Kelmoore Shareholders We are pleased to inform you that the plan of reorganization has been approved by the Kelmoore Strategic Trust shareholders. As of September 26, 2008 any shares you had in the Kelmoore Strategy®, Kelmoore Strategy® Eagle and Kelmoore Strategy® Liberty Funds were converted into shares of the Dunham Monthly Distribution Fund. As part of the reorganization, we would like to inform you about important changes you will see. Account Number(s): The account number for your new Dunham Funds account will be the same as your Kelmoore Funds account number. New Account Statements: You will receive one statement for July 1, 2008 through September 30, 2008 which will report both your Kelmoore Funds and Dunham Monthly Distribution Fund activity for the period. Activity for the Kelmoore Strategy Money Market Fund will be reported separately. Dunham Funds offers electronic delivery of confirmations, statements and regulatory documents. Please see the Account Access section below for instructions on how to sign up for online access and request electronic delivery. New Fund Symbols: Class Ticker CUSIP Fund Number C DCMDX 265458638 211 A DAMDX 265458646 311 Fund Information: Please visit www.dunhamfunds.com for more information on the Dunham Monthly Distribution Fund including daily prices, and performance information, as well as information regarding the other investment products and services we offer. New Contact Number: Dunham Funds Shareholders Services can be reached at (888) 3DUNHAM (338-6426). Assistance is available during the following hours: Monday through Thursday: 8:30 a.m. – 6:00 p.m. (Eastern Time) Friday: 8:30 a.m. – 5:30 p.m. (Eastern Time) Account Access: Dunham Funds offers online access to your account as well as electronic delivery of confirmations, statements and regulatory documents. Due to security issues, the username and password you have used to access your Kelmoore account have not been carried over. To establish online access, please follow the instructions below: Go to www.dunham.com, click Login, then click on the link in the Dunham Funds Direct Shareholders section. Click on Create Login. Complete the required information, then click, Create. (You will need your account number and your Social Security number.) Log into the system using your newly-created user ID and password. Click Change Options under Account Maintenance in the left navigation bar to make desired changes and sign up for electronic delivery. New Check Deposit and Wire Instructions: Effective September 29, 2008, please use the following instructions to deposit funds into your Dunham Funds account(s) via check or wire transfer: Check Deposit Instructions: Please make checks payable to Dunham Funds and mail to: Dunham Funds c/o Gemini Fund Services, LLC 4020 South 147th Street, Suite 2 Omaha, NE 68137 To avoid possible processing delays, please include your account number on all checks. New Wire Transfer Instructions: First National Bank Omaha, NE 68102 ABA# 104000016 Credit: (name of fund) DDA # 110190871 FBO: (name of fund)   (class)   (name/title on the account)   (account #) New Money Market Fund: We are pleased to offer the U.S. Government Money Market Portfolio for your cash management needs. If you had instructed Kelmoore to pay distributions into the Kelmoore Strategy® Money Market Fund, you will need to provide instructions to establish this with the U.S. Government Money Market Portfolio by completing an Account Maintenance form. If you previously held shares of the Kelmoore Strategy® Money Market Fund and wish to transfer these funds to the new money market fund in your Dunham Funds account, please complete and return the Authorization form. U.S. Government Money Market Portfolio Prospectus September 19, 2008 letter to Kelmoore Money Market Investors Automatic Investment Plan and Systematic Withdraw Plan: Any automatic investment or systematic withdraw instructions you have set up with the Kelmoore Funds will carry over uninterrupted to your Dunham Fund account on the 25th of each month. If you had automatic investments into or systematic withdrawals from multiple Kelmoore Strategy® Funds, they will be combined into one investment or withdrawal from the Dunham Monthly Distribution Fund. For example, systematic withdrawals of $300 from the Kelmoore Strategy® Liberty Fund and $400 from the Kelmoore Strategy® Eagle Fund will be combined to one $700 systematic withdrawal from the Dunham Monthly Distribution Fund. Should you wish to change these amounts, please complete either a Non-Retirement Account Maintenance or IRA Distribution form. Monthly Distributions: The Dunham Monthly Distribution Fund seeks to pay monthly distributions to its shareholders at an annual rate equal to Prime, which is currently 5%, although this is not guaranteed. This distribution will occur on the last day of each month, payable on the first business day of the following month. If you want your systematic withdrawal or investment to coincide with the monthly distribution, please complete either an Non-Retirement Account Maintenance or IRA Distribution form and return to Shareholder Services. Year-End Tax Reporting: For your convenience, the 2008 tax information for the Kelmoore Funds (excluding the Kelmoore Strategy® Money Market Fund) and for the Dunham Monthly Distribution Fund will be reported on one combined 1099 which will be sent to you by January 31, 2009. The 2008 tax information for the Kelmoore Strategy Money Market Fund will be sent to you separately. We thank you for your support during this transition and we look forward to a long and prosperous relationship with you. Please visit www.dunham.com for updates regarding the reorganization and your account. If you have any questions about this letter, please contact the Shareholder Services support line toll-free at (888) 3DUNHAM (338-6426). Investors should consider the investment objectives, risk factors, charges, and expenses of the Dunham Funds carefully before investing. This and other important information is contained in the Fund's summary prospectus and/or prospectus, which may be obtained by contacting your financial advisor, or by calling toll free (800) 442-4358. Please read prospectus materials carefully before investing or sending money. Investing involves risk, including possible loss of principal. For Broker/Dealer and Existing Investor Use Only. Dunham & Associates Investment Counsel, Inc. serves as adviser and distributor of the Dunham Funds.