Homestead Advisers Corp

Item 5. Fees and Compensation

There are several fee schedules that Homestead Advisers employs. The fees are negotiable
and determined based on the client’s assets under management and investment strategy,
including investment restrictions and limitations. The standard fee schedules are as
follows:

Standard Fee Schedule for Equity SMAs:
0.32% - 0.70% of the market value of portfolio assets

Standard Fee Schedule for Fixed Income SMAs:
0.10% - 0.40% of the market value of portfolio assets

Standard Fee Schedule for Plans – Fixed Income Strategies
Cost reimbursable

Standard Fee Schedule for Plans – Equity Strategies
.20% of the market value of the portfolio assets

Standard Fee Schedule for Model Portfolio Program Sponsors
The typical annual advisory fee rate for program sponsors using Homestead Advisers' large
value investment strategies is 0.35% to 0.65% of account assets.

Standard Fee Schedule for Affiliate Accounts
Fees charged to accounts of Homestead Advisers’ ultimate parent company, NRECA, its
subsidiaries, and other affiliates will vary from those charged to other Clients.

Standard Fee Schedule for the Homestead Funds
0.40% - 0.85% of average daily net assets

Homestead Advisers has entered into a contractual expense limitation agreement with
certain series of the Homestead Funds (each, a “Fund”), as described in the agreement. The
expense limitation agreement provides that to the extent the annual operating expenses
incurred by a Fund exceed the stated percentage of the Fund’s average daily net assets,
such excess amount will be the liability of Homestead Advisers. The term of the expense
limitation agreement with respect to a Fund is for a limited time period, usually one year.
At the end of that period, Homestead Advisers may revise, renew or discontinue the
agreement.

Homestead Advisers bills Clients, except for program sponsors, for investment management
fees incurred. The fee accruals for the Homestead Funds are paid monthly in arrears to
Homestead Advisers. These fees are paid following a request of Homestead Funds by the
Homestead Funds’ custodian from the Homestead Funds account directly to Homestead
Advisers. Homestead Advisers bills NRECA for management of the Plans monthly. Other
private advisory Clients are sent quarterly invoices for their respective fees and submit
payment to Homestead Advisers. Depending on the program sponsor, program sponsor fees
are paid quarterly in advance within forty-five days prior to the beginning of each quarter
or quarterly in arrears within forty-five days following the end of the quarter.

Homestead Advisers does not deduct the investment management fee from the Clients’
accounts. Rather, it bills its Client accounts, and the Client sends payment by wire to
Homestead Advisers’ bank account. If a new Client account is established during the
quarter, the investment management fee will be charged as of the effective date of the
investment management agreement. If a Client terminates an account, the investment
management fee will generally be charged on a prorated basis.

In addition to paying investment management fees, Clients may also be subject to other
investment expenses such as custodial charges, mutual fund fees (as discussed below) and
other related costs associated with products or services that may be necessary or incidental
to such investments or accounts. Additionally, Clients will pay brokerage fees, commissions
and other transaction costs. See Item 12 – Brokerage Practices, below, for additional
information.

The recommendation of Homestead Funds to a private advisory Client raises a conflict of
interest because Homestead Advisers serves as the investment adviser to Homestead
Funds. In an effort to address this conflict of interest, a private advisory Client will not be
charged an advisory fee for those assets under management invested in Homestead Funds.
It should be noted, however, that when private advisory Client assets are invested in
Homestead Funds, the private advisory Client still indirectly pays an advisory fee to
Homestead Advisers equal to the advisory fee paid by Homestead Funds to Homestead
Advisers that is applicable to the shares of Homestead Funds owned by the private advisory
Client. Thus, a private advisory Client whose assets are invested in Homestead Funds may
pay an indirect advisory fee that is higher than the waived advisory fee set forth in the
investment advisory agreement the private advisory Client has with Homestead Advisers.
Generally, private advisory Clients are not invested in any investment companies other

than Homesteads Funds or exchange-traded funds, and therefore are not subject to any
additional investment management fees. However, Homestead Advisers may use sweep
vehicles for excess cash, which may charge additional investment management fees and
may invest in mutual funds or commingled trusts.

Additionally, you should be aware that Homestead Advisers’ portfolio managers are
compensated with a combination of base pay and variable pay based on (i) the performance
of the Client portfolios they manage and (ii) qualitative factors correlated with the
embodiment of NRECA’s core competencies and aligned with Homestead Advisers’ strategic
priorities. Applicable Client portfolios managed by the portfolio manager are equally
weighted to minimize potential conflicts.; however, the variable pay made to portfolio
managers based on account performance may create an incentive to make frequent, and/or
unnecessary trades in order to boost performance. Homestead Advisers has adopted trade
allocation procedures that set forth fair treatment of all accounts and prohibit cross trades
between Client accounts. Additionally, the CCO regularly reviews the portfolio managers’
trading activities to monitor that all accounts are treated equitably and trading aligns with
investment strategy.

Item 7. Types of Clients

Homestead Advisers’ clients consist of investment companies, employee benefit plans,
pension and profit sharing plans, corporations and other business entities (collectively
referred to herein as “Clients”). As discussed above, Homestead Advisers may also provide
non-discretionary investment recommendations for certain strategies to program sponsors.

Generally, Homestead Advisers requires a minimum dollar value of assets of $5,000,000 for
a private advisory client to open a separately managed account. However, this amount is
negotiable. If the account size falls below the minimum requirement due to market
fluctuations only, a private advisory client will not be required to invest additional funds
with Homestead Advisers to meet the minimum account size.