November 15, 2006
SAN DIEGO, CA - Dunham & Associates
Investment Counsel, Inc. today announced that all of its public mutual
fund sub-advisers are on fulcrum-fee compensation. Under the new compensation plan for
sub-advisers, Dunham Fund investors may benefit because the fees clients pay for investment
management is determined by a sliding scale tied directly to the funds' performance.
"This is what Dunham & Associates is all about," Jeffrey A. Dunham, founder and
president of the firm, said. "This is what we have been working toward since we first started in 1985.
Dunham was founded on the belief that the traditional method of charging sub-adviser fees
to investors regardless of performance was inherently unfair. We have kept our commitment to that principle.
"I am very proud of our efforts on this front," Dunham added. "Other firms have offered fulcrum-fees,
though we believe Dunham & Associates is one of only a handful to provide the accountability and
inherent fairness of performance-based sub-adviser fees for its entire line of funds.
A recent regulatory exemption further enhances The Dunham Funds' focus on performance by permitting
Dunham & Associates Investment Counsel, Inc. to change sub-advisers without seeking shareholder
approval, subject to board approval. This exemption facilitates the firm's mission of tying sub-adviser fees to investment
performance wherever possible by replacing an underperforming sub-adviser with one more aligned to
achieving a fund's objective.
Fulcrum fees consist of two parts; a base fee and a performance fee. The base fee is a predetermined rate
at which a sub-adviser is compensated when net performance is in line with a benchmark set for the fund.
The base fee can be adjusted up or down by the performance fee, which is calculated by comparing net
fund performance against the benchmark over a rolling 12-month period. With the fulcrum-fee structure,
it is still possible that fund shareholders could compensate a sub-adviser even if performance is
negative, for example, if a benchmark declines at a greater rate than a decline in fund performance.
The overall objective of a fulcrum-fee structure is to better align the interests of clients with
the sub-advisers making investment decisions by tying compensation directly to managerial performance.
When performance is good, the sub-advisers' compensation increases on net profits over and above
applicable benchmarks. If performance declines, sub-advisers forfeit not only performance compensation,
but possibly a portion of the fixed base fee as well. Significant underperformance could result in
no compensation at all for the sub-adviser.
"All investments carry a degree of risk," Keith E. Gregg, Dunham & Associates' chief marketing
officer, said. "With the fulcrum-fee structure, the sub-adviser is sharing in that risk. We're
putting it on the line and telling investors, 'the sub-adviser does better only when you do better.'
"With fulcrum fees, we feel our clients can be more confident knowing that their interests are better aligned
with the underlying investment managers who are managing their money, since compensation is tied to
performance within stated fund objectives," said Gregg, who was nominated for the 2006 Skip Viragh Award
in recognition of his innovative contributions to the financial advisor community and its clients through
his groundbreaking work at Dunham & Associates."
Founded in 1985, Dunham & Associates Investment Counsel, Inc. is a private wealth management firm
dedicated to providing financial advisors with asset management solutions for affluent clients.
The San Diego, California-based firm is a Registered Investment Adviser and FINRA broker/dealer.
Dunham & Associates serves as adviser to and distributor of The Dunham Funds. As such, it receives
a separate fee. Some sub-advisers may receive a minimum fee even if they don’t meet the benchmark.
Dunham & Associates has specialized in providing investment programs for institutions, foundations,
and high net-worth individuals for more than two decades. For more information, please visit the
Dunham & Associates Website at: www.dunham.com.
Carefully consider the funds' investment objectives, risk factors, charges and expenses before
investing. This and other information can be found in the Fund prospectus, which may be obtained
by calling us at 800-442-4358. Read the prospectus carefully before investing. Investing involves
risk, including possible loss of principal.