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

18 Investment and other material activities of the Trust We set the investment policy and objectives for the Trust. These are contained in the SIPO, which can be changed at our discretion. The Trust s SIPO was updated in September 2013, although the policy and objectives have been much the same for the past five years. The SIPO can be found on our website at bonusbonds.co.nz. The Trust Deed allows us to invest in a wide range of securities. However, we ve agreed with the Trustee to restrict the range of investment options and exposures to individual investments in order to ensure that the Trust keeps a low-risk investment profile. These investments are primarily issued by registered banks, including ANZ. We usually acquire investments only if the underlying assets are capable of being independently valued or rated by a credit rating agency. We can, but do not currently intend to, invest in other unit trusts. Investment policy and objectives Investment policy The investment policy of the Trust is to invest the Trust s assets: according to the SIPO while complying with: all applicable laws, and the requirements of the Trust Deed and Prospectus. In carrying out this policy, ANZ Investments will determine the appropriate investments for the Trust. If the SIPO is amended we ll first consult with the Trustee. Investment objectives Our investment objectives include: managing the Trust s investments providing for Income to be distributed as a schedule of prizes preserving the Issue Price of each Bonus Bond, and ensuring that at least 15% of the Trust s investments can be liquidated immediately at, or very close to, their prevailing market values. The SIPO can be found on our website at bonusbonds.co.nz. Investment strategy Our investment strategy is to invest conservatively in debt securities and cash assets to preserve the value of each Bonus Bond and receive a consistent investment income stream for the Trust. Investment performance The table below summarises the Trust s investment performance over the last five years. The figures in the table are derived from the Trust s audited financial statements. Investment performance in this table is expressed as a dollar amount. This amount is calculated after deducting fees, expenses, and taxation (but before making any provision for the Reserve Fund and before awarding any prizes). To calculate the Trust s investment performance as a percentage, we divide the dollar amount of the investment return by the monthly average number of Bonus Bonds on issue (together with the Reserve Fund) for the specified year. Investment performance of the Trust and the Reserve Fund (for the years ending 31 March) 2015 $69,266, % 2014 $60,082, % * 2013 $63,693, % * 2012 $74,810, % * 2011 $78,526, % * * We have updated these figures so they include the Reserve Fund. The Trust s investment performance doesn t mean you re guaranteed to win a prize. Prizes (our distribution policy) We distribute the Trust s Income (after making allowances for fees, expenses, taxation, and the Reserve Fund) to Bondholders as prizes after random monthly prize draws. There are no other income distributions. Monthly prize draws include a mix of major and minor prizes. The number of prizes each month will depend on the Income to be distributed. See page 7 for more information on monthly prize draws, including eligibility criteria. As long as the Income (after allowances for fees, expenses, taxation, and the Reserve Fund) from our investment performance is sufficient, we re required to award at least one of each of the following major prizes: $1 million, $100,000 and $50, The Bonus Bonds Trust Prospectus No. 19

19 You don t have to pay income tax on prizes. See page 27 for more information on taxation. The following table summarises the prize awards made by the Trust in each of the last five years. Total awards Over the full year ending 31 March Bonus Bonds eligible for prize draws As at 31 March Total Bonus Bonds on issue As at 31 March 2015 $60,289,260 3,037,826,675 3,104,925, $54,789,480 3,111,077,885 3,176,470, $59,097,300 3,105,048,587 3,168,529, $76,446,120 2,966,388,630 3,032,338, $77,199,340 2,797,968,310 2,861,591,249 Total awards represent the amount distributed in prizes over the financial period. Bonus Bonds eligible for prize draws are those eligible at the end of the financial period. The total Bonus Bonds on issue and total awards figures come from the Trust s audited financial statements. Commentary on investment performance and prizes Financial year ending 31 March 2015: The Trust had a higher level of prize distributions when compared with the previous year. The Trust distributed over $60 million of prizes to Bondholders during the year. Bonus Bonds on issue reduced by $72 million to approximately $3,105 billion when compared to the previous year. Financial year ending 31 March 2014: The Trust had a lower level of prize distributions when compared with the previous year. Appropriate Reserve Fund levels were sought in an environment where after a period of continued low interest rates, interest rates were expected to rise. The Trust distributed over $54 million of prizes to Bondholders during the year. Bonus Bonds on issue are at record levels, increasing to over billion. Financial year ending 31 March 2013: The Trust had a lower investment performance when compared with the previous year, as interest rates continued to reduce to historically low levels. The Trust distributed over $59 million of prizes to Bondholders during the year. Bonus Bonds on issue are at record levels, increasing to over billion. Financial year ending 31 March 2012: The Trust had a lower investment performance when compared with the previous year, as interest rates continued to reduce to historically low levels. The Trust distributed over $76 million of prizes to Bondholders during the year. Bonus Bonds on issue were at record levels, increasing to over 3 billion. Financial year ending 31 March 2011: The Trust s investment performance increased compared with the previous year, but remained low as interest rates remained at historically low levels. The Trust distributed over $77 million of prizes to Bondholders during the year. Bonus Bonds on issue were at record levels and the Reserve Fund increased by $1.3 million, compared to the year-end 31 March 2010 position. Prize draws We distribute the Trust s Income (after making allowances for fees, expenses, taxation, and the Reserve Fund) to Bondholders as prizes after random monthly prize draws. Each eligible Bonus Bond you own gives you one entry into the monthly prize draw. See page 7 for more information on monthly prize draws, including eligibility criteria. How draws are made We select the prize winning Bonus Bonds at random by a method that gives all Bonus Bonds an equal chance of winning. The first eligible Bonus Bond selected wins the first prize, and so on, down to the smallest prize. The prize pool We determine the prize pool for a calendar month shortly after the previous month ends. The prize pool generally reflects the Trust s Income. We ve got no obligation to distribute all of the Income in prizes. See page 13 for more information on how we calculate Income. Reserve Fund The Reserve Fund is any accumulated Income that s held to: maintain the $1 price of each Bonus Bond manage the prize pool. When deciding whether to add or deduct money from the Reserve Fund, we consider market conditions and investment prospects. We invest the Reserve Fund in debt securities along with the rest of the Trust. When you sell your Bonus Bonds, you ve got no rights to a share of the Reserve Fund. Prize structure We split up the prize pool according to the following rules: We can decide how many prizes of each size are in each prize pool, as long as we have the minimum number of prizes listed below. Up to the first $2,500,000 of the prize pool, there must be at least: one prize at $1,000,000 one prize at $100,000 one prize at $50,000. For each remaining complete $100,000, there must be at least: one prize at $5,000 one prize at $500 one prize at $ prizes at $ prizes at $20. The much more fun investment bonusbonds.co.nz 19

20 For each remaining complete $10,000, there must be at least: one prize at $500 one prize at $ prizes at $50, and 375 prizes at $20. When less than $10,000 is left of the prize pool, we divide the remaining amount into $500 prizes until less than $500 is left. We divide the residue into $20 prizes until less than $20 is left. The Governor General may authorise changes to entitlements under the Trust Deed and the distribution of prizes. Any changes will be on our recommendation and the recommendation of the Minister of Finance. Publishing results of prize draws We make the results publicly available from the second Tuesday of each month by publishing them on bonusbonds.co.nz. We also contact the three major winners directly. For each monthly prize pool we publish: the total value of the prize pool the total number of prizes distributed a selection of winning numbers (currently prizes of $5,000 and above). If you re registered with MyBonusBonds and you win a prize, you ll receive an . Otherwise, we ll generally send prize winners a letter, although we re not required to do so. Paying major prizes We make every effort to contact you if you ve won a major prize. It helps us if you keep your address details up to date. Before we pay a major prize or issue extra Bonus Bonds, we ll ask for proof that you re the person with a right to the prize. Proof might include: the Certificate for the winning Bonus Bond appropriate identification and address verification. Paying other prizes If you win a prize that s not one of our major prizes, we ll do one of the following: pay it in cash into the bank account you ve given us (we ll only pay into one account) issue extra Bonus Bonds instead of paying prizes if: you ve asked us to do so you ve not met our identification or other legal requirements your nominated bank account is incorrect or no longer open you didn t meet some other legal requirement when you applied for the Bonus Bond that won the prize we ve sent you a cheque, based on instructions you ve given to us in the past, and you haven t cashed it in. We ll accept instructions for payment of prizes to one account only, regardless of the number of Bondholders. Once we ve made a payment, we have no further responsibility for the prize. Paying prizes to children under seven years of age If a prize is won by a Bondholder who is under seven years of age, we ll pay the prize to their parent or guardian. For children aged seven or over, we ll pay prizes to the nominated bank account of the child. If the nominated bank account has not been confirmed, we ll reinvest the prize in extra Bonus Bonds. Return of capital There are no undertakings to you regarding the return of your capital, being the total amount you ve invested in Bonus Bonds including any prizes you ve won. 7. Unit holder liability Your only responsibilities are to pay both: the full purchase price of your investment in Bonus Bonds any applicable taxes, although at the date of this prospectus there aren t any. You don t have any liability for either: any debt any other obligation of the Trust. We have the right to: recover any money paid to you in error withhold taxes recover taxes paid on your behalf. Under current tax law, you do not have to pay tax on prizes. See page 27 for more information on taxation. 20 The Bonus Bonds Trust Prospectus No. 19

21 8. Summary financial statements Summary financial statements for the last five years Year ending 31 March 2015 $ $ $ $ $000 Financial statements authorised on 2 July July July June July 2011 Summary balance sheet Call deposits 40,751 35,841 39,499 45, ,405 Other current assets 30,724 34,966 33,632 24,731 38,944 Investment securities 3,102,709 3,164,470 3,149,612 3,013,463 2,776,295 Total assets 3,174,184 3,235,277 3,222,743 3,083,815 2,931,644 Bonus Bonds on issue 3,104,926 3,176,471 3,168,529 3,032,338 2,861,591 Current tax liabilities 4,599 3,339 4,300 4,631 8,467 Other current liabilities 8,689 8,474 8,214 9,742 22,846 Total liabilities 3,118,214 3,188,284 3,181,043 3,046,711 2,892,904 Total equity 55,970 46,993 41,700 37,104 38,740 Total bondholder funds and equity 3,160,896 3,223,464 3,210,229 3,069,442 2,900,331 Summary Statement of Comprehensive Income Investment income 137, , , , ,050 Operating expenses 41,084 41,485 40,663 39,655 41,870 Distributions to bondholders 60,289 54,789 59,097 76,446 77,199 Profit before tax 35,914 27,710 29,365 27,456 34,981 Income tax expense 26,937 22,417 24,769 29,092 33,654 Profit / (loss) after tax 8,977 5,293 4,596 (1,636) 1,327 Other comprehensive income Total comprehensive income 8,977 5,293 4,596 (1,636) 1,327 The much more fun investment bonusbonds.co.nz 21

22 2015 $ $ $ $ $000 Financial statements authorised on 2 July July July June July 2011 Summary Statement of Changes in Equity Opening equity 46,993 41,700 37,104 38,740 37,413 Total comprehensive income 8,977 5,293 4,596 (1,636) 1,327 Closing equity 55,970 46,993 41,700 37,104 38,740 Summary Cash Flow Statement Net cash flows from operating activities Net cash flows from investing activities Net cash flows from financing activities 79,588 64,320 51,326 61,396 60,640 56,889 (21,399) (132,890) (226,099) 33,097 (131,567) (46,579) 75,442 93,919 (56,789) Net increase / (decrease) in cash held 4,910 (3,658) (6,122) (70,784) 36,948 Opening cash brought forward 35,841 39,499 45, ,405 79,457 Closing cash carried forward 40,751 35,841 39,499 45, ,405 Compliance with the Financial Reporting Act 1993 We ve extracted these summary financial statements from the Trust s full audited financial statements that contained unmodified audit opinions. The audited financial statements: were prepared in accordance with New Zealand Generally Accepted Accounting Practice complied with New Zealand equivalents to International Financial Reporting Standards (NZ IFRS) complied with International Financial Reporting Standards. Compliance with FRS-43 The information contained in the summary financial statements: was prepared in accordance with FRS-43 Summary Financial Statements, subject to clause 8(4) of Schedule 4 of the Securities Regulations 2009 was approved for issue by our directors on 11 September 2015 is presented in thousands of New Zealand dollars where required, has been amended between periods to make comparisons consistent with the way the current period, to 31 March 2015, is presented. Because of their summary nature, these summary financial statements cannot provide as complete an understanding as the full financial statements. The full financial statements are in Appendix 1 of this prospectus. 22 The Bonus Bonds Trust Prospectus No. 19

23 9. Minimum subscription No minimum amount must be raised by the issue of Bonus Bonds. 10. Guarantors Neither we, the Trustee, the Government nor anyone else guarantees the payment of any money from the Trust. 11. Acquisition of business or equity securities In the two years before this prospectus was registered, the Trust has not invested in a business or equity securities. 12. Options and units paid up otherwise than in cash We haven t issued, nor do we propose to issue, options to subscribe for Bonus Bonds. We won t accept any form of consideration, other than cash, for issuing any Bonus Bonds. The much more fun investment bonusbonds.co.nz 23

24 13. Interested persons Fees and expenses paid by the Trust to the Trustee, Manager, investment manager, or their related parties 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% For the year ended 31 March 2015, the Trust incurred around $41.1 million in fees and expenses. Fees paid by the Trust Management fee We can charge, and the Trust will pay us an annual management fee for administering and managing the Trust and its Register. There is no dollar limit to our management fee. At the date of this prospectus, our management fee is 1.15% of the gross value of the Trust plus GST. Under an agreement between the Financial Services Council and Inland Revenue, GST is currently calculated on only 10% of our management fee and paid by the Trust. This agreement is currently under review, and therefore the percentage of our management fee subject to GST, may change. Our management fee is calculated daily and paid monthly in arrears. We can change our management fee at any time by giving one month s prior written notice to the Trustee. No limit applies to the amount by which we can change our management fee. We ll publish any change to our management fee on bonusbonds.co.nz. See below under Expenses paid by the Trust for more information on fees and expences we may pay from our management fee (some of which we recover from the Trust as expenses). Manager s removal fee If we re removed as Manager, the Trustee must pay us a fee out of the Trust to compensate us for the loss of the role. The Trust Deed sets this removal fee as an amount equal to the total fees we were paid in the 24 months leading up to the date we were removed. There is no dollar limit to the size of the removal fee. Trustee fee The Trust pays the Trustee an annual fee to perform its responsibilities as Trustee. There is no dollar limit to the Trustee fee. At the date of this prospectus, the Trustee fee is 0.03% of the gross value of the Trust plus GST. GST is currently calculated on 100% of the Trustee fee and paid by the Trust. Before 1 April 2015 GST was calculated on 75% of the Trustee s fee. The Trustee fee is calculated daily and paid quarterly in arrears. The Trustee fee may be amended by agreement between the Trustee and us. Expenses paid by the Trust Expenses in general We and the Trustee can recover from the Trust expenses incurred when carrying out our duties under the Trust Deed. There is no dollar limit to the amount that we and the Trustee may be reimbursed, however there are limits to the types of expense that are able to be reimbursed (both internal and external). The expenses we and the Trustee can recover can include: costs, charges, and expenses (including legal fees) for forming the Trust, or acquiring, holding, and disposing of investments fees and expenses to accountants, auditors, solicitors, and other professionals to help us to carry out our duties We re not entitled to an increased management fee until the change has been published in the prospectus. 24 The Bonus Bonds Trust Prospectus No. 19

25 taxes and duties on the Trust or on investments costs of convening any meetings of Bondholders costs of keeping the Register and preparing and printing and posting Certificates, accounts, distribution statements, and cheques custody fees. Expenses paid by the Trust in the year ended 31 March 2015 In the year ended 31 March 2015: we recovered $2,788,263 in expenses, of which: $696,793 were expenses we incurred for the services that ANZ Investments provides to the Trust for the day-to-day selection and management of the Trust s investments $1,279,287 were expenses we incurred for the services that ANZ provides for the management and administration of the Trust s Register the remaining expenses included printing, postage costs, taxes and duties, and the fees and expenses of accountants, auditors, solicitors, and other professionals. the Trustee recovered $86,683 in expenses, all of which were expenses of the custodian. The Trust reimburses us for costs related to the administration and management of the Register that we ve delegated to ANZ. Some of these costs are based on transaction volumes through ANZ s branch network. Direct (or indirect) material interests This prospectus discloses the interests in the Trust of us, the Trustee, or any member of the ANZ Group, as well as their associated companies, directors, and officers. Except as disclosed, none of them have, in the past five years: had any material interest in the Trust, or entered into any material contract or arrangement on behalf of or in respect of the Trust. Our directors, as well as the directors of the Trustee or any member of the ANZ Group, can own Bonus Bonds, either directly or indirectly. Securities issued by the Trustee, Manager, investment manager, or their related parties In the two years before this prospectus was registered, we invested a combination of deposits on call, bank bonds, term deposits,and bank certificates of deposit with members of the ANZ Group. These investments were more than 10% of the value of the Trust. Expenses can vary from year to year. No other fees and expenses are paid to us, the Trustee, ANZ Investments, or our related parties Other than the fees and expenses described on pages 24 and 25, the Trust pays no other fees and expenses to us, the Trustee, ANZ Investments, or any of their related parties. 14. Material contracts The Trust has entered into the following material contracts (which do not include any contracts entered into in the ordinary course of business) during the two years before 11 September 2015: the Trust Deed between the Trustee and us was amended and restated on 13 September 2013 the investment management agreement between us and ANZ Investments was amended and restated by an agreement between us and ANZ Investments (then called OnePath (New Zealand) Limited) on 13 September 2013 the investment management agreement between us and ANZ Investments was amended by an agreement between us and ANZ Investments on 12 December The much more fun investment bonusbonds.co.nz 25

26 15. Pending proceedings The Trust has no pending legal proceedings or arbitrations that may have a material adverse effect on the Trust at the date this prospectus was registered. 16. Issue expenses We estimate that our expenses for issuing this prospectus will be approximately $22,000. This amount is paid by the Trust and comprises auditor s fees, legal fees, printing, and postage costs. The Trust doesn t pay commissions for the sale or purchase of Bonus Bonds. See page 24 for more information on expenses we recover from the Trust. 17. Other terms of offer and units All of the terms and conditions of our offer of Bonus Bonds are described in this prospectus, implied by law, or set out in the Trust Deed. 18. Financial statements and auditor s report The latest financial statements We filed the most recent audited financial statements for the Trust with the Companies Office on 14 August These statements: cover the financial year 1 April 2014 to 31 March 2015 comply with, and have been registered under, the Financial Reporting Act The auditor s report The auditor s report on the most recent audited financial statements for the Trust: doesn t refer to any fundamental uncertainties isn t qualified in any respect is dated 2 July This prospectus includes a report by the auditor stating that amounts in the summary financial statements have been correctly taken from the audited financial statements. See page 35 for Appendix 1 and the Trust s financial statements and page 49 for Appendix 2 and the auditor s report. 26 The Bonus Bonds Trust Prospectus No. 19

27 19. Places of inspection of documents The latest financial statements for the Trust are in Appendix 1 on page 35. We file the financial statements, Trust Deed, and other material documents for the Trust with the Office of the Ministry of Business, Innovation and Employment. All the documents we file are on a public register. You can: inspect them at any time on the Companies Office website at business.govt.nz/companies under Search other Registers get them by phoning the Ministry of Business, Innovation and Employment Business Service Centre during business hours on , or by ing [email protected] (you may need to pay a fee to the Ministry). For a free copy of any of the documents listed in this section, or for a copy of the annual report or SIPO, us at [email protected]. 20. Other material matters General There are no material matters other than those in this prospectus and in the financial statements that are in Appendix 1 starting on page 35. We make no undertakings about investment gains We don t make any guarantees about investment gains. In particular, we don t guarantee that: you ll win a prize you ll win sufficient prizes to give you an investment gain similar to, or better than, another investment product your share of prizes (if any) will reflect your share of the Bonus Bonds on issue the odds we quote will be reflected in the number of prizes you win, or you ll get back the money you spent buying Bonus Bonds. Taxation Under current tax law: the Trust pays income tax on net taxable income (including realised gains or losses on sales of investments) at the rate of 28% prizes that are paid out of the Trust s assets come from the Trust s previous years earnings (on which the Trust has already paid tax) and, as such, you don t have to declare any prizes you win for income tax purposes, and neither we nor the Trustee have to withhold taxes on prizes. Risks Like any investment, Bonus Bonds involve some risk, including the risk that you can lose some or all of your money invested in Bonus Bonds. Because of these risks: you might not win a prize, and therefore you might receive no investment gain from your investment the amount of Income that is available for prizes could fluctuate, which changes the odds of you winning a prize the number of Bonus Bonds eligible for each monthly prize draw changes which also changes the odds of you winning a prize The much more fun investment bonusbonds.co.nz 27

28 in special circumstances, 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, or your cash-in payment might be delayed. You should consider your financial circumstances, investment objectives, and the following risks when assessing an investment in Bonus Bonds. Investment (or market) risk Investment risks are the chances that an outcome, for example the change in value or income received from an investment, will be different than expected. The Trust s assets, and how they perform, can rise or fall because of changes in economies, financial markets, or regulatory and political conditions. These changes can impact investment performance as they can affect overall markets as well as individual assets, securities or issuers. For example, changes in interest rates, credit spreads, or equity markets may affect the Trust s Income as assets could lose value or issuers might be unable to meet their obligations. We mitigate market risks by investing mainly in quality short-term assets, so that the Trust s Standard & Poor s credit rating will not be impacted. Inflation risk It is possible for the purchasing power of your investment in Bonus Bonds to decrease over time. This would occur if you didn t win enough prizes to achieve a return that matched, or bettered, the rate of inflation. Concentration risk The Trust limits its investments to entities with a Standard & Poor s (or equivalent) credit rating of at least A-1. Given New Zealand s market size, this leads to a concentration of investments in registered banks. The number of New Zealand registered banks that meet this requirement is small, which means the Trust s investments are concentrated in a limited number of entities. At the date of this prospectus, approximately 88% of the Trust s assets were investments in New Zealand registered banks, and approximately 27.5% of the Trust is invested in ANZ. See page 12 for investments the Trust makes in parties that are related to the Manager, Trustee, or ANZ Investments (the investment manager). Liquidity risk There is no guarantee there will always be a liquid market for investments in securities. The ability of the Trust to buy or sell securities, and the price of those securities, may impact the investment performance of the Trust and its ability to process daily Cash-in requests. Liquidity risk would increase if the Trust receives large volumes of Cash-in requests. This would impact Bondholders ability to cash in their investments. We mitigate liquidity risks by: investing in assets that are of such quality that the Trust s Standard & Poor s credit rating will not be impacted investing in assets that have proven to be liquid through a range of market conditions holding a minimum of 10% of the Trust s assets in Government, or Government guaranteed, bonds and a minimum of 5% of the Trust s assets in registered certificates of deposit with New Zealand registered banks. Currency risk The Trust can invest in international assets denominated in foreign currencies but doesn t currently do so. We don t expect the Trust to invest in international assets denominated in foreign currencies in the future, but we can t rule out the possibility. If we did, any investment would be fully hedged to the New Zealand dollar. Derivative risk The Trust can invest in derivatives but doesn t currently do so. We don t expect the Trust to invest in derivatives in the future, but we can t rule out the possibility. Other risks Operational or systems failure may affect the investment performance of the Trust or financial markets. A failure of the Bonus Bonds balloting system may affect the Trust. The Manager may direct the Trustee, subject to Trust Deed provisions, to borrow. This may exaggerate the effect of any increase or decrease in the value of the Trust s assets and increase the risk of insolvency. The Manager may resolve to wind up the Trust in accordance with the Trust Deed if, in its opinion, it is in the interests of Bondholders to do so. 28 The Bonus Bonds Trust Prospectus No. 19

29 Changes to the Trust or changes to law may affect your Bonus Bonds We can make changes to the Trust, provided that those changes are allowed by the Trust Deed and any laws. These changes might include changes to the Trust s: SIPO (including asset class mix and permissible ranges) fees and expenses. We can also add to, close, or wind up the Trust. These changes may affect the level of risk and returns you can expect. Changes to tax or laws may affect your Bonus Bonds. Financial Markets Conduct Act 2013 The Financial Markets Conduct Act 2013 (FMCA) was enacted on 13 September 2013 and came into force in phases. The first phase began on 1 April 2014 and the second phase began on 1 December Under the second phase, new governance requirements and new disclosure requirements apply to all managed investment schemes, which includes the Bonus Bonds Trust, subject to a transition period for existing schemes. The transitional period expires on 1 December Existing schemes can choose an effective date when they opt in to the FMCA regime during the transitional period. To opt in to the FMCA regime, the Bonus Bonds Trust Deed will need to be amended to meet the new requirements of the FMCA regime. The prospectus will be replaced by a product disclosure statement or other form of disclosure document and an online register of material information for members and potential members. The FMCA also requires most managers of managed investment schemes to be licensed. Fund managers must have obtained a licence by 1 December 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. To maintain this, all of the Trust s investments must have a Standard & Poor s credit rating. Once a month, ANZ Investments submits a copy of the Trust s investment portfolio to Standard & Poor s for confirmation that the Trust meets a fund credit rating standard of AAf. A fund credit rating of AAf 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. You can find out more about Standard & Poor s credit ratings at standardandpoors.com. Standard & Poor s is not connected to us, Bonus Bonds or the Trust. A credit rating from Standard & Poor s is not a recommendation to buy, sell, or own Bonus Bonds. The WriteMark As part of our commitment to you, this prospectus meets the WriteMark Plain English Standard. The WriteMark is New Zealand s plain English quality mark. A document or webpage that carries the WriteMark has been checked for clarity, grammar, and presentation. The WriteMark doesn t apply to: the much more fun investment tag line compulsory wording from legislation text quoted from external sources such as the Standard & Poor s credit rating, or the annual report any Bonus Bond forms the text in the appendices. We expect to apply to the Financial Markets Authority (FMA) for a licence during Licenses will be issued at the discretion of FMA. The much more fun investment bonusbonds.co.nz 29

30 21. Manager s statement Our directors confirm that, in their opinion, and after due enquiry by them: the value of the Trust s assets relative to its liabilities (including contingent liabilities), and the ability of the Trust to pay its debts as they become due in the normal course of business, have not materially and adversely changed during the period between 31 March 2015 and 11 September Unit Trustee s statement The Trustee s statement is set out in Appendix 3 on page The Bonus Bonds Trust Prospectus No. 19

31 Glossary of key terms This glossary explains the meaning of certain terms that are used in this Bonus Bonds prospectus. ANZ ANZ Group ANZ Investments amortised cost asset auditor ANZ Bank New Zealand Limited. ANZ is also registrar of the Trust. ANZ, Australia and New Zealand Banking Group Limited, and their subsidiaries including the Manager and ANZ Investments. ANZ New Zealand Investments Limited, the company that selects and manages investments for the Bonus Bonds Trust. ANZ Investments is a wholly owned subsidiary of ANZ Bank New Zealand Limited, which is part of the ANZ Group. Also referred to as the investment manager. the total cost of an asset, taking into account repayments, interest earned, and any fees or discounts we receive. Our investments are initially recorded at what we paid for them. something that can be owned or controlled, with the expectation that it will provide an income or increase in value. the auditor is responsible for examining the Trust s accounts. The auditor is currently KPMG. KPMG is responsible for issuing an audit opinion in conjunction with their annual audit. authorised financial adviser Authorised Investment Bondholder Bonus Bond business day Cash-in request Cash-in request form Certificate custodian derivative extraordinary resolution Financial Markets Authority (FMA) a financial adviser who: meets legal requirements (qualification and professional standards) for giving personalised financial advice about financial products has been authorised by the Financial Markets Authority. has the same meaning as set out in the Trust Deed. Generally, the Trust will only invest in cash and longer-term fixed or floating interest-bearing securities. any existing or potential Bondholder in the Trust in whose name the Bonus Bonds are registered. Also referred to as you. a unit in the Trust. means a day on which the Manager is open for business in Wellington, but excluding Saturday and Sunday. a request to swap one or more Bonus Bonds for cash; also known as cashing in your investment. the form that you need to complete to cash in your Bonus Bonds. In the Trust Deed, this form is referred to as a Redemption Notice. a certificate that evidences a Bondholder s Bonus Bond(s) issued pursuant to clause 13 of the Trust Deed. Bonus Bonds Custodians Limited. The custodian is responsible for holding, and is recorded as the owner of, the Trust s assets. an investment whose value is usually linked to (or derived from) changes in the value of another asset, an index (such as a share market index or a commodity index), an interest rate, or an exchange rate. a resolution carried by a majority of more than three-fourths of the persons voting at a meeting duly convened and held in accordance with the Trust Deed. the independent Crown entity responsible for regulating New Zealand s financial markets. GST goods and services tax imposed under the Goods and Services Tax Act The much more fun investment bonusbonds.co.nz 31

32 Income inflation investment performance Issue Price liability management fee Manager market MyBonusBonds portfolio prospectus registrar Register Reserve Fund return risk securities securities market SIPO taxable income the net income earned by the Trust. Income is determined in accordance with the Trust Deed. It generally includes the investment gain (or loss) on the Trust, less our management fee, the Trustee s fee, taxation, any expenses we and the Trustee recover, as well as any other provisions we think necessary. the effect of rising prices over time. the gains or losses made when the assets in which the Trust invests change in value and/or earn income. the issue price of a Bonus Bond determined in accordance with the Trust Deed. a debt or financial obligation. the annual management fee paid to us for administering and managing the Trust and its Register. ANZ Investment Services (New Zealand) Limited, being the company that administers the Bonus Bonds Trust. The Manager is a wholly owned subsidiary of ANZ Bank New Zealand Limited, which is part of the ANZ Group. Also referred to as we, our, or us. in financial terms, a broad term describing all possible buyers and sellers of all available financial investments or investment products. Also referred to as securities market. the secure online service to access and manage your Bonus Bonds, available through the Bonus Bonds website at bonusbonds.co.nz. a collection of investments owned by a single person or entity. a document containing the details of an offer of securities to the public in New Zealand. The prospectus must have the content required by the Securities Act 1978, and must be registered with the Registrar of Financial Service Providers. see ANZ. a register maintained by ANZ, as the delegate of the Manager, that contains information about current and past Bondholders including: the name and address of the Bondholder(s) the number of Bonus Bonds held by each Bondholder the dates the Bondholder was entered on the register the dates the Bondholder acquired the Bonus Bonds the dates the Bondholder ceased to be a Bondholder. any accumulated Income that s held to meet any reduction in the Trust s capital. It is kept in the Reserve Fund Account. the total amounts that you receive when you withdraw (in full or in part) from Bonus Bonds along with any prizes you may have received while a Bondholder. the chance that an outcome, for example the change in value or income received from an investment, will be different than expected. investment products and financial instruments. see market. the statement of investment policies and objectives by which ANZ Investments, as the Manager s delegate for selecting and managing the Trust s investments, invests the assets of the Trust. The SIPO can be found on our website at bonusbonds.co.nz. an amount is taxable income of a person if it is included in calculating how much tax that person should pay. 32 The Bonus Bonds Trust Prospectus No. 19

33 total expense ratio the ratio of a fund s (such as the Trust s) total operating costs to its average net assets. It incorporates both the costs incurred within a fund and costs incurred by any underlying funds into which a fund invests. The total expense ratio is based on actual expenses incurred for the previous financial year. Total operating costs include fees and expenses incurred by the Trust (including management fees, trustee fees and expenses). Trust Trust Deed the investment fund created under the Trust Deed. In the Trust Deed, this is called the Trust Fund. the document that sets out the Trustee s and the Manager s rights and responsibilities in relation to the Trust, and the requirements for managing the Trust. For the purposes of this prospectus, the Trust Deed is the Trust Deed for Bonus Bonds dated 17 September 1990, as amended and restated on 13 September Trustee Trustee fee us we you your capital currently Trustees Executors Limited. The Trustee is independent of the Manager and supervises how the Manager runs the Trust, for the benefit of you and other Bondholders. a fee paid to the Trustee for supervising the management and administration of the Trust and holding the Trust s assets. see Manager. see Manager. any existing, or potential Bondholder in the Trust in whose name the Bonus Bonds are registered. Also referred to as Bondholder. the number of Bonus Bonds owned by a Bondholder. The much more fun investment bonusbonds.co.nz 33

34 34 The Bonus Bonds Trust Prospectus No. 19

35 Appendix 1: Financial Statements for the year ended 31 March 2015 The Bonus Bonds Trust Financial Statements FOR THE YEAR ENDED 31 MARCH 2015 The much more fun investment bonusbonds.co.nz 35

36 The Bonus Bonds Trust Financial Statements For the year ended 31 March 2015 Contents Annual Review 37 Statement of Comprehensive Income 38 Statement of Changes in Equity 38 Balance Sheet 39 Cash Flow Statement 40 Notes to the Financial Statements 41 Audit Report 47 Directory Manager: ANZ Investment Services (New Zealand) Limited, a wholly owned subsidiary of ANZ Bank New Zealand Limited Directors of Manager: John Body, Auckland Russell Jacobson, Wellington Fredrik Ohlsson, Auckland Registered Office of Manager: ANZ Investment Services (New Zealand) Limited Ground Floor ANZ Centre Albert Street Auckland Auditor: KPMG Chartered Accountants Level 9 10 Customhouse Quay Wellington Trustee: Trustees Executors Limited Level 5 10 Customhouse Quay Wellington Registrar of Unitholders: Bonus Bonds Centre 71 George Street PO Box 898 Dunedin 36 The Bonus Bonds Trust Prospectus No. 19

37 The Bonus Bonds Trust Financial Statements For the year ended 31 March 2015 Annual Review For the financial year ended 31 March 2015 the Bonus Bonds Trust has distributed over $60.2 million of prizes to Unitholders, an increase of 10% over the previous year. The Trust s funds under management ended the financial year at $3.10 billion, a reduction of 2.25%. The number of new bondholdings grew by over 31,000, demonstrating that New Zealanders continue to find Bonus Bonds a viable investment alternative. The Trust recorded a profit of $8.9 million, a modest increase over the previous year and this was used to strengthen the Trust s reserves position. While a low interest rate environment continues in New Zealand, ANZ Investment Services (New Zealand) Limited remains committed to maintaining an attractive offer through the distribution of after-tax income by way of the monthly random prize draws, while balancing this with a conservative investment approach. The Trust s investments are well positioned in the current environment. As at 31 March 2015 the overall balance sheet position of the Trust remains strong. John Body Chair of the Board of Directors ANZ Investment Services (New Zealand) Limited The much more fun investment bonusbonds.co.nz 37

38 The Bonus Bonds Trust Financial Statements For the year ended 31 March 2015 Statement of Comprehensive Income $ thousands Note Revenue Year to 31/03/2015 Year to 31/03/2014 Investment income 2 137, ,984 Expenses Operating expenses 3 41,084 41,485 Distributions to Unitholders 60,289 54,789 Profit before income tax 35,914 27,710 Tax expense 4 26,937 22,417 Profit after income tax 8,977 5,293 There are no items of other comprehensive income. Statement of Changes in Equity $ thousands Reserve fund account Year to 31/03/2015 Year to 31/03/2014 Opening balance 46,993 41,700 Profit after income tax 8,977 5,293 Closing balance 55,970 46,993 The notes to the financial statements form part of and should be read in conjunction with these financial statements. 38 The Bonus Bonds Trust Prospectus No. 19

39 The Bonus Bonds Trust Financial Statements For the year ended 31 March 2015 Balance Sheet $ thousands Note 31/03/ /03/2014 Assets Call deposits 40,751 35,841 Interest receivable 30,724 34,966 Investment securities 5 3,102,709 3,164,470 Total assets 3,174,184 3,235,277 Liabilities Bonus Bonds on issue 6 3,104,926 3,176,471 Current tax liabilities 4,599 3,339 Other current liabilities 7 8,689 8,474 Total liabilities 3,118,214 3,188,284 Equity Reserve Fund Account 55,970 46,993 Total equity 55,970 46,993 Unitholders' funds and equity Bonus Bonds on issue 3,104,926 3,176,471 Reserve fund account 55,970 46,993 Total Unitholders' funds and equity 3,160,896 3,223,464 For and on behalf of the Board of Directors of the Manager: John Body Chair of the Board of Directors ANZ Investment Services (New Zealand) Limited 2 July 2015 Russell Jacobson Director ANZ Investment Services (New Zealand) Limited 2 July 2015 The notes to the financial statements form part of and should be read in conjunction with these financial statements. The much more fun investment bonusbonds.co.nz 39

40 The Bonus Bonds Trust Financial Statements For the year ended 31 March 2015 Cash Flow Statement $ thousands Cash flows from operating activities Year to 31/03/2015 Year to 31/03/2014 Interest received 146, ,813 Operating expenses paid Income tax paid (41,136) (41,493) (25,677) (24,000) Net cash flows provided by operating activities 79,588 64,320 Cash flows from investing activities Proceeds from sale of investment securities 474, ,655 Proceeds from maturity of investment securities 2,500,556 1,415,246 Purchase of investment securities (2,918,592) (1,716,300) Net cash flows provided by investing activities 56,889 (21,399) Cash flows from financing activities Bonus Bonds applications received 837, ,502 Bonus Bonds redemptions paid (909,449) (942,560) Bonus Bonds prizes paid (60,022) (54,521) Net cash flows used in financing activities (131,567) (46,579) Net increase in cash and cash equivalents 4,910 (3,658) Opening cash and cash equivalents 35,841 39,499 Closing cash and cash equivalents 40,751 35,841 Reconciliation of profit for the year to net cash flow from operating activities Profit after income tax 8,977 5,293 Non-cash items: Unwind of premiums and discounts 5,535 6,905 Deferrals or accruals of past or future operating cash receipts or payments: Changes in interest receivable 4,242 (1,334) Changes in current tax liability 1,260 (961) Changes in other current liabilities (52) (8) Items classified as investing or financing activities: Gains on sale of investment securities (663) (364) Distributions to Unitholders 60,289 54,789 Net cash flows from operating activities 79,588 64,320 The notes to the financial statements form part of and should be read in conjunction with these financial statements. 40 The Bonus Bonds Trust Prospectus No. 19

41 The Bonus Bonds Trust Financial Statements For the year ended 31 March 2015 Notes to the Financial Statements 1. Accounting Policies (i) Reporting entity The reporting entity is The Bonus Bonds Trust (the Trust). The Trust was created by a Trust Deed dated 17 September 1990 (the Trust Deed) which was last amended on 17 September It is a Unit Trust registered under the Unit Trusts Act The Trust accepts funds from investors, places those funds in investments authorised by the Trust Deed and pays out cash prizes based on the returns earned and in accordance with a formula set out in the Trust Deed. These financial statements have been prepared in accordance with the Financial Reporting Act 1993, the Unit Trusts Act 1960 (each of which remain applicable to the Trust during the relevant transitional periods of the Financial Reporting Act 2013 and the Financial Markets Conduct Act 2013) and provisions of the Trust Deed. These financial statements have also been prepared in accordance with New Zealand Generally Accepted Accounting Practice. They comply with New Zealand equivalents to International Financial Reporting Standards (NZ IFRS) and other applicable Financial Reporting Standards, as appropriate for profit-oriented entities. The financial statements comply with International Financial Reporting Standards (IFRS). (ii) Presentation currency and rounding The amounts contained in the financial statements are presented and rounded in thousands of New Zealand dollars, unless otherwise stated. The functional currency of the Trust is New Zealand dollars. (iii) Measurement base These financial statements have been prepared on a going concern basis in accordance with historical cost concepts. (iv) Changes in accounting policies and adoption of new standards and amendments NZ IFRS 9 Financial Instruments (2009) was early adopted by the Trust for the year ended 31 March There have been no changes in accounting policies. (v) Specific Accounting Policies Recognition of interest income and expense Interest income and interest expense are recognised in the Statement of Comprehensive Income as they accrue, using the effective interest method. The effective interest method calculates the amortised cost of a financial asset or financial liability and allocates the interest income or interest expense, including any fees and directly related transaction costs that are an integral part of the effective interest rate, over the expected life of the financial asset or liability. Income and expense on the financial asset or financial liability is recognised on an effective yield basis in proportion to the amount outstanding over the period to maturity or repayment. Distributions to Unitholders The amount to be distributed by way of prizes is determined by the Manager and paid monthly, in accordance with the terms of the Trust Deed. Distributions to the Unitholders are recognised as an expense when prize draws occur. Taxation Income tax on profits for the period comprises current and deferred tax. Current tax is recognised in the Statement of Comprehensive Income as tax expense. Current tax is the expected tax payable on taxable income for the period, based on tax rates which are enacted or substantively enacted by the reporting date and including any adjustment for tax payable in previous periods. Current tax for current and prior periods is recognised as a liability to the extent that it is unpaid. Call deposits Call deposits with banks are liquid assets that are readily convertible to cash. Call deposits are measured at amortised cost. Investment securities Investment securities are initially recognised at fair value plus directly attributable transaction costs. They are subsequently measured at cost adjusted for the amortisation of any premium or discount using the yield to maturity basis. If there is objective evidence that an impairment loss on investment securities has been incurred, the carrying amount of the asset is reduced and a loss is recognised in the Statement of Comprehensive Income equal to the difference between the asset s carrying amount and the present value of estimated future cash flows discounted at the asset s original effective interest rate. Purchases and sales of investment securities are recognised on trade date, being the date on which the Trust commits to purchase or sell the asset. Bonus Bonds on issue Bonus Bonds on issue are a financial liability and are initially recognised at consideration received from Unitholders and are subsequently measured at their redemption amount. (vi) Presentation Goods and services tax Income, expenses and assets are recognised net of the amount of Goods and Services Tax (GST), except where the amount of GST incurred is not recoverable from the Inland Revenue Department (IRD). In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of the expense. Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from or payable to the IRD is included in other assets or liabilities in the balance sheet. The much more fun investment bonusbonds.co.nz 41

42 The Bonus Bonds Trust Financial Statements For the year ended 31 March 2015 Notes to the Financial Statements 2. Investment Income $ thousands Interest income Year to 31/03/2015 Year to 31/03/2014 New Zealand Government and Local Authority securities 14,773 10,288 Other securities 106, ,008 Call deposits 15,234 11,324 Total interest income 136, ,620 Gains on sale of investment securities New Zealand Government and Local Authority securities Other securities Total gains on sale of investment securities Total investment income 137, ,984 Investment income includes $38,376 thousand (2014: $28,760 thousand) of interest earned on financial instruments issued by ANZ Bank New Zealand Limited (ANZ New Zealand). 3. Operating Expenses $ thousands Year to 31/03/2015 Year to 31/03/2014 Management fee 37,147 37,625 Trustee fee 1,062 1,076 Custody fees Other operating expenses reimbursed to the Manager 2,788 2,697 Total operating expenses 41,084 41,485 Fees paid to auditors (KPMG New Zealand) Other operating expenses include fees for the audit of the financial statements of $76 thousand (2014: $75 thousand) and fees for the audit of the summary financial statements for inclusion in the Trust s prospectus of $5 thousand (2014: $5 thousand). The Manager of the Trust also paid fees to the auditor for assurance over prize draws during the year of $29 thousand (2014: $24 thousand) which were not reimbursed by the Trust. 4. Tax Expense $ thousands Year to 31/03/2015 Year to 31/03/2014 Profit before tax 35,914 27,710 Prima facie income tax at 28% 10,056 7,759 Tax effect of permanent differences: Non-deductible distributions to Unitholders 16,881 15,341 Other non-deductible expenses Income tax over provided in prior years - (862) Total tax expense 26,937 22, The Bonus Bonds Trust Prospectus No. 19

43 The Bonus Bonds Trust Financial Statements For the year ended 31 March 2015 Notes to the Financial Statements 5. Investment Securities $ thousands 31/03/ /03/2014 New Zealand Government securities 363, ,233 Local authority securities 28,499 72,532 Corporate bonds 6,156 83,345 Bank bonds 1,226,480 1,279,645 Term deposits 621, ,400 Call deposits 351, ,243 Discounted securities held with banks 505, ,072 Total investment securities 3,102,709 3,164,470 Non current portion of investment securities 1,315,792 1,187, Bonus Bonds on Issue $ thousands 31/03/ /03/2014 Balance at beginning of year 3,176,471 3,168,529 Applications received 837, ,502 Redemptions paid (909,449) (942,560) Balance at end of year 3,104,926 3,176,471 No. of Units (thousands) Units on issue at end of the year 3,104,926 3,176, Other Current Liabilities $ thousands Note 31/03/ /03/2014 Distributions payable 5,063 4,796 Other current liabilities 8 3,626 3,678 Total other current liabilities 8,689 8,474 The much more fun investment bonusbonds.co.nz 43

44 The Bonus Bonds Trust Financial Statements For the year ended 31 March 2015 Notes to the Financial Statements 8. Related Parties As at 31 March 2015 the combined fee for Manager and Trustee is set at 1.18% (excluding GST) of the value of units on issue (31 March % excluding GST). The terms of the Trust Deed entitle the Manager and Trustee to be reimbursed for certain expenses incurred by the Trustee or Manager. The Manager elected to claim reimbursement of these expenses for the year ended 31 March 2015 and the comparative period. These expenses are included in other operating expenses in Note 3. The parent company of the Manager is ANZ New Zealand, which is incorporated in New Zealand. The Trust invests in various ANZ New Zealand financial instruments such as call deposits, certificates of deposits and corporate bonds. All transactions are at arms length and in the ordinary course of business. As at balance date the related party balances were as follows: $ thousands 31/03/ /03/2014 Assets Call deposits 40,751 35,841 Investment securities 839, ,956 Interest receivable 4,721 7, , ,220 Liabilities Management fee payable 3,129 3,195 Trustee fee payable Expense reimbursements payable ,626 3, Fair Value Measurements Financial assets and financial liabilities not measured at fair value No assets or liabilities are carried at fair value. Below is a comparison of the carrying amounts as reported on the balance sheet and fair value of financial asset and liability categories other than those categories where the carrying amount is considered a reasonable approximation of fair value. The Trust uses a valuation method within the following hierarchy to determine fair value: Level 1 Quoted market price Where an active market exists fair value is based on quoted market prices for identical financial instruments. The quoted market price is not adjusted for any potential impact that may be attributed to a large holding of the financial instrument. NZ Government Bonds are Level 1 instruments. Level 2 Valuation technique using observable inputs In the event that there is no quoted market price for the instruments, fair values are based on present value estimates or other market accepted valuation techniques which include data, including interest and exchange rates, from observable markets wherever possible. Level 2 instruments are call and term deposits and bonds and discounted securities $ thousands 31/03/ /03/2014 Carrying amount Fair value Carrying amount Fair value Financial assets New Zealand Government securities 363, , , ,983 Bonds and discounted securities 1,766,969 1,784,163 1,620,594 1,631,723 Call and term deposits 972, ,703 1,290,643 1,290,643 Total investment securities 3,102,709 3,123,409 3,164,470 3,173, The Bonus Bonds Trust Prospectus No. 19

45 The Bonus Bonds Trust Financial Statements For the year ended 31 March 2015 Notes to the Financial Statements 10. Financial Risk Management Financial instruments are fundamental to the Trust s operations. Accordingly, the risks associated with financial instruments are a significant component of the risks faced by the Trust. These risks and the Trust s policies and objectives for managing those risks are outlined below. Credit risk Credit risk is the potential that the counterparty to a financial transaction will fail to perform according to the terms and conditions of the contract, thus causing loss. The key circumstances in which this might occur is if there was a failure by a bank, financial institution, corporate, local authority or other entity in which the Trust has invested. The Trust only invests in investment grade financial assets, measured as a minimum long term Standard and Poors credit rating of A. The maximum credit risk exposure for all financial instruments is equivalent to their carrying value. Concentrations of credit risk Concentrations of credit risk exist if a number of counterparties are engaged in similar activities and have similar economic characteristics that would cause their ability to meet contractual obligations to be similarly affected by changes in economic or other conditions. $ thousands 31/03/ /03/2014 Industry concentrations New Zealand Registered Banks 2,768,484 2,704,285 New Zealand Registered Banks (covered by government guarantees) - 113,520 New Zealand Government 370, ,062 Local Authorities 28,788 73,574 Other 6,206 84,836 Total financial assets 3,174,184 3,235,277 The largest exposures to individual counterparties as a percentage of total financial assets are: 31/03/ /03/2014 $ thousands % $ thousands % New Zealand Government 370, , ANZ Bank New Zealand Limited 884, , ASB Bank Limited 399, , Bank of New Zealand Limited 354, , Westpac Banking Corporation Limited 507, , The much more fun investment bonusbonds.co.nz 45

46 The Bonus Bonds Trust Financial Statements For the year ended 31 March 2015 Notes to the Financial Statements Liquidity risk Liquidity risk is the risk that under certain conditions, cash outflows can exceed cash inflows in a given period and that the Trust may therefore not be able to meet its obligations as they fall due. Liquidity risk arises from mismatches in the final maturity of balance sheet assets and liabilities. Bonus Bonds on issue are repayable on demand and other current liabilities are payable within three months. The Manager manages liquidity risk by predominantly investing in liquid assets and therefore liquidity risk is minimal. Market risk Interest rate risk Interest rate risk is the risk caused by fluctuations in market interest rates on future cash flows. Interest rate risk arises from differences in interest rates, and mismatches in the interest rate repricing profiles, of assets and liabilities. The Manager uses portfolio duration analysis to monitor and manage interest rate risk. Based on the carrying amount of financial assets at 31/03/2015, a 100 basis point change in interest rates would increase or decrease profit after tax and equity by $23 million (31/03/2014 $23 million). Capital management policies The Trust treats the Bonus Bonds units on issue and the Reserve Fund Account as its capital base. The Manager will target the Reserve Fund Account at 1.5% of the Trust s total capital in the long term. The target level of Reserve Fund Account is monitored periodically to ensure it is sufficient to protect the Trust s capital base against any changes to short term interest rates and/or credit spreads of 1%. The amount distributed as prizes by the Manager is dependent on the income generated by the Trust and the level of Reserve Fund Account required to protect the capital base of the Trust. The Trust targets a redemption price of $1 per unit for units on issue at a given time. 46 The Bonus Bonds Trust Prospectus No. 19

47 The Bonus Bonds Trust Financial Statements For the year ended 31 March 2015 Independent Auditor s Report To the Manager of Bonus Bonds Trust Independent auditor s report We have audited the accompanying financial statements of Bonus Bonds Trust (the Trust) on pages 35 to 46. The financial statements comprise the balance sheet as at 31 March 2015, the statements of comprehensive income, To the readers of the prospectus of Bonus Bonds Trust changes in equity and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. As auditor of Bonus Bonds Trust (''the Unit Trust'') we have prepared this report pursuant to clause 18 of Schedule 4 of the Securities Regulations 2009 for inclusion in the prospectus dated 11 September Management s responsibility for the financial statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with generally accepted accounting practice in New Zealand (being New Zealand Equivalents to International Financial Reporting Report Standards) on the financial and International statements Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement whether We have due audited to fraud the or financial error. statements of the Unit Trust for the year ended 31 March We expressed an unmodified audit opinion on those financial statements in our report dated 2 July 2015, which is included on pages 47 to 48 of this prospectus. The financial statements do not reflect the effects of events that occurred subsequent to the date of the report on those Auditor s responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in financial accordance statements. with International Standards on Auditing (New Zealand). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements Report on are the free summary from material financial misstatement. statements An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgement, The summary including financial the assessment statements of on the pages risks 21 of and material 22 are misstatement derived from of the the audited financial financial statements, whether due to statements fraud or error. of Bonus In making Bonds those Trust risk for assessments, the years ended the auditor 31 March considers 2011, internal 2012, 2013, control 2014 relevant and to the trust s preparation We and expressed fair presentation an unmodified of the opinion financial on statements those financial order statements to design in our audit audit procedures reports that are appropriate in for the each circumstances, of those years. but not The for summary the purpose financial of expressing statements an do opinion not reflect on the the effectiveness effects of events of the trust s internal control. An that audit occurred also includes subsequent evaluating to the the date appropriateness of the report on of those accounting financial policies statements. used and the reasonableness of accounting estimates, as well as evaluating the presentation of the financial statements. The summary financial statements do not contain all the disclosures required for full financial We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit statements opinion. under generally accepted accounting practice in New Zealand. Reading the summary financial statements, therefore, is not a substitute for reading the audited financial Our firm has also provided other services to the Trust in relation to the Trust s annual prospectus and specified statements of the group. procedures for prize draws. Subject to certain restrictions, partners and employees of our firm may also deal with the Trust on normal terms within the ordinary course of trading activities of the business of the Trust. These matters have Directors' responsibility for the summary financial statements not impaired our independence as auditor of the Trust. The firm has no other relationship with, or interests in, the trust. The directors are responsible for preparing a summary of the audited financial statements of the Unit Trust for the years ended 31 March 2011, 2012, 2013, 2014 and 2015 in accordance Opinion In our opinion, the financial statements on pages 35 to 46 comply with generally accepted accounting practice in with clause 8 of Schedule 4 of the Securities Regulations New Zealand and present fairly, in all material respects, the financial position of Bonus Bonds Trust as at 31 March 2015 and its financial performance and cash flows for the year then ended in accordance with New Zealand Equivalents to Auditor s responsibility for the summary financial statements International Financial Reporting Standards and International Financial Reporting Standards. Our responsibility is to express an opinion on the summary financial statements based on our procedures, which were conducted in accordance with International Standards on Auditing (New Zealand) 810 Engagements to Report on Summary Financial Statements. The much more fun investment bonusbonds.co.nz 47

48 The Bonus Bonds Trust Financial Statements For the year ended 31 March 2015 Report on other legal and regulatory requirements In accordance with the requirements of sections 16(1)(d) and 16(10(e) of the Financial Reporting Act 1993, we report that: Opinion on the summary financial statements we have obtained all the information and explanations that we have required; and in our opinion, proper accounting records have been kept by Bonus Bonds Trust as far as appears from our examination In of our those opinion, records the amounts set out in the summary financial statements on pages 21 and 22 of this prospectus, derived from the audited financial statements of the Unit Trust for the years ended 31 March 2011, 2012, 2013, 2014 and 2015, as required by clause 8 of Schedule 4 of the Securities Regulations 2009: are consistent, in all material respects, with those financial statements; and 2 July 2015 Wellington have been correctly taken from the audited financial statements of the Unit Trust for the years ended 31 March 2011, 2012, 2013, 2014 and Other matters Independence Our firm has also provided other services to the Trust in relation to specified procedures for prize draws. Subject to certain restrictions, partners and employees of our firm may also deal with the Trust on normal terms within the ordinary course of trading activities of the business of the Trust. These matters have not impaired our independence as auditors of the Trust. The firm has no other relationship with, or interest in, the Trust. Responsibility for updating We have no responsibility to update our opinion on the historical financial statements for events and circumstances occurring after the date of our audit report on those financial statements. Restriction on use This report has been prepared for inclusion in the prospectus for the purpose of meeting the requirements of clause 18 of Schedule 4 of the Securities Regulations We disclaim any assumption of responsibility for reliance on this report or the amounts included in the financial statements, the summary financial statements, for any purpose other than that for which they were prepared. In addition, we take no responsibility for, nor do we report on, any part of the prospectus not specifically mentioned in this report. Auditor s consent In accordance with regulation 18(1)(c)(ii) of the Securities Regulations 2009, we hereby give our consent to the inclusion of this report in the prospectus in the form in which it appears. We also confirm that we have not, before delivery of this prospectus, withdrawn our consent to the issue thereof. 11 September 2015 Wellington 48 The Bonus Bonds Trust Prospectus No. 19

49 Appendix 2: Auditor s Report Independent Auditor s Report Independent auditor s report To the readers of the prospectus of Bonus Bonds Trust As auditor of Bonus Bonds Trust ( the Unit Trust ) we have prepared this report pursuant to clause 18 of Schedule 4 of the Securities Regulations 2009 for inclusion in the prospectus dated 11 September To the readers of the prospectus of Bonus Bonds Trust Report on the financial statements As auditor of Bonus Bonds Trust (''the Unit Trust'') we have prepared this report pursuant to clause 18 of Schedule 4 of the Securities Regulations 2009 for inclusion in the prospectus dated 11 September We have audited the financial statements of the Unit Trust for the year ended 31 March We expressed an unmodified audit opinion on those financial statements in our report dated 2 July 2015, which is included on pages 47 to 48 of this prospectus. The financial statements do not reflect the effects of events that occurred subsequent to the date of the report on those financial statements. Report on the financial statements Report on the summary financial statements We have audited the financial statements of the Unit Trust for the year ended 31 March We expressed an unmodified audit opinion on those financial statements in our report dated 2 July 2015, which is included on pages 47 to 48 of this prospectus. The financial statements do not reflect the effects of events that occurred subsequent to the date of the report on those financial statements. The summary financial statements on pages 21 and 22 are derived from the audited financial statements of Bonus Bonds Trust for the years ended 31 March 2011, 2012, 2013, 2014 and We expressed an unmodified opinion on those financial statements in our audit reports for each of those years. The summary financial statements do not reflect the effects of events that occurred subsequent to the date of the report on those financial statements. The summary financial statements do not contain all the disclosures required for full financial statements under generally accepted accounting practice in New Zealand. Reading the summary financial statements, therefore, Report on the summary financial statements is not a substitute for reading the audited financial statements of the group. The summary financial statements on pages 21 and 22 are derived from the audited financial statements of Bonus Bonds Trust for the years ended 31 March 2011, 2012, 2013, 2014 and We expressed an unmodified opinion on those financial statements in our audit reports for each of those years. The summary financial statements do not reflect the effects of events that occurred subsequent to the date of the report on those financial statements. Directors responsibility for the summary financial statements The directors are responsible for preparing a summary of the audited financial statements of the Unit Trust for the years ended 31 March 2011, 2012, 2013, 2014 and 2015 in accordance with clause 8 of Schedule 4 of the Securities Regulations Auditor s responsibility for the summary financial statements Our responsibility is to express an opinion on the summary financial statements based on our procedures, which were conducted in accordance with International Standards on Auditing (New Zealand) 810 Engagements to Report on Summary Financial Statements. The summary financial statements do not contain all the disclosures required for full financial statements under generally accepted accounting practice in New Zealand. Reading the summary financial statements, therefore, is not a substitute for reading the audited financial statements of the group. Directors' responsibility for the summary financial statements The directors are responsible for preparing a summary of the audited financial statements of the Unit Trust for the years ended 31 March 2011, 2012, 2013, 2014 and 2015 in accordance with clause 8 of Schedule 4 of the Securities Regulations Auditor s responsibility for the summary financial statements Our responsibility is to express an opinion on the summary financial statements based on our procedures, which were conducted in accordance with International Standards on Auditing (New Zealand) 810 Engagements to Report on Summary Financial Statements. The much more fun investment bonusbonds.co.nz 49

50 Opinion on the summary financial statements In our opinion, the amounts set out in the summary financial statements on pages 21 and 22 of this prospectus, derived from the audited financial statements of the Unit Trust for the years ended 31 March 2011, 2012, 2013, 2014 and 2015, as required by clause 8 of Schedule 4 of the Securities Regulations 2009: Opinion on the summary financial statements are consistent, in all material respects, with those financial statements; and have been correctly taken from the audited financial statements of the Unit Trust for the years ended 31 March 2011, In our opinion, the amounts set out in the summary financial statements on pages 21 and 22 of this prospectus, derived from the audited financial statements of the Unit Trust for the years 2012, 2013, 2014 and ended 31 March 2011, 2012, 2013, 2014 and 2015, as required by clause 8 of Schedule 4 of the Securities Regulations 2009: Other matters Independence are consistent, in all material respects, with those financial statements; and Our firm has also provided other services to the Trust in relation to specified procedures for prize draws. Subject to certain restrictions, partners and employees of our firm may also deal with the Trust on normal terms within the have been correctly taken from the audited financial statements of the Unit Trust for the ordinary course of trading activities of the business of the Trust. These matters have not impaired our independence years ended 31 March 2011, 2012, 2013, 2014 and as auditors of the Trust. The firm has no other relationship with, or interest in, the Trust. Other matters Responsibility for updating We Independence have no responsibility to update our opinion on the historical financial statements for events and circumstances occurring after the date of our audit report on those financial statements. Our firm has also provided other services to the Trust in relation to specified procedures for prize draws. Subject to certain restrictions, partners and employees of our firm may also deal with the Trust on normal terms within the ordinary course of trading activities of the business of the Trust. These matters have not impaired our independence as auditors of the Trust. The firm has no other relationship with, or interest in, the Trust. Restriction on use This report has been prepared for inclusion in the prospectus for the purpose of meeting the requirements of clause 18 of Schedule 4 of the Securities Regulations We disclaim any assumption of responsibility for reliance on this report or the amounts included in the financial statements, the summary financial statements, for any purpose other than that for which they were prepared. In addition, we take no responsibility for, nor do we report on, any part of the prospectus not specifically mentioned in this report. Responsibility for updating Auditor s consent We have no responsibility to update our opinion on the historical financial statements for In events accordance and circumstances with regulation occurring 18(1)(c)(ii) of after the the Securities date of Regulations our audit 2009, report we on hereby those give financial our consent to the inclusion of statements. this report in the prospectus in the form in which it appears. We also confirm that we have not, before delivery of this prospectus, withdrawn our consent to the issue thereof. Restriction on use This report has been prepared for inclusion in the prospectus for the purpose of meeting the requirements of clause 18 of Schedule 4 of the Securities Regulations We disclaim any assumption of responsibility for reliance on this report or the amounts included in the financial statements, the summary financial statements, for any purpose other than that for which they were prepared. In addition, we take no responsibility for, nor do we report on, any part of the prospectus not specifically mentioned in this report. 11 September 2015 Wellington Auditor s consent In accordance with regulation 18(1)(c)(ii) of the Securities Regulations 2009, we hereby give our consent to the inclusion of this report in the prospectus in the form in which it appears. We also confirm that we have not, before delivery of this prospectus, withdrawn our consent to the issue thereof. 11 September 2015 Wellington 50 The Bonus Bonds Trust Prospectus No. 19

51 Appendix 3: Trustee s statement The much more fun investment bonusbonds.co.nz 51

52 09/15 ANZBB18225 A0673