Investment company that issues a class of conventional shares and a class of exchange-traded shares in the same fund

• US 20020128947A1
• Filed: 03/07/2001
• Published: 09/12/2002
• Est. Priority Date: 03/07/2001
• Status: Active Grant

• Current Assignee: The Vanguard Group Incorporated
• Original Assignee: The Vanguard Group Incorporated
• Inventors: Lenhard, Walter, Sauter, George U.
• Granted Patent: US 6,879,964 B2
• Time in Patent Office: Days
• US Class Current: 705/37
• CPC Class Codes: G06Q 20/042 characterized in that the payment protocol involves at least one cheque
• CPC Class Codes: G06Q 20/10 specially adapted for electronic funds transfer [EFT] systems; specially adapted for home banking systems
• CPC Class Codes: G06Q 20/102 Bill distribution or payments
• CPC Class Codes: G06Q 20/105 involving programming of a portable memory device, e.g. IC cards, "electronic purses"
• CPC Class Codes: G06Q 20/108 Remote banking, e.g. home banking
• CPC Class Codes: G06Q 20/1085 involving automatic teller machines [ATMs]
• CPC Class Codes: G06Q 20/40 Authorisation, e.g. identification of payer or payee, verification of customer or shop credentials; Review and approval of payers, e.g. check credit lines or negative lists
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• CPC Class Codes: G06Q 40/02 Banking, e.g. interest calculation or account maintenance credit or loans G06Q40/03
• CPC Class Codes: G06Q 40/03 Credit; Loans; Processing thereof
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange
• CPC Class Codes: G06Q 40/06 Asset management; Financial planning or analysis
• CPC Class Codes: G06Q 40/12 Accounting
• CPC Class Codes: G06Q 40/123 Tax preparation or submission
• CPC Class Codes: G06Q 40/128 Check-book balancing, updating or printing arrangements

Abstract

An investment company is administered by issuing one or more classes of shares that are bought from and redeemed with the company at a net asset value, issuing one or more classes of shares that are listed for trading on a securities exchange and that are bought and sold at negotiated market prices, and maintaining, in one or more computers, account data of the outstanding shares. A shareholder may acquire exchange-traded shares by requesting conversion of a designated number or dollar value of shares belonging to the one or more classes of shares that are bought from and redeemed with the company at a net asset value for a monetarily equivalent number of shares of the one or more classes of shares which are exchange-traded shares of the company. An authorized participant may purchase exchange-traded shares directly from the investment company in exchange for a basket of securities of generally equivalent monetary value. A direct purchase requires a purchase of a predetermined number of exchange-traded shares. An investor may also purchase or sell exchange-traded shares on the secondary market through a broker. The exchange-traded shares may be issued by an open-end mutual find, a closed-end mutual fund, or a unit investment trust.

Claims

1. A computer-implemented method of administering an investment company, the method comprising:

(a) issuing one or more classes of shares that are bought from and redeemed with the company at a net asset value;

(b) issuing one or more classes of shares that are listed for trading on a securities exchange and that are bought and sold at negotiated market prices; and

(c) maintaining in one or more computers, account data of the outstanding shares.

2. The method of claim 1 further comprising:

(d) an investor purchasing or selling the exchange-traded shares on the secondary market through a broker; and

(e) updating account data of the investor in the one or more computers to reflect the new number of shares held by the investor.

3. The method of claim 2 further comprising:

(f) the broker purchasing or selling the exchange-traded shares from or to a market maker on behalf of the investor to fulfill the investor'"'"'s purchase or sell order.

4. The method of claim 1 wherein there are a plurality of shareholders and the account data includes an account for each shareholder.

5. The method of claim 1 further comprising:

(d) a shareholder acquiring exchange-traded shares by requesting conversion of a designated number or dollar value of shares belonging to the one or more classes of shares that are bought from and redeemed with the company at a net asset value for a monetarily equivalent number of shares of the one or more classes of shares that are exchange-traded shares of the company; and

(e) updating the account data in the one or more computers to reflect the new number of shares of each type.

6. The method of claim 1 further comprising:

(d) an authorized participant purchasing the exchange-traded shares directly from the investment company in exchange for a basket of securities of generally equivalent monetary value, wherein a direct purchase requires a purchase of a predetermined number of exchange-traded shares; and

(e) updating the account data in the one or more computers to include the newly purchased shares.

7. The method of claim 1 wherein the exchange-traded shares are issued by an open-end fund.

8. The method of claim 1 wherein the exchange-traded shares are issued by a closed-end fund.

9. The method of claim 1 wherein the exchange-traded shares are issued by a unit investment trust.

10. The method of claim 1 wherein the exchange-traded shares are publicly listed and traded.

11. The method of claim 1 wherein the investment company has an investment objective of tracking a specific benchmark index of securities.

12. The method of claim 1 wherein the investment company is actively managed by an investment advisor.

14. The system of claim 13 wherein an investor may purchase or sell the exchange-traded shares on the secondary market through a broker, the system further comprising:

(d) one or more brokerage computers for receiving and executing the purchase or selling of the exchange-traded shares, the account data of the investor being updated in the one or more computers to reflect the new number of shares held by the investor.

15. The system of claim 14 further comprising:

(e) a market maker computer in communication with the one or more brokerage computers, wherein the broker uses the one or more brokerage computers and the market maker computer to purchase or sell the exchange-traded shares from or to a market maker on behalf of the investor to fulfill the investor'"'"'s purchase or sell order.

16. The system of claim 13 wherein there are a plurality of shareholders and the account data includes an account for each shareholder.

17. The system of claim 13 wherein a shareholder may acquire the exchange-traded shares by requesting conversion of a designated number or dollar value of shares belonging to the one or more classes of shares that are bought from and redeemed with the company at a net asset value for a monetarily equivalent number of shares of the one or more classes of shares that are exchange-traded shares of the company, the system further comprising:

(d) a third processor for receiving and implementing the requests for conversion, the account data being updated in the one or more computers to reflect the new number of shares of each type.

18. The system of claim 13 wherein an authorized participant may purchase the exchange-traded shares directly from the investment company in exchange for a basket of securities of generally equivalent monetary value, wherein a direct purchase requires a purchase of a predetermined number of exchange-traded shares, the system further comprising:

(d) a third processor for receiving and implementing direct purchase requests, the account data being updated in the one or more computers to include the newly purchased shares.

19. The system of claim 13 wherein the exchange-traded shares are issued by an open-end fund.

20. The system of claim 13 wherein the exchange-traded shares are issued by a closed-end fund.

21. The system of claim 13 wherein the exchange-traded shares are issued by a unit investment trust.

22. The system of claim 13 wherein the exchange-traded shares are publicly listed and traded.

23. The system of claim 13 wherein the investment company has an investment objective of tracking a specific benchmark index of securities.

24. The system of claim 13 wherein the investment company is actively managed by an investment advisor.

26. The article of manufacture of claim 25 wherein the computer-executable instructions perform a method further comprising:

(d) an investor purchasing or selling the exchange-traded shares on the secondary market through a broker; and

(e) updating account data of the investor in the one or more computers to reflect the new number of shares held by the investor.

27. The article of manufacture of claim 26 wherein the computer-executable instructions perform a method further comprising:

(f) the broker purchasing or selling the exchange-traded shares from or to a market maker on behalf of the investor to fulfill the investor'"'"'s purchase or sell order.

28. The article of manufacture of claim 25 wherein there are a plurality of shareholders and the account data includes an account for each shareholder.

29. The article of manufacture of claim 25 wherein the computer-executable instructions perform a method further comprising:

(d) a shareholder acquiring the exchange-traded shares by requesting conversion of a designated number or dollar value of shares belonging to the one or more classes of shares that are bought from and redeemed with the company at a net asset value for a monetarily equivalent number of shares of the one or more classes of shares that are exchange-traded shares of the company; and

(e) updating the account data in the one or more computers to reflect the new number of shares of each type.

30. The article of manufacture of claim 25 wherein the computer-executable instructions perform a method further comprising:

(d) an authorized participant purchasing the exchange-traded shares directly from the investment company in exchange for a basket of securities of generally equivalent monetary value, wherein a direct purchase requires a purchase of a predetermined number of exchange-traded shares; and

(e) updating the account data in the one or more computers to include the newly purchased shares.

31. The article of manufacture of claim 25 wherein the exchange-traded shares are issued by an open-end fund.

32. The article of manufacture of claim 25 wherein the exchange-traded shares are issued by a closed-end fund.

33. The article of manufacture of claim 25 wherein the exchange-traded shares are issued by a unit investment trust.

34. The article of manufacture of claim 25 wherein the exchange-traded shares are publicly listed and traded.

35. The article of manufacture of claim 25 wherein the investment company has an investment objective of tracking a specific benchmark index of securities.

36. The article of manufacture of claim 25 wherein the investment company is actively managed by an investment advisor.

38. The method of claim 37 further comprising:

(c) the broker purchasing or selling the exchange-traded shares from or to a market maker on behalf of the investor to fulfill the investor'"'"'s purchase or sell order.

13. A data processing system for administering an investment company, the system comprising:

(a) a first processor which records one or more classes of shares issued by the investment company that are bought from and redeemed with the company at a net asset value;

(b) a second processor which records one or more classes of shares issued by the investment company that are listed for trading on a securities exchange and that are bought and sold at negotiated market prices; and

(c) one or more computers that maintain account data of the outstanding shares.

25. An article of manufacture for administering an investment company, the article of manufacture comprising a computer-readable medium holding computer-executable instructions for performing a method comprising:

(a) issuing one or more classes of shares that are bought from and redeemed with the company at a net asset value;

(b) issuing one or more classes of shares that are listed for trading on a securities exchange and that are bought and sold at negotiated market prices; and

(c) maintaining in one or more computers, account data of the outstanding shares.

37. In a computer-implemented investment company that has issued (i) one or more classes of shares that are bought from and redeemed with the company at a net asset value, (ii) one or more classes of shares that are listed for trading on a securities exchange and that are bought and sold at negotiated market prices, wherein one or more computers maintain account data of the outstanding shares, a method comprising:

(a) an investor purchasing or selling the exchange-traded shares on the secondary market through a broker; and

(b) updating account data of the investor in one or more computers to reflect the new number of shares held by the investor.

39. In a computer-implemented investment company that has issued (i) one or more classes of shares that are bought from and redeemed with the company at a net asset value, and (ii) one or more classes of shares that are listed for trading on a securities exchange and that are bought and sold at negotiated market prices, wherein one or more computers maintain account data of the outstanding shares, a method comprising:

(a) a shareholder acquiring exchange-traded shares by requesting conversion of a designated number or dollar value of shares belonging to the one or more classes of shares that are bought from and redeemed with the company at a net asset value for a monetarily equivalent number of shares of the one or more classes of shares that are exchange-traded shares of the company; and

(b) updating account data in the one or more computers to reflect the new number of shares of each type.