IMPORTANT INFORMATION

Please be aware:
Investments carry potential risks and
rewards. You should take the time to
read this document carefully.
If you have any queries about this
Investment Statement, please do not
hesitate to contact Baptist Savings.
Baptist Savings is not a registered bank.
WARNING:
Prospective investors are advised
that New Zealand Baptist Savings &
Development Society Inc. (BSDS), in
making this offer of debt securities, is not
subject to the normal offer document and
independent supervisor requirements
under the Securities Act 1978. This is
because a general exemption from those
requirements has been granted to all
charities.
Accordingly, the information required to
be disclosed in respect of this offer is less
than the information that would normally
be disclosed in a registered prospectus
and an investment statement.
Also, there is no independent supervision
of your money, and the normal
mechanism for redress if you encounter
difculties in securing repayment of your
money is not available.
The Financial Markets Authority has not
examined or approved this particular
offer. The general exemption was granted
on the basis that prospective investors
in charities are not necessarily seeking a
commercial investment opportunity, but
instead wish to support the charitable
purpose of the charity. The particular
charitable and religious purposes of BSDS
are discussed below.
If the investment risk or return, or
if repayment of your investment is
important to you, you should consider
seeking nancial advice before
subscribing to this offer. The FMA website
maintains a list of authorized nancial
advisers that you could consult; see www.
fma.govt.nz.
WHO IS PROVIDING THIS?
The New Zealand Baptist Savings &
Development Society Inc. (BSDS) is the
issuer. Its address is: PO Box 12738,
Penrose, Auckland 1642; Level 1, 477 Great
South Road, Penrose, Auckland 1061.
BSDS is incorporated under the
Incorporated Societies Act 1908, has
carried on business as a Development
Society since 1962 and is a registered
charity under No. CC24623. BSDS is
a religious organisation within the
denition of the Securities Act (Charity
Debt Securities) Exemption Notice
2013 and the Deposit Takers (Charities)
Exemption Notice 2014.
WHAT SORT OF INVESTMENT IS THIS?
BSDS Call and Term deposits are
unsecured interest bearing investments,
denominated in New Zealand dollars.
Fixed term investments have a xed rate
of interest payable to you by BSDS. The
interest rate on call deposits is subject to
change at any time, or after provision of
an agreed notice period.
WHAT WILL MY INVESTMENT BE USED
FOR?
The rules of the BSDS only allow money
to be lent to Christian organisations
recognised by the Baptist Union of New
Zealand. BSDS provides low cost nance
and grants to Christian organisations
throughout New Zealand. The funds
deposited are utilised to satisfy the
charitable purposes of BSDS, such as
building facilities and providing better
resources for Christian organisations,
who in turn carry out benevolent and
charitable works in local communities.
Deposits held on reserve may be invested
with nancial institutions or investment
companies that have an investment grade
credit rating.
No member of the BSDS staff or any
Board director may use depositors money
for their own purposes and there are
strict provisions against private pecuniary
gain in the Rules of the Society.
BSDS obtains the majority of its funds
from churches, individuals, companies
and trusts associated with those
churches.
WHAT RETURNS WILL I GET?
You are entitled to repayment of the
amount you invest and payment of
interest on the amount of your deposit.
Interest will be paid or compounded on
Term Deposits, with the frequency and on
the dates as specied on any application
form relating to the term deposit, or
as agreed with the BSDS at the time of
investment.
Resident Withholding Tax will be
deducted from interest payments to
New Zealand resident investors unless
the depositor provides a Certicate of
Exemption issued by the Inland Revenue
Department. For non-resident investors,
Non Resident Withholding Tax will be
deducted at the appropriate rate from
interest payments.
WHAT ARE MY RISKS?
Principal risk:
The main risk is not being paid on
time or in full, should BSDS become
insolvent or go into liquidation or
statutory management. This could occur
if borrowers from BSDS or if nancial
institutions or investment companies
holding funds from BSDS failed to repay
on time or in full.
Should this occur, you may not recover
all of the amount you invested, or receive
the agreed interest in full. You will not be
obliged to pay any more than the amount
you invested with BSDS.
General market risk:
Any political, social and or economic
downturn could negatively impact the
number of deposits held by BSDS or the
nancial position of our borrowers.
Regulatory risk:
Increasingly stringent regulatory and
legal requirements for non-bank deposit
takers (including BSDS) are signicantly
increasing our operational costs. This
has a negative impact on the retained
earnings and therefore capital adequacy
of BSDS.
BSDS mitigates this risk by completing
regular budgets to manage and forecast
its costs and expenditure.
BSDS is exempt until 1 May 2015 from the
following sections of the Reserve Bank of
New Zealand Act 1989:
to have a credit rating in section 157I
the governance requirements in section
157L.
BSDS is also exempted until 30 November
2016 from the following sections of the
Reserve Bank of New Zealand Act 1989:
the capital requirements in sections
157T and 157U;
the related party exposure
requirements in section 157X and 157Y;
and
the liquidity requirements in sections
157ZA and 157ZB.
However, by 1 October 2014, BSDS will
be under the trustee supervision of
Covenant Trustees Limited, part of whose
responsibility is to monitor the levels of
capital adequacy, related party lending
and liquidity.
Collateral security risk:
Under the Building Act 2004, territorial
authorities are required to ensure certain
buildings (including churches) are
strengthened to a minimum of 34 percent
of the new building standard.
This policy affects many BSDS borrowers
and has created a signicant liability for
many churches and therefore BSDS.
To mitigate this risk, BSDS has a strict
lending policy which includes criteria on
Earthquake-Prone Buildings before any
new lending is granted.
Depreciation can also affect the security
of BSDSs portfolio. BSDS mitigates this
risk through regular reviews of its lending
policies.
Credit risk:
Loans from BSDS are fully secured by
registered rst mortgages over land and
buildings.
All term loans are repayable on demand,
except in some cases where a xed
interest rate loan is involved.
While a registered rst mortgage provides
additional security for BSDS in the event
of a default by a borrower, it does not
provide immediate recovery of any funds
New Zealand Baptist Savings &
Development Society Incorporated
INVESTMENT
STATEMENT
New Zealand Baptist Savings &
Development Society Incorporated
Investment Statement Required for the
purposes of the Securities Act 1978, the
Securities Act (Charity Debt Securities)
Exemption Notice 2013 and the Deposit
Takers (Charities) Exemption Notice 2014.
still outstanding. As it could be months
before a property could be sold, there
would be a delay between a church
defaulting and when BSDS could recover
some or all of its money from the sale of
a property.
This provides a risk as it would impact on
BSDSs cash ow and liquidity.
To mitigate this risk BSDS has
conservative lending policies, as it only
lends up to 60% of the value of a church
property or other commercial property
and 80% of the value of a residential
property. Its investment policy is
similarly conservative, with at least 80%
of investments with the major trading
banks.
Concentration risk:
BSDS only lends to New Zealand
Christian churches and organizations.
There is therefore risk arising from the
concentration of borrowers in one country
and one sector. Additionally, churches,
like any entity, tend to experience periods
of prosperity and decline.
Churches also have varied income
sources that are very different from
typical businesses. Churches rely heavily
on gifts or tithing from members and this
source of income cannot be guaranteed.
Capital adequacy:
In the event of BSDS experiencing
signicant losses through nancial
institutions or investment companies
holding funds for BSDS and/or
experiencing signicant losses through its
lending to churches and other Christian
organizations, BSDS may be unable to
meet its obligations to its customers
under the terms of any debt security
(term deposit or savings account) or loan.
BSDS mitigates this risk by maintaining
its capital adequacy ratio at greater than
8%.
Operational risk:
The most signicant operational risk to
BSDS is IT and computer system failure
or degradation. This risk is managed by a
disaster recovery plan which has business
and client information backed up on
computers situated out of Auckland.
An additional operational risk is staff
mistake or negligence. To mitigate
this risk, the Board has regular staff
performance and operational reviews and
maintains a $2,000,000 delity insurance
policy, with cover for (but not limited to)
negligence and embezzlement.
Interest rate risk:
There is a risk that BSDS protability
might suffer if the margin between its
borrowing and lending narrows, and
interest rate rises will cause the value of
some of its investments to fall. This risk is
managed by BSDS regularly reviewing its
lending and borrowing rates and by not
being heavily exposed to the bond market.
Liquidity risk:
There is a risk that as BSDS tends to lend
for the long term and borrow from its
depositors for the short term, there might
not be enough cash to meet its obligations
to its depositors. BSDS manages this risk
by maintaining at least 20% of its deposits
in short term cash investments.
CONSEQUENCES OF INSOLVENCY
If BSDS becomes insolvent and is wound
up, you would rank equally with all other
unsecured creditors of BSDS and behind
all secured creditors and preferred claims.
However, BSDS has not and cannot under
the terms of its Trust Deed give any
securities to any person or organisation
that rank ahead of unsecured creditors.
WHAT ARE THE TERMS AND
CONDITIONS OF THE OFFER?
Minimum account balances for deposits
are:
$500 on Fixed Term deposits.
$100 on Call.
The minimum transaction amount on
savings accounts is $20.
Payment or delivery of investment
money can be made by cash, by cheque
payable to the New Zealand Baptist
Savings & Development Society Inc.,
by automatic payment, by ordinary
deposit to the BSDS bank account or by
another electronic delivery mechanism.
No period of notice is required for
withdrawal of on Call deposits.
Usually your term deposit is not
repayable until maturity. Should a term
deposit be repaid at your request prior
to maturity date, the interest rate may
be adjusted and the principal amount
repayable may be reduced to offset
interest payments (calculated at the
rate prior to adjustment) which you
may have received during the term of
the investment.
Holding of Investment money: Money
lodged with the BSDS will be deposited
in accordance with your instructions to
your nominated account or investment.
The money will be held according
to the usual terms and conditions
applying and so held until disbursed in
accordance with your instructions.
WHAT FEES DO YOU CHARGE?
BSDS does not charge account fees,
establishment fees, maintenance fees or
transaction fees for term or call deposit
accounts, but it reserves the right to
make an adjustment to the interest rate,
if the deposit is terminated or partially
withdrawn prior to maturity date.
RECORD KEEPING
Any money deposited with BSDS will
be allocated an account number. BSDS
will keep adequate records of deposits
and all withdrawals and dealings with
such money using the account number
allocated to your investment. You may
have access to those records upon
request.
ARE YOUR FINANCIAL STATEMENTS
AUDITED?
The BSDS systems and operations are
audited during each nancial year and
the nancial statements are audited
annually. It is a requirement of this
investment that all current depositors
and prospective depositors are entitled to
a free copy of BSDSs most recent audited
nancial statements within ve working
days of BSDS receiving the request.
DOES BSDS HAVE PROFESSIONAL
INDEMNITY INSURANCE?
BSDS maintains a delity insurance policy
with a cover of $2,000,000.
WHAT DISPUTE RESOLUTION
FACILITIES ARE AVAILABLE?
BSDS endeavours to maintain very good
relations with all its investors. In cases
where there is a need for a formal dispute
resolution process, BSDS will refer the
matter to the Chairman and then to
Financial Services Complaints Limited
as required under the Financial Services
Providers (Registration and Dispute
Resolution) Act 2008.
Dated 17 September 2014