Annual Report

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: 811-06136

HOMESTEAD FUNDS, INC.

(Exact name of registrant as specified in charter)

4301 Wilson Boulevard

Arlington, VA 22203

(Address of principal executive office – Zip code)

Danielle Sieverling

Homestead Funds, Inc.

4301 Wilson Boulevard

Arlington, VA 22203

(Name and address of agent for service)

Copies to:

Amy Ward Pershkow, Esq.

Vedder Price P.C.

1401 New York Avenue

Washington, D.C. 20005

(Name and addresses of agent for service)

Registrant’s telephone number, including area code: 800-258-3030

Date of fiscal year end: December 31

Date of reporting period: December 31, 2022

(a)The following is a copy of the report transmitted to stockholders pursuant to Rule 30e-1 under the Act (17 CFR 270.30e-1).

Table of Contents

President's Letter		1
Performance Evaluation
Daily Income Fund		2
Short-Term Government Securities Fund		4
Short-Term Bond Fund		6
Intermediate Bond Fund		8
Rural America Growth & Income Fund		10
Stock Index Fund		12
Value Fund		14
Growth Fund		16
International Equity Fund		18
Small-Company Stock Fund		20
Expense Example		22
Regulatory and Shareholder Matters		24
Report of Independent Registered Public Accounting Firm		37
Portfolio of Investments
Daily Income Fund		38
Short-Term Government Securities Fund		40
Short-Term Bond Fund		43
Intermediate Bond Fund		49
Rural America Growth & Income Fund		56
Stock Index Fund		61
Value Fund		62
Growth Fund		64
International Equity Fund		66
Small-Company Stock Fund		68

Statements of Assets and Liabilities		70
Statements of Operations		72
Statements of Changes in Net Assets		74
Financial Highlights
Daily Income Fund		80
Short-Term Government Securities Fund		81
Short-Term Bond Fund		82
Intermediate Bond Fund		83
Rural America Growth & Income Fund		84
Stock Index Fund		85
Value Fund		86
Growth Fund		87
International Equity Fund		88
Small-Company Stock Fund		89
Notes to Financial Statements		90
Directors, Trustees and Officers		100
Other Tax Information		103
Appendix - S&P 500 Index Master Portfolio		104

The investment commentaries on the following pages were prepared for each fund by its portfolio manager(s). The views expressed are those of the portfolio manager(s) on January 17, 2023, for each fund as of December 31, 2022. Since that date, those views might have changed. The opinions stated might contain forward-looking statements and discuss the impact of domestic and foreign markets, industry and economic trends, and governmental regulations on the funds and their holdings. Such statements are subject to uncertainty, and the impact on the funds might be materially different from what is described here.

Past performance does not guarantee future results.

Investors are advised to consider fund objectives, risks, charges and expenses before investing. The prospectus contains this and other information and should be read carefully before you invest. To obtain a prospectus, call 800.258.3030 or download a PDF at homesteadfunds.com.

Table of Contents

President’s Letter

2022 Annual Report

February 13, 2023

Dear Shareholders:

Stock and bond assets struggled in 2022 against a backdrop of surging inflation, tightening monetary policy and the prolonged conflict in Ukraine. The Fed moved aggressively to rein in inflation with seven tightening moves, taking its target for the federal funds rate from near zero at the start of the year to between 4.25, 4.50% at the close. The Bloomberg U.S. Aggregate Index posted a one-year return of -13.01%, its worst in 40 years, and the first time the index has posted two consecutive years of negative returns. Rising rates and fears that the Fed’s actions might overcorrect and throw the economy into recession put downward pressure on stocks as well, with the S&P 500 Index returning -18.11% for the year. The S&P 500 Index has recorded double-digit negative returns only 12 times since 1926, including 2022.

I encourage you to read the manager letters that follow to see how your portfolio managers interpreted the macroeconomic data and other inputs and made adjustments to the portfolios. With the exception of the Stock Index Fund, all of Homestead’s bond and stock funds are actively managed, meaning they seek to beat, not match, their index. Such a turbulent market backdrop as we saw in 2022 is certainly challenging, but it can provide opportunities for active managers to shine (in relative if not absolute terms) and potentially lay the groundwork for a solid recovery.

Let me also share with you the news that Prabha Carpenter, a co-manager of Homestead’s Rural America Growth & Income, Value and Small-Company Stock Funds retired on February 10, 2023. Prabha joined the team in 2002, starting as a senior equity analyst. We congratulate her on an exceptional career marked by more than two decades of service to institutional clients and shareholders. Mark Iong, a co-portfolio manager of the Rural America Growth & Income Fund, was named a co-manager of Homestead’s Value Fund and Small-Company Stock Fund, effective with the date of Prabha’s retirement. Thank you, Prabha, and we wish you a wonderful retirement!

In other company news, 2022 marked the first full year of operations for Homestead’s Rural America Growth & Income Fund, which launched on May 1, 2021. This is a balanced fund — owning both stocks and bonds — that primarily invests in securities with exposure to rural America. In choppy markets, such a broadly diversified holding could have appeal to those seeking a mixture of interest income and capital appreciation.

As you will read in the manager letters that follow, the outlook for the economy and markets — while never certain — is decidedly cloudy. We expect the Fed will be able to taper its aggressive pace of rate hikes at some point in the first or second quarter, and that should help to calm the markets. But we’ll also be watching the unemployment rate and signs of consumer strength for an indication of the strength of the economy. We appreciate your continued trust and confidence. Our representatives are here to speak with you about your portfolio and discuss your financial planning considerations. We welcome your call at 800.258.3030, option 2, or book an appointment online at homesteadfunds.com/appointments.

Sincerely,

Mark D. Santero

CEO, President and Director

Homestead Funds

Mark Santero

CEO, President and Director

Table of Contents

Daily Income Fund

Performance Evaluation _| Prepared by the Fund’s Subadvisor, Invesco Advisers, Inc.

Performance

The fund earned a return of 1.20% for the 12-month period ended December 31, 2022. The seven-day effective yield was 3.59% as of December 31, 2022.

Market Conditions

Inflation was the predominant theme for 2022. Jerome Powell and the Federal Open Market Committee (FOMC) moved away from their transitory inflation projections in late 2021 and 2022, brought about one of the most aggressive interest rate hiking cycles in history. The FOMC raised interest rates each meeting since March, bringing the range from 0.00%-0.25% to 4.25%-4.50% with more hikes expected in early 2023. The Consumer Price Index (CPI) peaked in June, rising to 9.1% year over year, but has steadily declined since with the December reading at 6.5%. Energy, food and goods are the main drivers for the decrease as supply chain issues are slowly normalizing, but housing remains strong despite mortgage rates hitting a 20-year high. The labor market has remained healthy with the unemployment rate at 3.5% as of December, and wage growth remains elevated with a steady demand for labor. The U.S. economy has upward momentum going into 2023, but the FOMC is committed to tackling inflation, which may bring volatility into the markets especially in the second half of the year.

In 2022, money market fund assets lingered near historic highs of $4.6 trillion. The inverted yield curve allowed money market investors to mirror duration in cadence with the Fed rate hikes. The supply/demand imbalance remained prevalent on the front end as the abundance of cash on the front end far exceeded the supply. Treasury issuance within the money market space was down 14.3% year over year. The Secured Overnight Financing Rate was set well below the Fed’s lower-bound interest rate range during periods of high demand, while the usage of the Fed’s overnight Reverse Repurchase Agreement Program (RRP) continues to set new participation records, awarding $2.5 trillion for the December 31, 2022 year end. Overnight triparty Treasury repurchase rates traded in sync with the Fed’s RRP rate, maintaining a tight spread to the Fed’s lower bound on the back of heightened demand from money market funds. The steepening of the U.S. Treasury bill curve has slowed down as the market anticipates that the Fed may be getting closer to the end of the hiking cycle.

Outlook

The Invesco Global Liquidity Team took over the day-to-day management of the Daily Income Fund portfolio on May 1, 2021. Our investment strategy and security selection are built on macroeconomic factors, effects of supply and demand dynamics relating to the Treasury markets, and

break-even analysis based on expected interest rates on the yield curve. We have utilized a barbell investment strategy that encapsulates a substantial amount of maturities in very short tenures to align in cadence with the Fed’s aggressive rate hike policy while investing in longer tenured Treasury and government agency floating rate notes that provide relative value. As we approach the later part of the hiking cycle, we will continue a detailed security selection that takes advantage of the evolving market environment. We will maintain a weighted average life position that reflects opportunistic fixed and floating rate note holdings that we believe offer diversification and attractive discount margins.

We believe that the fund is currently well positioned with a shortened weighted average maturity in this current Fed monetary policy environment and encapsulates a model that remains competitive and flexible in seeking to take advantage of the later part of the rising rate cycle. We expect to see a significant increase in net Treasury bill issuance over this year, which could translate to higher yields and investors extending out the front-end curve. As a result, we could see a drop in the Fed’s RRP, but with debt ceiling negotiations likely to be contentious, we expect net bill issuance to be concentrated in the second half of 2023, meaning RRP balances could still stay elevated for the beginning of the year. We still believe that the FOMC has a narrow pathway to fight inflation and keep the economy from going into a recession. Currently the market is pricing in interest rate cuts starting in the third quarter of 2023, which is a disconnect from the FOMC outlook. Even with inflation slowing, Jerome Powell and the FOMC have consistently reiterated that they are not contemplating cutting rates in 2023 and still have a ways to go for inflation to get back to the 2% target.

Performance Evaluation

Table of Contents

Daily Income Fund

Average Annual Total Returns (periods ended 12/31/22)
	1 YR %	5 YR %	10 YR %
Daily Income Fund	1.20	0.78	0.41

Yield
Annualized 7-day current yield quoted 12/31/22	3.53%

Security Diversification
	% of Total Investments
	as of 12/31/21	as of 12/31/22
U.S. government and agency obligations	100.0	81.2
Short-term and other assets*	0.0**	18.8
Total	100.0%	100.0%

Maturity
	as of 12/31/21	as of 12/31/22
Average weighted maturity	42 days	34 days

The returns quoted in the above table represent past performance, which is no guarantee of future results. Current performance may be higher or lower than that shown above. To obtain the most recent month-end returns, please call 800.258.3030 or visit homesteadfunds.com. Returns and the principal value of your investment will fluctuate such that shares, when redeemed, may be worth more or less than their original cost. You could lose money by investing in the Daily Income Fund. Although the fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. An investment in the Daily Income Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. The fund’s sponsor has no legal obligation to provide financial support to the fund, and you should not expect that the sponsor will provide financial support to the fund at any time.

The Daily Income Fund’s average annual total returns are net of any fee waivers and reimbursements. The fund’s advisor waived a portion of its management fee and/or reimbursed fund expenses during the five and 10-year periods and waived a portion of its management fee during the one-year period. Had the advisor not done so, the fund’s total returns would have been lower. The expenses used are as of the most recent period-end and may fluctuate over time. Returns include the reinvestment of dividends. Returns do not reflect taxes that the shareholder may pay on fund distributions or the redemption of fund shares.

*Represents investment in an unaffiliated U.S. government money market fund.

**Less than 0.1%

Performance Evaluation

Table of Contents

Short-Term Government Securities Fund

Performance Evaluation _| Prepared by the Fund’s Investment Advisor, Homestead Advisers Corp.

Performance

The fund returned -5.41% for the year ended December 31, 2022, underperforming its benchmark index, the ICE BofA 1-5 Year U.S. Treasury Index, which returned -5.25%.

The main detractor to the fund’s relative performance was its overweight allocation to agency issuers backed by the full faith and credit of the U.S. government. The overall upward increase in U.S. Treasury yields put downward pressure on agency issuers’ prices, while the coupon provided some cushion to offset the relative underperformance. However, the fund’s underperformance was nearly offset by the fund’s underweight allocation to U.S. Treasuries and its yield curve positioning.

The portfolio management team increased the fund’s duration throughout the year, closing some of the underweight relative to the benchmark as interest rates increased in response to inflationary pressures as the Federal Reserve aggressively increased borrowing rates and embarked in quantitative tightening.

Market Conditions

The year started on a positive note with corporate spreads holding under 100 basis points and the S&P 500 index reaching all-time highs in early January; however, the positive tone to the year quickly dissipated. Inflationary pressures carried on and were exacerbated by supply chain disruptions. Additionally, Russia’s war with Ukraine, which began in the first quarter, drove commodity prices — particularly oil, gas and fertilizer — higher, further complicating the inflation picture. West Texas oil prices rose to a high of $123.70 per barrel, and natural gas prices aggravated the energy crisis for most of Europe.

Headline inflation as measured by the Consumer Price Index (CPI) continued to run elevated at levels not seen since the late 1970s and early 1980s. Upward price pressures showed up in multiple categories, including food, energy, shelter, autos and services. CPI peaked at 9.06% in June 2022, and since then we have seen a steady decline to 6.5% at the end of the year driven by a decline in energy prices. The unemployment rate declined throughout the year, ending at 3.5%. Job openings as measured by the Job Openings and Labor Turnover Survey remained elevated. The supply-demand imbalance of labor prompted employers to compete for labor, driving wages higher.

The Federal Reserve increased the fed funds rate from the zero bound to a range of 4.25% to 4.50% by the end of the year. Consequently, U.S. Treasury yields climbed higher, with the benchmark 10-year Treasury increasing from 1.51% at the end of 2021 to 3.88% at the end of 2022. Fixed-income returns across the board were largely negative. The Bloomberg U.S. Aggregate Index posted its worst return in the past 40 years: -13.01%. Additionally, this marked the first time of negative back-to-back year-end returns for the flagship index. The rise in yields pressured bond prices,

Investment Advisor: Homestead Advisers
	Mauricio Agudelo, CFA Head of Fixed-Income Investments BS, Finance, The University of Maryland, Robert H. Smith School of Business
	Ivan Naranjo, CFA, FRM Fixed-Income Portfolio Manager BS, Finance, The University of Maryland, Robert H. Smith School of Business

generating negative returns. Thirty-year mortgage rates rose according to bankrate.com from 3.27% to 6.66% during the period. The absolute negative returns were somewhat offset by investment-grade spreads for corporate issuers despite mixed performance throughout the year. Credit spreads experienced a fair amount of volatility.

Outlook

Looking ahead into the new year, we look for the Federal Reserve to finalize interest rate increases during the first quarter and hold the policy rate steady for the balance of the year. We remain cautiously optimistic that any slowdown in growth will be brief and inflation will continue to come down to normal long-term averages. We are cognizant that the unemployment rate will likely increase, and this will put pressure on consumers’ balance sheets. In our view, we expect monetary policy to be restrictive via balance sheet reduction and a higher-than-normal fed funds rate. This normalization should continue to contribute higher volatility to markets as different dynamics get balanced with tighter, albeit necessary, monetary conditions for the economy.

We expect volatility in the U.S. Treasury market for maturities five years and in to be elevated and yields to be higher overall as market participants continuously reassess the Fed’s forward guidance. Longer-dated maturities will remain subject to volatility via inflation expectations, the outlook for long-term growth and the Fed’s shrinking of the balance sheet. Overall, we expect the curve to steepen as the year progresses. Regarding portfolio duration going forward, we expect to maintain our duration relatively close to the benchmark. Finally, we expect the agency sector to continue to perform well and see coupon carry as a significant contributor to returns and secondarily additional credit spread compression, therefore supporting our current overweight positioning.

Performance Evaluation

Table of Contents

Short-Term Government Securities Fund

Average Annual Total Returns (periods ended 12/31/22)
	1 YR %	5 YR %	10 YR %
Short-Term Government Securities Fund	-5.41	0.36	0.40
ICE BofA 1-5 Year U.S. Treasury Index	-5.25	0.66	0.71

Security Diversification
	% of Total Investments
	as of 12/31/21	as of 12/31/22
U.S. government and agency obligations	39.7	66.6
Corporate bonds—government guaranteed	50.2	25.8
Asset-backed securities	3.6	3.1
Corporate bonds—other	3.0	1.6
Mortgage-backed securities	0.9	1.1
Municipal bonds	0.9	0.1
Short-term and other assets*	1.7	1.7
Total	100.0%	100.0%

Maturity
	as of 12/31/21	as of 12/31/22
Average weighted maturity	2.45	2.48

Performance Comparison

Comparison of the change in value of a $10,000 investment in the fund and the ICE BofA 1-5 Year U.S. Treasury Index made on December 31, 2012.

The returns quoted in the above table and chart represent past performance, which is no guarantee of future results. Current performance may be higher or lower than that shown above. To obtain the most recent month-end returns, please call 800.258.3030 or visit homesteadfunds.com. Returns and the principal value of your investment will fluctuate such that shares, when redeemed, may be worth more or less than their original cost. The Short-Term Government Securities Fund’s average annual total returns are net of any fee waivers and reimbursements. The fund’s advisor waived a portion of its management fee during the periods shown. Had the advisor not done so, the fund's total returns would have been lower. The expenses used are as of the most recent period-end and may fluctuate over time. Returns include the reinvestment of dividends and capital gains. Returns do not reflect taxes that the shareholder may pay on fund distributions or the redemption of fund shares. It is not possible to invest directly in an unmanaged index. Index performance does not reflect transaction costs, fees or expenses.

*Represents investment in an unaffiliated U.S. government money market fund.

Performance Evaluation

Table of Contents

Short-Term Bond Fund

Performance Evaluation _| Prepared by the Fund’s Investment Advisor, Homestead Advisers Corp.

Performance

The fund returned -5.72% for the year ended December 31, 2022, underperforming its benchmark index, the ICE BofA 1-5 Year Corp./Gov. Index, which returned -5.54%.

The main contributor to the fund’s relative underperformance was its overweight allocation to the financials, asset-backed securities and industrial sectors versus its underweight to U.S. Treasuries and mortgage-backed securities (MBS). From a factor-based perspective, security selection detracted from performance, while duration-yield curve and income were positive contributors. Overall, the upward increase in U.S. Treasury yields put downward pressure on bond prices, therefore generating negative returns during the year.

The portfolio management team increased the fund’s duration and increased its MBS holdings throughout the year, closing some of the underweight relative to the benchmark as interest rates increased in response to inflationary pressures as the Federal Reserve aggressively increased borrowing rates and embarked in quantitative tightening.

Market Conditions

Investment Advisor: Homestead Advisers
	Mauricio Agudelo, CFA Head of Fixed-Income Investments BS, Finance, The University of Maryland, Robert H. Smith School of Business
	Ivan Naranjo, CFA, FRM Fixed-Income Portfolio Manager BS, Finance, The University of Maryland, Robert H. Smith School of Business

index. The rise in yields pressured bond prices, generating negative returns. Thirty-year mortgage rates rose according to bankrate.com from 3.27% to 6.66% during the period. The absolute negative returns were somewhat offset by investment-grade spreads for corporate issuers despite mixed performance throughout the year. Credit spreads experienced a fair amount of volatility.

Outlook

We expect volatility in the U.S. Treasury market for maturities five years and in to be elevated and yields to be higher overall as market participants continuously reassess the Fed’s forward guidance. We also expect that longer-dated maturities will remain subject to volatility via inflation expectations, the outlook for long-term growth and the Fed’s shrinking of the balance sheet. Overall, we expect the curve to steepen as the year progresses. Regarding portfolio duration going forward, we expect to maintain our duration relatively close to the benchmark. Finally, we expect investment-grade corporate spreads to remain volatile as Fed policy and inflation normalize, and we see coupon carry as a significant contributor to returns and secondarily additional credit spread compression; therefore, we remain cautiously optimistic and positioned to be active and opportunistic.

Performance Evaluation

Table of Contents

Short-Term Bond Fund

Average Annual Total Returns (periods ended 12/31/22)
	1 YR %	5 YR %	10 YR %
Short-Term Bond Fund	-5.72	0.76	1.08
ICE BofA 1-5 Year Corp./Gov. Index	-5.54	0.87	1.01

Security Diversification
	% of Total Investments
	as of 12/31/21	as of 12/31/22
U.S. government and agency obligations	30.9	51.4
Corporate bonds—other	35.4	26.1
Asset-backed securities	12.8	10.4
Yankee bonds	14.2	7.3
Corporate bonds—government guaranteed	2.6	2.1
Mortgage-backed securities	0.6	0.9
Municipal bonds	1.7	0.6
Short-term and other assets	1.8	1.2
Total	100.0%	100.0%

Maturity
	as of 12/31/21	as of 12/31/22
Average weighted maturity	2.68	2.70

Performance Comparison

Comparison of the change in value of a $10,000 investment in the fund and the ICE BofA 1-5 Year Corp./Gov. Index made on December 31, 2012.

The returns quoted in the above table and chart represent past performance, which is no guarantee of future results. Current performance may be higher or lower than that shown above. To obtain the most recent month-end returns, please call 800.258.3030 or visit homesteadfunds.com. Returns and the principal value of your investment will fluctuate such that shares, when redeemed, may be worth more or less than their original cost. The Short-Term Bond Fund’s average annual total returns are net of any fee waivers and reimbursements. The expenses used are as of the most recent period-end and may fluctuate over time. Returns include the reinvestment of dividends and capital gains. Returns do not reflect taxes that the shareholder may pay on fund distributions or the redemption of fund shares. It is not possible to invest directly in an unmanaged index. Index performance does not reflect transaction costs, fees or expenses.

Performance Evaluation

Table of Contents

Intermediate Bond Fund

Performance Evaluation _| Prepared by the Fund’s Investment Advisor, Homestead Advisers Corp.

Performance

The fund returned -13.38% for the year ended December 31, 2022, underperforming its benchmark index, the Bloomberg U.S. Aggregate Index, which returned -13.01%.

Market Conditions

The Federal Reserve increased the fed funds rate from the zero bound to a range of 4.25% to 4.50% by the end of the year. Consequently, U.S. Treasury yields climbed higher, with the benchmark 10-year Treasury increasing from 1.51% at the end of 2021 to 3.88% at the end of 2022. Fixed-income returns across the board were largely negative. The U.S. Aggregate Index posted its worst return in the past 40 years: -13.01%. Additionally, this marked the first time of negative back-to-back year-end returns for the flagship index. The rise in yields pressured bond prices, generating negative returns. Thirty-year mortgage rates rose according to bankrate.com from 3.27% to 6.66% during the period. The absolute negative returns were somewhat offset by

Investment Advisor: Homestead Advisers
	Mauricio Agudelo, CFA Head of Fixed-Income Investments BS, Finance, The University of Maryland, Robert H. Smith School of Business
	Ivan Naranjo, CFA, FRM Fixed-Income Portfolio Manager BS, Finance, The University of Maryland, Robert H. Smith School of Business

investment-grade spreads for corporate issuers despite mixed performance throughout the year. Credit spreads experienced a fair amount of volatility.

Outlook

We expect volatility in the U.S. Treasury market for maturities five years and in to be elevated and yields to be higher overall as market participants continuously reassess the Fed’s forward guidance for monetary policy. We also expect that longer-dated maturities will remain subject to volatility via inflation expectations, the outlook for long-term growth and the Fed’s shrinking of the balance sheet. Overall, we expect the curve to steepen as the year progresses. Regarding portfolio duration going forward, we expect to maintain our duration relatively close to the benchmark. Finally, we expect investment-grade corporate spreads to remain volatile as Fed policy and inflation normalize, and we see coupon carry as a significant contributor to returns and secondarily additional credit spread compression; therefore, we remain cautiously optimistic and positioned to be active and opportunistic.

Performance Evaluation

Table of Contents

Intermediate Bond Fund

Average Annual Total Returns (periods ended 12/31/22)
	1 YR %	Since Inception %
Intermediate Bond Fund	-13.38	-0.70
Bloomberg U.S. Aggregate Index	-13.01	-0.77

Security Diversification
	% of Total Investments
	as of 12/31/21	as of 12/31/22
U.S. government and agency obligations	14.9	34.5
Corporate bonds—other	35.5	23.0
Mortgage-backed securities	14.9	22.3
Asset-backed securities	12.7	9.2
Yankee bonds	12.1	4.9
Municipal bonds	3.6	2.5
Corporate bonds—government guaranteed	0.5	0.4
Short-term and other assets	5.8	3.2
Total	100.0%	100.0%

Maturity
	as of 12/31/21	as of 12/31/22
Average weighted maturity	7.90	8.34

Performance Comparison

Comparison of the change in value of a $10,000 investment in the fund and the Bloomberg U.S. Aggregate Index made on May 1, 2019.

The returns quoted in the above table and chart represent past performance, which is no guarantee of future results. Current performance may be higher or lower than that shown above. To obtain the most recent month-end returns, please call 800.258.3030 or visit homesteadfunds.com. Returns and the principal value of your investment will fluctuate such that shares, when redeemed, may be worth more or less than their original cost. The Intermediate Bond Fund’s average annual total returns are net of any fee waivers and reimbursements. The fund’s advisor waived all of its management fee and reimbursed a portion of the fund's expenses during the inception to date period and waived a portion of its management fee during the 1-year period. Had the advisor not done so, the fund's total returns would have been lower. The expenses used are as of the most recent period-end and may fluctuate over time. Returns include the reinvestment of dividends and capital gains. Returns do not reflect taxes that the shareholder may pay on fund distributions or the redemption of fund shares. It is not possible to invest directly in an unmanaged index. Index performance does not reflect transaction costs, fees or expenses.

Performance Evaluation

Table of Contents

Rural America Growth & Income Fund

Performance Evaluation _| Prepared by the Fund’s Investment Advisor, Homestead Advisers Corp.

Performance

The Rural America Growth & Income Fund returned -14.18% in 2022, outperforming its benchmark, a blend of the Russell 3000 Index (60%) and the Bloomberg Intermediate U.S. Government/Credit Bond Index (40%), which returned -14.59% in the same period. Both stocks and bonds, as individual asset classes, were down significantly in the year.

Portfolio Review

The equity portion of the fund accounted for most of the relative outperformance in 2022. Within this sleeve, overall selection effect was the most important driver of performance, particularly in consumer discretionary, our top-performing sector, where our retail holdings such as O’Reilly Automotive delivered strong double-digit returns as defensive consumer businesses were favored by the market in times of macroeconomic uncertainty. The fund also benefited from positive allocation effects thanks to our relative underweight in the communication services sector and overweight in the industrials sector. We would also point out Deere & Company as the fund’s top performer in 2022 when the agriculture equipment company powered through supply chain issues with continuing strong earnings growth underpinned by favorable crop fundamentals and order book visibility.

On the other hand, the fund’s largest detractors came from our underweight in energy, which was once again the best-performing equity sector in 2022, as well as weak stock selection in the health care sector. Zoetis, a leading animal health science company, was the worst-performing stock for the fund due to concerns on valuation and guidance reductions from supply chain challenges. We continue to maintain a position in the company, however, given the positive long-term fundamental outlook of the companion animal business where we believe new innovative therapeutics should allow the company to sustain durable growth.

For the fixed-income sleeve, the main detractor to relative performance was its overweight allocation to corporate credit, particularly industrials in the telecommunications space. The overall weak environment for risk throughout the year, as well as the upward move in yields across the yield curve, provided a challenging environment for the fixed-income sleeve; however, the corporate credit underperformance was nearly offset by the fund’s underweight allocation to risk-free assets when combining U.S. Treasuries and U.S. Government Guaranteed Agencies. Additionally, its yield curve positioning and income return were further positive contributors.

As active managers, we are constantly evaluating the fund’s positioning based on developments in key economic themes that we monitor closely for rural America. The biggest adjustment we made for the fund in 2022 was increasing our exposure to the energy sector where we initiated positions in several oil and gas companies, namely Chevron, ConocoPhillips and Marathon Petroleum. Oil and gas production is a vital part of the rural economy, and we have become increasingly positive on the long-term supply and demand outlook of the commodities, the financial strength of these businesses and their highly attractive market

Investment Advisor: Homestead Advisers*
	Mark Iong, CFA Equity Portfolio Manager BS, Operations Research and Information Engineering, Cornell
	Ivan Naranjo, CFA, FRM Fixed-Income Portfolio Manager BS, Finance, The University of Maryland, Robert H. Smith School of Business
Homestead Advisers' Jim Polk, head of equity investments, and Mauricio Agudelo, head of fixed-income investments, co-manage this fund with the individuals named above. Their bios appear in adjacent fund manager letters.

valuations. To help fund these purchases, we reduced our weighting in the information technology and communication services sectors while also eliminating several smaller holdings, such as Enersys, from the portfolio.

The fixed-income team increased the fund’s duration throughout the year, closing some of the underweight relative to the benchmark as interest rates increased in response to inflationary pressures as the Federal Reserve aggressively increased borrowing rates and embarked in quantitative tightening.

Outlook

Looking ahead into the new year, we look for the Federal Reserve to finalize interest rate increases during the first quarter and hold the policy rate steady for the balance of the year. We remain cautiously optimistic that any slowdown in growth will be brief and inflation will continue to come down to normal long-term averages. We are cognizant that the unemployment rate will likely increase, and this will put pressure on consumers’ balance sheets. In our view, we expect monetary policy to be restrictive via balance sheet reduction and a higher-than-normal fed funds rate. In the event of an economic downturn, equity earnings are likely to come under significant pressure as demand slows and margins deteriorate.

With that said, the portfolio management team remains sanguine on the U.S. economy over the long run, especially in rural America where a number of secular forces should continue to help reinvigorate economic activity in these local communities. We believe that multitrillion-dollar fiscal stimulus from the government — including the Infrastructure Investment and Jobs Act of 2021, the Inflation Reduction Act of 2022, and the latest CHIPS and Science Act — should all help fuel a U.S. reshoring and manufacturing renaissance in the coming years. With a balanced portfolio across different economic sectors, we believe the fund should remain well positioned despite ongoing market uncertainty.

*	On February 10, 2023, Prabha Carpenter retired from Homestead Advisers and no longer serves as portfolio manager of the Rural America Growth & Income Fund.

Performance Evaluation

Table of Contents

Rural America Growth & Income Fund

Average Annual Total Returns (periods ended 12/31/22)
	1 YR %	Since Inception %
Rural America Growth & Income Fund	-14.18	-6.26
Blended Index*	-14.59	-5.07
Russell 3000 Index**	-19.22	-5.63
Bloomberg Intermediate U.S. Government/Credit Bond Index**	-8.24	-5.06

Security Diversification
	% of Total Investments as of 12/31/22
Common stocks	55.5
Information technology	11.6
Industrials	9.7
Health care	8.1
Financials	7.8
Consumer discretionary	7.2
Real estate	4.5
Energy	2.4
Consumer staples	2.1
Materials	1.7
Communication services	0.4
U.S. government and agency obligations	18.4
Corporate bonds—other	13.0
Asset-backed securities	3.0
Municipal bonds	1.5
Mortgage-backed securities	1.2
Short-term and other assets	7.4
	100.0%

Top 10 Holdings
	% of Total Investments as of 12/31/22
Deere & Co.	2.7
Federal Farm Credit Bank, 09/27/29, 4.00%	2.7
Federal Farm Credit Bank, 02/25/26, 3.32%	2.7
Federal Farm Credit Bank, 10/21/25, 0.52%	2.4
Federal Farm Credit Bank, 04/28/27, 1.20%	2.3
Hershey Co. (The)	2.1
Jack Henry & Associates, Inc.	2.1
Zoetis Inc.	2.0
American Tower Corp.	2.0
Paycom Software, Inc.	1.9
Total	22.9%

Maturity
	as of 12/31/21	as of 12/31/22
Average weighted maturity	4.26	4.17

Performance Comparison

Comparison of the change in value of a $10,000 investment in the fund, the Blended Index* and the two component indexes of the Blended Index made on May 1, 2021.

The returns quoted in the above table and chart represent past performance, which is no guarantee of future results. Current performance may be higher or lower than that shown above. To obtain the most recent month-end returns, please call 800.258.3030 or visit homesteadfunds.com. Returns and the principal value of your investment will fluctuate such that shares, when redeemed, may be worth more or less than their original cost. The Rural America Growth & Income Fund’s average annual total returns are net of any fee waivers and reimbursements. The fund's advisor waived all of its management fee and reimbursed a portion of the fund's expenses during the periods shown. Had the advisor not done so, the fund's total returns would have been lower. The expenses used are as of the most recent period-end and may fluctuate over time. Returns include the reinvestment of dividends and capital gains. Returns do not reflect taxes that the shareholder may pay on fund distributions or the redemption of fund shares. It is not possible to invest directly in an unmanaged index. Index performance does not reflect transaction costs, fees or expenses.

*The fund's Blended Index is a blend of the Russell 3000 Index (60%) and the Bloomberg Intermediate U.S. Government/Credit Bond Index (40%).

**The returns of the Russell 3000 Index and the Bloomberg Intermediate U.S. Government/Credit Bond Index are shown because these indexes are the two components of the Blended Index.

Performance Evaluation

Table of Contents

Stock Index Fund

Performance Evaluation _| Prepared by the Master Portfolio’s Investment Advisor, BlackRock Fund Advisors

Index and Fund Performance

For the 12 months ended December 31, 2022, the U.S. large cap market metric and the fund’s benchmark, the S&P 500 Index, returned -18.11 and the fund returned -18.50%. The S&P 500 Index is a market capitalization-weighted index composed of 500 common stocks issued by large-capitalization companies in a wide range of industries. The stocks included in the index collectively represent a substantial portion of all common stocks publicly traded in the United States.

During the 12-month period, as changes were made to the composition of the S&P 500 Index, the Master Portfolio in which the fund invests purchased and sold securities to maintain its objective of replicating the risks and return of the index.

Market Conditions

In the first quarter of 2022, geopolitical tensions after the Russian invasion of Ukraine in February 2022 fueled existing concerns over rising inflation, interest rate hikes and rallying commodity prices. Conversely, economic data in the United States remained strong, with robust employment numbers and corporate earnings results. This provided comfort to investors but added to U.S. policy maker’s challenges. Investors were concerned that the Federal Reserve might dampen growth in its efforts to get inflation under control.

Commodity prices spiked in the first quarter of 2022 and pushed expectations for a higher inflation rate. The Fed hiked interest rates by 25 basis points in March 2022 and signaled hikes at all six remaining meetings for 2022 in an effort to tackle the highest inflation rate in four decades.

Concerns around high inflation, growth outlook and recession fears increased in the United States during the second quarter of 2022. While the unemployment rate remained low and wage growth remained strong, consumer sentiment went down as consumers struggled with higher prices and increased borrowing costs. Increased expectations of an interest rate hike weighed down on U.S. equity market valuations.

As the Fed continued to grapple with inflation, its messaging evolved over the second quarter. Initially, Chairman Jerome Powell adopted a more hawkish tone stating that the Fed would not hesitate to raise interest rates beyond neutral to achieve its inflation target and would be willing to accept an increase in the unemployment rate. But as risks to growth increased over the second quarter and recession fears intensified, the number and magnitude of future rate hikes beyond July 2022 remained unclear.

In the third quarter of 2022, the U.S. equity market rallied in July 2022 on the back of a softened tone from the Fed signaling a slower rate rise in 2023. However, the Fed’s hawkish tone later in the quarter at the Jackson Hole conference reaffirmed its commitment to fighting inflation. In its battle against a high inflation rate, the United States Congress passed a new bill that aimed to reduce inflation by curbing the deficit.

U.S. economic data showed a decline in growth over the first two quarters of the year, but other economic data released over the quarter highlighted the resilience of the U.S. economy. The labor market added 315,000 payroll jobs across the economy, generating considerable household income gains.

The U.S. equity market rallied again in the fourth quarter of 2022 despite tighter monetary policy. It posted positive returns in October and November 2022 while contractionary monetary policy targeted a higher inflation rate. The Fed reiterated its plan in December 2022 to continue tightening monetary policy as inflation remained well above target. Market performance dampened toward the end of December 2022.

After consecutive 75-basis-point interest rate hikes since June 2022, the Fed raised the federal funds rate by an additional 50 basis points in December 2022, bringing it to a range of 4.25% to 4.50%. Economic data released later in the quarter showed economic activities slowed down. Concerns regarding an economic recession and its magnitude remained elevated.

In the fourth quarter of 2022, from a Global Industry Classification Standard sector perspective, energy (+65.72%), utilities (+1.57%) and consumer staples (-0.62%) were among the best performers, while information technology (-28.14%), consumer discretionary (-37.03%) and communication services (-39.89%) were among the worst performers.

Performance Evaluation

Table of Contents

Stock Index Fund

Average Annual Total Returns (periods ended 12/31/22)
	1 YR %	5 YR %	10 YR %
Stock Index Fund	-18.50	8.86	11.97
S&P 500 Stock Index	-18.11	9.42	12.56

Sector Diversification
	% of Total Investments as of 12/31/22
Information technology	25.5
Health care	15.7
Financials	12.3
Consumer discretionary	9.7
Industrials	8.6
Communication	7.2
Consumer staples	7.2
Energy	5.2
Utilities	3.2
Materials	2.7
Real Estate	2.7
Total	100.0%

Top 10 Equity Holdings
	% of Total Investments as of 12/31/22
Apple, Inc.	6.0
Microsoft Corp.	5.5
Alphabet, Inc.	3.1
Amazon.com, Inc.	2.3
Berkshire Hathaway Inc.	1.7
UnitedHealth Group Inc.	1.5
Johnson & Johnson	1.4
Exxon Mobil Corp.	1.4
JPMorgan Chase & Co.	1.2
NVIDIA Corp.	1.1
Total	25.2%

Performance Comparison

Comparison of the change in value of a $10,000 investment in the fund and the S&P 500 Stock Index made on December 31, 2012.

The returns quoted in the above table and chart represent past performance, which is no guarantee of future results. Current performance may be higher or lower than that shown above. To obtain the most recent month-end returns, please call 800.258.3030 or visit homesteadfunds.com. Returns and the principal value of your investment will fluctuate such that shares, when redeemed, may be worth more or less than their original cost. The Stock Index Fund’s average annual total returns are net of any fee waivers and reimbursements. The expenses used are as of the most recent period-end and may fluctuate over time. Returns include the reinvestment of dividends and capital gains. Returns do not reflect taxes that the shareholder may pay on fund distributions or the redemption of fund shares. It is not possible to invest directly in an unmanaged index. Index performance does not reflect transaction costs, fees or expenses.

Performance Evaluation

Table of Contents

Value Fund

Performance Evaluation _| Prepared by the Fund’s Investment Advisor, Homestead Advisers Corp.

Performance

The Value Fund returned -5.50% for the 12 months ending December 31, 2022, outperforming its benchmark index, the Russell 1000 Value Index, which returned -7.54%. Outperformance was driven primarily by stock selection.

Portfolio Review

While sector allocation was negative for relative performance, it was more than offset by good stock selection, allowing the fund to lead the benchmark by 204 basis points.

Sector allocation negatively affected performance, with most of the negative effect coming from an underweight to the energy sector, which continued to rebound. In the energy sector, a significant underinvestment in new production over the past few years, combined with current disciplined capital spending and low valuations, has led to strong performance. Our overweight exposure to technology and underweight consumer staples also hurt performance. Positive sector allocation came from our underweights in communication services and real estate, both of which were negatively affected by rising interest rates. As a more defensive sector, health care outperformed the benchmark, and we were overweight.

Positive relative performance for the year was driven by good stock selection, particularly in health care and industrials. Cigna, a managed care organization, was the fund’s top contributor. A deep-value name within the managed care sector, the company benefited from a combination of stronger-than-expected free cash flow generation and a cheap valuation. Concerns around its commercial business exposure appear to be over discounted in the stock’s valuation.

Abbvie, another health care name, also benefited from a low valuation, better-than-expected earnings and a good dividend yield. While its lead drug, Humira, is due to come off patent in 2023, Abbvie has numerous other drugs — notably Rinvoq and Skyrizi, among others — that could allow it to grow faster than the pharmaceutical industry in the latter part of the decade.

In the industrials sector, Northrop Grumman, a defense company, also aided relative performance. We believe the company’s exposure to key government defense programs and heightened geopolitical concerns will continue to benefit it in the future.

Top detractors to performance came from two long-term holdings that have been significant contributors to performance in years past. Alphabet was down on concerns over a cyclical slowdown in online advertising; however, we believe the continued shift of advertising dollars to digital and Alphabet’s strong position in the search engine space should continue to benefit it in the future. Another large

Investment Advisor: Homestead Advisers*
	Mark Iong, CFA Equity Portfolio Manager BS, Operations Research and Information Engineering, Cornell
	Jim Polk, CFA Head of Equity Investments BA, English, Colby College; MBA, The Olin Graduate School of Business at Babson College

holding, Microsoft, was down on enterprise spending concerns and on a higher valuation. For both companies, we believe the current issues are cyclical in nature and not due to competitive dynamics. We believe the long-term prospects remain good for both companies.

Outlook

Although inflation has been coming down recently, it remains elevated versus the Federal Reserves’ mandate. Consequently, we foresee a continued Fed tightening cycle until it is convinced that inflation remains within its prescribed limits. As in 2022, this could continue to have the effect of compressing valuation multiples for stocks in general and high-growth/high-multiple stocks in particular. It could also lead to continued volatility in the markets as fear over a Fed that will raise interest rates too much, potentially leading the U.S. into recession, plays out in the market. For long-term investors, we see this volatility as a potential opportunity to find or add to good companies with strong long-term prospects that have become more reasonably priced. We continue to position the portfolio in companies we believe are of higher quality with strong balance sheets and reasonable valuations, which should reward shareholders over the long term.

*	On February 10, 2023, Prabha Carpenter retired from Homestead Advisers and no longer serves as portfolio manager of the Value Fund. In addition, effective February 10, 2023, Mark Iong began serving as portfolio manager of the Value Fund.

Performance Evaluation

Table of Contents

Value Fund

Average Annual Total Returns (periods ended 12/31/22)
	1 YR %	5 YR %	10 YR %
Value Fund	-5.50	8.74	12.25
Russell 1000 Value Index	-7.54	6.67	10.29

Sector Diversification
	% of Total Investments as of 12/31/22
Health care	22.7
Financials	17.4
Industrials	17.2
Information technology	10.3
Materials	7.8
Energy	7.7
Consumer discretionary	6.7
Communication services	4.3
Real estate	2.7
Consumer staples	1.0
Short-term and other assets	2.2
Total	100.0%

Top 10 Equity Holdings
	% of Total Investments as of 12/31/22
Honeywell International, Inc.	3.9
JPMorgan Chase & Co.	3.8
AbbVie Inc.	3.6
Abbott Laboratories	3.5
Microsoft Corp.	3.5
Chevron Corp.	3.2
Alphabet, Inc.	3.1
ConocoPhillips	3.0
Parker-Hannifin Corp.	3.0
Cigna Corp.	3.0
Total	33.6 %

Performance Comparison

Comparison of the change in value of a $10,000 investment in the fund and the Russell 1000 Value Index made on December 31, 2012.

The returns quoted in the above table and chart represent past performance, which is no guarantee of future results. Current performance may be higher or lower than that shown above. To obtain the most recent month-end returns, please call 800.258.3030 or visit homesteadfunds.com. Returns and the principal value of your investment will fluctuate such that shares, when redeemed, may be worth more or less than their original cost. The Value Fund’s average annual total returns are net of any fee waivers and reimbursements. The expenses used are as of the most recent period-end and may fluctuate over time. Returns include the reinvestment of dividends and capital gains. Returns do not reflect taxes that the shareholder may pay on fund distributions or the redemption of fund shares. It is not possible to invest directly in an unmanaged index. Index performance does not reflect transaction costs, fees or expenses.

Performance Evaluation

Table of Contents

Growth Fund

Performance Evaluation _| Prepared by the Fund’s Subadvisor, T. Rowe Price Associates

Performance

The Homestead Growth Fund returned -33.45% for the 12-month period and underperformed the Russell 1000 Growth Index, which returned -29.14%. Sector allocation drove relative underperformance during the year.

Portfolio Review

Communication services was a notable detractor from relative performance due to an overweight allocation and stock selection. We maintain an overweight to communication services, as we continue to find attractive opportunities in companies with innovative business models that we believe can take advantage of transformational change.

An underweight allocation in industrials and business services also weighed on relative results. Within the sector, we remain focused on areas where we believe there is secular, rather than cyclical, growth. As such, we continue to emphasize unique, company-specific opportunities that we believe can drive meaningful growth regardless of the economic backdrop.

Consumer discretionary further hindered relative performance due to poor stock picking and an overweight allocation. Shares of Rivian Automotive fell toward the end of the period in response to further deterioration in the macroenvironment. Rising rates and hawkish commentary from central bank officials, worsening consumer demand trends and falling used car prices continue to put downward pressure on the early-stage electric vehicle manufacturer.

In contrast, health care was the sole contributor to relative results, due to strong stock choices and an overweight allocation. Shares of Cigna continued their positive momentum in the fourth quarter, reporting another set of beat-and-raise earnings in October, driven by strength in both its EverNorth and health care segments, including a better-than-expected medical-loss ratio. The stock also received a boost following news that managed care company Centene had awarded its pharmacy-benefits management contract to Express Scripts, EverNorth’s pharmacy-benefits management business, starting in 2024.

Outlook

Heading into 2023, capital markets appear to have priced in a significant global economic slowdown. The key question is whether this deceleration will end in a “soft landing” — with slower but still positive growth — or in a full-fledged recession that drags down earnings. Much depends on the U.S. Federal Reserve and the world’s other major central banks as they continue efforts to bring inflation under control by hiking interest rates and draining liquidity from the markets. Nevertheless, geopolitical risks will remain potential triggers for downside volatility in 2023. Structural factors, such as bank capital requirements that constrain market liquidity, could magnify price movements, both up and down. While there are good reasons for caution in 2023,

Subadvisor: T. Rowe Price Associates
	Taymour Tamaddon, CFA Portfolio Manager BS, Applied Physics, Cornell University; MBA, Finance, Dartmouth

excessive pessimism and volatility can create value for agile investors. In difficult markets, security selection will be critical.

Performance Evaluation

Table of Contents

Growth Fund

Average Annual Total Returns (periods ended 12/31/22)
	1 YR %	5 YR %	10 YR %
Growth Fund	-33.45	7.60	13.22
Russell 1000 Growth Index	-29.14	10.96	14.10

Sector Diversification
	% of Total Investments as of 12/31/22
Information technology	46.2
Health care	21.9
Consumer discretionary	16.0
Communication services	11.7
Industrials	1.7
Consumer staples	1.1
Short-term and other assets	1.4
Total	100.0%

Top 10 Equity Holdings
	% of Total Investments as of 12/31/22
Microsoft Corp.	11.5
Alphabet, Inc.	7.2
Apple, Inc.	6.5
Amazon.com, Inc.	6.5
UnitedHealth Group, Inc.	5.0
Cigna Corp.	4.0
Intuit, Inc.	3.6
Fiserv, Inc.	3.3
Mastercard Inc.	2.8
Visa Inc.	2.6
Total	53.0%

Performance Comparison

Comparison of the change in value of a $10,000 investment in the fund and the Russell 1000 Growth Index made on December 31, 2012.

The returns quoted in the above table and chart represent past performance, which is no guarantee of future results. Current performance may be higher or lower than that shown above. To obtain the most recent month-end returns, please call 800.258.3030 or visit homesteadfunds.com. Returns and the principal value of your investment will fluctuate such that shares, when redeemed, may be worth more or less than their original cost. The Growth Fund’s average annual total returns are net of any fee waivers and reimbursements. The fund's advisor waived a portion of its management fee during the 10-year period. Had the advisor not done so, the fund's total returns would have been lower. The expenses used are as of the most recent period-end and may fluctuate over time. Returns include the reinvestment of dividends and capital gains. Returns do not reflect taxes that the shareholder may pay on fund distributions or the redemption of fund shares. It is not possible to invest directly in an unmanaged index. Index performance does not reflect transaction costs, fees or expenses.

Performance Evaluation

Table of Contents

International Equity Fund

Performance Evaluation _| Prepared by the Fund’s Subadvisor, Harding Loevner LP

Performance

For the one-year period ending December 31, 2022, the fund returned -19.13, trailing its benchmark, the MSCI EAFE Index, which returned -14.45%.

Portfolio Review

The portfolio’s tilt toward more expensive stocks accounts for a significant portion of the fund’s underperformance. Despite our efforts to constrain our holdings of the priciest stocks, over a quarter of the portfolio resides in the most expensive quintile due to the companies’ combination of superior growth prospects and higher quality. We find few companies in the lowest-priced cohort of stocks that meet our criteria for quality and growth and thus have about half the index’s weight there, made up of financial, energy, and mining stocks. Unfortunately, one of them was Russia’s Lukoil, swamping the good-value benefit of the others.

Some of the biggest detractors for the year came from health care. Japanese hematology testing specialist Sysmex struggled with a financially troubled distributor and rolling lockdowns in China, where it had previously enjoyed strong sales growth. Lonza’s stock lagged badly despite good results, while hearing aid maker Sonova Holding suffered from pinched consumers postponing purchases and upgrades.

In energy, the write-down of Russian energy producer Lukoil to zero left us significantly underweight in the only sector to finish the year in positive territory, adding additional pain. Within industrials, our capital goods holdings underperformed. Sweden’s Atlas Copco suffered from proximity to the Russian invasion of Ukraine and consequent economic growth concerns in the first half of the year as well as from falling orders from the semiconductor industry in its vacuum division, although its shares have recently recovered. Meanwhile, several of our Japanese industrials have also suffered from China’s economic slowdown and supply chain disruptions.

Our holdings in financials partially offset these poor returns, with resilient banks and rebounding Asian life insurers performing well. Our large underweight in consumer discretionary also helped relative performance.

Viewed by geography, we had poor stocks in every region except Pacific excluding Japan where Australian miner BHP, Singapore’s DBS Group and Hong Kong insurer AIA stood out. For most regions, the style headwind appears as poor stock selection: We owned too many high-priced shares around the world to beat their value-led markets.

Outlook

An all-too-human reaction to the poor performance of a particular type of asset is often a retroactive call to avoid it completely. Investors, exhibiting hindsight bias, express their regret with a blanket prohibition on the offender, hoping it will protect them from such indignities in the future.

We think it’s best to remain open-minded about sources of potential future returns, even in the face of idiosyncratic risks; history has demonstrated time and again that stocks that may feel “uninvestable” today due to such risks can deliver strong performance tomorrow. Our job is to weigh

Subadvisor: Harding Loevner LP
Ferrill Roll, CFA Co-Lead Portfolio Manager	Babatunde Ojo, CFA Portfolio Manager
Andrew West, CFA Co-Lead Portfolio Manager	Patrick Todd, CFA Portfolio Manager
Bryan Lloyd, CFA Portfolio Manager

those risks against the potential returns. We seek to identify companies with an above-average competitive advantage, prospects for sustainable growth, and a strong balance sheet and blessed with high-quality management. Only about 15% of companies in our benchmark can clear those hurdles. We don’t rule out particular countries or sectors based on top-down forecasts. Not only are those forecasts fallible, but even perfect top-down forecasts are not a reliable guide to future returns. Our preferred tack is to build portfolios that are prepared for anything.

The relative valuations of fast-growth and slow-growth international companies provide a provocative lens into current conditions. The good news for growth-oriented investors is that the valuations for stocks of faster-growing companies, after two years of underperformance, have returned to a more sustainable range. As high-growth stocks become more reasonably priced, we are eyeing them more covetously. For 2023, we think there’s room for us to increase our exposure to the faster-growing stocks, while potentially reducing our holdings in the most stable non-cyclical companies that are slower growing, particularly if other investors seem willing to pay up for their defensive characteristics.

Performance Evaluation

Table of Contents

International Equity Fund

Average Annual Total Returns (periods ended 12/31/22)
	1 YR %	5 YR %	10 YR %
International Equity Fund*	-19.13	3.50	5.64
MSCI^® EAFE^® Index	-14.45	1.54	4.67

Country Diversification
	% of Total Investments as of 12/31/22
Japan	17.7
France	11.7
Switzerland	10.7
Germany	10.0
Sweden	9.4
Britain	7.6
Canada	4.4
Australia	4.1
Hong Kong	3.9
Singapore	3.8
China	2.9
Spain	2.2
Netherlands	2.2
United States of America	1.8
Republic of South Korea	1.2
India	1.0
Denmark	0.9
Taiwan	0.7
Russia	0.0
Brazil, Mexico & Indonesia	1.5
Short-term and other assets	2.3
Total	100.0%

Top 10 Equity Holdings
	% of Total Investments as of 12/31/22
L’Oréal SA	4.0
AIA Group Ltd.	3.9
DBS Group Holdings Ltd.	3.8
BHP Group Ltd. ADR	3.6
Infineon Technologies AG	3.5
Roche Holding AG REG	3.5
Atlas Copco AB	3.4
Schneider Electric SE	3.3
Allianz SE REG	3.2
Rio Tinto PLC	2.8
Total	35.0%

Performance Comparison

Comparison of the change in value of a $10,000 investment in the fund and the MSCI^® EAFE^® Index made on December 31, 2012.

The returns quoted in the above table and chart represent past performance, which is no guarantee of future results. Current performance may be higher or lower than that shown above. To obtain the most recent month-end returns, please call 800.258.3030 or visit homesteadfunds.com. Returns and the principal value of your investment will fluctuate such that shares, when redeemed, may be worth more or less than their original cost. The International Equity Fund’s average annual total returns are net of any fee waivers and reimbursements. The fund's advisor waived a portion of its management fee during the periods shown. Had the advisor not done so, the fund's total returns would have been lower. The expenses used are as of the most recent period-end and may fluctuate over time. Returns include the reinvestment of dividends and capital gains. Returns do not reflect taxes that the shareholder may pay on fund distributions or the redemption of fund shares. It is not possible to invest directly in an unmanaged index. Index performance does not reflect transaction costs, fees or expenses.

*Performance information for the International Equity Fund (formerly the International Value Fund) reflects its performance as an actively managed fund subadvised by Mercator Asset Management through September 14, 2015; as a passively managed portfolio directed by SSGA Funds Management Inc. from September 15, 2015, to January 8, 2016; and, after a transition, as an actively managed fund subadvised by Harding Loevner LP from January 15, 2016, to period-end.

Performance Evaluation

Table of Contents

Small-Company Stock Fund

Performance Evaluation _| Prepared by the Fund’s Investment Advisor, Homestead Advisers Corp.

Performance

The Small-Company Stock Fund returned -16.91%, outperforming its benchmark, the Russell 2000 Index, which returned -20.44%. Outperformance was driven primarily by stock selection.

Portfolio Review

Although performance was negatively affected by sector allocation, good stock selection, particularly in industrials and information technology, led to outperformance for 2022.

Sector allocation was negative due to a large underweighting to the energy sector. The energy sector was the only sector in the Russell 2000 Index to achieve positive performance in 2022. Concerns over potential commodity supply shortages, a more moderate pace of drilling activity and cheap stock valuations drove the sector higher.

Our underweight in staples and utilities, both defensive sectors, also was a drag on performance. Despite concerns over a deteriorating macro backdrop, our overweights in the materials and industrials sectors were both positive to returns.

Stock selection drove our outperformance and was paced by two companies that were acquired during the year. Longtime holding Mantech, a defense contractor, was taken private by Carlyle Group. Maxar Technologies, which is a satellite telecommunication company in the process of launching a new set of satellites, was taken private by Advent International at an over 100% premium to its then closing price. Also contributing to favorable performance was Applied Industrial Technologies, an industrial distributor. It continued to evolve its model to higher-value-added engineering design services, which led to both higher margins and higher returns in 2022.

Negatively affecting performance was Avient, a global supplier of specialized polymers. Despite shifting its portfolio over the past couple of years to more defensive end markets such as health care and consumer, it continued to see weakness in its customers’ orders, leading to a lowering of earnings guidance.

Also hurting performance was NanoString, a life science diagnostic company. Its lack of earnings and concerns about the pace and success of new product launches weighed on the stock. We eliminated the fund’s position in the stock in the fourth quarter.

Lastly, Triumph Group, a turnaround story in the aerospace sector, was negative for performance. Triumph Group reshaped its portfolio to favor its higher margin aerospace systems and supports business; however, its guidance for a pushout of cash flow generation plus concerns over its balance sheet weighed on the stock.

Outlook

Although inflation has been coming down recently, it remains elevated versus the Federal Reserve’s mandate. Consequently, we foresee a continued Fed tightening cycle until it is convinced that inflation remains within its

Investment Advisor: Homestead Advisers*
	Mark Iong, CFA Equity Portfolio Manager BS, Operations Research and Information Engineering, Cornell
	Jim Polk, CFA Head of Equity Investments BA, English, Colby College; MBA, The Olin Graduate School of Business at Babson College

prescribed limits. As in 2022, this could continue to have the effect of compressing valuation multiples for stocks in general and high-growth/high-multiple stocks in particular.

It could also lead to continued volatility in the markets as fear that the Fed that could raise interest rates too much, potentially leading the U.S. into recession, plays out in the market. For long-term investors, we see this volatility as a potential opportunity to find or add to good companies with strong long-term prospects that have become more reasonably priced. We continue to position the portfolio in companies we believe are of higher quality with strong balance sheets and reasonable valuations, which we expect will reward shareholders over the long term.

*	On February 10, 2023, Prabha Carpenter retired from Homestead Advisers and no longer serves as portfolio manager of the Small-Company Stock Fund. In addition, effective February 10, 2023, Mark Iong began serving as portfolio manager of the Small-Company Stock Fund.

Performance Evaluation

Table of Contents

Small-Company Stock Fund

Average Annual Total Returns (periods ended 12/31/22)
	1 YR %	5 YR %	10 YR %
Small-Company Stock Fund	-16.91	2.00	7.47
Russell 2000 Index	-20.44	4.13	9.01

Sector Diversification
	% of Total Investments as of 12/31/22
Industrials	24.3
Financials	17.8
Information technology	16.9
Health care	14.1
Consumer discretionary	8.8
Materials	7.1
Energy	3.5
Real estate	3.4
Communication services	2.1
Short-term and other assets	2.0
Total	100.0%

Top 10 Equity Holdings
	% of Total Investments as of 12/31/22
Applied Industrial Technologies, Inc.	4.1
Atkore Inc.	4.0
Federal Signal Corp.	3.6
Summit Materials, Inc.	3.4
Medpace Holdings, Inc.	3.3
Comfort Systems USA, Inc.	2.9
Descartes Systems Group Inc. (The)	2.9
Glacier Bancorp, Inc.	2.8
Encore Capital Group, Inc.	2.6
Eastern Bankshares, Inc.	2.4
Total	32.0%

Performance Comparison

Comparison of the change in value of a $10,000 investment in the fund and the Russell 2000 Index made on December 31, 2012.

The returns quoted in the above table and chart represent past performance, which is no guarantee of future results. Current performance may be higher or lower than that shown above. To obtain the most recent month-end returns, please call 800.258.3030 or visit homesteadfunds.com. Returns and the principal value of your investment will fluctuate such that shares, when redeemed, may be worth more or less than their original cost. The Small-Company Stock Fund’s average annual total returns are net of any fee waivers and reimbursements. The expenses used are as of the most recent period-end and may fluctuate over time. Returns include the reinvestment of dividends and capital gains. Returns do not reflect taxes that the shareholder may pay on fund distributions or the redemption of fund shares. It is not possible to invest directly in an unmanaged index. Index performance does not reflect transaction costs, fees or expenses.

Performance Evaluation

Table of Contents

Expense Example

As a shareholder, you incur two types of costs: (1) transaction costs; and (2) ongoing costs, including management fees, service fees, and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in each of the Homestead Funds 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 July 1, 2022 and held through December 31, 2022.

Actual Expenses

The first line for each Fund in the table on the following page 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 that 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 the Period” to estimate the expenses you paid on your account during this period.

Individual Retirement Arrangements (IRAs) and Educational Savings Accounts (ESAs) are charged a $15.00 annual custodial fee. The charge is automatically deducted from your account in the fourth quarter of each year or, if you close your account, at the time of redemption. A fee is collected for each IRA or ESA, as distinguished by account type (Traditional IRA, Roth IRA, or ESA) and Social Security Number. For example, if you have both a Traditional IRA and a Roth IRA account, each would be charged a fee. But only one fee would be collected for each account type, regardless of the number of Funds held by each account type. These fees are not included in the example below. If included, the costs shown would be higher.

Hypothetical Example for Comparison Purposes

The second line for each Fund in the table on the following page provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio 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 Funds 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 the custodial account fee. Therefore, the hypothetical information in the example is useful in comparing your ongoing costs only, and will not help you determine the

relative total costs of owning different funds. In addition, if the custodial account fee was included, your costs would have been higher.

Expense Example

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Expense Example (Continued)

Daily Income Fund^b	Beginning Account Value July 1, 2022	Ending Account Value December 31, 2022	Expenses Paid During the Period^a	Annualized Expense Ratio for the Period Ended December 31, 2022
Actual Return	$1,000.00	$1,011.50	$3.04	0.60%
Hypothetical Return (5% return before expenses)	$1,000.00	$1,021.98	$3.06	0.60%

Short-Term Government Securities Fund^b
Actual Return	$1,000.00	$985.80	$3.76	0.75%
Hypothetical Return (5% return before expenses)	$1,000.00	$1,021.22	$3.82	0.75%

Short-Term Bond Fund
Actual Return	$1,000.00	$991.40	$3.65	0.73%
Hypothetical Return (5% return before expenses)	$1,000.00	$1,021.34	$3.70	0.73%

Intermediate Bond Fund^b
Actual Return	$1,000.00	$972.50	$3.98	0.80%
Hypothetical Return (5% return before expenses)	$1,000.00	$1,020.97	$4.08	0.80%

Rural America Growth & Income Fund^b
Actual Return	$1,000.00	$1,017.40	$5.08	1.00%
Hypothetical Return (5% return before expenses)	$1,000.00	$1,019.96	$5.09	1.00%

Stock Index Fund^c
Actual Return	$1,000.00	$1,016.50	$2.44	0.48%
Hypothetical Return (5% return before expenses)	$1,000.00	$1,022.58	$2.44	0.48%

Value Fund
Actual Return	$1,000.00	$1,086.10	$3.25	0.62%
Hypothetical Return (5% return before expenses)	$1,000.00	$1,021.89	$3.15	0.62%

Growth Fund
Actual Return	$1,000.00	$987.10	$4.25	0.85%
Hypothetical Return (5% return before expenses)	$1,000.00	$1,020.73	$4.32	0.85%

International Equity Fund^b
Actual Return	$1,000.00	$1,046.70	$5.15	1.00%
Hypothetical Return (5% return before expenses)	$1,000.00	$1,019.96	$5.09	1.00%

Small-Company Stock Fund
Actual Return	$1,000.00	$1,031.50	$5.50	1.07%
Hypothetical Return (5% return before expenses)	$1,000.00	$1,019.58	$5.47	1.07%

a.	The dollar amounts shown as “Expenses Paid During the Period” are equal to each Fund’s annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the period 184, then divided by 365.
b.	Reflects fee waiver and/or expense reimbursements in effect during the period.
c.	The Stock Index Fund is a feeder fund that invests substantially all of its assets in a Master Portfolio. The example reflects the expenses of both the feeder fund and the Master Portfolio.

Expense Example

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Regulatory and Shareholder Matters

Proxy Voting Policies and Procedures

The policies and procedures used to determine how to vote proxies relating to the Funds’ portfolio securities are available online at homesteadfunds.com and, without charge, upon request by calling 800-258-3030. This information is also available on the Securities and Exchange Commission’s website at sec.gov.

Proxy Voting Record

For the most recent twelve-month period ended June 30, information regarding how proxies relating to portfolio securities were voted on behalf of each of the Funds is available, without charge, upon request by calling 800-258-3030. This information is also available online at homesteadfunds.com and on the Securities and Exchange Commission’s website at sec.gov.

Quarterly Disclosure of Portfolio Holdings

The Funds, other than Daily Income Fund, file complete schedules of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year as an exhibit to their reports on Form N-PORT. The Daily Income Fund files its complete schedule of portfolio holdings with the SEC monthly on Form N-MFP. Portfolio holdings for the second and fourth quarters of each fiscal year are filed as part of the Funds’ semi-annual and annual reports. The Funds’ Form N-PORT, Form N-MFP, semi-annual and annual reports are available on the Commission’s website at sec.gov. The most recent quarterly portfolio holdings and semi-annual and annual reports also can be accessed on the Funds’ website at homesteadfunds.com.

Principal Risks

You may lose money by investing in the Funds. Below are summaries of some, but not all, of the principal risks of investing in one or more of the Funds, each of which could adversely affect a Fund’s NAV, yield and total return. Each risk listed below does not necessarily apply to each Fund, and you should read each Fund’s prospectus carefully for a description of the principal risks associated with investing in a particular Fund.

• Asset-Backed and Mortgage-Backed Securities Risk The risk that defaults, or perceived increases in the risk of defaults, on the obligations underlying asset-backed and mortgage-backed securities, including mortgage pass-through securities and collateralized mortgage obligations (“CMOs”), significant credit downgrades and illiquidity may impair the value of the securities. These securities also present a higher degree of prepayment risk (when repayment of principal occurs before scheduled maturity resulting in the Fund having to reinvest proceeds at a lower interest rate) and extension risk (when rates of repayment of principal are slower than expected, which may lock in a below-market interest rate, increase the security’s duration, and reduce the value of the security) than do other types of fixed income securities. Enforcing

rights against the underlying assets or collateral may be difficult, and the underlying assets or collateral may be insufficient if the issuer defaults.

• Cash Positions Risk A Fund will at times hold some of its assets in cash, which may hurt the Fund’s performance. Cash positions may also subject the Fund to additional risks and costs, such as increased exposure to the custodian bank holding the assets and any fees imposed for large cash balances.

• Commercial Paper Risk Investments in commercial paper are subject to the risk that the issuer cannot issue enough new commercial paper to satisfy its obligations with respect to its outstanding commercial paper, also known as rollover risk. Commercial paper is generally unsecured, which increases the credit risk associated with this type of investment. The value of commercial paper may be affected by changes in the credit rating or financial condition of the issuing entities. The value of commercial paper will tend to fall when interest rates rise and rise when interest rates fall.

• Concentration Risk To the extent the Fund concentrates in a particular industry, it may be more susceptible to economic conditions and risks affecting that industry.

• Convertible Securities Risk Convertible securities may be subordinate to other debt securities issued by the same issuer. Issuers of convertible securities are often not as strong financially as issuers with higher credit ratings. Convertible securities typically provide yields lower than comparable non-convertible securities. Their values may be more volatile than those of non-convertible securities, reflecting changes in the values of the securities into which they are convertible.

• Corporate Bond Risk Corporate debt securities are subject to the risk of the issuer’s inability to meet principal and interest payments on the obligations and may also be subject to price volatility due to factors such as interest rates, market perception of the creditworthiness of the issuer and general market liquidity.

• Currency Risk Foreign currencies may experience steady or sudden devaluation relative to the U.S. dollar or other currencies, adversely affecting the value of the Fund’s investments. The value of the Fund’s assets may be affected favorably or unfavorably by currency exchange rates, currency exchange control regulations, and restrictions or prohibitions on the repatriation of foreign currencies. Because the Fund’s net asset value is determined on the basis of U.S. dollars, if the local currency of a foreign market depreciates against the U.S. dollar, you may lose money even if the foreign market prices of the Fund’s holdings rise.

Regulatory and Shareholder Matters

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Regulatory and Shareholder Matters (Continued)

• Debt Securities Risks

Credit Risk The risk that an issuer or counterparty will fail to pay its obligations to the Fund when they are due. As a result, the Fund’s income might be reduced, the value of the Fund’s investment might fall, and/or the Fund could lose the entire amount of its investment. Changes in the financial condition of an issuer or counterparty, changes in specific economic, social or political conditions that affect a particular type of security or other instrument or an issuer, and changes in economic, social or political conditions generally can increase the risk of default by an issuer or counterparty, which can affect a security’s or other instrument’s credit quality or value and an issuer’s or counterparty’s ability to pay interest and principal when due.

Extension Risk The risk that as interest rates rise, repayments of principal on certain debt securities, including, but not limited to, mortgage-related securities, may occur at a slower rate than expected and the expected maturity of those securities could lengthen as a result. Securities that are subject to extension risk generally have a greater potential for loss when prevailing interest rates rise, which could cause their values to fall sharply.

Income Risk The risk that the Fund’s income may decline due to falling interest rates or other factors. Issuers of securities held by the Fund may call or redeem the securities during periods of falling interest rates, and the Fund would likely be required to reinvest in securities paying lower interest rates. During market conditions in which short-term interest rates are at low levels it is possible that the Fund will generate an insufficient amount of income to pay its expenses, and that it will not be able to pay a daily dividend and may have a negative yield (i.e., it may lose money on an operating basis). It is possible that the Fund would, during these conditions, maintain a substantial portion of its assets in cash, on which it may earn little, if any, income. If an obligation held by the Fund is prepaid, the Fund may have to reinvest the prepayment in other obligations paying income at lower rates.

Interest Rate Risk The risk that debt instruments will change in value because of actual or expected changes in interest rates. The value of an instrument with a longer duration (whether positive or negative) will be more sensitive to changes in interest rates than a similar instrument with a shorter duration. Bonds and other debt instruments typically have a positive duration, which means the value of the debt instrument will generally decline if interest rates increase. The value of debt instruments will also generally decline if inflation increases because the purchasing power of the future income and repaid principal is expected to be worth less when received by the Fund. Inflation rates may change

frequently and significantly as a result of changes in the domestic or global economy or changes in fiscal or monetary policies.

• Depositary Receipts Risk Depositary receipts in which the Fund may invest are receipts listed on U.S. exchanges that are issued by banks or trust companies that entitle the holder to all dividends and capital gains that are paid out on the underlying foreign shares. Investments in depositary receipts may be less liquid than the underlying shares in their primary trading market.

• Derivatives Risk The risk that an investment in derivatives will not perform as anticipated by the Fund’s manager or subadviser, cannot be closed out at a favorable time or price, or will increase the Fund’s volatility; that derivatives may create investment leverage; that, when a derivative is used as a substitute for or alternative to a direct cash investment, the transaction may not provide a return that corresponds precisely with that of the cash investment; or that, when used for hedging purposes, derivatives will not provide the anticipated protection, causing the Fund to lose money on both the derivatives transaction and the exposure the Fund sought to hedge. The counterparty to a derivatives contract may be unable or unwilling to make timely settlement payments, return the Fund’s margin, or otherwise honor its obligations. Changes in regulation relating to a mutual fund’s use of derivatives and related instruments could potentially limit or impact the Fund’s ability to invest in derivatives, limit a Fund’s ability to employ certain strategies that use derivatives and adversely affect the value or performance of derivatives and the Fund.

• Emerging and Frontier Market Risk The risk that investing in emerging and frontier markets will be subject to greater political and economic instability, greater volatility in currency exchange rates, less developed securities markets, possible trade barriers, currency transfer restrictions, a more limited number of potential buyers and issuers, an emerging market country’s dependence on revenue from particular commodities or international aid, less governmental supervision and regulation, unavailability of currency hedging techniques, differences in auditing and financial reporting standards, thinner trading markets, different clearing and settlement procedures and custodial services, and less developed legal systems than in many more developed countries. The securities of emerging market companies may trade less frequently and in smaller volumes than more widely held securities. These risks are generally greater for investments in frontier market countries, which typically have smaller economies or less developed capital markets than traditional emerging market countries.

• Equity Securities Risk Equity securities generally have greater price volatility than fixed-income securities. The market price of equity securities owned by a fund may go up or down, sometimes rapidly or unpredictably. Equity

Regulatory and Shareholder Matters

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Regulatory and Shareholder Matters (Continued)

securities may decline in value due to factors affecting the issuer, equity securities markets generally, particular industries represented in those markets or the issuer itself.

• Financial Markets Regulatory Risk Policy changes by the U.S. government or its regulatory agencies and political events within the United States and abroad may, among other things, affect investor and consumer confidence and increase volatility in the financial markets, perhaps suddenly and to a significant degree, which may adversely impact the Fund’s operations, universe of potential investment options, and return potential.

• Focused Investment Risk A fund that invests a substantial portion of its assets in a particular market, industry, sector, group of industries or sectors, country, region, group of countries or asset class is subject to greater risk than a fund that invests in a more diverse investment portfolio. In addition, the value of such a fund is more susceptible to any single economic, market, political or regulatory or other occurrence affecting, for example, the particular markets, industries, regions, sectors or asset classes in which the fund is invested. This is because, for example, issuers in a particular market, industry, region, sector or asset class may react similarly to specific economic, market, regulatory, political or other developments. The particular markets, industries, regions, sectors or asset classes in which the Fund may focus its investments may change over time and the Fund may alter its focus at inopportune times. For example, the Fund may have a significant portion of its assets invested in securities of companies in the information technology sector. Companies in the information technology sector can be adversely affected by, among other things, intense competition, earnings disappointments, and rapid obsolescence of products and services due to technological innovations or changing consumer preferences. As a matter of fundamental policy, the Intermediate Bond Fund will normally invest at least 25% of its total assets (i.e., concentrate) in mortgage-related assets and asset-backed instruments issued by government agencies or other governmental entities or by private originators or issuers, and other investments that Homestead Advisers considers to have the same primary economic characteristics.

• Foreign Risk Foreign securities are subject to political, regulatory, and economic risks not present in domestic investments and may exhibit more extreme changes in value than securities of U.S. companies. The securities markets of many foreign countries are relatively small, with a limited number of companies representing a small number of industries. In addition, foreign companies often are not subject to the same degree of regulation as U.S. companies. Reporting, legal, accounting and auditing standards of foreign countries differ, in some cases significantly, from U.S. standards. Nationalization, expropriation or confiscatory taxation, currency blockage, political changes or diplomatic developments could

adversely affect the Fund’s investments in a foreign country. In the event of nationalization, expropriation or other confiscation, the Fund could lose its entire investment. Investments in emerging market countries are likely to involve significant risks. These countries are generally more likely to experience political and economic instability.

• Geographic Focus Risk Concentration of the investments of a Fund in issuers located in a particular country or region will subject such Fund, to a greater extent than if investments were less concentrated, to the risks of volatile economic cycles and/or conditions and developments that may be particular to that country or region, such as: adverse securities markets; adverse exchange rates; social, political, regulatory, economic or environmental developments; natural disasters; or the spread of infectious illness or other public health issues.

• Growth Style Risk The risk that returns on stocks within the growth style in which the Fund invests will trail returns of stocks representing other styles or the market overall over any period of time and may shift in and out of favor with investors generally, sometimes rapidly, depending on changes in market, economic, and other factors. Growth stocks can be volatile, as these companies usually invest a high portion of earnings in their business and therefore may lack the dividends of value stocks that can cushion stock prices in a falling market. Also, earnings disappointments often lead to sharply falling prices because investors buy growth stocks in anticipation of superior earnings growth.

• High Yield Securities Risk The risk that debt instruments rated below investment grade or debt instruments that are unrated and determined by Homestead Advisers to be of comparable quality are predominantly speculative. These instruments, commonly known as “junk bonds,” have a higher degree of default risk and may be less liquid than higher-rated bonds. These instruments may be subject to greater price volatility due to such factors as specific corporate developments, interest rate sensitivity, negative perceptions of high yield investments generally, and less secondary market liquidity.

• Illiquid and Restricted Securities Risk Illiquid securities are securities that a Fund reasonably expects cannot be sold or disposed of in current market conditions in seven calendar days or less without the sale or disposition significantly changing the market value of the investment. Depending on the circumstances, illiquid securities may be considered to include securities with legal or contractual restrictions on resale, time deposits, repurchase agreements having maturities longer than seven days and securities that do not have readily available market quotations. In addition, the Fund may invest in securities that are sold in private placement transactions between their issuers and their purchasers and that are neither listed on an exchange nor traded over-the-counter.

Regulatory and Shareholder Matters

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Regulatory and Shareholder Matters (Continued)

Liquidity risk may be the result of, among other things, the lack of an active market. Liquid investments may become illiquid or less liquid after purchase by the Fund, particularly during periods of market turmoil. These factors may have an adverse effect on the Fund’s ability to dispose of particular securities at an advantageous time or price, which may reduce returns, and may limit the Fund’s ability to obtain accurate market quotations for purposes of valuing securities and calculating net asset value and to sell securities at fair value. If the Fund is forced to sell illiquid and relatively less liquid investments to meet redemption requests or for other cash needs, the Fund may suffer a loss. To the extent that a Fund engages in derivative transactions (for example, the Master Portfolio and International Equity Fund) or invests in securities with substantial market and/or credit risk, the Fund will tend to have greater exposure to liquidity risk. In addition, when there is illiquidity in the market for certain securities, the Fund, due to limitations on illiquid investments, may be subject to purchase and sale restrictions. If any privately placed securities held by the Fund are required to be registered under the securities laws of one or more jurisdictions before being resold, the Fund may be required to bear the expenses of registration. Also, a Fund may get only limited information about the issuer of a given restricted security, and therefore may be less able to predict a loss. Certain restricted securities may involve a high degree of business and financial risk and may result in substantial losses to a Fund.

• Index Fund Risk An index fund has operating and other expenses while an index does not. As a result, while a fund will attempt to track its underlying index as closely as possible, it will tend to underperform the index to some degree over time. If an index fund is properly correlated to its stated index, the Fund will perform poorly when the index performs poorly.

• Index-Related Risk There is no assurance that the index provider will compile the underlying index accurately, or that the underlying index will be determined, composed or calculated accurately. Gains, losses or costs associated with index provider errors will be borne by the Fund and its shareholders. Unusual market conditions may cause the index provider to postpone a scheduled rebalance, which could cause the underlying index to vary from its normal or expected composition. The postponement of a scheduled rebalance in a time of market volatility could mean that constituents that would otherwise be removed at rebalance due to changes in market capitalizations, issuer credit ratings, or other reasons may remain, causing the performance and constituents of the underlying index to vary from those expected under normal conditions.

• Investments in Other Investment Companies Risk The risk that an investment company or other pooled investment vehicle in which the Fund invests will not achieve its investment objective or execute its investment

strategies effectively or that significant purchase or redemption activity by shareholders of such an investment company might negatively affect the value of the investment company’s shares. There will be some duplication of expenses because the Fund also must pay its pro-rata share of that investment company’s fees and expenses.

• Investments in Small- and Mid-Size Companies Securities of small and medium-sized companies tend to be more volatile and less liquid than securities of large companies. Compared to large companies, small and medium-sized companies may face greater business risks because they lack the management depth or experience, financial resources, product diversification or competitive strengths of larger companies, and they may be more adversely affected by poor economic conditions. There may be less publicly available information about smaller companies than larger companies. In addition, these companies may have been recently organized and may have little or no track record of success.

• Issuer Risk The risk that the value of a security may decline because of adverse events or circumstances that directly relate to the issuer.

• Large Shareholders and Redemptions Risk The Fund may be adversely affected when a large shareholder purchases or redeems a large amount of shares relative to the size of the Fund, which can occur at any time. Large shareholder transactions can cause the Fund to make investment decisions at inopportune times or prices or miss attractive investment opportunities. In addition, such transactions can also cause the Fund to sell certain assets in order to meet purchase or redemption requests, which could indirectly affect the liquidity of the Fund’s portfolio. A smaller fund can be more adversely affected by large purchases or redemptions.

• Leverage Risk Some transactions may give rise to a form of economic leverage. These transactions may include, among others, derivatives, and may expose the Fund to greater risk and increase its costs. As an open-end investment company registered with the SEC, the Fund is subject to the federal securities laws, including the 1940 Act, the rules thereunder, and various SEC and SEC staff interpretive positions. The use of leverage may cause the Fund to liquidate portfolio positions when it may not be advantageous to do so to satisfy its obligations or to meet any required asset segregation requirements. Increases and decreases in the value of the Fund’s portfolio will be magnified when the Fund uses leverage.

• LIBOR Risk LIBOR is the offered rate for wholesale, unsecured funding available to major international banks. The terms of many investments, financings or other transactions to which the Fund may be a party have been historically tied to LIBOR. LIBOR may also be a significant factor in determining payment obligations under a

Regulatory and Shareholder Matters

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Regulatory and Shareholder Matters (Continued)

derivative investment and may be used in other ways that affect the Fund's investment performance. On March 5, 2021, the U.K. Financial Conduct Authority (FCA) and LIBOR’s administrator, ICE Benchmark Administration (IBA), announced that most LIBOR settings would no longer be published after the end of 2021 and a majority of U.S. dollar LIBOR settings will no longer be published after June 30, 2023. Regulators have established alternate reference rates in recent years and have generally prohibited banking institutions from entering into new contracts that are reliant on LIBOR rates. The transition from and eventual elimination of LIBOR and the terms of any replacement rate(s) may adversely affect transactions that use LIBOR as a reference rate, financial institutions that engage in such transactions, and the financial market generally. As such, the transition away from LIBOR may adversely affect the Fund's performance.

• Limited Operating History Risk The risk that a recently formed fund has a limited operating history to evaluate and may not attract sufficient assets to achieve or maximize investment and operational efficiencies.

• Loan Risk The risks associated with direct loans and participations include, but are not limited to, risks involving the enforceability of security interests and loan transactions, inadequate collateral, liabilities relating to collateral securing obligations, and the liquidity of these loans. The market for loans may be subject to irregular trading activity, wide bid/ask spreads and extended trade settlement periods. The loans in which the Fund invests may be rated below investment grade.

• Manager Risk The risk that the manager's or subadviser’s decisions, including security selection, will cause the Fund to underperform relative to the Fund’s peers. There can be no assurance that the manager's or subadviser’s investment techniques and decisions will produce the desired results. The Fund’s ability to achieve its investment objective is dependent upon the manager's or subadviser’s ability to identify profitable investment opportunities for the Fund. The past experience of the portfolio manager(s), including with other strategies and funds, does not guarantee future results for the Fund.

• Market Capitalization Risk Investing primarily in issuers within the same market capitalization category carries the risk that the category may be out of favor due to current market conditions or investor sentiment. Securities issued by large-cap companies tend to be less volatile than securities issued by smaller companies. However, larger companies may not be able to attain the high growth rates of successful smaller companies, especially during strong economic periods, and may be unable to respond as quickly to competitive challenges.

• Market Risk The risk that markets will perform poorly or that the returns from the securities in which the Fund invests will underperform returns from the general

securities markets or other types of investments. Markets may experience periods of high volatility and reduced liquidity in response to governmental actions or intervention, political, economic or market developments, or other external factors, such as outbreaks of infectious illnesses or other widespread public health issues and outbreaks of war or sanctions in response to military incursions. During those periods, the Fund may experience high levels of shareholder redemptions, and may have to sell securities at times when the Fund would otherwise not do so, and potentially at unfavorable prices. Certain securities may be difficult to value during such periods. These risks may be heightened for fixed income securities in low interest rate environments.

• Master/Feeder Structure Risk The Stock Index Fund pursues its objective by investing substantially all of its assets in another pooled investment vehicle (a “master fund”). The ability of the Fund to meet its investment objective is directly related to the ability of the master fund to meet its investment objective. The Fund will bear its pro rata portion of the expenses incurred by the master fund. Substantial redemptions by other investors in a master fund may affect the master fund’s investment program adversely and limit the ability of the master fund to achieve its objective.

• Money Market Fund Risk Although the Daily Income Fund seeks to preserve the value of your investment at $1.00 per share, you may lose money by investing in the Fund. The share price of Money market funds can fall below the $1.00 share price. The Fund’s sponsor has no legal obligation to provide financial support to the Fund, and you should not rely on or expect that the sponsor will enter into support agreements or take other actions to provide financial support to the Fund or maintain the Fund’s $1.00 share price at any time. The credit quality of the Fund’s holdings can change rapidly in certain markets, and the default of a single holding could have an adverse impact on the Fund’s share price. The Fund’s share price can also be negatively affected during periods of high redemption pressures, illiquid markets, and/or significant market volatility. While the Board of Directors may implement procedures to impose a fee upon the sale of your shares or temporarily suspend your ability to sell shares in the future if the Fund’s liquidity falls below required minimums because of market conditions or other factors, the Board has not elected to do so at this time. Should the Board elect to do so, such change would only become effective after shareholders were provided with specific advance notice of the change in the Fund’s policy and provided with the opportunity to redeem their shares in accordance with Rule 2a-7 before the policy change became effective.

• Money Market Securities Risk The value of a money market instrument typically will decline during periods of rising interest rates, and can also decline in response to

Regulatory and Shareholder Matters

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Regulatory and Shareholder Matters (Continued)

changes in the financial condition of the issuer, borrower, counterparty, or underlying collateral assets, or changes in market, economic, industry, political, and regulatory conditions affecting a particular type of security or issuer or fixed income securities generally. Money market funds are not designed to offer capital appreciation. Certain money market funds may impose a fee upon the sale of shares or may temporarily suspend the ability of investors to redeem shares if such fund’s liquidity falls below required minimums, which may adversely affect the Fund’s returns or liquidity.

• Municipal Bond Risk Factors unique to the municipal bond market may negatively affect the value of the Fund’s investment in municipal bonds. The Fund may invest in a group of municipal obligations that are related in such a way that an economic, business, or political development affecting one would also affect the others. In addition, the municipal bond market, or portions thereof, may experience substantial volatility or become distressed, and individual bonds may go into default, which would lead to heightened risks of investing in municipal bonds generally. The ability of municipalities to meet their obligations will depend on the availability of tax and other revenues, economic, political and other conditions within the state and municipality, and the underlying fiscal condition of the state and municipality.

• Operational and Cybersecurity Risk A Fund, its service providers, including its adviser, Homestead Advisers, and subadvisers, as applicable, and other market participants increasingly depend on complex information technology and communications systems to conduct business functions. These systems are subject to a number of different threats or risks that could adversely affect a Fund and its shareholders, despite the efforts of the Fund and its service providers to adopt technologies, processes and practices intended to mitigate these risks.

For example, unauthorized third parties may attempt to improperly access, modify, disrupt the operations of or prevent access to these systems or data within them (a “cyber-attack”), whether systems of the Fund, its service providers, counterparties or other market participants. Power or communications outages, acts of god, information technology equipment malfunctions, operational errors and inaccuracies within software or data processing systems may also disrupt business operations or impact critical data. Market events also may occur at a pace that overloads current information technology and communication systems and processes of the Fund, its service providers or other market participants, impacting the ability to conduct a Fund’s operations.

Cyber-attacks, disruptions or failures that affect the Fund’s service providers or counterparties may adversely affect a Fund and its shareholders, including by causing losses for the Fund or impairing Fund operations. For example, a Fund’s service providers’ assets or sensitive or

confidential information may be misappropriated, data may be corrupted and operations may be disrupted (e.g., cyber-attacks or operational failures may cause the release of private shareholder information or confidential Fund information, interfere with the processing of shareholder transactions, impact the ability to calculate the Fund’s NAV and impede trading). In addition, cyber-attacks, disruptions or failures may cause reputational damage and subject a Fund’s service providers to regulatory fines, litigation costs, penalties or financial losses, reimbursement or other compensation costs, and/or additional compliance costs. While the Fund and its service providers may establish business continuity and other plans and processes to address the possibility of cyber-attacks, disruptions or failures, there are inherent limitations in such plans and systems, including that they do not apply to third parties, such as other market participants, as well as the possibility that certain risks have not been identified or that unknown threats may emerge in the future. The Fund and its service providers may also incur substantial costs for cybersecurity risk management, including insurance, in order to prevent or mitigate future cyber security incidents, and the Fund and its shareholders could be negatively impacted as a result of such costs.

Similar types of operational and technology risks are also present for issuers of securities or other instruments in which the Fund invests, which could result in material adverse consequences for such issuers, and may cause a Fund’s investments to lose value. In addition, cyber-attacks involving a Fund’s counterparty could affect such counterparty’s ability to meet its obligations to the Fund, which may result in losses to the Fund and its shareholders. Furthermore, as a result of cyber-attacks, disruptions or failures, an exchange or market may close or issue trading halts on specific securities or the entire market, which may result in a Fund being, among other things, unable to buy or sell certain securities or unable to accurately price its investments. The Fund cannot directly control any cybersecurity plans and systems put in place by its service providers, Fund counterparties, issuers in which a Fund invests, or securities markets and exchanges.

• Participation Notes Risk The International Equity Fund may invest in participation notes to gain exposure to certain markets in which it cannot invest directly. Participation notes are generally traded over-the-counter. Participation notes are issued by banks, or broker-dealers, or their affiliates and are designed to replicate the return of a particular underlying equity or debt security, currency, or market. When the participation note matures, the issuer of the participation note will pay to, or receive from, a Fund the difference between the nominal value of the underlying instrument at the time of purchase and that instrument’s value at maturity. Participation notes involve the same risks associated with a direct investment in the underlying security, currency, or market that they seek to

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replicate. Investing in a participation note also exposes a Fund to the risk that the bank or broker-dealer that issues the certificate will not fulfill its contractual obligation to timely pay a Fund the amount owed under the certificate. In addition, a Fund has no rights under participation notes against the issuer(s) of the underlying security(ies) and must rely on the creditworthiness of the issuer(s) of the participation notes. In general, the opportunity to sell participation notes to a third party will be limited or nonexistent.

• Passive Investment Risk Because BlackRock Fund Advisors does not select the individual companies in the Index that the Master Portfolio tracks, the Master Portfolio may hold securities of companies that present risks that an investment adviser researching individual securities might otherwise seek to avoid.

• Portfolio Turnover Risk The risk that frequent purchases and sales of portfolio securities may result in the realization of taxable capital gains (including short-term capital gains), which are generally taxable at ordinary income rates to shareholders subject to tax when distributed by the Fund.

• Preferred Securities Risk The risk that: (i) certain preferred stocks contain provisions that allow an issuer under certain conditions to skip or defer distributions; (ii) preferred stocks may be subject to redemption, including at the issuer’s call, and, in the event of redemption, the Fund may not be able to reinvest the proceeds at comparable or favorable rates of return; (iii) preferred stocks are generally subordinated to bonds and other debt securities in an issuer’s capital structure in terms of priority for corporate income and liquidation payments; and (iv) preferred stocks may trade less frequently and in a more limited volume and may be subject to more abrupt or erratic price movements than many other securities.

• Repurchase Agreements Risk The Fund’s investment return on repurchase agreements will depend on the counterparty’s willingness and ability to perform its obligations under a repurchase agreement. If the Fund’s counterparty should default on its obligations, becomes subject to a bankruptcy or other insolvency proceeding or if the value of the collateral is insufficient, the Fund could (i) experience delays in recovering cash or the securities sold (and during such delay the value of the underlying securities may change in a manner adverse to the fund) and/or (ii) lose all or part of the income, proceeds or rights in the securities to which the Fund would otherwise be entitled.

• Restricted Securities Risk The Fund may hold securities that are restricted as to resale under the U.S. federal securities laws. There can be no assurance that a trading market will exist at any time for any particular restricted security. Limitations on the resale of these securities may prevent the Fund from disposing of them promptly at

reasonable prices or at all. The Fund may have to bear the expense of registering the securities for resale and the risk of substantial delays in effecting the registration. Also, restricted securities may be difficult to value because market quotations may not be readily available, and the values of restricted securities may have significant volatility.

• Rural America Investment Risk Because the Rural America Growth & Income Fund focuses its investments in companies tied economically to rural America, the Fund will be more susceptible to changes in rural American economic conditions, including, without limitation, those resulting from: the cyclicality of revenues and earnings associated with agribusinesses, unemployment rates, availability and quality of healthcare, changing consumer tastes, domestic and international competition, severe weather conditions and climate change, and the development of new infrastructure and related technologies. In the past, rural American populations have experienced deflation and instability in their financial institutions, and there can be no assurance that such difficulties will not resurface. Rural American economies may experience low demands for capital and low interest rate environments, and, as a result, investments in fixed income instruments in these regions may be subject to greater interest rate risk than are those in urban or suburban regions. Domestic trade restrictions and U.S. government tax and fiscal policies may have negative effects on rural American economies. Changes in any of the agribusiness value chain, infrastructure development, industrial transportation, consumer products and services, financial services, healthcare, or technology sectors could have a material negative impact on the Fund’s investments. For example, the retirement of coal generation assets, the expansion of broadband service, the implementation of more restrictive environmental laws and regulations and any additional increases in interest rates in these regions may all impact the performance of the Fund’s investments.

• Securities Lending Risk The Master Portfolio’s securities lending involves the risk that the borrower may fail to return the securities in a timely manner or at all. As a result, the Master Portfolio may lose money and there may be a delay in recovering the loaned securities. The Master Portfolio could also lose money if it does not recover the securities and/or the value of the collateral falls, including the value of investments made with cash collateral. These events could trigger adverse tax consequences for the Master Portfolio.

• Sovereign Debt Obligations Risk The risk that investments in debt obligations of sovereign governments may lose value due to the government entity’s unwillingness or inability to repay principal and interest when due in accordance with the terms of the debt or otherwise in a timely manner. Sovereign governments may

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default on their debt obligations for a number of reasons, including social, political, economic and diplomatic changes in countries issuing sovereign debt. The Fund may have limited (or no) recourse in the event of a default because bankruptcy, moratorium and other similar laws applicable to issuers of sovereign debt obligations may be substantially different from those applicable to private issuers, and any recourse may be subject to the political climate in the relevant country. In addition, foreign governmental entities may enjoy various levels of sovereign immunity, and it may be difficult or impossible to bring a legal action against a foreign governmental entity or to enforce a judgment against such an entity. Holders of certain foreign government debt securities may be requested to participate in the restructuring of such obligations and to extend further loans to their issuers. There can be no assurance that the foreign government debt securities in which the Fund may invest will not be subject to similar restructuring arrangements or to requests for new credit, which may adversely affect the Fund’s holdings.

• Tracking Error Risk Tracking error is the divergence of an index fund’s performance from that of the underlying index. Tracking error may occur because of differences between the securities and other instruments held in the Fund’s portfolio and those included in the Index, pricing differences, transaction costs incurred by the Fund, the Fund’s holding of uninvested cash, differences in timing of the accrual of dividends or interest, tax gains or losses, changes to the Index or the need of the Fund or Master Portfolio to meet various new or existing regulatory requirements. This risk may be heightened during times of increased market volatility or other unusual market conditions. Tracking error also may result because the Fund incurs fees and expenses, while the Index does not.

• U.S. Government Securities Risk The risk that the value of U.S. Government securities can decrease due to changes in interest rates, statutory debt limit negotiations, default or changes to the financial condition or credit rating of the U.S. Government.

• Value Style Risk The risk that returns on stocks within the value style in which the Fund invests will trail returns of stocks representing other styles or the market overall over any period of time and may shift in and out of favor with investors generally, sometimes rapidly, depending on changes in market, economic, and other factors. Investments in value securities may be subject to risks that (1) the issuer’s potential business prospects will not be realized; (2) their potential values will never be recognized by the market; and (3) their value was appropriately priced when acquired and they do not perform as anticipated.

• Variable and Floating-Rate Securities Risk The value of these securities may decline if their interest rates do not rise as much, or as quickly, as other interest rates. Conversely, these securities will not generally increase in value to the same extent as other fixed income securities, or at all, if interest rates decline.

• When-Issued, TBA and Delayed Delivery Securities Risk The Fund may purchase securities on a when-issued, TBA or delayed delivery basis and may purchase securities on a forward commitment basis. The purchase price of the securities is typically fixed at the time of the commitment, but delivery and payment can take place a month or more after the date of the commitment. The prices of the securities so purchased or sold are subject to market fluctuations. At the time of delivery of the securities, the value may be more or less than the purchase or sale price. Purchase of securities on a when-issued, TBA, delayed delivery, or forward commitment basis may give rise to investment leverage, and may result in increased volatility of the Fund's net asset value. Default by, or bankruptcy of, a counterparty to a when-issued, TBA or delayed delivery transaction would expose the Fund to possible losses because of an adverse market action, expenses or delays in connection with the purchase or sale of the pools specified in such transaction. Recently finalized rules of the Financial Industry Regulatory Authority, Inc. (FINRA) include mandatory margin requirements for the TBA market with limited exceptions. TBA trades historically have not been required to be collateralized. The rule is currently in effect and additional revisions will go into effect April 24, 2023.

Board Considerations in Approving the Investment Management Agreement and Sub-Advisory Agreement

Homestead Funds, Inc. (the “Corporation”) and Homestead Funds Trust (the “Trust”, and together with the Corporation, “Homestead”) have each entered into investment management agreements (the “Investment Management Agreements”) with Homestead Advisers Corp. (“Homestead Advisers”), pursuant to which Homestead Advisers is responsible for the day-to-day management of the following series of the Corporation: the Daily Income Fund, the Short-Term Government Securities Fund, the Short-Term Bond Fund, the Value Fund, the Growth Fund, the International Equity Fund and the Small-Company Stock Fund and the following series of the Trust: the Intermediate Bond Fund and the Rural America Growth & Income Fund (each series, a “Fund” and, collectively, the “Funds”)¹.

Homestead Advisers has entered into subadvisory agreements (the “Sub-advisory Agreements” and, together with the Investment Management Agreements, the “Agreements”) with T. Rowe Price Associates, Inc. (“T. Rowe Price”), Harding Loevner LP (“Harding Loevner”) and Invesco Advisers, Inc.

¹	Homestead Advisers serves as an administrator to the Stock Index Fund pursuant to an administrative services agreement with that Fund and does not currently serve as the Fund’s investment adviser.

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(“Invesco”), on behalf of the Growth Fund, the International Equity Fund, and the Daily Income Fund, respectively, pursuant to which T. Rowe Price, Harding Loevner, and Invesco are responsible for the day-to-day management of the assets of such Funds. Each of Homestead Advisers, T. Rowe Price, Harding Loevner, and Invesco is an “Adviser” and are collectively referred to as the “Advisers.”

The Board of Directors of the Corporation and the Board of Trustees of the Trust (together, the “Board” and their members, “Directors”) held a joint video conference meeting on August 11, 2022 (the “August Meeting”), at which they gave preliminary consideration to information bearing on the consideration of the Agreements. The Independent Directors, who are not “interested persons” (as defined in the Investment Company Act of 1940, as amended) of the Funds (the “Independent Directors”), and their independent legal counsel had previously met separately in an executive session held via video conference on August 8, 2022 (the “August Executive Session”), to discuss the materials received. During the August Executive Session the Independent Directors also reviewed and discussed with their independent legal counsel various key aspects of the Independent Directors’ legal responsibilities relating to the proposed continuation of the Agreements, as addressed in a memorandum prepared by independent legal counsel and provided in advance of the meeting. Following the August Executive Session and the August Meeting, the Independent Directors requested certain supplemental information from each Adviser. At its regularly scheduled quarterly meeting held in person on September 14-15, 2022 (the “September Meeting”), following the receipt of additional information and discussion at an executive session of the Independent Directors and independent counsel to the Independent Directors, at which no representative of the Advisers were present initially, but joined subsequently by invitation, the Board, with the Independent Directors voting separately, approved the continuation of the Agreements with respect to the Funds for an additional one-year period.

Prior to the August Meeting, the Independent Directors requested that the Advisers provide the Board information they deemed reasonably necessary for their consideration of the Agreements. Pursuant to this request, the Advisers provided the Board with, and the Board, including the Independent Directors, considered and discussed, information regarding, among other things:

• The level of the advisory fees that Homestead Advisers charges a Fund compared with the fees charged to comparable mutual funds and compared with those of Homestead Advisers’ non-investment company clients and the level of subadvisory fees that T. Rowe Price, Harding Loevner and Invesco receive with respect to the Growth Fund, the International Equity Fund and the Daily Income Fund, respectively, and compared with the advisory and/or subadvisory fees charged by T. Rowe Price, Harding Loevner and Invesco to other clients;

• Each Fund’s overall fees and operating expenses compared with similar mutual funds;

• Each Fund’s performance compared with similar mutual funds;

• The investment management and other services the Advisers provide the Funds, including each Adviser’s compliance program;

• The Advisers’ investment management personnel; and

• Homestead Advisers’ financial condition and profitability in connection with managing the Funds.

The Board also reviewed information provided by Broadridge Financial Solutions, Inc. (“Broadridge”), an information service provider unaffiliated with the Advisers, comparing each Fund’s advisory fee rate, net total expenses, operating expenses and performance to those of other similar open-end funds selected by Broadridge.

The Board also met over the course of the year with investment advisory personnel from Homestead Advisers and regularly reviewed detailed information, presented both orally and in writing, regarding the investment program, performance and operations of each Fund. The Advisers also presented additional information to the Board regarding the Funds. The Board then considered whether any further discussion or review was necessary, concluding that the information reviewed by the Board and the Independent Directors and their independent counsel prior to and at the September Meeting provided a sufficient basis for taking action on the continuation of the Agreements with respect to each Fund for an additional year.

Accordingly, the Board’s determination to approve the continuance of the Agreements was made on the basis of each Director’s business judgment after an evaluation of the information provided to the Board, both at the August and September Meetings and at prior meetings. In reaching their determinations relating to the continuation of the Agreements, the Board, including the Independent Directors, considered all factors they believed relevant, including the factors discussed below. Individual Directors may have attributed different weights to the various factors and assigned various degrees of materiality to information received in connection with the approval process. No single factor was determined to be decisive. In particular, the Board focused on the following:

Nature, Extent and Quality of Services. The Board considered the nature, extent and quality of the services the Advisers provide to the applicable Funds and the resources the Advisers dedicate to the Funds. In this regard, the Board evaluated, among other things, each Adviser’s personnel, experience, track record, compliance program and, with respect to Homestead Advisers, oversight of the Funds’ other service providers, including T. Rowe Price, Harding Loevner and Invesco in their capacity as subadvisers to the Growth

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Fund, the International Equity Fund and the Daily Income Fund, respectively. The Board considered information concerning the investment philosophy and investment processes used by the Advisers in managing the Funds. In this context, the Board also considered the managerial and financial resources available to the Advisers and concluded that they would be sufficient to meet any reasonably foreseeable obligations under the current Agreements. The Board considered each Adviser’s assessment of its ability to attract and retain capable personnel and succession planning processes with respect to the leadership of the Funds’ portfolio management teams. The Board considered the quality of the services provided by the Advisers and the quality of the resources available to the Funds. The Board further considered each Adviser’s experience and reputation and the professional qualifications of its personnel. The Board noted, in particular, that Homestead Advisers had made significant enhancements to its investment team in recent years and had made additional investments in personnel and technology to service existing shareholders in recent years.

The Board also considered that the Investment Management Agreements require Homestead Advisers to oversee the administration of all aspects of the Funds’ business and affairs and to provide certain services required for effective administration of the Funds.

On the basis of these considerations as well as others and in the exercise of their business judgment, the Board concluded that the nature, extent and quality of services provided by the Advisers to the Funds supported the continuation of the Agreements for an additional one-year period.

Investment Performance of the Funds. The Board reviewed reports provided by Broadridge that compared each Fund’s performance record (trailing annualized net total returns) for the one-, three-, five- and ten-year periods ended March 31, 2022, as applicable, against a group of funds within a category as assigned by Morningstar, Inc. (a “Peer Group”) and the Fund’s relevant benchmark index for the same time periods. In addition, the Board reviewed Morningstar Direct reports that compared each Fund’s performance record for the one-, three-, five- and ten-year periods ended December 31, 2021, as applicable, against each Fund’s benchmark index and/or Peer Group, as applicable. The Board also considered Homestead Advisers’ and the Subadvisers’ performance and reputation generally, and Homestead Advisers’ evaluation of the Subadvisers’ contribution to each Fund’s broader investment mandate.

In the case of each Fund that had performance that lagged that of its Peer Group or benchmark for certain (although not necessarily all) periods, the Board concluded that other factors relevant to performance supported continuation of the advisory arrangements. These factors included, among other factors, that the Fund’s more recent or long-term performance, as applicable, was competitive when compared to relevant performance benchmarks or peer

groups. The Board also noted that there had been meetings with members of each Fund’s portfolio management team on a regular basis during the prior year to discuss each Fund’s performance and related matters.

With respect to each Fund, the Board concluded that the Fund’s performance (including absolute performance and, where applicable, outperformance of peers and relevant benchmarks over long-term periods) and/or other relevant factors supported continuation of the Agreements.

Among other information, the Board took into account the following information regarding each individual Fund’s performance:

Daily Income Fund

The Board noted that the Fund underperformed its benchmark index for the one-, three-, five- and ten-year periods ended March 31, 2022. The Board considered that the Fund performed at the median of the Fund’s Peer Group for the one-year period and underperformed the median for the three-, five- and ten-year periods ended March 31, 2022. The Board observed Homestead Advisers’ statement that the Fund was an important part of the investment line-up for the Funds’ shareholder base and the cooperatives that are in that base, noting that changes to the Fund’s investment process, such as the addition of repurchase agreement counterparties by Invesco in the coming year, could help improve Fund performance. The Board also noted that Invesco began providing subadvisory services to the Fund on May 1, 2021.

Short-Term Government Securities Fund

The Board noted that the Fund outperformed its benchmark index for the one-year period and underperformed its benchmark index for the three-, five- and ten-year periods ended March 31, 2022. The Board considered that the Fund underperformed the median of the Fund’s Peer Group for the one-year period and outperformed the median for the three-, five- and ten-year periods ended March 31, 2022.

Short-Term Bond Fund

The Board noted that the Fund outperformed its benchmark index for the one- and ten-year periods, underperformed its benchmark index for the three-year period and performed equal to its benchmark index for the five-year period ended March 31, 2022. The Board considered that the Fund underperformed the median of the Fund’s Peer Group for the one-, three- and five-year periods and outperformed the median for the ten-year period ended March 31, 2022.

Intermediate Bond Fund

The Board noted that the Fund outperformed its benchmark index for the one-year period ended March 31, 2022. The Board considered that the Fund outperformed the median of the Fund’s Peer Group for the one-year period ended March 31, 2022.

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Rural America Growth & Income Fund

The Board noted that the Fund underperformed its custom blended benchmark index, a 60/40 mix between equity and fixed income indexes, for the period from the Fund’s inception to March 31, 2022. The Board considered that the Fund underperformed the median of the Fund’s Peer Group for the period from the Fund’s inception to March 31, 2022.

Value Fund

The Board noted that the Fund underperformed its benchmark index for the one-year period and outperformed its benchmark index for the three-, five- and ten-year periods ended March 31, 2022. The Board considered that the Fund underperformed the median of the Fund’s Peer Group for the one-year period and outperformed the median for the three-, five- and ten-year periods ended March 31, 2022.

Growth Fund

The Board noted that the Fund underperformed its benchmark index for the one-, three-, five- and ten-year periods ended March 31, 2022. The Board considered that the Fund underperformed the median of the Fund’s Peer Group for the one- and three-year periods and outperformed the median for the five- and ten-year periods ended March 31, 2022.

International Equity Fund

The Board noted that the Fund underperformed its benchmark index for the one-year period and outperformed its benchmark index for the three-, five- and ten-year periods ended March 31, 2022. The Board considered that the Fund outperformed the median of the Fund’s Peer Group for the one-, three-, five- and ten-year periods ended March 31, 2022.

Small-Company Stock Fund

The Board noted that the Fund outperformed its benchmark index for the one- and three-year periods and underperformed its benchmark index for the five- and ten-year periods ended March 31, 2022. The Board considered that the Fund underperformed the median of the Fund’s Peer Group for the one-, five- and ten-year periods and outperformed the median for the three-year period ended March 31, 2022. The Board observed the Fund’s underperformance for certain periods, noting that that performance had improved subsequent to Homestead Advisers taking steps to support and enhance the investment resources available to the portfolio management team (in addition to expanding the investment team).

Comparative Fees and Expense Ratios. The Board reviewed comparative fees and the costs of services provided under each of the Agreements. The Board considered the net total expense ratio, contractual advisory fees, net operating expense ratio and other expense information for each Fund

provided by Broadridge as compared against the Fund’s peer group identified by Morningstar, Inc. (“Expense Group”). The Board noted that the Funds are not currently subject to Rule 12b-1 fees and that the expense information provided by Broadridge included comparisons of the Funds’ net total expense ratios with those of their Expense Group peers both inclusive and exclusive of 12b-1 fees.

The Board concluded that the fees payable by the Funds to Homestead Advisers are reasonable in relation to the nature and quality of the services provided. In reaching this conclusion, the Board compared the fees payable by the Funds to the fees paid by other mutual funds that are in the same Expense Group. The Board also considered the fees Homestead Advisers receives from, and the scope of services it provides to, other Homestead Advisers clients, including its separate account and unified managed account clients, noting the significantly broader scope of services that Homestead Advisers provides to the Funds as compared to the other types of clients. In reaching their conclusion, the Board also took into account the costs and risks assumed by Homestead Advisers in connection with launching and maintaining publicly-offered mutual funds, and how those costs and risks differ from those associated with other components of Homestead Advisers’ business. The Board also considered the high level of customer service Homestead Advisers provides to shareholders. With respect to the total net expense ratios for certain of the Funds, the Board noted that the current net asset levels impacted the expense ratios for the Funds, and that expense ratios would be expected to decline as assets increase.

Among other information, the Board took into account the following information regarding particular Fund expense information:

Daily Income Fund

The Board noted that the Fund’s contractual management fee as of December 31, 2021 was higher than the median contractual management fee of the Expense Group and its total net expense ratio as of December 31, 2021 ranked in the 1st quintile of the Fund’s Expense Group (excluding Rule 12b-1/non-12b-1 service fees). The Board considered that the Fund reduced its contractual management fee effective May 1, 2021. The Board also considered the effect of peer funds’ fee waivers on those funds’ fee levels as compared to the Fund’s. The Board considered Homestead Advisers’ implementation of contractual fee caps and voluntary fee waivers (subject to certain excluded expenses).

The Board considered the fees paid to Invesco under the current Sub-advisory Agreement. This information included comparison of the Daily Income Fund’s subadvisory fee to that charged by Invesco to other accounts with a similar investment objective to the Fund, as well as the current management fee paid to Homestead Advisers under the existing Investment Management Agreement. The Board also

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took into account the anticipated demands, complexity and quality of the investment management of the Fund. The Board noted that Homestead Advisers, and not the Fund, is responsible for paying the fees charged by Invesco. The Board noted Homestead Advisers’ and Invesco’s representations about the services each provide to the Daily Income Fund. Based on these and other considerations, the Board concluded that the subadvisory fee payable by Homestead Advisers to Invesco is reasonable in relation to the nature and quality of the services provided.

Short-Term Government Securities Fund

Short-Term Bond Fund

The Board noted that the Fund’s contractual management fee as of December 31, 2021 was higher than the median contractual management fee of the Expense Group and its total net expense ratio as of December 31, 2021 ranked in the 5th quintile of the Fund’s Expense Group (excluding Rule 12b-1/non-12b-1 service fees). The Board considered that the Fund added fee breakpoints to its contractual management fee effective January 1, 2023 and considered Homestead Advisers’ implementation of contractual fee caps (subject to certain excluded expenses).

Intermediate Bond Fund

The Board noted that the Fund’s contractual management fee as of December 31, 2021 was higher than the median contractual management fee of the Expense Group and its total net expense ratio as of December 31, 2021 ranked in the 5th quintile of the Fund’s Expense Group (excluding Rule 12b-1/non-12b-1 service fees). The Board also noted the Fund’s breakpoint fee schedule and considered Homestead Advisers’ implementation of contractual fee caps (subject to certain excluded expenses).

Rural America Growth & Income Fund

The Board noted that the Fund’s contractual management fee as of December 31, 2021 was below the median contractual management fee of the Expense Group and its total net expense ratio as of December 31, 2021 ranked in the 2nd quintile of the Fund’s Expense Group (excluding Rule 12b-1/non-12b-1 service fees). The Board also noted the Fund’s breakpoint fee schedule and considered Homestead Advisers’ implementation of contractual fee caps (subject to certain excluded expenses).

Value Fund

The Board noted that the Fund’s contractual management fee as of December 31, 2021 was below the median contractual management fee of the Expense Group and its total net expense ratio as of December 31, 2021 ranked in the 1st quintile of the Fund’s Expense Group (excluding Rule 12b-1/non-12b-1 service fees). The Board also noted the Fund’s breakpoint fee schedule and considered Homestead Advisers’ implementation of contractual fee caps (subject to certain excluded expenses).

Growth Fund

The Board considered the fees paid to T. Rowe Price under the current Sub-advisory Agreement. This information included comparison of the Growth Fund’s subadvisory fee to that charged by T. Rowe Price to other accounts with a similar investment objective to the Fund, as well as the current management fee paid to Homestead Advisers under the existing Investment Management Agreement. The Board also took into account the anticipated demands, complexity and quality of the investment management of the Fund. The Board noted that Homestead Advisers, and not the Fund, is responsible for paying the fees charged by T. Rowe Price. The Board noted Homestead Advisers’ and T. Rowe Price’s representations about the services each provide to the Growth Fund. Based on these and other considerations, the Board concluded that the subadvisory fee payable by Homestead Advisers to T. Rowe Price is reasonable in relation to the nature and quality of the services provided.

International Equity Fund

The Board considered the fees paid to Harding Loevner under the current Sub-advisory Agreement. This information included a representation from Harding Loevner that the subadvisory fees for its other clients are not materially different from the Fund’s subadvisory fee and are each individually negotiated. The Board also took into account

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the anticipated demands, complexity and quality of the investment management of the Fund. The Board noted that Homestead Advisers, and not the Fund, is responsible for paying the fees charged by Harding Loevner. The Board noted Homestead Advisers’ and Harding Loevner’s representations regarding the services each provides to the International Equity Fund. Based on these and other considerations, the Board concluded that the subadvisory fee payable by Homestead Advisers to Harding Loevner is reasonable in relation to the nature and quality of the services provided.

Small-Company Stock Fund

The Board noted that the Fund’s contractual management fee as of December 31, 2021 was below the median contractual management fee of the Expense Group and its total net expense ratio as of December 31, 2021 ranked 12 out of 14 (5th quintile) of the Fund’s Expense Group (excluding Rule 12b-1/non-12b-1 service fees). The Board considered the Fund’s lower net asset level in recent years, relative to previous years, which resulted in certain expenses being allocated across a smaller asset base. The Board also noted the Fund’s breakpoint fee schedule and considered Homestead Advisers’ implementation of contractual fee caps (subject to certain excluded expenses).

After reviewing these and related factors, the Board concluded, within the context of their overall conclusions regarding the Agreements, that the fees to be charged to the Funds were fair and reasonable, and that the anticipated costs of these services supported the approval of the Agreements.

Cost of Services and Profits Realized by the Advisers. The Board considered the cost of the services provided by Homestead Advisers. The Board reviewed the information provided by Homestead Advisers concerning its profitability from the fees received from and the services provided to the Funds and the financial condition of Homestead Advisers for various past periods. The Board considered the profit margin information for Homestead Advisers’ investment company business as a whole, as well as Homestead Advisers’ profitability data for the Funds. The Board reviewed Homestead Advisers’ assumptions and methods of cost allocation used in preparing Fund-specific profitability data. The Board also considered the basis for Homestead Advisers’ belief that its methods of allocation were reasonable.

The Board considered their discussion with representatives of Homestead Advisers about the fees being charged to the Funds and considered the other administrative, compliance and shareholder services provided by Homestead Advisers to the Funds. The Board considered the Funds’ increased regulatory requirements. The Board noted and discussed the additional services provided by Homestead Advisers to the Funds compared to other investment products managed by Homestead Advisers, and noted that, in the cases of the Growth Fund, the International Equity Fund and the Daily

Income Fund, Homestead Advisers, and not the Fund, would pay the subadvisory fees to the subadvisers. The Board determined that Homestead Advisers should be entitled to earn a reasonable level of profits for the services it provides to the Funds. In light of the foregoing, the Board, including the Independent Directors, determined that the management fees were reasonable in relation to the wide array of services provided to the Funds.

The Board considered the compensation to be received by T. Rowe Price, Harding Loevner and Invesco from their relationship with the Growth Fund, the International Equity Fund and the Daily Income Fund, respectively, and considered the information on profitability provided by T. Rowe Price and Invesco. The Board noted that Homestead Advisers would continue to pay each subadviser from the management fees received from the Funds, and that the agreements were negotiated at arm’s length between Homestead Advisers and the subadvisers.

Economies of Scale. The Board considered the extent to which economies of scale would be realized as the Funds grow, and whether fee levels reflect these economies of scale for the benefit of each Fund’s shareholders. The Board also considered whether those economies of scale were shared with the Fund through breakpoints in investment management fees or other means, such as expense limitation arrangements and additional investments by Homestead Advisers in investment, trading, compliance and other resources. The Board noted that the Intermediate Bond Fund, Rural America Growth & Income, Value Fund, Growth Fund, Small-Company Stock Fund, International Equity Fund and as of January 1, 2023, the Short-Term Bond Fund, include breakpoints in their fee schedules, though some Fund assets have not yet reached the necessary levels to qualify for a lower fee rate. The Board was satisfied that the current fee structure was appropriate at this time.

Fall-Out Benefits. Additionally, the Board considered “fall-out benefits” to the Advisers, such as research, statistical and quotation services the Advisers may receive from broker-dealers executing the Funds’ portfolio transactions on an agency basis.

CONCLUSION

On the basis of these considerations as well as others and in the exercise of their business judgment, on September 15, 2022 the Board, including the Independent Directors, voted unanimously to approve the continuation of the Agreements for an additional one-year period.

Regulatory and Shareholder Matters

Table of Contents

Report of Independent Registered Public Accounting Firm

To the Board of Directors of Homestead Funds, Inc. and the Board of Trustees of Homestead Funds Trust and Shareholders of Daily Income Fund, Short-Term Government Securities Fund, Short-Term Bond Fund, Stock Index Fund, Value Fund, Growth Fund, International Equity Fund, Small-Company Stock Fund, Intermediate Bond Fund and Rural America Growth & Income Fund.

Opinions on the Financial Statements

We have audited the accompanying statements of assets and liabilities, including the portfolios of investments, of Daily Income Fund, Short-Term Government Securities Fund, Short-Term Bond Fund, Stock Index Fund, Value Fund, Growth Fund, International Equity Fund and Small-Company Stock Fund (constituting Homestead Funds, Inc.), Intermediate Bond Fund and Rural America Growth & Income Fund (constituting Homestead Funds Trust) (hereafter collectively referred to as the "Funds") as of December 31, 2022, the related statements of operations and of changes in net assets for each of the periods indicated in the table below, including the related notes, and the financial highlights for each of the periods indicated in the table below (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Funds as of December 31, 2022, the results of each of their operations, the changes in each of their net assets, and each of the financial highlights for each of the periods indicated in the table below, in conformity with accounting principles generally accepted in the United States of America.

Fund	Statement of Operations	Statement of change in net assets	Financial Highlights
Daily Income Fund	For the year ended December 31, 2022	For the years ended December 31, 2022 and 2021	For the years ended December 31, 2022, 2021, 2020, 2019, and 2018
Short-Term Government Securities Fund
Short-Term Bond Fund
Stock Index Fund
Value Fund
Growth Fund
International Equity Fund
Small-Company Stock Fund
Intermediate Bond Fund	For the year ended December 31, 2022	For the years ended December 31, 2022 and December 31, 2021	For the years ended December 31, 2022, 2021, and 2020, and the period May 1, 2019 (inception) to December 31, 2019
Rural America Growth & Income Fund	For the year ended December 31, 2022	For the year ended December 31, 2022 and the period ended from May 1, 2021 (inception) to December 31, 2021	For the year ended December 31, 2022, and the period ended from May 1, 2021 (inception) to December 31, 2021

Basis for Opinion

These financial statements are the responsibility of the Funds’ management. Our responsibility is to express an opinion on the Funds’ financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2022 by correspondence with the custodians and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinions.

Washington, DC

February 27, 2023

We have served as the auditor of one or more investment companies in Homestead Funds group of investment companies since 2001.

Report of Independent Registered Public Accounting Firm

Table of Contents

Portfolio of Investments

Daily Income Fund _| December 31, 2022

U.S. Government & Agency Obligations \| 81.2% of portfolio
	Interest Rate / Yield	Maturity Date	Face Amount	Value
Federal Farm Credit Bank	4.34%(a)	05/19/23	$1,000,000	$1,000,000
Federal Farm Credit Bank	4.33(a)	06/14/23	500,000	500,000
Federal Farm Credit Bank	4.32(a)	06/23/23	500,000	499,990
Federal Farm Credit Bank	4.33(a)	09/18/23	500,000	500,000
Federal Farm Credit Bank	4.34(a)	09/20/23	1,000,000	1,000,000
Federal Farm Credit Bank	4.35(a)	09/29/23	1,000,000	1,000,000
Federal Farm Credit Bank	4.36(a)	11/07/23	500,000	500,000
Federal Farm Credit Bank	4.34(a)	12/15/23	500,000	499,976
Federal Farm Credit Bank	4.34(a)	01/04/24	500,000	500,000
Federal Farm Credit Bank	4.36(a)	01/10/24	500,000	500,000
Federal Farm Credit Bank	4.34(a)	01/25/24	500,000	500,000
Federal Farm Credit Bank	4.34(a)	02/05/24	1,000,000	1,000,000
Federal Farm Credit Bank	4.35(a)	02/20/24	500,000	500,000
Federal Farm Credit Bank	4.35(a)	03/15/24	500,000	500,000
Federal Farm Credit Bank	4.34(a)	03/18/24	1,500,000	1,500,000
Federal Farm Credit Bank	4.35(a)	04/25/24	500,000	500,000
Federal Farm Credit Bank	4.35(a)	05/24/24	1,000,000	1,000,000
Federal Farm Credit Bank	4.40(a)	08/08/24	500,000	500,000
U.S. Treasury Bill	4.07	01/03/23	14,000,000	13,996,891
U.S. Treasury Bill	4.10	01/17/23	6,000,000	5,989,280
U.S. Treasury Bill	4.20	01/24/23	2,000,000	1,994,741
U.S. Treasury Bill	4.10	01/26/23	6,000,000	5,983,333
U.S. Treasury Bill	4.18	01/31/23	6,000,000	5,979,515
U.S. Treasury Bill	4.15	02/02/23	12,000,000	11,956,782
U.S. Treasury Bill	4.08	02/07/23	10,000,000	9,958,940
U.S. Treasury Bill	4.22	02/09/23	8,000,000	7,964,293
U.S. Treasury Bill	4.16	02/14/23	10,000,000	9,950,219
U.S. Treasury Bill	4.26	02/16/23	4,000,000	3,978,763
U.S. Treasury Bill	4.32	02/23/23	5,000,000	4,968,936
U.S. Treasury Bill	4.30	02/28/23	4,000,000	3,973,062
U.S. Treasury Bill	4.39	03/02/23	4,000,000	3,971,433
U.S. Treasury Bill	4.40	03/07/23	4,000,000	3,969,089
U.S. Treasury Bill	4.38	03/09/23	5,000,000	4,960,265
U.S. Treasury Bill	4.38	03/16/23	2,000,000	1,982,446
U.S. Treasury Bill	4.53	03/28/23	500,000	494,744
U.S. Treasury Bill	4.46	03/30/23	4,000,000	3,957,467
U.S. Treasury Bill	4.56	04/04/23	3,000,000	2,965,668
U.S. Treasury Bill	4.53	04/11/23	2,000,000	1,975,556
U.S. Treasury Bill	4.57	04/18/23	3,000,000	2,960,410
U.S. Treasury Bill	4.55	04/25/23	5,000,000	4,929,938
U.S. Treasury Bill	4.68	05/02/23	4,000,000	3,939,839
U.S. Treasury Bill	3.03	07/13/23	1,000,000	984,340
U.S. Treasury Bill	4.13	10/05/23	1,000,000	968,066
U.S. Treasury Bill	4.78	11/30/23	500,000	478,933
U.S. Treasury Note	4.51(a)	01/31/23	6,000,000	6,000,120
U.S. Treasury Note	4.49(a)	04/30/23	4,100,000	4,100,059
U.S. Treasury Note	4.49(a)	07/31/23	3,500,000	3,500,018
U.S. Treasury Note	4.49(a)	10/31/23	5,500,000	5,500,080
U.S. Treasury Note	4.44(a)	01/31/24	500,000	499,907
U.S. Treasury Note	4.38(a)	04/30/24	3,000,000	2,997,278
U.S. Treasury Note	4.50(a)	07/31/24	4,500,000	4,496,333
U.S. Treasury Note	4.60(a)	10/31/24	2,500,000	2,497,497
Total U.S. Government & Agency Obligations
(Cost $167,324,207)				167,324,207

Portfolio of Investments

The accompanying notes are an integral part of these financial statements.

Table of Contents

Portfolio of Investments

Short-Term Government Securities Fund _| December 31, 2022

U.S. Government & Agency Obligations \| 66.6% of portfolio
	Interest Rate / Yield	Maturity Date	Face Amount	Value
Export-Import Bank of the U.S.	1.90%	07/12/24	$553,286	$539,958
Export-Import Bank of the U.S.	1.73	09/18/24	1,355,844	1,314,169
Export-Import Bank of the U.S.	1.58	11/16/24	95,085	91,860
Export-Import Bank of the U.S.	2.54	07/13/25	128,682	124,517
Export-Import Bank of the U.S.	2.33	01/14/27	191,249	175,144
Private Export Funding Corp.	1.75	11/15/24	1,000,000	941,120
U.S. Department of Housing & Urban Development	5.77	08/01/26	46,000	46,049
U.S. International Development Finance Corp.	2.22(a)	01/24/25	2,000,000	2,023,021
U.S. International Development Finance Corp.	1.27(a)	06/21/25	1,000,000	941,345
U.S. International Development Finance Corp.	0.00(b)	07/17/25	1,000,000	909,456
U.S. International Development Finance Corp.	0.00(b)	01/17/26	700,000	691,167
U.S. International Development Finance Corp.	1.11	05/15/29	928,571	826,340
U.S. International Development Finance Corp.	2.36	10/15/29	1,608,382	1,472,913
U.S. International Development Finance Corp.	1.05	10/15/29	1,608,382	1,403,082
U.S. International Development Finance Corp.	1.24	08/15/31	1,418,919	1,233,346
U.S. Treasury Note	4.25	09/30/24	9,400,000	9,351,898
U.S. Treasury Note	0.25	07/31/25	15,880,000	14,329,839
U.S. Treasury Note	4.25	10/15/25	1,891,000	1,889,523
U.S. Treasury Note	4.50	11/15/25	805,000	809,843
U.S. Treasury Note	0.38	11/30/25	1,000,000	894,453
U.S. Treasury Note	3.88	11/30/27	785,000	780,707
U.S. Treasury Note	0.75	01/31/28	5,533,000	4,704,779
Total U.S. Government & Agency Obligations
(Cost $47,643,580)				45,494,529

Corporate Bonds Guaranteed by Export-Import Bank of the United States \| 25.8% of portfolio

Consumer Discretionary \| 0.1%
Ethiopian Leasing (2012) LLC	2.68	07/30/25	52,212	50,551
Total Consumer Discretionary				50,551
Energy \| 8.4%
Petroleos Mexicanos	2.38	04/15/25	405,250	391,619
Petroleos Mexicanos	2.46	12/15/25	520,500	497,058
Reliance Industries Ltd.	2.06	01/15/26	1,892,800	1,806,284
Reliance Industries Ltd.	1.87	01/15/26	2,438,947	2,320,425
Reliance Industries Ltd.	2.44	01/15/26	766,316	735,897
Total Energy				5,751,283
Financials \| 17.3%
CES MU2 LLC	1.99	05/13/27	1,481,066	1,382,394
Durrah MSN 35603	1.68	01/22/25	423,015	408,120
DY8 Leasing LLC	2.63	04/29/26	145,833	139,730
DY9 Leasing LLC	2.37	03/19/27	525,411	494,198
Export Lease Eleven Co. LLC	4.69(c)	07/30/25	51,695	51,505
Helios Leasing II LLC	2.67	03/18/25	1,312,279	1,273,175
HNA 2015 LLC	2.29	06/30/27	217,658	203,738
HNA 2015 LLC	2.37	09/18/27	128,749	120,485
KE Export Leasing 2013-A LLC	5.01(c)	02/25/25	1,395,932	1,391,260
Lulwa Ltd.	1.89	02/15/25	842,896	813,369
Lulwa Ltd.	1.83	03/26/25	266,298	255,632
MSN 41079 and 41084 Ltd.	1.72	07/13/24	1,339,525	1,297,852
MSN 41079 and 41084 Ltd.	1.63	12/14/24	358,775	346,054
Osprey Aircraft Leasing LLC	2.21	06/21/25	93,376	89,851
Penta Aircraft Leasing 2013 LLC	1.69	04/29/25	440,801	423,352
Pluto Aircraft Leasing LLC	4.74(c)	02/07/23	242,419	242,348

Portfolio of Investments

The accompanying notes are an integral part of these financial statements.

Table of Contents

Portfolio of Investments _| Short-Term Government Securities Fund _| December 31, 2022 _|

(Continued)

Corporate Bonds Guaranteed by Export-Import Bank of the United States \| 25.8% of portfolio (Continued)
	Interest Rate /Yield	Maturity Date	Face Amount	Value
Financials \| 17.3% (Continued)
Rimon LLC	2.45%	11/01/25	$135,000	$129,894
Salmon River Export LLC	2.19	09/15/26	643,129	611,335
Sandalwood 2013 LLC	2.84	07/10/25	205,022	199,279
Sandalwood 2013 LLC	2.82	02/12/26	273,638	263,453
Santa Rosa Leasing LLC	1.69	08/15/24	102,374	99,727
Santa Rosa Leasing LLC	1.47	11/03/24	180,351	174,219
Thirax 1 LLC	0.97	01/14/33	1,725,806	1,419,412
Total Financials				11,830,382
Total Corporate Bonds Guaranteed by Export-Import Bank of the United States
(Cost $18,725,600)				17,632,216
Asset-Backed Securities \| 3.1% of portfolio

American Credit Acceptance Receivables Trust 22-1A (d)	0.99	12/15/25	61,335	60,901
Avant Loans Funding Trust 22-REV1 (d)	6.54	09/15/31	150,000	146,452
Credit Acceptance Auto Loan Trust 20-3A (d)	1.24	10/15/29	203,750	199,543
First Investors Auto Owner Trust 21-2A (d)	0.48	03/15/27	75,409	72,920
GLS Auto Receivables Trust 21-3A (d)	0.42	01/15/25	19,994	19,890
GLS Auto Receivables Trust 21-4 (d)	0.84	07/15/25	66,560	65,654
Gracie Point International Fund 21-1 (d)	4.87(c)	11/01/23	205,921	205,456
LAD Auto Receivables Trust 21-1 (d)	1.30	08/17/26	121,970	118,531
Oasis Securitisation 21-1A (d)	2.58	02/15/33	38,335	37,775
Oasis Securitisation 21-2A (d)	2.14	10/15/33	133,950	130,628
Oasis Securitisation 22-2A (d)	6.85	10/15/34	310,141	308,494
PenFed Auto Receivables Owner Trust 22-A (d)	3.83	12/16/24	250,000	248,175
SBA Tower Trust (d)	2.84	01/15/25	250,000	235,629
United Auto Credit Securitization Trust 22-1A (d)	1.11	07/10/24	34,436	34,294
Upstart Securitization Trust 21-3 (d)	0.83	07/20/31	43,201	42,308
Westgate Resorts 22-1A (d)	2.29	08/20/36	225,137	211,750
Total Asset-Backed Securities
(Cost $2,193,322)				2,138,400
Corporate Bonds–Other \| 1.6% of portfolio

Financials \| 1.6%
Bank of America Corp.	4.83(c)	07/22/26	200,000	197,663
J.P. Morgan Chase & Co.	1.04(c)	02/04/27	100,000	86,987
Main Street Capital Corp.	3.00	07/14/26	415,000	357,649
Owl Rock Capital Corp. III (d)	3.13	04/13/27	250,000	205,798
Owl Rock Core Income Corp. (d)	3.13	09/23/26	250,000	212,741
Total Financials				1,060,838
Total Corporate Bonds–Other
(Cost $1,214,639)				1,060,838
Mortgage-Backed Securities \| 1.1% of portfolio

GNMA 21-8	1.00	01/20/50	543,709	424,749
GNMA CK0445	4.00	02/15/52	365,604	347,810
Total Mortgage-Backed Securities
(Cost $883,302)				772,559

The accompanying notes are an integral part of these financial statements.

Portfolio of Investments

Table of Contents

Portfolio of Investments _| Short-Term Government Securities Fund _| December 31, 2022 _|

(Continued)

Municipal Bond \| 0.1% of portfolio
	Interest Rate /Yield	Maturity Date	Face Amount	Value
New York \| 0.1%
Suffolk County New York	1.05%	06/15/23	$100,000	$98,405
Total New York				98,405
Total Municipal Bond
(Cost $100,000)				98,405

Money Market Fund \| 1.7% of portfolio
		Shares
State Street Institutional U.S. Government Money Market Fund Premier Class	4.12(e)	1,161,168	1,161,168
Total Money Market Fund
(Cost $1,161,168)			1,161,168
Total Investments in Securities
(Cost $71,921,611) \| 100.0%			$68,358,115

(a)	Interest is paid at maturity.
(b)	Zero coupon rate, purchased at a discount.
(c)	Variable coupon rate as of December 31, 2022.
(d)	Security was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be resold in transactions exempt from registration, normally to qualified institutional buyers. The securities have been determined to be liquid under criteria established by the Fund's Board of Directors. The total of such securities at period-end amounts to $2,556,939 and represents 3.7% of total investments.
(e)	7-day yield at December 31, 2022.

LLC -Limited Liability Company

Portfolio of Investments

The accompanying notes are an integral part of these financial statements.

Table of Contents

Portfolio of Investments

Short-Term Bond Fund _| December 31, 2022

U.S. Government & Agency Obligations \| 51.4% of portfolio
	Interest Rate / Yield	Maturity Date	Face Amount	Value
U.S. International Development Finance Corp.	0.67%(a)	04/23/29	$1,230,000	$1,130,782
U.S. International Development Finance Corp.	2.36	10/15/29	679,541	622,306
U.S. International Development Finance Corp.	1.05	10/15/29	977,092	852,372
U.S. Treasury Note	4.25	09/30/24	64,290,000	63,961,016
U.S. Treasury Note	4.50	11/30/24	1,030,000	1,030,040
U.S. Treasury Note	0.25	07/31/25	86,090,000	77,686,136
U.S. Treasury Note	4.25	10/15/25	52,892,000	52,850,678
U.S. Treasury Note	4.50	11/15/25	779,000	783,686
U.S. Treasury Note	3.88	11/30/27	46,832,000	46,575,888
Total U.S. Government & Agency Obligations
(Cost $249,701,596)				245,492,904

Corporate Bonds–Other \| 26.1% of portfolio

Communication Services \| 0.5%
Magallanes, Inc. (b)	3.76	03/15/27	1,355,000	1,220,217
Sprint Spectrum Co. LLC (b)	4.74	03/20/25	1,125,000	1,111,737
Total Communication Services				2,331,954
Consumer Discretionary \| 1.0%
Daimler Trucks Financial N.A. LLC (b)	1.63	12/13/24	1,500,000	1,392,058
Daimler Trucks Financial N.A. LLC (b)	3.50	04/07/25	1,255,000	1,203,890
US Airways 2013 1A PTT	3.95	05/15/27	2,662,986	2,418,809
Total Consumer Discretionary				5,014,757
Consumer Staples \| 1.1%
7-Eleven, Inc. (b)	0.63	02/10/23	1,000,000	994,874
7-Eleven, Inc. (b)	0.80	02/10/24	1,090,000	1,037,266
7-Eleven, Inc. (b)	0.95	02/10/26	800,000	700,636
Philip Morris International Inc.	5.13	11/15/24	1,150,000	1,151,520
Philip Morris International Inc.	5.00	11/17/25	460,000	462,067
Philip Morris International Inc.	5.13	11/17/27	805,000	810,879
Total Consumer Staples				5,157,242
Energy \| 2.3%
Cheniere Corpus Christi Holdings LLC	5.13	06/30/27	2,000,000	1,975,856
Energy Transfer Operating LP	2.90	05/15/25	2,900,000	2,731,060
Midwest Connector Capital Co. LLC (b)	3.90	04/01/24	3,270,000	3,166,138
Phillips 66 Co.	1.30	02/15/26	1,500,000	1,343,790
Pioneer Natural Resources Co.	1.13	01/15/26	1,023,000	911,807
Targa Resources Corp.	5.20	07/01/27	985,000	965,430
Total Energy				11,094,081
Financials \| 14.0%
Antares Holdings LP	3.95	07/15/26	335,000	289,723
Antares Holdings LP	2.75	01/15/27	1,000,000	801,075
Bank of America Corp.	2.46(c)	10/22/25	2,200,000	2,078,686
Bank of America Corp.	2.02(c)	02/13/26

Money Market Fund \| 18.8% of portfolio
	Interest Rate /Yield	Shares	Value
State Street Institutional U.S. Government Money Market Fund Premier Class	4.12%(b)	38,676,504	$38,676,504
Total Money Market Fund
(Cost $38,676,504)			38,676,504
Total Investments in Securities
(Cost $206,000,711) \| 100.0%			$206,000,711