Hearthstone, Inc., a California corporation (“Hearthstone”), is, and always has been, in one business only – investments in single-family homebuilding and development. The sole shareholder is Mark Porath, Chief Executive Officer. In 1992, Hearthstone pioneered the concept of pension fund investing in residential development and homebuilding and was one of the first sources of institutional capital dedicated exclusively to this sector. Since that time, through 42 investment funds, Hearthstone has financed the purchase and construction of over 157,000 residences and lots in 688 separate communities spread across 100 markets and 20 states. For the benefit of its clients, Hearthstone has financed projects sponsored by over 100 homebuilders and funded investments exceeding $19.0 billion in total value. Investments include land acquisition, development and construction projects, single-family home, condominium and townhome projects, and unentitled land projects. Hearthstone is required to obtain the client’s approval prior to making an investment. Investments are typically structured with interaction between five entities: 1) Project Owner – The Project Owner can be either a limited liability company (“LLC”) or a limited partnership (“LP”). It directly owns the actual project, whether it is a lot option (also known as “landbanking”) project involving the financing of land development, a homebuilding project involving the financing of land development and the construction of homes, or a land development project. In a homebuilding or land development project, the Project Owner is owned by the Builder Partner, the Investment Fund, and the Managing Entity. In a landbanking project, the Project Owner is owned by the Investment Fund and the Managing Entity. However, if the Project Owner is an LLC, the Managing Entity has no ownership stake. In the case of a lot option project, the Project Owner grants to the Builder Partner an option to purchase residential lots and the Builder Partner agrees to complete certain land development improvements. In the case of a homebuilding project, the business plan of the Project Owner is to develop the land and construct, market and sell homes on the land. 2) Builder Partner – The Builder Partner is the residential builder or developer selected to construct the project. 3) Investment Fund – The Investment Fund is an LLC. It is generally 1% owned by the Professionals Entity, as managing member, and 99% owned by investors. Investors buy membership units of the LLC and receive a share of the profits or Form ADV Part 2A: Investment Adviser Brochure Page 4 losses

of the projects based on their share of ownership. In some cases, the Investment Fund is also part owner of the Managing Entity. The Investment Fund is a private fund available to only Qualified Clients. A Qualified Client is qualified under Section 205-3 of the Investment Advisors Act of 1940 to invest in private placements and be subject to performance-based fees. Generally, in order for a client to be deemed "qualified", the client must either have a net worth of at least $1.5 million or have at least $750,000 invested with the investment advisor. 4) Managing Entity – If the Project Owner is an LP, the Managing Entity is an LLC owned by the Investment Fund, with Hearthstone as the manager. If the Project Owner is an LLC, the Managing Entity is Hearthstone, as the manager of the Project Owner. 5) Professionals Entity – The Professionals Entity is an LP. It is owned solely by Hearthstone, as the general partner, and the owner and certain current employees of Hearthstone, as limited partners. The Professionals Entity is also generally a 1% owner and managing member of the Investment Fund. The Professionals Entity receives a commensurate share of the project’s profits or losses. The Professionals Entity also receives Management Fees and Incentive Fees, if earned. Hearthstone also receives Incentive Fees, if earned, and some or all of the Management Fees from the Professionals Entity. Hearthstone manages all of its investments. In addition to managing assets held by Hearthstone-sponsored funds, Hearthstone also manages residential assets for pension funds and private businesses. Hearthstone’s advisory relationships are negotiated on a client-by-client basis and are tailored to the investment requirements of each client. Investors of Hearthstone invest in one or more Investment Fund. Each Investment Fund may invest in one or more projects. Hearthstone is required to obtain the client’s approval prior to adding a project or projects to an Investment Fund. Each Investment Fund and each investor will make a capital commitment to fund one or more projects. During the development of a project, capital calls will be made to the investors in order to meet current and short-term obligations. In no event will capital calls exceed the agreed to capital commitment. Assets under Management: As of the date of this filing, Hearthstone manages a total of $1.7 billion in client assets. Assets are internally valued using generally accepted accounting principles. Form ADV Part 2A: Investment Adviser Brochure Page 5