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
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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: July 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, (17 CFR 270.30e-1)
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ADELANTE FUNDS:
ADELANTE U.S. REAL ESTATE SECURITIES FUND
SEMI-ANNUAL REPORT
JULY 31, 2005
[LOGO] ADELANTE CAPTITAL MANAGEMENT
Shares of Adelante Funds are distributed by an independent third party, UMB
Distribution Services, LLC.
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To Our Shareholders
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We are pleased to present Adelante Funds' 2005 Semi-Annual Report. In the
following pages, you will find detailed financial information for Adelante U.S.
Real Estate Securities Fund for the six months ended July 31, 2005.
In the event you have questions regarding this report, or Adelante Funds in
general, please call a shareholder services representative at 1-877-563-5327.
Thank you for your continued support of Adelante Funds. We look forward to
serving you in the months and years ahead.
Sincerely,
Adelante Funds
UMB Distribution Services, LLC, Distributor
ADELANTE U.S. REAL ESTATE SECURITIES FUND
EXPENSE EXAMPLE (UNAUDITED)
FOR THE SIX MONTHS ENDED JULY 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 February 1, 2005 to July 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
-------------------------------------------------------------------------------------------
Beginning Ending Expenses Beginning Ending Expenses
account account paid during account account paid during
value value period value value period
2/1/05 7/31/05 2/1/05- 7/31/05(1) 2/1/05 7/31/05 2/1/05- 7/31/05(1)
-------------------------------------------------------------------------------------------
Actual $1,000.00 $1,258.70 $6.98 $1,000.00 $1,259.90 $5.42
Hypothetical
(5% return before expenses) 1,000.00 1,018.82 6.24 1,000.00 1,020.20 4.84
(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 0.4959 (to reflect the one-half year period).
ADELANTE U.S. REAL ESTATE SECURITIES FUND
SCHEDULE OF INVESTMENTS
JULY 31, 2005 (UNAUDITED)
Number
of Shares Value
- --------- ---------
COMMON STOCKS 92.6%
APARTMENTS 20.2%
25,870 Archstone-Smith Trust $ 1,099,475
18,000 AvalonBay Communities, Inc. 1,576,080
17,510 BRE Properties, Inc. 786,199
7,680 Camden Property Trust 424,550
20,200 Education Realty Trust, Inc. 400,566
42,370 Equity Residential 1,711,748
9,260 Essex Property Trust, Inc. 850,624
43,000 United Dominion Realty Trust, Inc. 1,094,350
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7,943,592
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DIVERSIFIED/SPECIALTY 7.7%
4,690 Colonial Properties Trust 222,400
9,800 Crescent Real Estate Equities Company 191,296
28,210 Vornado Realty Trust 2,500,534
3,940 Washington Real Estate Investment Trust 126,671
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3,040,901
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INDUSTRIAL 7.6%
21,770 AMB Property Corporation 1,001,202
15,600 Catellus Development Corporation 562,536
31,510 ProLogis 1,435,596
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2,999,334
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INDUSTRIAL MIXED 2.0%
7,380 Duke Realty Corporation 250,625
11,490 Liberty Property Trust 515,671
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766,296
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OFFICE 24.5%
6,210 Alexandria Real Estate Equities, Inc. 499,594
10,000 American Financial Realty Trust 144,000
24,120 Arden Realty, Inc. 963,112
11,900 BioMed Realty Trust, Inc. 302,617
27,300 Boston Properties, Inc. 2,078,895
16,040 Brandywine Realty Trust 519,696
10,140 CarrAmerica Realty Corporation 393,838
29,300 Corporate Office Properties Trust 986,531
61,809 Equity Office Properties Trust 2,191,129
5,890 Kilroy Realty Corporation 306,869
5,990 Mack-Cali Realty Corporation 286,981
4,000 Maguire Properties, Inc. 119,800
7,660 Prentiss Properties Trust 310,000
8,040 SL Green Realty Corporation 560,388
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9,663,450
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ADELANTE U.S. REAL ESTATE SECURITIES FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
JULY 31, 2005 (UNAUDITED)
Number
of Shares Value
- --------- ---------
RETAIL - LOCAL 13.5%
19,800 Acadia Realty Trust $ 376,200
14,290 Developers Diversified Realty Corporation 695,494
14,640 Federal Realty Investment Trust 956,139
6,720 Kimco Realty Corporation 441,235
18,910 Pan Pacific Retail Properties, Inc. 1,314,434
12,830 Regency Centers Corporation 791,611
29,500 Sizeler Property Investors, Inc. 379,665
9,400 Weingarten Realty Investors 369,232
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5,324,010
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RETAIL - REGIONAL 17.1%
11,640 CBL & Associates Properties, Inc. 534,043
18,310 General Growth Properties, Inc. 841,894
18,790 The Macerich Company 1,319,434
35,790 Simon Property Group, Inc. 2,853,894
33,300 Taubman Centers, Inc. 1,183,482
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6,732,747
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TOTAL COMMON STOCKS (COST $19,867,047) 36,470,330
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PREFERRED STOCKS 4.9%
12,400 Developers Diversified Realty Corporation, Series G 323,268
15,500 Lexington Corporate Properties Trust, Series B 403,000
32,500 Mills Corporation, Series G 833,625
14,400 Taubman Centers, Inc., Series G 370,944
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1,930,837
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TOTAL PREFERRED STOCKS (COST $1,878,640) 1,930,837
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Principal
Amount
- ---------
1,333,549 SHORT-TERM INVESTMENT 3.4% 1,333,549
UMB Bank Money Market Fiduciary -----------
TOTAL SHORT-TERM INVESTMENT (COST $1,333,549) 1,333,549
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TOTAL INVESTMENTS (COST $23,079,236) 100.9% 39,734,716
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LIABILITIES LESS OTHER ASSETS (0.9%) (351,215)
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NET ASSETS 100.0% $39,383,501
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See notes to the Financial Statements
ADELANTE U.S. REAL ESTATE SECURITIES FUND
SECTOR BREAKDOWN (UNAUDITED)
JULY 31, 2005
[CHART]
APARTMENTS........................................20%
DIIVERSIFIED/SPECIALTY.............................8%
INDUSTRIAL.........................................8%
INDUSTRIAL/MIXED...................................2%
OFFICE............................................24%
RETAIL-LOCAL......................................13%
RETAIL-REGIONAL...................................17%
PREFERRED STOCKS...................................5%
SHORT-TERM INVESTMENT..............................3%
ADELANTE U.S. REAL ESTATE SECURITIES FUND
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 2005 (UNAUDITED)
ASSETS:
Investments, at value (cost $23,079,236) $ 39,734,716
Cash 44,387
Interest and dividends receivable 31,647
Receivable for capital stock sold 17,424
Due from advisor 1,592
Prepaid expenses and other assets 45,518
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Total assets 39,875,284
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LIABILITIES:
Payable for capital stock redeemed 474,138
Other accrued expenses 17,645
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Total liabilities 491,783
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NET ASSETS $ 39,383,501
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NET ASSETS CONSIST OF:
Paid-in-capital 17,057,309.00
Undistributed net investment income 439,414
Accumulated undistributed net realized gain on investments 5,231,298
Net unrealized appreciation on investments 16,655,480
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NET ASSETS $ 39,383,501
==============
SHARES OUTSTANDING, $0.0001 PAR VALUE,
(UNLIMITED SHARES AUTHORIZED)
CLASS K 837,645
CLASS Y 922,071
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE
CLASS K $ 22.46
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CLASS Y $ 22.31
==============
See notes to financial statements.
ADELANTE U.S. REAL ESTATE SECURITIES FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JULY 31, 2005 (UNAUDITED)
INVESTMENT INCOME:
Dividends $ 779,281
Interest 5,057
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Total investment income 784,338
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EXPENSES:
Investment advisory fees (see note 5) 136,005
Professional fees 63,752
Administration and accounting fees 34,248
Shareholder servicing fees 35,673
Distribution fees (see note 5) 20,290
Insurance expense 23,992
Trustees' fees and expenses 16,286
Federal and state registration fees 15,371
Reports to shareholders 14,119
Custody fees 6,843
Other expenses 2,074
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Total expenses before waiver and reimbursement of expenses 368,653
Less: Waiver and reimbursement of expenses (181,022)
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Net expenses 187,631
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NET INVESTMENT INCOME 596,707
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REALIZED AND UNREALIZED GAIN:
Net realized gain on investments 2,001,785
Change in unrealized appreciation on investments 5,660,840
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Net gain on investments 7,662,625
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NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $8,259,332
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See notes to financial statements.
ADELANTE U.S. REAL ESTATE SECURITIES FUND
STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS ENDED
JULY 31, 2005 YEAR ENDED
(UNAUDITED) JANUARY 31, 2005
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OPERATIONS:
Net investment income $ 596,707 $ 1,884,877
Net realized gain on investments 2,001,785 5,647,142
Change in unrealized appreciation on investments 5,660,840 (292,051)
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Net increase in net assets resulting from operations 8,259,332 7,239,968
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CAPITAL SHARE TRANSACTIONS:
Proceeds from sale of shares
Class K shares 3,259,505 6,727,380
Class Y shares 2,708,143 5,902,457
Shares issued to shareholders in reinvestment of distributions
Class K shares 69,647 2,445,915
Class Y shares 96,132 1,701,860
Payments for shares redeemed
Class K shares (6,737,208) (22,147,955)
Class Y shares (2,028,071) (9,712,484)
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Net increase (decrease) from capital share transactions (2,631,852) (15,082,827)
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DISTRIBUTIONS PAID FROM:
Net investment income
Class K shares (70,019) (729,340)
Class Y shares (103,992) (542,292)
Net realized gains
Class K shares - (1,728,187)
Class Y shares - (1,305,474)
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Total distributions (174,011) (4,305,293)
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TOTAL INCREASE (DECREASE) IN NET ASSETS 5,453,469 (12,148,152)
NET ASSETS:
Beginning of year 33,930,032 46,078,184
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End of year (includes undistributed net
investment income of $439,414 and
$67,519, respectively) $39,383,501 $33,930,032
=========== ===========
See notes to financial statements.
ADELANTE U.S. REAL ESTATE SECURITIES FUND
FINANCIAL HIGHLIGHTS
For a Fund Share Outstanding
Throughout the Year/Period.
CLASS K CLASS K CLASS K CLASS K CLASS K
---------------- ---------------- ---------------- ---------------- ----------------
SIX MONTHS ENDED
JULY 31, 2005 YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
(UNAUDITED) JANUARY 31, 2005 JANUARY 31, 2004 JANUARY 31, 2003 JANUARY 31, 2002
---------------- ---------------- ---------------- ---------------- ----------------
NET ASSET VALUE, BEGINNING OF YEAR/PERIOD $ 17.92 $ 17.23 $ 12.76 $ 12.91 $ 12.55
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.33 0.92 0.70 0.64 0.70
Net realized and unrealized gain/(loss)
on investments 4.30 1.82 4.46 (0.19) 0.66
----------- ----------- ----------- ----------- -----------
Total from investment operations 4.63 2.74 5.16 0.45 1.36
----------- ----------- ----------- ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income (0.09) (0.52) (0.58) (0.55) (0.66)
Distributions from capital gains - (1.53) (0.11) (0.05) (0.34)
----------- ----------- ----------- ----------- -----------
Total distributions (0.09) (2.05) (0.69) (0.60) (1.00)
----------- ----------- ----------- ----------- -----------
NET ASSET VALUE, END OF YEAR/PERIOD $ 22.46 $ 17.92 $ 17.23 $ 12.76 $ 12.91
=========== =========== =========== =========== ===========
TOTAL RETURN 25.87% 15.20% 41.21% 3.29% 11.01%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of year/period $18,912,827 $18,350,017 $28,984,996 $18,727,963 $13,364,481
Ratio of expenses to average net assets 1.25% 1.25% 1.25% 1.25% 1.25%
Ratio of expenses before waivers to
average net assets 2.35% 2.10% 2.23% 2.75% 2.96%
Ratio of net investment income to
average net assets 3.38% 4.11% 4.75% 5.21% 5.54%
Ratio of net investment income before
waivers to average net assets 2.27% 3.26% 3.77% 3.71% 3.83%
Portfolio turnover rate 15% 32% 15% 30% 54%
(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
FINANCIAL HIGHLIGHTS
For a Fund Share Outstanding Throughout
the Year/Period.
CLASS Y CLASS Y CLASS Y CLASS Y CLASS Y
---------------- ---------------- ---------------- ---------------- ----------------
SIX MONTHS ENDED
JULY 31, 2005 YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
(UNAUDITED) JANUARY 31, 2005 JANUARY 31, 2004 JANUARY 31, 2003 JANUARY 31, 2002
---------------- ---------------- ---------------- ---------------- ----------------
NET ASSET VALUE, BEGINNING OF YEAR/PERIOD $ 17.81 $ 17.12 $ 12.64 $ 12.78 $ 12.40
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.35 0.83 0.70 0.67 0.74
Net realized and unrealized gain/(loss)
on investments 4.26 1.96 4.49 (0.17) 0.65
----------- ----------- ----------- ----------- -----------
Total from investment operations 4.61 2.79 5.19 0.50 1.39
----------- ----------- ----------- ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income (0.11) (0.57) (0.60) (0.59) (0.67)
Distributions from capital gains - (1.53) (0.11) (0.05) (0.34)
----------- ----------- ----------- ----------- -----------
Total distributions (0.11) (2.10) (0.71) (0.64) (1.01)
----------- ----------- ----------- ----------- -----------
NET ASSET VALUE, END OF YEAR/PERIOD $ 22.31 $ 17.81 $ 17.12 $ 12.64 $ 12.78
=========== =========== =========== =========== ===========
TOTAL RETURN 25.99% 15.62% 41.88% 3.69% 11.39%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of year/period $20,927,388 $15,580,015 $17,093,188 $ 6,418,537 $ 3,520,190
Ratio of expenses to average net assets 0.97% 0.97% 0.97% 0.97% 0.97%
Ratio of expenses before waivers to
average net assets 1.99% 1.88% 2.06% 2.90% 3.85%
Ratio of net investment income to
average net assets 3.61% 4.41% 5.01% 5.58% 5.82%
Ratio of net investment income before
waivers to average net assets 2.59% 3.50% 3.92% 3.65% 2.94%
Portfolio turnover rate 15% 32% 15% 30% 54%
(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
JULY 31, 2005 (UNAUDITED)
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 openend 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 July 31, 2005, the Fund's Class K and Class Y shares are
outstanding.
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
ADELANTE U.S. REAL ESTATE SECURITIES FUND
NOTES TO FINANCIAL
STATEMENTS (CONTINUED) JULY 31, 2005 (UNAUDITED)
the cost of investment in the investment security and thus may impact
unrealized appreciation or depreciation of the investment security.
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:
SIX MONTHS ENDED YEAR ENDED
JULY 31, 2005 JANUARY 31, 2005
-------------------------- --------------------------
CLASS K SHARES: SHARES DOLLARS SHARES DOLLARS
Shares sold 163,482 $3,259,505 364,900 $6,727,380
Shares issued to holders in
reinvestment of dividends
and capital gains 3,517 69,647 126,964 2,445,915
Shares redeemed (353,245) (6,737,208) (1,150,691) (22,147,955)
------------ ------------ ------------ ------------
Net increase (decrease) (186,246) $(3,408,056) (658,827) $(12,974,660)
------------ ------------ ------------ ------------
ADELANTE U.S. REAL ESTATE SECURITIES FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JULY 31, 2005 (UNAUDITED)
SIX MONTHS ENDED YEAR ENDED
JULY 31, 2005 JANUARY 31, 2005
-------------------------- --------------------------
CLASS Y SHARES: SHARES DOLLARS SHARES DOLLARS
Shares sold 143,172 $2,708,143 329,854 $5,902,457
Shares issued to holders in
reinvestment of dividends
and capital gains 4,902 96,132 88,791 1,701,860
Shares redeemed (101,034) (2,028,071) (541,849) (9,712,484)
------------ ------------ ------------ ------------
Net increase (decrease) 47,041 $776,204 (123,204) $(2,108,167)
------------ ------------ ------------ ------------
Net increase (decrease) from
capital share transactions (139,205) $(2,631,852) (782,031) $(15,082,827)
============ ============ ============ ============
4. INVESTMENT TRANSACTIONS
Purchases and sales of securities for the Fund, excluding short-term
investments, for the six months ended July 31, 2005 were $5,147,779 and
$7,968,976 respectively. There were no purchases or sales of U.S.
Government securities for the six months ended July 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 six months ended July 31,
2005, the Adviser waived investment advisory fees for the Fund of $181,022.
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 July 31,
2005, $707,299 and $433,991 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 (UNAUDITED)
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 six months ended July 31, 2005, the Fund
incurred distribution expenses of $20,290.
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 July 31, 2005, gross unrealized appreciation and depreciation on
investments, based on cost for federal income tax purposes was as follows:
Cost of investments $22,763,509
===========
Gross unrealized appreciation $16,976,783
Gross unrealized depreciation (5,576)
-----------
Net unrealized appreciation on investments $16,971,207
===========
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 (UNAUDITED)
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, 2005, 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, and 21,953
shares abstained.
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 0705
ITEM 2. CODE OF ETHICS
Not applicable for semi-annual reports.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT
Not applicable for semi-annual reports.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Not applicable for semi-annual reports.
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 report to shareholders filed under Item 1 of this Form N-CSR.
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 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. Not applicable for semi-annual reports.
(b) Certifications required pursuant to Sections 302 and 906 of the
Sarbanes-Oxley Act of 2002 are filed herewith.
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
- --------------
/s/Michael A. Torres
- ------------------------------
Michael A. Torres
Principal Executive Officer
October 4, 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
- ------------------------------
Michael A. Torres
Principal Executive Officer
October 4, 2005
/s/Mark A. Hoopes
- ------------------------------
Mark A. Hoopes
Principal Financial Officer
October 4, 2005