N-Q 1 conestoganq.htm N-Q 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:

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, 2012


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, 2012 (Unaudited)

Shares

  

 Market Value

% of Total Net Assets

COMMON STOCKS

  
     

Consumer Discretionary

  

Educational Services

  

100,000

 

Capella Education Co. *

           2,823,000

 

192,000

 

Grand Canyon Education, Inc. *

           4,506,240

 

290,000

 

Healthstream, Inc. *

7,049,900

 

             Educational Services Total

14,379,140

 

Retail

    

115,000

 

Hibbett Sports, Inc. *

6,060,500

 

103,700

 

Medifast, Inc. *

2,736,643

 

274,800

 

Stamps.com, Inc. *

6,924,960

 

             Retail Total

15,722,103

 
     

Consumer Discretionary Sector Total

30,101,243

9.50%

     

Energy

    

Oil:  Crude Producers

  

125,000

 

Contango Oil & Gas, Inc.

5,295,000

 

Oil Well Equipment & Services

  

65,000

 

Carbo Ceramics, Inc.

           5,092,100

 

33,225

 

Core Laboratories NV

           3,631,825

 

54,100

 

Geospace Technologies Corp. *

4,807,867

 

             Oil Well Equipment & Services Industry Total

         13,531,792

 
     

Energy Sector Total

18,826,792

5.94%

     

Financial Services

    

Asset Management & Custodian

  

163,397

 

Westwood Holdings Group, Inc.

6,682,937

 

Financial Data & Systems

  

280,000

 

Advent Software, Inc. *

5,986,400

 

50,000

 

Factset Research Systems, Inc.

4,403,000

 

80,000

 

Morningstar, Inc.

5,026,400

 

             Financial Information Services Total

15,415,800

 
     

Financial Services Sector Total

22,098,737

6.97%

     

Healthcare

    

Healthcare Services

  

99,925

 

Medidata Solutions, Inc. *

3,915,062

 

114,858

 

National Research Corp.

6,225,304

 

            Healthcare Services Total

10,140,366

 

Medical Equipment

  

230,775

 

Abaxis, Inc.

           8,561,753

 

Medical and Dental Instruments and Supplies

  

256,000

 

Align Technology, Inc. *

7,104,000

 

310,050

 

Meridian Bioscience, Inc.

6,278,512

 

185,000

 

Neogen Corp. *

8,384,200

 

44,000

 

TECHNE Corp.

3,006,960

 

            Medical and Dental Instruments and Supplies Total

24,773,672

 

Pharmaceuticals & Biotech

  

676,000

 

Accelrys, Inc. *

6,117,800

 
     

Healthcare Sector Total

49,593,591

15.65%

     

Materials & Processing

  

Building Materials

   

299,575

 

Simpson Manufacturing Co., Inc.

           9,823,064

 

Chemicals & Allied Products

  

190,025

 

Balchem Corp. Class-B

           6,926,411

 
     

Materials & Processing Sector Total

         16,749,475

5.29%

     

Producer Durables

  

Aerospace

    

161,475

 

AeroVironment, Inc. *

           3,510,466

 

Commercial Services

  

170,000

 

Advisory Board Co. *

7,954,300

 

140,000

 

Costar Group, Inc. *

12,511,800

 

400,000

 

Innerworkings, Inc. *

5,512,000

 

180,000

 

Ritchie Bros. Auctioneers, Inc.

3,760,200

 

270,000

 

Rollins, Inc.

5,950,800

 

198,525

 

Tetra Tech, Inc. *

           5,254,957

 

             Commercial Services Total

         40,944,057

 

Diversified Manufacturing Operations

  

366,350

 

Raven Industries, Inc.

           9,656,986

 

Manufacturing & Production

  

255,000

 

Proto Labs, Inc. *

10,052,100

 

Scientific Instruments: Control & Filter

  

170,000

 

Faro Technologies, Inc. *

6,065,600

 

367,300

 

Sun Hydraulics Corp.

           9,579,184

 

             Scientific Instruments: Control & Filter Total

         15,644,784

 
     

Producer Durables Sector Total

79,808,393

25.18%

     

Technology

    

Computer Services Software & Systems

  

492,700

 

NIC, Inc.

8,050,718

 

390,400

 

Pro Holdings, Inc. *

7,140,416

 

325,000

 

SciQuest, Inc. *

5,154,500

 

205,025

 

Tyler Technologies, Inc. *

9,931,411

 

              Computer Services Software & Systems Total

30,277,045

 

Electronic Components

  

126,450

 

Hittite Microwave Corp. *

7,847,487

 

99,200

 

NVE Corp. *

5,504,608

 

              Electronic Components Total

13,352,095

 

Electronics

    

227,175

 

Acacia Research Corp. *

5,829,129

 

Information Technology

  

229,875

 

ACI Worldwide *

10,043,239

 

270,000

 

Blackbaud, Inc.

6,164,100

 

388,200

 

Bottomline Technologies, Inc. *

10,244,598

 

153,625

 

Sourcefire, Inc. *

7,254,172

 

              Information Technology Total

33,706,109

 

Computer Technology

  

108,000

 

Stratasys, Inc. *

8,656,200

 
     

Technology Sector Total

91,820,578

28.97%

     

TOTAL COMMON STOCKS

  

 

 

(Cost $247,663,184)

       308,998,809

97.50%

     
     

SHORT-TERM INVESTMENTS

  

8,054,994

 

UMB Bank Money Market Fiduciary (Cost $8,054,994) 0.01% **

8,054,994

2.54%

     

TOTAL INVESTMENTS

  

 

 

(Cost $255,718,178)

317,053,803

100.04%

     
  

Liabilities in Excess of Other Assets

(123,187)

-0.04%

  

 

 

 

  

TOTAL NET ASSETS

$316,930,616

100.00%

* Non-income producing.

** Variable rate security; the coupon rate represents the rate at December 31, 2012.

 

 NOTES TO FINANCIAL STATEMENTS

  

Conestoga Small Cap Fund

  

1. SECURITY TRANSACTIONS

  

At December 31, 2012 the net unrealized appreciation on investments, based on cost for federal income tax purposes of $255,718,178amounted to $61,335,625 which consisted of aggregate gross unrealized appreciation of $72,285,818 and aggregate gross unrealized depreciation of $10,950,193.

     

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, 2012 by major security type:



Valuation Inputs of Assets

 

Level 1

Level 2

Level 3

Total

Common Stock

 

$308,998,809

              $0

              $0

$308,998,809

Exchange Traded Funds

 

              $0

              $0

              $0

              $0

Convertible Bonds

 

              $0

              $0

              $0

              $0

Cash Equivalents

 

$8,054,994

              $0

              $0

$8,054,994

Total

 

$317,053,803

       $0

       $0

$317,053,803




CONESTOGA MID CAP FUND

 

 

     
   

Schedule of Investments

 

 

 

December 31, 2012 (Unaudited)

Shares

  

 Market Value

% of Total Net Assets

COMMON STOCKS

  
     

Consumer Discretionary

  

Auto Parts

    

1,700

 

Gentex Corp.

32,045

 

Recreational Vehicals & Boats

  

770

 

Polaris Industries, Inc.

64,796

 

Retail

    

880

 

Tractor Supply Co.

77,757

 

1,350

 

Urban Outfitters, Inc. *

53,136

 

             Retail Total

130,893

 
     

Consumer Discretionary Sector Total

227,734

10.33%

     

Consumer Staples

    

Foods

    

580

 

The J.M. Smucker Co.

50,019

 
     

Consumer Staples Total

                50,019

2.28%

     

Energy

    

Oil: Crude Producers

  

820

 

SM Energy Co.

42,812

 

Oil Well Equipment & Services

  

400

 

Carbo Ceramics, Inc.

                31,336

 

770

 

Core Laboratories NV

84,169

 

             Services Commercial Total

115,505

 
     

Energy Sector Total

158,317

7.18%

     

Financial Services

    

Financial Data & Systems

  

650

 

Factset Research Systems, Inc.

57,239

 

700

 

Morningstar, Inc.

43,981

 

             Financial Information Services Total

101,220

 

Insurance

    

170

 

Markel Corp.

73,681

 
     

Financial Services Sector Total

174,901

7.93%

     

Healthcare

    

Medical and Dental Instruments and Supplies

  

1,600

 

Align Technology, Inc. *

44,400

 

300

 

CR Bard, Inc.

29,322

 

550

 

Idexx Laboratories, Inc. *

51,040

 

950

 

Sirona Dental Systems, Inc. *

61,237

 

600

 

TECHNE Corp.

41,004

 

            Medical and Dental Instruments and Supplies Total

227,003

 

Pharmaceuticals & Biotech

  

1,320

 

Forest Laboratories, Inc. *

46,622

 

2,130

 

Myriad Genetics, Inc. *

58,043

 

            Pharmaceuticals & Biotech Total

104,665

 
     

Healthcare Sector Total

331,668

15.04%

     

Materials & Processing

  

Building Materials

   

900

 

Fastenal Co.

                41,985

 
     

Materials & Processing Sector Total

                41,985

1.91%

     

Producer Durables

  

Commercial Services

  

1,200

 

Coinstar, Inc. *

                62,412

 

2,420

 

Copart, Inc. *

71,390

 

650

 

IHS, Inc. *

62,400

 

2,000

 

Ritchie Bros Auctioneers, Inc.

                41,780

 

1,930

 

Rollins, Inc.

                42,537

 

1,300

 

Verisk Analytics, Inc. Class A *

66,261

 

              Commercial Services Total

346,780

 

Machinery

    

950

 

Graco, Inc.

                48,915

 

Transportation & Freight

  

800

 

C.H. Robinson Worldwide, Inc.

50,576

 

950

 

Expeditors International of Washington, Inc.

37,573

 

              Transportation & Freight Total

88,149

 

Scientific Instruments & Services

  

1,600

 

Donaldson Co., Inc.

52,544

 

1,550

 

Trimble Navigation Ltd. *

92,659

 

              Scientific Instruments & Services Total

145,203

 
     

Producer Durables Sector Total

629,047

28.53%

     

Technology

    

2,000

 

Qlik Technologies, Inc. *

43,440

 

Electronic Components

  

760

 

IPG Photonics Corp.

50,654

 

Electronics

    

2,600

 

Acacia Research Corp. *

66,714

 

Information Technology

  

1,000

 

Ansys, Inc. *

67,340

 

1,600

 

Dolby Laboratories, Inc. Class A

46,928

 

150

 

Equinix, Inc. *

30,930

 

1,100

 

Garmin, Ltd.

44,825

 

650

 

Intuit, Inc.

38,659

 

2,300

 

Nuance Communications, Inc. *

51,336

 

1,500

 

Micro Systems, Inc. *

63,660

 

              Information Technology Total

343,678

 
     

Technology Sector Total

504,486

22.88%

     

TOTAL COMMON STOCKS

  

 

 

(Cost $2,180,666)

           2,118,157

96.07%

     
     

SHORT-TERM INVESTMENTS

  

92,216

 

UMB Bank Money Market Fiduciary (Cost $92,216) 0.01% **

92,216

4.18%

     

TOTAL INVESTMENTS

  

 

 

(Cost $2,272,882)

2,210,373

100.25%

     
  

Liabilities in Excess of Other Assets

(5,677)

-0.25%

  

 

 

 

  

TOTAL NET ASSETS

$2,204,696

100.00%

* Non-income producing.

** Variable rate security; the coupon rate represents the rate at December 31, 2012.

 

 NOTES TO FINANCIAL STATEMENTS

  

Conestoga Mid Cap Fund

  

1. SECURITY TRANSACTIONS

  

At December 31, 2012 the net unrealized depreciation on investments, based on cost for federal income tax purposes of $2,272,882 amounted to $62,509 which consisted of aggregate gross unrealized appreciation of $92,987 and aggregate gross unrealized depreciation of $155,496.

     

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, 2012 by major security type:


Valuation Inputs of Assets

 

Level 1

Level 2

Level 3

Total

Common Stock

 

$2,118,157

              $0

              $0

$2,118,157

Exchange Traded Funds

 

              $0

              $0

              $0

              $0

Convertible Bonds

 

              $0

              $0

              $0

              $0

Cash Equivalents

 

$92,216

              $0

              $0

$92,216

Total

 

$2,210,373

       $0

       $0

$2,210,373




INSTITUTIONAL ADVISORS LARGECAP FUND

 

 

     
   

Schedule of Investments

 

 

 

December 31, 2012 (Unaudited)

Shares

  

 Market Value

% of Total Net Assets

COMMON STOCKS

  
     

Consumer Discretionary

  

Hotel Restaurants & Leisure

  

21,641

 

Darden Restaurants, Inc.

975,360

 

Media

    

39,489

 

McGraw-Hill Co., Inc.

2,158,864

 

Specialty Retail

    

45,957

 

The Tjx Co., Inc.

1,950,875

 

Textiles, Apparel & Luxury Goods

  

8,520

 

VF Corp.

1,286,264

 
     

 

 

Consumer Discretionary Sector Total

6,371,363

11.39%

     

Consumer Staples

    

Beverages

    

25,559

 

Pepsico, Inc. *

1,749,002

 

Food Products

    

35,261

 

General Mills, Inc.

1,425,250

 

38,370

 

McCormick & Co.

2,437,646

 

         Food Products Total

3,862,896

 

Food & Staples Retailing

  

40,546

 

Walgreen Co.

1,500,607

 

Household Products

  

12,189

 

Colgate Palmolive Co.

1,274,238

 
     

 

 

Consumer Staples Sector Total

8,386,743

14.99%

     

Energy

    

Energy Equipment & Services

  

10,821

 

Diamond Offshore Drilling, Inc.

735,395

 

Oil, Gas & Consumable Fuels

  

19,962

 

Chevron Corp.

2,158,691

 

21,206

 

Exxon Mobil Corp.

1,835,379

 

        Oil, Gas & Consumable Fuels Total

3,994,070

 
     

 

 

Energy Sector Total

           4,729,465

8.46%

     

Financials

    

Commercial Banks

  

58,146

 

US Bancorp.

1,857,183

 

Consumer Finance

   

47,512

 

Discover Financial Services

1,831,588

 

Insurance

    

53,046

 

Marsh & McLennan Companies, Inc.

1,828,496

 
     

 

 

Financials Sector Total

5,517,267

9.86%

     

Health Care

    

Biotechnology

    

19,029

 

Amgen, Inc.

           1,640,300

 

Health Care Equipment & Supplies

  

18,221

 

Baxter International, Inc.

           1,214,612

 

Health Care Providers & Services

  

9,826

 

Laboratory Corp of America Holdings

851,128

 

16,604

 

McKesson Corp.

1,609,924

 

       Health Care Providers & Services Total

2,461,052

 

Pharmaceuticals

    

30,845

 

Johnson & Johnson

2,162,234

 

62,748

 

Pfizer, Inc.

1,573,676

 

       Pharmaceuticals Total

3,735,910

 
     

 

 

Health Care Sector Total

9,051,874

16.18%

     

Industrials

    

Aerospace & Defense

  

17,661

 

United Technologies Corp.

1,448,379

 

20,149

 

Raytheon Co.

1,159,776

 

       Aerospace & Defense Total

           2,608,155

 

Air Freight & Logistics

  

18,719

 

C.H. Robinson Worldwide, Inc.

1,183,415

 

Machinery

    

8,831

 

Flowserve Corp.

           1,296,391

 

9,328

 

Parker-Hannifan Corp.

793,440

 

       Aerospace & Defense Total

           2,089,831

 
     

 

 

Industrials Sector Total

           5,881,401

10.51%

     

Information Technology

  

Communications Equipment

  

25,621

 

Qualcomm, Inc

           1,584,905

 

Computers & Peripherals

  

4,042

 

Apple, Inc.

2,151,043

 

IT Services

    

10,199

 

International Business Machines, Inc.

1,953,618

 

Semiconductors

    

68,096

 

Intel Corp.

1,404,139

 

Software

    

70,334

 

Microsoft Corp.

1,878,600

 

60,944

 

Oracle Corp.

2,030,654

 

       Software Total

           3,909,254

 
     

 

 

Information Technology Sector Total

11,002,959

19.67%

     

Materials

    

Containers & Packaging

  

37,499

 

Ball Corp.

           1,678,080

 
     

 

 

Materials Sector Total

1,678,080

3.00%

     

Telecommunications

  

Diversified Telecommunication

  

43,780

 

AT&T, Inc.

           1,475,824

 
     

 

 

Telecommunications Sector Total

1,475,824

2.64%

     

Utilities

    

Multi-Utilities

    

31,716

 

Wisconsin Energy Corp.

           1,168,735

 
     

 

 

Utilities Sector Total

1,168,735

2.09%

     

TOTAL COMMON STOCKS

  

 

 

(Cost $44,115,876)

         55,263,711

98.79%

     
     

SHORT-TERM INVESTMENTS

  

676,892

 

UMB Bank Money Market Fiduciary 0.01% (Cost $676,892) **

676,892

1.21%

     
     

TOTAL INVESTMENTS

  

 

 

(Cost $44,792,768)

55,940,603

100.00%

     
  

Other Assets in Excess of Liabilities

(569)

0.00%

  

 

 

 
  

TOTAL NET ASSETS

55,940,034

100.00%

* Non-income producing.

** Variable rate security; the coupon rate represents the rate at December 31, 2012.

 

 NOTES TO FINANCIAL STATEMENTS

  

Institutional Advisors LargeCap Fund

  

1. SECURITY TRANSACTIONS

  

At December 31, 2012 the net unrealized appreciation on investments was $11,147,835, which consisted of aggregate gross unrealized appreciation of $11,841,370 and aggregate gross unrealized depreciation of $693,535.

     

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, 2012 by major security type:


Valuation Inputs of Assets

 

Level 1

Level 2

Level 3

Total

Common Stock

 

$55,263,711

              $0

              $0

$55,263,711

Exchange Traded Funds

 

              $0

              $0

              $0

              $0

Convertible Bonds

 

              $0

              $0

              $0

              $0

Cash Equivalents

 

$676,892

              $0

              $0

$676,892

Total

 

$55,940,603

       $0

       $0

$55,940,603




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, 2013


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, 2013


By /s/Robert M. Mitchell

* Robert M. Mitchell

  Treasurer and Chief Financial Officer


Date February 25, 2013


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