Patricia Murphy, CFA money market portfolio manager Patricia Murphy has been the portfolio manager of the Daily Income Fund since she joined RE Advisers in 1997. She is also director of pension investments for NRECA.

Fund Descriptions
Daily Income Fund

"I manage this Fund to keep a stable price of $1.00 per share and to generate a competitive level of current income,” portfolio manager Patricia Murphy says.

Ms. Murphy invests Fund assets in short-term debt securities that will mature in about a year or less. “These are instruments with high credit ratings, including short-term securities issued by U.S. Government agencies and high-quality commercial paper issued by corporations,” she explains.

This Fund carries the lowest risk of all the Homestead Funds and is suitable for conservative investors. The Fund’s share price is expected  — although not guaranteed — to remain constant at $1.00. However, the level of dividend income earned will fluctuate with changes in short-term interest rates.

Performance

The tables below show the Fund's average annual and year-to-date total returns for various holding periods and the Fund's current yield. The bar chart shows the Fund's annual return in each of the last 10 years or for each year since the Fund's inception. This indicates how widely performance has varied year-by-year.

Annualized seven-day effective yield on 01/02/09

0.74%

Daily Income Fund Historical Annual Total Returns

The total returns shown above represent past performance which does not guarantee future results. Investment return and principal value of an investment will fluctuate. An investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data quoted. An investment in the Daily Income Fund is not insured or guaranteed by the FDIC or any other government agency. While this Fund seeks to maintain a constant $1.00 per share price, it is possible to lose money by investing in this Fund.

Portfolio Composition

The following table shows how the Daily Income Fund is diversified and what its top holdings are.

Daily Income Fund Security Diversification
On 09/30/08 On 06/30/08 Commercial paper 74.8%  71.5% U.S. Government obligations  11.9%  13.4% Corporate bonds  3.4% 6.1% Cash equivalents    9.9% 9.0% Total 100% 100%

AVERAGE WEIGHTED MATURITY on 01/02/09

23 days

Fund assets on 12/31/08

$181,890,000

Distributions

If this Fund has declared income or capital gains distributions in the current year, they will be listed in the table below.  See Track Earnings Distributions for the Fund's distribution schedule. Distributions for the prior calendar year are also shown below.

Daily Income Fund 2008 Earnings Distributions

Distribution Type Declaration Date $/Per Share Ordinary Income 01/31/08 $0.0033 Ordinary Income 02/29/08 $0.0025 Ordinary Income 03/31/08 $0.0023 Ordinary Income 04/30/08 $0.0018 Ordinary Income 05/31/08 $0.0018 Ordinary Income 06/30/08 $0.0016 Ordinary Income 07/31/08 $0.0016 Ordinary Income 08/31/08 $0.0016 Ordinary Income 09/30/08 $0.0015 Ordinary Income 10/31/08 $0.0015 Ordinary Income 11/30/08 $0.0010 Ordinary Income 12/31/08 $0.0007

Daily Income Fund 2007 Earnings Distributions

Distribution Type Declaration Date $/Per Share Ordinary Income 01/31/07 $0.0039 Ordinary Income 02/28/07 $0.0036 Ordinary Income 03/31/07 $0.0039 Ordinary Income 04/30/07 $0.0038 Ordinary Income 05/31/07 $0.0039 Ordinary Income 06/30/07 $0.0038 Ordinary Income 07/31/07 $0.0039 Ordinary Income 08/31/07 $0.0039 Ordinary Income 09/30/07  $0.0038 Ordinary Income 10/31/07  $0.0037  Ordinary Income 11/30/07  $0.0035  Ordinary Income 12/31/07   $0.0036

Share Price History

This table shows how widely the Fund’s share price has fluctuated over time.

Daily Income Fund Share Price History

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Year End $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00  $1.00 Year High $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00  $1.00 Year Low $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00  $1.00