The Bonus Bonds Trust Prospectus No.19 Issued on 11 September bonusbonds.co.nz

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1 The Bonus Bonds Trust Prospectus No.19 Issued on 11 September 2015 bonusbonds.co.nz

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3 Contents Key information Description of unit trust Managers and promoters Registrar, custodian, auditors, and other professional advisers Independence of unit trustee and any custodian Unit trustee Description of unit trust and its development Unit holder liability Summary financial statements Minimum subscription Guarantors Acquisition of business or equity securities Options and units paid up otherwise than in cash Interested persons Material contracts Pending proceedings Issue expenses Other terms of offer and units Financial statements and auditor s report Places of inspection of documents Other material matters Manager s statement Unit Trustee s statement...30 Glossary of key terms...31 Appendix 1: Financial Statements for the year ended 31 March Appendix 2: Auditor s Report...49 Appendix 3: Trustee s statement This document is a registered prospectus for the purposes of the Securities Act 1978, and is dated 11 September It gives general information about Bonus Bonds and the Bonus Bonds Trust (the Trust). Investments in the Trust are not deposits in ANZ Bank New Zealand Limited or Australia and New Zealand Banking Group Limited (together ANZ Group), nor are they liabilities of ANZ Group. ANZ Group does not stand behind or guarantee the Trust. Investments are subject to investment risk, including possible delays in repayment, and loss of income and principal invested. ANZ Group will not be liable to you for the capital value or performance of your investment. Your investment in the Trust is not guaranteed by ANZ Group, Trustees Executors Limited, any of their directors or any other person. In this prospectus: we, our, us and Manager means ANZ Investment Services (New Zealand) Limited, a subsidiary of ANZ Bank New Zealand Limited you, your and Bondholder means any existing, or potential Bondholder in the Trust in whose name the Bonus Bonds are registered. See page 31 for a glossary of words used in this prospectus. The much more fun investment bonusbonds.co.nz 3

4 Key information What are Bonus Bonds? Bonus Bonds are a unique investment product. By buying Bonus Bonds, you get chances to win a share of thousands of cash prizes each month instead of earning interest or receiving investment gains. Bonus Bonds are one of New Zealand s largest investment products. When this prospectus was published, over $3 billion was invested in Bonus Bonds. You can cash in Bonus Bonds whenever you want giving you easy access to your investment whenever you need it. How much does a Bonus Bond cost? Each Bonus Bond costs $1. We can change this price in special circumstances, but have never done so, and don t expect to in the future. You can invest as much as you d like into Bonus Bonds provided you invest a minimum amount of $20 each time. We can change the minimum amount at any time. Who can buy Bonus Bonds? Any individual person can buy Bonus Bonds for themselves or jointly with other people. Companies, incorporated clubs and societies, and trusts can t buy Bonus Bonds unless they were a Bondholder on 13 September 2013 and still hold Bonus Bonds. How do Bonus Bonds prizes work? Each eligible Bonus Bond puts you in a monthly draw to win prizes. Even old Bonus Bonds you ve forgotten about are entered. If you win a prize, we ll either or write to you and then: pay your prize in cash into your bank account, or issue you with more Bonus Bonds. See page 18 for more information on how we pay prizes. Other than prizes, we don t distribute any Income or provide any returns on your investment in Bonus Bonds. The number and amount of prizes will change each year. In the twelve-month period 1 April 2014 to 31 March 2015, the Trust awarded over two million one hundred thousand prizes, totalling more than $60 million. See page 19 for more information on prize draws. When are prize draws held? Prize draws are held once a month on the first business day of the month, with results announced on the second Tuesday of each month. A Bonus Bond is only eligible for a draw after you own it for at least one calendar month. We ll enter it into the draw on the first day of the following month. For example, if you buy Bonus Bonds in March, those Bonus Bonds won t be in the monthly prize draw in April, but they will be in any monthly prize draws from the first day of May onwards. Bonus Bonds remain eligible to win prizes in every monthly draw until you cash them in. What are your chances of winning? In the August 2015 prize draw, the chance for any individual eligible Bonus Bond to win a prize was 1 in 18,943. The main factors that will change the prize pool, and therefore your chances of winning a prize, are: the Trust s investment performance the number of Bonus Bonds eligible for each monthly prize draw. For most prize draws over the next year, we expect that the chance of any Bonus Bond winning a prize will range between 1 in 20,000 to 1 in 35,000. The Trust Deed requires us to manage the prize pool so that your chances of winning a prize are no better than 1 in 9,600. What are the main benefits? An investment in Bonus Bonds has six main benefits. Monthly prizes: you could win a share of thousands of prizes each month, including a top prize of $1 million. See page 19 for more information on the Trust s prizes. Access to our special prize draws: we also hold occasional special prize draws to promote Bonus Bonds. We set the entry rules for these draws and we pay the prizes out of our management fee not out of the Trust. No income tax on prizes: if you win a prize, you won t have to pay any income tax on it. See page 27 for more information on taxation. Low risk: the Trust s investments are conservatively managed, which reduces the risk that you ll receive less than you paid for your Bonus Bonds when you cash them in. 4 The Bonus Bonds Trust Prospectus No. 19

5 Easy access to your investment: it s easy to cash your Bonus Bonds in, so your money is generally available if you need it. See page 12 for more information on cashing in. You re always connected: keep up to date with your Bonus Bonds through MyBonusBonds, our secure online service that allows you to access and manage your Bonus Bond investments. What are the risks? Like any investment, Bonus Bonds involve some risk. You should consider the following risks when assessing an investment in Bonus Bonds. You might not win a prize, so you might receive no gain from your investment. Inflation may mean your investment has less purchasing power by the time you cash in your Bonus Bonds. Changes in interest rates or financial markets may affect the Trust s investment performance as assets could lose value or issuers might be unable to meet their obligations. These changes could impact the amount, and number, of prizes. These changes may be to your advantage or disadvantage. The price for each Bonus Bond could fall below $1, which would mean that you could receive less money than you put in when you cash in your Bonus Bonds. Any changes in the number of Bonus Bonds eligible for each monthly prize draw will change the odds of you winning a prize. These changes may be to your advantage or disadvantage. In some circumstances, your cash-in payment might be delayed. The laws affecting Bonus Bonds could change, which, for example, might reduce the prizes available every month or your eligibility for them. See page 27 for more information on risks. You need to decide how any risks apply to your personal circumstances. We recommend that you talk to an authorised financial adviser about the investment options available to you. How do you buy more Bonus Bonds? You can buy additional Bonus Bonds for yourself and others: online at MyBonusBonds at any ANZ branch by automatic payment or bill payment. How do you cash in your Bonus Bonds? You can cash in some (or all) of your Bonus Bonds by giving us a completed Cash-in request form or lodging a request through MyBonusBonds. See page 12 for more information on Cash-in requests. If you cash in your Bonus Bonds, when will you get your money? Normally, we pay within five business days, or two business days if your request is made through MyBonusBonds. See page 7 for more information on exit fees for emergency cash-ins (and the reduced timeframes for emergency requests). If you cash in your Bonus Bonds, how much will you get? You ll currently get $1 for each Bonus Bond you cash in. In an emergency, a cash-in fee is applicable and this will reduce how much you get back. See page 7 for more information on the price of Bonus Bonds. How do you buy your first Bonus Bonds? The first time you buy Bonus Bonds, you need to fill out an application form. These are available at bonusbonds.co.nz, or at any ANZ branch. For your application to be successful, you ll need to supply us with acceptable proof of your identity and home address. You ll also need to give us information such as the country you were born in, your occupation and which country you pay tax in. The much more fun investment bonusbonds.co.nz 5

6 What are the fees? When you invest in Bonus Bonds, you currently pay no direct fees, unless you need an emergency cash-in. However, the Trust: pays us an annual management fee for administering and managing the Trust and its Register. At the date of this prospectus, our management fee is 1.15% of the gross value of the Trust plus GST (GST is calculated on only 10% of our fee. However, this is currently under review and may change). pays the Trustee an annual fee to perform its responsibilities as Trustee. At the date of this prospectus, the Trustee fee is 0.03% of the gross value of the Trust plus GST (GST is calculated on 100% of the Trustee s fee. Prior to 1 April 2015 GST was calculated on 75% of the Trustee s fee). reimburses us and the Trustee for any expenses we incur when carrying out our duties. This includes the reimbursement of expenses we incur for services we ve delegated to third parties, including: the selection and management of the Trust s investments the administration and management of the Trust s Register. No dollar limit applies to our management fee, the Trustee fee, or the amount that we and the Trustee may be reimbursed for expenses. Any fees paid, or expenses reimbursed, by the Trust will reduce the prize pool. The table below illustrates the total fees and expenses incurred by the Trust as a percentage of the average gross value of the Trust (being the total expense ratio). This percentage: is calculated on actual expenses incurred for the previous financial years, and is shown before tax. Bonus Bonds Trust Year ending 31 March 2015 Year ending 31 March 2014 Year ending 31 March % 1.28% 1.28% See page 24 for more information on the fees and expenses paid by the Trust. Bonus Bonds are not guaranteed Bonus Bonds uses an award-winning investment manager Bonus Bonds investments are managed by ANZ New Zealand Investments Limited ( ANZ Investments ), ANZ s award-winning fund manager. ANZ Investments has an outstanding record of investment performance in New Zealand. See investments.anz.co.nz for their full awards history. You re in good company When this prospectus was published: over $3,100,000,000 (that s over three billion dollars) was invested in Bonus Bonds over 1.3 million people own one or more Bonus Bonds. The Trust currently has a Standard & Poor s fund credit rating We seek to manage the Trust to a Standard & Poor s fund credit rating standard of AAf. This rating indicates that, in Standard & Poor s opinion, the Trust s portfolio holdings provide very strong protection against losses from credit defaults. Credit defaults occur if a person does not meet their financial obligations. Credit ratings are subject to change. See page 29 for more information on the Trust s credit rating. You can also find out more about Standard & Poor s credit ratings at standardandpoors.com. We and ANZ Investments are subsidiaries of ANZ We and ANZ Investments are subsidiaries of ANZ Bank New Zealand Limited. Help us keep in contact with you If your name or address changes, you must let us know so that we can update the Register. Bonus Bonds are not guaranteed by anyone (including ANZ Group, the Trustee and the Government). 6 The Bonus Bonds Trust Prospectus No. 19

7 1. Description of unit trust Name of the Trust The unit trust described in this prospectus is the Bonus Bonds Trust (the Trust). Year and place that the Trust was established The Trust was established in Wellington under the Unit Trusts Act 1960 by a Trust Deed dated 17 September 1990, as amended and restated on 13 September 2013 (the Trust Deed). The parties to the Trust Deed are ANZ Investment Services (New Zealand) Limited (the Manager) and Trustees Executors Limited (the Trustee). Duration of the Trust The Trust will be wound up on 16 September However, the Trust may be wound up early if one of the following happens: we believe it is in the interests of Bondholders to wind up the Trust the Bondholders pass an extraordinary resolution to wind up the Trust. Description of the units being offered This prospectus offers fully paid up units in the Trust. In this prospectus, we refer to a unit as a Bonus Bond. Unlike a typical unit trust, a Bonus Bond is not eligible for interest or an investment return. Your investment is pooled When you invest in the Trust, your investment is pooled with investments from other people who have invested in the Trust. See page 18 for more information on our investment policy and objectives. You jointly own the benefits of the Trust with every other Bondholder, and each individual Bonus Bond represents an equal share of the Trust s assets. A Bonus Bond does not entitle you to any specific assets of the Trust. Monthly prize draws We distribute Income from the Trust (after making allowances for fees, expenses, taxation and the Reserve Fund) to you through a monthly prize draw. You ve one entry into each prize draw for every eligible Bonus Bond you own. The prize draw randomly selects Bonus Bonds to win prizes. A Bonus Bond is only eligible for a draw after you own it for at least one calendar month. For example, if you buy Bonus Bonds in March, those Bonus Bonds won t be in the monthly prize draw in April, but they will be in any monthly prize draws from the first day of May onwards. Prize draws are completed on the first business day of the month, with results announced on the second Tuesday of each month. Bonus Bonds remain eligible to win prizes in every monthly draw until you cash them in. See page 19 for more information on prize draws. Maximum number of Bonus Bonds in the Trust The Trust is not limited to a maximum number or monetary amount of Bonus Bonds. The price of a Bonus Bond Since Bonus Bonds began in 1970, they ve been priced at $1 each. We don t expect a change in the price, but we can t rule out the possibility. The price of each Bonus Bond may go above (or below) $1 if we consider special circumstances justify such a change. Fees for buying and selling Bonus Bonds See page 24 for more information on the fees and expenses paid by the Trust. Entry fees for buying Bonus Bonds The Trust Deed allows us to charge you an entry fee or subscription fee for buying Bonus Bonds. However, we don t currently charge such a fee, nor do we intend to do so. Exit fees for ordinary cash-ins The Trust Deed allows us to charge you an exit fee for selling (cashing in) Bonus Bonds. However, we don t charge an exit fee unless you need payment urgently. Exit fees (and timeframes) for emergency cash-ins If you need urgent payment when you cash in your Bonus Bonds, you can make an emergency Cash-in request: at an ANZ branch online through MyBonusBonds. The much more fun investment bonusbonds.co.nz 7

8 We charge a fee for emergency cash-ins; we ll deduct the fee from the value of the Bonus Bonds you re cashing in. If you complete an emergency cash-in through: an ANZ branch, we charge a fee of $60; we ll make payment in cash or to an ANZ bank account that day, or overnight to other banks MyBonusBonds, we charge a fee of $15; we ll make payment on the next business day. We aim to make payment in the timeframes stated above, but do not guarantee this. You must complete and submit your emergency Cash-in request before 3.30pm at an ANZ branch or before 7pm through MyBonusBonds. Opening and closing dates The Trust will be wound up when it turns 80 years old, less one day; that is, on 16 September See page 17 for more information on how the Trust can be wound up. 2. Managers and promoters We are the manager of the Trust We, ANZ Investment Services (New Zealand) Limited, are the Manager of the Trust. Our principal address is: ANZ Investment Services (New Zealand) Limited Ground Floor ANZ Centre, Albert Street Auckland 1010 You can contact us, and our directors, at this address. At the date of this prospectus, our directors are: John Robert Body of Auckland (Chair) BCom, MBS Managing Director, ANZ Global Wealth, New Zealand John is responsible for ANZ s Wealth & Private Banking business in New Zealand. This part of the business provides private banking, insurance, investment, KiwiSaver, and other retirement savings products and services to help New Zealanders build and protect their wealth. John s experience includes 22 years working for ANZ s markets business. He has held a range of senior positions in Singapore, Melbourne, and New Zealand. John is on the board of the Financial Services Council. Bonnie Fredrik Mikael Ohlsson of Auckland MBA, BScience Managing Director, Retail & Business Banking, New Zealand Fred leads the team that supports ANZ s personal and small business customers. His focus is to help more New Zealanders to achieve their goals and ensure they re receiving great customer service. Fred joined ANZ Australia in December 2001 and came to ANZ New Zealand in 2010 to lead the Business Banking team. In 2013 his role grew to also manage the Retail division. Previously Fred held a number of positions across the group including General Manager Global Commercial Banking and General Manager Commercial Products. Russell Peter Jacobson of Wellington BCA, CA Head of Finance, Retail and Business Banking, New Zealand Russell leads the Finance teams for the New Zealand Retail and Business Banking division; Global Technology, Shared Services & Operations division; Enablement and Central Functions. Russell has over 30 years experience in banking in mostly senior finance roles in ANZ Australia and ANZ New Zealand. The directors of the Manager are also senior executives within the ANZ Group. Our directors and address may change without notice to you. A current list of directors and our current address are available online at business.govt.nz/companies. Our holding company We and ANZ Investments, the investment manager, are both subsidiaries of ANZ Bank New Zealand Limited. The holding company for ANZ is Australia and New Zealand Banking Group Limited, a company incorporated in Australia. Other unit trusts we manage We also currently manage the following unit trusts: ANZ PIE Fund ANZ Term Fund (this fund is currently being wound up) ANZ Private Call Fund (this fund is currently being wound up). 8 The Bonus Bonds Trust Prospectus No. 19

9 There are no promoters of the Trust There are no promoters of the Trust. ANZ Investments is the investment manager of the Trust ANZ New Zealand Investments Limited is the investment manager of the Trust. ANZ Investments is responsible for the day-to-day selection and management of the Trust s investments. We have no bankruptcy or dishonesty to report In the five years before this prospectus was registered, neither we, ANZ Investments, nor any of our or their directors have been: adjudged bankrupt or insolvent convicted of any crime involving dishonesty prohibited from acting as a director of a company placed in statutory management, voluntary administration, liquidation, or receivership. 3. Registrar, custodian, auditors, and other professional advisers Registrar ANZ Bank New Zealand Limited is the registrar of the Trust. The registrar is responsible for recording, maintaining and keeping all Bondholder records. The registrar conducts the registry functions through its Bonus Bonds Centre at: ANZ Bank New Zealand Limited c/- Bonus Bonds Centre Level 3, 71 George Street Dunedin 9054 Custodian Bonus Bonds Custodians Limited is the custodian of the Trust. The custodian is responsible for holding, and is recorded as, the owner of the Trust s assets. The custodian is a wholly owned subsidiary of the Trustee. Auditor The auditor of the Trust is KPMG. At the date of this prospectus, KPMG is a registered audit firm in terms of Section 25 of the Auditor Regulation Act This registration is subject to the standard conditions that apply to audit firm registrations. KPMG have considered and confirmed their independence as auditor, their quality procedures, and the objectivity of the audit partners and audit staff. Solicitors and other professional advisers Bell Gully were the solicitors involved in the preparation of this prospectus for us. No other professional advisers were used in preparing this prospectus. Experts No experts have been named in this prospectus. The much more fun investment bonusbonds.co.nz 9

10 4. Independence of unit trustee and any custodian The Trustee and custodian are independent of us (as the Manager) and ANZ Investments (as the investment manager). 5. Unit trustee Trustees Executors Limited is the Trustee Trustees Executors Limited is the trustee of the Trust. The Trustee is required to supervise what we do as Manager to administer and manage the Trust. The law requires the Trustee to act with the care, diligence, and skill expected of a prudent person whose job is to act as a trustee. Except as limited by the Trust Deed, the Trustee has all powers over the investments of the Trust that an owner would have. You can contact the Trustee at their address at: Trustees Executors Limited Level 5, 10 Customhouse Quay Wellington, 6011 You can also contact any of the Trustee s directors at this address. The directors of the Trustee are: Paul Raymond Shelley Hocking BMS, CA, CSAP, of Martinborough Peter Andrew Metz CA, MBA, BS, of New York, United States of America Robert Paul Russell BCA, CA, of Lower Hutt. The directors and Trustee s address may change without notice. You can find the current list of directors and the Trustee s address at business.govt.nz/companies or by calling the Trustee on (04) The Financial Markets Authority has granted a licence to the Trustee under section 16(1) of the Securities Trustees and Statutory Supervisors Act 2011 (now the Financial Markets Supervisors Act 2011). This licence allows the Trustee to act as a trustee of a range of financial products. The licence expires on 16 January 2018 and is subject to reporting conditions. For a copy of the Trustee s licence, including the conditions on the licence, see the Financial Markets Authority s website at fma.govt.nz and the website of the Register of Financial Service Providers at fspr.govt.nz. Incorporation of the Trustee The Trustee was incorporated in New Zealand on 6 July 1881 under the Joint Stock Companies Act 1860, and empowered as a statutory trustee company by its own Act of Parliament. It was re-registered under the Companies Act 1993 on 30 June On 1 May 2002, the Trustees Executors Limited Act 2002 reconfirmed Trustees Executors Limited s status as a statutory trustee company in New Zealand. Trustee s holding company The Trustee s ultimate holding company in New Zealand is Sterling Grace (NZ) Limited, incorporated in New Zealand on 30 July That company is ultimately owned by the Grace family, through various private trusts. The Grace family established Sterling Grace Corporation ( Sterling Grace ), which administers from its office in Brookville, Long Island, USA, investments for high net-worth investors, institutions, investment partnerships and the Grace family. It is active in global money management, private equity, hedge funds, real estate investments, financial planning and shipping. Sterling Grace and its predecessor companies have been involved in financial services since The Bonus Bonds Trust Prospectus No. 19

11 The history includes asset management, stock brokerage, underwriting, leveraged buyouts, strategic investments in insurance and banking, real estate investment and development, energy project development and management, and direct telecom investments. The only trust holding more than 25% of the ultimate ownership in Trustees Executors Limited is the John S Grace Millennium Trust, which means that no individual is automatically entitled to 25% or more of the ownership of the Trustee. The person who has effective control of that Trust is John Sheffield Grace, of Switzerland. Extent of Trustee s indemnity and circumstances when Trustee is personally liable If the Trustee is held personally liable for any loss or liability, the Trustee is entitled to full indemnity and reimbursement out of the Trust for: that loss or liability the costs of litigation, other proceedings, and actions legal fees and disbursements. The Trustee is personally liable to the Trust when a loss arises for any of the following reasons: the Trustee has defaulted under the terms of the Trust Deed or applicable law the Trustee has wilfully failed to act when the terms of the Trust Deed or applicable law required action the Trustee has otherwise failed to show the degree of care and diligence required of a trustee of the Trust, in view of the terms of the Trust Deed. To the fullest extent permitted by law, the Trustee does not have personal liability under any other circumstances. The Trustee does not guarantee payment The Trustee does not guarantee repayment of the Bonus Bonds or the payment of any earnings. (See also page 6 where we confirm that no other party guarantees the Bonus Bonds either.) 6. Description of unit trust and its development The Trust Deed and its amendments We and the Trustee agreed and signed an amended and restated version of the Trust Deed governing the Trust on 13 September When we refer to the Trust Deed in this prospectus, we mean the original deed and all its amendments. By buying Bonus Bonds, you agree to be bound by the terms of the Trust Deed and have the rights set out within it. Summary of the principal terms of the Trust Deed The principal terms of the Trust Deed are summarised below. Offer, issue, and sale, of Bonus Bonds We can decide how you can buy Bonus Bonds, in accordance with the terms and conditions in this prospectus, the Trust Deed, and applicable law. We can accept or refuse your application to buy Bonus Bonds. We do not have to give reasons if we refuse your application. When you apply for Bonus Bonds and we accept the application, we ll issue you with new Bonus Bonds. The much more fun investment bonusbonds.co.nz 11

12 The issue date of a Bonus Bond affects its eligibility for prize draws. (See page 19 for more information on prize draws). A Bonus Bond s issue date is: the date you apply to buy the Bonus Bond through MyBonusBonds for all other purchase methods, usually the date we receive payment. Please note that: payment by direct debit or automatic payment does not guarantee your application will be accepted we ll decline an online application if we don t receive your full payment within three business days. You ll receive the number of Bonus Bonds that can be purchased at the current purchase price with the amount of the payment we receive and accept. We currently require you to buy a minimum of 20 Bonus Bonds or $20 worth (but we can change this at any time). We do not currently limit the number of Bonus Bonds you can buy. Price of Bonus Bonds Except in special circumstances, the price of each Bonus Bond is $1. The Trust Deed allows us to change the price if we consider special circumstances have arisen. We ve not done so to date and don t intend to in the future, but we can t rule out the possibility. Cashing in Bonus Bonds To cash in your Bonus Bonds, you can make an online request through MyBonusBonds. You can also complete a Cash-in request form, which can be downloaded from bonusbonds.co.nz or obtained at any ANZ branch. If you re completing a Cash-in request form you ll need to go to an ANZ branch and show your identification to confirm that you ve a right to the money from the Bonus Bonds. We may require other supporting information, such as proof of your address. If you do not bring your Bonus Bonds Certificates with you or you no longer have these, we ll ask you to sign a declaration confirming that you re cashing them in. We can set minimum and maximum cash-in thresholds, but currently none apply. When will we pay? Once we receive your Cash-in request form, we have 28 business days within which to pay (unless we ve suspended or delayed cash-ins) although we normally pay earlier than this. If you ve purchased Bonus Bonds within the last four business days, you cannot cash them in through MyBonusBonds. You can cash them in at an ANZ branch as long as the money you used to buy them has been cleared. We have the right to suspend or delay Cash-in request payments We can suspend cash-in payments for up to 30 days if we have good reason to think that cashing in Bonus Bonds: is not practicable would disadvantage Bondholders. If we decide to suspend cash-in payments, this will apply to all Cash-in request forms submitted. In these circumstances, the cash-in price for Bonus Bonds is calculated on the day we end the suspension. With the Trustee s consent we can also delay cashing in your Bonus Bonds, or cash in small groups at a time, if both of the following apply: someone tries to cash in Bonus Bonds that exceed 3% of the total number of issued Bonus Bonds at that time (either in one notice or in a group of notices over three months) we and the Trustee agree it is in the interests of Bondholders as a whole to delay cashing in. In these circumstances, we calculate the cash-in price of the Bonus Bonds on the day we make payment. Investments We have the power to: buy and sell Authorised Investments in the name of the custodian buy and sell certain Authorised Investments without the prior consent of the Trustee, provided we follow the Trust s statement of investment policy and objectives (SIPO). We must make investment decisions that we consider are in the interests of Bondholders. The Trust Deed lists the categories of Authorised Investments for the Trust and the SIPO sets out the limits to any investments. See page 18 for more information on the investment and other material activities of the Trust. We can invest in, or enter into investment transactions with, related parties with the prior written consent of the Trustee. These related parties include any member of the ANZ Group or any related person of the Trustee. Related parties do not need to account to the Trust for any profit they make from such a transaction. 12 The Bonus Bonds Trust Prospectus No. 19

13 We ve delegated day-to-day selection and management of the Trust s investments to ANZ Investments We ve delegated the day-to-day selection and management of the Trust s investments to ANZ Investments. ANZ Investments charges us for providing these services to the Trust. The Trust reimburses us for all of these expenses. See page 24 for more information on the fees and expenses paid by the Trust. How we calculate Income (and the prize pool) We invest the Trust (including the Reserve Fund) with the aim of generating positive investment performance. This investment performance forms the basis of the prize pool after deductions (or provisions) have been taken into account. In simple terms, this is represented by the following equation: Investment performance less Fees less Expenses less Taxation plus/less Provisions for the Reserve Fund equals Income (being the prize pool) Distributing and allocating the Trust s Income We distribute the Trust s Income in the form of prizes. Prizes are based on a schedule of prizes with a random allocation determined by ballot. We have to distribute this Income as soon as practical after each month (and within 70 days of the end of the month when the prize draw occurred). Only eligible Bonus Bonds can win a prize in each monthly prize draw. No Bonus Bond can have a better chance of winning a prize than 1 in 9,600. See page 7 for more information on monthly prize draws, including eligibility criteria. Taxation liability Currently, you don t have to pay income tax on your winnings as a Bondholder, and the Trustee is not required to deduct tax when it pays those winnings to you. However, you re required to indemnify us and the Trustee if any tax is or was payable by you or on your Bonus Bonds. That means that we or the Trustee can deduct or withhold tax payable by you from any amount otherwise due to you in respect of your Bonus Bonds. If we or the Trustee pay any tax on your behalf, you ll be charged interest calculated daily at a rate we determine. Disclosing beneficial interests We can ask you to give us more information in order to: conduct appropriate customer due diligence on you, or comply with our obligations under all applicable laws, any applicable regulator guidance and policy, or our internal compliance policies. We may require you to send us documentation to verify information you provide to us. If you don t send us this information, we may cancel your Bonus Bonds at a price nominated by us and approved by the Trustee. The Register We keep a Register of Bondholders on behalf of the Trustee. The Register is the official record of Bonus Bond ownership. It records: the names and addresses of Bondholders the number of Bonus Bonds held by each Bondholder the date on which the name of each person was entered on the Register as a Bondholder the date on which each Bondholder acquired Bonus Bonds the date on which each person ceased to be a Bondholder. Help us keep the Register accurate If your name or address changes you must let us know so that we can update the Register. You can inspect the Register at any time during business hours at any ANZ Branch to see the information we hold about you and your Bonus Bonds. We may close the Register from time to time, as long as it isn t closed for more than 30 business days in a year. If you become aware of any mistakes in your application, your Certificates, or your bondholding, you should let us or the registrar know. See the following page for more information on fixing mistakes. The auditor of the Trust must audit the Register no less than every 12 months. The much more fun investment bonusbonds.co.nz 13

14 We recognise only the person recorded in the Register The only person we recognise as having an interest in the Bonus Bonds is the person or persons recorded as Bondholder(s). The Trustee can rely on the Register The Trustee is entitled to rely on the Register being correct. The Trustee doesn t have any responsibility or liability for mistakes in the Register. For joint Bondholders, we only send notices to the first two on the Register When we send notices to joint holders of Bonus Bonds, we only need to send them to the first two people (alphabetically) named for those Bonus Bonds. Cancelling Bonus Bonds We can cancel a Bonus Bond held by a person who is not entitled under the Trust Deed to be registered as a Bondholder. If we cancel a Bonus Bond, we ll: notify the Bondholder inform the registrar (who will record the cancellation in the Register) pay the Bondholder, or any other person that we think is entitled to the money, the value of the Bonus Bonds plus any prizes the Bonus Bonds may have won before they were cancelled. We won t make a payment if: we haven t received adequate proof of identity on the Bondholder the Bondholder received the Bonus Bonds through fraud or deceit, or the purchase price of any Bonus Bond being cancelled has not been paid. Fixing any mistakes The registrar will fix a mistake in the records once it is satisfied that a mistake has been made. If the mistake is in a Certificate, the registrar may ask you to return your Certificate so that it can be replaced or corrected. We ve delegated the management and administration of the Trust s Register to ANZ We ve delegated the management and administration of the Trust s Register to ANZ. ANZ charges us for providing these services to the Trust. The Trust reimburses us for some of these expenses. See page 24 for more information on the fees and expenses paid by the Trust. Transferring Bonus Bonds to someone else Bonus Bonds, including their corresponding number(s), can be transferred. However, to give effect to any transfer we may redeem the Bonus Bonds being transferred and issue replacement Bonus Bonds. In those circumstances, if the redeemed Bonus Bonds would have been eligible for the next prize draw, we ll adjust the issue date of the replacement Bonus Bonds to ensure that they are eligible for the next prize draw. If you want to transfer Bonus Bonds to another person, you ll need to complete a Cash-in request form and confirm the bondholding number the Bonus Bonds are to be transferred to. If the person receiving the Bonus Bonds is not an existing bondholder, they will need to complete an application form. You can download both forms at bonusbonds.co.nz or obtain them from any ANZ Branch. What happens to your Bonus Bonds if you die or become bankrupt? If you die, we ll recognise as the holder of your Bonus Bonds either: the executor or administrator of your estate, if you held the Bonus Bonds on your own surviving Bondholders, if you held the Bonus Bonds jointly with other people. If you become bankrupt, we ll recognise your administrator as the holder of your Bonus Bonds. If you become legally entitled to Bonus Bonds (for example, because someone has died or become bankrupt), we ll require evidence of your right to the Bonus Bonds. Once this has been confirmed, and subject to the terms of the Trust Deed, we ll accept your instructions in relation to the Bonus Bonds. If no-one claims your Bonus Bonds within six months of us learning that you ve died or become bankrupt, we re entitled to: cash-in the Bonus Bonds, and put the money into a bank account held by the Trustee for this purpose. We ll pay the money to those who can prove their right to claim it. This money does not earn interest, but the Trustee can deduct a reasonable fee for the administration of this money. 14 The Bonus Bonds Trust Prospectus No. 19

15 Bonus Bond Certificates When you buy Bonus Bonds, we currently provide you with either a physical or an electronic Certificate. You can ask us not to give you a physical Certificate. We may stop issuing physical Certificates. If we do, we will issue statements of holdings to you at least once every six months, and at any time on request by you. If you re a MyBonusBonds Registered User you ll be issued with an electronic Certificate. If you invest: at ANZ branches, we ll give you your Certificate immediately through MyBonusBonds, we ll issue you with an electronic Certificate after three business days in any other way, we ll post you a Certificate within ten business days of accepting your application. If you lose, damage, or destroy your Certificate, we can issue a replacement one. Consolidating and subdividing Bonus Bonds We can, at any time, consolidate or subdivide Bonus Bonds. If we do so, we must give written notice to you and the Trustee. We can make any arrangements we consider appropriate for cancelling existing Certificates and issuing new Certificates. Trustee s remuneration Page 24 summarises the Trust Deed provisions for the Trustee s remuneration, including fees and expenses. Removing the Trustee The Trustee can retire at any time, without reason, by giving us 90 days written notice if one of the following applies: all functions and duties of the position have been performed the Manager has appointed another licensed trustee the High Court has consented to the Trustee s resignation. We can remove the Trustee with the approval of the High Court under section 10(2) of the Unit Trusts Act We have the power to appoint a new trustee. If we don t appoint one, the Bondholders can do so by an extraordinary resolution. Our remuneration Page 24 summarises the Trust Deed provisions for our remuneration, including our fees and expenses. Removing us as the manager We can retire, as Manager, at any time by giving the Trustee 90 days written notice. Our retirement will not begin until a new manager has been appointed under the Trust Deed. The new manager needs to agree to be bound by the Trust Deed. The Trustee has the power to appoint a new manager on the directions of Bondholders. If the Trustee does not appoint a new manager, the Bondholders can do so by an extraordinary resolution. The Trustee can appoint a temporary manager until a new manager is formally appointed. We can be removed: by the High Court on an application (by the Trustee, any Bondholder or the FMA) under section 19(1) of the Unit Trusts Act 1960 if the Trustee certifies that removal is in the interests of the Bondholders by an extraordinary resolution of Bondholders. If removed, we ll immediately stop every activity to do with the Trust and promptly give the Trustee all information and documents that we hold. If we stop being the Manager for any reason, then unless we agree in writing the words ANZ and Bonus Bonds : may need to be removed from the name of the Trust, any portfolio, and any nominated person must not be used in any document, publication, or advertisement relating to the Trust must be removed from records where it is part of the name of a nominated person. We must act in accordance with section 4 of the Unit Trusts Act Borrowing We may direct the Trustee to borrow money on behalf of the Trust if we believe, in good faith, that borrowing is necessary or desirable either: in the general interests of Bondholders; or to conduct the investment or management or other operations of the Trust. The FMA also has the power to remove or replace a Trustee under the Securities Trustees and Supervisors Act 2011 (now the Financial Markets Supervisors Act 2011). The Trustee must hold a licence under the Securities Trustees and Statutory Supervisors Act 2011 (now the Financial Markets Supervisors Act 2011). The much more fun investment bonusbonds.co.nz 15

16 The Trustee must take all necessary steps to follow our direction providing: the total amount borrowed or raised does not exceed 50% of the gross value of the Trust, and the Trustee is satisfied that it has no liability beyond the investments in the Trust, and no obligation except as Trustee. Bondholders are not personally liable for the Trust s debts if there is a shortfall of Trust assets. Auditor The Trustee appoints the auditor after consulting with the Manager. The auditor is paid a fee from the Trust. The auditor must be a chartered accountant or a firm of chartered accountants with a current certificate of public practice, and must hold a licence. The auditor must not be an officer or employee of either the Manager or the Trustee, or a partner of someone who is such an officer or employee. The auditor may be our auditor, and may also be the auditor for other unit trusts. The auditor may: retire at any time by giving the Trustee 90 days written notice, or be removed from office by the Trustee. Preparing financial accounts We and the Trustee must: keep true and proper records of all transactions and activities, and exchange information necessary for this purpose. We prepare financial statements for the Trust each financial year. The auditor audits these statements. The auditor s report states whether the financial statements: comply with Generally Accepted Accounting Practice in New Zealand comply with International Financial Reporting Standards presents fairly the financial position of the Trust and of its financial performance and cash flows for each year. We do not send Bondholders a copy of the financial statements or the auditor s report unless they ask for them. Meetings of Bondholders We or the Trustee can call a meeting of Bondholders. We must call a meeting if we receive a written request from any one of: the Trustee Bondholders who collectively own at least 10% of the total number of Bonus Bonds at least 10% of the total number of Bondholders. You can find more information on how to call and run a meeting in the Trust Deed. See page 27 for more information on how to inspect our documents and get a copy of the Trust Deed. Amending the Trust Deed We and the Trustee can agree to amend the Trust Deed without getting Bondholders consent in any of the following circumstances: if the Trustee believes the amendment: will correct a manifest error, or is of a formal or technical nature will make the Trust easier or more economical to run, or is needed to comply with legal requirements will not generally disadvantage Bondholders, or will protect their interests if the amendment is authorised by an extraordinary resolution of Bondholders. If a Trust Deed amendment will materially alter the terms of the Trust, we must get the prior consent of the Minister of Finance. If the Minister of Finance consents in writing to such an amendment, we must send you a summary of the amendment within three months. We and the Trustee can change the list of Authorised Investments without approval from the Minister of Finance if: we send details of the proposed change to all Bondholders, and Bondholders who collectively own at least 10% of all Bonus Bonds don t call for a meeting within 30 days of us posting those details. Our powers We manage the Trust as Manager. We provide administration, registry, marketing, and investment management services to the Trust. In carrying out our role, we can do anything that is not forbidden under any law or the Trust Deed. We can invest, purchase, sell, and lend, on behalf of the Trust. We must do our best to ensure that we manage the Trust properly and efficiently. We can also determine how to exercise any voting rights conferred by an investment. 16 The Bonus Bonds Trust Prospectus No. 19

17 We can delegate any of our powers under the Trust Deed to our own staff or to anyone approved by the Trustee. We can appoint delegates, agents, attorneys, officers, employees, sub-delegates, and sub-agents. We re responsible for the acts or omissions of anyone to whom we delegate. The Trustee s powers The Trustee has all powers over the investments of the Trust as the legal owner of the investments. The Trustee must act within the provisions of the Trust Deed and must generally follow our instructions. Under section 12(1)(c) of the Unit Trusts Act 1960, the Trustee can refuse to act on a direction if it believes the direction is not in the best interests of Bondholders. The Trustee may, among other things: hold the Trust s assets in trust for Bondholders maintain bank accounts in the name of the Trust approve the form and management of the Register appoint or remove the manager appoint the chairperson and keep minutes at meetings of Bondholders lend money out of the Trust, borrow money and grant security over it to any person. Our indemnity and the Trustee s indemnity When we or the Trustee act, or omit to act, or incur any liabilities, for the Trust, we do so on behalf of the Trust and not in our personal capacities unless we ve breached our obligations as described below. The Trustee s indemnity from the Trust is described on page 11. We have an equivalent right of indemnity. Specifically, if we re held personally liable for any loss or liability, we re entitled to full indemnity and reimbursement out of the Trust for: that loss or liability the costs of litigation, other proceedings and actions legal fees and disbursements. We and the Trustee are personally liable to the Trust when a loss arises, where we or the Trustee (as applicable) have either: wilfully acted against the terms of the Trust Deed or applicable law wilfully failed to act when the terms of the Trust Deed or applicable law require action. To the fullest extent permitted by law, we have no personal liability under any other circumstances. We and the Trustee are also entitled to be reimbursed for any expenses incurred by acting as Manager or Trustee (as applicable) under the Trust Deed. This includes any expenses incurred in bringing or defending any litigation concerning the Trust. See page 24 for more information on the expenses we and the Trustee can recover. None of the limitations on liability will exempt us, or the Trustee, or our officers, where we or the Trustee (as applicable) have breached our obligations under the Trust by failing to demonstrate the degree of care and diligence required, having regard to the Trust Deed. We re not responsible for any acts, omissions, breaches, or defaults of the Trustee, and the Trustee is not responsible for our acts, omissions, breaches, or defaults. Winding up the Trust The Trust will be wound up when it turns 80 years old, less one day; that is, on 16 September The Trust can be wound up early if one of the following happens: we certify in writing that, in our opinion, it is in the interests of Bondholders to wind up the Trust the Bondholders pass an extraordinary resolution to wind up the Trust. The Trustee will give notice to the Bondholders within 14 days of any of these events. The notice will identify the event and tell Bondholders that the Trustee intends to distribute the Trust. As soon as possible after this, the Trustee will: convert all the assets of the Trust into cash discharge all the liabilities of the Trust, including any contingent liabilities of ours and of the Trustee s that are payable from the Trust pay our and the Trustee s costs and expenses arising from the wind-up of the Trust distribute the balance (including the Reserve Fund) among Bondholders in proportion to the number of Bonus Bonds they own. The Trustee may, following an extraordinary resolution of Bondholders, distribute all or part of the Trust s assets. Such a distribution is subject to the Trustee s right of indemnity, and will be made to each Bondholder in proportion to the Bonus Bonds they hold. Distributions may be made in instalments. Restrictions on investment The Trust Deed does not restrict the percentage of the Trust s assets that we can invest in any one company or class of company, investment, or property. However: all investments must be Authorised Investments we must not buy or sell assets if doing so is clearly not in the interests of Bondholders we must comply with the SIPO for the Trust at all times. The much more fun investment bonusbonds.co.nz 17