Exhibit a(7)

ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
HOMESTEAD FUNDS, INC.

FIRST:

The Board of Directors ("Board") of Homestead Funds, Inc., a Maryland Corporation ("Corporation") organized on June 29, 1990, has, by action on August 29, 2002, changed the name of the series of the Corporation heretofore known as "Small Company Stock Fund" to "Small-Company Stock Fund".

SECOND:

The renaming described herein was approved by unanimous action of the entire Board of Directors of the Corporation. The actions described herein are limited to changes expressly permitted by Section 2-605 of the Corporations and Associations Article to be made without action by the shareholders.

THIRD:

The Corporation is registered with the U.S. Securities and Exchange Commission as an open-end investment company under the Investment Company Act of 1940.

FOURTH:

These Articles of Amendment shall be effective as of December 31, 2002.

IN WITNESS WHEREOF, these Articles of Amendment have been signed and acknowledged below by the President and attested to by the Vice-President of the Corporation under penalties of perjury on this 19th day of December, 2002.

Homestead Funds, Inc.

                                            By: /s/Peter R. Morris
                                                -------------------------------
                                                Peter R. Morris
                                                President
                                                Homestead Funds, Inc.

Attest:

By: /s/Denise Trujillo
    ----------------------------------
    Denise Trujillo
    Vice-President
    Homestead Funds, Inc.

I, Hope Saxton, Secretary for the Corporation, being duly sworn, do hereby verify under penalties of perjury that the above Articles of Amendment were approved by unanimous action of the entire Board of Directors of the Corporation at a meeting held August 29, 2002 and do hereby certify under penalties of perjury the matters and facts set forth in the Articles of Amendment with respect to authorization and approval.

/s/Hope Saxton
------------------------------
Hope Saxton
Secretary
Homestead Funds, Inc.

Exhibit d(1)

INVESTMENT MANAGEMENT AGREEMENT

Investment Management Agreement, made as of the 26th day of September, 2003, by and between Homestead Funds, Inc., a Maryland corporation (the "Company"), on behalf of the Daily Income Fund (the "Fund"), and RE Advisers Corporation, a Virginia corporation (the "Investment Manager").

WHEREAS, the Company engages in business as an open-end management investment company and is registered as such under the Investment Company Act of 1940, as amended (the "1940 Act"); and

WHEREAS, the Company is a series type investment company currently consisting of eight series, the Daily Income Fund, the Value Fund, the Short-Term Bond Fund, the Short-Term Government Securities Fund, the Small-Company Stock Fund, the Stock Index Fund, the Nasdaq-100 Index Tracking Stock(SM) Fund, and the International Stock Index Fund, each with its own investment program, policies, and investment objectives, and restrictions; and

WHEREAS, the Investment Manager is engaged principally in the business of rendering investment management services and registered as an investment manager under the Investment Advisers Act of 1940, as amended; and

WHEREAS, the Company retained the Investment Manager pursuant to an Investment Management Agreement dated as of September 17, 1990 and desires to continue to retain the Investment Manager to render investment management services (i.e. investment advisory and administrative services) to it on behalf of the Fund in the manner and on the terms and conditions hereinafter set forth, amending and restating the Investment Management Agreement dated as of September 17, 1990;

NOW THEREFORE, the parties hereto agree as follows:

1. Duties and Responsibilities of the Investment Manager.

1.1 Investment Advisory Services. The Investment Manager shall act as the investment manager to the Fund and shall, subject to the supervision of the Company's Board of Directors, provide the following investment advisory services: (i) formulate and implement a continuing program for the management of the assets and resources of the Fund in a manner consistent with the Fund's investment objectives, investment program, policies and restrictions, that may be amended and updated, for time to time, to reflect changes in financial and economic conditions; (ii) make all determinations with respect to the investment of the Fund's assets in accordance with applicable law and the Fund's investment objectives, investment program, policies, and restrictions as provided in the Company's Prospectus and Statement of Additional Information, as amended from time to time, provisions of the Internal Revenue Code of 1986, as amended, relating to

regulated investment companies, and such other limitations as the Board of Directors of the Company my impose by notice in writing to the Investment Manager; (iii) make all determinations as to the purchase and sale of portfolio securities, including advising the Board of Directors as to certain matters involving the Fund's portfolio securities that are not in the nature of investment decisions; (iv) obtain and evaluate such business and financial information relating to the economy, industries, businesses, securities markets, and securities as it may deem necessary or useful in discharging its responsibilities under this Agreement; (v) furnish the Board of Directors with periodic reports concerning the Investment Manager's economic outlook and investment strategy, as well as information concerning the Fund's portfolio activity and investment performance; (vi) determine the creditworthiness of the issuers, obligers, or guarantors of money market and debt securities utilized by the Fund; and (vii) evaluate the creditworthiness of any entities with which the Fund proposes to engage in repurchase transactions. In furtherance of this duty, the Investment Manager, as agent and attorney-in-fact with respect to the Fund, is authorized, in its discretion and without prior consultation with the Fund and the Board of Directors of the Company to buy, sell, exchange, convert for the Fund's use, and otherwise trade in any money market instruments' bonds, and other securities or assets, and to select the broker-dealers, underwriters or issuers to be used and to place orders and negotiate commissions (if any) for the execution of transactions in securities with or through such broker-dealers, underwriters, or Issuers.

1.2 Administrative services. In addition to investment advisory services set forth above in 1.1, the Investment Manager shall oversee the administration of all aspects of the Company's business and affairs with respect to the Fund and shall provide certain services required for effective administration of the Company with respect to the Fund, in connection therewith, the Investment Manager shall:

1.2.1 Office and Other Facilities. Furnish, without cost to the company, or provide and pay the cost of, such office facilities, furnishings, and office equipment as are adequate for the Company's needs.

1.2.2 Personnel. Provide, without additional remuneration from or other cost to the Company, the services of individuals competent to perform all of the Company's executive, administrative, compliance, and clerical functions that are not covered by 2.2.9 below or performed by or through employees or other persons or agents engaged by the Company (including, e.g., the custodian, accounting services agent, transfer agent, dividend disbursing agent and shareholder servicing agent).

1.2.3 Agents. Assist the Company in selecting, coordinating the activities of, supervising, and acting as liaison with any persons and agents engaged by the Company, including the Company's custodian, accounting services agent, transfer agent, dividend disbursing agent, shareholder servicing agent, independent accountants, and independent legal counsel. The Investment Manager shall also monitor the functions of such persons and agents including, in particular, the accounting services agent in its evaluation of the Fund's portfolio securities.

1.2.4 Directors and Officers. Authorize and permit the Investment Manager's directors, officers and employees who may be elected or appointed as directors or officers of the Company to serve in such capacities, without remuneration from or additional cost to the Company.

1.2.5 Books and Records. Ensure that all financial, accounting, corporate, and other records required to be maintained and preserved by the Company or on its behalf will be maintained in accordance with applicable laws and regulations and that the Company's corporate existence will be maintained.

1.2.6 Reports to the Company. Furnish to or place at the disposal of the Company such information, reports, evaluations, analyses, and opinions relating to its administrative functions as the Company may, at any time or from time to time, reasonably request or as the Investment Manager may deem helpful to the Company.

1.2.7 Reports and Findings. Assist in the development and preparation of all reports and communications by the Company to the Fund's shareholders and all reports and filings necessary to maintain the registrations and qualifications of the Company's shares under federal and state law.

2. Allocation of Expenses.

2.1 Expenses Paid by Investment Manager.

2.1.1 Salaries and Fees of Directors and Officers. As between the Fund and the Investment Manager, the Investment Manager shall pay all salaries, expenses and fees, if any of the directors, officers or employees of the Investment Manager who are directors, officers, or employees of the Company. The Investment Manager has obtained such personnel through an agreement with National Rural Electric Cooperative Association, which has primary responsibility for the salaries, expenses and fees of persons provided to serve as directors, officers and employees of the Investment Manager.

2.1.2 Waiver or Assumption and Reimbursement of the Company's Expenses by Investment Manager. The Waiver of assumption and reimbursement by the Investment Manager of any expense of the Company that the Investment Manager is not required by this Agreement to waive, or assume and reimburse, shall not obligate the Investment Manager to waive, or assume or reimburse, the same or any similar expense of the Company on any subsequent occasion, unless required pursuant to a separate agreement between the Company and the Investment Manager.

2.1.3 Organizational Expenses. The Investment Manager shall pay or assume all organizational expenses of the Company.

2.2 Expenses paid by the Company. The Company with respect to the Fund, shall bear all expenses of its operations and business not specifically waived, assumed or agreed to be paid by the Investment Manager as provided in this Agreement or any other agreement between the Company and the Investment Manager. In particular, the expenses hereby allocated to the Company, with respect to the Fund, include, but are not limited to:

2.2.1 Custody and Accounting services. All fees and expenses of depositories, custodians, accounting service agents, and other agents for the transfer, receipt, safekeeping, servicing of and accounting for the Fund's cash, securities, and other property, including, among other things, fees and expenses for the calculation of standardized effective and compound yield quotations for the Fund, maintenance of ledgers, position and income reports, and settlement of fund purchases and sales.

2.2.2 Transfer Agency, shareholder servicing, and Dividend Disbursement. All costs of establishing, maintaining, and servicing accounts of shareholders of the Fund, including the Fund's proportionate share of all fees and expenses of the Company's transfer agent, shareholder services agent, dividend disbursing agent and any other agents engaged by the Company to service such Fund accounts. In addition, the company shall reimburse the Investment Manager and charge to the Fund the Fund's proportionate share of all expenses incurred by the Investment Manager in responding to telephonic and written inquiries from, and in mailing information to Fund shareholders and others who may request information on behalf of Fund shareholders, regarding matters such as shareholder account or transaction status, net asset value of Fund shares, Fund performance, and general information about the Fund.

2.2.3 Shareholder Reports. All costs of preparing, setting in type, printing, and distributing reports and other communications to shareholders of the Fund.

2.2.4 Prospectuses. All costs of preparing, setting in type, printing and mailing to shareholders of the Fund annual or more frequent revisions of the Company's Prospectus and Statement of Additional Information and any supplements thereto.

2.2.5 Shareholder Meetings. All costs incidental to holding meetings of shareholders of the Fund, including the printing of notices and proxy materials, and proxy solicitations therefor.

2.2.6 Pricing and Portfolio Valuation. All costs of daily valuation of the individual portfolio securities of the Fund and daily computation of the net asset value per share of the Fund, including (i) a proportionate share of the cost of any equipment obtained by the Company, the Investment Manager or agents of the Company or a proportionate share of the cost of any equipment currently owned by the Investment Manager that will be used to price the Fund's shares or value the Fund's assets, or (ii) the cost of the services of any agents engaged by the Company for the purpose of pricing Fund shares or valuing the assets of the Fund.

2.2.7 Communications. All charges for equipment or services used for communications between the Investment Manager or the Company and the custodian, accounting services agent, transfer agent, shareholder servicing agent, dividend disbursing agent, or any other agent engaged by the Company to provide services to the Fund.

2.2.8 Independent Legal and Accounting Fees. The Fund's proportionate share of all charges for services and expenses of the Company's independent legal counsel and independent accountants.

2.2.9 Directors' Fees and Expenses. The Fund's proportionate share of all compensation of directors (other than those directors affiliated with the Investment Manager), all expenses incurred in connection with their services as directors, and all expenses of meetings of the Board of Directors and committees of the Board of Directors.

2.2.10 Federal Registration Fees. The Fund's proportionate share of all fees and expenses of maintaining the registration of the Company under the 1940 Act and maintaining the registration of the Fund's shares or registering additional shares of the Fund under the Securities Act of 1933, as amended (the "1933 Act"), including all fees and expenses incurred in connection with the preparation, setting in type, printing, and filing of any post-effective amendments or supplements to the Registration Statement, Prospectus, and Statement of Additional Information for the Company under the 1933 Act or the 1940 Act that may be prepared from time to time.

2.2.11 State Registration Fees. The Fund's proportionate share of all fees and expenses of maintaining the registration and qualification of the Company and of the Fund's shares for sale under the securities laws of various states and jurisdictions and registering and qualifying additional shares of the Fund, and of maintaining the registration and qualification of the Company under all other laws applicable to the Company or its business activities.

2.2.12 Issue, Redemption, and Transfer of the Fund's Shares. All expenses incurred in connection with the issue, redemption, and transfer of the Fund's shares, including the expenses of confirming all share transactions and of transmitting share certificates for the Fund.

2.2.13 Bonding and Insurance. All expenses of bond, liability, and other insurance coverage required by law or regulation or deemed advisable by the Board of Directors of the Company, including, without limitation, such bond, liability and other insurance expense that may from time to time be allocated to the Fund in a manner approved by its Board of Directors.

2.2.14 Brokerage Commissions. All brokers' commissions, if any, and other charges incident to the purchase or sale of the Fund's portfolio securities.

2.2.15 Taxes. The Fund's proportionate share of all taxes or governmental fees payable to federal, state or other governmental agencies, domestic or foreign, including issue, stamp, or transfer taxes.

2.2.16 Trade Association Fees. The Fund's proportionate share of all fees, dues and other proportionate share expenses incurred in connection with the Company's trade association or other membership in any investment organization.

2.2.17 Nonrecurring and Extraordinary Expenses. The Fund's proportionate share of such nonrecurring and extraordinary expenses as may arise, including the costs of actions, suits, or proceedings to which the Company is a party and the expenses the Company may incur as a result of its legal obligation to provide indemnification to its officers, directors, employees, and agents.

3. Management Fees.

3.1 Compensation. The Company, with respect to the Fund, shall pay the Investment Manager as compensation for all services rendered, facilities provided and expenses waived or assumed and reimbursed by the Investment Manager, investment management fees computed as follows, based on the value of the average daily net assets of the Fund:

3.1.1 Rate. The fees with respect to the Fund shall be at the following annualized rates: .50% of average daily net assets.

3.1.2 Method of Computation. The fee shall accrue each calendar day and the sum of the daily fee accruals for the Fund shall be paid monthly to the Investment Manager on the first business day of the next calendar month. The daily fee accruals shall be computed by multiplying the fraction of one over the number of calendar days in the year by the applicable annual rates for the Fund, described in subparagraph 3.1.1, above, and multiplying the product by the net assets of the Fund as determined in accordance with the Company's Prospectus as of the close of business on the previous business day on which the Company was open for business.

3.1.3 Proration of Fee. If this Agreement becomes effective or terminated before the end of any month, the fee for the period from the effective date to the end of such month or from the beginning of such month to the date of termination, as the case may be, shall be prorated according to the proportion which such period bears to the full month in which such effectiveness or termination occurs.

4. Brokerage. Subject to seeking best execution, and subject to any policies or procedures as then approved by the Company's Board of Directors, the Investment Manager, in carrying out its duties under Paragraph 1.1, may cause the fund to pay a broker-dealer which furnishes brokerage and research services (as such services are defined under Section 28(e) of the Securities Exchange Act of 1934, as amended (the "1934 Act")) a higher commission than that which might be charged by another broker-

dealer which does not furnish brokerage and research services or which furnished brokerage and research services deemed to be of lesser value, if the Investment Manager determines in good faith that the amount of such commission is reasonable in relation to the value of the brokerage and research services provided by the broker-clearer viewed in terms of either that particular transaction or the overall responsibilities of the Investment Manager with respect to the other accounts, if any, as to which it exercises investment discretion (as such term is defined under Section 3(a)(35) of the 1934 Act).

5. Investment Manager's Use of the Services of Others. The Investment Manager may at its own cost (except as contemplated by Paragraph 4 of this Agreement) employ, retain or otherwise avail itself of the services or facilities of other persons or organizations for the purpose of providing the Investment Manager or the Company with (i) such statistical and other factual information; (ii) such advice regarding economic factors and trends; (iii) such advice as to occasional transactions in specific securities; (iv) or such other information, advice or assistance as the Investment Manager may deem necessary, appropriate or convenient for the discharge of its obligations hereunder or otherwise helpful to the Company or the Fund, or in the discharge of the Investment Manager's overall responsibilities with respect to the other accounts which it serves as an investment manager.

6. Ownership of Records. All records required to be maintained and preserved by the Company, with respect to the Fund, pursuant to the provisions of rules or regulations of the Securities and Exchange Commission under Section 31(a) of the 1940 Act and maintained and preserved by the Investment Manager on behalf of the Company, with respect to the Fund, are the property of the Company and shall be surrendered by the Investment Manager promptly on request by the Company.

7. Reports to Investment Manager. The Company shall furnish or otherwise make available to the Investment Manager such Prospectuses, Statements of Additional Information, financial statements, proxy statements, reports, and other information relating to the business and affairs of the Company, with respect to the Fund, as the Investment Manager may, at any time or from time to time, reasonably require in order to discharge its obligations under this Agreement.

8. Services to Other Clients. Nothing herein contained shall limit the freedom of the Investment Manager or any affiliated person of the Investment Manager to render investment supervisory and corporate administrative services to other investment companies, to act as investment counselor to other persons, firms or corporations, or to engage in other business activities; however, so long as this Agreement or any extension, renewal or amendment hereof shall remain in effect or until the Investment Manager shall otherwise consent, the Investment Manager shall be the only investment manager to the Company.

9. Limitation of Liability of Investment Manager. Neither the Investment Manager nor any of its officers, directors, or employees, nor any persons performing executive, administrative, trading, or other functions for the Company, with respect to the Fund or

the Investment Manager (at the direction or request of the Investment Manager) in connection with the Investment Manager's discharge of its obligations undertaken or reasonably assumed with respect to the this Agreement, shall be liable for any error of judgment or mistake of law or for any loss suffered by the Company, with respect to the Fund, in connection with the matters to which this Agreement relates, except for loss resulting from willful misfeasance, bad faith, or gross negligence in the performance of its or their duties on behalf of the Company or from reckless disregard by the Investment Manager or any such persons of the duties of the Investment Manager under this Agreement.

10. Term of Agreement. This Agreement is an amendment and restatement of the Investment Management Agreement dated as of September 17, 1990 and shall have a term of 12 months beginning on the first day of the month following the affirmative vote of a majority of the outstanding voting securities of the Fund approving this Agreement. This Agreement shall thereafter continue from year to year, but only so long as such continuance is specifically approved at least annually by the Board of Directors of the Company or by vote of a majority of the outstanding voting securities of the Fund in accordance with the requirements of the 1940 Act, and in either event by the vote of a majority of the Board of Directors of the Company who are not "interested persons" (as defined in the 1940 Act and rules thereunder) of any such party, cast, in person, at a meeting called for the purpose of voting on such approval.

Any approval of this Agreement by the holders of a majority of the outstanding shares (as defined in the 1940 Act and rules thereunder) of the Fund shall be effective to approve or continue this Agreement with respect to the Fund, notwithstanding (i) that a comparable agreement has not been approved by the holders of a majority of the outstanding shares of any other series of the Company and (ii) that this Agreement has not been approved by the vote of a majority of the outstanding shares of the Company, unless such approval shall be required by any other applicable law or otherwise. The Investment Manager shall furnish to the Company, promptly upon its request, such information as may be reasonably necessary to evaluate the terms of this Agreement or any extension, renewal or amendment thereof.

11. Amendment and Assignment of Agreement. This Agreement may not be amended without the affirmative vote of a majority of the outstanding voting securities of the Fund, and this Agreement shall automatically and immediately terminate in the event of its assignment.

12. Termination of Agreement. This Agreement may be terminated by either party hereto, without the payment of any penalty, upon 60 days prior notice in writing to the other party; provided, that in the case of termination by the Company such action shall have been authorized by resolution of a majority of the Board of Directors of the Company who are not parties to this Agreement or interested persons of any such party, or by vote of a majority of the outstanding voting securities of the Fund.

13. Miscellaneous.

13.1 Captions. The captions in this Agreement are included for convenience of reference only and in no other way define or delineate any of the provisions hereof or otherwise affect their construction or effect.

13.2 Interpretation. Nothing herein contained shall be deemed to require the Company to take any action contrary to its Articles of Incorporation or By-Laws, or any applicable statutory or regulatory requirement to which it is subject or by which it is bound, or to relieve or deprive the Board of Directors of its responsibility for and control of the conduct of the affairs of the Company.

13.3 Definitions. Any question of interpretation of any term or provision of this Agreement having a counterpart in or otherwise derived from a term or provision of the 1940 Act shall be resolved by reference to such term or provision of the 1940 Act and to interpretations thereof, if any, by the United States courts or, in the absence of any controlling decision of any such court, by rules, regulations or orders of the Securities and Exchange Commission validly issued pursuant to the 1940 Act. Specifically, the terms "vote of a majority of the outstanding voting securities", "interested person", "assignment", and "affiliated person" shall have the meanings assigned to them by Section 2(a) of the 1940 Act. In addition, where the effect of a requirement of the 1940 Act reflected in any provision of this Agreement is relaxed by a rule, regulation or order of the Securities and Exchange Commission, whether of special or of general application, such provision shall be deemed to incorporate the effect of such rule, regulation or order.

IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by their respective officers thereunto duly authorized and their respective corporate seals to be hereunto affixed, as of the day and year first above written.

ATTEST:                                     HOMESTEAD FUNDS, INC.
                                            on behalf of the Daily Income Fund

/s/ Hope L. Saxton                          By: /s/ Denise Trujillo
------------------------------                  --------------------------------
    Hope L. Saxton, Secretary                       Denise Trujillo,
                                                    Vice-President and Counsel

ATTEST:                                     RE ADVISERS CORPORATION

/s/ Hope L. Saxton                          By: /s/ Peter R. Morris
------------------------------                  -------------------------------
    Hope L. Saxton, Secretary                       Peter R. Morris, President

Exhibit d(2)

INVESTMENT MANAGEMENT AGREEMENT

Investment Management Agreement, made as of the 26th day of September, 2003, by and between Homestead Funds, Inc., a Maryland corporation (the "Company"), on behalf of the Value Fund (the "Fund"), and RE Advisers Corporation, a Virginia corporation (the "Investment Manager").

WHEREAS, the Company engages in business as an open-end management investment company and is registered as such under the Investment Company Act of 1940, as amended (the "1940 Act"); and

WHEREAS, the Company is a series type investment company currently consisting of eight series, the Daily Income Fund, the Value Fund, the Short-Term Bond Fund, the Short-Term Government Securities Fund, the Small-Company Stock Fund, the Stock Index Fund, the Nasdaq-100 Index Tracking Stock(SM) Fund, and the International Stock Index Fund, each with its own investment program, policies, and investment objectives, and restrictions; and

WHEREAS, the Investment Manager is engaged principally in the business of rendering investment management services and registered as an investment manager under the Investment Advisers Act of 1940, as amended; and

WHEREAS, the Company retained the Investment Manager pursuant to an Investment Management Agreement dated as of September 17, 1990 and desires to continue to retain the Investment Manager to render investment management services (i.e. investment advisory and administrative services) to it on behalf of the Fund in the manner and on the terms and conditions hereinafter set forth, amending and restating the Investment Management Agreement dated as of September 17, 1990;

NOW THEREFORE, the parties hereto agree as follows:

1. Duties and Responsibilities of the Investment Manager.

1.1 Investment Advisory Services. The Investment Manager shall act as the investment manager to the Fund and shall, subject to the supervision of the Company's Board of Directors, provide the following investment advisory services: (i) formulate and implement a continuing program for the management of the assets and resources of the Fund in a manner consistent with the Fund's investment objectives, investment program, policies and restrictions, that may be amended and updated, from time to time, to reflect changes in financial and economic conditions; (ii) make all determinations with respect to the investment of the Fund's assets in accordance with applicable law and the Fund's investment objectives, investment program, policies, and restrictions as provided in the Company's Prospectus and Statement of Additional Information, as amended from time to time, provisions of the Internal Revenue Code of 1986, as amended, relating to regulated investment companies, and such other limitations as the Board of Directors of the Company may impose by notice in writing to the Investment Manager; (iii) make all

determinations as to the purchase and sale of portfolio securities, including advising the Board of Directors as to certain matters involving the Fund's portfolio securities that are not in the nature of investment decisions; (iv) obtain and evaluate such business and financial information relating to the economy, industries, businesses, securities markets, and securities as it may deem necessary or useful in discharging its responsibilities under this Agreement; (v) furnish the Board of Directors with periodic reports concerning the Investment Manager's economic outlook and investment strategy, as well as information concerning the Fund's portfolio activity and investment performance;
(vi) determine the creditworthiness of the issuers, obligers, or guarantors of money market and debt securities utilized by the Fund; and (vii) evaluate the creditworthiness of any entities with which the Fund proposes to engage in repurchase transactions. In furtherance of this duty, the Investment Manager, as agent and attorney-in-fact with respect to the Fund, is authorized, in its discretion and without prior consultation with the Fund and the Board of Directors of the Company to buy, sell, exchange, convert for the Fund's use, and otherwise trade in any money market instruments' bonds, and other securities or assets, and to select the broker-dealers, underwriters or issuers to be used and to place orders and negotiate commissions (if any) for the execution of transactions in securities with or through such broker-dealers, underwriters, or issuers.

1.2 Administrative services. In addition to investment advisory services set forth above in 1.1, the Investment Manager shall oversee the administration of all aspects of the Company's business and affairs with respect to the Fund and shall provide certain services required for effective administration of the Company with respect to the Fund, in connection therewith, the Investment Manager shall:

1.2.1 Office and Other Facilities. Furnish, without cost to the company, or provide and pay the cost of, such office facilities, furnishings, and office equipment as are adequate for the Company's needs.

1.2.2 Personnel. Provide, without additional remuneration from or other cost to the Company, the services of individuals competent to perform all of the Company's executive, administrative, compliance, and clerical functions that are not covered by 2.2.9 below or performed by or through employees or other persons or agents engaged by the Company (including, e.g., the custodian, accounting services agent, transfer agent, dividend disbursing agent and shareholder servicing agent).

1.2.3 Agents. Assist the Company in selecting, coordinating the activities of, supervising, and acting as liaison with any other persons and agents engaged by the Company, including the Company's custodian, accounting services agent, transfer agent, dividend disbursing agent, shareholder servicing agent, independent accountants and independent legal counsel. The Investment Manager shall also monitor the functions of such persons and agents, including, in particular, the accounting services agent in its evaluation of the Fund's portfolio securities.

1.2.4 Directors and Officers. Authorize and permit the Investment Manager's directors, officers and employees who may be elected or appointed as

directors or officers of the Company to serve in such capacities, without remuneration from or additional cost to the Company.

1.2.5 Books and Records. Ensure that all financial, accounting, corporate, and other records required to be maintained and preserved by the Company or on its behalf will be maintained in accordance with applicable laws and regulations and that the Company's corporate existence will be maintained.

1.2.6 Reports to the Company. Furnish to or place at the disposal of the Company such information, reports, evaluations, analyses and opinions relating to its administrative functions as the Company may, at any time or from time to time, reasonably request or as the Investment Manager may deem helpful to the Company.

1.2.7 Reports and Filings. Assist in the development and preparation of all reports and communications by the Company to the Fund's shareholders and all reports and filings necessary to maintain the registrations and qualifications of the Company's shares under federal and state law.

2. Allocation of Expenses.

2.1 Expenses Paid by Investment Manager.

2.1.1 Salaries and Fees of Directors and Officers. As between the Fund and the Investment Manager, the Investment Manager shall pay all salaries, expenses and fees, if any of the directors, officers or employees of the Investment Manager who are directors, officers or employees of the Company. The Investment Manager has obtained such personnel through an agreement with National Rural Electric Cooperative Association, which has primary responsibility for the salaries, expenses and fees of persons provided to serve as directors, officers and employees of the Investment Manager.

2.1.2 Waiver or Assumption and Reimbursement of the Company's Expenses by Investment Manager. The Waiver of assumption and reimbursement by the Investment Manager of any expense of the Company that the Investment Manager is not required by this Agreement to waive, or assume and reimburse, shall not obligate the Investment Manager to waive, or assume or reimburse the same or any similar expense of the Company on any subsequent occasion, unless so required pursuant to a separate agreement between the Company and the Investment Manager.

2.1.3 Organizational Expenses. The Investment Manager shall pay or assume all organizational expenses of the Company.

2.2 Expenses paid by the Company. The Company, with respect to the Fund, shall bear all expenses of its operations and business not specifically waived, assumed or agreed to be paid by the Investment Manager as provided in this Agreement or any other agreement between the Company and the Investment Manager. In particular, the

expenses hereby allocated to the Company, with respect to the Fund, include, but are not limited to:

2.2.1 Custody and Accounting services. All Fees and expenses of depositories, custodians, accounting service agents, and other agents for the transfer, receipt, safekeeping, servicing of and accounting for the fund's cash, securities and other property, including, among other things, fees and expenses for the calculation of standardized effective and compound yield quotations for the Fund, maintenance of ledgers, position and income reports, and settlement of fund purchases and sales.

2.2.2 Transfer Agency, shareholder servicing, and Dividend Disbursement. All costs of establishing, maintaining, and servicing accounts of shareholders of the Fund, including the Fund's proportionate share of all fees and expenses of the Company's transfer agent, shareholder services agent, dividend disbursing agent and any other agents engaged by the Company to service such Fund accounts. In addition, the company shall reimburse the Investment Manager and charge to the Fund and the Fund's proportionate share of all expenses incurred by the Investment Manager in responding to telephonic and written inquiries from, and in mailing information to Fund shareholders and others who may request information on behalf of Fund shareholders, regarding matters such as shareholder account or transaction status, net asset value of Fund shares, Fund performance, and general information about the Fund.

2.2.3 Shareholder Reports. All costs of preparing, setting in type, printing, and distributing reports and other communications to shareholders of the Fund.

2.2.4 Prospectuses. All costs of preparing, setting in type, printing and mailing to shareholders of the Fund annual or more frequent revisions of the Company's Prospectus and Statement of Additional Information and any supplements thereto.

2.2.5 Shareholder Meetings. All costs incidental to holding meetings of shareholders of the Fund, including the printing of notices and proxy materials, and proxy solicitations therefor.

2.2.6 Pricing and Portfolio Valuation. All costs of daily valuation of the individual portfolio securities of the Fund and daily computation of the net asset value per share of the Fund, including (i) a proportionate share of the cost of any equipment obtained by the Company, the Investment Manager or agents of the Company or a proportionate share of the cost of any equipment currently owned by the Investment Manager that will be used to price the Fund's shares or value the Fund's assets, or (ii) the cost of the services of any agents engaged by the Company for the purpose of pricing Fund shares or valuing the assets of the Fund.

2.2.7 Communications. All charges for equipment or services used for communications between the Investment Manager or the Company and the custodian, accounting services agent, transfer agent, shareholder servicing agent, dividend

disbursing agent, or any other agent engaged by the Company to provide services to the Fund.

2.2.8 Independent Legal and Accounting Fees. The Fund's proportionate share of all charges for services and expenses of the Company's independent legal counsel and independent accountants.

2.2.9 Directors' Fees and Expenses. The Fund's proportionate share of all compensation of directors (other than those directors affiliated with the Investment Manager), all expenses incurred in connection with their services as directors, and all expenses of meetings of the Board of Directors and committees of the Board of Directors.

2.2.10 Federal Registration Fees. The Fund's proportionate share of all fees and expenses of maintaining the registration of the Company under the 1940 Act and maintaining the registration of the Fund's shares or registering additional shares of the Fund under the Securities Act of 1933, as amended (the "1933 Act"), including all fees and expenses incurred in connection with the preparation, setting in type, printing, and filing any post-effective amendments or supplements to the Registration Statement, Prospectus, and Statement of Additional Information for the Company under the 1933 Act or the 1940 Act that may be prepared from time to time.

2.2.11 State Registration Fees. The Fund's proportionate share of all fees and expenses of maintaining the registration and qualification of the Company and of the Fund's shares for sale under the securities laws of various states and jurisdictions and registering and qualifying additional shares of the Fund, and of maintaining the registration and qualification of the Company under all other laws applicable to the Company or its business activities.

2.2.12 Issue, Redemption, and Transfer of the Fund's Shares. All expenses incurred in connection with the issue, redemption, and transfer of the Fund's shares, including the expenses of confirming all share transactions and of transmitting share certificates for the Fund.

2.2.13 Bonding and Insurance. All expenses of bond, liability, and other insurance coverage required by law or regulation or deemed advisable by the Board of Directors of the Company, including, without limitation, such bond, liability and other insurance expense that may from time to time be allocated to the Fund in a manner approved by its Board of Directors.

2.2.14 Brokerage Commissions. All brokers' commissions, if any, and other charges incident to the purchase or sale of the Fund's portfolio securities.

2.2.15 Taxes. The Fund's proportionate share of all taxes or governmental fees payable to federal, state or other governmental agencies, domestic or foreign, including issue, stamp, or transfer taxes.

2.2.16 Trade Association Fees. The Fund's proportionate share of all fees, dues and other proportionate share expenses incurred in connection with the Company's trade association or other membership in any investment organization.

2.2.17 Nonrecurring and Extraordinary Expenses. The Fund's proportionate share of such nonrecurring and extraordinary expenses as may arise, including the costs of actions, suits, or proceedings to which the Company is a party and the expenses the Company may incur as a result of its legal obligation to provide indemnification to its officers, directors, employees, and agents.

3. Management Fees.

3.1 Compensation. The Company, with respect to the Fund, shall pay the Investment Manager as compensation for all services rendered, facilities provided and expenses waived or assumed and reimbursed by the Investment Manager, investment management fees computed as follows, based on the value of the average daily net assets of the Fund:

3.1.1 Rate. The fees with respect to the Fund shall be at the following annualized rates: .65% of average daily net assets up to $200 million; .50% of average daily net assets up to the next $200 million; and .40% of average daily net assets in excess of $400 million.

3.1.2 Method of Computation. The fee shall accrue each calendar day and the sum of the daily fee accruals for the Fund shall be paid monthly to the Investment Manager on the first business day of the next calendar month. The daily fee accruals shall be computed by multiplying the fraction of one over the number of calendar days in the year by the applicable annual rates for the Fund, described in subparagraph 3.1.1, above, and multiplying the product by the net assets of the Fund as determined in accordance with the Company's Prospectus as of the close of business on the previous business day on which the Company was open for business.

3.1.3 Proration of Fee. If this Agreement becomes effective or terminates before the end of any month, the fee for the period from the effective date to the end of such month or from the beginning of such month to the date of termination, as the case may be, shall be prorated according to the proportion which such period bears to the full month in which such effectiveness or termination occurs.

4. Brokerage. Subject to seeking best execution, and subject to any policies or procedures as then approved by the Company's Board of Directors, the Investment Manager, in carrying out its duties under Paragraph 1.1, may cause the Fund to pay a broker-dealer which furnishes brokerage and research services (as such services are defined under Section 28(e) of the Securities Exchange Act of 1934, as amended (the "1934 Act")) a higher commission than that which might be charged by another broker-

dealer which does not furnish brokerage and research services or which furnished brokerage and research services deemed to be of a lesser value, if the Investment Manager determines in good faith that the amount of such commission is reasonable in relation to the value of the brokerage and research services provided by the broker-clearer viewed in terms of either that particular transaction or the overall responsibilities of the Investment Manager with respect to the other accounts, if any, as to which it exercises investment discretion (as such term is defined under Section 3(a)(35) of the 1934 Act).

5. Investment Manager's Use of the Services of Others. The Investment Manager may at its own cost (except as contemplated by Paragraph 4 of this Agreement) employ, retain or otherwise avail itself of the services or facilities of other persons or organizations for the purpose of providing the Investment Manager or the Company with (i) such statistical and other factual information; (ii) such advice regarding economic factors and trends; (iii) such advice as to occasional transactions in specific securities; (iv) or such other information, advice or assistance as the Investment Manager may deem necessary, appropriate or convenient for the discharge of its obligations hereunder or otherwise helpful to the Company or the Fund, or in the discharge of the Investment Manager's overall responsibilities with respect to the other accounts which it serves as an investment manager.

6. Ownership of Records. All records required to be maintained and preserved by the Company, with respect to the Fund, pursuant to the provisions of rules or regulations of the Securities and Exchange Commission under Section 31(a) of the 1940 Act and maintained and preserved by the Investment Manager on behalf of the Company, with respect to the Fund, are the property of the Company and shall be surrendered by the Investment Manager promptly on request by the Company.

7. Reports to Investment Manager. The Company shall furnish or otherwise make available to the Investment Manager such Prospectuses, Statements of Additional Information, financial statements, proxy statements, reports, and other information relating to the business and affairs of the Company, with respect to the Fund, as the Investment Manager may, at any time or from time to time, reasonably require in order to discharge its obligations under this Agreement.

8. Services to Other Clients. Nothing herein contained shall limit the freedom of the Investment Manager or any affiliated person of the Investment Manager to render investment supervisory and corporate administrative services to other investment companies, to act as investment counselor to other persons, firms or corporations, or to engage in other business activities; however, so long as this Agreement or any extension, renewal or amendment hereof shall remain in effect or until the Investment Manager shall otherwise consent, the Investment Manager shall be the only investment manager to the Company.

9. Limitation of Liability of Investment Manager. Neither the Investment Manager nor any of its officers, directors, or employees, nor any persons performing executive, administrative, trading, or other functions for the Company, with respect to the Fund or

the Investment Manager (at the direction or request of the Investment Manager) in connection with the Investment Manager's discharge of its obligations undertaken or reasonably assumed with respect to this Agreement, shall be liable for any error of judgment or mistake of law or for any loss suffered by the Company, with respect to the Fund in connection with the matters to which this Agreement relates, except for loss resulting from willful misfeasance, bad faith, or gross negligence in the performance of its or their duties on behalf of the Company or from reckless disregard by the Investment Manager or any such persons of the duties of the Investment Manager under this Agreement.

10. Term of Agreement. This Agreement is an amendment and restatement of the Investment Management Agreement dated as of September 17, 1990 and shall have a term of 12 months beginning on the first day of the month following the affirmative vote of a majority of the outstanding voting securities of the Fund approving this Agreement. This Agreement shall thereafter continue from year to year, but only so long as such continuance is specifically approved at least annually by the Board of Directors of the Company or by vote of a majority of the outstanding voting securities of the Fund in accordance with the requirements of the 1940 Act, and in either event by the vote of a majority of the Board of Directors of the Company who are not "interested persons" (as defined in the 1940 Act and rules thereunder) of any such party, cast, in person, at a meeting called for the purpose of voting on such approval.

Any approval of this Agreement by the holders of a majority of the outstanding shares (as defined in the 1940 Act and rules thereunder) of the Fund shall be effective to approve or continue this Agreement with respect to the Fund, notwithstanding (i) that a comparable agreement has not been approved by the holders of a majority of the outstanding shares of any other series of the Company and (ii) that this Agreement has not been approved by the vote of a majority of the outstanding shares of the Company, unless such approval shall be required by any other applicable law or otherwise. The Investment Manager shall furnish to the Company, promptly upon its request, such information as may be reasonably necessary to evaluate the terms of this Agreement or any extension, renewal or amendment thereof.

11. Amendment and Assignment of Agreement. This Agreement may not be amended without the affirmative vote of a majority of the outstanding voting securities of the Fund, and this Agreement shall automatically and immediately terminate in the event of its assignment.

12. Termination of Agreement. This Agreement may be terminated by either party hereto, without the payment of any penalty, upon 60 days prior notice in writing to the other party; provided, that in the case of termination by the Company such action shall have been authorized by resolution of a majority of the Board of Directors of the Company who are not parties to this Agreement or interested persons of any such party, or by vote of a majority of the outstanding voting securities of the Fund.

13. Miscellaneous.

13.1 Captions. The captions in this Agreement are included for convenience of reference only and in no other way define or delineate any of the provisions hereof or otherwise affect their construction or effect.

13.2 Interpretation. Nothing herein contained shall be deemed to require the Company to take any action contrary to its Articles of Incorporation or By-Laws, or any applicable statutory or regulatory requirement to which it is subject or by which it is bound, or to relieve or deprive the Board of Directors of its responsibility for and control of the conduct of the affairs of the Company.

13.3 Definitions. Any question of interpretation of any term or provision of this Agreement having a counterpart in or otherwise derived from a term or provision of the 1940 Act shall be resolved by reference to such term or provision of the 1940 Act and to interpretations thereof, if any, by the United States courts or, in the absence of any controlling decision of any such court, by rules, regulations or orders of the Securities and Exchange Commission validly issued pursuant to the 1940 Act. Specifically, the terms "vote of a majority of the outstanding voting securities", "interested person", "assignment", and "affiliated person", shall have the meanings assigned to them by Section 2(a) of the 1940 Act. In addition, where the effect of a requirement of the 1940 Act reflected in any provision of this Agreement is relaxed by a rule, regulation or order of the Securities and Exchange Commission, whether of special or of general application, such provision shall be deemed to incorporate the effect of such rule, regulation or order.

IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by their respective officers thereunto duly authorized and their respective corporate seals to be hereunto affixed, as of the day and year first above written.

ATTEST:                                     HOMESTEAD FUNDS, INC.
                                            on behalf of the Value Fund

/s/Hope L. Saxton                           By: /s/Denise Trujillo
---------------------------                 ------------------------------------
Hope L. Saxton, Secretary                   Denise Trujillo,
                                            Vice-President and Counsel

ATTEST:                                     RE ADVISERS CORPORATION

/s/Hope L. Saxton                           By: /s/Peter R. Morris
---------------------------                 -----------------------------------
Hope L. Saxton, Secretary                   Peter R. Morris, President

Exhibit d(3)

INVESTMENT MANAGEMENT AGREEMENT

Investment Management Agreement, made as of the 26th day of September, 2003, by and between Homestead Funds, Inc., a Maryland corporation (the "Company"), on behalf of the Short-Term Bond Fund (the "Fund"), and RE Advisers Corporation, a Virginia corporation (the "Investment Manager").

WHEREAS, the Company engages in business as an open-end management investment company and is registered as such under the Investment Company Act of 1940, as amended (the "1940 Act"); and

WHEREAS, the Company is a series type investment company currently consisting of eight series, the Daily Income Fund, the Value Fund, the Short-Term Bond Fund, the Short-Term Government Securities Fund, the Small-Company Stock Fund, the Stock Index Fund, the Nasdaq-100 Index Tracking Stock(SM) Fund, and the International Stock Index Fund, each with its own investment program, policies, and investment objectives, and restrictions; and

WHEREAS, the Investment Manager is engaged principally in the business of rendering investment management services and registered as an investment manager under the Investment Advisers Act of 1940, as amended; and

WHEREAS, the Company retained the Investment Manager pursuant to an Investment Management Agreement dated as of August 27, 1991 and desires to continue to retain the Investment Manager to render investment management services (i.e. investment advisory and administrative services) to it on behalf of the Fund in the manner and on the terms and conditions hereinafter set forth, amending and restating the Investment Management Agreement dated as of August 27, 1991;

NOW THEREFORE, the parties hereto agree as follows:

1. Duties and Responsibilities of the Investment Manager.

1.1 Investment Advisory Services. The Investment Manager shall act as the investment manager to the Fund and shall, subject to the supervision of the Company's Board of Directors, provide the following investment advisory services: (i) formulate and implement a continuing program for the management of the assets and resources of the Fund in a manner consistent with the Fund's investment objectives, investment program, policies and restrictions, that may be amended and updated, from time to time, to reflect changes in financial and economic conditions; (ii) make all determinations with respect to the investment of the Fund's assets in accordance with applicable law and the Fund's investment objectives, investment program, policies, and restrictions as provided in the Company's Prospectus and Statement of Additional Information, as amended from time to time, provisions of the Internal Revenue Code of 1986, as amended, relating to regulated investment companies, and such other limitations as the Board of Directors of the Company may impose by notice in writing to the Investment Manager; (iii) make all

determinations as to the purchase and sale of portfolio securities, including advising the Board of Directors as to certain matters involving the Fund's portfolio securities that are not in the nature of investment decisions; (iv) obtain and evaluate such business, and financial information relating to the economy, industries, businesses, securities markets, and securities as it may deem necessary or useful in discharging its responsibilities under this Agreement; (v) furnish the Board of Directors with periodic reports concerning the Investment Manager's economic outlook and investment strategy, as well as information concerning the Fund's portfolio activity and investment performance;
(vi) determine the creditworthiness of the issuers, obligers, or guarantors of money market and debt securities utilized by the Fund; and (vii) evaluate the creditworthiness of any entities with which the Fund proposes to engage in repurchase transactions. In furtherance of this duty, the Investment Manager, as agent and attorney-in-fact with respect to the Fund, is authorized, in its discretion and without prior consultation with the Fund and the Board of Directors of the Company to buy, sell, exchange, convert for the Fund's use, and otherwise trade in any money market instruments' bonds, and other securities or assets, and to select the broker-dealers, underwriters or issuers to be used and to place orders and negotiate commissions (if any) for the execution of transactions in securities with or through such broker-dealers, underwriters, or issuers.

1.2 Administrative services. In addition to investment advisory services set forth above in 1.1, the Investment Manager shall oversee the administration of all aspects of the Company's business and affairs with respect to the Fund and shall provide certain services required for effective administration of the Company with respect to the Fund, in connection therewith, the Investment Manager shall:

1.2.1 Office and Other Facilities. Furnish, without cost to the company, or provide and pay the cost of, such office facilities, furnishings, and office equipment as are adequate for the Company's needs.

1.2.2 Personnel. Provide, without additional remuneration from or other cost to the Company, the services of individuals competent to perform all of the Company's executive, administrative, compliance, and clerical functions that are not covered by 2.2.9 below or performed by or through employees or other persons or agents engaged by the Company (including, e.g., the custodian, accounting services agent, transfer agent, dividend disbursing agent and shareholder servicing agent).

1.2.3 Agents. Assist the Company in selecting, coordinating the activities of, supervising, and acting as liaison with any other persons and agents engaged by the Company, including the Company's custodian, accounting services agent, transfer agent, dividend disbursing agent, shareholder servicing agent, independent accountants, and independent legal counsel. The Investment Manager shall also monitor the functions of such persons and agents, including, in particular, the accounting services agent in its evaluation of the Fund's portfolio securities.

1.2.4 Directors and Officers. Authorize and permit the Investment Manager's directors, officers and employees who may be elected or appointed as

directors or officers of the Company to serve in such capacities, without remuneration from or additional cost to the Company.

1.2.5 Books and Records. Ensure that all financial, accounting, corporate, and other records required to be maintained and preserved by the Company or on its behalf will be maintained in accordance with applicable laws and regulations and that the Company's corporate existence will be maintained.

1.2.6 Reports to the Company. Furnish to or place at the disposal of the Company such information, reports, evaluations, analyses and opinions relating to its administrative functions as the Company may, at any time or from time to time, reasonably request or as the Investment Manager may deem helpful to the Company.

1.2.7 Reports and Filings. Assist in the development and preparation of all reports and communications by the Company to the Fund's shareholders and all reports and filings necessary to maintain the registrations and qualifications of the Company's shares under federal and state law.

2. Allocation of Expenses.

2.1 Expenses Paid by Investment Manager.

2.1.1 Salaries and Fees of Directors and Officers. As between the Fund and the Investment Manager, the Investment Manager shall pay all salaries, expenses and fees, if any of the directors, officers or employees of the Investment Manager who are directors, officers or employees of the Company. The Investment Manager has obtained such personnel through an agreement with National Rural Electric Cooperative Association, which has primary responsibility for the salaries, expenses and fees of persons provided to serve as directors, officers and employees of the Investment Manager.

2.1.2 Waiver or Assumption and Reimbursement of the Company's Expenses by Investment Manager. The Waiver of assumption and reimbursement by the Investment Manager of any expense of the Company that the Investment Manager is not required by this Agreement to waive, or assume and reimburse, shall not obligate the Investment Manager to waive, or assume or reimburse, the same or any similar expense of the Company on any subsequent occasion, unless so required pursuant to a separate agreement between the Company and the Investment Manager.

2.1.3 Organizational Expenses. The Investment Manager shall pay or assume all organizational expenses of the Company.

2.2 Expenses paid by the Company. The Company, with respect to the Fund, shall bear all expenses of its operations and business not specifically waived, assumed or agreed to be paid by the Investment Manager as provided in this Agreement or any other

agreement between the Company and the Investment Manager. In particular, the expenses hereby allocated to the Company, with respect to the Fund, include, but are not limited to:

2.2.1 Custody and Accounting services. All fees and expenses of depositories, custodians, accounting service agents, and other agents for transfer, receipt, safekeeping, servicing of and accounting for the Fund's cash, securities, and other property, including, among other things, fees and expenses for the calculation of standardized effective and compound yield quotations for the Fund, maintenance of ledgers, position and income reports, and settlement of fund purchases and sales.

2.2.2 Transfers Agency, shareholder servicing, and Dividend Disbursement. All costs of establishing, maintaining, and servicing accounts of shareholders of the Fund, including the Fund's proportionate share of all fees and expenses of the Company's transfer agent, shareholder services agent, dividend disbursing agent and any other agents engaged by the Company to service such Fund accounts. In addition, the company shall reimburse the Investment Manager and charge to the Fund the Fund's proportionate share of all expenses incurred by the Investment Manager in responding to telephonic and written inquiries from, and in mailing information to Fund shareholders and others who may request information on behalf of Fund shareholders, regarding matters such as shareholder account or transaction status, net asset value of Fund shares, Fund performance, and general information about the Fund.

2.2.3 Shareholder Reports. All costs of preparing, setting in type, printing, and distributing reports and other communications to shareholders of the Fund.

2.2.4 Prospectuses. All costs of preparing, setting in type, printing and mailing to shareholders of the Fund annual or more frequent revisions of the Company's Prospectus and Statement of Additional Information and any supplements thereto.

2.2.5 Shareholder Meetings. All costs incidental to holding meetings of shareholders of the Fund, including the printing of notices and proxy materials, and proxy solicitations therefor.

2.2.6 Pricing and Portfolio Valuation. All costs of daily valuation of the individual portfolio securities of the Fund and daily computation of the net asset value per share of the Fund, including (i) a proportionate share of the cost of any equipment obtained by the Company, the Investment Manager or agents of the Company or a proportionate share of the cost of any equipment currently owned by the Investment Manager that will be used to price the Fund's shares or value the Fund's assets, or (ii) the cost of the services of any agents engaged by the Company for the purpose of pricing Fund shares or valuing the assets of the Fund.

2.2.7 Communications. All charges for equipment or services used for communications between the Investment Manager or the Company and the custodian,

accounting services agent, transfer agent, shareholder servicing agent, dividend disbursing agent, or any other agent engaged by the Company to provide services to the Fund.

2.2.8 Independent Legal and Accounting Fees. The Fund's proportionate share of all charges for services and expenses of the Company's independent legal counsel and independent accountants.

2.2.9 Directors' Fees and Expenses. The Fund's proportionate share of all compensation of directors (other than those directors affiliated with the Investment Manager), all expenses incurred in connection with their services as directors, and all expenses of meetings of the Board of Directors and committees of the Board of Directors.

2.2.10 Federal Registration Fees. The Fund's proportionate share of all fees and expenses of maintaining the registration of the Company under the 1940 Act and maintaining the registration of the Fund's shares or registering additional shares of the Fund under the Securities Act of 1933, as amended (the "1933 Act"), including all fees and expenses incurred in connection with the preparation, setting in type, printing, and filing of any post-effective amendments or supplements to the Registration Statement, Prospectus, and Statement of Additional Information for the Company under the 1933 Act or the 1940 Act that may be prepared from time to time.

2.2.11 State Registration Fees. The Fund's proportionate share of all fees and expenses of maintaining the registration and qualification of the Company and of the Fund's shares for sale under the securities laws of various states and jurisdictions and registering and qualifying additional shares of the Fund, and of maintaining the registration and qualification of the Company under all other laws applicable to the Company or its business activities.

2.2.12 Issue, Redemption, and Transfer of the Fund's Shares. All expenses incurred in connection with the issue, redemption, and transfer of the Fund's shares, including the expenses of confirming all share transactions and of transmitting share certificates for the Fund.

2.2.13 Bonding and Insurance. All expenses of bond, liability, and other insurance coverage required by law or regulation or deemed advisable by the Board of Directors of the Company, including, without limitation, such bond, liability and other insurance expense that may from time to time be allocated to the Fund in a manner approved by its Board of Directors.

2.2.14 Brokerage Commissions. All brokers' commissions, if any, and other charges incident to the purchase or sale of the Fund's portfolio securities.

2.2.15 Taxes. The Fund's proportionate share of all taxes or governmental fees payable to federal, state or other governmental agencies, domestic or foreign, including issue, stamp, or transfer taxes.

2.2.16 Trade Association Fees. The Fund's proportionate share of all fees, dues and other proportionate share expenses incurred in connection with the Company's trade association or other membership in any investment organization.

2.2.17 Nonrecurring and Extraordinary Expenses. The Fund's proportionate share of such nonrecurring and extraordinary expenses as may arise, including the costs of actions, suits, or proceedings to which the Company is a party and the expenses the Company may incur as a result of its legal obligation to provide indemnification to it's officers, directors, employees, and agents.

3. Management Fees.

3.1 Compensation. The Company, with respect to the Fund, shall pay the Investment Manager as compensation for all services rendered, facilities provided and expenses waived or assumed and reimbursed by the Investment Manager, investment management fees computed as follows, based on the value of the average daily net assets of the Fund:

3.1.1 Rate. The fees with respect to the Fund shall be at the following annualized rates: .60% of average daily net assets.

3.1.2 Method of Computation. The fee shall accrue each calendar day and the sum of the daily fee accruals for the Fund shall be paid monthly to the Investment Manager on the first business day of the next calendar month. The daily fee accruals shall be computed by multiplying the fraction of one over the number of calendar days in the year by the applicable annual rates for the Fund, described in subparagraph 3.1.1, above, and multiplying the product by the net assets of the Fund as determined in accordance with the Company's Prospectus as of the close of business on the previous business day on which the Company was open for business.

3.1.3 Proration of Fee. If this Agreement becomes effective or terminates before the end of any month, the fee for the period from the effective date to the end of such month or from the beginning of such month to the date of termination, as the case may be, shall be prorated according to the proportion which such period bears to the full month in which such effectiveness or termination occurs.

4. Brokerage. Subject to seeking best execution, and subject to any policies or procedures as then approved by the Company's Board of Directors, the Investment Manager, in carrying out its duties under Paragraph 1.1, may cause the Fund to pay a broker-dealer which furnishes brokerage and research services (as such services are defined under Section 28(e) of the Securities Exchange Act of 1934, as amended (the "1934 Act")) a higher commission than that which might be charged by another broker-dealer which does not furnish brokerage and research services or which furnished brokerage and research services deemed to be of a lesser value, if the Investment Manager determines in good faith that the amount of such commission is reasonable in

relation to the value of the brokerage and research services provided by the broker-clearer viewed in terms of either that particular transaction or the overall responsibilities of the Investment Manager with respect to the other accounts, if any, as to which it exercises investment discretion (as such term is defined under Section 3(a)(35) of the 1934 Act).

5. Investment Manager's Use of the Services of Others. The Investment Manager may at its own cost (except as contemplated by Paragraph 4 of this Agreement) employ, retain or otherwise avail itself of the services or facilities of other persons or organizations for the purpose of providing the Investment Manager or the Company with (i) such statistical and other factual information; (ii) such advice regarding economic factors and trends; (iii) such advice as to occasional transactions in specific securities; (iv) or such other information, advice or assistance as the Investment Manager may deem necessary, appropriate or convenient for the discharge of its obligations hereunder or otherwise helpful to the Company or the Fund, or in the discharge of the Investment Manager's overall responsibilities with respect to the other accounts which it serves as an investment manager.

6. Ownership of Records. All records required to be maintained and preserved by the Company, with respect to the Fund, pursuant to the provisions of rules or regulations of the Securities and Exchange Commission under Section 31(a) of the 1940 Act and maintained and preserved by the Investment Manager on behalf of the Company, with respect to the Fund, are the property of the Company and shall be surrendered by the Investment Manager promptly on request by the Company.

7. Reports to Investment Manager. The Company shall furnish or otherwise make available to the Investment Manager such Prospectuses, Statements of Additional Information, financial statements, proxy statements, reports, and other information relating to the business and affairs of the Company, with respect to the Fund, as the Investment Manager may, at any time or from time to time, reasonably require in order to discharge its obligations under this Agreement.

8. Services to Other Clients. Nothing herein contained shall limit the freedom of the Investment Manager or any affiliated person of the Investment Manager to render investment supervisory and corporate administrative services to other investment companies, to act as investment counselor to other persons, firms or corporations, or to engage in other business activities; however, so long as this Agreement or any extension, renewal or amendment hereof shall remain in effect or until the Investment Manager shall otherwise consent, the Investment Manager shall be the only investment manager to the Company.

9. Limitation of Liability of Investment Manager. Neither the Investment Manager nor any of its officers, directors, or employees, nor any persons performing executive, administrative, trading, or other functions for the Company, with respect to the Fund or the Investment Manager (at the direction or request of the Investment Manager) in connection with the Investment Manager's discharge of its obligations undertaken or reasonably assumed with respect to this Agreement, shall be liable for any error of

judgment or mistake of law or for any loss suffered by the Company, with respect to the Fund, in connection with the matters to which this Agreement relates, except for loss resulting from willful misfeasance, bad faith, or gross negligence in the performance of its or their duties on behalf of the Company or from reckless disregard by the Investment Manager or any such persons of the duties of the Investment Manager under this Agreement.

10. Term of Agreement. This Agreement is an amendment and restatement of the Investment Management Agreement dated as of August 27, 1991 and shall have a term of 12 months beginning on the first day of the month following the affirmative vote of a majority of the outstanding voting securities of the Fund approving this Agreement. This Agreement shall thereafter continue from year to year, but only so long as such continuance is specifically approved at least annually by the Board of Directors of the Company or by vote of a majority of the outstanding voting securities of the Fund in accordance with the requirements of the 1940 Act, and in either event by the vote of a majority of the Board of Directors of the Company who are not "interested persons" (as defined in the 1940 Act and rules thereunder) of any such party, cast, in person, at a meeting called for the purpose of voting on such approval.

Any approval of this Agreement by the holders of a majority of the outstanding shares (as defined in the 1940 Act and rules thereunder) of the Fund shall be effective to approve or continue this Agreement with respect to the Fund, notwithstanding (i) that a comparable agreement has not been approved by the holders of a majority of the outstanding shares of any other series of the Company and (ii) that this Agreement has not been approved by the vote of a majority of the outstanding shares of the Company, unless such approval shall be required by any other applicable law or otherwise. The Investment Manager shall furnish to the Company, promptly upon its request, such information as may be reasonably necessary to evaluate the terms of this Agreement or any extension, renewal or amendment thereof.

11. Amendment and Assignment of Agreement. This Agreement may not be amended without the affirmative vote of a majority of the outstanding voting securities of the Fund, and this Agreement shall automatically and immediately terminate in the event of its assignment.

12. Termination of Agreement. This Agreement may be terminated by either party hereto, without the payment of any penalty, upon 60 days prior notice in writing to the other party; provided, that in the case of termination by the Company such action shall have been authorized by resolution of a majority of the Board of Directors of the Company who are not parties to this Agreement or interested persons of any such party, or by vote of a majority of the outstanding voting securities of the Fund.

13. Miscellaneous.

13.1 Captions. The captions in this Agreement are included for convenience of reference only and in no other way define or delineate any of the provisions hereof or otherwise affect their construction or effect.

13.2 Interpretation. Nothing herein contained shall be deemed to require the Company to take any action contrary to its Articles of Incorporation or By-Laws, or any applicable statutory or regulatory requirement to which it is subject or by which it is bound, or to relieve or deprive the Board of Directors of its responsibility for and control of the conduct of the affairs of the Company.

13.3 Definitions. Any questions of interpretation of any term or provision of this Agreement having a counterpart in or otherwise derived from a term or provision of the 1940 Act shall be resolved by reference to such term or provision of the 1940 Act and to interpretations thereof, if any, by the United States courts or, in the absence of any controlling decision of any such court, by rules, regulations or orders of the Securities and Exchange Commission validly issued pursuant to the 1940 Act. Specifically, the terms "vote of a majority of the outstanding voting securities", "interested person", "assignment", and "affiliated person" shall have the meanings assigned to them by Section 2(a) of the 1940 Act. In addition, where the effect of a requirement of the 1940 Act reflected in any provision of this Agreement is relaxed by a rule, regulation or order of the Securities and Exchange Commission, whether of special or of general application, such provision shall be deemed to incorporate the effect of such rule, regulation or order.

IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by their respective officers thereunto duly authorized and their respective corporate seals to be hereunto affixed, as of the day and year first above written.

ATTEST:                                     HOMESTEAD FUNDS, INC.
                                            on behalf of the Short-Term Bond
                                            Fund

/s/ Hope L. Saxton                          By: /s/ Denise Trujillo
---------------------------------               -------------------------------
Hope L. Saxton, Secretary                       Denise Trujillo,
                                                Vice-President and Counsel

ATTEST:                                     RE ADVISERS CORPORATION

/s/ Hope L. Saxton                          By: /s/ Peter R. Morris
----------------------------------              ------------------------------
Hope L. Saxton, Secretary                       Peter R. Morris, President

Exhibit d(4)

INVESTMENT MANAGEMENT AGREEMENT

Investment Management Agreement, made as of the 26th day of September, 2003, by and between Homestead Funds, Inc., a Maryland corporation (the "Company"), on behalf of the Short-Term Government Securities Fund (the "Fund"), and RE Advisers Corporation, a Virginia corporation (the "Investment Manager").

WHEREAS, the Company engages in business as an open-end management investment company and is registered as such under the Investment Company Act of 1940, as amended (the "1940 Act"); and

WHEREAS, the Company is a series type investment company currently consisting of eight series, the Daily Income Fund, the Value Fund, the Short-Term Bond Fund, the Short-Term Government Securities Fund, the Small-Company Stock Fund, the Stock Index Fund, the Nasdaq-100 Index Tracking Stock(SM) Fund, and the International Stock Index Fund, each with its own investment program, policies, and investment objectives, and restrictions; and

WHEREAS, the Investment Manager is engaged principally in the business of rendering investment management services and registered as an investment manager under the Investment Advisers Act of 1940, as amended; and

WHEREAS, the Company retained the Investment Manager pursuant to an Investment Management Agreement dated as of March 7, 1995 and desires to continue to retain the Investment Manager to render investment management services (i.e. investment advisory and administrative services) to it on behalf of the Fund in the manner and on the terms and conditions hereinafter set forth, amending and restating the Investment Management Agreement dated as of March 7, 1995;

NOW THEREFORE, the parties hereto agree as follows:

1. Duties and Responsibilities of the Investment Manager.

1.1 Investment Advisory Services. The Investment Manager shall act as the investment manager to the Fund and shall, subject to the supervision of the Company's Board of Directors, provide the following investment advisory services: (i) formulate and implement a continuing program for the management of the assets and resources of the Fund in a manner consistent with the Fund's investment objectives, investment program, policies and restrictions, that may be amended and updated, from time to time, to reflect changes in financial and economic conditions; (ii) make all determinations with respect to the investment of the Fund's assets in accordance with applicable law and the Fund's investment objectives, investment program, policies, and restrictions as provided in the Company's Prospectus and Statement of Additional Information, as amended from time to time, provisions of the Internal Revenue Code of 1986, as amended, relating to regulated investment companies, and such other limitations as the Board of Directors of the Company may impose by notice in writing to the Investment Manager; (iii) make all

determinations as to the purchase and sale of portfolio securities, including advising the Board of Directors as to certain matters involving the Fund's portfolio securities that are not in the nature of investment decisions; (iv) obtain and evaluate such business, and financial information relating to the economy, industries, businesses, securities markets, and securities as it may deem necessary or useful in discharging its responsibilities under this Agreement; (v) furnish the Board of Directors with periodic reports concerning the Investment Manager's economic outlook and investment strategy, as well as information concerning the Fund's portfolio activity and investment performance;
(vi) determine the creditworthiness of the issuers, obligers, or guarantors of money market and debt securities utilized by the Fund; and (vii) evaluate the creditworthiness of any entities with which the Fund proposes to engage in repurchase transactions. In furtherance of this duty, the Investment Manager, as agent and attorney-in-fact with respect to the Fund, is authorized, in its discretion and without prior consultation with the Fund and the Board of Directors of the Company to buy, sell, exchange, convert for the Fund's use, and otherwise trade in any money market instruments' bonds, and other securities or assets, and to select the broker-dealers, underwriters or issuers to be used and to place orders and negotiate commissions (if any) for the execution of transactions in securities with or through such broker-dealers, underwriters, or Issuers.

1.2 Administrative services. In addition to investment advisory services set forth above in 1.1, the Investment Manager shall oversee the administration of all aspects of the Company's business and affairs with respect to the Fund and shall provide certain services required for effective administration of the Company with respect to the Fund, in connection therewith, the Investment Manager shall:

1.2.1 Office and Other Facilities. Furnish, without cost to the company, or provide and pay the cost of, such office facilities, furnishings, and office equipment as are adequate for the Company's needs.

1.2.2 Personnel. Provide, without additional remuneration from or other cost to the Company, the services of individuals competent to perform all of the Company's executive, administrative, compliance, and clerical functions that are not covered by 2.2.9 below or performed by or through employees or other persons or agents engaged by the Company (including, e.g., the custodian, accounting services agent, transfer agent, dividend disbursing agent and shareholder servicing agent).

1.2.3 Agents. Assist the Company in selecting, coordinating the activities of, supervising, and acting as liaison with any other persons and agents engaged by the Company, including the Company's custodian, accounting services agent, transfer agent, dividend disbursing agent, shareholder servicing agent, independent accountants, and independent legal counsel. The Investment Manager shall also monitor the functions of such persons and agents, including, in particular, the accounting services agent in its evaluation of the Fund's portfolio securities.

1.2.4 Directors and Officers. Authorize and permit the Investment Manager's directors, officers and employees who may be elected or appointed as

directors or officers of the Company to serve in such capacities, without remuneration from or additional cost to the Company.

1.2.5 Books and Records. Ensure that all financial, accounting, corporate, and other records required to be maintained and preserved by the Company or on its behalf will be maintained in accordance with applicable laws and regulations and that the Company's corporate existence will be maintained.

1.2.6 Reports to the Company. Furnish to or place at the disposal of the Company such information, reports, evaluations, analyses and opinions relating to its administrative functions as the Company may, at any time or from time to time, reasonably request or as the Investment Manager may deem helpful to the Company.

1.2.7 Reports and Filings. Assist in the development and preparation of all reports and communications by the Company to the Fund's shareholders and all reports and filings necessary to maintain the registrations and qualifications of the Company's shares under federal and state law.

2. Allocation of Expenses.

2.1 Expenses Paid by Investment Manager.

2.1.1 Salaries and Fees of Directors and Officers. As between the Fund and the Investment Manager, the Investment Manager shall pay all salaries, expenses and fees, if any of the directors, officers or employees of the Investment Manager who are directors, officers or employees of the Company. The Investment Manager has obtained such personnel through an agreement with National Rural Electric Cooperative Association, which has primary responsibility for the salaries, expenses and fees of persons provided to serve as directors, officers and employees of the Investment Manager.

2.1.2 Waiver or Assumption and Reimbursement of the Company's Expenses by Investment Manager. The Waiver of assumption and reimbursement by the Investment Manager of any expense of the Company that the Investment Manager is not required by this Agreement to waive, or assume and reimburse, shall not obligate the Investment Manager to waive, or assume or reimburse, the same or any similar expense of the Company on any subsequent occasion, unless so required pursuant to a separate agreement between the Company and the Investment Manager.

2.1.3 Organizational Expenses. The Investment Manager shall pay or assume all organizational expenses of the Company.

2.2 Expenses paid by the Company. The Company, with respect to the Fund, shall bear all expenses of its operations and business not specifically waived, assumed or agreed to be paid by the Investment Manager as provided in this Agreement or any other

agreement between the Company and the Investment Manager. In particular, the expenses hereby allocated to the Company, with respect to the Fund, include, but are not limited to:

2.2.1 Custody and Accounting services. All fees and expenses of depositories, custodians, accounting service agents, and other agents for transfer, receipt, safekeeping, servicing of and accounting for the Fund's cash, securities, and other property, including, among other things, fees and expenses for the calculation of standardized effective and compound yield quotations for the Fund, maintenance of ledgers, position and income reports, and settlement of fund purchases and sales.

2.2.2 Transfers Agency, shareholder servicing, and Dividend Disbursement. All costs of establishing, maintaining, and servicing accounts of shareholders of the Fund, including the Fund's proportionate share of all fees and expenses of the Company's transfer agent, shareholder services agent, dividend disbursing agent and any other agents engaged by the Company to service such Fund accounts. In addition, the company shall reimburse the Investment Manager and charge to the Fund the Fund's proportionate share of all expenses incurred by the Investment Manager in responding to telephonic and written inquiries from, and in mailing information to Fund shareholders and others who may request information on behalf of Fund shareholders, regarding matters such as shareholder account or transaction status, net asset value of Fund shares, Fund performance, and general information about the Fund.

2.2.3 Shareholder Reports. All costs of preparing, setting in type, printing, and distributing reports and other communications to shareholders of the Fund.

2.2.4 Prospectuses. All costs of preparing, setting in type, printing and mailing to shareholders of the Fund annual or more frequent revisions of the Company's Prospectus and Statement of Additional Information and any supplements thereto.

2.2.5 Shareholder Meetings. All costs incidental to holding meetings of shareholders of the Fund, including the printing of notices and proxy materials, and proxy solicitations therefore.

2.2.6 Pricing and Portfolio Valuation. All costs of daily valuation of the individual portfolio securities of the Fund and daily computation of the net asset value per share of the Fund, including (i) a proportionate share of the cost of any equipment obtained by the Company, the Investment Manager or agents of the Company or a proportionate share of the cost of any equipment currently owned by the Investment Manager that will be used to price the Fund's shares or value the Fund's assets, or (ii) the cost of the services of any agents engaged by the Company for the purpose of pricing Fund shares or valuing the assets of the Fund.

2.2.7 Communications. All charges for equipment or services used for communications between the Investment Manager or the Company and the custodian,

accounting services agent, transfer agent, shareholder servicing agent, dividend disbursing agent, or any other agent engaged by the Company to provide services to the Fund.

2.2.8 Independent Legal and Accounting Fees. The Fund's proportionate share of all charges for services and expenses of the Company's independent legal counsel and independent accountants.

2.2.9 Directors' Fees and Expenses. The Fund's proportionate share of all compensation of directors (other than those directors affiliated with the Investment Manager), all expenses incurred in connection with their services as directors, and all expenses of meetings of the Board of Directors and committees of the Board of Directors.

2.2.10 Federal Registration Fees. The Fund's proportionate share of all fees and expenses of maintaining the registration of the Company under the 1940 Act and maintaining the registration of the Fund's shares or registering additional shares of the Fund under the Securities Act of 1933, as amended (the "1933 Act"), including all fees and expenses incurred in connection with the preparation, setting in type, printing, and filing of any post-effective amendments or supplements to the Registration Statement, Prospectus, and Statement of Additional Information for the Company under the 1933 Act or the 1940 Act that may be prepared from time to time.

2.2.11 State Registration Fees. The Fund's proportionate share of all fees and expenses of maintaining the registration and qualification of the Company and of the Fund's shares for sale under the securities laws of various states and jurisdictions and registering and qualifying additional shares of the Fund, and of maintaining the registration and qualification of the Company under all other laws applicable to the Company or its business activities.

2.2.12 Issue, Redemption, and Transfer of the Fund's Shares. All expenses incurred in connection with the issue, redemption, and transfer of the Fund's shares, including the expenses of confirming all share transactions and of transmitting share certificates for the Fund.

2.2.13 Bonding and Insurance. All expenses of bond, liability, and other insurance coverage required by law or regulation or deemed advisable by the Board of Directors of the Company, including, without limitation, such bond, liability and other insurance expense that may from time to time be allocated to the Fund in a manner approved by its Board of Directors.

2.2.14 Brokerage Commissions. All brokers' commissions, if any, and other charges incident to the purchase or sale of the Fund's portfolio securities.

2.2.15 Taxes. The Fund's proportionate share of all taxes or governmental fees payable to federal, state or other governmental agencies, domestic or foreign, including issue, stamp, or transfer taxes.

2.2.16 Trade Association Fees. The Fund's proportionate share of all fees, dues and other proportionate share expenses incurred in connection with the Company's trade association or other membership in any investment organization.

2.2.17 Nonrecurring and Extraordinary Expenses. The Fund's proportionate share of such nonrecurring and extraordinary expenses as may arise, including the costs of actions, suits, or proceedings to which the Company is a party and the expenses the Company may incur as a result of its legal obligation to provide indemnification to it's officers, directors, employees, and agents.

3. Management Fees.

3.1 Compensation. The Company, with respect to the Fund, shall pay the Investment Manager as compensation for all services rendered, facilities provided and expenses waived or assumed and reimbursed by the Investment Manager, investment management fees computed as follows, based on the value of the average daily net assets of the Fund:

3.1.1 Rate. The fees with respect to the Fund shall be at the following annualized rates: .45% of average daily net assets.

3.1.2 Method of Computation. The fee shall accrue each calendar day and the sum of the daily fee accruals for the Fund shall be paid monthly to the Investment Manager on the first business day of the next calendar month. The daily fee accruals shall be computed by multiplying the fraction of one over the number of calendar days in the year by the applicable annual rates for the Fund, described in subparagraph 3.1.1, above, and multiplying the product by the net assets of the Fund as determined in accordance with the Company's Prospectus as of the close of business on the previous business day on which the Company was open for business.

3.1.3 Proration of Fee. If this Agreement becomes effective or terminates before the end of any month, the fee for the period from the effective date to the end of such month or from the beginning of such month to the date of termination, as the case may be, shall be prorated according to the proportion which such period bears to the full month in which such effectiveness or termination occurs.

4. Brokerage. Subject to seeking best execution, and subject to any policies or procedures as then approved by the Company's Board of Directors, the Investment Manager, in carrying out its duties under Paragraph 1.1, may cause the Fund to pay a broker-dealer which furnishes brokerage and research services (as such services are defined under Section 28(e) of the Securities Exchange Act of 1934, as amended (the "1934 Act")) a higher commission than that which might be charged by another broker-dealer which does not furnish brokerage and research services or which furnished brokerage and research services deemed to be of a lesser value, if the Investment Manager determines in good faith that the amount of such commission is reasonable in

relation to the value of the brokerage and research services provided by the broker-clearer viewed in terms of either that particular transaction or the overall responsibilities of the Investment Manager with respect to the other accounts, if any, as to which it exercises investment discretion (as such term is defined under Section 3(a)(35) of the 1934 Act).

5. Investment Manager's Use of the Services of Others. The Investment Manager may at its own cost (except as contemplated by Paragraph 4 of this Agreement) employ, retain or otherwise avail itself of the services or facilities of other persons or organizations for the purpose of providing the Investment Manager or the Company with (i) such statistical and other factual information; (ii) such advice regarding economic factors and trends; (iii) such advice as to occasional transactions in specific securities; (iv) or such other information, advice or assistance as the Investment Manager may deem necessary, appropriate or convenient for the discharge of its obligations hereunder or otherwise helpful to the Company or the Fund, or in the discharge of the Investment Manager's overall responsibilities with respect to the other accounts which it serves as an investment manager.

6. Ownership of Records. All records required to be maintained and preserved by the Company, with respect to the Fund, pursuant to the provisions of rules or regulations of the Securities and Exchange Commission under Section 31(a) of the 1940 Act and maintained and preserved by the Investment Manager on behalf of the Company, with respect to the Fund, are the property of the Company and shall be surrendered by the Investment Manager promptly on request by the Company.

7. Reports to Investment Manager. The Company shall furnish or otherwise make available to the Investment Manager such Prospectuses, Statements of Additional Information, financial statements, proxy statements, reports, and other information relating to the business and affairs of the Company, with respect to the Fund, as the Investment Manager may, at any time or from time to time, reasonably require in order to discharge its obligations under this Agreement.

8. Services to Other Clients. Nothing herein contained shall limit the freedom of the Investment Manager or any affiliated person of the Investment Manager to render investment supervisory and corporate administrative services to other investment companies, to act as investment counselor to other persons, firms or corporations, or to engage in other business activities; however, so long as this Agreement or any extension, renewal or amendment hereof shall remain in effect or until the Investment Manager shall otherwise consent, the Investment Manager shall be the only investment manager to the Company.

9. Limitation of Liability of Investment Manager. Neither the Investment Manager nor any of its officers, directors, or employees, nor any persons performing executive, administrative, trading, or other functions for the Company, with respect to the Fund or the Investment Manager (at the direction or request of the Investment Manager) in connection with the Investment Manager's discharge of its obligations undertaken or reasonably assumed with respect to this Agreement, shall be liable for any error of

judgment or mistake of law or for any loss suffered by the Company, with respect to the Fund, in connection with the matters to which this Agreement relates, except for loss resulting from willful misfeasance, bad faith, or gross negligence in the performance of its or their duties on behalf of the Company or from reckless disregard by the Investment Manager or any such persons of the duties of the Investment Manager under this Agreement.

10. Term of Agreement. This Agreement is an amendment and restatement of the Investment Management Agreement dated as of March 7, 1995 and shall have a term of 12 months beginning on the first day of the month following the affirmative vote of a majority of the outstanding voting securities of the Fund approving this Agreement. This Agreement shall thereafter continue from year to year, but only so long as such continuance is specifically approved at least annually by the Board of Directors of the Company or by vote of a majority of the outstanding voting securities of the Fund in accordance with the requirements of the 1940 Act, and in either event by the vote of a majority of the Board of Directors of the Company who are not "interested persons" (as defined in the 1940 Act and rules thereunder) of any such party, cast, in person, at a meeting called for the purpose of voting on such approval.

Any approval of this Agreement by the holders of a majority of the outstanding shares (as defined in the 1940 Act and rules thereunder) of the Fund shall be effective to approve or continue this Agreement with respect to the Fund, notwithstanding (i) that a comparable agreement has not been approved by the holders of a majority of the outstanding shares of any other series of the Company and (ii) that this Agreement has not been approved by the vote of a majority of the outstanding shares of the Company, unless such approval shall be required by any other applicable law or otherwise. The Investment Manager shall furnish to the Company, promptly upon its request, such information as may be reasonably necessary to evaluate the terms of this Agreement or any extension, renewal or amendment thereof.

11. Amendment and Assignment of Agreement. This Agreement may not be amended without the affirmative vote of a majority of the outstanding voting securities of the Fund, and this Agreement shall automatically and immediately terminate in the event of its assignment.

12. Termination of Agreement. This Agreement may be terminated by either party hereto, without the payment of any penalty, upon 60 days prior notice in writing to the other party; provided, that in the case of termination by the Company such action shall have been authorized by resolution of a majority of the Board of Directors of the Company who are not parties to this Agreement or interested persons of any such party, or by vote of a majority of the outstanding voting securities of the Fund.

13. Miscellaneous.

13.1 Captions. The captions in this Agreement are included for convenience of reference only and in no other way define or delineate any of the provisions hereof or otherwise affect their construction or effect.

13.2 Interpretation. Nothing herein contained shall be deemed to require the Company to take any action contrary to its Articles of Incorporation or By-Laws, or any applicable statutory or regulatory requirement to which it is subject or by which it is bound, or to relieve or deprive the Board of Directors of its responsibility for and control of the conduct of the affairs of the Company.

13.3 Definitions. Any questions of interpretation of any term or provision of this Agreement having a counterpart in or otherwise derived from a term or provision of the 1940 Act shall be resolved by reference to such term or provision of the 1940 Act and to interpretations thereof, if any, by the United States courts or, in the absence of any controlling decision of any such court, by rules, regulations or orders of the Securities and Exchange Commission validly issued pursuant to the 1940 Act. Specifically, the terms "vote of a majority of the outstanding voting securities", "interested person", "assignment", and "affiliated person" shall have the meanings assigned to them by Section 2(a) of the 1940 Act. In addition, where the effect of a requirement of the 1940 Act reflected in any provision of this Agreement is relaxed by a rule, regulation or order of the Securities and Exchange Commission, whether of special or of general application, such provision shall be deemed to incorporate the effect of such rule, regulation or order.

IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by their respective officers thereunto duly authorized and their respective corporate seals to be hereunto affixed, as of the day and year first above written.

ATTEST:                                       HOMESTEAD FUNDS, INC.
                                              on behalf of the Short-Term
                                              Government Securities Fund

/s/ Hope L. Saxton                            By: /s/ Denise Trujillo
-------------------------------                   ------------------------------
Hope L. Saxton, Secretary                         Denise Trujillo,
                                                  Vice-President and Counsel

ATTEST:                                       RE ADVISERS CORPORATION

/s/ Hope L. Saxton                            By: /s/ Peter R. Morris
-------------------------------                   ------------------------------
Hope L. Saxton, Secretary                         Peter R. Morris, President

Exhibit d(5)

INVESTMENT MANAGEMENT AGREEMENT

Investment Management Agreement, made as of the 26th day of September, 2003, by and between Homestead Funds, Inc., a Maryland corporation (the "Company"), on behalf of the Small-Company Stock Fund (the "Fund"), and RE Advisers Corporation, a Virginia corporation (the "Investment Manager").

WHEREAS, the Company engages in business as an open-end management investment company and is registered as such under the Investment Company Act of 1940, as amended (the "1940 Act"); and

WHEREAS, the Company is a series type investment company currently consisting of eight series, the Daily Income Fund, the Value Fund, the Short- Term Bond Fund, the Short-Term Government Securities Fund, the Small-Company Stock Fund, the Stock Index Fund, the Nasdaq-100 Index Tracking Stock(SM) Fund, and the International Stock Index Fund, each with its own investment program, policies, and investment objectives, and restrictions;

and

WHEREAS, the Investment Manager is engaged principally in the business of rendering investment management services and registered as an investment manager under the Investment Advisers Act of 1940, as amended; and

WHEREAS, the Company retained the Investment Manager pursuant to an Investment Management Agreement initially dated as of September 17, 1990 and desires to continue to retain the Investment Manager to render investment management services (i.e., investment advisory and administrative services) to it on behalf of the Fund in the manner and on the terms and conditions hereinafter set forth;

NOW THEREFORE, the parties hereto agree as follows:

1. Duties and Responsibilities of the Investment Manager.

1.1 Investment Advisory Services. The Investment Manager shall act as the investment manager to the Fund and shall, subject to the supervision of the Company's Board of Directors, provide the following investment advisory services: (i) formulate and implement a continuing program for the management of the assets and resources of the Fund in a manner consistent with the Fund's investment objectives, investment program, policies and restrictions, that may be amended and updated, from time to time, to reflect changes in financial and economic conditions; (ii) make all determinations with respect to the investment of the Fund's assets in accordance with applicable law and the Fund's investment objectives, investment program, policies, and restrictions as provided in the Company's Prospectus and Statement of Additional Information, as amended from time to time, provisions of the Internal Revenue Code of 1986, as amended, relating to regulated investment companies, and such other limitations as the Board of Directors of the Company may impose by notice in writing to the Investment Manager; (iii) make all

determinations as to the purchase and sale of the portfolio securities, including advising the Board of Directors as to certain matters involving the Fund's portfolio securities that are not in the nature of investment decisions;
(iv) obtain and evaluate such business and financial information relating to the economy, industries, businesses, securities markets, and securities as it may deem necessary or useful in discharging its responsibilities under this Agreement; (v) furnish the Board of Directors with periodic reports concerning the Investment Manager's economic outlook and investment strategy, as well as information concerning the Fund's portfolio activity and investment performance;
(vi) determine the creditworthiness of the issuers, obligers, or guarantors of money market and debt securities utilized by the Fund; and (vii) evaluate the creditworthiness of any entities with which the Fund proposes to engage in repurchase transactions. In furtherance of this duty, the Investment Manager, as agent and attorney-in-fact with respect to the Fund, is authorized, in its discretion and without prior consultation with the Fund and the Board of Directors of the Company to buy, sell, exchange, convert for the Fund's use, and otherwise trade in any money market instruments' bonds, and other securities or assets, and to select the broker-dealers, underwriters or issuers to be used and to place orders and negotiate commissions (if any) for the execution of transactions in securities with or through such broker-dealers, underwriters, or issuers.

1.2 Administrative services. In addition to investment advisory services set forth above in 1.1, the Investment Manager shall oversee the administration of all aspects of the Company's business and affairs with respect to the Fund and shall provide certain services required for effective administration of the Company with respect to the Fund, in connection therewith, the Investment Manager shall:

1.2.1 Office and Other Facilities. Furnish, without cost to the company, or provide and pay the cost of, such office facilities, furnishings, and office equipment as are adequate for the Company's needs.

1.2.2 Personnel. Provide, without additional remuneration from or other cost to the Company, the services of individuals competent to perform all of the Company's executive, administrative, compliance, and clerical functions that are not covered by 2.2.9 below or performed by or through employees or other persons or agents engaged by the Company (including, e.g., the custodian, accounting services agent, transfer agent, dividend disbursing agent and shareholder servicing agent).

1.2.3 Agents. Assist the Company in selecting, coordinating the activities of, supervising, and acting as liaison with any other persons and agents engaged by the Company, including the Company's custodian, accounting services agent, transfer agent, dividend disbursing agent, shareholder servicing agent, independent accountants, and independent legal counsel. The Investment Manager shall also monitor the functions of such persons and agents, including, in particular, the accounting services agent in its evaluation of the Fund's portfolio securities.

1.2.4 Directors and Officers. Authorize and permit the Investment Manager's directors, officers and employees who may be elected or appointed as

directors or officers of the Company to serve in such capacities, without remuneration from or additional cost to the Company.

1.2.5 Books and Records. Ensure that all financial, accounting, corporate, and other records required to be maintained and preserved by the Company or on its behalf will be maintained and preserved by the Company or on its behalf will be maintained in accordance with applicable laws and regulations and that the Company's corporate existence will be maintained.

1.2.6 Reports to the Company. Furnish to or place at the disposal of the Company such information, reports, evaluations, analyses, and opinions relating to its administrative functions as the Company may, at any time or from time to time, reasonably request or as the Investment Manager may deem helpful to the Company.

1.2.7 Reports and Filings. Assist in the development and preparation of all reports and communications by the Company to the Fund's shareholders and all reports and filings necessary to maintain the registrations and qualifications of the Company's shares under federal and state law.

2. Allocation of Expenses

2.1 Expenses Paid by Investment Manager.

2.1.1 Salaries and Fees of Directors and Officers. As between the Fund and the Investment Manager, the Investment Manager shall pay all salaries, expenses and fees, if any of the directors, officers or employees of the Investment Manager who are directors, officers or employees of the Company. The Investment Manager has obtained such personnel through an agreement with National Rural Electric Cooperative Association, which has primary responsibility for the salaries, expenses and fees of persons provided to serve as directors, officers and employees of the Investment Manager.

2.1.2 Waiver or Assumption and Reimbursement of the Company's Expenses by Investment Manager. The Waiver of assumption and reimbursement by the Investment Manager of any expense of the Company that the Investment Manager is not required by this Agreement to waive, or assume and reimburse, shall not obligate the Investment Manager to waive, or assume or reimburse, the same or any similar expense of the Company on any subsequent occasion, unless so required pursuant to a separate agreement between the Company and the Investment Manager.

2.1.3 Organizational Expenses. The Investment Manager shall pay or assume all organizational expenses of the Company.

2.2 Expenses paid by the Company. The Company, with respect to the Fund, shall bear all expenses of its operations and business not specifically waived, assumed or agreed to be paid by the Investment Manager as provided in this Agreement or any other

agreement between the Company and the Investment Manager. In particular, the expenses hereby allocated to the Company, with respect to the Fund, include, but are not limited to:

2.2.1 Custody and Accounting services. All fees and expenses of depositories, custodians, accounting service agents, and other agents for the transfer, receipt, safekeeping, servicing of and accounting for the Fund's cash, securities, and other property, including, among other things, fees and expenses for the calculation of standardized effective and compound yield quotations for the Fund, maintenance of ledgers, position and income reports, and settlement of fund purchases and sales.

2.2.2 Transfer Agency, shareholder servicing, and Dividend Disbursement. All costs of establishing, maintaining, and servicing accounts of shareholders of the Fund, including the Fund's proportionate share of all fees and expenses of the Company's transfer agent, shareholder services agent, dividend disbursing agent and any other agents engaged by the Company to service such Fund accounts. In addition, the company shall reimburse the Investment Manager and charge to the Fund the Fund's proportionate share of all expenses incurred by the Investment Manager in responding to telephonic and written inquiries from, and in mailing information to Fund shareholders and others who may request information on behalf of Fund shareholders, regarding matters such as shareholder account or transaction status, net asset value of Fund shares, Fund performance, and general information about the Fund.

2.2.3 Shareholder Reports. All costs of preparing, setting in type, printing, and distributing reports and other communications to shareholders of the Fund.

2.2.4 Prospectuses. All costs of preparing, setting in type, printing and mailing to shareholders of the Fund annual or more frequent revisions of the Company's Prospectus and Statement of Additional Information and any supplements thereto.

2.2.5 Shareholder Meetings. All costs incidental to holding meetings of shareholders of the Fund, including the printing of notices and proxy materials, and proxy solicitations therefore.

2.2.6 Pricing and Portfolio Valuation. All costs of daily valuation of the individual portfolio securities of the Fund and daily computation of the net asset value per share of the Fund, including (i) a proportionate share of the cost of any equipment obtained by the Company, the Investment Manager or agents of the Company or a proportionate share of the cost of any equipment currently owned by the Investment Manager that will be used to price the Fund's shares or value the Fund's assets, or (ii) the cost of the services of any agents engaged by the Company for the purpose of pricing Fund shares or valuing the assets of the Fund.

2.2.7 Communications. All charges for equipment or services used for communications between the Investment Manager or the Company and the custodian,

accounting services agent, transfer agent, shareholder servicing agent, dividend disbursing agent, or any other agent engaged by the Company to provide services to the Fund.

2.2.8 Independent Legal and Accounting Fees. The Fund's proportionate share of all charges for services and expenses of the Company's independent legal counsel and independent accountants.

2.2.9 Directors' Fees and Expenses. The Fund's proportionate share of all compensation of directors (other than those directors affiliated with the Investment Manager), all expenses incurred in connection with their services as directors, and all expenses of meetings of the Board of Directors and committees of the Board of Directors.

2.2.10 Federal Registration Fees. The Fund's proportionate share of all fees and expenses of maintaining the registration of the Company under the 1940 Act and maintaining the registration of the Fund's shares or registering additional shares of the Fund under the Securities Act of 1933, as amended (the "1933 Act"), including all fees and expenses incurred in connection with the preparation, setting in type, printing, and filing of any post-effective amendments or supplements to the Registration Statement, Prospectus, and Statement of Additional Information for the Company under the 1933 Act or the 1940 Act that may be prepared from time to time.

2.2.11 State Registration Fees. The Fund's proportionate share of all fees and expenses of maintaining the registration and qualification of the Company and of the Fund's shares for sale under the securities laws of various states and jurisdictions and registering and qualifying additional shares of the Fund, and of maintaining the registration and qualification of the Company under all other laws applicable to the Company or its business activities.

2.2.12 Issue, Redemption, and Transfer of the Fund's Shares. All expenses incurred in connection with the issue, redemption, and transfer of the Fund's shares, including the expenses of confirming all share transactions and of transmitting share certificates for the Fund.

2.2.13 Bonding and Insurance. All expenses of bond, liability, and other insurance coverage required by law or regulation or deemed advisable by the Board of Directors of the Company, including, without limitation, such bond, liability and other insurance expense that may from time to time be allocated to the Fund in a manner approved by its Board of Directors.

2.2.14 Brokerage Commissions. All brokers' commissions, if any, and other charges incident to the purchase or sale of the Fund's portfolio securities.

2.2.15 Taxes. The Fund's proportionate share of all taxes or governmental fees payable to federal, state or other governmental agencies, domestic or foreign, including issue, stamp, or transfer taxes.

2.2.16 Trade Association Fees. The Fund's proportionate share of all fees, dues and other expenses incurred in connection with the Company's trade association or other membership in any investment organization.

2.2.17 Nonrecurring and Extraordinary Expenses. The Fund's proportionate share of such nonrecurring and extraordinary expenses as may arise, including the costs of actions, suits, or proceedings to which the Company is a party and the expenses the Company may incur as a result of its legal obligation to provide indemnification to its officers, directors, employees, and agents.

3. Management Fees.

3.1 Compensation. The Company, with respect to the Fund, shall pay the Investment Manager as compensation for all services rendered, facilities provided and expenses waived or assumed and reimbursed by the Investment Manager, investment management fees computed as follows, based on the value of the average daily net assets of the Fund:

3.1.1 Rate. The fees with respect to the Fund shall be at the following annualized rates: 0.85% of average daily net assets up to $200 million; 0.75% of average daily net assets in excess of $200 million.

3.1.2 Method of Computation. The fee shall accrue each calendar day and the sum of the daily fee accruals for the Fund shall be paid monthly to the Investment Manager on the first business day of the next calendar month. The daily fee accruals shall be computed by multiplying the fraction of one over the number of calendar days in the year by the applicable annual rates for the Fund, described in subparagraph 3.1.1, above, and multiplying the product by the net assets of the Fund as determined in accordance with the Company's Prospectus as of the close of business on the previous business day on which the Company was open for business.

3.1.3 Proration of Fee. If this Agreement becomes effective or terminates before the end of any month, the fee for the period from the effective date to the end of such month or from the beginning of such month to the date of termination, as the case may be, shall be prorated according to the proportion which such period bears to the full month in which such effectiveness or termination occurs.

4. Brokerage. Subject to seeking best execution, and subject to any policies or procedures as then approved by the Company's Board of Directors, the Investment Manager, in carrying out its duties under Paragraph 1.1, may cause the fund to pay a broker-dealer which furnishes brokerage and research services (as such services are defined under Section 28(e) of the Securities Exchange Act of 1934, as amended (the "1934 Act")) a higher commission than that which might be charged by another broker-dealer which does not furnish brokerage and research services or which furnished brokerage and research services deemed to be of lesser value, if the Investment Manager

determines in good faith that the amount of such commission is reasonable in relation to the value of the brokerage and research services provided by the broker-clearer viewed in terms of either that particular transaction or the overall responsibilities of the Investment Manager with respect to the other accounts, if any, as to which it exercises investment discretion (as such term is defined under Section 3(a)(35) of the 1934 Act).

5. Investment Manager's Use of the Service of Others. The Investment Manager may at its own cost (except as contemplated by Paragraph 4 of this Agreement) employ, retain or otherwise avail itself of the services or facilities of other persons or organizations for the purpose of providing the Investment Manager or the Company with (i) such statistical and other factual information; (ii) such advice regarding economic factors and trends; (iii) such advice as to occasional transactions in specific securities; (iv) or such other information, advice or assistance as the Investment Manager may deem necessary, appropriate or convenient for the discharge of its obligations hereunder or otherwise helpful to the Company or the Fund, or in the discharge or the Investment Manager's overall responsibilities with respect to the other accounts which it serves as an investment manager.

6. Ownership of Records. All records required to be maintained and preserved by the Company, with respect to the Fund, pursuant to the provisions of rules or regulations of the Securities and Exchange Commission under Section 31(a) of the 1940 Act and maintained and preserved by the Investment Manager on behalf of the Company, with respect to the Fund, are the property of the Company and shall be surrendered by the Investment Manager promptly on request by the Company.

7. Reports to Investment Manager. The Company shall furnish or otherwise make available to the Investment Manager such Prospectuses, Statements of Additional Information, financial statements, proxy statements, reports, and other information relating to the business and affairs of the Company, with respect to the Fund, as the Investment Manager may, at any time or from time to time, reasonably require in order to discharge its obligations under this Agreement.

8. Services to Other Clients. Nothing herein contained shall limit the freedom of the Investment Manager or any affiliated person of the Investment Manager to render investment supervisory and corporate administrative services to other investment companies, to act as investment counselor to other persons, firms or corporations, or to engage in other business activities; however, so long as this Agreement or any extension, renewal or amendment hereof shall remain in effect or until the Investment Manager shall otherwise consent, the Investment Manager shall be the only investment manager to the Company.

9. Limitation of Liability of Investment Manager. Neither the Investment Manager nor any of its officers, directors, or employees, nor any persons performing executive, administrative, trading, or other functions for the Company, with respect to the Fund or the Investment Manager (at the direction or request of the Investment Manager) in connection with the Investment Manager's discharge of its obligations undertaken or

reasonably assumed with respect to this Agreement, shall be liable for any error of judgment or mistake of law or for any loss suffered by the Company, with respect to the Fund, in connection with the matters to which this Agreement relates, except for loss resulting from willful misfeasance, bad faith, or gross negligence in the performance of its or their duties on behalf of the Company or from reckless disregard by the Investment Manager or any such persons of the duties of the Investment Manager under this Agreement.

10. Term of Agreement. This Agreement shall have a term of 12 months beginning on the first day of the month following the affirmative vote of a majority of the outstanding voting securities of the Fund approving this Agreement. This Agreement shall thereafter continue from year to year, but only so long as such continuance is specifically approved at least annually by the Board of Directors of the Company or by vote of a majority of the outstanding voting securities of the Fund in accordance with the requirements of the 1940 Act, and in either event by the vote of a majority of the Board of Directors of the Company who are not "interested persons" (as defined in the 1940 Act and rules thereunder) of any such party, cast, in person, at a meeting called for the purpose of voting on such approval.

Any approval of this Agreement by the holders of a majority of the outstanding shares (as defined in the 1940 Act and rules thereunder) of the Fund shall be effective to approve or continue this Agreement with respect to the Fund, notwithstanding (i) that a comparable agreement has not been approved by the holders of a majority of the outstanding shares of any other series of the Company and (ii) that this Agreement has not been approved by the vote of a majority of the outstanding shares of the Company, unless such approval shall be required by any other applicable law or otherwise. The Investment Manager shall furnish to the Company, promptly upon its request, such information as may be reasonably necessary to evaluate the terms of this Agreement or any extension, renewal or amendment thereof.

11. Amendment and Assignment of Agreement. This Agreement may not be amended without the affirmative vote of a majority of the outstanding voting securities of the Fund, and this Agreement shall automatically and immediately terminate in the event of its assignment.

12. Termination of Agreement. This Agreement may be terminated by either party hereto, without the payment of any penalty, upon 60 days prior notice in writing to the other party; provided, that in the case of termination by the Company such action shall have been authorized by resolution of a majority of the Board of Directors of the Company who are not parties to this Agreement or interested persons of any such party, or by vote of a majority of the outstanding voting securities of the Fund.

13. Miscellaneous.

13.1 Captions. The captions in this Agreement are included for convenience of reference only and in no other way define or delineate any of the provisions hereof or otherwise affect their construction or effect.

13.2 Interpretation. Nothing herein contained shall be deemed to require the Company to take any action contrary to its Articles of Incorporation or By-Laws, or any applicable statutory or regulatory requirement to which it is subject or by which it is bound, or to relieve or deprive the Board of Directors of its responsibility for and control of the conduct of the affairs of the Company.

13.3 Definitions. Any question of interpretation of any term or provision of this Agreement having a counterpart in or otherwise derived from a term or provision of the 1940 Act shall be resolved by reference to such term or provision of the 1940 Act and to interpretations thereof, if any, by the United States courts or, in the absence of any controlling decision of any such court, by rules, regulations or orders of the Securities and Exchange Commission validly issued pursuant to the 1940 Act. Specifically, the terms "vote of a majority of the outstanding voting securities", "interested person", "assignment", and "affiliated person" shall have the meanings assigned to them by Section 2(a) of the 1940 Act. In addition, where the effect of a requirement of the 1940 Act reflected in any provision of this Agreement is relaxed by a rule, regulation or order of the Securities and Exchange Commission, whether of special or of general application, such provision shall be deemed to incorporate the effect of such rule, regulation or order.

IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by their respective officers thereunto duly authorized and their respective corporate seals to be hereunto affixed, as of the day and year first above written.

ATTEST:                                       HOMESTEAD FUNDS, INC.
                                              on behalf of the Small-Company
                                              Stock Fund

/s/ Hope L. Saxton                            By: /s/ Denise Trujillo
------------------------------------              ------------------------------
Hope L. Saxton, Secretary                         Denise Trujillo,
                                                  Vice-President and Counsel

ATTEST:                                       RE ADVISERS CORPORATION

/s/ Hope L. Saxton                            By: /s/ Peter R. Morris
------------------------------------              ------------------------------
Hope L. Saxton, Secretary                         Peter R. Morris, President

Exhibit d(6)

INVESTMENT MANAGEMENT AGREEMENT

Investment Management Agreement, made as of the 26th day of September, 2003, by and between Homestead Funds, Inc., a Maryland corporation (the "Company"), on behalf of the Nasdaq-100 Index Tracking Stock(SM) Fund (the "Fund"), and RE Advisers Corporation, a Virginia corporation (the "Investment Manager").

WHEREAS, the Company engages in business as an open-end management investment company and is registered as such under the Investment Company Act of 1940, as amended (the "1940 Act"); and

WHEREAS, the Company is a series type investment company currently consisting of eight series, the Daily Income Fund, the Value Fund, the Short-Term Bond Fund, the Short-Term Government Securities Fund, the Small-Company Stock Fund, the Stock Index Fund, the Nasdaq-100 Index Tracking Stock(SM) Fund, and the International Stock Index Fund, each with its own investment program, policies, and investment objectives, and restrictions; and

WHEREAS, the Investment Manager is engaged principally in the business of rendering investment management services and registered as an investment manager under the Investment Advisers Act of 1940, as amended; and

WHEREAS, the Company retained the Investment Manager pursuant to an Investment Management Agreement initially dated as of September 17, 1990 and desires to continue to retain the Investment Manager to render investment management services (i.e., investment advisory and administrative services) to it on behalf of the Fund in the manner and on the terms and conditions hereinafter set forth;

NOW THEREFORE, the parties hereto agree as follows:

1. Duties and Responsibilities of the Investment Manager.

1.1 Investment Advisory Services. The Investment Manager shall act as the investment manager to the Fund and shall, subject to the supervision of the Company's Board of Directors, provide the following investment advisory services: (i) formulate and implement a continuing program for the management of the assets and resources of the Fund in a manner consistent with the Fund's investment objectives, investment program, policies and restrictions, that may be amended and updated, from time to time, to reflect changes in financial and economic conditions; (ii) make all determinations with respect to the investment of the Fund's assets in accordance with applicable law and the Fund's investment objectives, investment program, policies, and restrictions as provided in the Company's Prospectus and Statement of Additional Information, as amended from time to time, provisions of the Internal Revenue Code of 1986, as amended, relating to regulated investment companies, and such other limitations as the Board of Directors of the Company may impose by notice in writing to the investment Manager; (iii) make all determinations as to the purchase and sale of portfolio securities, including advising the

Board of Directors as to certain matters involving the Fund's portfolio securities that are not in the nature of investment decisions; (iv) obtain and evaluate such business and financial information relating to the economy, industries, businesses, security markets, and securities as it may deem necessary or useful in discharging its responsibilities under this Agreement;
(v) furnish the Board of Directors with periodic reports concerning the Investment Manager's economic outlook and investment strategy, as well as information concerning the Fund's portfolio activity and investment performance;
(vi) determine the creditworthiness of the issuers, obligors, or guarantors of money market and debt securities utilized by the Fund; and (vii) evaluate the creditworthiness of any entities with which the Fund proposes to engage in repurchase transactions. In furtherance of this duty, the Investment Manager, as agent and attorney-in-fact with respect to the Fund, is authorized, in its discretion and without prior consultation with the Fund and the Board of Directors of the Company to buy, sell, exchange, convert for the Fund's use, and otherwise trade in any money market instruments' bonds, and other securities or assets, and to select the broker-dealers, underwriters or issuers to be used and to place orders and negotiate commissions (if any) for the execution of transactions in securities with or through such broker-dealers, underwriters, or issuers.

1.2 Administrative services. In addition to investment advisory services set forth above in 1.1, the Investment Manager shall oversee the administration of all aspects of the Company's business and affairs with respect to the Fund and shall provide certain services required for effective administration of the Company with respect to the Fund, in connection therewith, the Investment Manager shall:

1.2.1 Office and Other Facilities. Furnish, without cost to the company, or provide and pay the cost of, such office facilities, furnishings, and office equipment as are adequate for the Company's needs.

1.2.2 Personnel. Provide, without additional remuneration from or other cost to the Company, the services of individuals competent to perform all of the Company's executive, administrative, compliance, and clerical functions that are not covered by 2.2.9 below or performed by or through employees or other persons or agents engaged by the Company (including, e.g., the custodian, accounting services agent, transfer agent, dividend disbursing agent and shareholder servicing agent).

1.2.3 Agents. Assist the Company in selecting, coordinating the activities of, supervising, and acting as liaison with any other persons and agents engaged by the Company, including the Company's custodian, accounting services agent, transfer agent, dividend disbursing agent, shareholder servicing agent, independent accountants, and independent legal counsel. The Investment Manager shall also monitor the functions of such persons and agents, including, in particular, the accounting services agent in its evaluation of the Fund's portfolio securities.

1.2.4 Directors and Officers. Authorize and permit the Investment Manager's directors, officers and employees who may be elected or appointed as

directors or officers of the Company to serve in such capacities, without remuneration from or additional cost to the Company.

1.2.5 Books and Records. Ensure that all financial, accounting, corporate, and other records required to be maintained and preserved by the Company or on its behalf will be maintained in accordance with applicable laws and regulations and that the Company's corporate existence will be maintained.

1.2.6 Reports to the Company. Furnish to or place at the disposal of the Company such information, reports, evaluations, analyses, and opinions relating to its administrative functions as the Company may, at any time or from time to time, reasonably request or as the Investment Manager may deem helpful to the Company.

1.2.7 Reports and Filings. Assist in the development and preparation of all reports and communications by the Company to the Fund's shareholders and all reports and filings necessary to maintain the registrations and qualifications of the Company's shares under federal and state law.

2. Allocation of Expenses.

2.1 Expenses Paid by the Investment Manager.

2.1.1 Salaries and Fees of Directors and Officers. As between the Fund and the Investment Manager, the Investment Manager shall pay all salaries, expenses and fees, if any of the directors, officers or employees of the Investment Manager who are directors, officers or employees of the Company. The Investment Manager has obtained such personnel through an agreement with National Rural Electric Cooperative Association, which has primary responsibility for the salaries, expenses and fees of persons provided to serve as directors, officers and employees of the Investment Manager.

2.1.2 Waiver or Assumption and Reimbursement of the Company's Expenses by Investment Manager. The Waiver of assumption and reimbursement by the Investment Manager of any expense of the Company that the Investment Manager is not required by this Agreement to waive, or assume and reimburse, shall not obligate the Investment Manager to waive, or assume or reimburse, the same or any similar expense of the Company on any subsequent occasion, unless so required pursuant to a separate agreement between the Company and the Investment Manager.

2.1.3 Organizational Expenses. The Investment Manager shall pay or assume all organizational expenses of the Company.

2.2 Expenses paid by the Company. The Company, with respect to the Fund, shall bear all expenses of its operations and business not specifically waived, assumed or agreed to be paid by the Investment Manager as provided in this Agreement or any other agreement between the Company and the Investment Manager. In particular, the

expenses hereby allocated to the Company, with respect to the Fund, include, but are not limited to:

2.2.1 Custody and Accounting services. All fees and expenses of depositories, custodians, accounting service agents, and other agents for the transfer, receipt, safekeeping, servicing of and accounting for the Fund's cash, securities, and other property, including, among other things, fees and expenses for the calculation of standardized effective and compound yield quotations for the Fund, maintenance of ledgers, position and income reports, and settlement of fund purchases and sales.

2.2.2 Transfer Agency, shareholder servicing, and Dividend Disbursement. All costs of establishing, maintaining, and servicing accounts of shareholders of the Fund, including the Fund's proportionate share of all fees and expenses of the Company's transfer agent, shareholder services agent, dividend disbursing agent and any other agents engaged by the Company to service such Fund accounts. In addition, the company shall reimburse the Investment Manager and charge to the Fund the Fund's proportionate share of all expenses incurred by the Investment Manager in responding to telephonic and written inquiries from, and in mailing information to Fund shareholders and others who may request information on behalf of Fund shareholders, regarding matters such as shareholder account or transaction status, net asset value of Fund shares, Fund performance, and general information about the Fund.

2.2.3 Shareholder Reports. All costs of preparing, setting in type, printing, and distributing reports and other communications to shareholders of the Fund.

2.2.4 Prospectuses. All costs of preparing, setting in type, printing and mailing to shareholders of the Fund annual or more frequent revisions of the Company's Prospectus and Statement of Additional Information and any supplements thereto.

2.2.5 Shareholder Meetings. All costs incidental to holding meetings of shareholders of the Fund, including the printing of notices and proxy materials, and proxy solicitations therefor.

2.2.6 Pricing and Portfolio Valuation. All costs of daily valuation of the individual portfolio securities of the Fund and daily computation of the net asset value per share of the Fund, including (i) a proportionate share of the cost of any equipment obtained by the Company, the Investment Manager or agents of the Company or a proportionate share of the cost of any equipment currently owned by the Investment Manager that will be used to price the Fund's shares or value the Fund's assets, or (ii) the cost of the services of any agents engaged by the Company for the purpose of pricing Fund shares or valuing the assets of the Fund.

2.2.7 Communications. All charges for equipment or services used for communications between the Investment Manager or the Company and the custodian, accounting services agent, transfer agent, shareholder servicing agent, dividend

disbursing agent, or any other agent engaged by the Company to provide services to the Fund.

2.2.8 Independent Legal and Accounting Fees. The Fund's proportionate share of all charges for services and expenses of the Company's independent legal counsel and independent accountants.

2.2.9 Directors' Fees and Expenses. The Fund's proportionate share of all compensation of directors (other than those directors affiliated with the Investment Manager), all expenses incurred in connection with their services as directors, and all expenses of meetings of the Board of Directors and committees of the Board of Directors.

2.2.10 Federal Registration Fees. The Fund's proportionate share of all fees and expenses of maintaining the registration of the Company under the 1940 Act and maintaining the registration of the Fund's shares or registering additional shares of the Fund under the Securities Act of 1933, as amended (the "1933 Act"), including all fees and expenses incurred in connection with the preparation, setting in type, printing, and filing of any post-effective amendments or supplements to the Registration Statement, Prospectus, and Statement of Additional Information for the Company under the 1933 Act or the 1940 Act that may be prepared from time to time.

2.2.11 State Registration Fees. The Fund's proportionate share of all fees and expenses of maintaining the registration and qualification of the Company and of the Fund's shares for sale under the securities laws of various states and jurisdictions and registering and qualifying additional shares of the Fund, and of maintaining the registration and qualification of the Company under all other laws applicable to the Company or its business activities.

2.2.12 Issue, Redemption, and Transfer of the Fund's Shares. All expenses incurred in connection with the issue, redemption, and transfer of the Fund's shares, including the expenses of confirming all share transactions and of transmitting share certificates for the Fund.

2.2.13 Bonding and Insurance. All expenses of bond, liability, and other insurance coverage required by law or regulation or deemed advisable by the Board of Directors of the Company, including, without limitation, such bond, liability and other insurance expense that may from time to time be allocated to the Fund in a manner approved by its Board of Directors.

2.2.14 Brokerage Commissions. All brokers' commissions, if any, and other charges incident to the purchase or sale of the Fund's portfolio securities.

2.2.15 Taxes. The Fund's proportionate share of all taxes or governmental fees payable to federal, state or other governmental agencies, domestic or foreign, including issue, stamp, or transfer taxes.

2.2.16 Trade Association Fees. The Fund's proportionate share of all fees, dues and other expenses incurred in connection with the Company's trade association or other membership in any investment organization.

2.2.17 Nonrecurring and Extraordinary Expenses. The Fund's proportionate share of such nonrecurring and extraordinary expenses as may arise, including the costs of actions, suits, or proceedings to which the Company is a party and the expenses the Company may incur as a result of its legal obligation to provide indemnification to its officers, directors, employees, and agents.

3. Management Fees.

3.1 Compensation. The Company, with respect to the Fund, shall pay the Investment Manager as compensation for all services rendered, facilities provided and expenses waived or assumed and reimbursed by the Investment Manager, investment management fees computed as follows, based on the value of the average daily net assets of the Fund:

3.1.1 Rate. The fees with respect to the Fund shall be at the following annualized rates: 0.25% of average daily net assets.

3.1.2 Method of Computation. The fee shall accrue each calendar day and the sum of the daily fee accruals for the Fund shall be paid monthly to the Investment Manager on the first business day of the next calendar month. The daily fee accruals shall be computed by multiplying the fraction of one over the number of calendar days in the year by the applicable annual rates for the Fund, described in subparagraph 3.1.1, above, and multiplying the product by the net assets of the Fund as determined in accordance with the Company's Prospectus as of the close of business on the previous business day on which the Company was open for business.

3.1.3 Proration of Fee. If this Agreement becomes effective or terminates before the end of any month, the fee for the period from the effective date to the end of such month or from the beginning of such month to the date of termination, as the case may be, shall be prorated according to the proportion which such period bears to the full month in which such effectiveness or termination occurs.

4. Brokerage. Subject to seeking best execution, and subject to any policies or procedures as then approved by the Company's Board of Directors, the Investment Manager, in carrying our its duties under paragraph 1.1, may cause the Fund to pay a broker-dealer which furnishes brokerage and research services (as such services are defined under Section 28(e) of the Securities Exchange Act of 1934, as amended (the "1934 Act")) a higher commission than that which might be charged by another broker-dealer which does not furnish brokerage and research services or which furnished brokerage and research services deemed to be of lesser value, if the Investment Manager determines in good faith that the amount of such commission is reasonable in relation to the value of the brokerage and research services provided by the broker-clearer viewed in

terms of either that particular transaction or the overall responsibilities of the Investment Manager with respect to the other accounts, if any, as to which it exercises investment discretion (as such term is defined under Section 3(a)(35) of the 1934 Act).

5. Investment Manager's Use of the Services of Others. The Investment Manager may at its own cost (except as contemplated by Paragraph 4 of this Agreement) employ, retain or otherwise avail itself of the services or facilities of other persons or organizations for the purpose of providing the Investment Manager or the Company with (i) such statistical and other factual information; (ii) such advice regarding economic factors and trends; (iii) such advice as to occasional transactions in specific securities; (iv) or such other information, advice or assistance as the Investment Manager may deem necessary, appropriate or convenient for the discharge of its obligations hereunder or otherwise helpful to the Company or the Fund, or in the discharge of the Investment Manager's overall responsibilities with respect to the other accounts which it serves as an investment manager.

6. Ownership of Records. All records required to be maintained and preserved by the Company, with respect to the Fund, pursuant to the provisions of rules or regulations of the Securities and Exchange Commission under Section 31(a) of the 1940 Act and maintained and preserved by the Investment Manager on behalf of the Company, with respect to the Fund, are the property of the Company and shall be surrendered by the Investment Manager promptly on request by the Company.

7. Reports to Investment Manager. The Company shall furnish or otherwise make available to the Investment Manager such Prospectuses, Statements of Additional Information, financial statements, proxy statements, reports, and other information relating to the business and affairs of the Company, with respect to the Fund, as the Investment Manager may, at any time or from time to time, reasonably require in order to discharge its obligations under this Agreement.

8. Services to Other Clients. Nothing herein contained shall limit the freedom of the Investment Manager or any affiliated person of the Investment Manager to render investment supervisory and corporate administrative services to other investment companies, to act as investment counselor to other persons, firms or corporations, or to engage in other business activities; however, so long as this Agreement or any extension, renewal or amendment hereof shall remain in effect or until the Investment Manager shall otherwise consent, the Investment Manager shall be the only investment manager to the Company.

9. Limitation of Liability of Investment Manager. Neither the Investment Manager nor any of its officers, directors, or employees, nor any persons performing executive, administrative, trading, or other functions for the Company, with respect to the fund or the Investment Manager (at the direction or request of the Investment Manager) in connection with the Investment Manager's discharge of its obligations undertaken or reasonably assumed with respect to this Agreement, shall be liable for any error of judgment or mistake of law or for any loss suffered by the Company, with respect to the

Fund, in connection with the matters to which this Agreement relates, except for loss resulting from willful misfeasance, bad faith, or gross negligence in the performance of its or their duties on behalf of the Company or from reckless disregard by the Investment Manager or any such persons of the duties of the Investment Manager under this Agreement.

10. Term of Agreement. This Agreement shall have a term of 12 months beginning on the first day of the month following the affirmative vote of a majority of the outstanding voting securities of the Fund approving this Agreement. This Agreement shall thereafter continue from year to year, but only so long as such continuance is specifically approved at least annually by the Board of Directors of the Company or by vote of a majority of the outstanding voting securities of the Fund in accordance with the requirements of the 1940 Act, and in either event by the vote of a majority of the Board of Directors of the Company who are not "interested persons" (as defined in the 1940 Act and rules thereunder) of any such party, cast, in person, at a meeting called for the purpose of voting on such approval.

Any approval of this Agreement by the holders of a majority of the outstanding shares (as defined in the 1940 Act and rules thereunder) of the Fund shall be effective to approve or continue this Agreement with respect to the Fund, notwithstanding (i) that a comparable agreement has not been approved by the holders of a majority of the outstanding shares of any other series of the Company and (ii) that this Agreement has not been approved by the vote of a majority of the outstanding shares of the Company, unless such approval shall be required by any other applicable law or otherwise. The Investment Manager shall furnish to the Company, promptly upon its request, such information as may be reasonably necessary to evaluate the terms of this Agreement or any extension, renewal or amendment thereof.

11. Amendment and Assignment of Agreement. This Agreement may not be amended without the affirmative vote of a majority of the outstanding voting securities of the Fund, and this Agreement shall automatically and immediately terminate in the event of its assignment.

12. Termination of Agreement. This Agreement may be terminated by either party hereto, without the payment of any penalty, upon 60 days prior notice in writing to the other party; provided, that in the case of termination by the Company such action shall have been authorized by resolution of a majority of the Board of Directors of the Company who are not parties to this Agreement or interested persons of any such party, or by vote of a majority of the outstanding voting securities of the Fund.

13. Miscellaneous.

13.1. Captions. The captions in this Agreement are included for convenience of reference only and in no other way define or delineate any of the provisions hereof or otherwise affect their construction or effect.

13.2. Interpretation. Nothing herein contained shall be deemed to require the Company to take any action contrary to its Articles of Incorporation or By-Laws, or any applicable statutory or regulatory requirement to which it is subject or by which it is bound, or to relieve or deprive the Board of Directors of its responsibility for and control of the conduct of the affairs of the Company.

13.3 Definitions. Any question of interpretation of any term or provision of this Agreement having a counterpart in or otherwise derived from a term or provision of the 1940 Act shall be resolved by reference to such term or provision of the 1940 Act and to interpretations thereof, if any, by the United States courts or, in the absence of any controlling decision of any such court, by rules, regulations or orders of the Securities and Exchange Commission validly issued pursuant to the 1940 Act. Specifically, the terms "vote of a majority of the outstanding voting securities", "interested person", "assignment", and "affiliated person" shall have the meanings assigned to them by Section 2(a) of the 1940 Act. In addition, where the effect of a requirement of the 1940 Act reflected in any provision of this Agreement is relaxed by a rule, regulation or order of the Securities and Exchange Commission, whether of special or of general application, such provision shall be deemed to incorporate the effect of such rule, regulation or order.

IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by their respective officers thereunto duly authorized and their respective corporate seals to be hereunto affixed, as of the day and year first above written.

ATTEST:                                       HOMESTEAD FUNDS, INC.
                                              on behalf of the Nasdaq-100 Index
                                              Tracking Stock(SM) Fund

/s/Hope L. Saxton                             By: /s/Denise Trujillo
---------------------------                       ------------------------------
Hope L. Saxton, Secretary                         Denise Trujillo,
                                                  Vice-President and Counsel

ATTEST:                                       RE ADVISERS CORPORATION

/s/Hope L. Saxton                             By: /s/Peter R. Morris
---------------------------                       ------------------------------
Hope L. Saxton, Secretary                         Peter R. Morris, President

Exhibit h(2)

AMENDMENT NO. 1 TO THE
TRANSFER AGENCY AND SERVICE AGREEMENT

THIS AMENDMENT is made and entered into as of January 1, 2003, by and between Homestead Funds, Inc. (the "Fund") and National Financial Data Services, Inc. (the "Transfer Agent").

WHEREAS, pursuant to the Transfer Agency and Service Agreement dated as of September 4, 2000 (the "Agreement") between the Fund and the Transfer Agent, the Transfer Agent performs certain transfer agency and recordkeeping services for the Fund as described therein;

WHEREAS, the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 and the rules and regulations promulgated thereunder (collectively, the "USA PATRIOT Act") impose new anti-money laundering requirements on financial institutions, including mutual funds;

WHEREAS, the Fund has adopted and implemented a written anti-money laundering program as required by the USA PATRIOT Act;

WHEREAS, the USA PATRIOT Act authorizes a mutual fund to delegate to a service provider, including its transfer agent, the implementation and operation of aspects of its anti-money laundering program; and

WHEREAS, the Fund desires to delegate to the Transfer Agent the implementation and operation of certain aspects of the Fund's anti-money laundering program and the Transfer Agent desires to accept such delegation.

NOW THEREFORE, in consideration of the foregoing and the mutual covenants and agreements hereinafter contained, the parties hereby agree to amend the Agreement, pursuant to the terms thereof, by adding the following provisions:

1. Anti-Money Laundering Duties

1.1 The Transfer Agent agrees to perform the duties set forth below with respect to the ownership of shares in the Fund for which the Transfer Agent maintains the applicable shareholder information. This list of duties may be amended from time to time by mutual agreement of the parties upon the execution by the parties of a subsequent amendment that includes a revised list of duties.

- Submit all new account and registration maintenance transactions through the Office of Foreign Assets Control ("OFAC") database and such other U.S. Government-issued lists or databases of trade restricted individuals or entities as may be required from time to time, respond to confirmed matches, and notify the Fund of any match.

- Submit special payee checks through the OFAC database, respond to confirmed matches, and notify the Fund of any match.

- Review redemption transactions that occur within thirty (30) days of account establishment or maintenance.

- Review wires sent pursuant to banking instructions other than those on file with the Transfer Agent.

- Review accounts with small balances followed by large purchases.

- Review accounts with frequent activity within a specified date range followed by a large redemption.

- On a daily basis, review purchase and redemption activity per tax identification number ("TIN") within the Funds to determine if activity for that TIN exceeded the $100,000 threshold on any given day.

- Compare all new accounts and registration maintenance through the Known Offenders Database and notify the Fund of any match.

- Monitor and track cash equivalents under $10,000 for a rolling twelve-month period and file IRS Form 8300 and issue the shareholder notices required by the IRS, promptly reporting any such filing or notice to the Fund.

- Determine when a suspicious activity report ("SAR") should be filed as required by regulations applicable to mutual funds; prepare and file the SAR; provide the Fund with a copy of the SAR within a reasonable time after filing; notify the Fund if any further communication is received from U.S. Department of the Treasury or other law enforcement agencies regarding any SAR that has been filed.

- Compare account information to any FinCEN request received by the Fund and provided to the Transfer Agent pursuant to USA PATRIOT Act
Section 314(a). Provide the Fund with documents/information necessary to respond to requests under USA PATRIOT Act Section 314(a) within required time frames.

- Pursuant to the current and effective customer identification program mutually agreed to by the Fund and the Transfer Agent, (i) verify the identity of any person seeking to open an account with the Fund, (ii) maintain records of the information used to verify the person's identity, and (iii) determine whether the person appears on any lists of known or suspected terrorists or terrorists organizations provided to the Fund by any government agency.

1.2 The Transfer Agent agrees to submit such periodic written reports to the Fund regarding the Transfer Agent's performance of the delegated anti-money laundering duties, as well as the

overall operation and implementation of those duties, as the Fund may reasonably request from time to time.

1.3 The Transfer Agent represents and warrants that its Internal Audit Department will audit the Transfer Agent annually or as required by law for compliance with the delegated anti-money laundering duties and any related policies and procedures. The Transfer Agent agrees to permit the Fund to conduct an annual on-site review of the Transfer Agent's performance of its anti-money laundering duties.

1.4 The Transfer Agent agrees to generate and keep adequate written records of certain important determinations and processes (e.g., determining that a suspicious activity does not warrant an SAR filing, determining that an OFAC hit is a false positive and the account does not require freezing, etc) and to permit the Fund to review such records as the Fund may request from time to time.

2. Consent to Examination

2.1 In connection with the performance by the Transfer Agent of the anti-money laundering duties described in Section 1, the Transfer Agent understands and acknowledges that the records relating to the Transfer Agent's implementation and operation of and compliance with its anti-money laundering program on behalf of the Fund may be subject, from time to time, to examination and/or inspection by federal regulators in order that the regulators may evaluate such compliance. The Transfer Agent hereby consents to such examination and/or inspection and agrees to cooperate with such federal examiners in connection with their review. For purposes of such examination and/or inspection, the Transfer Agent will use its best efforts to make available, during normal business hours, all required records and information for review by such examiners.

3. Limitation on Delegation.

3.1 The Fund acknowledges and agrees that in accepting the delegation hereunder the Transfer Agent is not undertaking and shall not be responsible for the overall compliance by the Fund with the USA PATRIOT Act. Additionally, the parties acknowledge and agree that the Transfer Agent shall only be responsible for performing anti-money laundering duties with respect to the ownership of shares in the Fund for which the Transfer Agent maintains the applicable shareholder information.

4. Compensation.

4.1 In consideration for the Transfer Agent's performance of the foregoing duties, the Fund agrees to pay the Transfer Agent the anti-money laundering account fee listed on the fee schedule to the Agreement as may be in effect and mutually agreed to by the parties from time to time. The terms of the Agreement shall apply with respect to the payment of such fee in the same manner and to the same extent as any other fees incurred under the Agreement.

5. Miscellaneous.

5.1 In all other regards, the terms and provisions of the Agreement shall continue to apply with full force and effect.

5.2. Each party represents to the other that the execution and delivery of this Amendment has been duly authorized.

IN WITNESS WHEREOF, each of the parties has caused this Amendment to be executed in its name and behalf by its duly authorized representative as of the date first above written.

WITNESSED BY:                             NATIONAL FINANCIAL DATA SERVICES, INC.

/s/ Sandra A. Mucci                       By: /s/ Sharon Freyer
-----------------------------                 ----------------------------------

Name: Sandra A. Mucci                     Name: Sharon Freyer

Title: Paralegal                          Title: Secretary

WITNESSED BY:                             HOMESTEAD FUNDS, INC.

/s/ Hope L. Saxton                        By: /s/ Peter R. Morris
-----------------------------                 ----------------------------------

Name: Hope L. Saxton                      Name: Peter R. Morris

Title: Secretary, ACO                     Title: President

Exhibit h(3)

FEE SCHEDULE

Effective Date: January 1, 2004 through January 31, 2007

General:

Fees are billable on a monthly basis at the rate of 1/12 of the annual fee. A charge is made for an account in the month that an account opens or closes.

Daily/Monthly Dividend Funds (per open account within a fund)                   $15.40/year
All Other Funds (per open account within a fund)                                $13.20/year

Monthly Base Fee (per fund)                                                     $19,800.00/year

Other Account Fees:

Closed Account Fee (per closed account within a fund)                           $2.64/year
Anti-Money Laundering (per non-networked level 3 accounts)                      $0.15/year

Activity Fees:

New Account Set Up                                                              $4.40/each
Correspondence                                                                  $3.30/each
Checkwriting Processed                                                          $1.10/each
Checkwriting Set-Up                                                             $5.50/each
Manual Financial Transactions                                                   $1.65/each
Manual Non-Financial Transactions                                               $0.85/each
Telephone Calls (received/placed)                                               $3.30/each
Ad-Hoc Reporting (first 10 per month, free)                                     $50.00/report

Fund Implementation Fee:                                                        $1,650.00/cusip

Fiduciary Administration Fees:

Account Maintenance Fee                                                         $13.00/year

(per ss, per plan, paid by shareholder or RE Adviser's discretion, regardless of number of Homestead Mutual Funds.)

Out-of-Pocket Expenses:

Out-of-pocket expenses are billed as incurred and include, but are not limited to: mailing expenses (i.e., statements, stationary, checks, certificates, sales literature, printing, postage, etc.), automated telephone servicing charges, telecommunication expenses, equipment and software expenses (client-site only), programming expenses (i.e., charges necessary to establish consolidated statement), microfiche, freight, ACH bank charges, all related bank charges, document storage and all other expenses incurred on the Fund's behalf.

NATIONAL FINANCIAL DATA                       HOMESTEAD FUNDS,INC.
SERVICES, INC.

BY: /s/Mark Scovell                           BY: /s/Peter  R. Morris
    -----------------------------                 ------------------------------
Name: Mark Scovell                            Name: Peter R. Morris

Title: Senior Vice President and COO          Title: President

Exhibit i

April 28, 2004

Homestead Funds, Inc.
4301 Wilson Boulevard
Arlington, Virginia 22203

Ladies and Gentlemen:

You have requested my opinion, as counsel to Homestead Funds, Inc. ("Fund"), a Maryland Corporation, as to certain matters regarding the issuance of Shares of the Fund. As used in this letter, the term "Shares" means the shares of common stock of each series of the Fund that may be issued pursuant to the Registration Statement for Homestead Funds, Inc. filed with the Securities and Exchange Commission ("SEC") pursuant to the Securities Act of 1933 ("1933 Act").

As counsel, I have examined the Fund's Articles of Incorporation, Articles Supplementary, and By-laws and such resolutions and minutes of meetings of the Fund's Board of Directors as I have deemed relevant to this opinion, as set forth herein. This opinion is limited to the laws and facts in existence on the date hereof, and it is further limited to the laws (other than the conflict of law rules) of the State of Maryland that in my experience are normally applicable to the issuance of shares by registered investment companies organized as corporations under the laws of that State and to the 1933 Act, the Investment Company Act of 1940 ("1940 Act") and the regulations of the SEC thereunder.

Based on the foregoing, I am of the opinion that the issuance of the Shares has been duly authorized by the Fund and that, when sold, the Shares will have been validly issued, fully paid and non-assessable, provided that (1) the Shares are sold in accordance with the terms contemplated by the Registration Statement, including receipt by the Fund of full payment for the Shares and compliance with the 1933 Act and the 1940 Act, and (2) the aggregate number of Shares issued, when combined with all other then-outstanding shares, does not exceed the number of shares that the Fund is authorized to issue.

I hereby consent to the filing of this opinion as an exhibit to the Fund's Registration Statement.

Very truly yours,

/s/Denise Trujillo

  Denise Trujillo

Exhibit j(1)

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Post-Effective Amendment No. 26 to the registration statement on Form N-1A ("Registration Statement") of our report dated February 20, 2004, relating to the financial statements and financial highlights which appears in the December 31, 2003 Annual Report to Shareholders of the Homestead Funds, Inc., which are also incorporated by reference into the Registration Statement. We also consent to the references to us under the heading "Financial Highlights" and "Independent Accountants" in such Registration Statement.

/s/ PricewaterhouseCoopers LLP
Baltimore, Maryland
April 28, 2004

Exhibit j(2)

Michael Berenson
(202) 739-5450
mberenson@morganlewis.com

April 28, 2004

Homestead Funds, Inc.
4301 Wilson Boulevard
Arlington, Virginia 22203

Ladies and Gentlemen:

We hereby consent to the reference to our name under the caption "Legal Matters" in the Statement of Additional Information contained in post-effective amendment no. 26 to the registration statement on Form N-1A (File No. 33-35788) for Homestead Funds, Inc. filed with the Securities and Exchange Commission pursuant to the Securities Act of 1933 (the "1933 Act") and the Investment Company Act of 1940. In giving this consent, we do not concede that we are in the category of persons whose consent is required under Section 7 of the 1933 Act.

Very truly yours,

MORGAN, LEWIS & BOCKIUS LLP

By: /s/ Michael Berenson
    Michael Berenson

Exhibit p(1)

CODE OF ETHICS
OF
HOMESTEAD FUNDS, INC.
RE ADVISERS CORPORATION
RE INVESTMENT CORPORATION

EFFECTIVE SEPTEMBER 17, 1990
LAST AMENDED SEPTEMBER 26, 2003

I. GENERAL STATEMENT OF POLICY.

This Code of Ethics (the "Code") deals with the securities transactions of certain officers, directors, and employees of Homestead Funds, Inc. (the "Corporation"), RE Advisers Corporation (the "Adviser"), and RE Investment Corporation (the "Distributor"). The Code has been developed in light of, and in compliance with, Rule 17j-1 under the Investment Company Act of 1940 (the "1940 Act"). Rule 17j-1 requires investment companies, as well as their investment advisers and principal underwriters, to adopt written codes of ethics containing provisions reasonably necessary to prevent certain personnel from engaging in any act, practice, or course of business prohibited under the anti-fraud provisions of Rule 17j-1(b).

This Code is formulated by the Corporation, the Adviser, and the Distributor to address the fiduciary duty that their directors, officers, employees, and affiliates have to the Corporation's investors. The Corporation intends that all such personnel should not take inappropriate advantage of their positions and should conduct themselves in a manner to avoid actual or potential conflicts of interests and to meet their duty to at all times place the interests of the Corporation's investors first.

The Code is intended to provide guidance to such personnel in the conduct of their investments in order to eliminate the possibility of securities transactions occurring which place, or appear to place, such personnel in conflict with the interests of the Corporation's investors. The Corporation, the Adviser, and the Distributor have adopted policies and procedures to ensure compliance with the Code. In addition, the Adviser has adopted policies and procedures relating to the misuse of material non-public information, the so-called "insider trading" provisions under Section 204A of the Investment Advisers Act of 1940.

II. RULE 17j-1.

General Antifraud Provisions. Rule 17j-1 under the 1940 Act provides that it is unlawful for any affiliated person of a registered investment company, or any affiliated person of such company's investment manager or principal underwriter in connection with any purchase or sale, directly or indirectly, by such person of a "security held or to be acquired" by such investment company, to engage in any of the following acts, practices or courses of business:

a. employ any device, scheme, or artifice to defraud such investment company;

b. make to such investment company any untrue statement of a material fact or omit to state to such investment company a material fact necessary in order to make the statements made, in light of the circumstances under which they are made, not misleading;

c. engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any such investment company; and

d. engage in any manipulative practice with respect to such investment company.

III. DEFINITIONS.

a. Access Person. The term "access person" means:

i. any director (including an independent director), officer, general partner, or advisory person of the Corporation or the Adviser;

ii. any director, officer, or general partner of the Distributor who, in the ordinary course of business, makes, participates in or obtains information regarding the purchase or sale of covered securities by the Corporation, or whose functions or duties in the ordinary course of business relate to the making of any recommendation to the Corporation regarding the purchases or sale of covered securities.

b. Advisory Person. The term "advisory person" of the Corporation or the Adviser means:

i. any employee of the Corporation or the Adviser (or of any company in a control relationship to the Corporation or the Adviser, for example, the Distributor or NRECA) who, in connection with his or her regular functions or duties, makes, participates in, or obtains information regarding the purchase or sale of covered securities by the Corporation, or whose functions relate to the making of any recommendations with respect to the purchases or sales; and

ii. any natural person in a control relationship to the Corporation or the Adviser who obtains information concerning recommendations made to the Corporation with regard to the purchase or sale of covered securities by the Corporation.

c. Beneficial Interest. The term "beneficial interest" shall be interpreted in the same manner as it would be in determining whether a person is subject to the provisions of Section 16 of the Securities Exchange Act of 1934 and the rules and regulations thereunder, except that the determination of direct or indirect beneficial interest will apply to all securities which an access person has or acquires. Generally, a person is regarded as having a beneficial interest in those securities held in his or her name, the name of his or her spouse, the names of his or her minor children who reside with him or her, and any other relatives (parents, adult children, brothers, sisters, etc.) whose investments he or she directs or controls, whether the person lives with him/her or not. A person may also be regarded as having a beneficial interest in securities held in the name of another person (individual, partner, corporation, trust, custodian, or other entity) if, by reason of any contract, understanding or relationship, he or she obtains or may obtain benefits from the securities substantially equivalent to those of ownership. A person does not derive a beneficial interest by virtue of serving as a trustee or executor unless he or she, or a member of his or her immediate family, has a vested interest in the income or corpus of the trust or estate.

d. Control. The term "control" shall have the same meaning as set forth in Section 2(a)(9) of the 1940 Act.

e. Covered Security. The term "covered security" shall have the same meaning as the term "security" set forth in Section 2(a)(36) of 1940 Act, except that it shall not include direct obligations of the Government of the United States, bankers' acceptances, bank certificates of deposit, commercial paper, high quality short-term debt instruments, including repurchase agreements, and shares of registered open-end management investment companies. "High quality short-term debt instrument" means any instrument that has a maturity at issuance of less than 366 days and that is rated in one of the two highest rating categories by a nationally recognized statistical rating organization.

f. Independent Director. The term "independent director" means a director of the Corporation who is not an "interested person" of the Corporation within the meaning of Section 2(a)(19) of the 1940 Act.

g. Initial Public Offering. The term "initial public offering" means an offering of securities registered under the Securities Act of 1933 [15 U.S.C. 77a], the issuer of which , immediately before the registration, was not subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934 [15 U.S.C. 78m or 78o(d)].

h. Investment Personnel. The term "investment personnel" means:

i. any employee of the Corporation or the Adviser (or of any company in a control relationship to the Corporation or the Adviser, for example, the Distributor or NRECA) who, in connection with his or her regular functions or duties, makes or participates in making recommendations regarding the purchase or sale of securities by the Corporation; and

ii. any natural person who controls the Corporation or the Adviser and who obtains information concerning recommendations made to the Corporation regarding the purchase or sale of securities by the Corporation.

i. Limited Offering. The term "limited offering" means an offering that is exempt from registration under the Securities Act of 1933 pursuant to Section 4(2) or 4(6) [15 U.S.C. 77d(2) or 77d(6)] or pursuant to Rule 504, 505, or 506 [17 C.F.R. 230.504, 230.505, or 230.506] under the Securities Act of 1933.

j. Portfolio Manager. The term "portfolio manager" means an access person who is entrusted with the direct responsibility and authority to make investment decisions on behalf of the Corporation.

k. Purchase or Sale of a Covered Security. The term "purchase or sale of a covered security" includes, among other things, the writing of an option to purchase or sell a covered security.

l. Research Analyst. The term "research analyst" means an access person who conducts securities research relating to the portfolios of the Corporation.

m. Security Held or to be Acquired. The term "security held or to be acquired" by the Corporation means:

i. any covered security which, within the most recent 15 days:

(1) is or has been held by the Corporation; or

(2) is being or has been considered by the Corporation or the Adviser for purchase by the Corporation; and

ii. any option to purchase or sell, and any security convertible into or exchangeable for, a covered security described in paragraph (i) of this section.

IV. PERSONS TO WHOM THIS CODE IS APPLICABLE.

The Code applies to all "access persons" as defined above. Such access persons will be provided with a copy of this Code and informed of their duty to comply with its provisions.

V. PROHIBITIONS.

a. Unless exempted under Section VI below, no access person shall purchase or sell, directly or indirectly, any beneficial interest in a security which at the time of such purchase or sale is being purchased or sold (an order has been entered but not executed) on behalf of the Corporation.

b. Investment personnel shall not purchase, directly or indirectly, any beneficial interest in any security sold as a part of an initial public offering of the security.

c. Investment personnel shall not purchase, directly or indirectly, any beneficial interest in any security sold as part of a limited offering of the security without the prior approval of the Compliance Officer. Any investment personnel owning a beneficial interest in such securities shall disclose such ownership to the Corporation if any transaction of the Corporation in the shares or the issuer of the limited offering is contemplated. In such circumstances, the investment decision must be reviewed by investment personnel with no interest in the transaction.

d. Investment personnel shall not accept gifts from any person or entity doing business with or on behalf of the Corporation, other than de minimis gifts or meals.

e. Investment personnel shall not serve on the boards of directors of any publicly traded corporation, other than the Corporation, without the prior approval of the Compliance Officer.

f. Unless exempted under Section VI below, investment personnel shall not profit from the sale and purchase, or purchase and sale within sixty
(60) calendar days, of any beneficial interest in the same or equivalent securities.

g. Unless exempted under Section VI below, no portfolio manager or research analyst shall purchase or sell, directly or indirectly, any security in which he has, or by reason of such transaction acquires, any direct or indirect beneficial interest within seven (7) calendar days of the purchase or sale by the Corporation of the security.

VI. EXEMPTED TRANSACTIONS

The prohibitions of Section V of the code shall not apply to:

a. purchases or sales effected in any account over which an access person has no direct or indirect influence or control;

b. purchases or sales which are nonvolitional on the part of the access person or the Corporation;

c. purchases which are part of an automatic dividend reinvestment plan;

d. purchases effected upon the exercise of rights issued pro rata to all holders of a class of securities, to the extent such rights were acquired from such issuer, and sales of such rights so acquired;

e. purchases or sales of securities made by a portfolio manager or research analyst within seven (7) days before the purchase or sale by the Corporation of the security that are determined by the Compliance Officer (i) to be securities of highly capitalized companies that are widely traded and (ii) to involve an amount of less than $20,000;

f. sales of securities made by investment personnel within sixty
(60) days of the purchase of the same or equivalent securities where it is determined by the Compliance Officer that the sale was not one of an ongoing series of short term sales and purchases and that the timing of the sales was not a part of a design to reap short term trading profits;

g. the restrictions of Section V.a. shall not apply to any independent director who executes a securities transaction without actual knowledge that the Corporation has an outstanding buy or sell pending in the same security.

VII. PRECLEARANCE OF PERSONAL SECURITIES TRANSACTIONS

a. Every access person shall obtain prior approval from the Compliance Officer (or designated person) before purchasing or selling, directly or indirectly, any covered security in any account over which the access person has a beneficial interest. This requirement shall apply to an independent director only if the independent director has actual knowledge at the time of his purchase or sale that the Corporation was considering the purchase or sale of the covered security.

b. Access persons are not required to preclear the following transactions:

i. purchases or sales of securities in any account managed on a discretionary basis by a person other than the access person and with respect to which such access person does not in fact influence or control the transactions;

ii. purchases which are part of an automatic dividend or distribution reinvestment plan;

iii. purchases caused by the exercise of rights issued by an issuer pro rata to all holders of a class of its securities, to the extent such rights were acquired from such issuer, and sales of such rights so acquired;

iv. purchases or sales of securities caused by the exercise of an option to purchase or sell a security so long as the exercise of that option is nonvolitional on the part of the access person and the access person reports the details of the transaction to the Compliance Officer within three business days of the exercise of the option (this exception does not affect the requirement that the writing of an option to purchase or sell a security must be precleared).

VIII. REPORTING REQUIREMENTS

a. Securities transactions

i. General Requirement to Report. Every access person shall submit a report ("Securities Transaction Report") to the Compliance Officer which contains the information described in Section
VIII.a.iv. of this Code with respect to transactions in any security in which such access person has, or, by reason of such transaction, acquires any direct or indirect beneficial interest in the security or with respect to any security in which the individual has a beneficial interest at the time he becomes an access person.

ii. Exemptions From Reporting Requirements.

(A) A person need not submit a Securities Transaction Report with respect to transactions offered for, and covered securities held in, any account over which the person has no direct or indirect influence or control.

(B) A director of the Corporation who is not an "interested person" of the Corporation within the meaning of Section 2(a)(19) of the Act [15 U.S.C. 80a-2(a)(19)], and who would be required to make a report solely by reason of being a director of the Corporation, need not make:

(1) An initial holdings report or an annual holdings report.

(2) A quarterly transaction report, unless the director knew or, in the ordinary course of fulfilling his or her official duties as a Corporation director, should have known that during the 15-day period immediately before or after the director's transaction in a covered security, the Corporation purchased or sold the covered

security, or the Corporation or the Adviser considered purchasing or selling the covered security.

(C) No access person shall be required to submit a Securities Transaction Report under this Code if such report would duplicate information recorded and filed with the Adviser pursuant to Rule 204-2(a)(12) or 204-2(a)(13) under the Investment Advisers Act of 1940 (such as the Securities Transaction Report for the Adviser).

iii. Time Period Within Which Reports Must Be Filed.

(A) An initial holdings report must be filed no later than 10 days after the person becomes an access person;

(B) Every quarterly Securities Transaction Report by an access person shall be made not later than ten
(10) calendar days after the end of the calendar quarter in which the transaction to which the Report relates was effected or in which the individual becomes an access person.

iv. Quarterly Reports. Every quarterly Securities Transaction Report shall contain the following information:

(A) the date of the transaction, the title and the number of shares, and the principal amount of each security involved;

(B) the nature of the transaction (i.e., purchase, sale, or any other type of acquisition or disposition);

(C) the price at which the transaction was effected;

(D) the name of the broker, dealer, bank with or through whom the transaction was effected;

(E) the interest rate and maturity date (if applicable); and

(F) the date that the report is submitted by the access person.

(G) if the access person during the quarter established a new account in which any securities were held for the direct or indirect benefit of the access person, provide:

(1) The name of the broker dealer or bank with whom the access person established the account;

(2) The date the account was established; and

(3) The date that the report is submitted by the access person.

v. Initial Reports. Every initial holdings report shall contain the following information:

(A) the title and the number of shares, and the principal amount of each security in which the access person has any direct or indirect beneficial ownership on the date the person becomes an access person;

(B) the name of any broker, dealer or bank with whom the access person maintained an account in which any securities were held for the direct or indirect benefit of the access person as of the date the person became an access person;

(C) the date that the report is submitted by the access person.

vi. Annual Reports. Every annual holdings report shall contain the following information current as of a date no more than 30 days before the report is submitted:

(A) the title, number of shares and principal amount of each security in which the access person has any direct or indirect beneficial ownership;

(B) the name of any broker, dealer or bank with whom the access person maintained an account in which any securities were held for the direct or indirect benefit of the access person as of the date the person became an access person;

(C) the date that the report is submitted by the access person.

vii. Report Not an Admission of Beneficial Interest. Any such Securities Transaction Report may contain a statement that the Report shall not be construed as an admission by the person making such Report that he has any direct or indirect beneficial interest in the security to which the report relates.

b. 1/2 of 1% Ownership Position Report. Every access person shall report immediately to the Compliance Officer the name of any publicly owned company (or any company anticipating a public offering of an equity security) and the total number of such company's shares beneficially owned by him if such ownership is more than 1/2 of 1% of the total outstanding shares of such company.

c. Adverse Interests. Every access person shall report immediately to the Compliance Officer any beneficial interest of the access person in any party with which he deals on behalf of the Corporation.

d. Broker Reports. All access persons shall direct their brokers to supply to the Compliance Officer duplicate copies of confirmations of all securities transactions beneficially owned by them when furnished to the access person and copies of all periodic statements of securities held. This shall not require a second set of duplicate copies from any access person already complying with NASD rules.

e. Annual Certification. Each access person shall certify annually that he or she is aware of, is subject to, and has complied with all of the requirements of this Code.

f. Administration of Code of Ethics. The Corporation, the Adviser, and the Distributor must use reasonable diligence and institute procedures reasonably necessary to prevent violations of the Code. No less frequently than annually, the Corporation, the Adviser, and Distributor must furnish to the Corporation's board of directors, and the board of directors must consider, a written report that:

i. describes any issues arising under the Code or procedures since the last report to the board of directors, including, but not limited to, information about material violations of the code or procedures and sanctions imposed in response to the material violations; and

ii. certifies that the Corporation, the Adviser, and the Distributor have adopted procedures reasonably necessary to prevent access persons from violating the Code.

IX. SANCTIONS

It shall be the responsibility of the Compliance Officer to identify all access persons who are required to make initial holdings reports and quarterly Securities Transactions Reports and must inform these access persons of their reporting obligation. It shall be the responsibility of the Compliance Officer to receive and maintain all reports submitted by an access person and to use reasonable diligence and institute procedures reasonably necessary to monitor the adequacy of such report and to otherwise prevent or detect violations of this Code. Upon discovering a material violation of this Code involving any access person, it shall be the responsibility of the Compliance Officer to report such violation to the Board of Directors of the Corporation. The Board of Directors may impose such sanctions against the access person determined to have violated this Code as such Board deems appropriate, including inter alia, forfeiture of profits made in the transaction, a letter of censure or suspension or termination of the employment, officership or directorship of the violator with the Corporation. No director shall participate in a determination of whether he has committed a violation of this Code or of the imposition of any sanction against himself.

X. RECORD RETENTION

The Corporation, on behalf of each series of the Corporation currently existing or created in the future, shall maintain records in the manner and to the extent set forth below, which records may be maintained on microfilm under the conditions described in Rule 31a-2(f)(1) under the 1940 Act, and shall be available for examination by the Securities and Exchange Commission or any representative of the Commission at any time and from time to time for reasonable periodic, special or other examination:

a. Retention of Code. A copy of the Code that is in effect, or that at any time within the past five years was in effect, shall be preserved in an easily accessible place;

b. Record of Violations. A record of any violation of this Code and of any action taken as a result of such violation shall be preserved in any easily accessible place for a period of not less than five (5) years following the end of the fiscal year in which the violation occurs;

c. Copy of Reports.

i. A copy of each report made by an access person pursuant to this Code must be preserved for a period of not less than five (5) years from the end of the fiscal year in which such report is made, the first two (2) years in an easily accessible place; and

ii. A copy of each report required by Section VIII.f. of this Code must be maintained for at least five years after the end of the fiscal year in which it is made, the first two years in an easily accessible place.

d. List of Access Persons. A list of all persons who are, or within the past five (5) years of business have been required to make reports pursuant to Rule 17j-1 and/or this Code, or who are or were responsible for reviewing these reports, shall be maintained in an easily accessible place; and

e. Site of Records to be Kept. All such records and/or documents required to be maintained pursuant to this Code and/or Rule 17j-1 shall be kept at the offices of the Corporation.

f. Record of Decisions. The Compliance Officer must maintain a record of any decision, and the reasons supporting the decision, to approve the acquisition by investment personnel of securities for at least five years after the end of the fiscal year in which the approval is granted.

XI. CONFIDENTIAL

All reports and other records required to be filed or maintained under this Code shall be treated as confidential.

XII. INTERPRETATION OF PROVISIONS

The Board of Directors of the Corporation may, from time to time, adopt such interpretations of this Code as such Board deems appropriate.

XIII. AMENDMENTS TO CODE

Any amendment to the Code shall be deemed an amendment to Section IV of this Code, effective thirty (30) calendar days after written notice of such amendment shall have been received by the Secretary of the Corporation, unless the Board expressly determines that such amendment shall become effective on an earlier date or shall not be adopted.

I have read this Code of Ethics and understand it. I agree to comply fully with all of the above provisions.

Date:________________ Signed:______________________________

EXHIBIT (p)(2)

STATE STREET MASTER FUNDS (THE "MASTER TRUST")
STATE STREET INSTITUTIONAL INVESTMENT TRUST
(THE "TRUSTS" AND EACH A "TRUST")

CODE OF ETHICS

I. DEFINITIONS

1. "Access Person" shall have the same meaning as that set forth in Rule 17j-1(a)(1) of the Investment Company Act of 1940 Act, as amended (the "1940 Act").

2. "Adviser" shall mean SSgA Funds Management, Inc.

3. "Adviser Access Person" shall mean a director, officer or advisory person, as defined in Rule 17j-1(a)(2), of the Adviser who, with respect to each Trust, makes any recommendation, participates in the determination of which recommendation shall be made, or whose principal function or duties relate to the determination of which recommendation shall be made to the Trusts; or who, in connection with his or her duties, obtains any information concerning securities recommendations being made by the Adviser to each Trust. For the purposes of this Code, an Adviser Access Person does not include any person who is subject to securities transaction reporting requirements of the Adviser's Code of Ethics which contains provisions that are substantially similar, including reporting obligations, to those in this Code and which are in compliance with Rule 17j-1 of the 1940 Act.

4. "Adviser's Code of Ethics" shall mean the Code of Ethics of SSgA Funds Management, Inc. with respect to personal securities transactions.

5. "Beneficial Ownership" shall be interpreted in the manner as it would be in determining whether a person is subject to the provisions of
Section 16 of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.

6. A Security is being "considered for purchase or sale" by a Fund when a recommendation that such Fund purchase or sell the Security has been made by the Adviser or an Access Person of the Adviser or each Trust. "Code" shall mean this Code of Ethics.

7. "Control" shall have the same meaning as that set forth in
Section 2(a)(9) of the 1940 Act. Generally it means the power to exercise a controlling influence over the management or policies of a company, unless such power is solely the result of an official position with such company.

8. "Compliance Officer" shall mean (i) with respect to the Adviser, a person designated by the Adviser to receive reports and take certain actions, as provided in the Adviser's Code of Ethics, and (ii) with respect to the Trusts, a person designated by the Trusts to receive reports and take certain actions, as provided in this Code of Ethics.

9. "Fund" or "Funds" shall mean such portfolio or series of each Trust.

10. "Interested Person" shall have the meaning as considered in
Section 2(a)(19) of the 1940 Act.

11. "Independent Trustee" shall mean any Trustee of the Trusts who is not an Interested Person of the respective Trust.

12. An "Initial Public Offering" means an offering registered under the Securities Act of 1933, the issuer of which, immediately before the registration, was not subject to the reporting requirements of Sections 13 or 15(d) of the Securities Exchange Act of 1934.

13. "Investment Company Access Person" shall mean a trustee, officer or advisory person, as defined in Rule 17j-1(a)(2), of the respective Trust other than an Independent Trustee or an Adviser Access Person.

14. "Limited Offering" means an offering that is exempt from registration under the Securities Act of 1933 pursuant to section 4(2) or section 4(6) or pursuant to rule 504, rule 505, or rule 506 under the Securities Act of 1933.

15. "Purchase" or "sale" of a security includes, among other things, the writing of an option to purchase or sell a security.

16. "Security" shall have the same meanings as that set forth in
Section 2(a)(36) of the 1940 Act (generally, all securities) except that it shall not include securities issued by the Government of the United States or an agency or instrumentality thereof (including all short-term debt securities which are "government securities" within the meaning of Section 2(a)(16) of the 1940 Act), bankers' acceptances, bank certificates of deposit, commercial paper and shares of registered open-end investment companies.

17. "Trusts" means the State Street Master Funds and the State Street Institutional Investment Trust.

II. CODE PROVISIONS APPLICABLE TO ALL ACCESS PERSONS

No Access Person of the Trusts, in connection with the purchase or sale, directly or indirectly, by such Access Person of a Security held or to be acquired by the Trusts, shall:

1. employ any device, scheme or artifice to defraud the Trusts;

2. make to the Trusts any untrue statement of a material fact or omit to state to the Trusts a material fact necessary in order to make the statements made, in light of the circumstances under which they are made, not misleading;

3. engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon the Trusts; or

4. engage in any manipulative practice with respect to the Trusts.

III. CODE PROVISIONS APPLICABLE ONLY TO ADVISER ACCESS PERSONS

This section shall only apply to Adviser Access Persons if the Adviser's code is less restrictive than this Code.

1. Prohibited Purchases and Sales. No Investment Company Access Person shall purchase or sell, directly or indirectly, any Security in which such Investment Company Access Person has, or by reason of such transaction acquires, any direct or indirect Beneficial Ownership and which to such Investment Company Access Person's actual knowledge as the time of such purchase or sale:

(a) is being considered for purchase or sale by a Fund; or

(b) is being purchased or sold by a Fund.

2. Exempted Transactions. The prohibitions of Section III.1 of this Code shall not apply to:

(a) purchases or sales effected in any account over which the Investment Company Access Person has no direct or indirect influence or control;

(b) purchases or sales which are non-volitional on the part of the Investment Company Access Person;

(c) purchases or sales which are part of an automatic dividend reinvestment plan;

(d) purchases effected upon the exercise of rights issued by an issuer pro rata to all holders of a class of its securities, to the extent such rights were acquired from such issuer, and sales of such rights so acquired;

(e) sales of securities held in a margin account to the extent necessary in order to meet margin requirements;

(f) purchases or sales of variables and fixed insurance products and U.S. Internal Revenue Code Section 529 plans;

(g) general obligation municipal bonds, transactions in ESOPs, Share Builder and similar services, and exchange traded funds;

(h) securities received via a gift or inheritance;

(i) purchases or sales of direct obligations of the government of the United States or other sovereign government or supra-national agency, high quality short-term debt instruments; banker acceptances; certificates of deposit, commercial paper, repurchase agreements, and securities issued by open-end investment companies (e.g. mutual funds);

(j) purchases or sales other than those exempted in (a) through (i) above, (i) which will not cause the Investment Company Access Person to gain improperly a personal profit as a result of such Investment Company Access Person's relationship with the Trusts, or (ii) which are only remotely potentially harmful to a Fund because the proposed transaction would be unlikely to affect a highly institutional market, or
(iii) which, because of the circumstances of the proposed transaction, are not related economically to the Securities purchased or sold or to be purchased or sold by a Fund, and in each case which are previously approved by the Compliance Officer of the Trusts, which approval shall be confirmed in writing.

3. Investments in IPOs and Limited Offerings. Adviser Access Persons must obtain approval from the Compliance Officer of the Trusts or the Adviser prior to directly or indirectly acquiring beneficial ownership in any securities in an Initial Public Offering or in a Limited Offering. In granting such approval, the Compliance Officer shall consider, among other factors, whether the investment opportunity in question should be reserved for the Trusts and whether the opportunity is being offered to an individual by virtue of his position with the Trusts or the Adviser.

4. Reporting. Whether or not one of the exemptions listed in
Section III.2 hereof applies, each Adviser Access Person shall file with the Compliance Officer of the Trusts:

(a) within 10 days of becoming an Adviser Access Person, a dated initial holdings report (see Exhibit B). Such report shall contain the title of, the number of shares of, and the principal amount of each security beneficially owned by the Adviser Access Person. Such report shall also list the name of any broker, dealer or bank with whom the Investment Company Access person maintained an account in which any securities were held for the direct or indirect benefit of the Adviser Access Person as of the date the person became an Adviser Access Person;

(b) an annual holdings (see Exhibit D) report which updates the information provided in the initial holdings report. Such report shall provide the information required in subparagraph (a) above, which information must be as of a date no more than 30 days prior to the date such report is submitted;

(c) an annual certification (see Exhibit A) certifying that they have read and understand this Code and recognize that they are subject to the provisions hereof and will comply with the policy procedures stated herein.

(d) a quarterly dated transaction written report (see Exhibit C) containing the information described below with respect to each transaction in any Security in which such Adviser Access Person has, or by reason of such transaction acquires, any direct or indirect Beneficial Ownership; provided, however, that such Adviser Access Person shall not be required to make a report with respect to any transaction effected for any account over which such Adviser Access Person does not have any direct or indirect influence or control. Each such report shall be deemed to be filed with the Trusts for purposes of this Code, and may contain a statement that the report shall not be construed as an admission by the Adviser Access Person that he or she has any direct or indirect Beneficial Ownership in the Security to which the report relates. Such report shall be made not later than 10 days after the end of the calendar quarter in which the transaction to which the report relates was effected, and shall contain the following information:

(i) the date of the transaction, the title of and the number of shares, and the principal amount of each Security involved;

(ii) the nature of the transaction (i.e., purchase, sale or any other type of acquisition or disposition);

(iii) the price at which the transaction was effected; and

(iv) the name of the broker, dealer or bank with or through whom the transaction was effected.

Any report concerning a purchase or sale prohibited under Section III.1 hereof with respect to which the Adviser Access Person relies upon one of the exemptions provided in Section III.2 shall contain a brief statement of the exemption relied upon and the circumstances of the transaction.

5. Review. The Compliance Officer of the Trusts shall review or supervise the review of the personal securities transactions reported pursuant to Section III.4. As part of that review, each such reported securities transaction shall be compared against completed and contemplated portfolio transactions of the Trusts to determine whether a violation of this Code may have occurred. If the Compliance Officer of the Trusts determines that a violation may have occurred, the Compliance Officer of the Trusts shall submit the pertinent information regarding the transaction to the Trustees of the Trusts. The Trustees shall evaluate whether a material violation of this Code has occurred, taking into account all the exemptions provided under Section
III.2. Before making any determination that a violation has occurred, the Trustees shall give the person involved an opportunity to supply additional information regarding the transaction in question and shall consult with counsel for the Adviser Access Person whose transaction is in question.

6. Sanctions. If the Trustees of the Trusts determine that a material violation of this Code has occurred, the Trustees may take such action and impose such sanctions as said Trustees deem appropriate.

7. Exception to Reporting Requirements. No Adviser Access Person shall be required to comply with the provisions of Section III.4.(c) hereof if the report required thereunder would duplicate information contained in broker trade confirmations or account statements timely received by the Designated Person of the Trusts.

8. Preclearance. The following procedures shall govern all transactions in Securities in which an Adviser Access Person has or seeks to obtain any Beneficial Ownership ("Adviser Access Person Accounts"), except for those transactions effected pursuant to one of the exemptions described in
Section III.2.

- Transactions Subject to Preclearance

As described in the following sections, certain Adviser Access Person transactions in Securities are subject to preclearance and subsequent review by the Compliance Officer. A transaction for a Adviser Access Person Account may be disapproved if it is determined by the Compliance Officer that the Adviser Access Person is unfairly benefiting from, or that the transaction is in conflict with, or appears to be in conflict with, any Fund transaction, any of the above trading restrictions, or this Code.

The determination that a Adviser Access Person may unfairly benefit from, or that a Adviser Access Person transaction may conflict with, or appears to be in conflict with, a Client Transaction will be subjective and individualized, may include questions about timely and adequate dissemination of information, availability of bids and offers, and other factors deemed pertinent for that transaction or series of transactions. It is possible that a disapproval of a transaction could be costly to a Adviser Access Person or an Adviser Access Person's family; therefore, each Adviser Access Person should take great care to adhere to Fund's trading restrictions and avoid conflicts or the appearance of conflicts.

Any disapproval of a Adviser Access Person transaction shall be in writing. An Adviser Access Person may appeal any such disapproval by written notice to the Compliance Officer within two business

days after receipt of notice of disapproval.

- Procedures for Preclearance

Transactions through Brokers or Banks. Transactions through brokers or banks are permitted only after the Adviser Access Person has: (x) provided written notice to the Compliance Officer prior to opening or placing an initial order in an account with such broker or bank, or, if an account(s) with such broker or bank was established prior to the implementation of this Code, has provided the Compliance Officer with written details about the account(s); (y) obtained the written clearance of the Compliance Officer prior to opening or placing initial orders in such account or, in the case of a pre-existing account, placing any further orders in such account; and (z) provided such broker or bank with a written notice of the Covered Person's affiliation with the Trusts and requested that copies of trade confirmations and statements be sent to Trusts' Compliance Officer. A copy of such written notice and request should also be provided to the Compliance Officer.

After an Adviser Access Person has obtained clearance to execute transactions through a broker or bank, the Adviser Access Person must submit a Covered Person Trade Preclearance Form (see Exhibit D) to the Compliance Officer prior to executing each transaction through the broker or bank. The Compliance Officer will notify a Adviser Access Person within two business days of any conflict and will advise whether the Adviser Access Person's transaction has been cleared.

Other Transactions. All other Adviser Access Person transactions in Securities (e.g., participation in a privately-negotiated transaction), other than Exempt Transactions, must be cleared in writing by the Compliance Officer prior to the Adviser Access Person entering into the transaction. If an Adviser Access Person wishes to engage in such a transaction, he or she must submit a Adviser Access Person Trade Preclearance Form to the Compliance Officer. The Compliance Officer will notify a Covered Person within five business days of any conflict and will advise whether the Covered Person's transaction has been cleared.

IV. CODE PROVISIONS APPLICABLE ONLY TO INDEPENDENT TRUSTEES OF THE TRUSTS

1. Prohibited Purchases and Sales. No Independent Trustee of the Trusts shall purchase or sell, directly or indirectly, any Security in which such Independent Trustee has, or by reason of such transaction acquires, any direct or indirect Beneficial Ownership and which to such Independent Trustee's actual knowledge at the time of such purchase or sale:

(a) is being considered for purchase or sale by a Fund; or

(b) is being purchased or sold by a Fund.

2. Exempted Transactions. The prohibitions of Section IV.1 of this Code shall not apply to:

(a) purchases or sales effected in any account over which the Independent Trustee has no direct or indirect influence or control;

(b) purchases or sales which are non-volitional on the part of the Independent Trustee;

(c) purchases or sales which are part of an automatic dividend reinvestment plan;

(d) purchases effected upon the exercise of rights issued by an issuer pro rata to all holders of a class of its securities, to the extent such rights were acquired from such issuer, and sales of such rights so acquired;

(e) sales of securities held in a margin account to the extent necessary in order to meet margin requirements;

(f) purchases or sales other than those exempted in (a) through (e) above, (i) which will not cause the Independent Trustee to gain improperly a personal profit as a result of such Independent Trustee's relationship with the Trusts, or
(ii) which are only remotely potentially harmful to a Fund because the proposed transaction would be unlikely to affect a highly institutional market, or (iii) which, because of the circumstances of the proposed transaction, are not related economically to the Securities purchased or sold or to be purchased or sold by a Fund, and in each case which are previously approved by the Compliance Officer of the Trusts, which approval shall be confirmed in writing.

3. Reporting.

(a) An Independent Trustee of the Trusts who would be required to file with the Compliance Officer of the Trusts a dated written report (see Exhibit C) containing the information described in Section IV.3(b) of this Code with respect to each transaction in any Security in which such Independent Trustee has, or by reason of such transaction acquires, any direct or indirect Beneficial Ownership, solely by reason of being a Trustees of the Trusts shall file such written report (see Exhibit C) only if such Independent Trustee, at the time the transaction was entered into, actually knew, or in the ordinary course of fulfilling official duties as a trustee of the Trusts should have known, that during the 15-day period immediately preceding or after the date of that transaction such Security was or is:

(i) to be purchased or sold by a Fund, or

(ii) being considered for purchase or sale by a Fund;

provided, however, that such Independent Trustee shall not be required to make a report with respect to any transaction effected for any account over which such Independent Trustee does not have any direct or indirect influence or control. Each such report shall be deemed to be filed with the Trusts for purposes of this Code, and may contain a statement that the report shall not be construed as an admission by the Independent Trustee that such Independent Trustee has any direct or indirect Beneficial Ownership in the Security to which the report relates.

(b) Such report, if required as described in Section
IV.3(a), shall be made not later than 10 days after the end of the calendar quarter in which the transaction to which the report relates was effected, and shall contain the following information:

(i) the date of the transaction, the title of and the number of shares, and the principal amount of each Security involved;

(ii) the nature of the transaction (i.e., purchase, sale or any other type of acquisition or disposition);

(iii) the price at which the transaction was effected; and

(iv) the name of the broker, dealer or bank with or through whom the transaction was effected.

(c) Each Independent Trustee shall file with the Trusts' Compliance Officer an annual certification (see Exhibit A) certifying that they have read and understand this Code and recognize that they are subject to the provisions hereof and will comply with the policy procedures stated herein.

Any report required to be filed with the Trusts' Compliance Officer, as described in Section IV.3(a), concerning a purchase or sale prohibited under
Section IV.1 hereof with respect to which the Independent Trustee relies upon one of the exemptions provided in Section IV.2 shall contain a brief statement of the exemption relied upon and the circumstances of the transaction.

4. Review. The Compliance Officer of the Trusts shall review or supervise the review of the personal securities transactions reported pursuant to Section IV.3. As part of that review, each such reported securities transaction shall be compared against completed and contemplated portfolio transactions of the Trusts to determine whether a violation of this Code may have occurred. If the Compliance Officer of the Trusts determines that a violation may have occurred, the Compliance Officer of the Trusts shall submit the pertinent information regarding the transaction to the Trustees of the Trusts. The Trustees shall evaluate whether a material violation of this Code has occurred, taking into account all the exemptions provided under Section
IV.2. Before making any determination that a violation has occurred, the Trustees shall give the person involved an opportunity to supply additional information regarding the transaction in question and shall consult with counsel for the Independent Trustee whose transaction is in question.

5. Sanctions. If the Trustees of the Trusts determine that a material violation of this Code has occurred, the Trustees may take such action and impose such sanctions as said Trustees deem appropriate.

V. CODE PROVISIONS APPLICABLE ONLY TO INVESTMENT COMPANY ACCESS PERSONS

1. Prohibited Purchases and Sales. No Investment Company Access Person shall purchase or sell, directly or indirectly, any Security in which such Investment Company Access Person has, or by reason of such transaction acquires, any direct or indirect Beneficial Ownership and which to such Investment Company Access Person's actual knowledge as the time of such purchase or sale:

(a) is being considered for purchase or sale by a Fund; or

(b) is being purchased or sold by a Fund.

2. Exempted Transactions. The prohibitions of Section V.1 of this Code shall not apply to:

(a) purchases or sales effected in any account over which the Investment Company Access Person has no direct or indirect influence or control;

(b) purchases or sales which are non-volitional on the part of the Investment Company Access Person;

(c) purchases or sales which are part of an automatic dividend reinvestment plan;

(d) purchases effected upon the exercise of rights issued by an issuer pro rata to all holders of a class of its securities, to the extent such rights were acquired from such issuer, and sales of such rights so acquired;

(e) sales of securities held in a margin account to the extent necessary in order to meet margin requirements;

(f) purchases or sales other than those exempted in (a) through (e) above, (i) which will not cause the Investment Company Access Person to gain improperly a personal profit as a result of such Investment Company Access Person's relationship with the Trusts, or (ii) which are only remotely potentially harmful to a Fund because the proposed transaction would be unlikely to affect a highly institutional market, or
(iii) which, because of the circumstances of the proposed transaction, are not related economically to the Securities purchased or sold or to be purchased or sold by a Fund, and in each case which are previously approved by the Compliance Officer of the Trusts, which approval shall be confirmed in writing.

3. Reporting. Whether or not one of the exemptions listed in
Section V.2 hereof applies, each Investment Company Access Person shall file with the Compliance Officer of the Trusts:

(a) within 10 days of becoming an Investment Company Access Person, a dated initial holdings report (see Exhibit
B). Such report shall contain the title of, the number of shares of, and the principal amount of each security beneficially owned by the Investment Company Access Person. Such report shall also list the name of any broker, dealer or bank with whom the Investment Company Access person maintained an account in which any securities were held for the direct or indirect benefit of the Investment Company Access Person as of the date the person became an Investment Company Access Person;

(e) an annual holdings (see Exhibit D) report which updates the information provided in the initial holdings report. Such report shall provide the information required in subparagraph (a) above, which information must be as of a date no more than 30 days prior to the date such report is submitted;

(f) an annual certification (see Exhibit A) certifying that they have read and understand this Code and recognize that they are subject to the provisions hereof and will comply with the policy procedures stated herein.

(g) a quarterly dated transaction written report (see Exhibit C) containing the information described below with respect to each transaction in any Security in which such Investment Company Access Person has, or by reason of such transaction acquires, any direct or indirect Beneficial Ownership; provided, however, that such Investment Company Access Person shall not be required to make a report with respect to any transaction effected for any account over which such Investment Company Access

Person does not have any direct or indirect influence or control. Each such report shall be deemed to be filed with the Trusts for purposes of this Code, and may contain a statement that the report shall not be construed as an admission by the Investment Company Access Person that he or she has any direct or indirect Beneficial Ownership in the Security to which the report relates. Such report shall be made not later than 10 days after the end of the calendar quarter in which the transaction to which the report relates was effected, and shall contain the following information:

(i) the date of the transaction, the title of and the number of shares, and the principal amount of each Security involved;

(ii) the nature of the transaction (i.e., purchase, sale or any other type of acquisition or disposition);

(iii) the price at which the transaction was effected; and

(iv) the name of the broker, dealer or bank with or through whom the transaction was effected.

Any report concerning a purchase or sale prohibited under Section V.1 hereof with respect to which the Investment Company Access Person relies upon one of the exemptions provided in Section V.2 shall contain a brief statement of the exemption relied upon and the circumstances of the transaction.

4. Review. The Compliance Officer of the Trusts shall review or supervise the review of the personal securities transactions reported pursuant to Section V.3. As part of that review, each such reported securities transaction shall be compared against completed and contemplated portfolio transactions of the Trusts to determine whether a violation of this Code may have occurred. If the Compliance Officer of the Trusts determines that a violation may have occurred, the Compliance Officer of the Trusts shall submit the pertinent information regarding the transaction to the Trustees of the Trusts. The Trustees shall evaluate whether a material violation of this Code has occurred, taking into account all the exemptions provided under Section V.2. Before making any determination that a violation has occurred, the Trustees shall give the person involved an opportunity to supply additional information regarding the transaction in question and shall consult with counsel for the Investment Company Access Person whose transaction is in question.

5. Sanctions. If the Trustees of the Trusts determine that a material violation of this Code has occurred, the Trustees may take such action and impose such sanctions as said Trustees deem appropriate.

6. Exception to Reporting Requirements. No Investment Company Access Person shall be required to comply with the provisions of Section V.3.(c) hereof if the report required thereunder would duplicate information contained in broker trade confirmations or account statements timely received by the Designated Person of the Trusts.

VI. MISCELLANEOUS PROVISIONS

1. Approval of Code. This Code shall be deemed to be each Trust's Code of Ethics upon approval by the Trustees of the respective Trust, including a majority of the Independent Trustees.

2. Amendment or Revision of the Code. Any amendment to or revision of this Code of Ethics shall be promptly furnished to each Trust's Trustees and any material amendment to or revision of this Code of Ethics must be approved by the Trustees, including a majority of the Independent Trustees, no later than six months after adoption of such amendment or revision.

3. Amendment or Revision of Adviser's Code of Ethics. Any amendment or revision of the Adviser's Code of Ethics shall be deemed to be an amendment or revision of Section III.1 of this Code, and such amendment or revision shall be promptly furnished to the Independent Trustees of the Trusts.

4. Annual Issues and Certification Report. At periodic intervals established by the Trustees of the Trusts, but no less frequently than annually, the Compliance Officer of the Trusts shall provide a written report to the Trustees of the Trusts regarding any issues which arose under this Code of Ethics since the last report to the Board of Trustees, including, but not limited to, information about material Code or procedure violations and sanctions imposed in response to any material violations. In addition, the Compliance Officer of the Trusts will provide to the Trustees of the Trusts in writing a certification that each Trust has adopted procedures reasonably necessary to prevent Investment Company Access Persons from violating this Code of Ethics.

5. Records. The Trusts shall maintain records in the manner and to the extent set forth below, which records may be maintained on microfilm under the conditions described in Rule 31a-2(f)(1) under the 1940 Act and shall be available for examination by representatives of the Securities and Exchange Commission:

(a) A copy of this Code and any other code that is, or at any time within the past five years has been, in effect shall be preserved in an easily accessible place;

(b) A record of any violation of this Code and of any action taken as a result of such violation shall be preserved in an easily accessible place for a period of not less than five years following the end of the fiscal year in which the violation occurs;

(c) A copy of each report made pursuant to this Code shall be preserved for a period of not less than five years from the end of the fiscal year in which its is made, the first two years in an easily accessible place; and

(d) A list of persons who are, or within the past five years have been, required to make reports pursuant to this Code shall be maintained in an easily accessible place.

6. Confidentiality. All reports of securities transactions and any other information filed with the Trusts or furnished to any person pursuant to this Code shall be treated as confidential, but are subject to review as provided herein and by representatives of the Securities and Exchange Commission.

7. Interpretation of Provisions. The Trustees of the Trusts may from time to time adopt such interpretation of this Code as they deem appropriate.

8. Effect of Violation of this Code. In adopting Rule 17j-1, the Securities and Exchange Commission specifically noted in Investment Company Act Release No. 11421 that a violation of any provision of a particular code of ethics, such as this Code, would not be considered a per se unlawful act prohibited by the general anti-fraud provisions of the Rule. In adopting this Code of Ethics, it is not intended that a violation of this Code is or should be considered to be a violation of Rule 17j-1.

9. Conflicts with other Codes of Ethics. To the extent this Code conflicts with any code of ethics or other code or policy to which Investment Company Access Persons, Investment Personnel or Adviser Access Person is also subject, this Code shall control; except that if the other code of ethics is more restrictive than this Code, such other code of ethics shall control.

10. Adviser Reporting. At periodic intervals established by the Trustees of the Trusts, but no less frequently than annually, the Compliance Officer of the Adviser shall report to the Board of Trustees of the Trusts all material violations by Adviser Access Persons of the Adviser's Code of Ethics during such period and the corrective action taken by the Adviser.

Adopted: May 17, 2000
Amended: November 20, 2003

EXHIBIT A

                            ANNUAL CERTIFICATION FORM

         This is to certify that I have read and understand the Codes of Ethics

of State Street Master Funds and State Street Institutional Investment Trust (the "Trusts"), dated May 17, 2000, as amended November 20, 2003, and that I recognize that I am subject to the provisions thereof and will comply with the policy and procedures stated therein.

This is to further certify that I have complied with the requirements of such Codes of Ethics and that I have reported all personal securities transactions required to be disclosed or reported pursuant to the requirements of such Codes of Ethics.

Please sign your name here:___________________________________

Please print your name here:__________________________________

Please date here: _______________________________

Please sign two copies of this Certification Form, return one copy to the Compliance Officer of the Trusts and retain the other copy, together with a copy of the Codes of Ethics, for your records.

EXHIBIT B

State Street Master Funds

State Street Institutional Investment Trust

(the "Trusts")

INITIAL SECURITIES HOLDINGS REPORT

To the Compliance Officer:

As of the date set forth below, I have direct or indirect beneficial ownership in the following securities, which are required to be reported pursuant to the Trusts' Codes of Ethics:

[ ] NONE

or:

                                                               Broker/
          No. of Shares or Principal  Dollar Amount of  Dealer or Bank Through
Security            Amount                Holdings            Whom Held

This report is not an admission that I have or had any direct or indirect beneficial ownership in the securities listed above.

Date: Signature:________________________________

EXHIBIT C

                            State Street Master Funds
                   State Street Institutional Investment Trust
                                 (the "Trusts")

SECURITIES TRANSACTION REPORT

For the Calendar Quarter Ended _____________

To the Compliance Officer:

During the quarter referred to above, the following transactions were effected in securities of which I had, or by reason of such transaction acquired, direct or indirect beneficial ownership, and which are required to be reported pursuant to the Trusts' Codes of Ethics:

[ ] NONE

or:

                                                                     Broker/
                                                                    Dealer or
                         No. of                  Nature of            Bank
                       Shares or    Dollar     Transaction           Through
            Date of    Principal   Amount of    (Purchase,            Whom
Security  Transaction    Amount   Transaction  Sale, Other)  Price  Effected
--------  -----------  ---------  -----------  ------------  -----  ---------

This report (i) excludes transactions with respect to which I had no direct or indirect influence or control, (ii) other transactions not required to be reported, and (iii) is not an admission that I have or had any direct or indirect beneficial ownership in the securities listed above.

[ ] I CERTIFY THAT I DID NOT HAVE ACCESS TO CURRENT INFORMATION REGARDING
THE TRUSTS' TRADES DURING THIS REPORTING PERIOD.

Date: ________________ Signature: _____________________________

                                                                                         Check type of account
                                                                                       --------------------------
                                                                                                 Immediate family
Title, No. of shares & principal amount of security(1)  Name of broker-dealer or bank  Personal      fiduciary
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CHECK ONE:

[ ] The above record is of every security in which I have direct or indirect ownership and every investment account that I beneficially hold at a bank, broker or similar institution, as of the date listed above.

[ ] In lieu of listing my securities and accounts above, I have provided copies of trade confirmations and/or brokerage account statements covering all of my securities holdings and accounts.

THIS REPORT IS NOT AN ADMISSION THAT I HAVE ANY DIRECT OR INDIRECT BENEFICIAL
OWNERSHIP IN THE SECURITIES LISTED ABOVE.

_________________________________                _______________________________
Signature                                        Date

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Print Name

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(1) AS USED IN THIS REPORT, THE TERM "SECURITY" MEANS ALL SECURITIES EXCEPT: (i)

SECURITIES ISSUED BY THE GOVERNMENT OF THE UNITED STATES, (ii) BANKERS' ACCEPTANCES, (iii) CERTIFICATES OF DEPOSIT, (iv) COMMERCIAL PAPER AND (v) SHARES OF REGISTERED OPEN-END INVESTMENT COMPANIES.

EXHIBIT (p)(3)

STATE STREET GLOBAL ADVISORS

SSgA FUNDS MANAGEMENT, INC.

CODE OF ETHICS

DECEMBER 2003

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I.    Introduction.......................................................      1

II.   Applicability......................................................      1

III.  Key Definitions....................................................      2

         Beneficial Ownership............................................      2
         Covered Securities..............................................      2

IV.   Pre-Clearance of Personal Securities Transactions..................      3

V.    Restrictions.......................................................      4

         Blackout Periods................................................      4
         Initial Public Offerings and Private Placements.................      4
         Options.........................................................      4
         Mutual Funds....................................................      4
         Short-Term Trading and Other Restrictions.......................      5

VI.   Reporting Requirements.............................................      5

VII.  Standard of Conduct................................................      7

         Personal Trading................................................      7
         Protecting Confidential Information.............................      8
         Gifts and Entertainment.........................................      9
         Service as a Director/Outside
         Employment and Activities.......................................      9

VIII. Sanctions..........................................................     10

[SSgA LOGO]

STATE STREET GLOBAL ADVISORS
SSgA FUNDS MANAGEMENT, INC.

I. INTRODUCTION

The Code of Ethics (the "Code") is designed to reinforce State Street Global Advisors' ("SSgA's")/SSgA Funds Management, Inc.'s ("SSgA FM's") reputation for integrity by avoiding even the appearance of impropriety in the conduct of our business. The Code sets forth procedures and limitations which govern the personal securities transactions of every SSgA/SSgA FM employee.

SSgA/SSgA FM and our employees are subject to certain laws and regulations governing personal securities trading. We have developed this Code to promote the highest standards of behavior and ensure compliance with applicable laws. In addition to the provisions outlined in this document, employees in SSgA's Global Offices may be subject to different or additional requirements provided by your local Compliance Officer.

Employees should be aware that they may be held personally liable for any improper or illegal acts committed during their course of employment, and that "ignorance of the law" is not a defense. Employees may be subject to civil penalties such as fines, regulatory sanctions including suspensions, as well as criminal penalties.

Employees must read the Code and comply with it. Failure to comply with the provisions of the Code may result in serious sanctions including, but not limited to: disgorgement of profits, dismissal, substantial personal liability and referral to law enforcement agencies or other regulatory agencies. Employees should retain the Code in their records for future reference. Any questions regarding the Code should be directed to the Compliance and Risk Management Group or your local Compliance Officer.

General Principles

Each SSgA/SSgA FM employee is responsible for maintaining the very highest ethical standards when conducting business. More specifically, this means:

- Each employee has a duty at all times to place the interests of our clients first;

- All personal securities transactions must be conducted consistent with the Code and in such a manner as to avoid any actual or potential conflict of interest or other abuse of the employee's position of trust and responsibility; and

- No employee should take inappropriate advantage of his/her position or engage in any fraudulent or manipulative practice with respect to our clients' accounts.

II. APPLICABILITY

SSgA/SSgA FM Employees

This Code is applicable to all SSgA and SSgA FM employees. This includes full-time, part-time, benefited and non-benefited, and exempt and non-exempt employees. Additionally, each new employee's offer letter will include a copy of the Code of Ethics and a statement advising the individual that he/she will be subject to the Code of Ethics if he/she accepts the offer of employment. If, outside the U.S., due to local employment practices it is necessary to modify this approach then the offer letters will be revised in accordance with local law.

Family Members and Related Parties

The Code applies to the accounts of the employee, his/her spouse or domestic partner, his/her minor children, his/her adult children living at home, and any relative, person or entity for whom the employee directs the investments. Joint accounts will also need to be included if a SSgA/SSgA FM employee is one of the joint account holders.

Contractors and Consultants

Each SSgA/SSgA FM contractor/consultant/temporary employee contract will include the Code as an addendum, and each contractor/consultant/temporary employee will be required to sign an acknowledgement that he/she has read the Code and will abide by it except for the pre-clearance and reporting provisions.

Investment Clubs

An employee who is a member of an investment club is subject to the pre-clearance and reporting requirements of the Code with respect to the transactions of the investment club. Additionally, memberships in Investment Clubs will require prior approval of the Compliance and Risk Management Group.

III. KEY DEFINITIONS

BENEFICIAL OWNERSHIP

For purposes of the Code, "beneficial ownership" shall be interpreted in the same manner as it would be in Rule 16a-1(a)(2) under the Securities Exchange Act of 1934 ("Exchange Act") in determining whether a person is subject to the provisions of Section 16 under the Exchange Act and the rules and regulations thereunder.

COVERED SECURITIES

For purposes of the Code, "Security" shall have the meaning set forth in Section 2(a)(36) of the Investment Company Act of 1940 ("1940 Act"). This definition of "Security" includes, but is not limited to: any note, stock, treasury stock, bond, debenture, evidence of indebtedness, certificates of interest or participation in any profit-sharing agreement, any put, call, straddle, option or privilege on any Security or on any group or index of Securities, or any put, call, straddle, option or privilege entered into on a national securities exchange relating to foreign currency. Further, for the purpose of the Code, "Security" shall include any commodity contracts as defined in Section 2(a)(1)(A) of the Commodity Exchange Act. This definition includes but is not limited to futures contracts on equity indices.

Covered securities will also include exchange traded funds ("ETFs") or any equivalents in local non-US jurisdictions, single stock futures and both the U.S. Securities and Exchange Commission ("SEC") and Commodity Futures Trading Commission ("CFTC") regulated futures.

"Security" shall NOT include direct obligations of the government of the United States or any other sovereign country or supra-national agency, bankers' acceptances, bank certificates of deposit, commercial paper and high quality short-term debt instruments, including repurchase agreements, variable and fixed insurance products, and interests in IRC Section 529 plans.

IV. PRE-CLEARANCE OF PERSONAL SECURITIES TRANSACTIONS

Unless the investment type is exempted for pre-clearance purposes, all employees must request and receive pre-clearance prior to engaging in the purchase or sale of a security. Although a request may need to be pre-cleared, it may be subject to the de minimis exception which would permit the trade to be automatically pre-approved due to its size. All pre-clearance requests will be made by submitting a Pre-clearance Request Form to the Equity or Fixed Income Trading Desk. Request Forms are available on the Code of Ethics Intranet Site.

Pre-clearance approval is only good until midnight local time of the day when approval is obtained. "Good-till-cancelled" orders are not permitted. "Limit" orders must receive pre-clearance every day the order is open.

As there could be many reasons for pre-clearance being granted or denied, employees should not infer from the pre-clearance response anything regarding the security for which pre-clearance was requested.

De Minimis Exception

Employee transactions effected pursuant to the de minimis exception remain subject to the pre-clearance and reporting requirements of the Code. A "de minimis transaction" is a personal trade that meets the following conditions: A transaction of less than US $20,000 or the local country equivalent, 2,000 shares or units, and not more than 1% of the average daily trading volume in the security for the preceding 5 trading days.

Exempted Securities

Pre-clearance by employees is not required for the following transactions:

- Transactions made in an account where the employee pursuant to a valid legal instrument has given investment discretion to an unaffiliated/unrelated third party;

- Purchases or sales of direct obligations of the government of the United States or other sovereign government or supra-national agency, high quality short-term debt instruments, bankers acceptances, certificates of deposit ("CDs"), commercial paper, repurchase agreements, and securities issued by open-end investment companies (e.g., mutual funds);

- Automatic investments in programs where the investment decisions are non-discretionary after the initial selections by the account owner (although the initial selection requires pre-clearance);

- Reinvestments in dividend investment plans;

- Purchases or sales of broad-based stock indices;

- Purchases or sales of variable and fixed insurance products and U.S. Internal Revenue ("IRS") Code Section 529 plans;

- Exercised rights, warrants or tender offers;

- General obligation municipal bonds, transactions in ESOPs, and Share Builder and similar services; and

- Securities received via a gift or inheritance.

State Street Stock

Any discretionary purchase or sale of State Street stock, including shares in a 401(k) plan, needs to be pre-cleared subject to the de minimis requirements. This does not affect the current policy where an employee may trade SSC stock or exercise options obtained pursuant to employee compensation plans on a specific day pursuant to SSC corporate policy.

V. RESTRICTIONS

BLACKOUT PERIODS

Subject to the de minimis exception, employees may not trade in a covered security on any day that a client has a pending buy or sell order in the same covered security.

In addition, subject to the de minimis exception, an employee may not buy or sell a security that a client account/fund has traded within 7 calendar days on either side of the fund's or other account's execution date.

INITIAL PUBLIC OFFERINGS AND PRIVATE PLACEMENTS

Employees are prohibited from acquiring securities through an allocation by the underwriter of an initial public offering ("IPO"). There is an exception for a situation where the spouse/domestic partner of an employee, with prior written disclosure to and written approval from a Senior Compliance Officer in the officer where the staff member is principally employed, could acquire shares in an IPO of his/her employer.

In addition, employees are prohibited from purchasing securities in a private offering unless the purchase is approved in writing by a Compliance Officer. Private placements include certain co-operative investments in real estate, commingled investment vehicles such as hedge funds, and investments in family owned businesses. Time-shares and cooperative investments in real estate used as a primary or secondary residence are not considered to be private placements.

OPTIONS

Employees are prohibited from buying options. There is an exception for employees who have received options from a prior employer. In those instances, the exercising of options received from the prior employer is subject to the pre-clearance and reporting requirements of this Code.

MUTUAL FUNDS

SSgA/SSgA FM employee investments in any mutual funds that are advised or sub-advised by SSgA FM are subject to a ninety (90) day holding period. These transactions are subject to the reporting, but not pre-clearance, requirements of this Code.

The current list of SSgA FM advised and sub-advised mutual funds is maintained by the Compliance and Risk Management Group and is located on the Code of Ethics Intranet page.

Investments in money market funds or short-term income funds advised or sub-advised by SSgA FM are exempt from these requirements.

SHORT-TERM TRADING AND OTHER RESTRICTIONS

The following restrictions apply to all securities transactions by employees:

- Short-Term Trading. Employees are prohibited from profiting from the purchase and sale or sale and purchase of the same securities within sixty
(60) calendar days.

- Excess Trading. While active personal trading may not in and of itself raise issues under applicable laws and regulations, we believe that a very high volume of personal trading can be time consuming and can increase the possibility of actual or apparent conflicts with portfolio transactions. Accordingly, an unusually high level of personal trading activity is strongly discouraged and may be monitored by the Compliance and Risk Management Group to the extent appropriate for the category of person, and a pattern of excessive trading may lead to the taking of appropriate action under the Code.

- Front Running. Employees may not engage in "front running," that is, the purchase or sale of securities for their own accounts on the basis of their knowledge of SSgA's/SSgA FM's trading positions or plans.

- Material Nonpublic Information. Employees possessing material nonpublic information regarding any issuer of securities must refrain from purchasing or selling securities of that issuer until the information becomes public or is no longer considered material.

- Shorting of Securities. Employees may not engage in the practice of shorting securities.

VI. REPORTING REQUIREMENTS

All Securities are subject to the reporting requirements of the Code except the following:

- Direct Obligations of any sovereign government or supra-national agency;

- Bankers' acceptances, bank certificates of deposit, commercial paper and high quality short-term debt instruments, including repurchase agreements;

- Shares issued by open-end mutual funds not advised or sub-advised by SSgA FM;

- Reinvestments in dividend investment plans; and

- Variable and fixed insurance products and IRC Code Section 529 plans.

IRC 401(k) plans are also exempt from the reporting requirements except: (i) self-directed brokerage accounts and (ii) investments in State Street stock. Employees must report holdings of or transactions in ESOPs or pension or retirement plans if they have a direct or indirect beneficial ownership interest in any covered securities held by the plan.

Additionally, securities received via a gift or inheritance are required to be reported, but are not subject to the pre-clearance requirements of the Code.

a. Initial Holdings Reports

Within ten (10) days of being hired by SSgA/SSgA FM, each employee must provide the Compliance and Risk Management Group with a statement of all securities holdings and brokerage accounts. More specifically, each employee must provide the following information:

- The title, number of shares and principal amount of each Security in which the employee had any direct or indirect beneficial ownership when the person became an employee;

- The name of any broker, dealer or bank with whom the employee maintained an account in which any securities were held for the direct or indirect benefit of the employee as of the date the person became an employee; and

- The date the report is submitted by the employee.

b. Duplicate Statements and Confirmations

Upon SSgA/SSgA FM employment and for any accounts opened during employment, an employee must instruct his/her broker-dealer, trust account manager or other entity through which he/she has a securities trading account to send directly to our Compliance and Risk Management Group:

- Trade confirmation summarizing each transaction; and

- Periodic statements.

This applies to all accounts in which an employee has a beneficial interest. A sample letter with the Compliance address is located as an exhibit to the Code.

c. Quarterly Transaction Reports

Each employee is required to submit quarterly his/her Quarterly Securities Report within ten (10) days of each calendar quarter end to the Compliance and Risk Management Group. The form for making this report will be provided to each employee on a quarterly basis.

Specific information to be provided includes:

1. With respect to any transaction during the quarter in a Security in which any employee had any direct or indirect Beneficial Ownership:

- The date of the transaction, the title, the interest rate and maturity date (if applicable), the number of shares and the principal amount of each Security involved;

- The nature of the transaction, (i.e., purchase, sale, or other type of acquisition or disposition);

- The price of the Security at which the transaction was effected;

- The name of the broker, dealer or bank with or through which transaction was effected; and

- The date that the report is submitted by the employee.

2. With respect to any account established by the employee in which any securities were held during the quarter for the direct or indirect benefit of the employee:

- The name of the broker, dealer, or bank with whom the employee established the account;

- The date the account was established; and

- The date the report is submitted by the employee.

d. Annual Holdings Reports

Each employee is required to submit annually a list of holdings, which is current as of a date no more than thirty (30) days before the report is submitted. In addition, each employee is required to certify annually that he/she has reviewed and understands the provisions of the Code. The forms for making these reports will be provided to each employee on an annual basis.

Specific information to be provided includes:

- The title, number of shares and principal amount of each Covered Security in which the employee had any direct or indirect beneficial ownership;

- The name of any broker, dealer or bank with whom the employee maintains an account in which any securities are held for the direct or indirect benefit of the employee; and

- The date that the report is submitted by the employee.

VII. STANDARD OF CONDUCT

PERSONAL TRADING

All State Street employees, including SSgA/SSgA FM employees, are required to follow the provisions outlined in State Street Corporation's Corporate Standard of Conduct. The Standard of Conduct includes a policy on Personal Trading which all State Street employees must follow in addition to any additional personal trading policies implemented by their business areas. The policy includes the following list of provisions:

- Employees will not buy or sell securities (or recommend their purchase or sale) based upon "inside information."

- Employees will not sell State Street securities short.

- Employees will not engage in options trading or hedging transactions in State Street securities.

- Employees will not sell the securities of a customer short when we, as individual employees, are directly responsible for providing services to that customer.

- Employees will not buy options in the securities of a customer (unless conducted as part of a hedging strategy) when we, as individual employees, are directly responsible for providing services to that customer.

- Employees will not purchase securities of an issuer when State Street is involved in the underwriting or distribution of the securities.

- Employees will not buy or sell securities based upon our knowledge of the trading position or plans of State Street or a customer.

- Employees will not buy or sell securities based upon anticipated research recommendations. (Employees are required to wait at least 3 business days following public dissemination of a recommendation made by State Street prior to making a person trade. Some business units may impose a longer restriction period.)

- Employees will not use their influence as State Street employees to accept preferential treatment from an issuer or broker with respect to an investment opportunity, nor from a broker with respect to the fees charged in relation to conducting a personal securities transaction.

- Employees will not originate a rumor not participate in the circulation of one concerning any publicly traded security, particularly the securities of State Street or any customer of State Street.

- Employees allow trading of customer accounts and for State Street's own account to precede personal trades of the personal trades could affect the market price of a security.

- Employees will not invest in the securities of a supplier or vendor to State Street, if they as individual employees, have substantial responsibility for representing State Street in its relationship with that firm.

PROTECTING CONFIDENTIAL INFORMATION

Employees may receive information about SSgA/SSgA FM, State Street Bank & Trust Company, State Street Corporation, their clients and other parties that, for various reasons, should be treated as confidential. All employees are expected to strictly comply with measures necessary to preserve the confidentiality of the information.

Insider Trading and Tipping

The misuse of material nonpublic information, or inside information, constitutes a fraud under the securities laws of the United States and many other countries. Fraudulent misuse of inside information includes buying or selling securities while in possession of material nonpublic information for an employee or employee-related account, a proprietary account or for the account of any client. Fraudulent misuse of inside information also includes disclosing or tipping such information to someone else who then trades on it, or using such information as a basis for recommending the purchase or sale of a security. Information is material when it has market significance and there is a likelihood that a reasonable investor would consider the information important in deciding whether to buy or sell the securities of the company involved. It is nonpublic if it has not been broadly disseminated.

In no event may any employee who receives inside information use that information to trade or recommend securities affected by such information for personal benefit, the benefit of SSgA/SSgA FM or any affiliate or the benefit of a third party. More specifically:

- No employee may, while in possession of inside information affecting a security, purchase or sell such security for the account of such employee, a client or any other person or entity.

- No employee may disclose inside information to any person outside of SSgA/SSgA FM. However, discussions with legal counsel and disclosures authorized by the client in furtherance of a related project or transaction are permitted.

- No employee may recommend or direct the purchase or sale of a security to anyone while in the possession of inside information, however obtained.

GIFTS AND ENTERTAINMENT

All employees are required to follow the Corporate Standard of Conduct's Gifts and Entertainment Policy. The policy includes the following provisions:

- Employees should avoid any excessive or disreputable entertainment that would reflect unfavorably on State Street;

- Employees do not offer or accept cash or its equivalent as a gift;

- Employees recognize that promotional gifts such as those that bear the logo of a company's name or that routinely are made available to the general public are generally acceptable business gifts;

- Employees fully, fairly and accurately account on the books and records of State Street for any expense associated with a gift or entertainment; and

- Employees do not accept any gift or bequest under a will or trust from a customer of State Street.

For purposes of the SSgA/SSgA FM Code, the gifts and entertainment limit will be $250.00 or the local equivalent. In order for an employee to accept a gift above the limit, he/she must obtain prior written approval from his/her manager and provide a copy of the approval to the Chief Compliance Officer.

SERVICE AS A DIRECTOR/OUTSIDE EMPLOYMENT AND ACTIVITIES

All employees are required to comply with the Corporate Standard of Conduct's Conflicts from Outside Activities Policy. The policy includes the following provisions:

- Employees are to avoid any business activity, outside employment or professional service that competes with State Street or conflicts with the interests of State Street or its customers.

- An employee is required to obtain the approval of his/her Area Executive before becoming a director, officer, employee, partner or sole proprietor of a "for profit" organization. The request for approval should disclose the name of the organization, the nature of the business, whether any conflicts of interest could reasonably result from the association, whether fees, income or other compensation will be earned and whether there are any relationships between the organization and State Street. The request for approval along with the preliminary approval of the Area Executive is subject to the final review and approval of the State Street General Counsel.

- Employees do not accept any personal fiduciary appointments such as administrator, executor or trustee other than those arising from family or other close personal relationships.

- Employees do not use State Street resources, including computers, software, proprietary information, letterhead and other property in connection with any employment or other activity outside of State Street.

- Employees disclose to their Area Executive any situation that could present a conflict of interest or the appearance of a conflict with State Street and discuss how to control the risk.

When completing their annual certification acknowledging receipt and understanding of the Code of Ethics, SSgA/SSgA FM employees will be asked to disclose all outside affiliations. Any director/trustee positions with public companies or companies likely to become public are prohibited without prior written approval of the Department Head and/or Managing Director, Chief Compliance and Risk Management Officer, SSgA CEO, and State Street's General Counsel.

VIII. SANCTIONS

Upon discovering a violation of this Code by an employee or his/her family member or related party, the Code of Ethics Review Committee may impose such sanctions as it deems appropriate, including, among other things, the following:

- A letter of censure to the violator;

- A monetary fine levied on the violator;

- Suspension of the employment of the violator;

- Termination of the employment of the violator;

- Civil referral to the SEC or other civil regulatory authorities determined by the Adviser or other appropriate entity; or

- Criminal referral - determined by the Adviser or other appropriate entity.

Examples of possible sanctions include, but are not limited to:

- A warning letter, with a cc: to the employee's manager, for a first time pre-clearance or reporting violation;

- Monetary fines and disgorgement of profits when an employee profits on the purchase of a security he/she should not purchase; and

- Recommendation for suspension or termination if an employee is a serial violator of the Code.

Appeals Process

If an employee decides to appeal a sanction, he/she should contact Human Resources.

Exhibit q(2)

HOMESTEAD FUNDS, INC.
4301 Wilson Boulevard
Arlington, VA 22203

POWER OF ATTORNEY

I, Douglas Johnson, the undersigned Director of Homestead Funds, Inc. (the "Corporation"), a Maryland corporation, hereby constitute and appoint Denise Trujillo, Esq. of Arlington, Virginia, my true and lawful agent and attorney-in-fact with full power and authority to sign for me, in my name and in my capacity as Director of the Corporation, the Corporation's registration statements under the Securities Act of 1933 and Investment Company Act of 1940 and any and all amendments and supplements thereto, with all exhibits, instruments, and applications necessary or appropriate in connection therewith, and to file these documents with the Securities and Exchange Commission or any other regulatory authority as may be necessary or desirable. I hereby ratify and confirm my signature as it may be signed by said agent and attorney-in-fact as herein authorized.

Dated: 3/25/04

/s/Douglas Johnson
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Douglas Johnson
Director