<PAGE> 1
---THE---
CONESTOGA
--FUNDS--
Equity Fund
Special Equity Fund
International Equity Fund
Balanced Fund
Bond Fund
Intermediate Income Fund
Short-Term Income Fund
Pennsylvania Tax-Free Bond Fund
Cash Management Fund
U.S. Treasury Securities Fund
Tax-Free Fund
------------------------------
ANNUAL REPORT
OCTOBER 31, 1995
------------------------------
<PAGE> 2
MESSAGE FROM THE CHAIRMAN
To Our Shareholders:
The fiscal year ended October 31, 1995 was one of positive change in both the
financial markets and our fund family.
During the year, the markets demonstrated the value of investor patience and
perseverance by lagging through the end of calendar year 1994, only to rally
strongly through the first nine months of calendar year 1995. Those who remained
invested during this period have experienced gratifying gains in all three asset
categories: stocks, bonds, and cash equivalents.
For The Conestoga Funds, fiscal year 1995 also marked the beginning of an
exciting new phase in our evolution. Among the most significant developments of
1995 was the introduction of a multi-class share system, in which all Conestoga
Fund portfolios are now available in two classes, Retail Shares and
Institutional Shares.
Another important development was the introduction of three new portfolios. Our
new International Equity Fund offers investors the opportunity to take advantage
of the potential growth in the global equity markets. Our new Short-Term Income
Fund provides a convenient vehicle for investors seeking the relative safety and
stability of a quality-oriented, short-term bond fund. And our new Balanced Fund
offers a convenient choice for those who seek the dual advantages of an
investment in both equities and bonds through a single portfolio.
Together, the new share classes and new portfolios make The Conestoga Funds more
useful to a broad range of investors, including those who incorporate our funds
into such increasingly popular programs as employer-sponsored retirement plans
and asset allocation accounts.
The net effect of these and other developments has been strong asset growth for
our fund family. In addition, assets were further expanded in 1995 by the
conversion of Meridian Asset Management's Employee Benefit Collective Funds into
selected Conestoga portfolios. This conversion has helped many of our portfolios
achieve the "critical mass" that can lead to greater investment opportunities
and more efficient cost structures. And, it affirms that our investment
management approach meets the needs of large institutional investors.
Fiscal year 1995 brought a significant operational change as we appointed SEI
Financial Management Corporation and SEI Financial Services Company, both wholly
owned subsidiaries of SEI Corporation ("SEI"), to the roles of administrator and
distributor, respectively, of The Conestoga Funds, replacing The BISYS Group,
Inc. SEI is a leading mutual fund service provider company, and we are pleased
that their experience and advanced systems will be supporting us as we serve the
growing needs of our investors.
With market conditions appearing relatively favorable and our fund family
growing stronger, we look forward to continued progress in the months ahead.
Thank you for your continued confidence in The Conestoga Funds.
Sincerely,
/s/ THOMAS J. TAYLOR
- --------------------
Thomas J. Taylor
Chairman of the Board
<PAGE> 3
MESSAGE FROM THE INVESTMENT ADVISOR
OVERVIEW OF THE U.S. ECONOMY AND FINANCIAL MARKETS
Over the last year of transition, investors have experienced a complete change
in sentiment within the financial markets. This ranged from pessimism during the
latter part of 1994, to near-euphoria in some sectors through the third calendar
quarter of 1995. From today's perspective, it seems neither of these extremes
was justified by the actual direction of economic events.
U.S. economic growth slowed over the past year from its rapid pace of the prior
year. The slowdown, dubbed the "soft landing," was engineered by the Federal
Reserve Board via a series of interest rate increases throughout 1994 and into
early 1995. Interest rate sensitive sectors of the economy, such as the housing
industry, languished with rate increases in excess of 2.5 percentage points. In
the spring of 1995, economic activity fell below the Fed's targeted rate of
2.5%, and the Fed was forced to shift its monetary posture away from being
restrictive. On July 6, 1995, the Fed lowered the short-term target rate by
0.25%, citing receding inflationary pressures. The economy rebounded from its
malaise to end the fiscal year on a stronger note.
After the serious declines of 1994, the U.S. financial markets responded in
textbook fashion to a slow but steadily growing economy with moderate interest
rates and subdued inflation by posting their strongest results since 1991. The
stock market, as measured by the S&P 500 Index, gained 26.4% for the year, while
the bond market's benchmark, the Lehman Aggregate Index, returned 15.7% for the
fiscal year. Other factors contributed to the impressive rallies, such as a
rebounding U.S. dollar, merger activity, cash flow into mutual funds, and the
prospects for a viable balanced budget as well as a capital gains tax cut.
OUTLOOK FOR THE ECONOMY AND U.S. FINANCIAL MARKETS
Now in its fifth year of expansion, the economy appears poised to grow at a
steady pace of 2.0 - 2.5% annualized. Interest rate sensitive sectors have
rebounded with the year-long decline in rates, contributing again to the overall
level of growth. Businesses continue to invest in technology to improve their
worldwide competitiveness, albeit at a slower pace than 1994's 16% increase. The
consumer is holding up his end by spending on services. Inflation is benign and
does not appear to pose a threat for the foreseeable future. The U.S. Congress,
under new leadership, seems determined to reach a compromise on the deficit and
reduce spending over the next decade. Therefore, we are optimistic about the
near-term outlook for the economy, which at the hands of the Federal Reserve can
avoid a recession while not heating up to an inflationary level of growth.
Many of the aforementioned factors which propelled the U.S. markets to new highs
this past year remain in place. The stock market, however, faces the uncertainty
of future earnings, as well as somewhat lofty price/earnings ratios. Corporate
profits, while still expanding at a healthy pace, may find it more difficult to
produce positive surprises, an important ingredient for driving stock prices up
to higher highs. In short, we may see a stock market that moves sideways for a
while, digesting the latest round of good news, while evaluating the prospects
for 1996 earnings.
The bond market is faced with a few near-term obstacles, such as the debt
ceiling, logjams on the balanced budget process, and an unresponsive Federal
Reserve. Longer-term, however, we are optimistic on the bond market, given the
current slow pace of economic growth, and more importantly, the lack of
inflationary pressures. In addition, the final passage of the Budget
Reconciliation Bill could help tilt the Federal Reserve toward an accommodative
policy which is a strong positive for the bond market.
In summary, we believe that investors can look forward to overall positive
conditions for all three asset classes, now that the markets appear to have rid
themselves of the need to overreact. Therefore, while we may not witness the
magnitude of the previous year's dramatic turnaround, we hope to see progress of
a more "normal" nature, with gains coming from the application of prudent
investment management skills rather than any sudden shifts in overall market
sentiment.
Sincerely,
/s/ PHILIP H. BROWN, II
- -----------------------
Philip H. Brown, II
President
Meridian Investment Company
<PAGE> 4
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FUND PERFORMANCE
- --------------------------------------------------------------------------------
The Conestoga Funds 1995 Annual Report--October 31, 1995
EQUITY FUND
Value of $10,000 Investment
<TABLE>
<CAPTION>
CONESTOGA EQUITY CONESTOGA EQUITY CONESTOGA EQUITY STANDARD & POOR'S
FUND, RETAIL FUND, RETAIL FUND, INSTI. 500 INDEX
(WITHOUT LOAD) (WITH LOAD) (SYNTHETIC)
---------------- ----------------- ---------------- -------------------
<S> <C> <C> <C> <C>
2/28/90 $10000 $ 9800 $10000 $10000
10/90 9079 8897 9079 9369
10/91 13561 13290 13561 12509
10/92 14822 14526 14822 13754
10/93 17028 16688 17028 15808
10/94 17415 17066 17415 16417
10/95 21235 20811 21246 20756
</TABLE>
<TABLE>
<CAPTION>
Average
One Five Annualized
Year Year Inception
Return Return to Date
- ----------------------------------------------------------------
<S> <C> <C> <C>
22.00% 18.53% 14.21% Institutional (Synthetic)
21.94% 18.52% 14.20% Retail without Load
19.47% 18.05% 13.80% Retail with Load
</TABLE>
Past performance is not indicative of future performance. The inception date of
the Retail Shares was 2/28/90, and the inception date of the Institutional
Shares was 2/21/95. All Shares were previously classified as Retail, but
Institutional clients were not charged the maximum 2.0% sales charge that
applies to the Retail Shares. Total Returns for the periods prior to the
inception date of the Institutional Shares were calculated using a combination
of Institutional and Retail data (synthetic performance).
For the 12 months ended October 31, 1995, Institutional Shares of the Conestoga
Equity Fund produced a total return of 22.00%, while Retail Shares without Load
produced a total return of 21.94%, and Retail Shares with Load produced a total
return of 19.47%. This compares to a total return of 26.43% for the fund's
benchmark, the Standard & Poor's 500 Index.
One reason for the slight underperformance in relation to the benchmark was the
adoption of a relatively defensive posture during late 1994, when the outlook
for the economy was at its most pessimistic, and the new Republican majority in
Congress was generating political uncertainty. This approach prevented the fund
from realizing some of the early gains of 1995, until we could implement a more
aggressive strategy, which then remained in place for the rest of the fiscal
year.
During a year of strong overall market performance, the fund benefitted from an
overweighting in financial issues, which continued to rise due to a combination
of industry consolidation and good fundamental earnings performance. Among the
portfolio's holdings at year-end were Chase Manhattan, Chemical Bank, Travelers
Group, BankAmerica, and CIGNA.
The fund also saw strong gains in the consumer staples category, particularly in
its holdings of supermarket company stocks. Many supermarket companies are
currently enjoying excellent earnings due to a major shift in pricing power away
from the manufacturer, and into the hands of the retailer.
Looking ahead, we see a favorable environment for equities, as the economy
continues to grow at a moderate rate, while relatively low inflation should
prevent any upward pressure on interest rates.
In this environment, corporate profits should continue to grow steadily,
although we believe the current high valuation levels may already reflect much
of the potential increases for the coming year. So, while we do not expect to
experience the same level of results that were enjoyed during the past fiscal
year, we do look forward to continued, if more modest, gains.
The performance of the Conestoga Equity Fund is measured against the Standard &
Poor's 500 Index, an unmanaged index generally representative of the performance
of the U.S. stock market. The index does not reflect the deduction of expenses
associated with a mutual fund, such as investment management and fund accounting
fees. The Fund's performance reflects the deduction of fees for these
value-added services.
1
<PAGE> 5
- --------------------------------------------------------------------------------
SPECIAL EQUITY FUND
Value of $10,000 Investment
<TABLE>
<CAPTION>
CONESTOGA SPECIAL CONESTOGA SPECIAL CONESTOGA SPECIAL RUSSELL 3000
EQUITY FUND, EQUITY FUND, EQUITY FUND, EQUAL WEIGHTED
RETAIL RETAIL INSTI. INDEX
(WITHOUT LOAD) (WITH LOAD) (SYNTHETIC)
----------------- ----------------- ----------------- --------------
<S> <C> <C> <C> <C>
3/31/94 $10000 $ 9800 $10000 $10000
10/94 10170 9967 10170 10334
10/95 12656 12403 12656 12427
</TABLE>
<TABLE>
<CAPTION>
Average Annualized
One Year Return Inception To Date
- ---------------------------------------------------------------------------
<S> <C> <C>
24.44% 10.30% Institutional (Synthetic)
24.44% 10.30% Retail without Load
21.97% 8.97% Retail with Load
</TABLE>
Past performance is not indicative of future performance. The inception date of
the Retail Shares was 3/15/94, and the inception date of the Institutional
Shares was 2/21/95. All Shares were previously classified as Retail, but
Institutional clients were not charged the maximum 2.0% sales charge that
applies to the Retail Shares. Total Returns for the periods prior to the
inception date of the Institutional Shares were calculated using a combination
of Institutional and Retail data (synthetic performance).
For the 12 months ended October 31, 1995, Institutional Shares of the Conestoga
Special Equity Fund produced a total return of 24.44%, while Retail Shares
without Load produced a total return of 24.44%, and Retail Shares with Load
produced a total return of 21.97%. This compares to a total return of 20.23% for
the fund's benchmark, the Russell 3000 Equal Weighted Index.
The fund's strong performance can be attributed to good overall markets, as well
as key strategic decisions made during the year.
For example, the fund held relatively large positions in the technology area,
with issues such as ComputerVision producing above-average returns. Holdings in
the biotechnology area, such as Gilford Pharmaceuticals, also advanced strongly
during the year.
In addition, while the fund tends to focus on smaller capitalization issues, it
also held significant positions in large-cap stocks in such areas as financial
services, which performed well during the year. Among the financial services
companies in the portfolio at year-end were Bank of Boston, BankAmerica, and
Barnett Banks.
Looking ahead, we believe the environment remains favorable for aggressive
growth companies, and we therefore plan to continue selecting issues that offer
above-average growth potential. In terms of sectors, we plan to remain
overweighted in such areas as financial services and underweighted in the
healthcare industry, which faces continued cost control pressure from government
agencies and private insurers.
However, ours is an issue-by-issue selection process, and we will continue to
search for promising growth companies in any industry, regardless of their
economic sector.
The performance of the Conestoga Special Equity Fund is measured against the
Russell 3000 Equal Weighted Index, an unmanaged index that consists of 3,000
large U.S. companies representing approximately 98% of the U.S. equity market.
The index does not reflect the deduction of expenses associated with a mutual
fund, such as investment management and fund accounting fees. The Fund's
performance reflects the deduction of fees for these value-added services.
2
<PAGE> 6
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FUND PERFORMANCE
- --------------------------------------------------------------------------------
The Conestoga Funds 1995 Annual Report--October 31, 1995
INTERNATIONAL EQUITY FUND
Value of $10,000 Investment
<TABLE>
<CAPTION>
CONESTOGA CONESTOGA CONESTOGA MORGAN STANLEY
INTERNATIONAL INTERNATIONAL INTERNATIONAL CAPITAL INTERNATIONAL
EQUITY FUND, EQUITY FUND, EQUITY FUND, EAFE INDEX
RETAIL RETAIL INSTI.
(WITHOUT LOAD) (WITH LOAD)
-------------- ------------- ------------- ---------------------
<S> <C> <C> <C> <C>
5/31/95 10000 9800 10000 10000
10/95 11024 10804 11044 9956
</TABLE>
<TABLE>
<CAPTION>
Cumulative Average Annualized
Inception to Date Inception to Date
- ------------------------------------------------------------------
<S> <C> <C>
10.10% 23.10% Institutional
9.90% 23.62% Retail without Load
7.75% 17.48% Retail with Load
</TABLE>
Past performance is not indicative of future performance. The inception date of
the Retail and Institutional Shares was 5/15/95.
For the period, May 31, 1995 through October 31, 1995, Institutional Shares of
the Conestoga International Equity Fund produced a total return of 10.90%, while
Retail Shares without Load produced a total return of 10.24%, and Retail Shares
with Load produced a total return of 8.04%. This compares to a total return of
(0.44)% for the fund's benchmark, the Morgan Stanley Capital International EAFE
Index.
The fund's performance was the result of our focus on strong geographic regions,
and strong stock groups.
Geographically, the fund benefitted particularly from its investments in the
Japanese market, where a recovery in stock prices coincided with a substantial
drop in the value of the Yen, resulting in very strong yields for dollar-based
investors. The proper timing of a currency hedge against the Yen helped to
maximize the fund's gains.
In terms of stock groups, the fund focused on global telecommunications and
technology issues, which were particularly strong during the third quarter of
the fiscal year. In addition, the fund's pharmaceutical and consumer products
holdings performed extremely well.
Looking ahead, we remain very bullish on the international equity markets,
particularly in comparison with the U.S. market which appears to be in the later
phases of its current rally. The emerging international markets, by contrast,
appear to have a great deal of room for expansion, and may benefit from capital
inflows in the event of a downturn in U.S. stocks.
The fund has been underweighted in Japan and Europe throughout the past year,
and will likely remain so as we pursue the potential for stronger gains from
less mature and more robust markets elsewhere.
The performance of the Conestoga International Equity Fund is measured against
the Morgan Stanley Capital International EAFE Index, an unmanaged index
generally representative of the performance of over 900 securities listed on the
stock exchanges of countries in Europe, Australia and the Far East. The index
does not reflect the deduction of expenses associated with a mutual fund, such
as investment management and fund accounting fees. The Fund's performance
reflects the deduction of fees for these value-added services.
3
<PAGE> 7
- --------------------------------------------------------------------------------
BALANCED FUND
Value of $10,000 Investment
<TABLE>
<CAPTION>
CONESTOGA CONESTOGA
BALANCED BALANCED
FUND, FUND, CONESTOGA LEHMAN
RETAIL RETAIL BALANCED STANDARD & BROTHERS
(WITHOUT (WITH FUND, POOR'S 500 AGGREGATE BOND
LOAD) LOAD) INSTI. INDEX INDEX
--------- --------- --------- ---------- --------------
<S> <C> <C> <C> <C> <C>
6/30/95 $10000 $ 9800 $10000 $10000 $10000
10/95 10496 10286 10498 10756 10329
</TABLE>
<TABLE>
<CAPTION>
Cumulative Average Annualized
Inception to Date Inception to Date
- ------------------------------------------------------------------------------------
<S> <C> <C>
4.89% 14.71% Institutional
5.27% 16.33% Retail without Load
3.20% 9.72% Retail with Load
</TABLE>
Past performance is not indicative of future performance. The inception date of
the Retail Shares was 6/29/95, and the inception date of the Institutional
Shares was 6/26/95.
For the period June 30, 1995 through October 31, 1995, Institutional Shares of
the Conestoga Balanced Fund produced a total return of 4.98%, while Retail
Shares without Load produced a total return of 4.96%, and Retail Shares with
Load produced a total return of 2.86%. This compares to a total return of 7.56%
for the Standard & Poor's 500 Index and 3.29% for the Lehman Brothers Aggregate
Bond Index, the benchmarks for the Fund.
The fund benefitted from strong performance in both its equity and fixed income
components.
On the equity side, positive results were achieved through holdings in the
financial services sector, where growing profits and continued consolidation
boosted share prices during the period. The consumer staples category also
produced good earnings, resulting in capital appreciation opportunities.
On the fixed income side, the fund experienced good total returns through its
investments in such sectors as industrial bonds and banking and financial
industry securities.
Looking ahead, we see a continuation of the good environment for both equities
and fixed income instruments, with a combination of moderate economic growth and
low inflation.
The performance of the Conestoga Balanced Fund is measured against the Standard
& Poor's 500 Index and the Lehman Brothers Aggregate Bond Index. These unmanaged
indices do not reflect the deduction of expenses associated with a mutual fund,
such as investment management and fund accounting fees. The Fund's performance
reflects the deduction of fees for these value-added services.
4
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FUND PERFORMANCE
- --------------------------------------------------------------------------------
The Conestoga Funds 1995 Annual Report--October 31, 1995
BOND FUND
Value of $10,000 Investment
<TABLE>
<CAPTION>
CONESTOGA CONESTOGA CONESTOGA LEHMAN
BOND BOND BOND BROTHERS
FUND, FUND, FUND, AGGREGATE
RETAIL RETAIL INSTI. BOND
(WITHOUT LOAD) (WITH LOAD) (SYNTHETIC) INDEX
--------------- ------------ ----------- ---------
<S> <C> <C> <C> <C>
2/28/90 $10000 $ 9800 $10000 $10000
10/90 10465 10256 10465 10595
10/91 12053 11812 12053 12269
10/92 13233 12968 13233 13476
10/93 14621 14329 14621 15076
10/94 13937 13658 13937 14523
10/95 15864 15547 15870 16795
</TABLE>
<TABLE>
<CAPTION>
Average
One Five Annualized
Year Year Inception
Return Return to Date
- --------------------------------------------------------------------------
<S> <C> <C> <C>
13.87% 8.68% 8.48% Institutional (Synthetic)
13.83% 8.68% 8.48% Retail without Load
11.55% 8.25% 8.10% Retail with Load
</TABLE>
Past performance is not indicative of future performance. The inception date of
the Retail Shares was 2/28/90, and the inception date of the Institutional
Shares was 2/21/95. All Shares were previously classified as Retail, but
Institutional clients were not charged the maximum 2.0% sales charge that
applies to the Retail Shares. Total Returns for the periods prior to the
inception date of the Institutional Shares were calculated using a combination
of Institutional and Retail data (synthetic performance).
For the 12 months ended October 31, 1995, Institutional Shares of the Conestoga
Bond Fund (formerly called the Income Fund) produced a total return of 13.87%,
while Retail Shares without Load produced a total return of 13.83%, and Retail
Shares with Load produced a total return of 11.55%. This compares to a total
return of 15.65% for the fund's benchmark, the Lehman Brothers Aggregate Bond
Index.
As the fiscal year began, the fund favored more defensive bonds and
shorter-duration issues. This strategy helped to keep the portfolio's overall
duration slightly shorter than that of our benchmark.
As the year progressed, assets were shifted along the yield curve and into
higher yielding industrial, banking and financial issues, and Yankee bonds which
we felt were undervalued.
Throughout the year, utility issues were underweighted, due to competitive rate
uncertainties which are currently inherent in these securities.
Looking ahead, we believe it's unlikely that the Federal Reserve Board will move
interest rates significantly in the months ahead, given the relatively low level
of inflation and continued efforts to reduce the Federal deficit. Therefore, we
look forward to a more stable bond market where income, rather than capital
appreciation, will be the predominant theme. We have positioned the portfolio to
take advantage of these conditions by focusing on the higher-yielding sectors
such as corporate and mortgage-backed securities.
The performance of the Conestoga Bond Fund is measured against the Lehman
Brothers Aggregate Bond Index, an unmanaged index generally representative of
the performance of the U.S. bond market. The index does not reflect the
deduction of expenses associated with a mutual fund, such as investment
management and fund accounting fees. The Fund's performance reflects the
deduction of fees for these value-added services.
5
<PAGE> 9
- --------------------------------------------------------------------------------
INTERMEDIATE INCOME FUND
Value of $10,000 Investment
<TABLE>
<CAPTION>
CONESTOGA CONESTOGA CONESTOGA MERRILL LEHMAN
INTERMEDIATE INTERMEDIATE INTERMEDIATE LYNCH BROTHERS
INCOME INCOME INCOME 1-5 YEAR INTERMEDIATE
FUND, RETAIL FUND, FUND, GOVT/ GOVT/
(WITHOUT RETAIL INSTI. CORPORATE CORPORATE
LOAD) (WITH LOAD) (SYNTHETIC) BOND INDEX BOND INDEX
------------ ------------ ------------ ---------- ------------
<S> <C> <C> <C> <C> <C>
2/28/90 $10000 $ 9800 $10000 $10000 $10000
10/90 10611 10399 10611 10680 10637
10/91 11985 11746 11985 12009 12109
10/92 13062 12800 13062 13124 13319
10/93 13988 13708 13988 13671 14642
10/94 13851 13574 13851 13665 14359
10/95 15222 14917 15225 15097 16157
</TABLE>
<TABLE>
<CAPTION>
Average
One Five Annualized
Year Year Inception
Return Return to Date
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
9.92% 7.49% 7.69% Institutional (Synthetic)
9.90% 7.48% 7.69% Retail without Load
7.69% 7.04% 7.31% Retail with Load
</TABLE>
Past performance is not indicative of future performance. The inception date of
the Retail Shares was 2/28/90, and the inception date of the Institutional
Shares was 2/21/95. All Shares were previously classified as Retail, but
Institutional clients were not charged the maximum 2.0% sales charge that
applies to the Retail Shares. Total Returns for the periods prior to the
inception date of the Institutional Shares were calculated using a combination
of Institutional and Retail data (synthetic performance).
For the 12 months ended October 31, 1995, Institutional Shares of the Conestoga
Intermediate Income Fund produced a total return of 9.92%, while Retail Shares
without Load produced a total return of 9.90%, and Retail Shares with Load
produced a total return of 7.69%. This compares to a total return of 12.52% for
the fund's benchmark, the Lehman Brothers Intermediate Government/Corporate Bond
Index.
Both the name and the investment parameters of this fund changed during the
year, leading to a corresponding change in overall performance. Prior to
February 21, 1995, the fund was known as the Limited Maturity Fund, and was
restricted to maturities of six years (measured by the Merrill Lynch 1-5 Year
Government/Corporate Bond Index). Thereafter, as the Intermediate Income Fund,
the portfolio was permitted to extend to maturities of up to ten years,
requiring the new benchmark. Had this change occurred earlier in the year, the
fund may have been better positioned to take advantage of the bond market rally
by investing in longer-term issues.
Another contributor to the fund's underperformance was its positions in
shorter-term mortgage securities, which are not included in the benchmark. We
believe that these high-quality securities add value to the portfolio over time,
and intend to retain some representation with mortgage-backed securities in the
portfolio.
Since May, the fund has extended its duration somewhat, to a level that is
neutral to its current index. Average maturity has been extended as well, but
remains on the shorter side of the benchmark, standing at 3.75 years at the end
of fiscal 1995.
Looking ahead, we see a positive environment for intermediate term issues, with
relatively low inflation, moderate economic growth, and little activity from the
Fed. Therefore, we are optimistic that the fund will provide the competitive
yield and relative stability that are characteristic of intermediate-term funds.
The performance of the Conestoga Intermediate Income Fund is measured against
the Lehman Brothers Intermediate Government/Corporate Bond Index, an unmanaged
index generally representative of the performance of U.S. Government and
corporate debt with maturities between one and 9.99 years. The index does not
reflect the deduction of expenses associated with a mutual fund, such as
investment management and fund accounting fees. The Fund's performance reflects
the deduction of fees for these value-added services.
6
<PAGE> 10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FUND PERFORMANCE
- --------------------------------------------------------------------------------
The Conestoga Funds 1995 Annual Report--October 31, 1995
SHORT-TERM INCOME FUND
Value of $10,000 Investment
<TABLE>
<CAPTION>
CONESTOGA CONESTOGA MERRILL
SHORT-TERM SHORT-TERM CONESTOGA LYNCH
INCOME INCOME SHORT-TERM 1-YEAR
FUND, RETAIL FUND, INCOME TREASURY
(WITHOUT RETAIL FUND, BILL
LOAD) (WITH LOAD) INSTI. INDEX
---------- ----------- ---------- --------
<S> <C> <C> <C> <C>
5/31/95 $10000 $ 9800 $10000 $10000
10/95 10239 10034 10248 10259
</TABLE>
<TABLE>
<CAPTION>
Cumulative Average Annualized
Inception to Date Inception to Date
- --------------------------------------------------------------------
<S> <C> <C>
2.87% 6.31% Institutional
2.57% 5.71% Retail without Load
0.56% 1.23% Retail with Load
</TABLE>
Past performance is not indicative of future performance. The inception date of
the Retail Shares was 5/17/95, and the inception date of the Institutional
Shares was 5/15/95.
For the period May 31, 1995 through October 31, 1995, Institutional Shares of
the Conestoga Short-Term Income Fund produced a total return of 2.48%, while
Retail Shares without Load produced a total return of 2.39%, and Retail Shares
with Load produced a total return of 0.34%. This compares to a total return of
2.59% for the fund's benchmark, the Merrill Lynch 1-Year Treasury Bill Index.
Due to its short-term nature, the fund did not fully participate in the bond
market rally to the same degree as longer-term funds. As issues matured during
the year, it became increasingly difficult to replace them with securities of
comparable quality and yields.
The fund took advantage of high-quality asset-backed securities, including those
which are backed by credit card, automobile, and short-term finance company
receivables, which offered a yield advantage over U.S. Treasury securities.
This strategy allowed the fund to avoid extending its maturity and thus its
volatility throughout the year. At year-end, the average maturity of the fund
remained at the lower end of its parameters, or approximately one year.
Looking ahead, the fund will continue to seek high-quality issues that offer
some level of yield enhancement, while continuing to pursue a strategy of
relative price stability.
The performance of the Conestoga Short-Term Income Fund is measured against the
Merrill Lynch 1-Year Treasury Bill Index, an unmanaged index generally
representative of the total rate of return of one year Treasury Bills based on
daily closing prices. The index does not reflect the deduction of expenses
associated with a mutual fund, such as investment management and fund accounting
fees. The Fund's performance reflects the deduction of fees for these
value-added services.
7
<PAGE> 11
- --------------------------------------------------------------------------------
PENNSYLVANIA TAX-FREE BOND FUND
Value of $10,000 Investment
<TABLE>
<CAPTION>
CONESTOGA CONESTOGA CONESTOGA LEHMAN
PENNSYLVANIA PENNSYLVANIA PENNSYLVANIA BROTHERS
TAX-FREE TAX-FREE TAX-FREE LEHMAN 5-YEAR
BOND FUND, BOND FUND, BOND FUND, BROTHERS MUNICIPAL
RETAIL RETAIL INST. MUNICIPAL BOND
(WITHOUT LOAD) (WITH LOAD) (SYNTHETIC) BOND INDEX INDEX
-------------- ------------ ------------ ---------- --------
<S> <C> <C> <C> <C> <C>
9/30/92 $10000 $ 9800 $10000 $10000 $10000
10/92 9792 9596 9792 9902 9949
10/93 10962 10743 10962 11295 10922
10/94 10534 10323 10534 10803 10883
10/95 11829 11593 11829 12407 12003
</TABLE>
<TABLE>
<CAPTION>
Average Annualized
One Year Return Inception to Date
- ---------------------------------------------------------------------------
<S> <C> <C>
12.30% 5.48% Institutional (Synthetic)
12.30% 5.48% Retail without Load
10.00% 4.81% Retail with Load
</TABLE>
Past performance is not indicative of future performance. The inception date of
the Retail Shares was 9/21/92, and the inception date of the Institutional
Shares was 2/21/95. All Shares were previously classified as Retail, but
Institutional clients were not charged the maximum 2.0% sales charge that
applies to the Retail Shares. Total Returns for the periods prior to the
inception date of the Institutional Shares were calculated using a combination
of Institutional and Retail data (synthetic performance).
For the 12 months ended October 31, 1995, Institutional Shares of the Conestoga
Pennsylvania Tax-Free Bond Fund produced a total return of 12.30%, while Retail
Shares without Load produced a total return of 12.30%, and Retail Shares with
Load produced a total return of 10.00%. This compares to a total return of
14.85% for the Lehman Brothers Municipal Bond Index and 10.29% for the Lehman
Brothers 5-Year Municipal Bond Index, the benchmarks for the fund.
Throughout the year, tax-free funds were negatively impacted by the continued
prospect of tax reform, including a proposed flat tax which could eliminate the
tax advantage offered by municipal bonds. While we cannot predict the outcome of
this legislative debate, we have taken steps to keep the fund in a defensive
position in order to limit the potential downside.
For example, during most of the year the fund's average maturity was kept to
about 10.5 years, which is at the short end of our target maturity range of 10
to 12 years.
In addition, the portfolio maintained its overall quality level throughout the
year, focusing on high-quality names and non-callable securities. We have
generally steered clear of utility issues, which have been tainted by increasing
competition in the industry. However, we have enhanced the yield of the
portfolio with some hospital and housing issues.
Looking ahead, we plan to remain in a defensive position by maintaining our
shorter maturity level, in the belief that continued uncertainty will affect
both the direction of the market and the availability of attractive new issues.
The performance of the Conestoga Pennsylvania Tax-Free Bond Fund is measured
against the Lehman Brothers Municipal Bond Index and the Lehman Brothers 5-Year
Municipal Bond Index. These unmanaged indices do not refect the deduction of
expenses associated with a mutual fund, such as investment management and fund
accounting fees. The Fund's performance reflects the deduction of fees for these
value-added services.
8
<PAGE> 12
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FUND PERFORMANCE
- --------------------------------------------------------------------------------
The Conestoga Funds 1995 Annual Report--October 31, 1995
CASH MANAGEMENT FUND
For the 12 months ended October 31, 1995, Institutional Shares of the Conestoga
Cash Management Fund produced a total return of 5.43%, while Retail Shares
produced a total return of 5.25%. (Past performance is not indicative of future
performance.) This compares to a total return of 5.38% for the fund's benchmark,
the IBC/Donoghue's Money Fund Average Taxable-First Tier Index.
This performance was achieved through maintaining an average maturity between 35
and 45 days. Increased yield was attained, however, through the addition of
securities which offered favorable yield spreads over Treasury securities.
For much of the year, the largest portion of the fund was invested in
high-quality commercial paper, followed by U.S. Government agency issues and
repurchase agreements backed by Treasuries.
Throughout the year, yields on short-term instruments were dampened somewhat by
the prospect of an easing of credit conditions by the Federal Reserve Board.
Looking ahead, we see this trend continuing. We plan to continue our approach of
enhancing yield through individual security selection.
The performance of the Conestoga Cash Management Fund is measured against the
IBC/Donoghue's Money Fund Average Taxable-First Tier Index, an unmanaged index
based upon the unweighted averages of yields of funds which have similar
investment objectives to the Fund. The index does not reflect the deduction of
expenses associated with a mutual fund, such as investment management and fund
accounting fees. The Fund's performance reflects the deduction of fees for these
value-added services.
U.S. TREASURY SECURITIES FUND
For the 12 months ended October 31, 1995, Institutional Shares of the Conestoga
U.S. Treasury Securities Fund produced a total return of 5.27%, while Retail
Shares produced a total return of 5.16%. (Past performance is not indicative of
future performance.) This compares to a total return of 5.24% for the fund's
benchmark, the IBC/Donoghue's Money Fund Average Taxable-U.S. Treasury & Repo
Index.
Throughout the year, the portfolio maintained an average maturity of between 40
and 50 days, extending on market setbacks to enhance yield. As a result, the
fund outperformed the benchmark.
We will continue to look for opportunities to buy into any weaknesses in the
market, in an effort to extend the maturity and increase the yield on the fund.
The performance of the Conestoga U.S. Treasury Securities Fund is measured
against the IBC/Donoghue's Money Fund Average Taxable-U.S. Treasury & Repo
Index, an unmanaged index based upon the unweighted averages of yields of funds
which have similar investment objectives to the Fund. The index does not reflect
the deduction of expenses associated with a mutual fund, such as investment
management and fund accounting fees. The Fund's performance reflects the
deduction of fees for these value-added services.
TAX-FREE FUND
For the 12 months ended October 31, 1995, Institutional Shares of the Conestoga
Tax-Free Fund produced a total return of 3.43%, while Retail Shares produced a
total return of 3.39%. (Past performance is not indicative of future
performance.) This compares to a total return of 3.31% for the fund's benchmark,
the IBC/Donoghue's Money Fund Average Tax-Free General Purpose Index.
The fund's performance can be attributed to our strategic use of securities of
varying maturities in order to maximize yield. For example, when yields were
less attractive, we made greater use of daily instruments and weekly demand
notes. This gave us the flexibility to purchase longer-maturity issues when
yields rose.
Throughout the year, the average maturity of the portfolio was generally between
40 and 50 days.
Going forward, we will continue to monitor the average maturity of the fund,
considering the prospects of further easing by the Federal Reserve Board. We
will also continue to evaluate the supply and demand factors of the short term
tax-free market in order to enhance the yield of the portfolio.
The performance of the Conestoga Tax-Free Fund is measured against the
IBC/Donoghue's Money Fund Average Tax-Free General Purpose Index, an unmanaged
index based upon the unweighted averages of yields of funds which have similar
investment objectives to the Fund. The index does not reflect the deduction of
expenses associated with a mutual fund, such as investment management and fund
accounting fees. The Fund's performance reflects the deduction of fees for these
value-added services.
9
<PAGE> 13
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Trustees
of The Conestoga Funds:
We have audited the accompanying statements of net assets of The Conestoga Funds
(the Fund) (comprising, respectively, the Equity Fund, the Special Equity Fund,
the International Equity Fund, the Balanced Fund, the Bond Fund (formerly the
Income Fund), the Intermediate Income Fund (formerly the Limited Maturity Fund),
the Short-Term Income Fund, the Pennsylvania Tax-Free Bond Fund, the Cash
Management Fund, the U.S. Treasury Securities Fund, and the Tax-Free Fund) as of
October 31, 1995, and the related statements of operations for the year (or
periods) then ended, the statement of changes in net assets, and the financial
highlights for each of the respective periods presented. These financial
statements and the financial highlights are the responsibility of the Funds'
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free from material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1995, by correspondence with the Fund's custodian and brokers, or
other auditing procedures where correspondence from brokers was not received. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective portfolios comprising The Conestoga Funds as of October 31,
1995 and the results of their operations for the year (or periods) then ended
and the changes in their net assets and the financial highlights for the periods
presented in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
December 8, 1995
10
<PAGE> 14
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
The Conestoga Funds--October 31, 1995
Equity Fund
<TABLE>
<CAPTION>
----------------------------------------------------------
Market
Description Shares Value (000)
----------------------------------------------------------
<S> <C>
COMMON STOCK -- 98.5%
AEROSPACE & DEFENSE -- 0.9%
Lockheed Martin 25,401 $ 1,730
McDonnell Douglas 21,717 1,776
------
Total Aerospace & Defense 3,506
------
AIRCRAFT -- 2.3%
Allied Signal 84,775 3,603
Boeing 27,310 1,792
Textron 30,000 2,063
United Technologies 16,500 1,464
------
Total Aircraft 8,922
------
APPAREL/TEXTILES -- 0.5%
Burlington Industries* 49,771 554
Fruit Of The Loom* 75,000 1,303
------
Total Apparel/Textiles 1,857
------
AUTOMOTIVE -- 1.8%
Ford Motor 205,000 5,894
Magna International, Class A 27,500 1,189
------
Total Automotive 7,083
------
BANKS -- 10.0%
Bank Of Boston 74,000 3,293
BankAmerica 196,900 11,322
Chase Manhattan 206,600 11,774
Chemical Banking 103,000 5,858
Citicorp 99,000 6,423
------
Total Banks 38,670
------
BUILDING & CONSTRUCTION -- 0.6%
Webb (Dell E.) 105,000 2,179
------
Total Building & Construction 2,179
------
CHEMICALS -- 3.2%
Dow Chemical 25,525 1,752
Hercules 5,100 272
IMC Global 36,600 2,562
Monsanto 32,500 3,404
Praxair 155,000 4,185
------
Total Chemicals 12,175
------
COMMUNICATIONS EQUIPMENT -- 1.4%
First Alert* 33,800 524
Motorola 32,175 2,111
Qualcomm* 65,000 2,503
------
Total Communications Equipment 5,138
------
COMPUTER SOFTWARE -- 1.4%
Autotote -- Class A* 90,230 271
Computer Associates
International 52,500 2,887
International Game Technology 146,358 1,701
Pyxis* 24,839 314
------
Total Computer Software 5,173
------
COMPUTER AND OFFICE EQUIPMENT -- 3.1%
Hewlett Packard 14,330 1,327
IBM 98,000 9,531
Novell* 56,435 931
------
Total Computer and Office Equipment 11,789
------
<CAPTION>
----------------------------------------------------------
Market
Description Shares Value (000)
----------------------------------------------------------
<S> <C>
COMPUTERS & SERVICES -- 2.9%
Apple Computer 94,000 $ 3,413
Compaq Computer* 57,500 3,206
Digital Equipment* 84,750 4,587
------
Total Computers & Services 11,206
------
CONCRETE & MINERAL PRODUCTS -- 0.5%
Owens Corning Fiberglass* 46,910 1,988
------
Total Concrete & Mineral Products 1,988
------
CONTAINERS & PACKAGING -- 0.4%
Owens-Illinois* 119,455 1,508
------
Total Containers & Packaging 1,508
------
ELECTRICAL SERVICES -- 6.3%
Central & South West 124,200 3,322
Consolidated Edison New York 142,000 4,313
Pacific Gas & Electric 120,800 3,549
Peco Energy 200,000 5,850
SCE 425,000 7,225
------
Total Electrical Services 24,259
------
ELECTRONIC AND OTHER ELECTRICAL EQUIPMENT -- 3.9%
General Electric 180,000 11,385
Philips Electronics ADR 75,000 2,897
Texas Instruments 13,100 894
------
Total Electronic and Other
Electrical Equipment 15,176
------
ENTERTAINMENT -- 0.3%
MGM Grand* 43,870 1,047
President Casinos* 31,325 96
------
Total Entertainment 1,143
------
ENVIRONMENTAL SERVICES -- 1.0%
Browning Ferris Industries 125,000 3,641
------
Total Environmental Services 3,641
------
FINANCIAL SERVICES -- 4.1%
Dean Witter Discover 89,013 4,428
Fleet Financial Group 55,000 2,131
Household International 38,000 2,138
ITT 40,000 4,901
MBNA 62,900 2,319
------
Total Financial Services 15,917
------
FOOD, BEVERAGE & TOBACCO -- 7.9%
Buenos Aires Embotellado-ADR 27,355 626
IBP 38,200 2,287
Nabisco Holdings -- Class A 179,500 4,824
Philip Morris Companies 173,860 14,691
RJR Nabisco Holdings 256,160 7,877
------
Total Food, Beverage & Tobacco 30,305
------
</TABLE>
11
<PAGE> 15
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
----------------------------------------------------------
Market
Description Shares Value (000)
----------------------------------------------------------
<S> <C>
HOUSEHOLD PRODUCTS -- 0.4%
Maytag 85,800 $ 1,630
------
Total Household Products 1,630
------
INSURANCE -- 4.0%
Aetna Life & Casualty 30,000 2,111
Cigna 30,000 2,974
Equitable Companies 195,500 4,154
The Travelers Group 125,000 6,312
Transport Holdings -- Class A* 625 25
------
Total Insurance 15,576
------
MACHINERY -- 3.0%
Baker Hughes 90,000 1,766
Brunswick 80,800 1,576
Case Equipment 55,000 2,097
Caterpillar 33,700 1,891
Deere 40,000 3,575
McDermott International 30,635 486
------
Total Machinery 11,391
------
MEDICAL PRODUCTS & SERVICES -- 2.6%
Beverly Enterprises* 136,600 1,605
Community Psychiatric* 48,400 526
Coram Healthcare* 100,000 400
FHP International* 45,000 1,091
Foundation Health* 53,704 2,276
Humana* 122,300 2,585
Novacare* 25,964 162
United Healthcare 9,850 523
United States Surgical 37,557 920
------
Total Medical Products & Services 10,088
------
METALS & MINING -- 0.9%
Potash of Saskatchewan 49,400 3,439
------
Total Metals & Mining 3,439
------
OIL AND GAS FIELD EXPLORATION SERVICES -- 9.7%
Ashland 100,000 3,163
British Petroleum Plc ADR 92,000 8,118
Diamond Shamrock 31,750 818
Enron 85,000 2,922
Mobil 78,600 7,919
Repsol S.A. ADR 161,500 4,784
Royal Dutch Petroleum 53,550 6,580
Tosco 57,700 1,991
YPF Sociedad Anonima ADR 72,385 1,240
------
Total Oil and Gas Field
Exploration Services 37,535
------
PAPER & PAPER PRODUCTS -- 0.5%
International Paper 50,000 1,850
------
Total Paper & Paper Products 1,850
------
PHARMACEUTICALS -- 2.6%
Caremark International 23,200 479
Elan Public* 111,100 4,457
Merck 45,805 2,634
Mylan Laboratories 63,100 1,199
Teva Pharmaceutical Industries
ADR 32,672 1,282
------
Total Pharmaceuticals 10,051
------
<CAPTION>
----------------------------------------------------------
Market
Description Shares Value (000)
----------------------------------------------------------
<S> <C>
PHOTOGRAPHIC EQUIPMENT & SUPPLIES -- 0.4%
Xerox 13,000 $ 1,687
------
Total Photographic Equipment & Supplies 1,687
------
RAILROADS -- 1.3%
Burlington Northern Santa Fe 30,000 2,517
CSX 28,600 2,395
------
Total Railroads 4,912
------
RESTAURANTS -- 2.0%
Darden Restaurants* 619,000 7,041
Rally's Hamburgers* 18,426 35
Vicorp Restaurants* 61,534 677
------
Total Restaurants 7,753
------
RETAIL -- 4.6%
Bed, Bath & Beyond* 7,600 238
Borders Group* 187,000 3,202
CML Group 275,000 1,581
Kroger* 169,505 5,657
Lowe's 159,200 4,298
Pep Boys 100,000 2,188
Vons* 23,000 584
------
Total Retail 17,748
------
RUBBER & PLASTIC -- 2.4%
Goodyear Tire & Rubber 245,000 9,310
------
Total Rubber & Plastic 9,310
------
SEMI-CONDUCTORS/INSTRUMENTS -- 2.5%
Intel 73,400 5,129
Micron Technology 24,500 1,730
National Semiconductor* 76,000 1,853
VLSI Technology 40,000 940
------
Total Semi-Conductors/Instruments 9,652
------
SERVICES-EMPLOYMENT AGENCIES -- 0.8%
Manpower 116,000 3,147
------
Total Services-Employment Agencies 3,147
------
SPECIALTY MACHINERY -- 0.9%
Westinghouse Electric 235,000 3,319
------
Total Specialty Machinery 3,319
------
STEEL & STEEL WORKS -- 1.6%
Birmingham Steel 8,070 123
Phelps Dodge 46,600 2,953
USX -- U.S. Steel Group 100,100 2,991
------
Total Steel & Steel Works 6,067
------
</TABLE>
12
<PAGE> 16
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
The Conestoga Funds--October 31, 1995
Equity Fund -- continued
<TABLE>
<CAPTION>
----------------------------------------------------------
Shares/Face Market
Description Amount (000) Value (000)
----------------------------------------------------------
<S> <C>
TELEPHONES & TELECOMMUNICATION -- 5.6%
Cellular Communications -- Class
A* 24,773 $ 1,328
MCI Communications 178,475 4,451
SBC Communications 80,000 4,470
Worldcom* 350,100 11,422
------
Total Telephones & Telecommunication 21,671
------
WHOLESALE -- 0.2%
Jan Bell Marketing* 80,480 272
Michael Foods 3,726 45
Universal -- Va 21,770 457
------
Total Wholesale 774
------
Total Common Stock
(Cost $362,939,414) 379,235
------
PREFERRED STOCKS -- 0.7%
PRINTING & PUBLISHING -- 0.4%
News -- Preferred Shares ADR 72,915 1,331
------
Total Printing & Publishing 1,331
------
TELEPHONES & TELECOMMUNICATION -- 0.3%
Cellular Communications
Preferred* 23,866 1,280
------
Total Telephones & Telecommunication 1,280
------
Total Preferred Stocks
(Cost $2,565,048) 2,611
------
COMMERCIAL PAPER -- 0.9%
American Express
5.750%, 11/01/95 $ 3,336 3,336
------
Total Commercial Paper
(Cost $3,336,000) 3,336
------
Total Investments -- 100.1%
(Cost $368,840,462) 385,182
------
OTHER ASSETS AND LIABILITIES -- (0.1%)
Other Assets and Liabilities,
Net (239)
------
Total Other Assets and Liabilities (239)
------
NET ASSETS:
Portfolio shares of the
Institutional Class (unlimited
authorization -- $0.001 par
value) based on 22,159,807
outstanding shares of
beneficial interest 334,512
Portfolio shares of the Retail
Class (unlimited
authorization -- $0.001 par
value) based on 385,955
outstanding shares of
beneficial interest 5,056
Undistributed net investment
income 101
Undistributed net realized gain
on investments 28,932
Unrealized appreciation on
investments 16,342
------
Total Net Assets -- 100.0% $ 384,943
======
<CAPTION>
----------------------------------------------------------
Market
Description Shares Value (000)
----------------------------------------------------------
<S> <C>
Net Asset Value, Offering Price
and Redemption Price Per
Share -- Institutional Class $ 17.07
======
Net Asset Value and Redemption
Price Per Share -- Retail Class $ 17.08
======
Maximum Offering Price Per
Share -- Retail Class
($17.08 / 98.0%) $ 17.43
======
* Non-income producing security
ADR American Depository Receipt
SPECIAL EQUITY FUND
COMMON STOCK -- 96.1%
AEROSPACE & DEFENSE -- 1.0%
McDonnell Douglas 7,500 $ 613
------
Total Aerospace & Defense 613
------
AGRICULTURE PRODUCTS -- 0.8%
Terra Industries 35,000 442
------
Total Agriculture Products 442
------
APPAREL/TEXTILES -- 3.7%
Burlington Industries* 5,117 57
Cyrk International* 20,100 221
Fieldcrest Cannon* 17,400 335
Gadzooks* 1,000 19
Gucci Group* 2,700 81
Haggar 20,000 330
Oneita Industries* 55,000 371
Oxford Industries 20,000 325
Quaker Fabric* 11,900 107
Supreme International* 18,400 294
------
Total Apparel/Textiles 2,140
------
AUTOMOTIVE -- 1.2%
Ford 13,000 373
Magna International -- Class A 6,500 281
Walbro 3,000 59
------
Total Automotive 713
------
BANKS -- 5.4%
Bank of Boston 14,500 645
BankAmerica 13,900 799
Barnett Banks 7,000 387
Chase Manhattan 12,000 684
Chemical Banking 9,100 518
MBNA 2,200 81
------
Total Banks 3,114
------
BROADCASTING, NEWSPAPERS & ADVERTISING -- 0.1%
Argyle Television* 2,000 34
------
Total Broadcasting, Newspapers & Advertising 34
------
</TABLE>
13
<PAGE> 17
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
----------------------------------------------------------
Market
Description Shares Value (000)
----------------------------------------------------------
<S> <C>
BUILDING & CONSTRUCTION -- 1.4%
Empresas ICA S.A.-ADS 7,500 $ 71
Webb (Del. E.) 35,000 727
------
Total Building & Construction 798
------
CHEMICALS -- 0.4%
Kinark* 65,000 195
------
Total Chemicals 195
------
COMMUNICATIONS EQUIPMENT -- 1.0%
ECI Telecommunications* 9,000 171
First Alert* 22,000 341
Qualcomm* 1,500 58
------
Total Communications Equipment 570
------
COMPUTER SOFTWARE -- 4.7%
Autotote -- Class A* 35,000 105
Checkfree* 3,600 76
Computer Associates
International 8,500 468
Computervision* 72,500 850
Control Data Systems* 60,000 795
Gametek* 10,000 18
Pyxis* 16,947 214
Simware* 18,400 173
------
Total Computer Software 2,699
------
COMPUTERS & SERVICES -- 2.4%
IBM 8,500 826
International Game Technology 21,514 250
Landmark Graphics* 7,200 157
Mizar* 18,200 155
------
Total Computers & Services 1,388
------
CONCRETE & MINERAL PRODUCTS -- 1.3%
Owens Corning Fiberglass* 17,500 742
------
Total Concrete & Mineral Products 742
------
CONTAINERS & PACKAGING -- 0.6%
Owens-Illinois* 25,700 324
------
Total Containers & Packaging 324
------
ELECTRICAL SERVICES -- 1.0%
SCE 35,000 595
------
Total Electrical Services 595
------
ELECTRONIC GAMING DEVICES -- 1.1%
Mikohn Gaming* 110,000 495
Video Lottery Technologies* 34,200 162
------
Total Electronic Gaming Devices 657
------
ELECTRONIC AND OTHER ELECTRICAL EQUIPMENT -- 1.9%
Cincinnati Microwave* 27,300 157
Philips Electronics ADR* 18,300 707
Rexel* 18,800 216
Smartflex Systems* 2,300 34
------
Total Electronic and Other Electrical Equipment 1,114
------
<CAPTION>
----------------------------------------------------------
Market
Description Shares Value (000)
----------------------------------------------------------
<S> <C>
ENERGY & POWER -- 1.3%
Zurn Industries 30,000 $ 750
------
Total Energy & Power 750
------
ENGINEERING CONSULTING -- 0.1%
Corrpro Companies* 9,700 55
------
Total Engineering Consulting 55
------
ENTERTAINMENT -- 1.0%
Boomtown* 17,000 125
Cinergi Pictures Entertainment* 14,300 55
Hollywood Park* 20,000 194
President Casinos* 17,226 53
Sports Club* 38,000 162
------
Total Entertainment 589
------
ENVIRONMENTAL CONSULTING -- 0.5%
Harding Associates* 40,300 277
------
Total Environmental Consulting 277
------
ENVIRONMENTAL SERVICES -- 1.3%
Browning Ferris Industries 25,000 728
------
Total Environmental Services 728
------
FINANCIAL SERVICES -- 3.7%
Donaldson, Luftkin, & Jenrette* 4,800 143
Household International 5,600 315
ITT 5,000 613
Jayhawk Acceptance* 27,400 329
WFS Financial* 45,000 747
------
Total Financial Services 2,147
------
FOOD, BEVERAGE & TOBACCO -- 5.6%
Cott 19,000 157
Michael Foods 51,476 624
Pepsi-Cola Puerto Rico Bottling* 69,200 944
Philip Morris Companies 8,500 718
RJR Nabisco Holdings 19,200 590
Rymer Foods* 178,600 223
------
Total Food, Beverage & Tobacco 3,256
------
HOME BUILDERS -- 0.4%
Belmont Homes* 4,100 72
Cavalier Homes 10,925 185
------
Total Home Builders 257
------
HOTELS & LODGING -- 1.3%
John Q. Hammons Hotels* 9,600 113
Prime Hospitality* 64,500 637
------
Total Hotels & Lodging 750
------
HOUSEHOLD FURNITURE & FIXTURES -- 0.7%
Ameriwood Industries
International* 20,900 105
Winsleow Furniture* 44,180 287
------
Total Household Furniture & Fixtures 392
------
</TABLE>
14
<PAGE> 18
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
The Conestoga Funds--October 31, 1995
Special Equity Fund -- continued
<TABLE>
<CAPTION>
----------------------------------------------------------
Market
Description Shares Value (000)
----------------------------------------------------------
<S> <C>
INSURANCE -- 3.5%
Allstate 740 $ 27
Gryphon Holdings* 36,700 573
Pac Rim Holding* 87,700 252
Prudential Reinsurance Holdings* 32,700 667
St. Paul Companies 3,840 195
The Travelers Group 6,500 328
Transport Holdings* 33 1
------
Total Insurance 2,043
------
LABORATORY ANALYTICAL INSTRUMENTS -- 0.4%
Molecular Dynamics* 1,400 8
Perseptive Biosystems* 21,000 224
------
Total Laboratory Analytical Instruments 232
------
MACHINERY -- 3.9%
Agco 8,950 401
Caterpillar 11,500 645
Deere 7,500 670
Kuhlman 50,000 575
------
Total Machinery 2,291
------
MEDICAL PRODUCTS & SERVICES -- 6.0%
Acme United* 129,200 388
Aequitron Medical* 9,000 71
Community Psychiatric* 12,400 135
Cooper Companies* 50,000 294
Keravision* 34,500 427
Metra Biosystems* 6,800 126
Pace Health Management Systems* 43,500 201
Possis Medical* 22,600 319
Resound* 47,400 373
Scios Nova* 218,200 789
Sterling House* 18,000 223
United Healthcare 1,366 73
Value Health* 5,400 124
------
Total Medical Products & Services 3,543
------
METALS & MINING -- 0.9%
Potash of Saskatchewan 7,800 543
------
Total Metals & Mining 543
------
OIL AND GAS FIELD EXPLORATION SERVICES -- 1.9%
Enron 10,000 344
Repsol S.A. ADR 25,000 740
------
Total Oil and Gas Field
Exploration Services 1,084
------
PAPER & PAPER PRODUCTS -- 1.1%
International Paper 17,000 629
------
Total Paper & Paper Products 629
------
PETROLEUM & FUEL PRODUCTS -- 0.1%
Kelley Oil & Gas* 15,000 38
------
Total Petroleum & Fuel Products 38
------
<CAPTION>
----------------------------------------------------------
Market
Description Shares Value (000)
----------------------------------------------------------
<S> <C> <C>
PHARMACEUTICALS -- 7.1%
Alpharma 18,700 $ 449
Anesta* 45,200 480
Aphton* 24,300 231
Elan* 17,000 682
Guilford Pharmaceuticals* 22,600 373
ISIP Pharmaceuticals* 27,300 276
NBTY* 26,500 133
Pharmaceutical Resources* 91,300 753
Roberts Pharmaceutical* 12,500 242
Teva Pharmaceutical Industries
ADR 14,000 550
------
Total Pharmaceuticals 4,169
------
RAILROADS -- 1.0%
CSX 7,200 603
------
Total Railroads 603
------
REAL ESTATE -- 0.2%
Agree Realty 9,400 139
------
Total Real Estate 139
------
REPAIR SERVICES -- 0.1%
Earl Scheib* 4,900 29
------
Total Repair Services 29
------
RESTAURANTS -- 4.0%
Darden Restaurants* 81,500 927
Hometown Buffet* 44,800 588
Rally's Hamburgers* 5,815 11
Uno Restaurant* 90,000 686
Vicorp Restaurants* 5,000 55
Vie De France* 21,000 66
------
Total Restaurants 2,333
------
RETAIL -- 6.4%
Bed Bath & Beyond* 3,500 109
Bon-Ton Stores* 51,000 332
Border Group* 54,000 926
Chico's Fas* 8,300 37
CML Group 92,200 530
De Rigo S.P.A. ADR* 200 4
Drug Emporium* 92,100 374
Intimate Brands* 5,400 90
Kroger* 16,000 534
Pacific Sunwear of California* 74,900 543
Sportmart Class A* 14,400 68
Sportmart* 14,400 110
Strouds* 19,000 88
------
Total Retail 3,745
------
RUBBER & PLASTIC -- 1.7%
Goodyear Tire And Rubber 13,000 494
O'Sullivan 45,000 495
------
Total Rubber & Plastic 989
------
</TABLE>
15
<PAGE> 19
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
----------------------------------------------------------
Shares/Face Market
Description Amount (000) Value (000)
----------------------------------------------------------
<S> <C>
SEMI-CONDUCTORS -- 3.8%
ESS Technology* 9,100 $ 273
Intel 7,400 517
Lam Research* 7,500 457
Micron Technology 7,800 550
National Semiconductor* 17,300 422
------
Total Semi-Conductors 2,219
------
SERVICES-EMPLOYMENT AGENCIES -- 0.9%
Manpower 20,000 543
------
Total Services-Employment Agencies 543
------
SPORTING AND ATHLETIC GOODS -- 1.2%
Callaway Golf 36,500 597
Meridian Sports* 17,300 104
------
Total Sporting and Athletic Goods 701
------
STEEL & STEEL WORKS -- 2.5%
Ak Steel Holding 22,000 682
Cold Metal Products* 42,800 246
USX 17,500 523
------
Total Steel & Steel Works 1,451
------
TELEPHONES & TELECOMMUNICATION -- 2.3%
Cellular Communications -- Class
A* 5,439 292
Executone Information Systems* 55,900 143
Intermedia Communications of
Florida* 40,500 511
Nextel Communications* 15,000 208
Peoples Telephone* 14,300 37
Telefonica De Espana ADR 4,000 151
------
Total Telephones & Telecommunication 1,342
------
TRUCKING -- 1.6%
Expeditors International of
Washington 25,000 656
PST Vans* 45,900 258
------
Total Trucking 914
------
VIDEO TECHNOLOGY -- 1.3%
Videonics* 55,000 770
------
Total Video Technology 770
------
WHOLESALE -- 0.3%
Government Technology Services* 33,500 188
------
Total Wholesale 188
------
Total Common Stock
(Cost $55,333,061) 55,877
------
COMMERCIAL PAPER -- 4.4%
American Express
5.750%, 11/01/95 $ 2,540 2,540
------
Total Commercial Paper
(Cost $2,540,000) 2,540
------
Total Investments -- 100.5%
(Cost $57,873,061) 58,417
------
OTHER ASSETS AND LIABILITIES -- (0.5%)
Other Assets and Liabilities,
Net (287)
------
Total Other Assets and Liabilities (287)
------
<CAPTION>
----------------------------------------------------------
Market
Description Shares Value (000)
----------------------------------------------------------
<S> <C>
NET ASSETS:
Portfolio shares of the
Institutional Class (unlimited
authorization -- $0.001 par
value) based on 5,027,349
outstanding shares of
beneficial interest $ 48,443
Portfolio shares of the Retail
Class (unlimited
authorization -- $0.001 par
value) based on 64,279
outstanding shares of
beneficial interest 643
Undistributed net investment
income 16
Undistributed net realized gain
on investments 8,483
Unrealized appreciation on
investments 545
------
Total Net Assets: -- 100.0% $ 58,130
======
Net Asset Value, Offering Price
and Redemption Price Per
Share -- Institutional Class $ 11.42
======
Net Asset Value and Redemption
Price Per Share -- Retail Class $ 11.42
======
Maximum Offering Price Per
Share -- Retail Class
($11.42 / 98.0%) $ 11.65
======
* Non-income producing security
ADR American Depository Receipt
INTERNATIONAL EQUITY FUND
FOREIGN COMMON STOCKS 90.2%
ARGENTINA 1.4%
Banco Frances Rio Plata ADR 2,200 $ 49
Cementera Argentina* 6,500 28
Commercial del Plata* 19,000 38
Irsa GDR* 1,400 29
Quilmes Industrial 2,200 39
------
Total Argentina 183
------
AUSTRALIA 0.8%
Newscorp 21,000 106
------
Total Australia 106
------
CHILE 0.2%
Santa Isabel ADR* 1,100 25
------
Total Chile 25
------
FINLAND 3.6%
Nokia, Cl A 8,400 481
------
Total Finland 481
------
</TABLE>
16
<PAGE> 20
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
The Conestoga Funds--October 31, 1995
International Equity Fund -- continued
<TABLE>
<CAPTION>
----------------------------------------------------------
Market
Description Shares Value (000)
----------------------------------------------------------
<S> <C> <C>
FRANCE 1.7%
Axa 800 $ 44
Business Objects ADR* 1,300 56
Castorama 165 27
Cie Bancaire 350 36
SGS-Thomson ADR* 1,500 68
------
Total France 231
------
GERMANY 0.7%
Veba 2,250 92
------
Total Germany 92
------
HONG KONG 5.9%
Cheung Kong Holdings 11,000 62
Citic Pacific 20,800 65
First Pacific 266,000 306
HSBC Holdings 15,200 221
Hutchison Whampoa 12,000 66
Sun Hung Kai Properties 8,000 64
------
Total Hong Kong 784
------
INDIA 0.6%
East India Hotels GDR* 1,400 24
I.T.C. ADR* 4,100 36
Ranbaxy Laboratories GDR 1,000 22
------
Total India 82
------
INDONESIA 1.0%
Indonesian Satellite ADR 4,000 133
------
Total Indonesia 133
------
IRELAND 0.4%
Elan ADR* 1,300 52
------
Total Ireland 52
------
ISRAEL 0.3%
ECI Telecommunications 1,800 34
------
Total Israel 34
------
ITALY 2.7%
Assicurazioni Generali 2,200 51
Falck* 12,200 28
Fila Holdings ADR 900 39
Gucci Group ADR* 3,100 93
Mediobanca 4,000 27
Telecom Italia 71,500 120
------
Total Italy 358
------
JAPAN 27.7%
Advantest 4,000 227
Alpine Electronics 4,000 56
Best Denski 2,000 29
Bridgestone 3,000 42
Canon 6,000 103
Canon Sales 1,000 24
Daini Denden 32 259
Daiwa Securities 7,000 82
Fanuc 2,000 87
<CAPTION>
----------------------------------------------------------
Market
Description Shares Value (000)
----------------------------------------------------------
<S> <C> <C>
Hirose Electric 1,050 $ 67
Ito Yokado 3,000 164
Keyence 500 62
Koa 5,000 81
Kokusai Electric 5,000 114
Komatsu 6,000 47
Kubota 6,000 37
Kurita Water Industries 1,000 28
Kyocera 4,000 328
Makita 2,000 31
Marui 2,000 35
Matsushita Electric 3,000 43
Mitsubishi Electric 5,000 37
Mitsubishi Estate 7,000 75
Mitsubishi Trust & Banking 2,000 28
Mitsui Fudosan 5,000 57
Murata 4,000 140
NEC 20,000 264
Nikon 10,000 143
Nippon Telegraph & Telephone 4 33
Nissan Motors 7,000 47
Nomura Securities 6,000 110
NTT Data Communications 3 75
Sankyo 1,000 22
Sanwa Bank 3,000 51
Sharp 7,000 97
Sony 1,000 45
Sumitomo Bank 3,000 53
Sumitomo Trust & Banking 4,000 46
Takeda Chemical Industries 2,000 28
TDK 1,000 52
Tokyo Electronics 4,000 174
Toray 6,000 37
Toyota Motor 4,000 74
Ushio 2,000 23
Yamanouchi Pharmaceutical 3,000 67
------
Total Japan 3,724
------
LUXEMBOURG 0.1%
Millicom International* 500 17
------
Total Luxembourg 17
------
MALAYSIA 3.8%
Arab-Malaysian Merchant Bank 12,000 148
Malayan Banking 10,000 81
New Straits Times Press 20,000 63
Sime Darby Malaysia 20,000 50
Technology Resources* 44,000 112
United Engineers 9,000 56
------
Total Malaysia 510
------
</TABLE>
17
<PAGE> 21
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
----------------------------------------------------------
Market
Description Shares Value (000)
----------------------------------------------------------
<S> <C> <C>
MEXICO 2.0%
Bufete Industrial ADR* 1,600 $ 21
Cemex, Cl A 5,300 16
Cifra* 35,000 37
Grupo Carso ADR* 2,500 24
Grupo Financiero Banamex, Cl B 11,000 19
Grupo Financiero Banamex, Cl L 550 1
Grupo Financiero Inbursa, Cl C 20,000 55
Grupo Iusacell ADS* 1,400 17
Grupo Modelo, Cl C 5,000 19
Grupo Posadas, Cl A* 52,300 17
Grupo Synkro ADR, Cl B* 80,000 20
Kimberly Clark, Cl A 1,700 22
------
Total Mexico 268
------
NETHERLANDS 4.7%
Advanced Semi-Conductor ADR* 700 33
ASM Litho Holdings ADR* 2,000 97
Baan ADR* 2,300 98
Elsevier 4,500 58
Getronics 1,000 48
International Nederlanden 500 30
Madge Networks ADR* 1,900 80
Philips Electronics 1,800 70
Polygram 1,100 69
Wolters Kluwer 500 46
------
Total Netherlands 629
------
NEW ZEALAND 0.5%
Telecom New Zealand ADR 1,015 67
------
Total New Zealand 67
------
NORWAY 1.2%
Hafslund Nycomed, Cl B 1,200 34
Petroleum Geo-Services ADR* 6,200 120
------
Total Norway 154
------
PERU 0.3%
Banco Wiese ADR 6,900 46
------
Total Peru 46
------
PHILIPPINES 0.5%
San Miguel, Cl B 20,000 66
------
Total Philippines 66
------
SINGAPORE 1.9%
City Development 7,000 43
Creative Technology ADR* 1,100 13
Flextronics ADR* 1,000 23
Singapore Press, F 2,400 38
Straits Steamship Land 14,000 39
United Overseas Bank, F 10,600 93
------
Total Singapore 249
------
SOUTH KOREA 3.1%
Korea Fund 3,000 65
Korea Mobile Telecom GDR* 2,500 93
Samsung Electric Non-Voting
GDS New* 4,000 256
Samsung Electric Voting GDR* 22 2
------
Total South Korea 416
------
<CAPTION>
----------------------------------------------------------
Market
Description Shares Value (000)
----------------------------------------------------------
<S> <C> <C>
SWEDEN 7.4%
Allgan, Cl B 1,600 $ 24
Asea, Cl B 1,400 138
Astra, Cl B 5,200 188
Autoliv 2,200 126
Ericsson Telephone ADR 23,400 500
Pharmacia, Cl B 500 17
------
Total Sweden 993
------
SWITZERLAND 4.9%
Brown Boveri & Cie Bearer 65 75
Ciba Geigy 125 108
Roche Holdings 35 255
Sandoz Pharmaceutical 260 215
------
Total Switzerland 653
------
THAILAND 2.3%
Advanced Info Service, F 9,000 148
Land and House, F 2,000 32
Total Access Communications ADR 11,000 67
United Communications 5,000 63
------
Total Thailand 310
------
UNITED KINGDOM 10.5%
Barclays Bank 5,200 61
BAT 4,200 34
British Sky Broadcasting ADR 5,500 197
Commercial Union 5,300 51
Glaxo Wellcome 7,200 97
Logica 6,100 46
Next 12,000 78
Reuters 16,200 151
Smithkline Beecham 20,500 210
Takare 6,000 19
Tele-Communications ADR, Cl A* 7,500 170
Vodafone Group 26,200 108
WPP Group 11,600 28
Zeneca Group 8,000 149
------
Total United Kingdom 1,399
------
Total Foreign Common Stocks
(Cost $11,387,561) 12,062
------
FOREIGN PREFERRED STOCKS 1.4%
GERMANY 1.4%
SAP 1,250 191
------
Total Germany 191
------
Total Foreign Preferred Stocks
(Cost $158,684) 191
------
</TABLE>
18
<PAGE> 22
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
The Conestoga Funds--October 31, 1995
International Equity Fund -- continued
<TABLE>
<CAPTION>
----------------------------------------------------------
Face Market
Description Amount (000) Value (000)
----------------------------------------------------------
<S> <C>
TIME DEPOSIT 7.7%
Bank of New York -- Cayman
Time Deposit
5.563%, 11/01/95 $ 1,029 $ 1,029
------
Total Time Deposit
(Cost $1,028,558) 1,029
------
Total Investments (99.3% of Net Assets)
(Cost $12,574,803) 13,282
------
OTHER ASSETS AND LIABILITIES 0.7%
Other Assets and Liabilities, Net 99
------
Total Other Assets and Liabilities 99
------
NET ASSETS:
Portfolio shares of
Institutional
Class (unlimited
authorization -- $0.001 par
value) -- based on
1,214,982 outstanding shares 12,425
Portfolio shares of Retail
Class (unlimited
authorization -- $0.001 par
value) -- based on
758 outstanding shares 8
Accumulated net investment loss (5)
Undistributed net realized gain
on investments and foreign
currency transactions 201
Unrealized appreciation on
forward foreign currency
contracts, foreign currency
and translation of other
assets and liabilities in
foreign currency 45
Unrealized appreciation on
investments 707
------
Total Net Assets: -- 100.0% $ 13,381
======
Net Asset Value, Offering Price
and
Redemption Price Per Share --
Institutional Class $ 11.01
======
Net Asset Value and Redemption
Price Per Share -- Retail Class $ 10.99
======
Maximum Offering Price Per
Share -- Retail Class
($10.99 / 98%) $ 11.21
======
* Non-income producing security
ADR American Depository Receipts
ADS American Depository Shares
GDR Global Depository Receipts
GDS Global Depository Shares
Cl Class
F Foreign Registry Shares
BALANCED FUND
COMMON STOCK -- 38.5%
AEROSPACE & DEFENSE -- 0.2%
McDonnell Douglas 900 $ 74
------
Total Aerospace & Defense 74
------
<CAPTION>
----------------------------------------------------------
Market
Description Shares Value (000)
----------------------------------------------------------
<S> <C> <C>
AIRCRAFT -- 1.1%
Allied Signal 3,800 $ 162
Boeing 1,500 98
Textron 1,000 69
United Technologies 900 80
------
Total Aircraft 409
------
APPAREL/TEXTILES -- 0.2%
Burlington Industries* 1,900 21
Fruit Of The Loom* 3,000 52
------
Total Apparel/Textiles 73
------
AUTOMOTIVE -- 0.7%
Ford Motor 7,700 222
Magna International, Class A 1,000 43
------
Total Automotive 265
------
BANKS -- 3.9%
Bank of Boston 2,600 116
BankAmerica 8,300 477
Chase Manhattan 7,800 445
Chemical Banking 4,400 250
Citicorp 3,500 227
------
Total Banks 1,515
------
BOOKS -- 0.0%
Borders Group* 1,000 17
------
Total Books 17
------
BUILDING & CONSTRUCTION -- 0.3%
Webb (Del E.) 5,400 112
------
Total Building & Construction 112
------
CHEMICALS -- 1.5%
Dow Chemical 900 62
Hercules 1,900 101
IMC Global 1,700 119
Monsanto 1,200 126
Praxair 6,500 175
------
Total Chemicals 583
------
COMMUNICATIONS EQUIPMENT -- 0.5%
First Alert* 1,200 19
Motorola 1,300 85
Qualcomm* 2,500 96
------
Total Communications Equipment 200
------
COMPUTER SOFTWARE -- 0.5%
Computer Associates
International 2,400 131
International Game Technology 5,400 63
Pyxis* 1,000 13
------
Total Computer Software 207
------
</TABLE>
19
<PAGE> 23
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
----------------------------------------------------------
Market
Description Shares Value (000)
----------------------------------------------------------
<S> <C>
COMPUTERS & SERVICES -- 2.4%
Apple Computer 3,600 $ 131
Compaq Computer* 2,000 112
Digital Equipment* 3,500 189
Hewlett Packard 800 74
IBM 4,000 389
Novell* 2,252 37
------
Total Computers & Services 932
------
CONCRETE & MINERAL PRODUCTS -- 0.1%
Owens Corning Fiberglass* 1,200 51
------
Total Concrete & Mineral Products 51
------
CONTAINERS & PACKAGING -- 0.2%
Owens-Illinois* 5,300 67
------
Total Containers & Packaging 67
------
ELECTRICAL SERVICES -- 2.5%
American Electric Power 1,800 69
Central And South West 4,100 110
Consolidated Edison New York 5,400 164
Pacific Gas And Electric 4,200 123
Peco Energy 8,500 248
SCE 14,300 243
------
Total Electrical Services 957
------
ELECTRONIC AND OTHER ELECTRICAL EQUIPMENT -- 1.8%
General Electric 7,200 456
Philips Electronics ADR 2,700 104
Texas Instruments 1,800 123
------
Total Electronic and Other
Electrical Equipment 683
------
ENTERTAINMENT -- 0.1%
MGM Grand* 1,800 43
------
Total Entertainment 43
------
ENVIRONMENTAL SERVICES -- 0.3%
Browning Ferris Industries 4,500 131
------
Total Environmental Services 131
------
FINANCIAL SERVICES -- 1.6%
Dean Witter Discover 3,700 183
Fleet Financial Group 2,000 78
Household International 1,400 79
ITT 1,500 184
MBNA 2,500 92
------
Total Financial Services 616
------
FOOD, BEVERAGE & TOBACCO -- 3.1%
IBP 1,900 114
Nabisco Holdings -- Class A 8,000 215
Philip Morris Companies 6,700 566
RJR Nabisco Holdings 10,300 317
------
Total Food, Beverage & Tobacco 1,212
------
HOUSEHOLD PRODUCTS -- 0.1%
Maytag 2,700 51
------
Total Household Products 51
------
<CAPTION>
----------------------------------------------------------
Market
Description Shares Value (000)
----------------------------------------------------------
<S> <C>
INSURANCE -- 1.6%
Aetna Life And Casualty 1,200 $ 84
Allstate 462 17
Cigna 1,200 119
Equitable Companies 7,300 155
The Travelers Group 5,000 253
Transport Holdings -- Class A* 25 1
------
Total Insurance 629
------
MACHINERY -- 1.1%
Baker Hughes 3,000 59
Case Equipment 2,500 95
Caterpillar 1,200 67
Deere 1,800 161
McDermott International 1,300 21
------
Total Machinery 403
------
MEDICAL PRODUCTS & SERVICES -- 0.8%
Beverly Enterprises* 5,100 60
Community Psychiatric* 1,500 16
FHP International* 1,500 36
Foundation Health* 1,600 68
Health Systems International
Class A* 700 21
Humana* 1,500 32
Novacare* 2,300 14
United Healthcare 500 27
United States Surgical 1,700 42
------
Total Medical Products & Services 316
------
METALS & MINING -- 0.3%
Potash of Saskatchewan 1,700 118
------
Total Metals & Mining 118
------
OIL AND GAS FIELD EXPLORATION SERVICES -- 4.0%
Ashland 3,500 111
British Petroleum PLC ADR 4,000 353
Diamond Shamrock 1,400 36
Enron 3,500 120
Mobil 3,200 322
Repsol S.A. ADR 7,100 210
Royal Dutch Petroleum 2,200 270
Tosco 2,300 79
YPF Sociedad Anonima ADR 2,700 46
------
Total Oil and Gas Field Exploration Services 1,547
------
PAPER & PAPER PRODUCTS -- 0.2%
International Paper 1,800 67
------
Total Paper & Paper Products 67
------
PHARMACEUTICALS -- 1.0%
Caremark International 900 19
Elan Public* 3,900 156
Merck 1,600 92
Mylan Laboratories 2,500 48
Teva Pharmaceutical Industries
ADR 1,400 55
------
Total Pharmaceuticals 370
------
</TABLE>
20
<PAGE> 24
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
The Conestoga Funds--October 31, 1995
Balanced Fund -- continued
<TABLE>
<CAPTION>
----------------------------------------------------------
Market
Description Shares Value (000)
----------------------------------------------------------
<S> <C>
PHOTOGRAPHIC EQUIPMENT & SUPPLIES -- 0.2%
Xerox 500 $ 65
------
Total Photographic Equipment & Supplies 65
------
RAILROADS -- 0.5%
Burlington Northern Santa Fe 1,100 92
CSX 1,200 101
------
Total Railroads 193
------
RESTAURANTS -- 0.6%
Darden Restaurants* 17,300 197
Vicorp Restaurants* 2,200 24
------
Total Restaurants 221
------
RETAIL -- 1.5%
CML Group 9,000 52
Kroger* 7,200 239
Lowe's 6,500 176
Pep Boys 3,500 77
Vons* 1,500 38
------
Total Retail 582
------
RUBBER & PLASTIC -- 1.0%
Goodyear Tire And Rubber 9,700 369
------
Total Rubber & Plastic 369
------
SEMI-CONDUCTORS/INSTRUMENTS -- 1.0%
Intel 3,100 216
Micron Technology 900 64
National Semiconductor* 3,200 78
VLSI Technology 1,500 35
------
Total Semi-Conductors/Instruments 393
------
SERVICES-EMPLOYMENT AGENCIES -- 0.3%
Manpower 4,000 109
------
Total Services-Employment Agencies 109
------
SPECIALTY MACHINERY -- 0.3%
Westinghouse Electric 7,500 106
------
Total Specialty Machinery 106
------
STEEL & STEEL WORKS -- 0.6%
Birmingham Steel 300 5
Phelps Dodge 1,900 120
USX -- U.S. Steel Group 3,900 117
------
Total Steel & Steel Works 242
------
TELEPHONES & TELECOMMUNICATION -- 2.3%
Cellular Communications -- Class
A* 2,000 107
MCI Communications 6,500 162
SBC Communications 3,000 168
Worldcom* 14,300 467
------
Total Telephones & Telecommunication 904
------
WHOLESALE -- 0.1%
Universal -- Va 900 19
------
Total Wholesale 19
------
Total Common Stock
(Cost $14,129,471) 14,851
------
PREFERRED STOCKS -- 0.1%
PRINTING & PUBLISHING -- 0.1%
News -- Preferred Shares ADR 3,200 58
------
Total Printing & Publishing 58
------
Total Preferred Stocks
(Cost $64,400) 58
------
<CAPTION>
----------------------------------------------------------
Shares/Face Market
Description Amount (000) Value (000)
----------------------------------------------------------
<S> <C> <C>
U.S. TREASURY OBLIGATIONS -- 34.8%
U.S. Treasury Bonds
8.750%, 05/15/17 $ 1,040 $ 1,320
7.625%, 02/15/25 80 93
U.S. Treasury Notes
7.375%, 05/15/96 700 707
7.500%, 01/31/97 950 971
6.500%, 05/15/97 645 653
8.500%, 05/15/97 85 89
7.375%, 11/15/97 1,645 1,699
8.125%, 02/15/98 355 373
9.000%, 05/15/98 815 878
9.250%, 08/15/98 430 469
8.875%, 11/15/98 1,105 1,201
6.750%, 05/31/99 1,215 1,253
7.125%, 09/30/99 600 627
7.500%, 10/31/99 970 1,028
7.500%, 11/15/01 1,275 1,379
9.250%, 02/15/16 510 673
------
Total U.S. Treasury Obligations
(Cost $13,321,228) 13,413
------
CORPORATE OBLIGATIONS -- 5.2%
Ahmanson H. F
7.875%, 09/01/04 185 197
Bear Stearns
6.875%, 10/01/05 175 175
Capital One Bank
8.125%, 02/27/98 90 94
Chase Manhattan Bank
6.500%, 08/01/05 100 98
Chemical Bank
6.125%, 11/01/08 230 214
First Nationwide
10.000%, 10/01/06 50 59
Lehman Brothers Holdings
7.125%, 09/15/03 175 176
Manufacturers & Traders
7.000%, 07/01/05 165 165
Niagara Mohawk Power
Callable @100 04/01/02
8.750%, 04/01/22 80 76
Provident Bank
6.375%, 01/15/04 160 156
TCI Communications
8.750%, 08/01/15 90 96
Tele-Communications
8.250%, 01/15/03 100 105
United Air Lines
10.670%, 05/01/04 320 375
------
Total Corporate Obligations
(Cost $1,968,434) 1,986
------
</TABLE>
21
<PAGE> 25
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
----------------------------------------------------------
Face Market
Description Amount (000) Value (000)
----------------------------------------------------------
<S> <C>
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 6.2%
FHLMC CMO Pool #E00388
7.000%, 08/01/10 $ 139 $ 140
FHLMC Pool #D63546
7.000%, 09/01/25 350 347
FNMA Pool #190203
8.000%, 02/01/23 176 180
FNMA Pool #290383
7.500%, 05/01/25 159 161
FNMA Pool #303460
6.500%, 07/01/10 288 286
FNMA Pool #317278
7.500%, 07/01/25 175 176
GNMA Pool #356688
7.000%, 07/15/23 386 384
GNMA Pool #780190
7.500%, 07/15/25 715 728
------
Total U.S. Government Agency Obligations
(Cost $2,393,321) 2,402
------
YANKEE BONDS -- 3.3%
AAB-Global
7.250%, 05/31/05 250 260
Carter Holt Harvey
8.375%, 04/15/15 85 94
CSR Finance
7.700%, 07/21/25 200 208
Laidlaw
8.750%, 04/15/25 75 86
Noranda
8.000%, 06/01/03 100 107
Quebec Province
7.500%, 07/15/23 280 281
Santander Finance
7.875%, 04/15/05 100 107
Toronto-Domnion Bank -- New York
6.150%, 10/15/08 140 131
------
Total Yankee Bonds
(Cost $1,251,897) 1,274
------
COMMERCIAL PAPER -- 10.5%
American Express
5.750%, 11/01/95 4,030 4,030
------
Total Commercial Paper
(Cost $4,030,000) 4,030
------
MORTGAGE RELATED -- 0.9%
Premier Auto Trust Series 1995-1
Class A4
7.850%, 09/04/98 110 113
Prudential Home Mortgage
Securities Pool #1994-29 Class
A5
7.000%, 10/25/24 235 230
------
Total Mortgage Related
(Cost $339,218) 343
------
Total Investments -- 99.5%
(Cost $37,497,969) 38,357
------
OTHER ASSETS AND LIABILITIES -- 0.5%
Other Assets and Liabilities, Net 206
------
Total Other Assets and Liabilities 206
------
<CAPTION>
----------------------------------------------------------
Face Market
Description Amount (000) Value (000)
----------------------------------------------------------
<S> <C> <C>
NET ASSETS:
Portfolio shares of the
Institutional Class (unlimited
authorization -- $0.001 par
value) based on 3,707,254
outstanding shares of
beneficial interest $ 37,304
Portfolio shares of the Retail
Class (unlimited
authorization --
$0.001 par value) based on
6,676 outstanding shares of
beneficial interest 68
Undistributed net investment
income 47
Undistributed net realized gain
on investments 285
Unrealized appreciation on
investments 859
------
Total Net Assets: -- 100.0% $ 38,563
======
Net Asset Value, Offering Price
and Redemption Price Per
Share -- Institutional Class $ 10.38
======
Net Asset Value and Redemption
Price Per Share -- Retail Class $ 10.39
======
Maximum Offering Price Per
Share -- Retail Class
($10.39 / 98.0%) $ 10.60
======
</TABLE>
* Non-income producing security
ADR American Depository Receipt
CMO Collateralized Mortgage Obligation
FHLMC Federal Home Loan Mortgage Corporation
FNMA Federal National Mortgage Association
GNMA Government National Mortgage Association
<TABLE>
<CAPTION>
BOND FUND
U.S. TREASURY OBLIGATIONS -- 35.8%
<S> <C> <C>
U.S. Treasury Bonds
10.750%, 05/15/03 $ 200 $ 257
8.750%, 05/15/17 8,745 11,099
8.125%, 08/15/19 195 235
8.500%, 02/15/20 2,600 3,251
7.500%, 11/15/24 500 571
7.625%, 02/15/25 2,450 2,843
U.S. Treasury Notes
7.500%, 01/31/97 1,065 1,089
6.500%, 05/15/97 1,155 1,170
8.500%, 05/15/97 1,225 1,276
8.500%, 07/15/97 2,075 2,170
9.000%, 05/15/98 6,345 6,836
9.250%, 08/15/98 12,140 13,231
8.875%, 02/15/99 4,568 4,991
6.750%, 05/31/99 6,050 6,239
7.125%, 09/30/99 6,335 6,625
</TABLE>
22
<PAGE> 26
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
The Conestoga Funds--October 31, 1995
Bond Fund -- continued
<TABLE>
<CAPTION>
----------------------------------------------------------
Face Market
Description Amount (000) Value (000)
----------------------------------------------------------
<S> <C>
U.S. TREASURY OBLIGATIONS -- CONTINUED
7.500%, 10/31/99 $ 3,955 $ 4,192
7.750%, 01/31/00 3,780 4,051
------
Total U.S. Treasury Obligations
(Cost $69,349,806) 70,126
------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 30.9%
FHLMC Pool #D63546
7.000%, 09/01/25 3,542 3,517
FHLMC Pool #E00388
7.000%, 08/01/10 1,386 1,398
FHLMC Pool #E20013
7.500%, 01/01/08 3,674 3,748
FHLMC Pool #E20185
7.000%, 07/01/10 1,559 1,572
FHLMC Series 1254 Class F
7.250%, 04/15/18 2,020 2,025
FHLMC Series 1411 Class E
6.000%, 02/15/16 2,580 2,562
FHLMC Series 1519 Class F
6.750%, 03/15/07 1,925 1,953
FHLMC Series 1528 Class C
6.500%, 05/15/05 1,920 1,848
FHLMC Series 1606 Class KA
6.250%, 11/15/08 1,971 1,970
FHLMC Series 30 Class D
9.500%, 02/15/20 2,000 2,186
FNMA Pool #190203
8.000%, 02/01/23 1,836 1,883
FNMA Pool #290383
7.500%, 05/01/25 1,651 1,669
FNMA Pool #303460
6.500%, 07/01/10 3,340 3,313
FNMA Pool #317278
7.500%, 07/01/25 1,840 1,860
FNMA Pool #50726
7.000%, 05/01/23 3,534 3,505
FNMA Series 1992-124 Class PG
7.000%, 01/25/18 1,930 1,942
FNMA Series 1992-196 Class E
5.750%, 02/25/03 1,680 1,655
FNMA Series 1992-210 Class H
6.500%, 03/25/19 1,660 1,641
FNMA Series 1992-65 Class H
8.500%, 01/25/20 1,836 1,914
FNMA Series 1993-194 Class B
5.500%, 10/25/98 1,585 1,543
FNMA Series 1993-2 Class PD
6.750%, 01/25/16 1,600 1,603
FNMA Series G92-24 Class E
6.500%, 11/25/20 1,397 1,392
GNMA Pool #286395
9.000%, 04/15/20 2,611 2,744
GNMA Pool #356688
7.000%, 07/15/23 3,825 3,802
GNMA Pool #780190
7.500%, 07/15/25 7,153 7,280
------
Total U.S. Government Agency Obligations
(Cost $59,949,162) 60,525
------
<CAPTION>
----------------------------------------------------------
Face Market
Description Amount (000) Value (000)
----------------------------------------------------------
<S> <C> <C>
CORPORATE OBLIGATIONS -- 15.4%
Ahmanson H. F.
7.875%, 09/01/04 $ 2,500 $ 2,656
Bear Stearns
6.875%, 10/01/05 1,640 1,638
Capital One Bank
8.125%, 02/27/98 910 948
Chase Manhattan Bank
6.500%, 08/01/05 1,005 980
Chemical Bank
6.125%, 11/01/08 2,140 1,988
First Nationwide
10.000%, 10/01/06 485 572
Georgia Pacific
7.700%, 06/15/15 975 997
8.250%, 03/01/23 770 805
Great Lakes Power
8.900%, 12/01/99 750 798
Laidlaw
8.750%, 04/15/25 1,485 1,710
Lehman Brothers
9.875%, 10/15/00 1,050 1,188
Lehman Brothers Holdings
7.125%, 09/15/03 1,725 1,736
Manufacturers & Traders
7.000%, 07/01/05 1,605 1,605
Niagara Mohawk Power
Callable 04/01/02 @ 104
8.750%, 04/01/22 940 888
Provident Bank
6.375%, 01/15/04 1,855 1,813
Southern Cal Gas
7.500%, 06/15/23 665 687
System Energy Resources
10.500%, 09/01/96 1,020 1,057
TCI Communications
8.750%, 08/01/15 905 965
Tele-Communications
Callable 01/15/03
9.250%, 01/15/23 1,885 2,019
Texas Utilities
Callable 04/01/03 @ 103.85
7.875%, 04/01/24 720 751
United Air Lines
10.670%, 05/01/04 2,910 3,427
Virginia Electric & Power
Callable 03/01/05 @ 103.48
8.250%, 03/01/25 840 919
------
Total Corporate Obligations
(Cost $29,483,836) 30,147
------
MORTGAGE RELATED -- 3.3%
GE Capital Mortgage Services
Series 1994-2 Class A4
6.000%, 01/25/09 2,680 2,605
Prudential Home Mortgage
Securities Series 1994-29
Class A5
7.000%, 10/25/24 2,475 2,419
</TABLE>
23
<PAGE> 27
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
----------------------------------------------------------
Face Market
Description Amount (000) Value (000)
----------------------------------------------------------
<S> <C> <C>
MORTGAGE RELATED -- CONTINUED
Residential Funding Mtg Sec 1
Series 1993-S7 Class A6
7.150%, 02/25/08 $ 1,500 $ 1,499
------
Total Mortgage Related
(Cost $6,450,512) 6,523
------
ASSET BACKED SECURITIES -- 2.5%
Banc One Credit Card Master
Trust Series 1994-A Class A
7.150%, 12/15/98 1,970 2,003
Premier Auto Trust Series 1995-1
Class A4
7.850%, 09/04/98 1,080 1,111
Standard Credit Card Master
Trust Series 1991-4 Class B
8.250%, 10/07/97 1,675 1,710
------
Total Asset Backed Securities
(Cost $4,788,625) 4,824
------
YANKEE BOND -- 7.0%
AAB-Global
7.250%, 05/31/05 2,070 2,150
Carter Holt Harvey
8.375%, 04/15/15 865 961
CSR Finance
7.700%, 07/21/25 1,815 1,885
Korea Electric Power
7.750%, 04/01/13 805 830
Noranda
8.000%, 06/01/03 1,330 1,423
Quebec Province
7.500%, 07/15/23 2,895 2,903
Santander Finance
7.875%, 04/15/05 2,265 2,418
Toronto-Domnion Bank-New York
6.150%, 10/15/08 1,160 1,088
------
Total Yankee Bond
(Cost $13,291,504) 13,658
------
MEDIUM TERM NOTE -- 1.2%
Paine Webber
6.730%, 01/20/04 1,300 1,267
Salomon
6.280%, 02/05/97 1,160 1,156
------
Total Medium Term Note
(Cost $2,339,420) 2,423
------
COMMERCIAL PAPER -- 2.4%
American Express
5.750%, 11/01/95 4,607 4,607
------
Total Commercial Paper
(Cost $4,607,000) 4,607
------
Total Investments -- 98.5%
(Cost $190,259,865) 192,833
------
OTHER ASSETS AND LIABILITIES -- 1.5%
Other Assets and Liabilities, Net 2,982
------
Total Other Assets and Liabilities 2,982
------
<CAPTION>
----------------------------------------------------------
Face Market
Description Amount (000) Value (000)
----------------------------------------------------------
<S> <C> <C>
NET ASSETS:
Portfolio shares of the
Institutional Class (unlimited
authorization -- $0.001 par
value) based on 18,422,250
outstanding shares of
beneficial interest $ 189,788
Portfolio shares of the Retail
Class (unlimited
authorization --
$0.001 par value) based on
130,046 outstanding shares of
beneficial interest 1,372
Undistributed net investment
income 384
Undistributed net realized gain
on investments 1,698
Unrealized appreciation on
investments 2,573
------
Total Net Assets: -- 100.0% $ 195,815
======
Net Asset Value, Offering Price
and
Redemption Price Per Share --
Institutional Class $ 10.55
======
Net Asset Value and Redemption
Price Per Share -- Retail Class $ 10.56
======
Maximum Offering Price Per
Share -- Retail Class
($10.56 / 98.0%) $ 10.78
======
</TABLE>
CMO Collateralized Mortgage Obligation
FNMA Federal National Mortgage Association
FHLMC Federal Home Loan Mortgage Corporation
GNMA Government National Mortgage Association
<TABLE>
<CAPTION>
INTERMEDIATE INCOME FUND
U.S. TREASURY OBLIGATIONS -- 61.1%
<S> <C> <C>
U.S. Treasury Notes
7.500%, 01/31/97 $ 4,110 $ 4,202
6.500%, 05/15/97 7,010 7,098
8.500%, 05/15/97 700 729
8.500%, 07/15/97 8,670 9,068
6.500%, 08/15/97 6,890 6,990
7.375%, 11/15/97 2,420 2,499
8.125%, 02/15/98 145 153
9.000%, 05/15/98 4,050 4,364
9.250%, 08/15/98 10,580 11,531
6.750%, 05/31/99 2,215 2,284
7.125%, 09/30/99 7,015 7,336
7.500%, 10/31/99 6,270 6,646
7.750%, 11/30/99 230 246
7.750%, 01/31/00 3,315 3,553
7.500%, 11/15/01 14,690 15,883
7.500%, 02/15/05 2,360 2,602
------
Total U.S. Treasury Obligations
(Cost $84,374,220) 85,184
------
</TABLE>
24
<PAGE> 28
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
The Conestoga Funds--October 31, 1995
Intermediate Income Fund -- continued
<TABLE>
<CAPTION>
----------------------------------------------------------
Face Market
Description Amount (000) Value (000)
----------------------------------------------------------
<S> <C>
CORPORATE OBLIGATIONS -- 13.3%
Bear Stearns
6.875%, 10/01/05 $ 710 $ 709
Capital One Bank
8.125%, 02/27/98 800 833
Chase Manhattan Bank
6.500%, 08/01/05 695 678
Chrysler, Callable @ 100 08/01/97
10.400%, 08/01/99 1,095 1,162
Colonial National Bank
7.000%, 08/01/03 1,595 1,609
First National Bank of Boston
8.000%, 09/15/04 2,000 2,150
Great Lakes Power
8.900%, 12/01/99 990 1,053
KN Energy
9.940%, 02/01/96 300 303
Lehman Bothers
9.875%, 10/15/00 2,000 2,263
Pennsylvania Power And Light
7.750%, 05/01/02 1,280 1,358
Philip Morris, Callable @ 100
06/11/92
6.500%, 12/12/95 250 250
Provident Bank
5.000%, 06/15/96 225 224
System Energy Resources
10.500%, 09/01/96 725 751
Tele-Communications
8.250%, 01/15/03 1,600 1,672
Transcont Gas
8.125%, 01/15/97 1,055 1,076
United Airlines
6.750%, 12/01/97 2,435 2,426
------
Total Corporate Obligations
(Cost $18,319,062) 18,517
------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 10.6%
FHLMC Remic Series 1254 Class F
7.250%, 04/15/18 205 205
FHLMC Remic Series 1411 Class E
6.000%, 02/15/16 1,725 1,713
FHLMC Remic Series 1509 Class A
6.500%, 10/15/00 1,233 1,216
FHLMC Remic Series 1519 Class F
6.750%, 03/15/07 1,755 1,780
FHLMC Remic Series 1528 Class C
6.500%, 05/15/05 1,755 1,689
FHLMC Remic Series 1606 Class KA
6.250%, 11/15/08 757 757
FNMA Pool #303460
6.500%, 07/01/10 1,809 1,795
FNMA Pool #327118
6.500%, 10/01/10 1,360 1,349
FNMA Remic Series 1992-124 Class
PG
7.000%, 01/25/18 300 302
<CAPTION>
----------------------------------------------------------
Face Market
Description Amount (000) Value (000)
----------------------------------------------------------
<S> <C>
FNMA Remic Series 1992-196 Class
E
5.750%, 02/25/03 1,140 $ 1,123
FNMA Remic Series 1993-194 Class
B
5.500%, 10/25/98 $1,900 1,851
FNMA Remic Series G92-24 Class E
6.500%, 11/25/20 947 943
------
Total U.S. Government Agency Obligations
(Cost $14,643,023) 14,723
------
YANKEE BONDS -- 7.0%
BHP Financial
5.625%, 11/01/00 1,730 1,661
Carter Holt Harvey
8.875%, 12/01/04 1,120 1,277
CSR America
6.875%, 07/21/05 1,670 1,693
Korea Development Bank
6.250%, 05/01/00 1,000 994
Laidlaw
7.875%, 04/15/05 1,490 1,585
Noranda
8.000%, 06/01/03 775 829
Santander Finance
7.875%, 04/15/05 1,625 1,734
------
Total Yankee Bonds
(Cost $9,551,082) 9,773
------
MEDIUM TERM NOTES -- 2.2%
First USA Bank
6.880%, 09/12/96 655 661
Fleet Financial Group
7.180%, 07/09/97 160 163
International Leases
7.830%, 11/14/96 1,345 1,370
Paine Webber
6.730%, 01/20/04 750 731
Paine Webber Group
6.630%, 09/17/97 160 161
------
Total Medium Term Notes
(Cost $3,018,165) 3,086
------
ASSET BACKED SECURITIES -- 3.1%
Banc One Credit Card
Master Trust 1994-A
7.150%, 12/15/98 1,675 1,703
Premier Auto Trust Series 1992-2
Class A
6.375%, 09/15/97 15 15
Premier Auto Trust Series 1994-4
Class A4
6.450%, 05/02/98 1,625 1,639
Premier Auto Trust Series 1995-1
Class 4
7.850%, 09/04/98 870 895
------
Total Asset Backed Securities
(Cost $4,230,806) 4,252
------
</TABLE>
25
<PAGE> 29
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
----------------------------------------------------------
Face Market
Description Amount (000) Value (000)
----------------------------------------------------------
<S> <C> <C>
COMMERCIAL PAPER -- 1.1%
American Express
5.750%, 11/01/95 $1,567 $ 1,567
------
Total Commercial Paper
(Cost $1,567,000) 1,567
------
Total Investments -- 98.3%
(Cost $135,703,358) 137,102
------
OTHER ASSETS AND LIABILITIES -- 1.7%
Other Assets and Liabilities, Net 2,371
------
Total Other Assets and Liabilities 2,371
------
NET ASSETS:
Portfolio shares of the
Institutional Class (unlimited
authorization -- $0.001 par
value) based on 12,909,945
outstanding shares of
beneficial interest 135,805
Portfolio shares of the Retail
Class (unlimited
authorization --
$0.001 par value) based on
114,722 outstanding shares of
beneficial interest 1,243
Undistributed net investment
income 261
Undistributed net realized gain
on investments 765
Unrealized appreciation on
investments 1,399
------
Total Net Assets: -- 100.0% $ 139,473
======
Net Asset Value, Offering Price and
Redemption Price Per Share --
Institutional Class $ 10.71
======
Net Asset Value and Redemption
Price Per Share -- Retail Class $ 10.72
======
Maximum Offering Price Per
Share -- Retail Class
($10.72 / 98.0%) $ 10.94
======
</TABLE>
FHLMC Federal Home Loan Mortgage Corporation
FNMA Federal National Mortgage Association
REMIC Real Estate Mortgage Investment Conduit
<TABLE>
<CAPTION>
SHORT-TERM INCOME FUND
U.S. TREASURY OBLIGATIONS -- 65.8%
<S> <C> <C>
U.S. Treasury Notes
7.500%, 01/31/96 $2,975 $ 2,989
5.125%, 03/31/96 4,515 4,508
7.875%, 07/31/96 1,500 1,525
6.500%, 09/30/96 555 559
7.500%, 01/31/97 5,000 5,113
6.500%, 05/15/97 2,140 2,167
8.500%, 05/15/97 190 198
5.625%, 08/31/97 2,000 2,000
7.375%, 11/15/97 2,500 2,582
7.125%, 09/30/99 2,000 2,091
------
Total U.S. Treasury Obligations
(Cost $23,674,766) 23,732
------
</TABLE>
<TABLE>
<CAPTION>
----------------------------------------------------------
Face Market
Description Amount (000) Value (000)
----------------------------------------------------------
<S> <C> <C>
CORPORATE BONDS -- 13.0%
Philip Morris
6.500%, 12/12/95 500 $ 500
Provident Bank
5.000%, 06/15/96 520 518
Smith Barney
6.000%, 03/15/97 600 599
Smithkline Beecham
5.250%, 01/26/96 1,000 999
Tele-Communications
5.280%, 08/20/96 560 555
Transcont Gas
8.125%, 01/15/97 525 536
W.R. Grace
6.500%, 12/01/95 1,000 1,000
------
Total Corporate Bonds
(Cost $4,698,191) 4,707
------
MEDIUM TERM NOTES -- 9.0%
First USA Bank
6.880%, 09/12/96 190 192
Ford Motor Credit
8.850%, 05/01/96 1,000 1,015
International Lease
7.830%, 11/14/96 1,000 1,018
McDonnell Douglas Finance
7.310%, 02/19/96 500 502
Salomon Brothers
9.000%, 07/23/96 500 509
------
Total Medium Term Notes
(Cost $3,224,578) 3,236
------
ASSET BACKED SECURITIES -- 6.1%
Banc One Credit Card
Master Trust 1994-A
7.150%, 12/15/98 420 427
Fical Home Equity Loans 90-1a
8.900%, 11/15/97 23 23
Premier Auto Trust 1994-4
Class A-4
6.450%, 05/02/98 600 605
</TABLE>
26
<PAGE> 30
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
The Conestoga Funds--October 31, 1995
Short-Term Income Fund -- continued
<TABLE>
<CAPTION>
----------------------------------------------------------
Face Market
Description Amount (000) Value (000)
----------------------------------------------------------
<S> <C>
ASSET BACKED SECURITIES -- CONTINUED
Premier Auto Trust Series 1992-2
Class A
6.375%, 09/15/97 $ 103 $ 103
Premier Auto Trust Series 1995-1
Class 4
7.850%, 09/04/98 1,000 1,028
------
Total Asset Backed Securities
(Cost $2,176,405) 2,186
------
U.S. GOVERNMENT AGENCY OBLIGATION -- 1.6%
FNMA Remic Series G92-24 Class E
6.500%, 11/25/20 577 575
------
Total U.S. Government Agency Obligation
(Cost $569,547) 575
------
COMMERCIAL PAPER -- 2.6%
American Express
5.750%, 11/01/95 932 932
------
Total Commercial Paper
(Cost $932,000) 932
------
Total Investments -- 98.1%
(Cost $35,275,487) 35,368
------
OTHER ASSETS AND LIABILITIES -- 1.9%
Other Assets and Liabilities,
Net 702
------
Total Other Assets and Liabilities 702
------
NET ASSETS:
Portfolio shares of the
Institutional Class (unlimited
authorization -- $0.001 par
value) based on 3,587,673
outstanding shares of
beneficial interest 35,870
Portfolio shares of the Retail
Class (unlimited
authorization --
$0.001 par value) based on
1,131 outstanding shares of
beneficial interest 11
Undistributed net investment
income 64
Undistributed net realized gain
on investments 33
Unrealized appreciation on
investments 92
------
Total Net Assets: -- 100.0% $ 36,070
======
Net Asset Value, Offering Price
and
Redemption Price Per Share --
Institutional Class $ 10.05
======
Net Asset Value and Redemption
Price Per Share -- Retail Class $ 10.04
======
Maximum Offering Price Per
Share -- Retail Class
($10.04 / 98.0%) $ 10.24
======
FNMA Federal National Mortgage Association
REMIC Real Estate Mortgage Investment Conduit
<CAPTION>
----------------------------------------------------------
Face Market
Description Amount (000) Value (000)
----------------------------------------------------------
<S> <C> <C>
PENNSYLVANIA TAX-FREE
Bond Fund
MUNICIPAL BONDS -- 100.8%
PENNSYLVANIA -- 100.8%
Allegheny County, Mercy Hospital
of Pittsburgh, RB, AMBAC
6.450%, 04/01/01 $ 200 $ 219
Allegheny County, Montefiore
Hospital Improvement, RB,
Escrowed To Maturity
5.800%, 10/01/03 140 146
Allentown, Water Authority, RB
5.650%, 07/15/96 100 101
Central Bucks, School District,
GO
6.600%, 02/01/03 175 191
Dauphin County, Correctional
Facility, GO, MBIA
5.450%, 08/01/07 200 204
Delaware County GO,
Callable @ 100 09/01/96
7.100%, 12/01/98 170 176
Delaware County, Villanova
University, RB, AMBAC
5.400%, 08/01/08 200 203
Erie County, Correctional
Facility, GO, MBIA, Escrowed
To Maturity
5.850%, 11/01/96 100 102
Gettysburg, Gettysburg College,
RB
5.300%, 02/15/97 250 254
Gettysburg, RB, VRDN
3.950%, 03/01/04 (B) 100 100
Hampden Township,
Sewer Authority, SO,
Escrowed To Maturity
5.350%, 04/01/03 140 145
Harrisburg, Resource Recovery,
RB
5.875%, 09/01/13 (A) 200 201
Hempfield, School District, GO,
FGIC
5.300%, 10/15/14 250 241
Keystone, School District, GO,
FGIC
4.750%, 09/01/06 240 231
Lehigh County, Sewer Authority,
RB, VRDN, FGIC
3.850%, 03/15/05 (B) 200 200
Lower Burrell, Sewer Authority,
RB, AMBAC
5.125%, 02/01/16 250 234
Millcreek Township, Sewer
Authority, RB, MBIA,
Pre-Refunded
6.000%, 11/01/99 (C) 150 159
Montgomery County, Hospital
Authority, Abington Hospital,
Series A, RB, AMBAC
5.125%, 06/01/14 250 232
</TABLE>
27
<PAGE> 31
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
----------------------------------------------------------
Face Market
Description Amount (000) Value (000)
----------------------------------------------------------
<S> <C> <C>
PENNSYLVANIA -- CONTINUED
Montgomery County, Public
Improvements, GO,
Callable @ 100 10/15/03
5.750%, 10/15/11 $ 175 $ 179
Nazareth, School District, GO,
AMBAC
5.500%, 11/15/12 200 198
Northampton County, Lehigh
University, Series A, RB, MBIA
5.750%, 11/15/18 150 150
Pennsylvania State, Allegheny
General Hospital, Series A, RB
6.300%, 09/01/97 200 207
Pennsylvania State, Housing
Finance Authority, Series 37a,
RB
5.450%, 10/01/17 (A) 200 183
Pennsylvania State, Industrial
Development Authority, RB,
AMBAC
5.800%, 07/01/09 250 258
Pennsylvania State,
Miscellaneous Improvement, GO,
Callable @ 100 09/01/99
6.250%, 09/01/00 150 154
Pennsylvania State, Penn State
University, RB, Callable @ 100
03/01/04
6.150%, 03/01/05 (A) 145 157
Pennsylvania State, Turnpike
Commission, Series P, RB
5.100%, 12/01/99 250 257
5.350%, 12/01/01 250 259
Pennsylvania State, University
Improvement, Series F, RB,
AMBAC, Callable @ 100 12/15/02
6.000%, 12/15/09 225 232
Philadelphia, Pennsylvania
Hospital, Series A, RB
5.250%, 02/15/14 250 236
Philadelphia, Philadelphia Gas
Works, Series 15, RB, MBIA
4.600%, 08/01/03 250 247
Quakertown, Hospital Authority,
RB, VRDN
3.750%, 07/01/05 (A) (B) 100 100
Rose Tree Media, School
District, GO, FGIC
5.350%, 02/15/10 150 150
Scranton-Lackawanna, University
of Scranton, Series A, RB,
Callable @ 100 03/01/02
6.150%, 03/01/03 (A) 150 160
Venango, Pollution Control, RB,
VRDN
4.600%, 12/01/12 (A) (B) 200 200
<CAPTION>
----------------------------------------------------------
Face Market
Description Amount (000) Value (000)
----------------------------------------------------------
<S> <C>
Wayne County, Housing Authority,
RB, MBIA
5.350%, 10/01/07 $ 190 $ 186
------
Total Pennsylvania 6,852
------
Total Municipal Bonds
(Cost $6,839,773) 6,852
------
Total Investments -- 100.8%
(Cost $6,839,773) 6,852
------
OTHER ASSETS AND LIABILITIES -- (0.8)%
Other Assets and Liabilities, Net (55)
------
Total Other Assets and Liabilities (55)
------
NET ASSETS:
Portfolio shares of the
Institutional Class (unlimited
authorization -- $0.001 par
value) based on 584,020
outstanding shares of
beneficial interest 6,018
Portfolio shares of the Retail
Class (unlimited
authorization --
$0.001 par value) based on
80,106 outstanding shares of
beneficial interest 825
Undistributed net investment
income 10
Accumulated net realized loss on
investments (68)
Unrealized appreciation on
investments 12
------
Total Net Assets: -- 100.0% $ 6,797
======
Net Asset Value, Offering Price
and Redemption Price Per
Share -- Institutional Class $ 10.23
======
Net Asset Value and Redemption
Price Per Share -- Retail Class $ 10.23
======
Maximum Offering Price Per
Share -- Retail Class
($10.23 / 98.0%) $ 10.44
======
</TABLE>
AMBAC American Municipal Bond Assurance Company
FGIC Federal Guaranty Insurance Corporation
GO General Obligation
MBIA Municipal Bond Insurance Association
RB Revenue Bonds
SO Special Obligation
VRDN Variable Rate Demand Note
(A) Securities are held in connection with a letter of
credit or other credit support.
(B) Floating Rate Security -- the rate reflected on the
Statement of Net Assets is the rate in effect on October
31, 1995.
(C) Pre-Refunded Security -- The Maturity Date shown is the
pre-refunded date.
28
<PAGE> 32
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
The Conestoga Funds--October 31, 1995
CASH MANAGEMENT FUND
<TABLE>
<CAPTION>
----------------------------------------------------------
Face
Description Amount (000) Value (000)
----------------------------------------------------------
<S> <C>
COMMERCIAL PAPER -- 36.6%
Abbey National
5.590%, 01/08/96 $ 5,000 $ 4,947
AIG Funding
6.035%, 11/01/95 3,000 3,000
American Express
5.700%, 11/01/95 5,000 5,002
5.690%, 01/12/96 5,000 4,943
Associates
5.700%, 01/23/96 5,000 4,934
Caisse Des Depots Et
Consignations
5.640%, 01/16/96 5,000 4,940
Eli Lilly
5.820%, 01/16/96 3,000 2,963
General Electric Capital
5.670%, 11/16/95 4,000 3,991
5.660%, 02/12/96 5,000 4,919
International Lease Finance
5.710%, 01/08/96 5,000 4,946
5.630%, 01/22/96 5,000 4,936
J.C. Penney
5.710%, 11/30/95 5,000 4,977
Pepsico
5.670%, 11/03/95 5,000 4,998
Province of Alberta
5.550%, 01/12/96 3,000 2,967
Sara Lee
5.800%, 11/02/95 5,000 4,999
5.710%, 11/08/95 5,000 4,994
Toronto Dominion Bank
5.660%, 01/17/96 5,000 4,939
5.490%, 03/19/96 5,000 4,894
Transamerica Finance
5.620%, 02/15/96 5,000 4,917
------
Total Commercial Paper
(Cost $87,206,251) 87,206
------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 7.5%
FHLB
5.490%, 01/17/96 3,000 2,965
FHLMC
5.560%, 11/21/95 5,000 4,985
FNMA
5.590%, 01/04/96 5,000 4,950
5.580%, 02/20/96 5,000 4,914
------
Total U.S. Government Agency Obligations
(Cost $17,813,615) 17,814
------
BANK NOTES -- 3.8%
FCC National Bank
5.900%, 08/21/96 5,000 4,996
5.650%, 11/01/96 4,000 3,997
------
Total Bank Notes
(Cost $8,993,431) 8,993
------
U.S. TREASURY OBLIGATIONS -- 3.3%
U.S. Treasury Bills
5.410%, 01/11/96 $ 3,000 2,968
5.540%, 07/25/96 5,000 4,795
------
Total U.S. Treasury Obligations
(Cost $7,762,549) 7,763
------
<CAPTION>
----------------------------------------------------------
Face
Description Amount (000) Value (000)
----------------------------------------------------------
<S> <C>
CERTIFICATES OF DEPOSIT -- 2.1%
National Westminster Bank
5.770%, 12/11/95 5,000 $ 5,000
------
Total Certificates of Deposit
(Cost $5,000,000) 5,000
------
REPURCHASE AGREEMENTS -- 48.8%
Hong Kong Shanghai Banking
5.850%, dated 10/31/95,
matures 11/01/95, repurchase
price $35,005,688
(collateralized by
U.S. Treasury Note, par value
$35,000,000, 6.875%, matures
03/31/97: market value
$35,803,299) 35,000 35,000
Merrill Lynch
5.850%, dated 10/31/95,
matures 11/01/95, repurchase
price $46,173,402
(collateralized by various
U.S. Treasury Notes,
total par value $44,803,000,
6.500%-6.875%, 04/30/97: total
market value $47,090,599) 46,166 46,166
Morgan Stanley
5.850%, dated 10/31/95,
matures 11/01/95, repurchase
price $35,005,688
(collateralized by
U.S. Treasury Note, par value
$26,675,000, 9.250%, matures
02/15/16: market value
$35,747,093) 35,000 35,000
------
Total Repurchase Agreements
(Cost $116,165,900) 116,166
------
Total Investments -- 102.1%
(Cost $242,941,746) 242,942
------
OTHER ASSETS AND LIABILITIES -- (2.1%)
Other Assets and Liabilities,
Net (5,064)
------
Total Other Assets and Liabilities (5,064)
------
NET ASSETS:
Portfolio shares of the
Institutional Class (unlimited
authorization -- $0.001 par
value) based on 234,652,830
outstanding shares of
beneficial interest 234,653
Portfolio shares of the Retail
Class (unlimited
authorization --
$0.001 par value) based on
3,361,129 outstanding shares
of
beneficial interest 3,361
</TABLE>
29
<PAGE> 33
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
----------------------------------------------------------
Face
Description Amount (000) Value (000)
----------------------------------------------------------
<S> <C>
NET ASSETS -- CONTINUED
Accumulated net realized loss on
investments $ (136)
------
Total Net Assets: -- 100.0% $ 237,878
======
Net Asset Value, Offering Price
and Redemption Price Per
Share -- Institutional Class $ 1.00
======
Net Asset Value, Offering Price
and Redemption Price Per
Share --
Retail Class $ 1.00
======
</TABLE>
FHLB Federal Home Loan Bank
FHLMC Federal Home Loan Mortgage Corporation
FNMA Federal National Mortgage Association
<TABLE>
<CAPTION>
U.S. TREASURY
SECURITIES FUND
U.S. TREASURY OBLIGATIONS -- 39.9%
<S> <C> <C>
U.S. Treasury Bills
5.720%, 11/09/95 $ 10,000 $ 9,987
5.400%, 12/21/95 20,000 19,850
5.340%, 01/04/96 25,000 24,763
5.310%, 01/11/96 10,000 9,895
5.410%, 01/11/96 10,000 9,893
5.830%, 01/11/96 10,000 9,885
5.780%, 02/08/96 10,000 9,851
5.300%, 03/07/96 15,000 14,720
5.290%, 03/14/96 10,000 9,803
5.310%, 04/04/96 15,000 14,657
6.020%, 04/04/96 5,000 4,875
5.540%, 05/02/96 10,000 9,718
5.540%, 07/25/96 5,000 4,795
U.S. Treasury Notes
7.500%, 02/29/96 10,000 10,062
7.625%, 04/30/96 10,000 10,096
U.S. Treasury Strip
05/15/96 5,000 4,854
------
Total U.S. Treasury Obligations
(Cost $177,703,757) 177,704
------
REPURCHASE AGREEMENTS -- 60.5%
Barclays De Zoete Wedd
5.850%, dated 10/31/95,
matures 11/01/95, repurchase
price $50,008,125
(collateralized by
U.S. Treasury Note, par value
$32,632,000, 11.250%, matures
02/15/15: market value
$51,069,081) 50,000 50,000
Hong Kong Shanghai Banking
5.850%, dated 10/31/95,
matures 11/01/95, repurchase
price $85,013,813
(collateralized by various
U.S. Treasury Notes,
total par value $70,220,000,
7.125%-12.500%,
08/15/14-02/15/23:
total market value
$87,257,890) $ 85,000 85,000
<CAPTION>
----------------------------------------------------------
Face
Description Amount (000) Value (000)
----------------------------------------------------------
<S> <C>
Merrill Lynch
5.850%, dated 10/31/95,
matures 11/01/95, repurchase
price $49,579,455
(collateralized by various
U.S. Treasury Notes, total par
value $40,257,000, 7.250%-
9.875%, 11/15/15-05/15/17:
total market value
$50,566,595) 49,571 $ 49,571
Morgan Stanley
5.850%, dated 10/31/95,
matures 11/01/95, repurchase
price $85,013,813
(collateralized by
U.S. Treasury Note, par value
$66,670,000, 8.750%, matures
08/15/20: market value
$86,689,520) 85,000 85,000
------
Total Repurchase Agreements
(Cost $269,571,400) 269,571
------
Total Investments -- 100.4%
(Cost $447,275,157) 447,275
------
OTHER ASSETS AND LIABILITIES -- (0.4%)
Other Assets and Liabilities,
Net (2,016)
------
Total Other Assets and Liabilities (2,016)
------
NET ASSETS:
Portfolio shares of the
Institutional Class (unlimited
authorization -- $0.001 par
value) based on 444,422,563
outstanding shares of
beneficial interest 444,423
Portfolio shares of the Retail
Class (unlimited
authorization --
$0.001 par value) based on
729,856 outstanding shares of
beneficial interest 730
Undistributed net realized gain
on investments 106
------
Total Net Assets: -- 100.0% $ 445,259
======
Net Asset Value, Offering and
Redemption Price Per Share --
Institutional Class $ 1.00
======
Net Asset Value, Offering and
Redemption Price Per Share --
Retail Class $ 1.00
======
</TABLE>
30
<PAGE> 34
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
The Conestoga Funds--October 31, 1995
TAX-FREE FUND
<TABLE>
<CAPTION>
----------------------------------------------------------
Face
Description Amount (000) Value (000)
----------------------------------------------------------
<S> <C> <C>
MUNICIPAL BONDS -- 99.9%
ALABAMA -- 0.7%
McIntosh, Industrial Development
Board, Ciba Geigy Corporate
Project, RB, VRDN
4.000%, 07/01/04 (A) (B) $ 400 $ 400
------
Total Alabama 400
------
ARIZONA -- 0.4%
Flagstaff, TECP
3.500%, 12/05/95 (B) 250 250
------
Total Arizona 250
------
ARKANSAS -- 4.9%
Mesa, Municipal Developement,
TECP
3.800%, 12/06/95 (B) 3,000 3,000
------
Total Arkansas 3,000
------
COLORADO -- 3.2%
Colorado State, Health
Facilities Authority, RB,
VRDN, MBIA
3.900%, 10/01/14 (A) 1,955 1,955
------
Total Colorado 1,955
------
FLORIDA -- 1.1%
Hillsborough, Pollution Control,
RB, VRDN
4.000%, 09/01/25 (A) (B) 700 700
------
Total Florida 700
------
GEORGIA -- 3.9%
Burke County, TECP
3.750%, 12/07/95 (B) 2,400 2,400
------
Total Georgia 2,400
------
HAWAII -- 2.4%
St County Honolulu, TECP
3.800%, 12/05/95 (B) 1,500 1,500
------
Total Hawaii 1,500
------
ILLINOIS -- 1.9%
Chicago, O'Hare Airport, RB,
VRDN
3.900%, 01/01/18 (A) (B) 1,200 1,200
------
Total Illinois 1,200
------
KANSAS -- 4.8%
Burlington, TECP
3.750%, 11/15/95 (B) 1,450 1,450
3.850%, 12/13/95 (B) 1,500 1,500
------
Total Kansas 2,950
------
KENTUCKY -- 3.6%
Jefferson County, TECP
3.800%, 11/20/95 (B) 2,200 2,200
------
Total Kentucky 2,200
------
LOUISIANA -- 2.5%
Louisiana State, Public
Facilities, RB, VRDN, FGIC
3.900%, 09/01/10 (A) $ 1,565 1,565
------
Total Louisiana 1,565
------
<CAPTION>
----------------------------------------------------------
Face
Description Amount (000) Value (000)
----------------------------------------------------------
<S> <C> <C>
MICHIGAN -- 4.5%
Delta County, TECP
3.750%, 11/21/95 (B) 1,300 $ 1,300
Michigan State, Storage Tank
Financial Authority, RB, VRDN
3.900%, 12/01/04 (A) (B) 1,500 1,500
------
Total Michigan 2,800
------
MINNESOTA -- 6.0%
Robbinsdale, Industrial
Development, Unicare Homes
Project,
RB, VRDN
4.000%, 10/01/14 (A) (B) 1,100 1,100
Rochester, TECP
3.150%, 11/09/95 (B) 1,100 1,100
3.800%, 01/22/96 (B) 1,500 1,500
------
Total Minnesota 3,700
------
MISSISSIPPI -- 6.2%
Independence, Waste, TECP
3.500%, 11/03/95 (B) 2,000 2,000
Jackson County, Pollution
Control, RB, VRDN
3.900%, 12/01/16 (A) 1,000 1,000
Perry County, Pollution Control,
RB, VRDN
3.950%, 03/01/02 (A) (B) 800 800
------
Total Mississippi 3,800
------
MISSOURI -- 1.1%
Kansas City, Hospital, RB, VRDN,
MBIA
4.000%, 04/15/15 (A) 700 700
------
Total Missouri 700
------
MONTANA -- 1.0%
Billings, Industrial
Development, RB, VRDN
3.950%, 12/01/14 (A) (B) 600 600
------
Total Montana 600
------
NEW YORK -- 2.1%
New York, Water Finance
Authority, RB, VRDN, FGIC
4.000%, 06/15/22 (A) 300 300
4.000%, 06/15/23 (A) 1,000 1,000
------
Total New York 1,300
------
NORTH CAROLINA -- 6.6%
Eastern Municipal Agency, Power
Systems, RB, Prerefunded
01/01/96 @ 103
7.750%, 01/01/96 (C) 2,000 2,070
</TABLE>
31
<PAGE> 35
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
----------------------------------------------------------
Face
Description Amount (000) Value (000)
----------------------------------------------------------
<S> <C> <C>
NORTH CAROLINA -- CONTINUED
North Carolina, Municipal Power,
TECP
3.750%, 01/24/96 (B) $ 2,000 $ 2,000
------
Total North Carolina 4,070
------
OHIO -- 8.1%
Ohio State, Air Quality
Development Authority, RB,
VRDN
4.000%, 09/01/30 (A)(B) 2,000 2,000
Ohio State, Air Quality, TECP
3.700%, 11/06/95 (B) 3,000 3,000
------
Total Ohio 5,000
------
PENNSYLVANIA -- 2.4%
Delaware County, TECP, FGIC
3.600%, 11/02/95 1,500 1,500
------
Total Pennsylvania 1,500
------
TEXAS -- 12.3%
Harris County, RB, VRDN
4.000%, 03/01/24 (A) (B) 1,100 1,100
San Antonio, Independent School
District, GO, Prerefunded
11/01/95 @ 100
8.000%, 11/01/95 (C) 1,700 1,700
Texas A & M, TECP
3.800%, 12/08/95 (B) 1,500 1,500
Texas Port Development
Authority, Stolt Terminals
Project, RB, VRDN
3.850%, 01/15/14 (A) (B) 1,300 1,300
Texas State, TAN
4.750%, 08/30/96 2,000 2,012
------
Total Texas 7,612
------
VIRGINIA -- 3.2%
Chesapeake, Independent
Development Authority, TECP
3.600%, 11/06/95 (B) 1,000 1,000
Penninsula Ports, TECP
3.650%, 11/07/95 (B) 1,000 1,000
------
Total Virginia 2,000
------
WASHINGTON, D.C. -- 4.6%
District of Columbia, Education
Bonds, American University
Issue A, RB, VRDN
3.950%, 12/01/15 (A) (B) 2,835 2,835
------
Total Washington, D.C. 2,835
------
WYOMING -- 12.5%
Converse, TECP
3.500%, 11/06/95 (B) 1,000 1,000
Gillette County, TECP
3.700%, 11/17/95 (B) 1,000 1,000
<CAPTION>
----------------------------------------------------------
Face
Description Amount (000) Value (000)
----------------------------------------------------------
<S> <C> <C>
Lincoln County, TECP
3.700%, 11/21/95 (B) $ 1,400 $ 1,400
Sweetwater County, TECP
3.650%, 12/08/95 2,500 2,499
Uinta County, Pollution Control,
RB, VRDN
3.900%, 08/15/02 (A) (B) 1,800 1,800
------
Total Wyoming 7,699
------
Total Municipal Bonds
(Cost $61,736,077) 61,736
------
Total Investments -- 99.9%
(Cost $61,736,077) 61,736
------
OTHER ASSETS AND LIABILITIES -- 0.1%
Other Assets and Liabilites, Net 55
------
Total Other Assets and Liabilities 55
------
NET ASSETS:
Portfolio shares of the
Institutional Class (unlimited
authorization -- $0.001 par
value) based on 60,491,930
outstanding shares of
beneficial interest 60,492
Portfolio shares of the Retail
Class (unlimited
authorization --
$0.001 par value ) based on
1,281,648 outstanding shares
of
beneficial interest 1,282
Undistributed net realized gain
on investments 17
------
Total Net Assets: -- 100.0% $ 61,791
======
Net Asset Value, Offering and
Redemption Price Per Share --
Institutional Class $ 1.00
======
Net Asset Value, Offering and
Redemption Price Per Share --
Retail Class $ 1.00
======
</TABLE>
FGIC Financial Guaranty Insurance Corporation
GO General Obligation
MBIA Municipal Bond Insurance Association
RB Revenue Bond
TAN Tax Anticipation Note
TECP Tax Exempt Commercial Paper
VRDN Variable Rate Demand Note
(A) Floating Rate Security -- the rate reflected on the
Statement of Net Assets is the rate in effect on October
31, 1995.
(B) Securities are held in conjunction with a letter of
credit or other credit support.
(C) The maturity date shown is the pre-refunded date.
32
<PAGE> 36
STATEMENT OF OPERATIONS (000)
- --------------------------------------------------------------------------------
The Conestoga Funds--For the year ended October 31, 1995
<TABLE>
<CAPTION>
------- ------- ------------ --------
SPECIAL INTERNATIONAL
EQUITY EQUITY EQUITY BALANCED
FUND FUND FUND(1) FUND(2)
------- ------- ------------ --------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest Income $ 582 $ 121 $ 50 $ 427
Dividend Income 4,507 351 48 104
Less Foreign Taxes Withheld -- -- (6) --
------- ------- -------- -------
Total Investment Income 5,089 472 92 531
------- ------- -------- -------
EXPENSES:
Investment Advisory Fees 1,503 480 51 89
Investment Advisory Fees Waived -- (466) -- (30)
Reimbursement from Advisor -- (50) -- --
Administrator Fees 352 56 9 20
Administrator Fees Waived (97) (18) -- (1)
Shareholder Servicing Fees(3) 38 8 -- --
Shareholder Servicing Fees Waived -- (8) -- --
Distribution Fees(4) 17 2 -- --
Distribution Fees Waived (10) (2) -- --
Registration Fees 114 20 5 4
Custody and Accounting Fees 71 30 17 2
Professional Fees 48 11 1 4
Transfer Agent Fees 86 25 1 4
Printing Fees 25 4 1 1
Pricing Expense 3 -- 8 --
Trustee Fees 12 2 -- 1
Insurance and Other Fees 3 2 2 1
Amortization of Deferred Organization Costs -- 8 2 2
------- ------- -------- -------
Total Expenses 2,165 104 97 97
------- ------- -------- -------
NET INVESTMENT INCOME (LOSS) 2,924 368 (5) 434
------- ------- -------- -------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net Realized Gain (Loss) on Security Transactions 28,979 8,512 (33) 285
Net Realized Gain on Foreign Currency Transactions -- -- 234 --
Net Change in Unrealized Appreciation on Investments 12,894 1,127 707 859
Net Change in Unrealized Appreciation on Foreign
Currency
and Translation of Other Assets and Liabilities in
Foreign Currencies -- -- 45 --
------- ------- -------- -------
Net Realized and Unrealized Gain (Loss) on
Investments: 41,873 9,639 953 1,144
------- ------- -------- -------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $44,797 $10,007 $ 948 $1,578
------- ------- -------- -------
------- ------- -------- -------
</TABLE>
Amounts designated as "--" are either $0 or have been rounded to $0.
(1) The International Equity Fund and the Short-Term Income Fund commenced
operations on May 15, 1995.
(2) The Balanced Fund commenced operations on June 26, 1995.
(3) Shareholder Servicing Fees relate to a Shareholder Service Plan that was in
effect through February 20, 1995.
(4) Distribution Fees relate to a Distribution Plan effective February 21, 1995
and are incurred solely by the Retail Class.
The accompanying notes are an integral part of the financial statements.
33
<PAGE> 37
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
------- ------------ ---------- ------------ ---------- ------------- --------
PENNSYLVANIA
INTERMEDIATE SHORT-TERM TAX-FREE CASH U.S. TREASURY
BOND INCOME INCOME BOND MANAGEMENT SECURITIES TAX-FREE
FUND FUND FUND(1) FUND FUND FUND FUND
------- ------------ ---------- ------------ ---------- ------------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 6,924 $4,760 $1,095 $323 $ 11,680 $21,001 $2,484
-- -- -- -- -- -- --
-- -- -- -- -- -- --
------- --------- -------- -------- -------- ---------- -------
6,924 4,760 1,095 323 11,680 21,001 2,484
------- --------- -------- -------- -------- ---------- -------
750 552 135 46 794 1,457 259
(409) (365) (82) (39) (397) (456) (158)
-- (6) -- (24) -- -- --
176 129 31 11 366 671 120
(13) (5) -- (3) -- (35) (35)
21 14 -- 5 145 266 51
(3) (8) -- (5) (62) (106) (51)
3 4 -- 2 10 30 5
(1) (2) -- (2) (3) (13) (5)
63 47 13 1 53 63 21
46 38 3 21 64 100 27
31 26 3 4 62 116 19
39 36 5 11 43 61 23
12 9 2 2 20 44 9
2 5 1 1 -- -- --
6 4 1 -- 11 24 4
3 6 1 1 19 45 7
-- -- 1 -- -- -- --
------- --------- -------- -------- -------- ---------- -------
726 484 114 32 1,125 2,267 296
------- --------- -------- -------- -------- ---------- -------
6,198 4,276 981 291 10,555 18,734 2,188
------- --------- -------- -------- -------- ---------- -------
3,058 1,152 32 (68) 2 41 (4)
-- -- -- -- -- -- --
3,499 1,825 92 501 -- -- --
-- -- -- -- -- -- --
------- --------- -------- -------- -------- ---------- -------
6,557 2,977 124 433 2 41 (4)
------- --------- -------- -------- -------- ---------- -------
$12,755 $7,253 $1,105 $724 $ 10,557 $18,775 $2,184
------- --------- -------- -------- -------- ---------- -------
------- --------- -------- -------- -------- ---------- -------
</TABLE>
The accompanying notes are an integral part of the financial statements.
34
<PAGE> 38
STATEMENT OF CHANGES IN NET ASSETS (000)
- --------------------------------------------------------------------------------
The Conestoga Funds--October 31, 1995
<TABLE>
<CAPTION>
-------------------- -------------------- ----------- ---------- --------------------
SPECIAL INTERNATIONAL
EQUITY EQUITY EQUITY BALANCED BOND
FUND FUND FUND FUND FUND
-------------------- -------------------- ----------- ---------- --------------------
11/1/94 11/1/93 11/1/94 3/15/94** 5/15/95** 6/26/95** 11/1/94 11/1/93
to 10/31/95 to 10/31/94 to 10/31/95 to 10/31/94 to 10/31/95 to 10/31/95 to 10/31/95 to 10/31/94
---------- ---------- ---------- ---------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net Investment Income
(Loss) $ 2,924 $ 361 $ 368 $ 62 $ (5) $ 434 $ 6,198 $ 1,302
Net Realized Gain (Loss)
on Securities and
Foreign Currency
Transactions 28,979 2,619 8,512 51 201 285 3,058 (1,359)
Net Change in Unrealized
Appreciation
(Depreciation) of
Investments and Foreign
Currencies 12,894 (1,933) 1,127 (583) 752 859 3,499 (1,239)
-------- -------- -------- -------- --------- -------- -------- --------
Increase (Decrease) in
Net Assets Resulting
from Operations 44,797 1,047 10,007 (470) 948 1,578 12,755 (1,296)
-------- -------- -------- -------- --------- -------- -------- --------
DISTRIBUTIONS TO
SHAREHOLDERS:
Net Investment Income:
Prior Class (a)* (125) (361) (35) (57) -- -- (359) (1,291)
Retail Class (b)* (53) -- (5) -- -- (1) (56) --
Institutional Class
(b)* (2,638) -- (316) -- -- (386) (5,443) --
Net Realized Gains:
Prior Class (a)* (2,660) (1,895) (80) -- -- -- -- (841)
-------- -------- -------- -------- --------- -------- -------- --------
Total Distributions (5,476) (2,256) (436) (57) -- (387) (5,858) (2,132)
CAPITAL TRANSACTIONS (C):
Prior Class (a)*:
Redesignated to Retail
Class (5,674) -- (471) -- -- -- (1,365) --
Redesignated to
Institutional Class (42,589) -- (9,970) -- -- -- (29,097) --
Proceeds from Shares
Issued 4,679 15,691 652 11,284 -- -- 9,204 5,563
Reinvestment of Cash
Distributions 2,420 1,929 115 57 -- -- 244 1,430
Cost of Shares
Repurchased (6,294) (11,959) (81) (745) -- -- (2,665) (7,534)
-------- -------- -------- -------- --------- -------- -------- --------
Increase (Decrease) in
Net Assets Derived from
Prior Class
Transactions (47,458) 5,661 (9,755) 10,596 -- -- (23,679) (541)
Retail Class (b)*:
Redesignated from Prior
Class 5,674 -- 471 -- -- -- 1,365 --
Proceeds from Shares
Issued 676 -- 186 -- 9 68 164 --
Reinvestment of Cash
Distributions 52 -- 5 -- -- -- 48 --
Cost of Shares
Repurchased (948) -- (57) -- (1) -- (291) --
-------- -------- -------- -------- --------- -------- -------- --------
Increase in Net Assets
Derived from Retail
Class Transactions 5,454 -- 605 -- 8 68 1,286 --
Institutional Class (b)*:
Redesignated from Prior
Class 42,589 -- 9,970 -- -- -- 29,097 --
Proceeds from Shares
Issued 351,837 -- 46,892 -- 13,282 39,740 192,154 --
Reinvestment of Cash
Distributions 2,568 -- 316 -- -- 386 5,109 --
Cost of Shares
Repurchased (59,497) -- (9,538) -- (857) (2,822) (38,426) --
-------- -------- -------- -------- --------- -------- -------- --------
Increase (Decrease) in
Net Assets Derived from
Institutional Class
Transactions 337,497 -- 47,640 -- 12,425 37,304 187,934 --
-------- -------- -------- -------- --------- -------- -------- --------
Increase (Decrease) in Net
Assets Derived from
Capital Transactions 295,493 5,661 38,490 10,596 12,433 37,372 165,541 (541)
-------- -------- -------- -------- --------- -------- -------- --------
Net Increase (Decrease)
in Net Assets 334,815 4,452 48,061 10,069 13,381 38,563 172,438 (3,969)
-------- -------- -------- -------- --------- -------- -------- --------
NET ASSETS:
Beginning of Period 50,128 45,676 10,069 -- -- -- 23,377 27,346
-------- -------- -------- -------- --------- -------- -------- --------
End of Period $ 384,943 $ 50,128 $58,130 $10,069 $13,381 $38,563 $ 195,815 $23,377
-------- -------- -------- -------- --------- -------- -------- --------
-------- -------- -------- -------- --------- -------- -------- --------
</TABLE>
Amounts designated as "--" are either $0 or have been rounded to $0.
* On February 21, 1995, the shareholders of each fund ratified the
classification of such fund's outstanding shares into Retail and
Institutional shares.
** Commencement of operations.
(a) For the current fiscal year Prior Class figures represent activity from
November 1, 1994 to February 21, 1995.
(b) Retail and Institutional Class figures represent activity from February 22,
1995 through October 31, 1995.
(c) See Capital Share Transactions in the Notes to the Financial Statements.
The accompanying notes are an integral part of the financial statements.
35
<PAGE> 39
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
-------------------- ---------- -------------------- -------------------- -------------------- -----------
SHORT- PENNSYLVANIA
INTERMEDIATE TERM TAX-FREE CASH U.S. TREASURY
INCOME INCOME BOND MANAGEMENT SECURITIES TAX-FREE
FUND FUND FUND FUND FUND FUND
-------------------- ---------- -------------------- -------------------- -------------------- -----------
11/1/94 11/1/93 5/15/95** 11/1/94 11/1/93 11/1/94 11/1/93 11/1/94 11/1/93 11/1/94
to 10/31/95 to 10/31/94 to 10/31/95 to 10/31/95 to 10/31/94 to 10/31/95 to 10/31/94 to 10/31/95 to 10/31/94 to 10/31/95
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 4,276 $ 1,036 $ 981 $ 291 $ 354 $ 10,555 $ 4,692 $ 18,734 $ 9,637 $ 2,188
1,152 (387) 32 (68) 9 2 (220) 41 10 (4)
1,825 (920) 92 501 (767) -- -- -- -- --
-------- -------- -------- -------- -------- --------- --------- --------- --------- ---------
7,253 (271) 1,105 724 (404) 10,557 4,472 18,775 9,647 2,184
-------- -------- -------- -------- -------- --------- --------- --------- --------- ---------
(264) (1,030) -- (81) (351) (2,788) (4,692) (5,069) (9,637) (706)
(50) -- -- (25) -- (133) -- (586) -- (42)
(3,736) -- (917) (186) -- (7,634) -- (13,079) -- (1,440)
-- (294) -- (9) (42) -- -- -- -- --
-------- -------- -------- -------- -------- --------- --------- --------- --------- ---------
(4,050) (1,324) (917) (301) (393) (10,555) (4,692) (18,734) (9,637) (2,188)
(1,398) -- -- (684) -- (4,185) -- (618) -- (2,456)
(15,213) -- -- (5,397) -- (206,899) -- (311,650) -- (67,736)
1,544 8,000 -- 470 6,261 229,934 588,009 304,528 797,674 113,629
179 891 -- 40 175 31 34 10 17 86
(6,352) (10,096) -- (1,662) (4,513) (159,426) (662,501) (317,660) (730,256) (98,423)
-------- -------- -------- -------- -------- --------- --------- --------- --------- ---------
(21,240) (1,205) -- (7,233) 1,923 (140,545) (74,458) (325,390) 67,435 (54,900)
1,398 -- -- 684 -- 4,185 -- 618 -- 2,456
161 -- 11 168 -- 1,981 -- 130,272 -- 330
46 -- -- 23 -- 126 -- 22 -- 42
(429) -- -- (78) -- (2,934) -- (130,182) -- (1,546)
-------- -------- -------- -------- -------- --------- --------- --------- --------- ---------
1,176 -- 11 797 -- 3,358 -- 730 -- 1,282
15,213 -- -- 5,397 -- 206,899 -- 311,650 -- 67,736
139,413 -- 46,933 1,858 -- 457,561 -- 1,003,030 -- 201,870
3,580 -- 917 73 -- 478 -- 683 -- 91
(23,119) -- (11,979) (1,527) -- (430,420) -- (870,864) -- (209,187)
-------- -------- -------- -------- -------- --------- --------- --------- --------- ---------
[135,087] -- 35,871 5,801 -- 234,518 -- 444,499 -- 60,510
-------- -------- -------- -------- -------- --------- --------- --------- --------- ---------
115,023 (1,205) 35,882 (634) 1,923 97,331 (74,458) 119,839 67,435 6,891
-------- -------- -------- -------- -------- --------- --------- --------- --------- ---------
118,226 (2,800) 36,070 (211) 1,126 97,333 (74,678) 119,880 67,445 6,887
-------- -------- -------- -------- -------- --------- --------- --------- --------- ---------
21,247 24,047 -- 7,008 5,882 140,545 215,223 325,379 257,934 54,904
-------- -------- -------- -------- -------- --------- --------- --------- --------- ---------
$ 139,473 $ 21,247 $ 36,070 $ 6,797 $ 7,008 $ 237,878 $ 140,545 $ 445,259 $ 325,379 $ 61,791
-------- -------- -------- -------- -------- --------- --------- --------- --------- ---------
-------- -------- -------- -------- -------- --------- --------- --------- --------- ---------
<CAPTION>
TAX-FREE
FUND
-----------
11/1/93
to 10/31/94
------------
<S> <C>
$ 1,197
--
--
---------
1,197
---------
(1,197)
--
--
--
---------
(1,197)
--
--
261,151
73
(252,559)
---------
8,665
--
--
--
--
---------
--
--
--
--
--
---------
--
---------
8,665
---------
8,665
---------
46,239
---------
$ 54,904
---------
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
36
<PAGE> 40
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The Conestoga Funds--For the year ended October 31, 1995
For a Share Outstanding Throughout the Period
<TABLE>
<CAPTION>
Net
Realized and
Unrealized Net
Net Asset Gains Dividends Distributions Assets
Value Net (Losses) from Net from Net Asset End of
Beginning Investment on Investment Realized Value End Total Period
of Period Income Investments Income Capital Gains of Period Return* (000)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- -------------
EQUITY FUND
- -------------
RETAIL
1995(1) $ 15.00 $ 0.18 $ 2.87 $(0.17) $ (0.80) $ 17.08 21.94% $ 6,591
INSTITUTIONAL
1995(1) 15.00 0.19 2.87 (0.19) (0.80) 17.07 22.00% 378,352
PRIOR CLASS
1994 15.39 0.11 0.22 (0.11) (0.61) 15.00 2.21% 50,128
1993 13.93 0.14 1.89 (0.14) (0.43) 15.39 14.90% 45,677
1992 13.08 0.19 1.02 (0.19) (0.17) 13.93 9.27% 28,103
1991 8.95 0.26 4.13 (0.26) -- 13.08 49.37% 12,830
1990(2) 10.00 0.14 (1.05) (0.14) -- 8.95 (9.22)% 5,982
- ----------------------
SPECIAL EQUITY FUND
- ----------------------
RETAIL
1995(1) $ 9.37 $ 0.12 $ 2.12 $(0.12) $ (0.07) $ 11.42 24.44% $ 734
INSTITUTIONAL
1995(1) 9.37 0.12 2.12 (0.12) (0.07) 11.42 24.44% 57,396
PRIOR CLASS
1994(3) 10.00 0.06 (0.63) (0.06) -- 9.37 (5.72)% 10,069
- ----------------------------
INTERNATIONAL EQUITY FUND
- ----------------------------
RETAIL
1995(4) $ 10.00 $ (.01) $ 1.00 $ -- $ -- $ 10.99 9.90% $ 9
INSTITUTIONAL
1995(4) 10.00 -- 1.01 -- -- 11.01 10.10% 13,372
- ----------------
BALANCED FUND
- ----------------
RETAIL
1995(5) $ 9.97 $ 0.11 $ 0.42 $(0.11) $ -- $ 10.39 5.27% $ 69
INSTITUTIONAL
1995(6) 10.00 0.12 0.37 (0.11) -- 10.38 4.89% 38,494
- ------------
BOND FUND
- ------------
RETAIL
1995(1) $ 9.81 $ 0.60 $ 0.72 $(0.57) $ -- $ 10.56 13.83% $ 1,373
INSTITUTIONAL
1995(1) 9.81 0.61 0.71 (0.58) -- 10.55 13.87% 194,442
PRIOR CLASS
1994 11.18 0.53 (1.04) (0.52) (0.34) 9.81 (4.75)% 23,377
1993 10.89 0.56 0.54 (0.56) (0.25) 11.18 10.63% 27,346
1992 10.65 0.70 0.32 (0.68) (0.10) 10.89 9.82% 15,180
1991 9.96 0.78 0.69 (0.78) -- 10.65 15.16% 7,255
1990(2) 10.00 0.50 (0.04) (0.50) -- 9.96 4.64% 4,593
- -----------------------------
INTERMEDIATE INCOME FUND
- -----------------------------
RETAIL
1995(1) $ 10.27 $ 0.55 $ 0.44 $(0.54) $ -- $ 10.72 9.90% $ 1,230
INSTITUTIONAL
1995(1) 10.27 0.57 0.42 (0.55) -- 10.71 9.92% 138,243
PRIOR CLASS
1994 11.01 0.50 (0.61) (0.49) (0.14) 10.27 (0.97)% 21,247
1993 10.87 0.53 0.21 (0.53) (0.07) 11.01 6.99% 24,047
1992 10.61 0.65 0.29 (0.64) (0.04) 10.87 9.11% 16,718
1991 10.12 0.77 0.50 (0.77) (0.01) 10.61 12.94% 7,116
1990(2) 10.00 0.48 0.12 (0.48) -- 10.12 6.10% 3,986
- ----------------------------
SHORT-TERM INCOME FUND
- ----------------------------
RETAIL
1995(7) $ 10.01 $ 0.23 $ 0.02 $(0.22) $ -- $ 10.04 2.57% $ 11
INSTITUTIONAL
1995(4) 10.00 0.25 0.03 (0.23) -- 10.05 2.87% 36,059
<CAPTION>
Ratio of
Ratio of of Expenses Income
Net to Average to Average
Ratio of Investment Net Assets Net Assets
Expenses Income (Excluding (Excluding Portfolio
to Average to Average Waivers and Waivers and Turnover
Net Assets Net Assets Reimbursements) Reimbursements) Rate
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- -------------
EQUITY FUND
- -------------
RETAIL
1995(1) 1.34% 1.23% 1.53% 1.04% 119%
INSTITUTIONAL
1995(1) 1.05% 1.44% 1.10% 1.44% 119%
PRIOR CLASS
1994 1.49% 0.75% 1.51% 0.73% 35%
1993 1.20% 0.94% 1.41% 0.73% 24%
1992 0.92% 1.47% 1.23% 1.17% 39%
1991 0.54% 2.30% 1.48% 1.36% 68%
1990(2) 0.65% 2.29% 1.59% 1.35% 43%
- ----------------------
SPECIAL EQUITY FUND
- ----------------------
RETAIL
1995(1) 0.27% 1.29% 2.24% (0.68)% 129%
INSTITUTIONAL
1995(1) 0.32% 1.14% 1.97% (0.51)% 129%
PRIOR CLASS
1994(3) 0.15% 1.06% 2.10% (0.89)% 39%
- ----------------------------
INTERNATIONAL EQUITY FUND
- ----------------------------
RETAIL
1995(4) 2.13% (.69)% 2.26% (.83)% 23%
INSTITUTIONAL
1995(4) 1.88% (0.10)% 1.88% (0.10)% 23%
- ---------------
BALANCED FUND
- ---------------
RETAIL
1995(5) 1.07% 3.37% 1.32% 3.12% 65%
INSTITUTIONAL
1995(6) 0.82% 3.66% 1.07% 3.41% 65%
- ------------
BOND FUND
- ------------
RETAIL
1995(1) 0.97% 6.02% 1.44% 5.55% 352%
INSTITUTIONAL
1995(1) 0.71% 6.09% 1.12% 5.68% 352%
PRIOR CLASS
1994 1.01% 5.07% 1.60% 4.48% 232%
1993 0.88% 5.16% 1.49% 4.55% 158%
1992 0.46% 6.78% 1.24% 6.01% 99%
1991 0.47% 7.71% 1.41% 6.78% 47%
1990(2) 0.68% 7.75% 1.62% 6.81% 23%
- -----------------------------
INTERMEDIATE INCOME FUND
- -----------------------------
RETAIL
1995(1) 0.93% 5.47% 1.51% 4.89% 260%
INSTITUTIONAL
1995(1) 0.64% 5.72% 1.15% 5.21% 260%
PRIOR CLASS
1994 0.90% 4.66% 1.64% 3.92% 170%
1993 0.78% 4.89% 1.50% 4.17% 90%
1992 0.47% 6.31% 1.24% 5.57% 53%
1991 0.40% 7.69% 1.34% 6.76% 33%
1990(2) 0.75% 7.42% 1.69% 6.48% 39%
- ----------------------------
SHORT-TERM INCOME FUND
- ----------------------------
RETAIL
1995(7) 0.88% 5.05% 1.33% 4.60% 40%
INSTITUTIONAL
1995(4) 0.63% 5.43% 1.08% 4.98% 40%
</TABLE>
37
<PAGE> 41
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net
Realized and
Unrealized Net
Net Asset Gains Dividends Distributions Assets
Value Net (Losses) from Net from Net Asset End of
Beginning Investment on Investment Realized Value End Total Period
of Period Income Investments Income Capital Gains of Period Return* (000)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------
PENNSYLVANIA TAX-FREE BOND FUND
- --------------------------------------
RETAIL
1995(1) $ 9.56 $ 0.47 $ 0.67 $(0.46) $ (0.01) $ 10.23 12.30% $ 820
INSTITUTIONAL
1995(1) 9.56 0.47 0.67 (0.46) (0.01) 10.23 12.30% 5,977
PRIOR CLASS
1994 10.48 0.46 (0.85) (0.46) (0.07) 9.56 (3.90)% 7,008
1993 9.77 0.45 0.70 (0.44) -- 10.48 11.94% 5,883
1992(8) 10.00 -- (0.23) -- -- 9.77 (2.28)% 3,405
- --------------------------
CASH MANAGEMENT FUND
- --------------------------
RETAIL
1995(1) $ 1.00 $ 0.05 $ -- $(0.05) $ -- $ 1.00 5.25% $ 3,358
INSTITUTIONAL
1995(1) 1.00 0.05 -- (0.05) -- 1.00 5.43% 234,520
PRIOR CLASS
1994 1.00 0.03 (0.03) -- -- 1.00 3.41% 140,545
1993 1.00 0.03 (0.03) -- -- 1.00 2.80% 215,223
1992 1.00 0.04 (0.04) -- -- 1.00 3.79% 113,096
1991 1.00 0.06 (0.06) -- -- 1.00 6.22% 151,166
1990(9) 1.00 0.07 (0.07) -- -- 1.00 7.59% 39,061
- ---------------------------------
U.S. TREASURY SECURITIES FUND
- ---------------------------------
RETAIL
1995(1) $ 1.00 $ 0.05 $ -- $(0.05) $ -- $ 1.00 5.16% $ 730
INSTITUTIONAL
1995(1) 1.00 0.05 -- (0.05) -- 1.00 5.27% 444,529
PRIOR CLASS
1994 1.00 0.03 (0.03) -- -- 1.00 3.07% 325,379
1993 1.00 0.03 (0.03) -- -- 1.00 2.57% 257,934
1992 1.00 0.04 (0.04) -- -- 1.00 3.64% 340,904
1991 1.00 0.06 (0.06) -- -- 1.00 5.96% 341,931
1990(9) 1.00 0.07 (0.07) -- -- 1.00 7.44% 106,771
- ----------------
TAX-FREE FUND
- ----------------
RETAIL
1995(1) $ 1.00 $ 0.03 $ -- $(0.03) $ -- $ 1.00 3.39% $ 1,282
INSTITUTIONAL
1995(1) 1.00 0.03 -- (0.03) -- 1.00 3.43% 60,509
PRIOR CLASS
1994 1.00 0.02 (0.02) -- -- 1.00 2.21% 54,904
1993 1.00 0.02 (0.02) -- -- 1.00 1.97% 46,239
1992 1.00 0.03 (0.03) -- -- 1.00 2.88% 46,295
1991 1.00 0.04 (0.04) -- -- 1.00 4.44% 45,647
1990(9) 1.00 0.05 (0.05) -- -- 1.00 5.31% 24,167
<CAPTION>
Ratio of
Ratio of of Expenses Income
Net to Average to Average
Ratio of Investment Net Assets Net Assets
Expenses Income (Excluding (Excluding Portfolio
to Average to Average Waivers and Waivers and Turnover
Net Assets Net Assets Reimbursements) Reimbursements) Rate
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- --------------------------------------
PENNSYLVANIA TAX-FREE BOND FUND
- --------------------------------------
RETAIL
1995(1) 0.51% 4.64% 1.62% 3.53% 15%
INSTITUTIONAL
1995(1) 0.51% 4.64% 1.65% 3.50% 15%
PRIOR CLASS
1994 0.38% 4.61% 1.57% 3.42% 37%
1993 0.51% 4.35% 1.63% 3.23% 50%
1992(8) 2.67% 0.52% 3.41% (0.22)% 31%
- --------------------------
CASH MANAGEMENT FUND
- --------------------------
RETAIL
1995(1) 0.74% 5.16% 0.97% 4.93% N/A
INSTITUTIONAL
1995(1) 0.56% 5.32% 0.79% 5.09% N/A
PRIOR CLASS
1994 0.71% 3.32% 0.99% 3.05% N/A
1993 0.65% 2.75% 0.87% 2.53% N/A
1992 0.48% 3.76% 0.70% 3.55% N/A
1991 0.49% 5.84% 0.79% 5.54% N/A
1990(9) 0.42% 7.95% 0.75% 7.62% N/A
- ---------------------------------
U.S. TREASURY SECURITIES FUND
- ---------------------------------
RETAIL
1995(1) 0.73% 5.26% 0.79% 5.20% N/A
INSTITUTIONAL
1995(1) 0.62% 5.14% 0.78% 4.98% N/A
PRIOR CLASS
1994 0.72% 3.03% 0.97% 2.78% N/A
1993 0.66% 2.55% 0.87% 2.33% N/A
1992 0.46% 3.65% 0.69% 3.44% N/A
1991 0.51% 5.61% 0.79% 5.32% N/A
1990(9) 0.38% 7.73% 0.79% 7.32% N/A
- ----------------
TAX-FREE FUND
- ----------------
RETAIL
1995(1) 0.48% 3.35% 0.88% 2.95% N/A
INSTITUTIONAL
1995(1) 0.46% 3.37% 0.83% 3.00% N/A
PRIOR CLASS
1994 0.37% 2.22% 1.05% 1.53% N/A
1993 0.45% 1.95% 0.96% 1.44% N/A
1992 0.33% 2.83% 0.73% 2.45% N/A
1991 0.43% 4.37% 0.87% 3.93% N/A
1990(9) 0.31% 5.57% 0.91% 4.97% N/A
</TABLE>
* Total Return figures do not reflect applicable sales loads.
(1) On February 21, 1995 the shares of the Fund were redesignated as either
Retail or Institutional shares. For the year ended October 31, 1995, the
Financial Highlights' ratios of expenses, ratios of net investment income,
total return, and the per share investment activities and distributions are
presented on a basis whereby the Fund's net investment income, expenses, and
distributions for the period November 1, 1994 through February 20, 1995 were
allocated to each class of shares based upon the relative net assets of each
class of shares as of February 21, 1995 and the results combined therewith
the results of operations and distributions for each applicable class for
the period February 21, 1995 through October 31, 1995.
(2) Commenced operations on February 28, 1990. All ratios for the period have
been annualized.
(3) Commenced operations on March 15, 1994. All ratios for the period have been
annualized.
(4) Commenced operations on May 15, 1995. All ratios for the period have been
annualized.
(5) Commenced operations on June 29, 1995. All ratios for the period have been
annualized.
(6) Commenced operations on June 26, 1995. All ratios for the period have been
annualized.
(7) Commenced operations on May 17, 1995. All ratios for the period have been
annualized.
(8) Commenced operations on September 21, 1992. All ratios for the period have
been annualized.
(9) Commenced operations on November 27, 1989. All ratios for the period have
been annualized.
The accompanying notes are an integral part of the financial statements.
38
<PAGE> 42
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The Conestoga Funds--October 31, 1995
1. Organization:
The Conestoga Family of Funds (the "Company") was organized as a Massachusetts
business trust under a Declaration of Trust dated August 1, 1989. The Company is
registered under the Investment Company Act of 1940, as amended, as an open-end
management investment company with eleven funds: the U.S. Treasury Securities
Fund, the Cash Management Fund, the Tax-Free Fund (collectively "the Money
Market Funds"), the Intermediate Income Fund, the Bond Fund, the Pennsylvania
Tax-Free Bond Fund, the Short-Term Income Fund (collectively "the Fixed Income
Funds"), the Equity Fund, the Special Equity Fund, the International Equity Fund
(collectively "the Equity Funds") and the Balanced Fund. The assets of each Fund
are segregated, and a shareholder's interest is limited to the Fund in which
shares are held. The Company currently offers two classes of shares in each
Fund: Institutional and Retail. Each Fund is authorized to issue an unlimited
number of shares of either class which are units of beneficial interest with a
par value of $0.001 per share. The Institutional and Retail Shares of each Fund
are subject to the same expenses except that Institutional Shares are not
subject to a distribution fee, and the Institutional Shares of the Fixed Income
and Equity Funds are not sold with a sales charge.
2. Significant Accounting Policies:
The following is a summary of significant accounting policies followed by the
Company. These policies are
in conformity with generally accepted accounting principles.
Security Valuation--Investments in equity securities which are traded on a
national securities exchange (or reported on the NASDAQ national market system)
are stated at the last quoted sales price--if readily available for such equity
securities--on each business day. If there is no such reported sale, these
securities, and unlisted securities for which market quotations are readily
available, are valued at the most recently quoted bid price.
Debt obligations exceeding 60 days to maturity for which market quotations
are readily available are valued at the most recently quoted bid price. Debt
obligations with 60 days or less until maturity may be valued either at the most
recently quoted bid price or at their amortized cost.
Investment securities held by the Money Market Funds are stated at
amortized cost which approximates market value. Under the amortized cost method,
any discount or premium is amortized ratably to the maturity of the security and
is included in interest income.
Foreign securities in the International Equity Fund are valued based upon
quotations from the primary market in which they are traded.
Federal Income Taxes--It is each Fund's intention to qualify as a regulated
investment company by complying with the appropriate provisions of the Internal
Revenue Code of 1986, as amended. Accordingly, no provisions for Federal income
taxes are required in the accompanying financial statements.
Security Transactions and Investment Income--
Security transactions are accounted for on the trade date of the security
purchase or sale. Dividend income is recognized on ex-dividend date, and
interest income is recognized on an accrual basis and includes the pro rata
amortization of premium or accretion of discount. The cost used in determining
net realized capital gains and losses on the sale of securities are those of the
specific securities sold, adjusted for the accretion and amortization of
purchase discounts and premiums during the applicable holding period. Purchase
discounts and premiums on securities held by the Equity and Fixed Income Funds
are accreted and amortized to maturity using the scientific amortization method,
which approximates the effective interest method.
Repurchase Agreements--Securities pledged as collateral for repurchase
agreements are held at a custodian bank in the name of the Fund until the
repurchase agreements mature. Provisions of the repurchase agreements ensure
that the market value of the collateral, including accrued interest thereon, is
sufficient in the event of default of the counterparty. If the counterparty
defaults and the value of the collateral declines or if the counterparty enters
an insolvency proceeding, realization of the collateral by the Funds may be
delayed or limited.
Net Asset Value Per Share--The net asset value per share of each class of
each Fund is calculated on each business day. In general, it is computed by
dividing the assets of each class of each Fund, less its liabilities, by the
number of outstanding shares of the respective class of the Fund. The maximum
offering price per share for Retail Shares of the Equity and Fixed Income Funds
is
39
<PAGE> 43
- --------------------------------------------------------------------------------
equal to the net asset value per share plus a sales load of 2.00%. The offering
price per share for the Institutional Shares of the Equity and Fixed Income
Funds is the net asset value per share. The offering price for Institutional and
Retail Shares of the Money Market Funds is the amortized cost per share, which
approximates net asset value per share.
Foreign Currency Translation--The books and records of the International
Equity Fund are maintained in U.S. dollars on the following basis:
(I) market value of investment securities, assets and liabilities at the
current rate of exchange; and
(II) purchases and sales of investment securities, income and expenses at
the relevant rates of exchange prevailing on the respective dates of
such transactions.
The International Equity Fund does not isolate that portion of gains and
losses on investments in equity securities which is due to changes in the
foreign exchange rates from that which is due to changes in market prices of
equity securities.
The International Equity Fund reports certain foreign currency related
transactions as components of realized gains for financial reporting purposes,
whereas such components are treated as ordinary income for Federal income tax
purposes.
Forward Foreign Currency Contracts--The International Equity Fund enters
into forward foreign currency contracts as hedges against either specific
transactions or Fund positions. All commitments are "marked-to-market" daily at
the applicable foreign exchange rate and any resulting unrealized gains or
losses are recorded currently. The International Equity Fund realizes gains or
losses at the time the forward contracts are extinguished. Unrealized gains or
losses on outstanding positions in forward foreign currency contracts held at
the close of the year will be recognized as ordinary income or loss for Federal
income tax purposes.
Maturity Dates--Certain variable rate and floating rate securities are
subject to "maturity shortening" devices such as put or demand features. Under
Rule 2a-7 of the Investment Company Act of 1940 (the "1940 Act"), as amended,
these securities are deemed to have maturities shorter than the ultimate
maturity dates. Accordingly, the maturity dates reflected in the Statement of
Net Assets are the shorter of the effective demand/put date or the ultimate
maturity date.
Classes--Class-specific expenses are borne by that class. Other expenses,
income, and realized and unrealized gains and losses are allocated to their
respective classes on the basis of relative daily net assets.
Other--Distributions from net investment income for the Equity and Fixed
Income Funds are declared and paid to shareholders on a periodic basis.
Distributions from net investment income for the Money Market Funds are declared
daily and paid to shareholders monthly. Any net realized capital gains are
distributed to shareholders at least annually.
3. Administration and Distribution Agreements:
The Company and SEI Financial Management Corporation (the "Administrator") are
parties to an administration agreement (the "Administration Agreement") dated
May 1, 1995. Under the terms of the Administration Agreement the Administrator
is entitled to a fee calculated daily and paid monthly at an annual rate of .17%
of the average daily net assets of each Fund. Prior to May 1, 1995, The Winsbury
Company ("Winsbury") served as the Administrator to the Company and was entitled
to a fee calculated daily and paid monthly at the annual rate of .20% of the
average daily net assets of each Fund.
The Company has adopted a distribution and services plan (the "Distribution
Plan") applicable to the Retail Shares pursuant to rule 12b-1 under the 1940
Act. As provided in the Distribution Plan, each Fund is authorized to pay the
distributor a fee for distribution services in an amount not to exceed on an
annual basis .40% of the average daily net assets of the Retail Shares of the
Funds. The Company and SEI Financial Services Company (the "Distributor"), a
wholly-owned subsidiary of SEI Corporation and a registered broker-dealer, are
parties to a distribution agreement (the "Distribution Agreement") dated May 1,
1995. Under the terms of the Distribution Agreement, the Distributor receives no
fees for its Institutional Shares distribution services, and is entitled to
receive fees as set forth in the Distribution Plan for services performed and
expenses assumed under the Distribution Agreement as to the Retail Shares of the
Funds. Prior to May 1, 1995 Winsbury served as Distributor to the Company and
was entitled to receive commissions earned on sales of shares of the Equity and
40
<PAGE> 44
NOTES TO FINANCIAL STATEMENTS -- continued
- --------------------------------------------------------------------------------
The Conestoga Funds--October 31, 1995
Fixed Income Funds. For the six months ended April 30, 1995, Winsbury received
$7,736 from commissions earned on sales of shares of the Equity and Fixed Income
Funds, of which $261 was reallowed to Meridian Securities Inc., an affiliate of
Meridian Bancorp, and an investment dealer of the Funds.
4. Investment Advisory Agreements:
Investment advisory services are provided to the Company by Meridian Investment
Company (the "Investment Advisor"), a subsidiary of Meridian Bancorp, Inc. Under
the terms of the investment advisory agreements, the Investment Advisor is
entitled to receive a fee from the Fund, computed daily and paid monthly, at an
annual rate equal to the lesser of (a) (i) .40% of the average daily net assets
of each of the Cash Management, Tax-Free and U.S. Treasury Securities Funds,
(ii) .74% of the average daily net assets of each of the Equity, Bond,
Intermediate Income, Pennsylvania Tax-Free Bond, and Short-Term Income Funds,
(iii) .75% of the average daily net assets of the Balanced Fund, (iv) 1.00% of
the average daily net assets of the International Equity Fund, and (v) 1.50% of
the average daily net assets of the Special Equity Fund, or (b) such fee as
agreed upon in writing by a Fund and the Investment Advisor in advance of the
period to which the fee relates.
Pursuant to the Company's investment advisory agreement for the
International Equity Fund, the Investment Advisor has retained Marvin & Palmer
Associates, Inc. ("Marvin & Palmer") as Sub-Advisor to such Fund pursuant to a
Sub-Investment Advisory Agreement. For its services under such Sub-Investment
Advisory Agreement, Marvin & Palmer is paid a monthly fee by Meridian calculated
on an annual basis equal to .75% of the first $100 million of the International
Equity Fund's average daily net assets, .70% of the second $100 million of the
International Equity Fund's average daily net assets, .65% of the third $100
million of the International Equity Fund's average daily net assets, and .60% of
the International Equity Fund's average daily net assets in excess of $300
million.
5. Organizational Costs and
Transactions with Affiliates:
Organizational costs have been capitalized by the Company and are being, or
were, amortized on a straight line basis over a maximum of sixty months
following commencement of operations. In the event any of the initial shares of
the Company are redeemed by any holder thereof during the period that the
Company is amortizing its organizational costs, the redemption proceeds payable
to the holder thereof by the Company will be reduced by the unamortized
organizational cost in the same ratio as the number of initial shares being
redeemed bears to the number of initial shares outstanding at the time of
redemption.
Certain officers of the Company are also officers of the Administrator
and/or SEI Financial Services Company (the "Distributor"). Such officers are
paid no fees by the Company for serving as officers of the Company.
6. Investment Transactions:
The cost of security purchases and the proceeds from security sales, excluding
short-term investments, for the year ended October 31, 1995 were as follows:
<TABLE>
<CAPTION>
U.S. Govt.
Purchases Sales Purchases U.S. Govt. Sales
(000) (000) (000) (000)
------- ------- ------- ----------
<S> <C> <C> <C> <C>
Equity $ 228,276 $229,329 -- --
Special Equity 38,281 39,567 -- --
International Equity 14,651 2,343 -- --
Balanced 52,677 20,147 -- --
Bond 255,196 251,397 $ 163,069 $182,327
Intermediate Income 140,542 138,144 101,752 100,103
Short-Term Income 20,442 7,585 16,637 5,479
Pennsylvania
Tax-Free Bond 897 1,865 -- --
</TABLE>
At October 31, 1995, the total cost of securities and net realized gains or
losses on securities sold for Federal income tax purposes was not materially
different from amounts reported for financial reporting purposes. The aggregate
gross unrealized appreciation and depreciation for securities held by the Equity
41
<PAGE> 45
- --------------------------------------------------------------------------------
and Fixed Income Funds at October 31, 1995 were as follows:
<TABLE>
<CAPTION>
Net
Unrealized
Appreciated Depreciated Appreciation--
Securities Securities (Depreciation)
(000) (000) (000)
------- ------- ---------
<S> <C> <C> <C>
Equity $28,816 $12,474 $16,342
Special Equity 5,315 4,771 544
International Equity 1,081 374 707
Balanced 1,218 359 859
Bond 2,765 192 2,573
Intermediate Income 1,472 73 1,399
Short-Term Income 94 2 92
Pennsylvania Tax-Free Bond 89 77 12
</TABLE>
At October 31, 1995 the following Funds had available realized capital
losses to offset future net capital gains in the amounts shown as follows:
<TABLE>
<CAPTION>
Capital Loss Carryover
Fund October 31, 1995 Expiring 2002 Expiring 2003
- --- -------------- -------- --------
<S> <C> <C> <C>
International Equity $ 21,098 $ -- $21,098
Pennsylvania
Tax-Free Bond 68,029 -- 68,029
Cash Management 217,837 217,837 --
Tax-Free 3,824 -- 3,824
</TABLE>
The Bond Fund utilized its entire capital loss carryforward balance of
$1,283,474 which was carried over from the previous year.
The Cash Management Fund utilized $2,310 of its capital loss carryforward
balance during the year.
The Intermediate Income Fund utilized its entire capital loss carryforward
balance of $383,000 which was carried over from the previous year.
7. Forward Foreign Currency Contracts:
The International Equity Fund may enter into forward foreign currency exchange
contracts as hedges against fund positions. Such contracts, which may protect
the value of the Fund's investment securities against a decline in the value of
currency, do not eliminate fluctuations in the underlying prices of the
securities. They simply establish an exchange rate at a future date. Also,
although such contracts tend to minimize the risk of loss due to a decline in
the value of a hedged currency, at the same time they tend to limit any
potential gain that might be realized should the value of such foreign currency
increase.
The following forward foreign currency contracts
in the International Equity Fund were outstanding at
October 31, 1995:
<TABLE>
<CAPTION>
Net Unrealized
Contracts to In Exchange Appreciation/
Settlement Deliver FX For $ Depreciation
Date Currency (000) (000) (000)
------- ----- ------- ------- ---------
<S> <C> <C> <C> <C> <C>
Foreign Currency 11/30/95 UK 450 $ 709 $ --
Sales 11/30/95 JY 191,660 1,930 46
11/02/95 JY 3,209 31 --
11/02/95 SK 139 21 --
----------- ---
$ 2,691 $ 46
----------- ---
Foreign Currency 11/02/95 JY 2,927 $ 29 $ --
Purchases 11/02/95 JY 2,237 22 --
----------- ---
$ 51 $ --
----------- ---
$ 46
==========
</TABLE>
Currency Legend
JY Japanese Yen
SK Swedish Krona
UK British Sterling Pound
42
<PAGE> 46
NOTES TO FINANCIAL STATEMENTS -- continued
- --------------------------------------------------------------------------------
The Conestoga Funds--October 31, 1995
8. Share Transactions:
<TABLE>
<CAPTION>
Special International Intermediate
Equity Equity Equity Balanced Bond Income
Fund Fund Fund Fund Fund Fund
---- ---- ------- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C>
PERIOD FROM
NOVEMBER 1, 1994
THROUGH
FEBRUARY 21, 1995:
Exchange out to
Retail Class (401) (52) -- -- (138) (136)
Exchange out to
Institutional Class (3,007) (1,099) -- -- (2,935) (1,478)
Shares issued 331 73 -- -- 938 151
Shares issued in
lieu of cash
distributions 180 13 -- -- 25 18
Shares repurchased (446) (9) -- -- (273) (625)
------ ------ ----- ----- ------ ------
Net Decrease (3,343) (1,074) -- -- (2,383) (2,070)
====== ====== ===== ===== ====== ======
PERIOD FROM
FEBRUARY 22, 1995
THROUGH
OCTOBER 31, 1995:
RETAIL CLASS:
Exchange in from
previous class 401 52 -- -- 138 136
Shares issued 41 17 1 7 15 15
Shares issued in
lieu of cash
distributions 3 -- -- -- 5 4
Shares repurchased (59) (5) -- -- (28) (40)
------ ------ ----- ----- ------ ------
Net Increase 386 64 1 7 130 115
====== ====== ===== ===== ====== ======
INSTITUTIONAL CLASS:
Exchange in from
previous class 3,007 1,099 -- -- 2,935 1,478
Shares issued 22,654 4,786 1,291 3,945 18,682 13,274
Shares issued in
lieu of cash
distributions 151 28 -- 37 491 338
Shares repurchased (3,652) (886) (76) (275) (3,686) (2,180)
------ ------ ----- ----- ------ ------
Increase in net
assets derived from
Institutional
transactions 22,160 5,027 1,215 3,707 18,422 12,910
====== ====== ===== ===== ====== ======
</TABLE>
<TABLE>
<CAPTION>
Pennsylvania
Short-Term Tax-Free Cash U.S. Treasury
Income Bond Management Securities Tax-Free
Fund Fund Fund Fund Fund
------ -------- ------- -------- ------
<S> <C> <C> <C> <C> <C>
PERIOD FROM
NOVEMBER 1, 1994
THROUGH
FEBRUARY 21, 1995:
Exchange out to
Retail Class -- (69) (4,188) (618) (2,456)
Exchange out to
Institutional
Class -- (543) (207,034) (311,574) (67,719)
Shares issued -- 49 229,934 304,528 113,629
Shares issued in lieu
of cash distributions -- 4 31 10 86
Shares repurchased -- (174) (159,426) (317,660) (98,423)
--
---- -------- -------- -------
Net Decrease -- (733) (140,683) (325,314) (54,883)
== ==== ======== ======== =======
PERIOD FROM
FEBRUARY 22, 1995
THROUGH OCTOBER 31,
1995:
RETAIL CLASS:
Exchange in from
previous class -- 69 4,188 618 2,456
Shares issued 1 16 1,981 130,272 332
Shares issued in lieu
of cash distributions -- 2 126 22 42
Shares repurchased -- (7) (2,934) (130,182) (1,548)
--
---- -------- -------- -------
Net Increase 1 80 3,361 730 1,282
== ==== ======== ======== =======
INSTITUTIONAL CLASS:
Exchange in from
previous class -- 543 207,034 311,574 67,719
Shares issued 4,689 185 457,561 1,003,029 201,868
Shares issued in lieu
of cash distributions 91 7 479 683 91
Shares repurchased (1,192) (151) (430,420) (870,863) (209,186)
--
---- -------- -------- -------
Net Increase 3,588 584 234,654 444,423 60,492
== ==== ======== ======== =======
</TABLE>
43
<PAGE> 47
- --------------------------------------------------------------------------------
9. Shareholder Voting Results:
A special meeting of shareholders was held on January 9, 1995 (reconvened
January 12, 1995, January 13, 1995 and February 10, 1995) for the Company to
vote on the following proposals (i) the election of a Board of seven (7)
trustees (Dominic S. Genuardi, Sr., Steven I. Gross, J. David Huber, Robert C.
Kingston, Dale E. Smith, Thomas J. Taylor and William J. Tomko); (ii) the
ratification of the selection of Coopers & Lybrand, L.L.P. as independent
accountants for the Company for the fiscal year ending October 31, 1995; (iii)
the approval of the adoption of a new Distribution and Services Plan with
respect to the Retail Shares of each of the Company's existing Funds (the U.S.
Treasury Securities Fund, the Cash Management Fund, the Tax-Free Fund, the
Intermediate Income Fund, the Bond Fund, the Equity Fund, the Pennsylvania
Tax-Free Bond Fund and the Special Equity Fund), pursuant to Rule 12b-1 under
the Investment Company Act of 1940; (iv) with respect to the Bond Fund only, the
approval of a change in the fundamental investment objective of the Fund; and
(v) with respect to the Intermediate Income Fund only, the approval of a change
in the fundamental investment objective of the Fund. The following were the
results of the vote (Unaudited):
MEETING OF SHAREHOLDERS
JANUARY 9, 1995
<TABLE>
<CAPTION>
Proposal 3 Cash Management Tax-Free Special Equity
- ---------------------- --------------- ---------- --------------
<S> <C> <C> <C>
For................... 81,862,297 30,681,945 934,540
Against............... 3,217,557 634,459 1,368
Abstentions........... 8,118,366 1,444,175 none
</TABLE>
RECONVENED
JANUARY 13, 1995
<TABLE>
<CAPTION>
Proposal 1 In Favor Withheld
- ------------------------ ----------- -----------
<S> <C> <C>
Dominic S. Genuardi,
Sr..................... 347,299,332 23,395,703
Steven I. Gross......... 347,159,952 23,535,083
J. David Huber.......... 347,283,622 23,411,413
Robert C. Kingston...... 346,762,700 23,932,336
Dale E. Smith........... 347,304,576 23,390,459
Thomas J. Taylor........ 347,283,622 23,411,413
William J. Tomko........ 347,283,622 23,411,413
</TABLE>
<TABLE>
<CAPTION>
Proposal 2
- -------------------------
<S> <C>
COOPERS & LYBRAND, L.L.P.
For...................... 330,010,191
Against.................. 16,943,555
Abstentions.............. 23,741,287
</TABLE>
<TABLE>
<CAPTION>
Proposal 3 Intermediate Income Bond Equity PA Tax-Free
- ---------------------- ------------------- --------- -------------- -----------
<S> <C> <C> <C> <C>
For................... 1,107,049 1,110,841 1,343,747 369,400
Against............... 5,266 54,399 366,865 10,079
Abstentions........... 9,098 39,677 102,000 47,478
</TABLE>
<TABLE>
<CAPTION>
Proposal 4 Bond
- -------------------------- ---------
<S> <C>
For....................... 1,138,236
Against................... 29,140
Abstentions............... 37,540
</TABLE>
<TABLE>
<CAPTION>
Proposal 5 Intermediate Income
- -------------------- -------------------
<S> <C>
For................. 1,107,122
Against............. 5,722
Abstentions......... 8,568
</TABLE>
RECONVENED
FEBRUARY 10, 1995
<TABLE>
<CAPTION>
U.S. Treasury
Proposal 3 Securities
- ----------------- ------------------------
<S> <C>
For.............. 178,314,048
Against.......... 3,692,885
Abstentions...... 50,897,923
</TABLE>
44
<PAGE> 48
NOTICE TO SHAREHOLDERS OF THE CONESTOGA FUNDS
For shareholders that do not have an October 31, 1995 taxable year end, this
notice is for informational purposes only. For shareholders with an October 31,
1995 taxable year end, please consult your tax advisor as to the pertinence of
this notice.
For the fiscal year ended October 31, 1995 the portfolios of The Conestoga Funds
are designating long term capital gains and qualifying dividend income with
regard to distributions paid during the year as follows:
<TABLE>
<CAPTION>
(A) (B)
LONG TERM ORDINARY
CAPITAL GAINS INCOME TOTAL
DISTRIBUTIONS DISTRIBUTIONS DISTRIBUTIONS
FUND (TAX BASIS) (TAX BASIS) (TAX BASIS)
- ---------------------------------- ------------- ------------- -------------
<S> <C> <C> <C>
Equity 37% 63% 100%
Special Equity 0% 100% 100%
International Equity 0% 100% 100%
Balanced 0% 100% 100%
Bond 0% 100% 100%
Intermediate Income 0% 100% 100%
Short-Term Income 0% 100% 100%
Pennsylvania Tax-Free Bond 3% 97% 100%
Cash Management 0% 100% 100%
U.S. Treasury Securities 0% 100% 100%
Tax-Free 0% 100% 100%
</TABLE>
<TABLE>
<CAPTION>
(C) (D) (E)
QUALIFYING TAX EXEMPT FOREIGN
FUND DIVIDENDS (1) INTEREST TAX CREDIT
- ---------------------------------- ------------- ------------- -------------
<S> <C> <C> <C>
Equity 53% 0% 0%
Special Equity 49% 0% 0%
International Equity 0% 0% 0%
Balanced 10% 0% 0%
Bond N/A 0% 0%
Intermediate Income N/A 0% 0%
Short-Term Income N/A 0% 0%
Pennsylvania Tax-Free Bond N/A 100% 0%
Cash Management N/A 0% 0%
U.S. Treasury Securities N/A 0% 0%
Tax-Free N/A 97% 0%
</TABLE>
(1) Qualifying dividends represent dividends which qualify for the corporate
dividends received deduction.
* Items (A) and (B) are based on the percentage of each portfolio's total
distribution.
** Items (C) and (D) are based on the percentage of gross income of each
portfolio.
45
<PAGE> 49
CON-F-004-02
