N-Q 1 conestoganq.htm SEC Filing

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, 2009


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, 2009 (Unaudited)

 Shares

 

 Market Value

% of Total Net Assets

 COMMON STOCKS

  
    

CONSUMER DISCRETIONARY

  
    

Educational Services

  

30,000

Capella Education Co. *

1,798,800

3.27%

Textiles Apparel & Shoes

  

60,000

Iconix Brand Group, Inc. *

922,800

1.68%

    

                    CONSUMER DISCRETIONARY SECTOR TOTAL

2,721,600

4.95%

    

ENERGY

   
    

Oil:  Crude Producers

  

27,500

St. Mary Land & Exploration Co.

573,925

1.04%

Oil Well Equipment & Services

  

37,501

Carbo Ceramics, Inc.

           1,282,534

2.33%

10,000

Core Laboratories NV

              871,500

1.58%

85,000

Tesco Corp. *

674,900

1.22%

             Oil Well Equipment & Services Industry Total

           2,828,934

5.13%

    

                    ENERGY SECTOR TOTAL

3,402,859

6.17%

    

FINANCIAL SERVICES

  
    

Asset Management & Custodian

  

37,500

Westwood Holdings Group, Inc.

1,567,875

2.85%

Banks:  Diversified

  

20,000

PrivateBancorp, Inc.

444,800

0.81%

Commercial Finance & Mortgage Companies

  

50,000

Financial Federal Corp.

1,027,500

1.87%

Financial Data & Systems

  

52,500

Advent Software, Inc. *

1,721,475

3.12%

20,000

Factset Research Systems, Inc.

997,400

1.81%

27,500

Morningstar, Inc. *

1,133,825

2.06%

             Financial Data & Systems Industry Total

3,852,700

6.99%

Security Brokerage & Services

  

10,000

TMX Group, Inc. (Canada)

291,070

0.52%

    

 

FINANCIAL SERVICES SECTOR TOTAL

7,183,945

13.04%

    

HEALTHCARE

   
    

Biotechnology

   

17,450

Kensey Nash Corp. *

457,365

0.83%

Health Care Servies

  

66,000

Phase Forward, Inc. *

997,260

1.81%

35,000

Quality Systems, Inc.

1,993,600

3.62%

            Health Care Services Industry Total

2,990,860

5.43%

Medical Equipment

 

 

60,000

Abaxis, Inc. *

1,232,400

2.24%

90,000

Somanetrics Corp. *

1,485,900

2.70%

            Medical Equipment Industry Total

2,718,300

4.94%

Medical & Dental Instruments & Supplies

  

35,000

Integra Lifesciences Holdings Co. *

              927,850

1.68%

30,000

Landauer, Inc.

1,840,200

3.34%

55,000

Meridian Bioscience, Inc.

1,241,900

2.25%

50,001

Neogen Corp. *

1,449,029

2.63%

40,000

Surmodics, Inc. *

905,200

1.64%

22,500

TECHNE Corp.

1,435,725

2.61%

Medical & Dental Instruments & Supplies Industry Total

7,799,904

14.15%

    

 

HEALTHCARE SECTOR TOTAL

13,966,429

25.35%

    

MATERIALS & PROCESSING

  
    

Building Materials

  

70,000

Simpson Manufacturing Co., Inc.

           1,513,400

2.75%

    

                        MATERIALS & PROCESSING SECTOR TOTAL

           1,513,400

2.75%

    

PRODUCER DURABLES

  
    

Aerospace

   

30,000

Aerovironment, Inc. *

              925,800

1.68%

19,000

Curtiss-Wright Corp.

564,870

1.03%

              Aerospace Industry Total

1,490,670

2.71%

Commercial Services

  

47,500

Advisory Board Co. *

1,220,750

2.22%

44,000

Costar Group, Inc. *

1,754,280

3.18%

77,500

Ritchie Bros Auctioneers, Inc.

1,817,375

3.30%

102,501

Rollins, Inc.

1,774,292

3.22%

30,000

Tetra Tech, Inc. *

859,500

1.56%

              Commercial Services Total

7,426,197

13.48%

Diversified Manufacturing Operations

  

50,000

Raven Industries, Inc.

1,280,000

2.32%

Machinery:  Specialty

  

12,000

K-Tron International, Inc. *

960,000

1.74%

Scientific Instruments:  Control & Filter

  

22,500

Franklin Electric Co., Inc.

              583,200

1.06%

75,000

Sun Hydraulics Corp.

1,212,750

2.20%

              Electrical Equipment & Componets Total

1,795,950

3.26%

    

                       PRODUCER DURABLES SECTOR TOTAL

12,952,817

23.51%

    

TECHNOLOGY

   
    

Communications Technology

  

33,000

EMS Technologies, Inc. *

              689,700

1.25%

Computer Services Software & Systems

  

47,500

Ansys, Inc. *

1,480,100

2.69%

76,000

Blackbaud, Inc.

1,181,800

2.15%

60,000

Blackboard, Inc. *

1,731,600

3.14%

47,500

Micros Systems, Inc. *

1,202,700

2.18%

110,000

Tyler Technologies, Inc. *

1,718,200

3.12%

              Computer Services Software & Systems Total

7,314,400

13.28%

Computer Technology

  

26,550

Rimage Corp. *

              440,996

0.80%

Electronic Components

  

43,950

NVE Corp. *

2,135,970

3.87%

Electronics

   

50,000

II-VI, Inc. *

1,111,500

2.02%

    

 

TECHNOLOGY SECTOR TOTAL

11,692,566

21.22%

    

TOTAL COMMON STOCKS

  

 

(Cost $52,446,171)

         53,433,616

96.99%

    
    

 SHORT-TERM INVESTMENTS  

  

          1,643,410

UMB Bank Money Market Fiduciary (Cost $1,643,410) 0.05% **

1,643,410

2.98%

    

TOTAL INVESTMENTS

  

 

(Cost $54,089,581)

55,077,026

99.97%

    
 

Other Assets Less Liabilities

14,508

0.03%

 

 

 

 

 

TOTAL NET ASSETS

$55,091,534

100.00%

* Non-income producing.

** Variable rate security; the coupon rate represents the rate at June 30, 2009

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

 

 NOTES TO FINANCIAL STATEMENTS

  

Conestoga Small Cap Fund

  

1. SECURITY TRANSACTIONS

  

At June 30, 2009 the net unrealized appreciation on investments, based on cost for federal income tax purposes of $54,089,581 amounted to $987,445 which consisted of aggregate gross unrealized appreciation of $7,404,297 and aggregate gross unrealized depreciation of $6,416,852.

    

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, 2009:

    
  

INVESTMENT

OTHER

  

IN

FINANCIAL

  

SECURITIES

INSTRUMENTS*

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

Level 1 - Quoted prices

 $        55,077,026

 $                                   -   

Level 2 - Other significant observable inputs

                             -   

                                      -   

Level 3 - Significant unobservable inputs

                             -   

                                      -   

Total                                      

 $        55,077,026

 $                                   -   

    

*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.

    

 INSTITUTIONAL ADVISORS LARGECAP FUND

 

 

    
   

Schedule of Investments

 

 

June 30, 2009 (Unaudited)

 Shares

 

 Market Value

% of Total Net Assets

 COMMON STOCKS

  
    

CONSUMER DISCRETIONARY

  
    

Hotel Restaurants & Leisure

  

15,916

Darden Restaurants, Inc.

524,910

3.29%

Media

   

10,188

McGraw-Hill Co., Inc.

306,761

1.92%

Specialty Retail

   

20,521

Staples, Inc.

414,114

2.59%

Textiles, Apparel & Luxury Goods

  

4,750

VF Corp.

262,913

1.65%

    

 

CONSUMER DISCRETIONARY SECTOR TOTAL

1,508,698

9.45%

    

CONSUMER STAPLES

  
    

Beverages

   

12,492

Pepsi Co.

686,560

4.30%

Food Products

   

19,687

McCormick & Co.

640,418

4.01%

Food & Staples Retailing

  

24,319

Walgreen Co.

714,979

4.48%

    

 

CONSUMER STAPLES SECTOR TOTAL

2,041,957

12.79%

    

ENERGY

   
    

Oil, Gas & Consumable Fuels

  

8,117

Chevron Corp.

537,751

3.37%

9,527

Exxon Mobil Corp.

666,033

4.17%

9,068

Occidental Petroleum Corp.

596,765

3.74%

    

 

ENERGY SECTOR TOTAL

           1,800,549

11.28%

    

FINANCIALS

   
    

Capital Markets

   

7,138

T Rowe Price Group

297,440

1.86%

Commercial Banks

  

14,680

US Bancorp

263,066

1.65%

15,457

Wells Fargo & Co.

374,987

2.35%

       Commercial Banks Total

638,053

4.00%

Insurance

   

10,047

Aflac, Inc.

312,361

1.96%

    

 

FINANCIALS SECTOR TOTAL

1,247,854

7.82%

    

HEALTH CARE

   
    

Biotechnology

   

8,375

Amgen, Inc. *

              443,373

2.78%

Health Care Equipment & Supplies

  

11,054

Stryker Corp.

439,286

2.75%

Health Care Providers & Services

  

4,403

Laboratory Corp of America *

298,479

1.87%

Pharmaceuticals

   

12,230

Johnson & Johnson

694,664

4.35%

11,743

Lilly Eli & Co.

406,778

2.55%

11,687

Pfizer, Inc.

175,305

1.10%

       Pharmaceutical Total

1,276,747

8.00%

    

 

HEALTH CARE SECTOR TOTAL

2,457,885

15.40%

    

INDUSTRIALS

   
    

Aerospace & Defense

  

10,361

United Technologies Corp.

538,358

3.37%

Air Freight & Logistics

  

6,993

C.H. Robinson Worldwide, Inc.

364,685

2.28%

Industrial Conglomerates

  

15,368

General Electric Co.

180,113

1.13%

Machinery

   

10,590

Danaher Corp.

              653,827

4.10%

    

 

INDUSTRIALS SECTOR TOTAL

           1,736,983

10.88%

    

INFORMATION TECHNOLOGY

  
    

Communications Equipment

  

15,396

Qualcom, Inc

              695,899

4.36%

Computers & Peripherals

  

3,279

Apple, Inc. *

467,028

2.93%

14,792

Hewlett-Packard Co.

571,711

3.58%

4,576

International Business Machines, Inc.

477,825

2.99%

      Computers & Peripherals Total

1,516,564

9.50%

Semiconductors & Semiconductor

  

18,507

Altera Corp.

301,479

1.89%

 Software

   

15,916

Intuit, Inc.

448,672

2.81%

14,965

Microsoft Corp.

355,718

2.23%

24,924

Oracle Corp.

533,872

3.34%

       Software Total

           1,338,262

8.38%

    

 

INFORMATION TECHNOLOGY SECTOR TOTAL

3,852,204

24.13%

    

MATERIALS

   
    

Chemicals

   

11,569

Sigma Aldrich Corp.

              573,359

3.59%

    

 

MATERIALS SECTOR TOTAL

573,359

3.59%

    

TELECOMMUNICATIONS

  
    

Diversified Telecommunication

  

21,931

AT&T, Inc.

              544,765

3.41%

    

 

TELECOMMUNICATIONS SECTOR TOTAL

544,765

3.41%

TOTAL COMMON STOCKS

  

 

(Cost $15,263,118)

         15,764,254

98.75%

    
    

 SHORT-TERM INVESTMENTS  

  

             594,989

UMB Bank Money Market Fiduciary 0.05% (Cost $594,989) **

594,989

3.72%

    
    

TOTAL INVESTMENTS

  

 

(Cost $15,858,107)

16,359,243

102.47%

    
 

Liabilities In Excess of Other Assets

(394,783)

(2.47%)

 

 

 

 

 

TOTAL NET ASSETS

15,964,460

100%

* Non-income producing.

** Variable rate security; the coupon rate represents the rate at June 30, 2009

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

 

 NOTES TO FINANCIAL STATEMENTS

  

Institutional Advisors LargeCap Fund

  

1. SECURITY TRANSACTIONS

  

At June 30, 2009 the net unrealized appreciation on investments, based on cost for federal income tax purposes of $15,858,107 amounted to $502,290 which consisted of aggregate gross unrealized appreciation of $1,184,319 and aggregate gross unrealized depreciation of $682,029.

    

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, 2009:

    
  

INVESTMENT

OTHER

  

IN

FINANCIAL

  

SECURITIES

INSTRUMENTS*

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

Level 1 - Quoted prices

 $        16,359,243

 $                                   -   

Level 2 - Other significant observable inputs

                             -   

                                      -   

Level 3 - Significant unobservable inputs

                             -   

                                      -   

Total                                      

 $        16,359,243

 $                                   -   

    

*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 28, 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 August 28, 2009


By /s/Robert M. Mitchell

* Robert M. Mitchell

  Treasurer and Chief Financial Officer


Date August 28, 2009


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