N-Q 1 conestoganq.htm N-Q

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, 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

December 31, 2011 (Unaudited)

 

 

 

Shares

  

 Market Value

% of Total Net Assets

COMMON STOCKS

  
     

Consumer Discretionary

  

Consumer Services

   

205,000

 

Zipcar, Inc. *

2,751,100

 

Educational Services

   

52,275

 

Capella Education Co. *

           1,884,514

 

279,600

 

Healthstream, Inc. *

           5,158,620

 

8,625

 

Strayer Education, Inc.

838,264

 

             Educational Services Total

7,881,398

 

Retail

    

85,000

 

Hibbett Sports, Inc. *

3,840,300

 

110,000

 

Stamps.com, Inc. *

2,874,300

 

             Retail Total

6,714,600

 

Textile Apparel & Shoes

  

208,700

 

Iconix Brand Group, Inc. *

3,399,723

 
     

Consumer Discretionary Sector Total

20,746,821

11.21%

     

Energy

    

Oil:  Crude Producers

  

64,000

 

Contango Oil & Gas, Inc. *

3,723,520

 

Oil Well Equipment & Services

  

30,450

 

Carbo Ceramics, Inc.

           3,755,399

 

22,650

 

Core Laboratories NV

           2,580,967

 

             Oil Well Equipment & Services Industry Total

           6,336,366

 
     

Energy Sector Total

10,059,886

5.43%

     

Financial Services

    

Asset Management & Custodian

  

125,225

 

Westwood Holdings Group, Inc.

4,576,974

 

Financial Data & Systems

  

175,000

 

Advent Software, Inc. *

4,263,000

 

20,775

 

Factset Research Systems, Inc.

1,813,242

 

65,200

 

Morningstar, Inc.

3,876,140

 

             Financial Information Services Total

9,952,382

 
     

Financial Services Sector Total

14,529,356

7.85%

     

Healthcare

    

Healthcare Services

   

99,925

 

Quality Systems, Inc.

           3,696,226

 

Medical Equipment

   

160,000

 

Abaxis, Inc. *

           4,427,200

 

Medical and Dental Instruments and Supplies

  

190,000

 

Align Technology, Inc. *

4,507,750

 

51,075

 

Integra Lifesciences Holdings Co. *

1,574,642

 

210,000

 

Meridian Bioscience, Inc.

3,956,400

 

62,795

 

National Research Corp.

2,437,074

 

98,550

 

Neogen Corp. *

3,019,572

 

32,725

 

TECHNE Corp.

2,233,809

 

            Medical and Dental Instruments and Supplies Total

17,729,247

 

Pharmaceuticals & Biotech

  

410,000

 

Accelrys, Inc. *

2,755,200

 
     

Healthcare Sector Total

28,607,873

15.45%

     

Materials & Processing

  

Building Materials

   

177,000

 

Simpson Manufacturing Co., Inc.

           5,957,820

 

Chemicals & Allied Products

  

120,000

 

Balchem Corp. Class-B

           4,864,800

 
     

Materials & Processing Sector Total

         10,822,620

5.85%

     

Producer Durables

   

Aerospace

    

73,050

 

AeroVironment, Inc. *

           2,298,883

 

Commercial Services

  

82,000

 

Advisory Board Co. *

6,085,220

 

135,000

 

Costar Group, Inc. *

9,008,550

 

251,000

 

Innerworkings, Inc. *

2,336,810

 

103,625

 

Ritchie Bros. Auctioneers, Inc.

2,288,040

 

178,376

 

Rollins, Inc.

3,963,515

 

146,100

 

Tetra Tech, Inc. *

           3,154,299

 

             Commercial Services Total

         26,836,434

 

Diversified Manufacturing Operations

  

109,550

 

Raven Industries, Inc.

           6,781,145

 

Scientific Instruments: Control & Filter

  

260,000

 

Sun Hydraulics Corp.

6,091,800

 
     

Producer Durables Sector Total

42,008,262

22.69%

     

Technology

    

Computer Services Software & Systems

  

307,825

 

NIC, Inc.

           4,097,151

 

75,650

 

Pegasystems, Inc.

2,224,110

 

182,600

 

Pro Holdings, Inc. *

2,717,088

 

182,600

 

Tyler Technologies, Inc. *

5,498,086

 

              Computer Services Software & Systems Total

14,536,435

 

Electronic Components

  

71,800

 

Hittite Microwave Corp. *

3,545,484

 

99,125

 

NVE Corp. *

5,504,411

 

              Electronic Components Total

9,049,895

 

Electronics

    

104,350

 

Acacia Research Corp. *

3,809,818

 

95,750

 

II-VI, Inc. *

1,757,970

 

              Electronics Total

5,567,788

 

Information Technology

  

125,000

 

ACI Worldwide *

3,580,000

 

140,875

 

Blackbaud, Inc.

3,902,237

 

271,325

 

Bottomline Technologies, Inc. *

6,286,600

 

137,625

 

Comscore, Inc. *

2,917,650

 

135,675

 

Sourcefire, Inc. *

4,393,156

 

              Information Technology Total

21,079,643

 

Specialized Printing and Phototyping

  

140,875

 

Stratasys, Inc. *

4,284,009

 
     

Technology Sector Total

54,517,770

29.44%

     

TOTAL COMMON STOCKS

  

 

 

(Cost $146,600,000)

       181,292,588

97.92%

     
     

SHORT-TERM INVESTMENTS

  

7,537,004

 

UMB Bank Money Market Fiduciary (Cost $7,537,004) 0.01% **

7,537,004

4.07%

     

TOTAL INVESTMENTS

  

 

 

(Cost $154,137,004)

188,829,592

101.99%

     
  

Other Assets Less Liabilities

(3,677,939)

-1.99%

  

 

 

 
  

TOTAL NET ASSETS

$185,151,653

100.00%

* Non-income producing.

** Variable rate security; the coupon rate represents the rate at December 31, 2011.

 

 NOTES TO FINANCIAL STATEMENTS

  

Conestoga Small Cap Fund

  

1. SECURITY TRANSACTIONS

  

At December 31, 2011 the net unrealized appreciation on investments, based on cost for federal income

 

tax purposes of $154,137,004 amounted to $34,692,588 which consisted of aggregate gross unrealized appreciation of

 $40,529,695 and aggregate gross unrealized depreciation of $5,837,107.

  
     

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, 2011 by major security type:


Valuation Inputs of Assets

 

Level 1

Level 2

Level 3

Total

Common Stock

 

$181,292,588

              $0

              $0

$181,292,588

Exchange Traded Funds

 

              $0

              $0

              $0

              $0

Convertible Bonds

 

              $0

              $0

              $0

              $0

Cash Equivalents

 

$7,537,004

              $0

              $0

$7,537,004

Total

 

$188,829,592

       $0

       $0

$188,829,592



INSTITUTIONAL ADVISORS LARGECAP FUND

 

 

     
   

Schedule of Investments

December 31, 2011 (Unaudited)

 

 

 

Shares

  

 Market Value

% of Total Net Assets

COMMON STOCKS

  
     

Consumer Discretionary

  

Hotel Restaurants & Leisure

  

38,422

 

Darden Restaurants, Inc.

1,751,275

 

Media

    

46,277

 

McGraw-Hill Co., Inc.

2,081,077

 

Specialty Retail

    

27,028

 

The Tjx Co., Inc.

1,744,657

 

Textiles, Apparel & Luxury Goods

  

11,463

 

VF Corp.

1,455,686

 
     

 

 

Consumer Discretionary Sector Total

7,032,695

13.13%

     

Consumer Staples

    

Beverages

    

17,371

 

Pepsico, Inc.

1,152,566

 

Food Products

    

29,462

 

General Mills, Inc.

1,190,559

 

47,528

 

McCormick & Co.

2,396,362

 

         Food Products Total

3,586,921

 

Food & Staples Retailing

  

58,713

 

Walgreen Co.

1,941,052

 

Household Products

  

13,270

 

Colgate Palmolive Co.

1,226,015

 
     

 

 

Consumer Staples Sector Total

7,906,554

14.77%

     

Energy

    

Energy Equipment & Services

  

11,742

 

Diamond Offshore Drilling, Inc.

648,863

 

Oil, Gas & Consumable Fuels

  

21,606

 

Chevron Corp.

2,298,878

 

22,996

 

Exxon Mobil Corp.

1,949,141

 

        Oil, Gas & Consumable Fuels Total

4,248,019

 
     

 

 

Energy Sector Total

           4,896,882

9.14%

     

Financials

    

Capital Markets

    

54,409

 

Federated Investors, Inc.

824,296

 

Consumer Finance

   

52,398

 

Discover Financial Services

1,257,552

 

Insurance

    

46,137

 

Progressive Corp.

900,133

 
     

 

 

Financials Sector Total

2,981,981

5.57%

     

Health Care

    

Biotechnology

    

32,102

 

Amgen, Inc. *

           2,061,269

 

Health Care Equipment & Supplies

  

19,664

 

Baxter International, Inc.

              972,975

 

Health Care Providers & Services

  

10,630

 

Laboratory Corp of America Holdings *

913,861

 

18,206

 

McKesson Corp.

1,418,429

 

       Health Care Providers & Services Total

2,332,290

 

Pharmaceuticals

    

33,770

 

Johnson & Johnson

2,214,637

 

57,526

 

Pfizer, Inc.

1,244,863

 

       Pharmaceuticals Total

3,459,500

 
     

 

 

Health Care Sector Total

8,826,034

16.48%

     

Industrials

    

Aerospace & Defense

  

25,013

 

United Technologies Corp.

1,828,200

 

Air Freight & Logistics

  

16,885

 

C.H. Robinson Worldwide, Inc.

1,178,235

 

Industrial Conglomerates

  

23,414

 

Danaher Corp.

           1,101,395

 
     

 

 

Industrials Sector Total

           4,107,830

7.67%

     

Information Technology

  

Communications Equipment

  

22,024

 

Qualcomm, Inc

           1,204,713

 

Computers & Peripherals

  

5,555

 

Apple, Inc. *

2,249,775

 

35,717

 

Hewlett-Packard Co.

920,070

 

       Computers & Peripherals Total

3,169,845

 

IT Services

    

11,046

 

International Business Machines, Inc.

2,031,138

 

Semiconductors & Semiconductor

  

44,678

 

Altera Corp.

1,657,554

 

Software

    

76,629

 

Microsoft Corp.

1,989,289

 

60,173

 

Oracle Corp.

1,543,437

 

       Software Total

 

           3,532,726

 
     

 

 

Information Technology Sector Total

11,595,976

21.66%

     

Materials

    

Containers & Packaging

  

43,363

 

Ball Corp.

           1,548,493

 
     

 

 

Materials Sector Total

1,548,493

2.89%

     

Telecommunications

  

Diversified Telecommunication

  

66,574

 

AT&T, Inc.

           2,013,199

 
     

 

 

Telecommunications Sector Total

2,013,199

3.76%

     

Utilities

    

Multi-Utilities

    

49,891

 

Wisconsin Energy Corp.

           1,744,189

 
     

 

 

Utilities Sector Total

1,744,189

3.26%

     

TOTAL COMMON STOCKS

  

 

 

(Cost $47,946,944)

         52,653,833

98.33%

     
     

SHORT-TERM INVESTMENTS

  

52,252

 

UMB Bank Money Market Fiduciary 0.03% (Cost $52,252) **

52,252

0.10%

     
     

TOTAL INVESTMENTS

  

 

 

(Cost $47,999,196)

52,706,085

98.43%

     
  

Other Assets Less Liabilities

841,651

1.57%

  

 

 

 
  

TOTAL NET ASSETS

53,547,736

100.00%

* Non-income producing.

** Variable rate security; the coupon rate represents the rate at December 31, 2011.

 

 NOTES TO FINANCIAL STATEMENTS

  

Institutional Advisors LargeCap Fund

  

1. SECURITY TRANSACTIONS

  

At December 31, 2011 the net unrealized appreciation on investments was $4,706,889, which consisted of aggregate gross unrealized appreciation of $7,504,297 and aggregate gross unrealized depreciation of $2,797,408.

     

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, 2011 by major security type:


Valuation Inputs of Assets

 

Level 1

Level 2

Level 3

Total

Common Stock

 

$52,653,833

              $0

              $0

$52,653,833

Exchange Traded Funds

 

              $0

              $0

              $0

              $0

Convertible Bonds

 

              $0

              $0

              $0

              $0

Cash Equivalents

 

$52,252

              $0

              $0

$52,252

Total

 

$52,706,085

       $0

       $0

$52,706,085



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 21, 2012


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 21, 2012


By /s/Robert M. Mitchell

* Robert M. Mitchell

  Treasurer and Chief Financial Officer


Date February 21, 2012


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