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: June 30, 2011


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, 2011 (Unaudited)

 Shares

  

 Market Value

% of Total Net Assets

 COMMON STOCKS

  
     

Consumer Discretionary

  

Educational Services

   

44,500

 

Capella Education Co. *

           1,862,325

 

11,100

 

Strayer Education, Inc.

1,402,929

 

             Educational Services Total

3,265,254

 

Retail

    

15,000

 

Hibbett Sports, Inc. *

610,650

 

Textile Apparel & Shoes

  

170,000

 

Iconix Brand Group, Inc. *

4,114,000

 
     

Consumer Discretionary Sector Total

7,989,904

5.10%

     

Energy

    

Oil:  Crude Producers

  

51,000

 

Contango Oil & Gas Co. *

2,980,440

 

Oil Well Equipment & Services

  

36,551

 

CARBO Ceramics, Inc.

           5,955,985

 

22,325

 

Core Laboratories NV

           2,490,131

 

11,325

 

Tesco Corp. *

219,818

 

             Oil Well Equipment & Services Industry Total

           8,665,934

 
     

Energy Sector Total

11,646,374

7.43%

     

Financial Services

    

Asset Management & Custodian

  

107,061

 

Westwood Holdings Group, Inc.

4,079,024

 

Financial Data & Systems

  

146,000

 

Advent Software, Inc. *

4,112,820

 

20,475

 

Factset Research Systems, Inc.

2,095,002

 

62,500

 

Morningstar, Inc.

3,798,750

 

             Financial Information Services Total

10,006,572

 
     

Financial Services Sector Total

14,085,596

8.99%

     

Healthcare

    

Health Care Services

  

161,000

 

Align Technology, Inc. *

3,670,800

 

191,900

 

Healthstream, Inc. *

2,546,513

 

22,962

 

National Research Corp.

838,802

 

47,875

 

Quality Systems, Inc.

4,179,488

 

            Health Care Services Total

11,235,603

 

Medical Equipment

   

135,000

 

Abaxis, Inc. *

           3,678,750

 

74,500

 

Immucor, Inc. *

1,521,290

 

             Medical Equipment Total

5,200,040

 

Medical & Dental Equipment & Supplies

  

50,325

 

Integra Lifesciences Holdings Co. *

2,406,038

 

170,000

 

Meridian Bioscience, Inc.

4,098,700

 

59,751

 

Neogen Corp. *

2,701,343

 

32,250

 

Techne Corp.

2,688,683

 

            Medical & Dental Equipment & Supplies Total

11,894,764

 
     

Healthcare Sector Total

28,330,407

18.08%

     

Materials & Processing

  

Building Materials

   

150,000

 

Simpson Manufacturing Co., Inc.

           4,480,500

 

Chemicals & Allied Products

  

77,225

 

Balchem Corp.

           3,380,911

 
     

Materials & Processing Sector Total

           7,861,411

5.02%

     

Producer Durables

   

Aerospace

    

62,850

 

AeroVironment, Inc. *

           2,221,748

 

Commercial Services

  

61,275

 

Advisory Board Co. *

3,546,597

 

105,000

 

CoStar Group, Inc. *

6,224,400

 

99,300

 

Ritchie Bros. Autioneers, Inc.

2,729,757

 

170,926

 

Rollins, Inc.

3,483,472

 

130,000

 

Tetra Tech, Inc. *

           2,925,000

 

             Commercial Services Total

         18,909,226

 

Diversified Manufacturing Operations

  

87,450

 

Raven Industries, Inc.

           4,871,840

 

Scientific Instruments: Control & Filter

  

144,675

 

Sun Hydraulics Corp.

6,915,465

 
     

Producer Durables Sector Total

32,918,279

21.01%

     

Technology

    

Computer Services Software & Systems

  

330,000

 

Accelrys, Inc. *

2,346,300

 

110,000

 

Blackbaud, Inc.

3,049,200

 

53,250

 

Blackboard, Inc. *

2,310,517

 

41,650

 

MICROS Systems, Inc. *

2,070,421

 

240,000

 

NIC, Inc.

           3,230,400

 

55,000

 

Pegasystems, Inc.

2,560,250

 

110,000

 

Pro Holdings, Inc. *

1,923,900

 

160,000

 

Tyler Technologies, Inc. *

4,284,800

 

              Computer Services Software & Systems Total

21,775,788

 

Electronic Components

  

83,350

 

Acacia Research Corp. *

3,058,111

 

66,975

 

Hittite Microwave Corp. *

4,146,422

 

80,000

 

NVE Corp. *

4,676,000

 

              Electronic Components Total

11,880,533

 

Electronics

    

119,500

 

II-VI, Inc. *

3,059,200

 

Information Technology

  

240,000

 

Bottomline Technologies, Inc. *

5,930,400

 

158,175

 

Comscore, Inc. *

4,096,732

 

121,000

 

Sourcefire, Inc. *

3,596,120

 
   

13,623,252

 
     

Technology Sector Total

50,338,773

32.13%

     

TOTAL COMMON STOCKS

  

 

 

(Cost $108,910,954)

       153,170,744

97.76%

     
     

 SHORT-TERM INVESTMENTS  

  

          2,946,927

 

UMB Bank Money Market Fiduciary (Cost $2,946,927) 0.01% **

2,946,927

1.88%

     

TOTAL INVESTMENTS

  

 

 

(Cost $111,857,881)

156,117,671

99.64%

     
  

Other Assets Less Liabilities

559,016

0.36%

  

 

 

 

  

TOTAL NET ASSETS

$156,676,687

100.00%

* Non-income producing.

** Variable rate security; the coupon rate represents the rate at June 30, 2011.

 

 NOTES TO FINANCIAL STATEMENTS

  

Conestoga Small Cap Fund

  

1. SECURITY TRANSACTIONS

  

At June 30, 2011 the net unrealized appreciation on investments, based on cost for federal income

 

tax purposes of $111,857,881 amounted to $47,206,717 which consisted of aggregate gross unrealized appreciation of

 $48,925,957 and aggregate gross unrealized depreciation of $1,719,240.

  
     

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 June 30, 2011 by major security type:


Valuation Inputs of Assets

 

Level 1

Level 2

Level 3

Total

Common Stock

 

$153,170,744

              $0

              $0

$153,170,744

Exchange Traded Funds

 

              $0

              $0

              $0

              $0

Convertible Bonds

 

              $0

              $0

              $0

              $0

Cash Equivalents

 

$2,946,927

              $0

              $0

$2,946,927

Total

 

$156,117,671

       $0

       $0

$156,117,671




INSTITUTIONAL ADVISORS LARGECAP FUND

 

 

     
    

Schedule of Investments

 

 

 

June 30, 2011 (Unaudited)

 Shares

  

 Market Value

% of Total Net Assets

 COMMON STOCKS

  
     

CONSUMER DISCRETIONARY

  
     

Hotel Restaurants & Leisure

  

37,810

 

Darden Restaurants, Inc.

1,881,425

3.36%

Media

    

45,536

 

McGraw-Hill Co., Inc.

1,908,413

3.41%

Specialty Retail

    

26,597

 

TJX Companies, Inc.

1,397,140

2.50%

Textiles, Apparel & Luxury Goods

  

11,281

 

VF Corp.

1,224,665

2.19%

     

 

 

CONSUMER DISCRETIONARY SECTOR TOTAL

6,411,643

11.45%

     

CONSUMER STAPLES

  
     

Beverages

    

17,093

 

Pepsico, Inc.

1,203,860

2.15%

Food Products

    

46,766

 

McCormick & Co.

2,318,190

4.14%

28,990

 

General Mills, Inc.

1,079,008

1.93%

         Food Products Total

3,397,198

6.07%

Food & Staples Retailing

  

57,774

 

Walgreen Co.

2,453,084

4.38%

Household Products

  

9,707

 

Colgate Palmolive Co.

848,489

1.52%

     

 

 

CONSUMER STAPLES SECTOR TOTAL

7,902,631

14.11%

     

ENERGY

    
     

Energy Equipment & Services

  

30,631

 

Cameron International Corp. *

1,540,433

2.75%

Oil, Gas & Consumable Fuels

  

21,264

 

Chevron Corp.

2,186,789

3.91%

22,631

 

Exxon Mobil Corp.

1,841,711

3.29%

        Oil, Gas & Consumable Fuels Total

4,028,500

7.19%

     

 

 

ENERGY SECTOR TOTAL

           5,568,933

9.95%

     

FINANCIALS

    
     

Capital Markets

    

53,535

 

Federated Investors, Inc.

1,276,274

2.28%

Insurance

    

23,862

 

Aflac, Inc.

1,113,888

1.99%

45,399

 

Progressive Corp.

970,630

1.73%

        Insurance Total

2,084,518

3.72%

     

 

 

FINANCIALS SECTOR TOTAL

3,360,792

6.00%

     

HEALTH CARE

    
     

Biotechnology

    

31,590

 

Amgen, Inc. *

           1,843,276

3.29%

Health Care Equipment & Supplies

  

26,255

 

Stryker Corp.

           1,540,906

2.75%

Health Care Providers & Services

  

17,913

 

McKesson Corp.

1,498,422

2.68%

10,461

 

Laboratory Corp of America *

1,012,520

1.81%

       Health Care Providers & Services Total

2,510,942

4.48%

Pharmaceuticals

    

33,229

 

Johnson & Johnson

2,210,393

3.95%

27,759

 

Pfizer, Inc.

571,835

1.02%

       Pharmaceuticals Total

2,782,228

4.97%

     

 

 

HEALTH CARE SECTOR TOTAL

8,677,352

15.50%

     

INDUSTRIALS

    
     

Aerospace & Defense

  

24,614

 

United Technologies Corp.

2,178,585

3.89%

Air Freight & Logistics

  

16,614

 

C.H. Robinson Worldwide, Inc.

1,309,847

2.34%

Industrial Conglomerates

  

36,510

 

General Electric Co.

688,578

1.23%

Machinery

    

35,485

 

Danaher Corp.

           1,880,350

3.36%

     

 

 

INDUSTRIALS SECTOR TOTAL

           6,057,360

10.82%

     

INFORMATION TECHNOLOGY

  
     

Communications Equipment

  

21,674

 

Qualcomm, Inc

           1,230,866

2.20%

Computers & Peripherals

  

5,470

 

Apple, Inc. *

1,836,114

3.28%

35,143

 

Hewlett-Packard Co.

1,279,205

2.28%

       Computers & Peripherals Total

3,115,319

5.56%

Information Technology Services

  

10,871

 

International Business Machines, Inc.

1,864,920

3.33%

Semiconductors & Semiconductor

  

43,963

 

Altera Corp.

2,037,685

3.64%

 Software

    

49,775

 

Microsoft Corp.

1,294,150

2.31%

59,210

 

Oracle Corp.

1,948,601

3.48%

       Software Total

 

           3,242,751

5.79%

     

 

 

INFORMATION TECHNOLOGY SECTOR TOTAL

11,491,541

20.52%

     

MATERIALS

    
     

Containers & Packaging

  

42,664

 

Ball Corp.

           1,640,857

2.93%

     

 

 

MATERIALS SECTOR TOTAL

1,640,857

2.93%

     

TELECOMMUNICATION SERVICES

  
     

Diversified Telecommunication

  

56,475

 

AT&T, Inc.

           1,773,879

3.17%

     

 

 

TELECOMMUNICATIONS SECTOR TOTAL

1,773,879

3.17%

     

UTILITIES

    
     

Multi-Utilities

    

49,091

 

Wisconsin Energy Corp.

           1,539,003

2.75%

     

 

 

UTILITIES SECTOR TOTAL

1,539,003

2.75%

     

TOTAL COMMON STOCKS

  

 

 

(Cost $47,510,178)

         54,423,991

97.19%

     
     

 SHORT-TERM INVESTMENTS  

  

          1,599,868

 

UMB Bank Money Market Fiduciary 0.03% (Cost $1,599,868) **

1,599,868

2.86%

     
     

TOTAL INVESTMENTS

  

 

 

(Cost $49,110,046)

56,023,859

100.05%

     
  

Liabilites in Excess of Other Assets

(29,159)

-0.05%

  

 

 

 
  

TOTAL NET ASSETS

55,994,700

100.00%

* Non-income producing.

** Variable rate security; the coupon rate represents the rate at June 30, 2011.

 

 NOTES TO FINANCIAL STATEMENTS

  

Institutional Advisors LargeCap Fund

  

1. SECURITY TRANSACTIONS

  

At June 30, 2011 the net unrealized appreciation on investments was $6,913,813, which consisted of aggregate gross unrealized  

appreciation of $7,711,166 and aggregate gross unrealized depreciation of $797,353.

  
     

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 June 30, 2011 by major security type:


Valuation Inputs of Assets

 

Level 1

Level 2

Level 3

Total

Common Stock

 

$54,423,991

              $0

              $0

$54,423,991

Exchange Traded Funds

 

              $0

              $0

              $0

              $0

Convertible Bonds

 

              $0

              $0

              $0

              $0

Cash Equivalents

 

$1,599,868

              $0

              $0

$1,599,868

Total

 

$56,023,859

       $0

       $0

$56,023,859




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 August 19, 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 August 19, 2011


By /s/Robert M. Mitchell

* Robert M. Mitchell

  Treasurer and Chief Financial Officer


Date August 19, 2011


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