DESCRIPTION OF NOTES
The Fund is hereby offering three types of investments in the aggregate principal amount of $3,000,000: (1) Term Notes, (2) Debentures, and (3) Save By Mail (and related savings programs). These investments are unsecured and nonnegotiable and are being offered to Members of the Synod through this Prospectus. Prior to purchasing any of the investments in this Offering, you should carefully read the section entitled “Risk Factors,” together with other information contained in this Offering. The sale of the Term Notes, Debentures, and savings programs is subject to the discretion of the Fund. For example, the Fund may turn down subscriptions where a single subscriber is deemed by the Fund to have too much invested in the Fund, where the Fund has already sold sufficient securities for its needs, or where the interest rate environment makes it impractical or uneconomical for the Fund to sell the Fund’s securities.
TERM NOTES
- One-year Term Notes are issued in the amount of $50.00 or more and earn 4.0 % simple interest. Investors have no right to early redemption.
- Three-year Term Notes are issued in amounts of $100.00 or more and earn 2.00% Interest provided the note is held three years or longer. Early redemption reduces interest to 1.50%, provided the note is held for more than one year.
- Five-year Term Notes are issued in amounts of $1,000.00 or more and earn 2.50% interest. Early redemption reduces Interest to 2.00% provided the note is held more than three years and 1.50% provided the note is held more than one year but no more than three years.
INTEREST ON NOTES
The rates of interest as of the date of this Prospectus for all fixed-rate term notes and debentures are set forth on the cover. The interest rate offered for any newly issued notes and debentures is subject to change. These rates may be changed as of the first day of each month to rates above or below the rate set forth on the cover of this Prospectus by up to 2 percent each month. The rate determined as of the first day of each month will be effective for all notes issued during that month. The rate at which fixed-rate term notes are issued will remain in effect for the entire term of the notes.
TAX ASPECTS
Purchasers of securities will recognize neither gain nor loss for federal income tax purposes, nor will they receive a charitable deduction upon the purchase of a security. The interest paid or payable on the securities will be taxable as ordinary income to the holder in the year that it is paid or accrued. Interest is accrued over the life of the Debentures and is paid at the maturity date. The holder must, nevertheless, report such interest as income on his federal income tax return and state income tax returns over the life of the Debentures as interest accrues. In the unlikely event of a sale or exchange of the Notes or the Debentures, the seller would generally report either -short-term gain or loss, depending upon the length of time held, the gain or the loss being equal to the difference between his purchase price and the amount he receives upon sale or exchange, less previously accrued interest. Purchasers who hold Debentures or Notes until their maturity will not be taxed upon the return of the principal purchase price or the payment of previously accrued and taxed interest. Any excess will be interest income. The Fund will notify Investors of interest earned on securities by sending them Federal Income Tax Form 1099 by January 31 of each year.
PLAN OF DISTRIBUTION
Funds are solicited from the membership of the Lutheran congregations within the District to be invested in the Fund for periods of time at a modest rate of return. We sell the Notes and Debentures through the District’s periodicals and through mailings to the membership of the District. Periodically, printed reminders are sent to the congregations in the District for general distribution to the membership as a reminder that the Fund has a need for funds for other congregations. The Fund’s distribution expenses are minimal. The Fund pays for a lawyer to review and approve the registration statement and prints prospectuses as needed.
RISK FACTORS
Investors should carefully consider, among other things, the following factors in connection with a purchase of the Notes and/or Debentures.
- NOTES, DEBENTURES, SAVE-BY-MAIL, AND YOUNG ELITE SAVERS PLANS ARE UNINSURED
The Notes, Debentures, Save-By-Mail, and Y.E.S. plans are not insured by any federal or state agency. If the Fund were to become insolvent, then you would, in all likelihood, lose all of your investment in the Notes or Debentures or Save-By-Mail or Y.E.S. plans. - NOTES, DEBENTURES, SAVE-BY-MAIL, AND YOUNG ELITE SAVERS PLANS ARE UNSECURED AND NONNEGOTIABLE
The Notes, Debentures, Save-by-Mail, and Y.ES. Plans are unsecured and nonnegotiable, and the repayment of the principal and interest thereon is dependent upon the financial condition of the Fund as well as the financial condition of the various churches that are members of the District, technological assaults on our infrastructure aimed at stealing information, fraud or interference with regular service and interruption of our loan operations and the sale and redemption of our securities and notes, may result from the exploitation of these vulnerabilities. Cyber-attacks and other cybersecurity matters, if successful, could have an adverse effect on our ability to make payments or redeem our securities and to successfully collect on our outstanding notes.
We may not have the resources or technical sophistication to anticipate or prevent rapidly evolving cyberattacks. Attacks may target us, our customers and suppliers or others who have entrusted us with information. In addition, attacks not targeted at us but solely at suppliers, may cause disruption to our computer systems or breach the data that we maintain on customers, employees, suppliers, and others.
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