Asset Allocation Models

All investing is subject to risk, including the possible loss of the money you invest. Neither asset allocation nor diversification ensures a profit or protects against a loss.

Using the Asset Allocation Tool
The asset allocation tool relies entirely on the limited information you provide in response to the questions posed in the risk tolerance questionnaire, and does not take into account any other information pertaining to your particular personal financial or investment situation. Homestead Advisers Corp., Homestead Financial Services Corp. and their affiliates do not verify the completeness or accuracy of such information and do not tailor an Asset Allocation Model to your particular circumstances.

As a result, you should not rely on the tool as providing advice or a recommendation as to any asset allocation or security selection. The tool does not provide any advice regarding whether or how your asset allocation should change over time and is not a substitute for consulting with a financial advisor. Changes in tax or benefit laws, investment markets or your own financial situation over time can cause actual results of any asset allocation made today to deviate substantially from expectations. To address this possibility, you should create several scenarios, with various sets of assumptions, to evaluate a wide range of possible outcomes. You may make changes to your responses and Asset Allocation Model selection at any time.

The asset allocation tool is provided on a non-discretionary basis, and you are under no obligation to buy or sell any Homestead Fund or other investment product or service based on any Asset Allocation Model.

Predefined Asset Allocation Models
The predefined Asset Allocation Models and related tools, as well as other investor resources provided by Homestead Advisers, are intended as informational and educational tools and should not be relied upon as the primary basis for investment, financial, tax-planning or retirement decisions. The Asset Allocation Models represent examples of possible asset allocations based on varying degrees of market risk and other factors. These Asset Allocation Models are generic and are not tailored to the investment objectives of any specific investor. The Asset Allocation Models neither are, nor should be construed as, investment advice or an offer or solicitation or recommendation to buy, sell or hold any Homestead Fund or other security.

The Asset Allocation Models for one or more Asset Allocation Models may change at any time and neither Homestead Advisers Corp. nor Homestead Financial Services Corp. will notify you when such changes are made. In addition, Asset Allocation Models do not utilize any rebalancing methodologies and also will not be rebalanced when deposits or withdrawals are made. Therefore, if you choose to allocate your mutual fund holdings according to an Asset Allocation Model, your mutual fund holdings will not be updated as a result of any changes to the Asset Allocation Models nor according to any rebalancing strategy unless you elect to set up auto-rebalancing for your account. A rebalancing strategy seeks to minimize relative risk by aligning your portfolio to a target asset allocation as the portfolio’s asset allocation changes. Not rebalancing a portfolio may over time change its risk and return characteristics. Strategies that do not rebalance may not address prolonged changes in market conditions. You are responsible for monitoring your investments and their performance and for determining whether your investments should be rebalanced. Further, we are under no obligation to update or change the asset allocation tool in any way or inform you of any changes to the tool or to any Asset Allocation Model.

An Asset Allocation Model can help you focus on a possible asset allocation strategy and create a plan of action. Homestead Advisers Corp., Homestead Financial Services Corp. and their affiliates do not provide tax advice, and you always should consult your own tax advisor regarding your personal circumstances before taking any action that might have tax consequences. You may also wish to consult a financial advisor for advice that is tailored to your investment needs. There is no guarantee that any particular asset allocation or mix of funds will meet your investment objectives, provide you with a given level of income or protect against a loss. The Asset Allocation Models are intended to help manage investment risk.

You understand and acknowledge that investments made pursuant to the Asset Allocation Models are limited to investments in the Homestead Funds. By selecting an Asset Allocation Model and creating a Homestead Funds account for the purpose of making investments pursuant to an Asset Allocation Model, you are choosing to enter into a series of mutual fund orders allocated across the specific Homestead Funds that are included in the Asset Allocation Model selected by you. This may present a conflict of interest in that Homestead Advisers and its affiliates receive compensation, directly or indirectly, in connection with the management, distribution and/or servicing of the Homestead Funds.

Investment return and principal value of an investment will fluctuate. An investor’s shares, when redeemed, may be worth more or less than their original cost.

Customized Asset Allocation Model
You should consult with your financial advisor to establish your investment goals and the appropriate allocations of your investments, and you should carefully consider whether a customized Asset Allocation Model is appropriate for you.

Rebalancing
You may set up auto-rebalancing for your account at any time. This will rebalance your account, according to the frequency you select, to match your chosen Asset Allocation Model percentages. When rebalancing, the system performs exchange transactions among the Homestead Funds in the account, so that the resulting positions are in line with percentages listed in the Asset Allocation Model for the account. As a result, each exchange involves purchase and sell transactions. Please note that this may result in a taxable event for non-IRA accounts. Rebalancing can entail transaction costs and tax consequences that should be considered when determining a rebalancing strategy.