618,408)

33,514,980

100.72%

     
  

Liabilities in excess of other assets

(240,088)

-0.72%

  

 

 

 

  

TOTAL NET ASSETS

$33,274,892

100.00%

* Non-income producing.

** Variable rate security; the coupon rate represents the rate at December 31, 2008

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

 

 NOTES TO FINANCIAL STATEMENTS

  

Conestoga Small Cap Fund

  

1. SECURITY TRANSACTIONS

  

At December 31, 2008 the net unrealized depreciation on investments, based on cost for federal income

 

tax purposes of $38,618,408 amounted to $5,103,428 which consisted of aggregate gross unrealized appreciation of

 

 $2,890,563 and aggregate gross unrealized depreciation of $7,993,991.

  
     

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 December 31, 2008:

  
     
   

INVESTMENT

OTHER

   

IN

FINANCIAL

   

SECURITIES

INSTRUMENTS*

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

 

Level 1 - Quoted prices

 

   $         33,514,980    

   $                                    -     

Level 2 - Other significant observable inputs

                                  -   

                                           -     

Level 3 - Significant unobservable inputs

                                  -   

                                           -    

Total                                      

 

   $         33,514,980    

   $                                    -    

     

*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 February 12, 2009


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 February 12, 2009


By /s/Robert M. Mitchell

* Robert M. Mitchell

  Treasurer and Chief Financial Officer


Date February 12, 2009


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