System and method for creating and administering an investment instrument

• US 7,127,423 B2
• Filed: 08/27/2001
• Issued: 10/24/2006
• Est. Priority Date: 08/28/2000
• Status: Active Grant

• Current Assignee: Ameriprise Financial, Inc.
• Original Assignee: Ameriprise Financial, Inc.
• Inventors: Bristol, Ron, Burns, Georgann G., Hoover, Douglas, Hall, Pan, Dunning, Doug, Kohn, Bruce, McEvoy, Terry
• Primary Examiner(s): Bashore, Alain L.
• Application Number:
  US09/940,509
• Publication Number:
  US 20020059123A1
• Time in Patent Office: 1,884 Days
• Field of Search: 705/35, 705/36
• US Class Current: 705/36.00R
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• 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

Abstract

The present invention provides a system and method for creating and administering an investment instrument. More specifically, the present invention provides a system and method for creating and administering an investment instrument that may be cleared through a depository company, that has relatively short terms and/or that enables investors to participate in financial market activity while protecting their principal investments. In accordance with one embodiment of the invention, an investment instrument preserves an investor'"'"'s principal and offers a choice of several models for generating return. Return-generating models may allow an investor to participate fully in market movement, participate partially in market movement with a guaranteed minimum return, or receive a fixed return without participating in market movement.

Claims

1. A computer-implemented method for enabling investors to participate in a market index and preserve principal, said method comprising:

offering for sale, via a host computer, an investment instrument, wherein said investment instrument includes a face value, term and date of maturity;

accepting funds, via said host computer, from a purchaser for said investment instrument;

allowing, via said host computer, said purchaser of said investment instrument to select a return-generating model for said investment instrument from at least two different return-generating models, at least one of said return-generating models being based on at least one of full and partial investment in a market index;

calculating, via said host computer, a return earned by said investment instrument at an end of at least one of said term and said date of maturity according to said return-generating model selected by said purchaser;

adding said return, via said host computer, to said face value of said investment instrument to calculate said principal of said investment instrument;

guaranteeing said principal against losses; and

distributing to said purchaser a monetary equivalent of at least one of said principal and said return.

2. The method of claim 1 wherein said offering for sale step is conducted by a party other than an issuer of said investment instrument.

3. The method of claim 1 wherein said accepting funds step is conducted by a party other than an issuer of said investment instrument.

4. The method of claim 1 wherein said funds are deposited with a depository company.

5. The method of claim 4 wherein said depository is the Depository Trust Company.

6. The method of claim 4 wherein said term has a duration of 52 weeks.

7. The method of claim 4 wherein said term has a duration of one calendar year.

8. The method of claim 4 wherein said term has a duration of two calendar years.

9. The method of claim 1 wherein said term has a duration of 52 weeks.

10. The method of claim 1 wherein said term has a duration of one calendar year.

11. The method of claim 1 wherein said term has a duration of two calendar years.

12. The method of claim 1 wherein said face value is determined by an issuer of said investment instrument.

13. The method of claim 1 wherein said face value is chosen by said purchaser of said investment instrument.

14. The method of claim 1 wherein said date of maturity occurs after 10 of said terms.

15. The method of claim 1 wherein said return-generating model may be selected from a group comprising a fixed rate of return, a rate of return based on partial participation in a market index and a rate of return based on full participation in a market index.

16. The method of claim 15 wherein said rate of return based on partial participation in a market index also includes a guaranteed, minimum interest.

17. The method of claim 1 wherein said investment instrument accrues interim interest from the date of purchase until the first day of said term.

18. The method of claim 1 wherein calculating said return and said principal is performed at the end of each said term.

19. The method of claim 1 wherein calculating said return and said principal is performed by a computer system including accounting software.

20. The method of claim 1 wherein calculating said return and said principal is performed daily.

21. The method of claim 1 wherein said distributing at least one of said principal, said return is performed at the end of said term.

22. The method of claim 1 wherein said distributing at least one of said principal, said return is performed upon request of said purchaser.

23. A system configured to enable investors to participate in a market index and preserve principal, said system comprising:

a module configured for offering for sale an investment instrument, wherein said investment instrument includes a face value, term and date of maturity;

a module configured for accepting purchase funds from a purchaser of said investment instrument;

at least two return-generating models for said investment instrument configured to allow said purchaser to chose at least one of said return-generating models, at least one of said return-generating models being based on at least one of full and partial investment in a market index;

a first module configured for calculating a return earned by said investment instrument at an end of at least one of said term and said date of maturity according to said return-generating model selected by said purchaser;

a second module configured for calculating said principal of said investment instrument by adding said return to said face value;

a module configured for guaranteeing said principal against losses; and

a module configured for distributing to said purchaser a monetary equivalent of at least one of said principal, and said return at said end of at least one of said term and said date of maturity.

24. The system of claim 23 wherein said module configured for offering said investment instrument for sale comprises an issuer and a seller.

25. The system of claim 24 wherein said issuer and said seller are different entities.

26. The system of claim 24 wherein said issuer and said seller are the same entity.

27. The system of claim 23 wherein said face value is determined by an issuer of said investment instrument.

28. The system of claim 23 wherein said face value is chosen by said purchaser.

29. The system of claim 23 wherein said module configured for accepting purchase funds includes a depository company.

30. The system of claim 29 wherein said depository company is the Depository Trust Company.

31. The system of claim 29 wherein said term has a duration of 52 weeks.

32. The system of claim 29 wherein said term has a duration of one calendar year.

33. The system of claim 29 wherein said term has a duration of two calendar years.

34. The system of claim 23 wherein said term has a duration of 52 weeks.

35. The system of claim 23 wherein said term has a duration of one calendar year.

36. The system of claim 23 wherein said term has a duration of two calendar years.

37. The system of claim 23 wherein said date of maturity occurs after 10 of said terms.

38. The system of claim 23 wherein said return-generating model may be selected from a group comprising a fixed rate of return, a rate of return based on partial participation in a market index and a rate of return based on full participation in a market index.

39. The system of claim 38 wherein said rate of return based on partial participation in a market index also includes a guaranteed, minimum interest.

40. The system of claim 23 wherein said investment instrument accrues interim interest from the date of purchase until the first day of said term.

41. The system of claim 23 wherein said first module and said second module for calculating is configured for calculating said return and said principal at the end of each said term.

42. The system of claim 23 wherein said first module and said second module for calculating is configured for calculating said return and said principal daily.

43. The system of claim 23 wherein said module configured for distributing is configured for distributing at least one of said principal, and said return at the end of said term.

44. The system of claim 23 wherein said module configured for distributing is configured for distributing at least one of said principal, and said return upon request of said purchaser.

45. A computer-implemented method of investing, in which the investor participates in a market index while protecting principal, comprising:

purchasing, via a host computer, an investment instrument, wherein said investment instrument includes a certain face value, term and date of maturity;

selecting, via said host computer, a return-generating model for said investment instrument from at least two different return-generating models, at least one of said return-generating models being based on at least one of full and partial investment in a market index;

earning interest on said investment instrument in accordance with said return-generating model; and

receiving the monetary equivalent of said face value and said interest at the end of at least one of said term and said date of maturity.

46. The method of claim 45, further comprising the step of withdrawing at least a portion of at least one of said face value and said interest at any time during said term.

47. The method of claim 45, further comprising the step of paying a withdrawal penalty for withdrawing at least a portion of at least one of said face value and said interest at any time before the end of said term.

48. The method of claim 45, in which said receiving step further involves receiving the monetary equivalent of said face value and said interest at the end of said term, minus the amount of any withdrawals and withdrawal penalties.

49. The method of claim 45, wherein said purchasing step may be accomplished by at least one of deposit of cash, check and money order with a seller of said investment instrument.

50. The method of claim 49 wherein said seller is a different entity from an issuer of said investment instrument.

51. The method of claim 45 wherein said seller is also an issuer of said investment interest.

52. The method of claim 45, wherein said return-generating model is based on full participation in the return of a financial market, with no guaranteed return.

53. The method of claim 45, wherein said return-generating model is based on partial participation in the return of a financial market, with a specified amount of guaranteed return.

54. A computer-implemented method for enabling investors to participate in a market index and preserve principal, said method comprising:

offering for sale, via a host computer, an investment instrument, wherein said investment instrument includes a face value, term and date of maturity;

allowing, via said host computer, a purchaser of said investment instrument to select a return-generating model for said investment instrument from at least two different return-generating models, at least one of said return-generating models being based on at least one of full and partial investment in a market index;

accepting, via said host computer, from said purchaser, a purchase order and purchase funds for said investment instrument;

issuing, via said host computer, said investment instrument in a name of said purchaser upon receipt of said purchase order and said purchase funds;

calculating, via said host computer, a return earned by said investment instrument at an end of at least one of said term and said date of maturity according to said return-generating model selected by said purchaser;

adding, via said host computer, said return to said face value of said investment instrument to calculate said principal of said investment instrument;

guaranteeing said principal against losses; and

distributing the monetary equivalent of at least one of said principal and said return to said purchaser at the end of said term.

55. The method of claim 54 wherein at least one of said offering, accepting and distributing steps are performed by a seller of said investment instrument and at least one of said issuing, calculating, adding and guaranteeing steps are performed by an issuer of said investment instrument.

56. The method of claim 55 wherein said seller is a different entity from said issuer.

57. The method of claim 55 wherein said seller and said issuer are the same entity.

58. The method of claim 54, further comprising the step of clearing said purchase funds through a depository company.

59. The method of claim 58 wherein said depository company is the Depository Trust Company.

60. The method of claim 58 wherein said term has a duration of 52 weeks.

61. The method of claim 58 wherein said term has a duration of one calendar year.

62. The method of claim 58 wherein said term has a duration of two calendar years.

63. The method of claim 54 wherein said term has a duration of 52 weeks.

64. The method of claim 54 wherein said term has a duration of one calendar year.

65. The method of claim 54 wherein said term has a duration of two calendar years.

66. The method of claim 54 wherein said face value is determined by an issuer of said investment instrument.

67. The method of claim 54 wherein said face value is chosen by said purchaser.

68. The method of claim 54 wherein said date of maturity occurs after 10 of said terms.

69. The method of claim 54 wherein said return-generating model may be selected from a group comprising a fixed rate of return, a rate of return based on partial participation in a market index and a rate of return based on full participation in a market index.

70. The method of claim 69 wherein said rate of return based on partial participation in a market index also includes a guaranteed, minimum interest.

71. The method of claim 54 wherein said investment instrument accrues interim interest from the date of purchase until the first day of said term.

72. The method of claim 54 wherein calculating said return and said principal is performed at the end of each said term.

73. The method of claim 54 wherein calculating said return and said principal is performed by a computer system including accounting software.

74. The method of claim 54 wherein calculating said return and said principal is performed daily.

75. The method of claim 54 wherein said distributing of at least one of said principal, and said return is performed at the end of said term.

76. The method of claim 54 wherein said distributing of at least one of said principal, and said return is performed upon request of said purchaser.