N-Q 1 conestoganq.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:

Josh Deringer, Esq.

Drinker Biddle

One Logan Square, Ste 2000

Philadelphia, PA 19103


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


Date of fiscal year end: September 30


Date of reporting period: December 31, 2010


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, 2010 (Unaudited)

 

 Shares

  

 Market Value

% of Total Net Assets

 

 COMMON STOCKS

   
      

CONSUMER DISCRETIONARY

   
      

Educational Services

    

42,500

 

Capella Education Co. *

           2,829,650

2.24%

 

10,600

 

Strayer Education, Inc.

1,613,532

1.28%

 

             Educational Services Total

4,443,182

3.52%

 

Textiles Apparel & Shoes

   

142,100

 

Iconix Brand Group, Inc. *

2,743,951

2.17%

 
      

                    CONSUMER DISCRETIONARY SECTOR TOTAL

7,187,133

5.69%

 
      

ENERGY

     
      

Oil:  Crude Producers

   

20,900

 

Contango Oil & Gas Co. *

1,210,737

0.96%

 

29,525

 

SM Energy Co.

1,739,908

1.38%

 

             Oil:  Crude Producers Total

2,950,645

2.34%

 

Oil Well Equipment & Services

   

36,551

 

CARBO Ceramics, Inc.

           3,784,491

2.99%

 

22,325

 

Core Laboratories NV

           1,988,041

1.57%

 

99,175

 

Tesco Corp. *

1,574,899

1.25%

 

             Oil Well Equipment & Services Industry Total

           7,347,431

5.81%

 
      

                    ENERGY SECTOR TOTAL

10,298,076

8.15%

 
      

FINANCIAL SERVICES

   
      

Asset Management & Custodian

   

88,250

 

Westwood Holdings Group, Inc.

3,526,470

2.79%

 

Financial Data & Systems

   

66,750

 

Advent Software, Inc. *

3,866,160

3.06%

 

32,975

 

Factset Research Systems, Inc.

3,091,736

2.45%

 

62,500

 

Morningstar, Inc.

3,317,500

2.62%

 

             Financial Information Services Total

10,275,396

8.13%

 
      

 

 

FINANCIAL SERVICES SECTOR TOTAL

13,801,866

10.92%

 
      

HEALTHCARE

     
      

Biotechnology

     

231,450

 

Accelrys, Inc. *

1,921,035

1.52%

 

Health Care Services

    

47,875

 

Quality Systems, Inc.

3,342,633

2.64%

 

Medical Equipment

    

103,000

 

Abaxis, Inc. *

           2,765,550

2.19%

 

64,100

 

Immucor, Inc. *

1,271,103

1.01%

 

             Medical Equipment Total

4,036,653

3.20%

 

Medical & Dental Equipment & Supplies

   

147,075

 

Align Technology, Inc. *

2,873,846

2.27%

 

48,125

 

Integra Lifesciences Holdings Co. *

2,276,312

1.80%

 

42,850

 

Landauer, Inc.

2,569,715

2.03%

 

155,075

 

Meridian Bioscience, Inc.

3,591,537

2.84%

 

57,451

 

Neogen Corp. *

2,357,215

1.87%

 

32,250

 

Techne Corp.

2,117,857

1.68%

 

            Medical & Dental Equipment & Supplies Total

15,786,482

12.49%

 
      

 

 

HEALTHCARE SECTOR TOTAL

25,086,803

19.85%

 
      

MATERIALS & PROCESSING

   
      

Building Materials

    

131,500

 

Simpson Manufacturing Co., Inc.

           4,064,665

3.22%

 
      

                        MATERIALS & PROCESSING SECTOR TOTAL

           4,064,665

3.22%

 
      

PRODUCER DURABLES

   
      

Aerospace

     

60,150

 

AeroVironment, Inc. *

           1,613,825

1.28%

 

Commercial Services

    

58,675

 

Advisory Board Co. *

2,794,690

2.21%

 

97,750

 

CoStar Group, Inc. *

5,626,490

4.45%

 

99,300

 

Ritchie Bros. Autioneers, Inc.

2,288,865

1.81%

 

170,926

 

Rollins, Inc.

3,375,788

2.67%

 

94,725

 

Tetra Tech, Inc. *

           2,373,809

1.88%

 

             Commercial Services Total

         16,459,642

13.02%

 

Diversified Manufacturing Operations

   

83,650

 

Raven Industries, Inc.

           3,989,268

3.16%

 

Scientific Instruments: Control & Filter

   

138,775

 

Sun Hydraulics Corp.

5,245,695

4.15%

 
      

                       PRODUCER DURABLES SECTOR TOTAL

27,308,430

21.61%

 
      

TECHNOLOGY

     
      

Communications Technology

   

54,575

 

EMS Technologies, Inc. *

           1,079,494

0.85%

 

Computer Services Software & Systems

   

14,375

 

Ansys, Inc. *

748,506

0.59%

 

89,900

 

Blackbaud, Inc.

2,328,410

1.84%

 

65,825

 

Blackboard, Inc. *

2,718,572

2.15%

 

212,450

 

Bottomline Technologies, Inc. *

4,612,289

3.65%

 

41,650

 

MICROS Systems, Inc. *

1,826,769

1.45%

 

175,000

 

NIC, Inc.

           1,699,250

1.34%

 

39,425

 

Pegasystems, Inc.

1,444,138

1.14%

 

46,200

 

Sourcefire, Inc. *

           1,197,966

0.95%

 

128,350

 

Tyler Technologies, Inc. *

2,664,546

2.11%

 

              Computer Services Software & Systems Total

19,240,446

15.22%

 

Electronic Components

   

41,925

 

Acacia Research Corp. *

1,087,535

0.86%

 

63,475

 

Hittite Microwave Corp. *

3,874,514

3.07%

 

67,775

 

NVE Corp. *

3,919,428

3.10%

 

              Electronic Components Total

8,881,477

7.03%

 

Electronics

     

57,150

 

II-VI, Inc. *

2,649,474

2.10%

 

Information Technology

   

151,175

 

comScore, Inc. *

3,377,249

2.67%

 
      

 

 

TECHNOLOGY SECTOR TOTAL

35,228,140

27.87%

 
      

TOTAL COMMON STOCKS

   

 

 

(Cost $88,767,351)

       122,975,113

97.31%

 
      
      

 SHORT-TERM INVESTMENTS  

   

          3,460,802

 

UMB Bank Money Market Fiduciary (Cost $3,460,802) 0.03% **

3,460,802

2.73%

 
      

TOTAL INVESTMENTS

   

 

 

(Cost $92,228,153)

126,435,915

100.04%

 
      
  

Liabilities in Excess of Other Assets

(49,341)

-0.04%

 
  

 

 

 

 
  

TOTAL NET ASSETS

$126,386,574

100.00%

 

* Non-income producing.

 

** Variable rate security; the coupon rate represents the rate at December 31, 2010.

 

 

 

 NOTES TO FINANCIAL STATEMENTS

   

Conestoga Small Cap Fund

   

1. SECURITY TRANSACTIONS

   

At December 31, 2010 the net unrealized appreciation on investments, based on cost for federal income tax purposes of $92,228,153 amounted to $34,207,763 which consisted of aggregate gross unrealized appreciation of $35,216,351 and aggregate gross unrealized depreciation of $1,008,588.

 
 
 
      

2.  SECURITY VALUATION

   

Securities that are traded on any exchange are valued at the last quoted sale price.  Securities which are quoted by NASDAQ are valued at the NASDAQ Official Closing Price.  Lacking a last sale price, a security is valued at its last bid price except when, in the opinion of the Fund’s Adviser, the last bid price does not accurately reflect the current value of the security.  All other securities for which over-the-counter market quotations are readily available are valued at their last bid price.  When market quotations are not readily available, when the Adviser determines the last bid price does not accurately reflect the current value or when restricted securities are being valued, such securities are valued as determined in good faith by the Adviser, in conformity with guidelines adopted by and subject to review of the Board of Trustees of the Trust.   

 

Short-term investments in fixed income securities with maturities of less than 60 days when acquired, or which subsequently are within 60 days of maturity, are valued by using the amortized cost method of valuation, which the Board has determined will represent fair value.

 

Accounting principles generally accepted in the United States of America define fair value  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 and 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.  The three-tier hierarchy seeks to maximize the use of observable market data and minimize the use of unobservable inputs and to establish classification of fair value measurements for disclosure purposes. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk. Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs are inputs that reflect the Fund’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.  The three-tier hierarchy of inputs is summarized below:

 
 

Level 1 - Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities. Valuation adjustments and block discounts are not applied to Level 1 securities.  Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these securities does not entail a significant degree of judgment.

 

Level 2 - Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

 

Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement.  The following table presents information about the Fund’s assets measured at fair value as of December 31, 2010 by major security type:

 
 
      

Valuation Inputs of Assets

 

Level 1

Level 2

Level 3

Total

Common Stock

 

$122,975,113

              $0

              $0

$122,975,113

Exchange Traded Funds

 

              $0

              $0

              $0

              $0

Convertible Bonds

 

              $0

              $0

              $0

              $0

Cash Equivalents

 

$3,460,802

              $0

              $0

$3,460,802

Total

 

$126,435,915

       $0

       $0

$126,435,915

      



INSTITUTIONAL ADVISORS LARGECAP FUND

 

 

 
      
    

Schedule of Investments

 

 

 

 

December 31, 2010 (Unaudited)

 

 Shares

  

 Market Value

% of Total Net Assets

 

 COMMON STOCKS

   
      

CONSUMER DISCRETIONARY

   
      

Hotel Restaurants & Leisure

   

17,141

 

Darden Restaurants, Inc.

796,028

3.37%

 

Media

     

10,973

 

McGraw-Hill Co., Inc.

399,527

1.69%

 

Specialty Retail

     

22,101

 

Staples, Inc.

503,240

2.13%

 

Textiles, Apparel & Luxury Goods

   

5,115

 

VF Corp.

440,811

1.87%

 
      

 

 

CONSUMER DISCRETIONARY SECTOR TOTAL

2,139,606

9.05%

 
      

CONSUMER STAPLES

   
      

Beverages

     

13,453

 

Pepsico, Inc.

878,885

3.72%

 

Food Products

     

21,202

 

McCormick & Co.

986,529

4.17%

 

13,143

 

General Mills, Inc.

467,759

1.98%

 

         Food Products Total

1,454,288

6.15%

 

Food & Staples Retailing

   

26,193

 

Walgreen Co.

1,020,479

4.32%

 
      

 

 

CONSUMER STAPLES SECTOR TOTAL

3,353,652

14.19%

 
      

ENERGY

     
      

Oil, Gas & Consumable Fuels

   

9,645

 

Chevron Corp.

880,106

3.72%

 

10,257

 

Exxon Mobil Corp.

749,992

3.17%

 

10,601

 

Murphy Oil Corp.

790,305

3.34%

 
      

 

 

ENERGY SECTOR TOTAL

           2,420,403

10.24%

 
      

FINANCIALS

     
      

Capital Markets

     

24,271

 

Federated Investors, Inc.

635,172

2.69%

 

Insurance

     

10,818

 

Aflac, Inc.

610,460

2.58%

 

20,582

 

Progressive Corp.

408,964

1.73%

 

        Insurance Total

1,019,424

4.31%

 
      

 

 

FINANCIALS SECTOR TOTAL

1,654,596

7.00%

 
      

HEALTH CARE

     
      

Biotechnology

     

12,182

 

Amgen, Inc. *

              668,792

2.83%

 

Health Care Equipment & Supplies

   

11,903

 

Stryker Corp.

              639,191

2.70%

 

Health Care Providers & Services

   

8,121

 

McKesson Corp.

571,556

2.42%

 

4,743

 

Laboratory Corp of America *

417,005

1.76%

 

       Health Care Providers & Services Total

988,561

4.18%

 

Pharmaceuticals

     

13,174

 

Johnson & Johnson

814,812

3.45%

 

12,585

 

Pfizer, Inc.

220,363

0.93%

 

       Pharmaceutical Total

1,035,175

4.38%

 
      

 

 

HEALTH CARE SECTOR TOTAL

3,331,719

14.10%

 
      

INDUSTRIALS

     
      

Aerospace & Defense

   

11,159

 

United Technologies Corp.

878,436

3.72%

 

Air Freight & Logistics

   

7,532

 

C.H. Robinson Worldwide, Inc.

603,991

2.56%

 

Industrial Conglomerates

   

16,552

 

General Electric Co.

302,736

1.28%

 

Machinery

     

16,087

 

Danaher Corp.

              758,824

3.21%

 
      

 

 

INDUSTRIALS SECTOR TOTAL

           2,543,987

10.76%

 
      

INFORMATION TECHNOLOGY

   
      

Communications Equipment

   

9,826

 

Qualcomm, Inc

              486,289

2.06%

 

Computers & Peripherals

   

2,473

 

Apple, Inc. *

797,691

3.38%

 

15,932

 

Hewlett-Packard Co.

670,737

2.84%

 

       Computers & Peripherals Total

1,468,428

6.21%

 

Information Technology Services

   

4,929

 

International Business Machines, Inc.

723,380

3.06%

 

Semiconductors & Semiconductor

   

19,931

 

Altera Corp.

709,145

3.00%

 

 Software

     

11,934

 

Intuit, Inc. *

588,346

2.49%

 

22,566

 

Microsoft Corp.

629,817

2.66%

 

26,843

 

Oracle Corp.

840,186

3.55%

 

       Software Total

 

           2,058,349

8.71%

 
      

 

 

INFORMATION TECHNOLOGY SECTOR TOTAL

5,445,591

23.04%

 
      

MATERIALS

     
      

Chemicals

     

12,461

 

Sigma Aldrich Corp.

              829,404

3.51%

 
      

 

 

MATERIALS SECTOR TOTAL

829,404

3.51%

 
      

TELECOMMUNICATION SERVICES

   
      

Diversified Telecommunication

   

25,604

 

AT&T, Inc.

              752,245

3.18%

 
      

 

 

TELECOMMUNICATIONS SECTOR TOTAL

752,245

3.18%

 
      

UTILITIES

     
      

Multi-Utilities

     

11,128

 

Wisconsin Energy Corp.

              654,994

2.77%

 
      

 

 

UTILITIES SECTOR TOTAL

654,994

2.77%

 
      

TOTAL COMMON STOCKS

   

 

 

(Cost $17,250,388)

         23,126,197

97.85%

 
      
      

 SHORT-TERM INVESTMENTS  

   

             507,178

 

UMB Bank Money Market Fiduciary 0.03% (Cost $507,178) **

507,178

2.14%

 
      
      

TOTAL INVESTMENTS

   

 

 

(Cost $17,757,566)

23,633,375

99.99%

 
      
  

Other Assets Less Liabilities

1,215

0.01

 
  

 

 

 

 
  

TOTAL NET ASSETS

23,634,590

100%

 

* Non-income producing.

 

** Variable rate security; the coupon rate represents the rate at December 31, 2010.

 

 

 

 NOTES TO FINANCIAL STATEMENTS

   

Institutional Advisors LargeCap Fund

   

1. SECURITY TRANSACTIONS

   

At December 31, 2010 the net unrealized appreciation on investments was $5,875,809, which consisted of aggregate gross unrealized appreciation of $6,015,711 and aggregate gross unrealized depreciation of $139,902.

 
 
      

2. SECURITY VALUATION

   

Securities that are traded on any exchange are valued at the last quoted sale price.  Securities which are quoted by NASDAQ are valued at the NASDAQ Official Closing Price. Lacking a last sale price, a security is valued at its last bid price except when, in the opinion of the Fund’s Adviser, the last bid price does not accurately reflect the current value of the security.  All other securities for which over-the-counter market quotations are readily available are valued at their last bid price.  When market quotations are not readily available, when the Adviser determines the last bid price does not accurately reflect the current value or when restricted securities are being valued, such securities are valued as determined in good faith by the Adviser, in conformity with guidelines adopted by and subject to review of the Board.   

 

Short term investments in fixed income securities with maturities of less than 60 days when acquired, or which subsequently are within 60 days of maturity, are valued by using the amortized cost method of valuation, which the Board has determined will represent fair value.

 

Accounting principles generally accepted in the United States of America define fair value  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 and 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.  The three-tier hierarchy seeks to maximize the use of observable market data and minimize the use of unobservable inputs and to establish classification of fair value measurements for disclosure purposes. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk. Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs are inputs that reflect the Fund’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.  The three-tier hierarchy of inputs is summarized below:

 
 

Level 1 - Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities. Valuation adjustments and block discounts are not applied to Level 1 securities.  Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these securities does not entail a significant degree of judgment.

 

Level 2 - Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

 

Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement.  The following table presents information about the Fund’s assets measured at fair value as of December 31, 2010 by major security type:

 
 
      

Valuation Inputs of Assets

 

Level 1

Level 2

Level 3

Total

Common Stock

 

$23,126,197

              $0

              $0

$23,126,197

Exchange Traded Funds

 

              $0

              $0

              $0

              $0

Convertible Bonds

 

              $0

              $0

              $0

              $0

Cash Equivalents

 

$507,178

              $0

              $0

$507,178

Total

 

$23,633,375

       $0

       $0

$23,633,375

      
      



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/ William C. Martindale Jr.

* William C. Martindale Jr.

   Chief Executive Officer


Date February 25, 2011


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/ William C. Martindale Jr.

* William C. Martindale Jr.

   Chief Executive Officer


Date February 25, 2011


By /s/Robert M. Mitchell

* Robert M. Mitchell

  Treasurer and Chief Financial Officer


Date February 25, 2011


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