1. Consumers
  2. Choose your investments
  3. Product disclosure statements

Product disclosure statements

A product disclosure statement (PDS) provides you with essential information to help you decide whether to invest in a financial product. It uses clear language to explain the product and replaces older forms of financial product disclosure information such as investment statements and prospectuses.

Why is a PDS important?

A PDS describes how a product works and provides you with information about the organisation that is offering it. Importantly, it will give you an understanding of the risks and returns and any fees and charges.

You must be given the PDS before you invest in the financial product.

More detailed information about offers is also available online at a new government website register called ‘Disclose’ www.business.govt.nz/disclose.

If you’re considering investing in a company that is about to list on the sharemarket through an initial public offering (IPO), it’s important that you understand the company’s financial position before you go ahead. This guide will help you do that by explaining the ‘selected financial information’ table in the PDS.

Start with the key information summary

Every PDS has a key information summary at the front of the document. This summarises the most significant points about the product and guides you on where in the document to go to read more.

What’s included in a key information summary for each type of financial product is set out in law, so you can easily compare similar financial products.

Key information summaries will include:

  1. What the financial product is
  2. Information about the organisation offering the financial product
  3. The key terms of the investment
  4. The key risks affecting the investment.

Other key information will depend on the type of investment being considered. For example:

  • The key information summary for a fund will also tell you what your money will be invested in.
  • The key information summary for a bond will also tell you whether you can get your money out of the investment early and whether the investment has been given a credit rating.

You can view an example of a key information summary for a bond here

The content and size of a PDS will vary depending on the type of financial product.

Shares A PDS will be no longer than 60 pages, or 30,000 words. It will enable you to assess the underlying business, including the current value of the assets, growth prospects, and how the money raised will be used.
Bonds A PDS will be no longer than 30 pages, or 15,000 words. It will explain who the issuer is, the reasons they are trying to raise money from you, and enable you to assess the likelihood they will pay you the money they are promising to pay.
Managed funds A PDS will be no longer than 12 pages, or 6,000 words. It will enable you to understand the scheme’s investment aims (including the balance between risk and return) and fees.
Derivatives  A PDS will be no longer than 30 pages, or 15,000 words. It will enable you to assess what the derivative does and the risks it poses.

Investments that are not financial products do not require a PDS. For example, if you are buying a house the seller won’t need to give you a PDS. Some simple investments, such as bank term deposits don’t require a PDS either.

Ask questions and make sure you understand the product before you invest

If you’re not sure, seek financial advice from an Authorised Financial Adviser (AFA). Ask whether the financial product you’re considering is right for you. Our getting financial advice section has information on how to choose an adviser. You can also learn more about the different types of investments available in our ways to invest section.

We issue guidance to help providers prepare quality product disclosure statements but we don’t check every one. If you believe a provider has failed to provide a clear explanation of their product in the PDS please let us know.