UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act File Number 811-09679
Adelante Funds
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(Exact name of registrant as specified in charter)
1995 University Avenue, Suite 225
Berkeley, CA 94704
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(Address of principal executive offices)
Adelante Capital Management LLC
1995 University Avenue, Suite 225
Berkeley, CA 94704
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(Name and address of agent for service)
Registrant's telephone number, including area code: (510) 849-8360
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Date of fiscal year end: January 31
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Date of reporting period: January 31, 2005
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ITEM 1. REPORTS TO STOCKHOLDERS
The following is a copy of the report transmitted to shareholders pursuant to
Rule 30e-1 under the Investment Company Act of 1940, as amended (the "1940
Act"):
- --------------------------------------------------------------------------------
ADELANTE FUNDS:
ADELANTE U.S. REAL ESTATE SECURITIES FUND
ANNUAL REPORT
JANUARY 31, 2005
[GRAPHIC OMITTED]
Shares of Adelante Funds are distributed by an independent
third party, UMB Distribution Services, LLC.
- --------------------------------------------------------------------------------
Dear Shareholder: January 31, 2005
We are delighted to present you with Adelante Funds' annual report for fiscal
year ended January 31, 2005. This marks our fifth anniversary in the mutual fund
arena and we continue to believe that mutual funds provide an efficient means
for investors to gain exposure to multiple asset classes. We would like to take
this opportunity to thank you for your investment in, and continued support of
Adelante Funds.
The public ownership of commercial real estate continued to expand and new
investors continued to commit capital throughout the past year. Calendar year
2004 also marked the fifth consecutive year that Real Estate Investment Trusts
("REITs"), as measured by the Dow Jones Wilshire REIT Index, outperformed the
broader equity market, as measured by the S&P 500(R) Index. Despite a sharp
sell-off in April 2004, REITs rebounded and posted positive performance as
measured by the various real estate securities indices.
The Adelante U.S. Real Estate Securities Fund (the "Fund") also experienced its
fifth consecutive year of positive performance. For the fiscal year ended
January 31, 2005, the average annual returns since inception for Class Y shares,
the Dow Jones Wilshire REIT Index and the S&P 500(R) Index were 20.24%, 20.58%
and -1.91%, respectively. For a more detailed discussion of the Fund's
performance, please see the Management's Discussion of Fund Performance section
of this report.
While we presently believe that there are positive opportunities in the real
estate securities markets, it is worthwhile to note the potential risks involved
with investing in these securities, and consequently in the Fund. The principal
risks of investing in the Fund are risks generally associated with investing in
stocks and risks specific to investing in the real estate industry. Real estate
investing involves special risks, including interest rate fluctuation, credit
risk, liquidity risk and the impact of varied economic conditions on real estate
values and occupancy rates. Some real estate securities, including REITs, have
limited diversification and are, therefore, subject to risks inherent in
operating and financing a limited number of projects, including greater market
fluctuations.
As we diligently monitor our universe of companies, their markets and portfolio
activities, our experienced management team will continue to employ the same
disciplined and research driven approach to their investment management process.
It has been our pleasure to serve you and we appreciate your loyalty to Adelante
Funds. As always, if you have any questions or issues or you would like to make
an additional purchase, you can call and talk to a shareholder services
representative at 1-877-563-5327.
Sincerely,
Michael A. Torres
Chairman and President
UMB Distribution Services, LLC, Distributor
Not authorized for use unless preceded or accompanied by a current Adelante
Funds prospectus.
A message from your portfolio manager:
We are delighted to provide you with our report for the fiscal year ended
January 31, 2005. During that period, Class Y shares of Adelante U. S. Real
Estate Securities Fund (the "Fund") gained 15.62% while Class K shares gained
15.19% vs. a gain of 16.81% for the Dow Jones Wilshire REIT Index.(1) These
results are impressive relative to the S&P 500(R) Index(2), which gained 6.23%
over the same period. For the year ended December 31, 2004, Class Y shares
returned 31.60% versus 33.22% for the Dow Jones Wilshire REIT Index. Since
inception (February 16, 2000) cumulative total returns for Class Y shares, the
Dow Jones Wilshire REIT Index and the S&P 500(R) Index for the period ended
January 31, 2005, were 149.46%, 152.94% and -9.11% respectively, and for the
period ended December 31, 2004 were 173.83%, 177.28% and -6.84% respectively.
Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost. Performance for Class K and
Class Y shares will differ due to differences in class expenses. Current
performance may be higher or lower than the performance quoted. To obtain
performance information current to the most recent month-end, please call
1-877-563-5327.
For the reporting period, REITs, as evidenced by the Dow Jones Wilshire REIT
Index, delivered a fifth year of outperformance relative to broader equity
benchmarks as shown above. Similarly, in the year ended 2004, only one out of
the 92 constituents of the Dow Jones Wilshire REIT Index, Affordable Residential
Communities, produced a negative total return. Of the remainder, only four
companies, the most prominent being Equity Office Properties, produced less than
double-digit positive total returns.* We believe the strong performance was
directly attributable to a healthy asset transaction market where asset values
continued to rise.
The Fund's return for the fiscal year was primarily driven by security
selection. For the second consecutive year, the Fund's regional retail holdings
provided the greatest contribution as General Growth Properties acquired the
Rouse Company, further consolidating the ownership of U.S. regional malls. The
three best performing holdings were Avalon Bay Communities, a focused apartment
owner developer, up 44.95%, Archstone Smith Trust, a national apartment company,
up 35.57% and Cousins Properties Inc., a diversified property owner, up 31.03%.
With respect to sector performance, retail continued to shine, with the two
retail sectors (local and regional) being among the top three performing sectors
for the Fund this past year. As the economic picture brightened throughout the
fiscal year, consumers continued to spend which helped to bolster returns within
the retail sectors. This enabled the Fund's holdings in the regional malls
sector to return 23.52% and holdings in the shopping centers sector to return
20.61%. Holdings in the apartment sector returned a solid 22.36% despite less
than favorable fundamentals relative to the other real estate sectors. The
Fund's weakest performing sector in 2004 was industrial, and it still managed to
return a competitive 14.89%.
The Fund continued to avoid the non-core sectors of the commercial real estate
market due to their high potential for volatility. Non-core real estate sectors
include factory outlet, hotel, manufactured housing and storage. Within the Dow
Jones Wilshire REIT Index, these sectors comprise nearly 11.5% of the market.
The decision to avoid non-core sectors held the Fund's performance down this
fiscal year as factory outlets returned 32.16%, hotels returned 21.47% and
storage returned 14.66%. While the Fund did miss out on these attractive
returns, it did not take on the added potential risk associated with these
volatile sectors. We believe this approach helped the Fund in seeking to control
risk while still providing competitive returns.
Over the course of the year, we began to reduce the Fund's perpetual preferred
positions. At period end, 4.6% of the Fund was spread among four such holdings,
with a 7.20% average yield. While the Fund did benefit from the enhanced yield
and relatively lower volatility of these holdings, they did hold back the total
return of the Fund. As a whole, the preferred positions returned 5.35% for the
fiscal year.
Looking forward into 2005, we believe the operating performance of REITs will
continue to improve from the trough of 2003, albeit unevenly across the various
property types. Finally, we believe that investor demand for REITs will slow in
the first half of 2005 and increase as earning growth confirms the real estate
recovery, despite a very pricey asset market. We also like to remind investors
to consider the risks inherent in investing in REITs such as risks associated
with the real estate industry, liquidity, interest rates and small market
capitalization.
As always, we vigilantly analyze and monitor each REIT's premium / discount to
its underlying net asset value and strive to manage the Fund to produce an
attractive risk adjusted return for its investors. By doing so, we hope to
provide investors the opportunity to add the diversification benefits that real
estate brings to a multi-asset class portfolio.
Michael A. Torres
Chief Executive Officer, Adelante Capital Management LLC
- --------
*Portfolio composition will change due to ongoing management of the Fund.
References to specific securities should not be construed as a recommendation by
the Fund, its adviser or distributor.
(1) The Dow Jones Wilshire REIT Index is an unmanaged market capitalization
weighted index of U.S. publicly traded real estate investment trusts (REITS)
representing a variety of property types.
(2) The S&P 500(R) Index is an unmanaged index of 500 selected common stocks,
most of which are listed on the New York Stock Exchange. The S&P 500(R) Index is
heavily weighted toward stocks with large market capitalization and represents
approximately two-thirds of the total market value of all domestic common
stocks.
The Adelante U.S. Real Estate Securities Fund is distributed by UMB Distribution
Services, LLC.
ADELANTE U.S. REAL ESTATE SECURITIES FUND
EXPENSE EXAMPLE (UNAUDITED)
FOR THE SIX MONTHS ENDED JANUARY 31, 2005
As a shareholder of the Adelante U.S. Real Estate Securities Fund (the "Fund"),
you incur ongoing costs, including management fees and other Fund expenses. If
you invest through a financial intermediary, you may also incur additional costs
such as a transaction fee charged on the purchase or sale of the Fund or an
asset-based management fee. This Example is intended to help you understand your
ongoing costs (in dollars) of investing in the Fund and to compare these costs
with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period from August 1, 2004 to January 31, 2005.
ACTUAL EXPENSES
The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses you paid over the period.
Simply divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the first
line under the heading entitled "Expenses Paid During Period" to estimate the
expenses you paid on your account during the period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratios and an assumed rate of return of 5% per year before expenses, which is
not the Fund's actual return. The hypothetical account values and expenses may
not be used to estimate the actual ending account balance or expenses you paid
for the period. You may use this information to compare the ongoing costs of
investing in the Fund and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any costs that may be associated with
investing in the Fund through a financial intermediary. Therefore, the second
line of the table is useful in comparing the ongoing costs only, and will not
help you determine the relative total costs of owning different funds. In
addition, if any costs associated with investing through a financial
intermediary were included, your costs would have been higher.
Class K Class Y
-----------------------------------------------------------------
Expenses Expenses
Beginning Ending paid during Beginning Ending paid during
account account period account account period
value value 8/1/04- value value 8/1/04-
8/1/04 1/31/05 1/31/05(1) 8/1/04 1/31/05 1/31/05(1)
-----------------------------------------------------------------
Actual $1,000.00 $1,121.60 $6.67 $1,000.00 $1,124.20 $5.18
Hypothetical
(5% return
before expenses) 1,000.00 1,018.71 6.34 1,000.00 1,020.12 4.93
(1) Expenses are equal to the Funds' annualized expense ratios (1.25% for Class
K and 0.97% for Class Y), multiplied by the average account value over the
period, and multiplied by 0.5027 (to reflect the one-half year period).
ADELANTE U.S. REAL ESTATE SECURITIES FUND
GROWTH OF A $10,000 INVESTMENT
Adelante U.S.
Real Estate
Securities Dow Jones Wilshire
Fund, Class K S&P 500 REIT Index
------------- ------- ----------
02/16/00 10,000.00 10,000.00 10,000.00
02/29/00 10,020.00 9,751.07 9,956.80
03/31/00 10,500.00 10,705.02 10,351.59
04/30/00 11,200.00 10,382.90 11,085.51
05/31/00 11,380.00 10,169.85 11,227.30
06/30/00 11,777.76 10,420.53 11,508.09
07/31/00 12,857.73 10,257.66 12,590.54
08/31/00 12,338.12 10,894.76 12,118.90
09/30/00 12,898.06 10,319.63 12,583.78
10/31/00 12,228.97 10,275.98 12,044.32
11/30/00 12,517.19 9,465.82 12,293.51
12/31/00 13,331.91 9,512.11 13,165.62
01/31/01 13,133.08 9,849.60 13,160.88
02/28/01 12,955.18 8,951.51 12,943.59
03/31/01 12,985.73 8,384.43 13,028.89
04/30/01 13,218.75 9,035.99 13,310.83
05/31/01 13,483.55 9,096.53 13,634.95
06/30/01 14,302.01 8,875.12 14,442.55
07/31/01 14,045.28 8,787.79 14,152.26
08/31/01 14,612.22 8,237.67 14,715.23
09/30/01 14,287.46 7,572.48 14,073.94
10/31/01 13,701.65 7,716.89 13,572.91
11/30/01 14,406.80 8,308.85 14,392.17
12/31/01 14,782.23 8,381.63 14,760.03
01/31/02 14,578.96 8,259.35 14,701.73
02/28/02 14,838.69 8,100.11 15,023.55
03/31/02 15,767.74 8,404.75 15,995.13
04/30/02 15,790.51 7,895.17 16,082.78
05/31/02 16,097.90 7,836.98 16,297.81
06/30/02 16,576.93 7,278.68 16,730.68
07/31/02 15,726.24 6,711.30 15,824.88
08/31/02 15,933.16 6,755.40 15,838.64
09/30/02 15,351.13 6,021.22 15,212.23
10/31/02 14,607.96 6,551.21 14,395.48
11/30/02 15,258.23 6,936.81 15,083.59
12/31/02 15,482.75 6,529.27 15,289.33
01/31/03 15,057.92 6,358.21 14,844.10
02/28/03 15,411.95 6,262.83 15,114.56
03/31/03 15,782.49 6,323.58 15,482.45
04/30/03 16,294.29 6,844.65 16,079.14
05/31/03 17,056.04 7,205.36 16,989.22
06/30/03 17,438.10 7,297.30 17,356.02
07/31/03 18,255.33 7,425.73 18,279.19
08/31/03 18,411.56 7,570.53 18,431.45
09/30/03 18,954.40 7,490.14 19,079.87
10/31/03 19,209.23 7,913.85 19,363.02
11/30/03 20,022.26 7,983.49 20,216.15
12/31/03 20,510.33 8,402.16 20,822.23
01/31/04 21,263.11 8,556.39 21,655.54
02/29/04 21,658.02 8,675.30 22,015.02
03/31/04 22,897.58 8,544.43 23,338.12
04/30/04 19,684.97 8,410.29 19,921.42
05/31/04 21,099.02 8,525.99 21,443.42
06/30/04 21,650.93 8,691.51 22,073.85
07/31/04 21,838.22 8,403.82 22,186.87
08/31/04 23,486.39 8,437.83 24,018.17
09/30/04 23,353.22 8,529.21 23,904.33
10/31/04 24,735.07 8,659.51 25,231.02
11/30/04 25,727.49 9,009.89 26,360.36
12/31/04 26,899.71 9,316.49 27,728.46
01/31/05 24,494.04 9,089.38 25,293.90
Adelante U.S.
Real Estate
Securities Dow Jones Wilshire
Fund, Class Y S&P 500 REIT Index
------------- ------- ----------
02/16/00 10,000.00 10,000.00 10,000.00
02/29/00 10,020.00 9,751.07 9,956.80
03/31/00 10,500.00 10,705.02 10,351.59
04/30/00 11,210.00 10,382.90 11,085.51
05/31/00 11,380.00 10,169.85 11,227.30
06/30/00 11,782.21 10,420.53 11,508.09
07/31/00 12,863.52 10,257.66 12,590.54
08/31/00 12,353.47 10,894.76 12,118.90
09/30/00 12,917.10 10,319.63 12,583.78
10/31/00 12,256.80 10,275.98 12,044.32
11/30/00 12,545.68 9,465.82 12,293.51
12/31/00 13,357.18 9,512.11 13,165.62
01/31/01 13,166.06 9,849.60 13,160.88
02/28/01 12,985.56 8,951.51 12,943.59
03/31/01 13,011.84 8,384.43 13,028.89
04/30/01 13,259.17 9,035.99 13,310.83
05/31/01 13,528.01 9,096.53 13,634.95
06/30/01 14,356.81 8,875.12 14,442.55
07/31/01 14,107.03 8,787.79 14,152.26
08/31/01 14,693.47 8,237.67 14,715.23
09/30/01 14,357.71 7,572.48 14,073.94
10/31/01 13,774.16 7,716.89 13,572.91
11/30/01 14,489.84 8,308.85 14,392.17
12/31/01 14,872.44 8,381.63 14,760.03
01/31/02 14,665.88 8,259.35 14,701.73
02/28/02 14,941.30 8,100.11 15,023.55
03/31/02 15,890.26 8,404.75 15,995.13
04/30/02 15,924.98 7,895.17 16,082.78
05/31/02 16,237.46 7,836.98 16,297.81
06/30/02 16,713.31 7,278.68 16,730.68
07/31/02 15,871.80 6,711.30 15,824.88
08/31/02 16,082.18 6,755.40 15,838.64
09/30/02 15,490.44 6,021.22 15,212.23
10/31/02 14,734.81 6,551.21 14,395.48
11/30/02 15,395.99 6,936.81 15,083.59
12/31/02 15,627.92 6,529.27 15,289.33
01/31/03 15,206.84 6,358.21 14,844.10
02/28/03 15,567.76 6,262.83 15,114.56
03/31/03 15,946.57 6,323.58 15,482.45
04/30/03 16,480.55 6,844.65 16,079.14
05/31/03 17,257.25 7,205.36 16,989.22
06/30/03 17,651.36 7,297.30 17,356.02
07/31/03 18,484.90 7,425.73 18,279.19
08/31/03 18,644.25 7,570.53 18,431.45
09/30/03 19,208.53 7,490.14 19,079.87
10/31/03 19,468.61 7,913.85 19,363.02
11/30/03 20,310.76 7,983.49 20,216.15
12/31/03 20,806.88 8,402.16 20,822.23
01/31/04 21,575.63 8,556.39 21,655.54
02/29/04 22,004.12 8,675.30 22,015.02
03/31/04 23,245.64 8,544.43 23,338.12
04/30/04 20,000.88 8,410.29 19,921.42
05/31/04 21,433.14 8,525.99 21,443.42
06/30/04 22,011.91 8,691.51 22,073.85
07/31/04 22,190.66 8,403.82 22,186.87
08/31/04 23,888.80 8,437.83 24,018.17
09/30/04 23,757.09 8,529.21 23,904.33
10/31/04 25,158.35 8,659.51 25,231.02
11/30/04 26,186.80 9,009.89 26,360.36
12/31/04 27,382.79 9,316.49 27,728.46
01/31/05 24,945.65 9,089.38 25,293.90
ADELANTE U.S. REAL ESTATE SECURITIES FUND
ONE YEAR AND AVERAGE ANNUAL TOTAL RETURNS SINCE INCEPTION (2/16/00)
Average Annual Average Annual
One Year Since Inception One Year Since Inception
As of As of As of As of
December 31, 2004 December 31, 2004 January 31, 2005 January 31, 2005
----------------- ----------------- ---------------- ----------------
Adelante U.S. Real
Estate Securities Fund
- - Class K 31.15% 22.51% 15.19% 19.80%
Adelante U.S. Real
Estate Securities Fund
- - Class Y 31.60% 22.96% 15.62% 20.24%
S&P 500 Index(R) 10.88% -1.44% 6.23% -1.91%
Dow Jones Wilshire REIT Index 33.22% 23.28% 16.81% 20.58%
- ----------------------------------------------------------------------------------------------------------------
The line graphs shown above for the Fund assumes an initial investment of
$10,000 made after the close of business on 2/15/00 (the Fund's inception date).
Returns shown include the reinvestment of all dividends and distributions. Past
performance, particularly for periods of less than one year, is not predictive
of future results. Investment return and principal value will fluctuate, so that
your shares, when redeemed, may be worth more or less than the original cost.
The S&P 500(R) Index is an unmanaged index of 500 selected common stocks, most
of which are listed on the New York Stock Exchange. The Index is heavily
weighted toward stocks with large market capitalizations and represents
approximately two-thirds of the total market value of all domestic common
stocks.
The Dow Jones Wilshire REIT Index is an unmanaged index of approximately 100
selected securities which measures U.S. publicly traded Real Estate Investment
Trusts.
Average annual total returns do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund shares.
ADELANTE U.S. REAL ESTATE SECURITIES FUND
SCHEDULE OF INVESTMENTS
JANUARY 31, 2005
Number
of Shares Value
- ------------ ----------
COMMON STOCKS 94.3%
APARTMENTS 21.0%
40,470 Archstone-Smith Trust $ 1,388,121
19,000 AvalonBay Communities, Inc. 1,271,480
15,910 BRE Properties, Inc. 585,011
7,280 Camden Property Trust 329,857
19,600 Education Realty Trust, Inc. 329,084
45,270 Equity Residential 1,427,816
8,560 Essex Property Trust, Inc. 615,892
4,620 Gables Residential Trust 154,585
46,700 United Dominion Realty Trust, Inc. 1,037,674
-------------
7,139,520
-------------
DIVERSIFIED/SPECIALTY 3.2%
4,290 Colonial Properties Trust 155,727
7,570 Cousins Properties, Inc. 229,295
10,400 Crescent Real Estate Equities Company 172,328
10,490 Liberty Property Trust 409,635
4,140 Washington Real Estate Investment Trust 125,359
-------------
1,092,344
-------------
INDUSTRIAL 9.9%
21,470 AMB Property Corporation 799,328
24,500 Catellus Development Corporation 657,090
7,320 CenterPoint Properties Corporation 310,734
10,880 Duke Realty Corporation 338,368
32,710 ProLogis 1,247,559
-------------
3,353,079
-------------
OFFICE 31.4%
5,410 Alexandria Real Estate Equities, Inc. 360,090
12,700 American Financial Realty Trust 191,135
25,420 Arden Realty, Inc. 857,162
12,500 BioMed Realty Trust, Inc. 249,375
29,300 Boston Properties, Inc. 1,692,954
14,340 Brandywine Realty Trust 397,218
19,440 CarrAmerica Realty Corporation 590,004
29,000 Corporate Office Properties Trust 746,170
74,909 Equity Office Properties Trust 2,095,954
5,990 Kilroy Realty Corporation 234,089
5,890 Mack-Cali Realty Corporation 247,262
6,400 Maguire Properties, Inc. 151,360
8,360 Prentiss Properties Trust 299,539
7,340 SL Green Realty Corporation 390,708
31,010 Vornado Realty Trust 2,144,031
-------------
10,647,051
-------------
ADELANTE U.S. REAL ESTATE SECURITIES FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
JANUARY 31, 2005
Number
of Shares Value
- ------------ ----------
RETAIL - LOCAL 12.0%
32,800 Acadia Realty Trust $ 526,768
8,490 Developers Diversified Realty Corporation 337,477
18,040 Federal Realty Investment Trust 851,127
6,420 Kimco Realty Corporation 340,132
22,410 Pan Pacific Retail Properties, Inc. 1,297,315
10,730 Regency Centers Corporation 530,062
4,900 Weingarten Realty Investors 175,175
-------------
4,058,056
-------------
RETAIL - REGIONAL 16.8%
5,170 CBL & Associates Properties, Inc. 355,593
29,310 General Growth Properties, Inc. 931,179
21,290 The Macerich Company 1,218,001
39,190 Simon Property Group, Inc. 2,323,967
32,700 Taubman Centers, Inc. 883,227
-------------
5,711,967
-------------
TOTAL COMMON STOCKS (COST $21,087,599) 32,002,017
-------------
PREFERRED STOCKS 4.6%
23,400 CBL & Associates Properties, Series C 614,250
12,400 Developers Diversified Realty
Corporation, Series G 331,452
15,500 Lexington Corporate Properties
Trust, Series B 406,100
7,800 New Plan Excel Realty Trust, Series E 205,920
-------------
1,557,722
-------------
TOTAL PREFERRED STOCKS (COST $1,477,500) 1,557,722
-------------
ADELANTE U.S. REAL ESTATE SECURITIES FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
JANUARY 31, 2005
Principal
Amount Value
- ----------- ----------
$384,471 SHORT-TERM INVESTMENT 1.1%
UMB Bank Money Market Fiduciary $ 384,471
v -------------
TOTAL SHORT-TERM INVESTMENT (COST $384,471) 384,471
-------------
TOTAL INVESTMENTS (COST $22,949,570) 100.0% 33,944,210
LIABILITIES LESS OTHER ASSETS 0.0% (14,178)
-------------
NET ASSETS 100.0% $ 33,930,032
=============
See notes to the financial statements.
SECTOR BREAKDOWN (UNAUDITED)
JANUARY 31, 2005
Office 31%
Apartments 21%
Retail - Regional 17%
Retail - Local 12%
Industrial 10%
Preferred Stocks 5%
Diversified/Specialty 3%
Short-Term Investment 1%
ADELANTE U.S. REAL ESTATE SECURITIES FUND
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 2005
ASSETS:
Investments, at value (cost $22,949,570) $ 33,944,210
Interest and dividends receivable 18,196
Receivable for capital stock sold 16,019
Due from advisor 55
Prepaid expenses and other assets 21,025
------------------
Total assets 33,999,505
------------------
LIABILITIES:
Payable for capital stock redeemed 4,455
Other accrued expenses 65,018
------------------
Total liabilities 69,473
------------------
NET ASSETS $ 33,930,032
==================
NET ASSETS CONSIST OF:
Paid-in-capital $ 19,689,161
Undistributed net investment income 16,718
Accumulated undistributed net realized gain on
investments 3,229,513
Net unrealized appreciation on investments 10,994,640
------------------
NET ASSETS $ 33,930,032
==================
SHARES OUTSTANDING, $0.0001 PAR VALUE,
(UNLIMITED SHARES AUTHORIZED)
CLASS K 1,023,891
CLASS Y 875,030
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE
CLASS K $ 17.92
==================
CLASS Y $ 17.81
==================
See notes to financial statements.
ADELANTE U.S. REAL ESTATE SECURITIES FUND
STATEMENT OF OPERATIONS
YEAR ENDED JANUARY 31, 2005
INVESTMENT INCOME:
Dividends $2,389,861
Interest 4,168
-------------
Total investment income 2,394,029
-------------
EXPENSES:
Investment advisory fees (see note 5) 356,824
Professional fees 147,903
Administration and accounting fees 75,825
Shareholder servicing fees 73,222
Distribution fees (see note 5) 68,305
Insurance expense 51,502
Trustees' fees and expenses 40,714
Federal and state registration fees 36,806
Reports to shareholders 28,967
Custody fees 13,228
Other expenses 3,779
-------------
Total expenses before waiver and reimbursement of expenses 897,075
Less: Waiver and reimbursement of expenses (387,923)
-------------
Net expenses 509,152
-------------
NET INVESTMENT INCOME 1,884,877
-------------
REALIZED AND UNREALIZED GAIN:
Net realized gain on investments 5,647,142
Change in unrealized appreciation on investments (292,051)
-------------
Net gain on investments 5,355,091
-------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $7,239,968
=============
See notes to financial statements.
ADELANTE U.S. REAL ESTATE SECURITIES FUND
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED
JANUARY 31, 2005 JANUARY 31, 2004
OPERATIONS:
Net investment income $ 1,884,877 $ 1,738,010
Net realized gain on investments 5,647,142 170,844
Change in unrealized appreciation on investments (292,051) 10,443,702
------------- -------------
Net increase in net assets resulting from operations 7,239,968 12,352,556
------------- -------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sale of shares
Class K shares 6,727,380 6,099,862
Class Y shares 5,902,457 9,531,886
Shares issued to shareholders in reinvestment of
distributions
Class K shares 2,445,915 1,105,895
Class Y shares 1,701,860 569,998
Payments for shares redeemed
Class K shares (22,147,955) (4,027,874)
Class Y shares (9,712,484) (2,992,119)
------------- -------------
Net increase (decrease) from capital share
transactions (15,082,827) 10,287,648
------------- -------------
DISTRIBUTIONS PAID FROM:
Net investment income
Class K shares (729,340) (932,399)
Class Y shares (542,292) (495,243)
Net realized gains
Class K shares (1,728,187) (176,598)
Class Y shares (1,305,474) (104,280)
------------- -------------
Total distributions (4,305,293) (1,708,520)
------------- -------------
TOTAL INCREASE (DECREASE) IN NET ASSETS (12,148,152) 20,931,684
NET ASSETS:
Beginning of year 46,078,184 25,146,500
------------- -------------
End of year (includes undistributed net
investment income of $16,718 and
$67,519, respectively) $ 33,930,032 $ 46,078,184
============= =============
See notes to financial statements.
FINANCIAL HIGHLIGHTS
For a Fund Share Outstanding
Throughout the Year/Period.
CLASS K CLASS K CLASS K CLASS K CLASS K
------------ ------------ ------------ ------------ ------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
JANUARY 31, JANUARY 31, JANUARY 31, JANUARY 31, JANUARY 31,
2005 2004 2003 2002 2001(1)
------------ ------------ ------------ ------------ ------------
NET ASSET VALUE, BEGINNING OF
YEAR/PERIOD $ 17.23 $ 12.76 $ 12.91 $ 12.55 $ 10.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.92 0.70 0.64 0.70 0.53
Net realized and unrealized
gain/(loss) on investments 1.82 4.46 (0.19) 0.66 2.58
------------ ------------ ------------ ------------ ------------
Total from investment
operations 2.74 5.16 0.45 1.36 3.11
------------ ------------ ------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income (0.52) (0.58) (0.55) (0.66) (0.54)
Distributions from capital gains (1.53) (0.11) (0.05) (0.34) (0.02)
------------ ------------ ------------ ------------ ------------
Total distributions (2.05) (0.69) (0.60) (1.00) (0.56)
------------ ------------ ------------ ------------ ------------
NET ASSET VALUE, END OF YEAR/PERIOD $ 17.92 $ 17.23 $12.76 $ 12.91 $ 12.55
============ ============ ============ ============ ============
TOTAL RETURN 15.19% 41.21% 3.29% 11.01% 31.33%(2)
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of year/period $ 18,350,017 $ 28,984,996 $ 18,727,963 $13,364,481 $ 11,727,066
Ratio of expenses to average
net assets 1.25% 1.25% 1.25% 1.25% 1.25%(3)
Ratio of expenses before waivers
to average net assets 2.10% 2.23% 2.75% 2.96% 7.36%(3)
Ratio of net investment income
to average net assets 4.11% 4.75% 5.21% 5.54% 5.02%(3)
Ratio of net investment income
before waivers to average net assets 3.26% 3.77% 3.71% 3.83% (1.09)%(3)
Portfolio turnover rate 32% 15% 30% 54% 25%(2)
(1) Commenced operations on February 16, 2000
(2) Not annualized for periods less than a year
(3) Annualized
See notes to financial statements.
FINANCIAL HIGHLIGHTS
For a Fund Share Outstanding
Throughout the Year/Period.
CLASS Y CLASS Y CLASS Y CLASS Y CLASS Y
------------ ------------ ------------ ------------ ------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
JANUARY 31, JANUARY 31, JANUARY 31, JANUARY 31, JANUARY 31,
2005 2004 2003 2002 2001(1)
------------ ------------ ------------ ------------ ------------
NET ASSET VALUE, BEGINNING OF
YEAR/PERIOD $ 17.12 $ 12.64 $ 12.78 $ 12.40 $ 10.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.83 0.70 0.67 0.74 0.66
Net realized and unrealized
gain/(loss) on investments 1.96 4.49 (0.17) 0.65 2.49
------------ ------------ ------------ ------------ ------------
Total from investment operations 2.79 5.19 0.50 1.39 3.15
------------ ------------ ------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income (0.57) (0.60) (0.59) (0.67) (0.72)
Distributions from capital gains
(1.53) (0.11) (0.05) (0.34) (0.03)
------------ ------------ ------------ ------------ ------------
Total distributions (2.10) (0.71) (0.64) (1.01) (0.75)
------------ ------------ ------------ ------------ ------------
NET ASSET VALUE, END OF YEAR/PERIOD $ 17.81 $17.12 $ 12.64 $ 12.78 $12.40
============= ============ ============ ============ ============
TOTAL RETURN 15.62% 41.88% 3.69% 11.39% 31.66%(2)
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of year/period $ 15,580,015 $ 17,093,188 $ 6,418,537 $ 3,520,190 $ 686,703
Ratio of expenses to average
net assets 0.97% 0.97% 0.97% 0.97% 0.97%(3)
Ratio of expenses before waivers
to average net assets 1.88% 2.06% 2.90% 3.85% 22.69%(3)
Ratio of net investment income
to average net assets 4.41% 5.01% 5.58% 5.82% 5.80%(3)
Ratio of net investment income
before waivers to average net assets 3.50% 3.92% 3.65% 2.94% (15.91)%(3)
Portfolio turnover rate 32% 15% 30% 54% 25%(2)
(1) Commenced operations on February 16, 2000
(2) Not annualized for periods less than a year
(3) Annualized
See notes to financial statements.
ADELANTE U.S. REAL ESTATE SECURITIES FUND
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 2005
1. ORGANIZATION
Adelante Funds (the "Trust") was organized on October 28, 1999 as a
Delaware business trust and registered under the Investment Company Act of
1940 (the "1940 Act"), as amended, as an open-end management investment
company. The Trust currently consists of one investment portfolio: Adelante
U.S. Real Estate Securities Fund (the "Fund"). The Fund was formerly known
as Lend Lease U.S. Real Estate Securities Fund. The Fund is a
non-diversified portfolio of the Trust and is authorized to issue three
classes of shares: Class A, Class K and Class Y. The Fund's share classes
differ in terms of sales charges, fees and eligibility requirements. The
Fund's Class K and Class Y shares commenced operations on February 16,
2000. As of January 31, 2005, the Fund's Class K and Class Y shares are
outstanding. Adelante Capital Management LLC (the "Adviser") is the Fund's
investment adviser.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
financial statements have been prepared in accordance with accounting
policies generally accepted in the United States of America that require
management to make certain estimates and assumptions at the date of the
financial statements. Actual results may differ from such estimates.
INVESTMENT VALUATION - In connection with the determination of the Fund's
net asset value, securities that are traded on a recognized stock exchange
are valued at the last sale price on the securities exchange on which such
securities are primarily traded. If a closing price is not reported, equity
securities for which reliable bid quotations are available are valued at
the mean between bid and asked prices. Short-term securities having a
maturity of 60 days or less are valued at amortized cost, which
approximates market value. Any securities for which there are no readily
available market quotations and other assets will be valued at their fair
value as determined in good faith by the Adviser pursuant to procedures
established by and under the supervision of the Board of Trustees. The fair
value of a security is the amount which a Fund might reasonably expect to
receive upon a current sale. Valuing securities at fair value involves
greater reliance on judgment than valuing securities that have readily
available market quotations. There can be no assurance that the Funds could
obtain the fair value assigned to a security if they were to sell the
security at approximately the time at which the Funds determine their net
asset value per share.
FEDERAL INCOME TAXES - It is the Fund's policy to meet the requirements of
the Internal Revenue Code applicable to regulated investment companies and
to distribute substantially all investment company net taxable income and
net capital gains each year to shareholders in a manner which results in no
tax cost to the Fund. Therefore, no federal income tax or excise tax
provision has been made.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME - Securities transactions are
accounted for on a trade date basis. Realized gains and losses from
securities transactions are recorded on the identified cost basis. Dividend
income is recognized on the ex-dividend date and interest income is
recognized daily on an accrual basis. Return of capital distributions from
investments will decrease the cost of investment in the investment security
and thus may impact unrealized appreciation or depreciation of the
investment security.
ADELANTE U.S. REAL ESTATE SECURITIES FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JANUARY 31, 2005
DISTRIBUTIONS TO SHAREHOLDERS - Dividends from net investment income are
declared and paid quarterly. Distributions of net realized capital gains,
if any, are declared and paid at least annually.
Distributions to shareholders are determined in accordance with federal
income tax regulations and are recorded on the ex-dividend date. The
character of distributions made during the year from net investment income
or net realized gains may differ from the characterization for federal
income tax purposes due to differences in the recognition of income,
expense and gain items for financial statement and tax purposes. Where
appropriate, reclassifications between net asset accounts are made for such
differences that are permanent in nature. Accordingly, at January 31, 2005,
reclassifications were recorded to increase accumulated undistributed net
realized gain on investments by $664,046 and decrease undistributed net
investment income by $664,046.
EXPENSES - Each class of shares is charged for those expenses directly
attributable to the class. Expenses that are not directly attributable to a
class of shares are typically allocated among the classes in proportion to
their relative shares outstanding.
INDEMNIFICATIONS - Under the Fund's organizational documents, their
officers and trustees are indemnified against certain liability arising out
of the performance of their duties to the Fund. Additionally, in the normal
course of business, the Fund enters into contracts with service providers
that contain general indemnification clauses. The Fund's maximum exposure
under these arrangements is unknown as this would involve future claims
that may be made against the Fund that have not yet occurred. However, the
Fund expects the risk of loss to be remote.
3. CAPITAL TRANSACTIONS
Transactions of the Fund were as follows:
YEAR ENDED YEAR ENDED
JANUARY 31, 2005 JANUARY 31, 2004
------------------------- ----------------------
CLASS K SHARES: SHARES DOLLARS SHARES DOLLARS
Shares sold 364,900 $6,727,380 409,549 $6,099,862
Shares issued to
holders in
reinvestment of
dividends and
capital gains 126,964 2,445,915 71,911 1,105,895
Shares redeemed (1,150,691) (22,147,955) (266,179) (4,027,874)
----------- ------------ --------- -----------
Net increase (decrease) (658,827) $(12,974,660) 215,281 $3,177,883
----------- ------------ --------- -----------
ADELANTE U.S. REAL ESTATE SECURITIES FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JANUARY 31, 2005
YEAR ENDED YEAR ENDED
JANUARY 31, 2005 JANUARY 31, 2004
------------------------- ----------------------
CLASS Y SHARES: SHARES DOLLARS SHARES DOLLARS
Shares sold 329,854 $5,902,457 650,319 $9,531,886
Shares issued to
holders in
reinvestment of
dividends and
capital gains 88,791 1,701,860 36,986 569,998
Shares redeemed (541,849) (9,712,484) (196,899) (2,992,119)
----------- ------------ --------- -----------
Net increase (decrease) (123,204) $(2,108,167) 490,406 $7,109,765
----------- ------------ --------- -----------
Net increase
(decrease) from
capital share
transactions (782,031) $(15,082,827) 705,687 $10,287,648
=========== ============= ========= ===========
4. INVESTMENT TRANSACTIONS
Purchases and sales of securities for the Fund, excluding short-term
investments, for the year ended January 31, 2005 were $13,782,424 and
$30,727,288 respectively. There were no purchases or sales of U.S.
Government securities for the year ended January 31, 2005.
5. INVESTMENT ADVISORY AGREEMENT
The Fund has entered into an Investment Advisory Agreement with the
Adviser. The Fund pays a fee based on the Fund's average daily net assets
at the annual rate of 0.80% for the services provided by the Adviser. The
Adviser has contractually agreed to limit the annual operating expenses of
Class K and Class Y shares of the Fund to 1.25% and 0.97%, respectively,
through January 31, 2005, subject to later reimbursement by the Fund in
certain circumstances. The expense limitation has been renewed through
August 25, 2006. The Adviser has contractually agreed that in the event
that the foregoing Fund expense limitation is not renewed, the Adviser will
limit the Fund's Class K and Y shares total annual fund operating expense
to 2.25% through January 31, 2011. During the year ended January 31, 2005,
the Adviser waived investment advisory fees for the Fund of $387,923. The
Adviser is entitled to recoup from the Fund amounts waived or reimbursed
for a period of up to three years from the date such amounts were waived or
reimbursed, provided the Fund's expenses, including such recouped amounts,
do not exceed the stated expense limitations. At January 31, 2005, $693,120
and $392,485 was subject to potential recoupment for Class K and Class Y,
respectively.
ADELANTE U.S. REAL ESTATE SECURITIES FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JANUARY 31, 2005
Pursuant to Rule 12b-1 of the 1940 Act, the Trust has adopted a plan of
distribution for the Class K shares of the Fund (the "Plan") which permits
the Fund to pay for certain expenses associated with the distribution of
its Class K shares and for services provided to its Class K shareholders.
Under the Plan, the Fund's Class K shares may pay expenses pursuant to the
distribution plan equal to a maximum of 0.25% of the average daily net
assets of such class. During the year ended January 31, 2005, the Fund
incurred distribution expenses of $68,305.
6. INVESTMENT RISKS
As an investor in real estate investment trusts and other public companies
in the real estate industry, the Fund is subject to certain risks generally
incidental to the development, ownership and management of real property.
These risks include the cyclical nature of real estate markets; changes in
general economic, business and credit conditions, including interest rate
levels and availability of financing; applicable federal, state, and local
regulations; changes in availability and cost of insurance; increases in
the costs of labor and materials; material shortages; strikes; changes in
market rental rates; competition for tenants; the bankruptcy or insolvency
of tenants; and potential liability under environmental and other laws.
7. FEDERAL INCOME TAX INFORMATION
At January 31, 2005, gross unrealized appreciation and depreciation on
investments, based on cost for federal income tax purposes was as follows:
Cost of investments $22,732,320
==========
Gross unrealized appreciation $11,271,532
Gross unrealized depreciation (59,642)
----------
Net unrealized appreciation on investments $11,211,890
==========
The difference between cost amounts for financial statement and federal
income tax purposes is due primarily to timing differences in recognizing
certain gains and losses in security transactions.
ADELANTE U.S. REAL ESTATE SECURITIES FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JANUARY 31, 2005
The tax basis of components of distributable net earnings at January 31,
2005 were as follows:
Undistributed ordinary income $297,065
Accumulated capital and other losses 2,731,916
Unrealized appreciation 11,211,890
----------
Total accumulated earnings $14,240,871
==========
The differences between book-basis and tax-basis unrealized appreciation is
attributable primarily to the tax deferral from return of capital
adjustments from real estate investment trusts and losses on wash sales.
The tax components of distributions paid during the fiscal years ending
January 31, 2005 and January 31, 2004 were as follows:
Year Ended Year Ended
January 31, 2005 January 31, 2004
---------------- ----------------
Distributions paid from:
Ordinary income $1,903,042 $1,560,537
Net long-term capital gains 2,267,646 101,798
Unrecaptured section 1250 gain 134,605 46,185
---------- ----------
Total distributions paid $4,305,293 $1,708,520
========== ==========
ADELANTE U.S. REAL ESTATE SECURITIES FUND
TAX DESIGNATION (UNAUDITED)
The Fund hereby designates $2,402,251 as long-term capital gain
distributions for the purpose of the dividends paid deduction.
Under Section 854(b)(2) of the Internal Revenue Code (the "Code"), the Fund
designates up to a maximum of $32,000 as qualified dividends for purposes
of the maximum rate under Section 1(h)(11) of the Code for the fiscal year
ended January 31, 2005. In the beginning of 2006, shareholders will receive
Form 1099-DIV which will include their share of qualified dividends
distributed during the calendar year 2005.
PROXY VOTING POLICIES AND PROCEDURES (UNAUDITED)
For a description of the policies and procedures that the Fund uses to
determine how to vote proxies relating to portfolio securities, please call
1-877-563-5327 and request a Statement of Additional Information. One will
be mailed to you free of charge. The Statement of Additional Information is
also available on the website of the Securities and Exchange Commission at
http://www.sec.gov. Information on how the Fund voted proxies relating to
portfolio securities during the twelve month period ending June 30, 2004,
will be available without charge, upon request, by calling 1-877-563-5327
or by accessing the website of the Securities and Exchange Commission.
DISCLOSURE OF PORTFOLIO HOLDINGS (UNAUDITED)
The Fund will file complete schedules of portfolio holdings with the
Securities and Exchange Commission for the first and third quarters of each
fiscal year on Form N-Q. The Fund's Form N-Q will be available on the Web
site of the Securities and Exchange Commission at http://www.sec.gov.
RESULTS OF THE SHAREHOLDER MEETING (UNAUDITED)
A Special Meeting of the Shareholders of the Fund was held on January 11,
2005 where shareholders voted on a new investment advisory agreement
between the Trust and Adelante Capital Management LLC with respect to the
Fund.
With regard to the approval of the new investment advisory agreement
between the Trust and Adelante Capital Management LLC with respect to the
Fund, 2,098,458 shares voted in favor of the proposal, 8,923 shares voted
against, 21,953 shares abstained and 232,358 shares were not voted.
PRICEWATERHOUSECOOPERS
- --------------------------------------------------------------------------------
PRICEWATERHOUSECOOPERS LLP
333 Market Street
San Francisco CA 94105-2119
Telephone (415) 498 5000
Facscimile (415) 498 7100
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees and Shareholders
of Adelante U.S. Real Estate Securities Fund
(formerly Lend Lease U.S. Real Estate Securities Fund)
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Adelante U.S. Real Estate
Securities Fund (the "Fund") at January 31, 2005, the results of its operations
for the year then ended, the changes in its net assets for each of the two years
in the period then ended and the financial highlights for each of the periods
presented, in conformity with accounting principles generally accepted in the
United States of America. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Fund's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included confirmation
of securities at January 31, 2005 by correspondence with the custodian, provide
a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
San Francisco, California
March 23, 2005
ADELANTE FUND
FUND TRUSTEE AND OFFICER INFORMATION
INDEPENDENT TRUSTEES
- ------------------------------------------------------------------------------------------------------------------------------------
CURRENT PRINCIPAL OTHER
POSITION OCCUPATION NUMBER OF FUNDS DIRECTORSHIPS
HELD WITH DURING THE PAST OVERSEEN WITHIN HELD OUTSIDE
NAME/BIRTH DATE ADDRESS THE FUND FIVE YEARS THE FUND COMPLEX THE FUND COMPLEX
William J. Klipp 1995 University Trustee Private investor 1 Director of
12/9/55 Avenue, Suite 225 since 2000 (2000-present); President and Assetmark Funds
Berkeley, CA 94704 Chief Operating Officer,
Charles Schwab Investment
Management, Inc., an
investment advisory firm
(1995-1999); Executive Vice
President, Schwab Funds(R) and
Charles Schwab & Co., Inc., a
financial services company
(1995-1999)
- ------------------------------------------------------------------------------------------------------------------------------------
Scott MacKillop 1995 University Trustee President, U.S. Fiduciary 1 Prima Capital
5/2/51 Avenue, Suite 225 since 2002 Services, managed account and Holdings, Inc.
Berkeley, CA 94704 consulting service to
financial institutions and
advisors, (2004-present);
President and Principal,
Trivium Consulting, LLC,
consultant to financial
service organizations
(2001-2004); President
(1999-2000), Executive Vice
President and Chief Operating
Officer (1997-1999), Portfolio
Management Consultants, Inc.,
consulting to financial
advisors and institutions;
President, ADAM Investment
Services, Inc., consulting to
financial advisors and institutions
(1997-2000).
- ------------------------------------------------------------------------------------------------------------------------------------
Kevin Malone Greenrock Research, Inc. Trustee President and Founder, 1 None
7/3/47 216 S. Jefferson St. since 2000 Greenrock Research, Inc.,
Chicago, IL 60605 consultant to financial
service organizations,
(1996-present).
- ------------------------------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEE* AND OFFICER
- ------------------------------------------------------------------------------------------------------------------------------------
Michael A. Torres 1995 University Chairman of Chief Executive Officer, 1 None
6/21/60 Avenue, Suite 225 the Board Adelante Capital Management
Berkeley, CA 94704 and LLC, an investment advisory
President firm, (2002-present);
since 2002, President and Co-President,
Vice Lend Lease Rosen Real Estate
President Securities LLC (1998-2002);
2000-2002 President and Co-President ERE
Rosen Real Estate Securities,
LLC, an investment advisory
firm (1997-1998); Director,
AMB Rosen Real Estate Securities,
LLC, an investment advisory firm
(1995-1997).
- ------------------------------------------------------------------------------------------------------------------------------------
OFFICERS
- ------------------------------------------------------------------------------------------------------------------------------------
Mark A. Hoopes 1995 University Vice Chief Compliance Officer, Adelante 1 None
3/31/64 Avenue, Suite 225 President Capital Management LLC, an
Berkeley, CA 94704 since 2000 investment advisory firm,
Treasurer (2004-present); Principal
since 2003, (2002-2004); Vice President
Chief (2000-2001), Lend Lease Real Estate
Compliance Investments, Inc; Account Director
Officer since Mutual Fund Services Division,
2004 SEI Investments, Inc.
(1994-2000)
- ------------------------------------------------------------------------------------------------------------------------------------
Mark J. Nuti 1995 University Secretary Chief Operating Officer, 1 None
3/29/58 Avenue, Suite 225 since 2003 Adelante Capital Management
Berkeley, CA 94704 LLC, an investment advisory
firm, (2004-present); Chief
Operating Officer, Lend Lease
Rosen Real Estate Securities
LLC, an investment advisory
firm (2003-2004); Director,
Senior Vice President and Chief
Operating Officer, Jurika & Voyles,
L.P., an investment advisory firm
(1999-2003).
* Mr. Torres is an "interested person" of the Trust within the meaning of the
1940 Act by virtue of his position with the Trust and with Adelante Capital
Management LLC, the adviser for the Fund.
Each Trustee serves until the Trust is terminated except if the Trustee dies,
resigns, retires or is removed before then. The Trust's President, Treasurer,
and Secretary hold office until the next annual meeting of the Trustees and
until their respective successors are chosen and qualified or if before then,
until he or she dies, resigns, is removed or becomes disqualified. The Vice
President holds office at the pleasure of the Trustees. Additional information
about the Trustees is available in the Statement of Additional Information and
is available, without charge, upon request, by calling 1-877-563-5327.
This page intentionally left blank.
TRUSTEES William J. Klipp
Scott MacKillop
Kevin Malone
Michael A. Torres
INVESTMENT ADVISER ADELANTE CAPITAL MANAGEMENT LLC
1995 University Avenue, Suite 225
Berkeley, CA 94704
ADMINISTRATOR AND UMB FUND SERVICES, INC.
FUND ACCOUNTANT 803 West Michigan Street, Suite A
Milwaukee, Wisconsin 53233
CUSTODIAN UMB BANK, N.A.
928 Grand Blvd.
Kansas City, MO 64106
INDEPENDENT AUDITORS PRICEWATERHOUSECOOPERS LLP
333 Market Street
San Francisco, CA 94105
LEGAL COUNSEL GOODWIN PROCTER LLP
Exchange Place
Boston, MA 02109
DISTRIBUTOR UMB DISTRIBUTION SERVICES, LLC
803 West Michigan Street, Suite A
Milwaukee, Wisconsin 53233
DIVIDEND-DISBURSING UMB FUND SERVICES, INC.
AND TRANSFER AGENT c/o Adelante Funds
803 West Michigan Street, Suite A
Milwaukee, Wisconsin 53233
This report is submitted for the general information of shareholders of Adelante
Funds. It is not authorized for distribution to prospective investors unless
accompanied or preceded by an effective Prospectus for the Adelante U.S. Real
Estate Securities Fund. The Prospectus provides more complete information,
including fees and expenses, the investment objectives, risks and operating
policies of the Fund. Read the Prospectus carefully.
LE 410 0105
ITEM 2. CODE OF ETHICS
The Registrant has adopted a code of ethics (the "Code") that applies to its
principal executive officer, principal financial officer and principal
accounting officer. A copy of the Code is available free of charge upon request
by calling 1-877-563-5327.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT
Having reviewed and discussed the background and qualification of each member of
its audit committee, the Board of Trustees has determined that no member of the
audit committee satisfies the definition of audit committee financial expert in
Form N-CSR. Based on this evaluation, the Board has nevertheless concluded that
its audit committee members' experience and expertise will enable them to
effectively perform their oversight duties with respect to the Trust's financial
statements and the Trust's independent auditors.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The aggregate fees for each of the last two fiscal years for professional
services rendered by the principal accountant for the audit of the Registrant's
annual financial statements or services that are normally provided by the
accountant in connection with statutory and regulatory filings or engagements
are listed below.
(a) Audit Fees.
Fiscal year ended January 31, 2005 $31,737
Fiscal year ended January 31, 2004 $20,000
(b) Audit-Related Fees.
None.
(c) Tax Fees.
Fiscal year ended January 31, 2005 $6,705
Fiscal year ended January 31, 2004 $6,325
(d) All Other Fees.
None.
(e)
(1) The audit committee of the Registrant's board of directors considered
whether the provision of non-audit services that was rendered to the
Registrant's investment adviser and was not required to be pre-approved by the
audit committee is compatible with maintaining the independence of the
Registrant's principal accountant. The audit committee receives quarterly
reports on the amount and nature of such services and discusses such services
and their effect on the principal accountant's independence with the
Registrant's principal accountant in connection with the committee's
deliberations regarding the engagement of the principal accountant.
(2) During fiscal year 2004, all of the non-audit services provided by the
Registrant's principal accountant were pre-approved by the audit committee.
(f) Not applicable.
(g) The aggregate non-audit fees billed by the Registrant's accountant for
services rendered to the Registrant, and rendered to the Registrant's investment
adviser, and any entity controlling, controlled by, or under common control with
the adviser that provides ongoing services to the Registrant:
Fiscal year ended January 31, 2005 $ 35,720
Fiscal year ended January 31, 2004 $1,119,349
(h) Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS
The schedule of investments in securities of unaffiliated issuers is included as
part of the reports to shareholders filed under Item 1.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 11. CONTROLS AND PROCEDURES
(a)The Registrant's principal executive officer and principal financial officer
concluded that the Registrant's disclosure controls and procedures (as
defined in Rule 30a-3(c) under the 1940 Act) provide reasonable assurances
that information required to be disclosed by the Registrant on Form N-CSR is
recorded, processed, summarized and reported within the required time periods
and that information required to be disclosed by the Registrant in the
reports that it files or submits on Form N-CSR is accumulated and
communicated to the Registrant's management, including its principal
executive and principal financial officers, as appropriate to allow timely
decisions regarding required disclosure, based on their evaluation
of the disclosure controls and procedures as of a date within 90 days of the
filing date of this report.
(b)There was no change in the Registrant's internal control over financial
reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred
during the second fiscal quarter of the period covered by this report that
has materially affected, or is reasonably likely to materially affect, the
Registrant's internal control over financial reporting.
ITEM 12. EXHIBITS
(a) Code of Ethics.
(1) The Code of Ethics for the principal executive and principal financial
officer is available free of charge upon request by calling
1-877-563-5327.
(2) Certifications, as required by Rule 30a-2(a) under the Investment
Company Act of 1940, for the principal executive officer and principal
financial officer are filed herewith.
(3) Not applicable.
(b) Not applicable.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Adelante Funds
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/s/ Michael A. Torres
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Michael A. Torres
Principal Executive Officer
April 8, 2005
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.
/s/ Michael A. Torres
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Michael A. Torres
Principal Executive Officer
April 8, 2005
/s/ Mark A. Hoopes
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Mark A. Hoopes
Principal Financial Officer
April 8, 2005