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Adelante U. S. Real Estate Securities Fund


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									December 31, 2006

Adelante U. S. Real Estate Securities Fund
Adelante U.S. Real Estate Securities Fund seeks total return from a combination of dividend income and long-term growth.

Fund Facts
Total Assets: Number of Holdings: Median Market Cap: Average Annual Turnover: 30-Day SEC Yield: Class Y: 30-Day SEC Yield: Class K: $36.8 M 40 $4.2 B 24% 2.77% 2.41%

Property Sector Weightings**
Diversified/Specialty 15.7% Office 28.8% Apartment 22.9% Retail-Local 6.8% Retail-Regional 21.8% Cash -1.7% Industrial Mixed 0.7% Industrial 5.0%

Top Ten Holdings**
1. Vornado Realty Trust 2. Simon Property Group, Inc. 3. General Growth Properties 4. Equity Residential 5. Boston Properties, Inc. 6. Equity Office Properties Trust 7. AvalonBay Communities, Inc. 8. The Macerich Company 9. Alexander’s Inc. 10. Douglas Emmett Inc.

Performance – Total Return * as of 12/31/06
8.26% 7.58% 6.50% 6.39% 6.12% 5.36% 5.10% 4.19% 3.43% 3.42%
40% 35% 30% 25% 20% 15% 10% 5% 0%
Annualized Since Inception
10.08% 9.99% 8.98% 23.36% 22.94% 23.66% 23.27% 22.84% 23.85% 26.71%26.32% 27.35%

Class Y

Class K

Dow Jones Wilshire REIT Index
36.01% 35.68% 36.12%

Five Year Annualized

Three Year Annualized

One Year


Ten Largest Holdings


(Net of investment management fees)


The performance data quoted represents past performance and past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. 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. Risks involved with investing in the Fund include real estate industry risks, risks associated with REITs and industry concentration. The total expense ratio is capped at 0.97% for class Y and 1.25% for class K. The performance figures reflect reinvested dividends, income, and capital gains, and are net of fees. In the absence of fee waivers, total returns would be reduced. The Dow Jones Wilshire REIT Index is an unmanaged index of approximately 87 issuers as of December 31, 2006 and reflects the reinvestment of dividends and other earnings.

**Portfolio holdings will change due to ongoing management of the Fund. References to specific securities or sectors should not be considered as
recommendations by the Fund, its Adviser or Distributor.
2006 Adelante Capital Management LLC

Principal Investment Strategy
The Fund seeks to achieve its objective by investing at least 85% of its assets in equity securities of companies principally engaged in the U.S. real estate industry. Adelante Capital Management LLC (“Adelante”), the Fund’s adviser, manages the Fund’s day to day investment activity. The process of selecting portfolio positions is a two-part process involving both an analysis for property sectors (a top-down approach) and an analysis of individual companies within the selected property sectors (a bottom-up approach). First, the top-down process is used to identify promising property sectors of the U.S. real estate market. In conducting this analysis, Adelante relies on proprietary real estate transaction databases, supply and demand forecasts for various property types such as residential, commercial and industrial real estate and local market intelligence from an extensive network of affiliates around the country engaged in various aspects of the real estate industry and its own subjective views of the market for real estate and real estate securities. The Fund ordinarily expects to be invested in at least four property sectors of the real estate market but, if conditions warrant, may focus its investments more narrowly. The property sectors identified through the top-down process yield a universe of companies from which Adelante then selects Fund investments. Adelante evaluates potential investments based on a variety of factors including overall investment strategy, strength of company management, fundamental analysis of financial statements and yields. A substantial portion of the Fund’s portfolio at any given time may be invested in real estate investment trusts (“REITs”). Furthermore, the Fund expects under normal circumstances to invest principally in what are known as “equity REITs”. An equity REIT owns or leases real estate and realizes a return on its holdings primarily from rental income although it may also realize gains (or losses) by selling properties in its portfolio. Equity REITs generally exercise some degree of control over the operational aspects of their real estate investments, lease terms and property maintenance and repair. REITs invest shareholder capital in real estate-related loans, interests or securities. A REIT is not taxed on income distributed to shareholders if it complies with certain federal tax requirements relating primarily to its organization, ownership, assets and income and, further, if it distributes the vast majority of its taxable income to shareholders each year. As a consequence, REITs generally focus on income-producing real estate investments. The Fund expects its investments to be primarily in companies contained in the Dow Jones Wilshire REIT Index having market capitalizations that fall in the upper two thirds of the range of market capitalizations represented in the Dow Jones Wilshire REIT Index. These companies include those with large, medium and small capitalizations.

Ticker Symbols:

Class K - LLUKX Class Y - LLUYX

For more information:
Adelante Capital Management LLC 555 12th Street Suite 2100 Oakland, CA 94607 Tel 510-986-2100 Fax 510-268-0663 Adelante Funds Tel 877-563-5327 Not authorized for use unless preceded or accompanied by a current Adelante Funds prospectus.
UMB Distribution Services LLC, Distributor

Portfolio Manager

Michael A. Torres is primarily responsible for the day to day management of the Fund and the
selection of the Fund’s investments. Mr. Torres is Chief Executive Officer of Adelante and has 21 years of real estate and securities research experience. Prior to joining Adelante in 1995, Mr. Torres was director of real estate research and a portfolio manager for Wilshire Asset Management. At Wilshire, he created the Wilshire Real Estate Securities Index, widely recognized as the industry’s performance benchmark. Mr. Torres developed relationships with many national real estate companies during his five-year tenure with the Prudential Mortgage Capital Company. He has a B.A. in architecture and a M.B.A. in real estate finance from the University of California, Berkeley.
2006 Adelante Capital Management LLC

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