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.
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.
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:
|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 6000 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.