This invention relates to a computer-implemented method and system for operating a pooled investment fund. The invention also relates to a computer-implemented method for operating a pooled investment scheme and a method for reporting holdings in a pooled investment fund or pooled investment scheme.

BACKGROUND OF THE INVENTION Following the deregulation of financial markets, there has been observed an increase in the number of people wanting to be investors. There is significant variety in the types of investors; from corporations who specialise in investments (such as investment banks) through to 'mum and dad' investors, whom have little knowledge of investments. One recurring theme is the benefit of pooling smaller investors together. Pooling makes a diversified portfolio of investments a more achievable outcome, whilst decreasing the average or aggregate brokerage rates and investment advice costs for each member of the pool. There are many types of pooled investment funds, both in terms of the investment objectives associated with the fund (such as, the type of investments the fund will hold) and the methods and structures used to manage the assets contained therein. Though pooled investment funds can be operated by the individual investors, it is typical for specialist investment entities to be engaged. Specialist investment entities can manage the pooled investment fund on behalf of the group of investors in the pooled investment fund. Alternatively, specialist investment entities can own the pooled investment fund, and allow individuals to invest directly into the pooled investment fund (and thus, indirectly invest in the investments held by the pooled investment fund.) The methods of operating pooled investment funds are inherently related to the type of pooled investment fund that has been created.

At its most basic, a pooled investment fund could simply be a group of investors purchasing securities (for example, a property) together at some point in time. In such an arrangement, one would expect the ownership of the securities to be proportional to the contributions made by each investor. At the termination of the investment, the gains or losses would be shared in accordance with the proportional ownership of the investors.

The above example is relatively straightforward in that the pooled investment fund has a finite beginning and a finite end, and the investors remain fixed throughout the duration of the pooled investment fund. Some pooled investment funds, however, allow investors to enter and exit the fund at differing times. In addition, the pooled investment fund may continue to buy and sell securities throughout the duration of the pooled investment fund.

Another example of a type of pooled investment fund is a unit trust. Unit trusts are commonly found in New Zealand, Australia and the United Kingdom. They are a loose equivalent of the mutual funds which are found in the United States and Canada. In a unit trust, the investors invest in 'units' associated with the trust. The value of the units is not fixed; and varies in accordance with the performance of the investments undertaken, the issuing of units, the redemption of units, and the costs and fees incurred by the unit trust. Though a unit trust does offer the benefits associated with any pooled investment arrangement, they also have several setbacks. The first negative aspect is that the ownership of the unit trust is related to an individual's ownership of the units that make up the unit trust, and not their proportional ownership of the underlying securities within the unit trust. As a result, the unit holders' property rights can be subverted via the use of practices such as reserving and other inter-member cross-subsidisations. An example of this is where an existing unit holder is subjected to the investments made on incoming contributions (since this is pooled as part of the trust, to which the existing unit holder has a proportional entitlement) even though the existing unit holder has made no changes to their holding.

A further consequence of the lack of association between units and the underlying securities is that reports to unit holders can show unit price and quantity, but not the underlying holdings in securities. Though it is possible to report the securities held by the unit trust in its entirety, these cannot be related to the units held by the particular unit holder. That is to say, the proportional ownership of the unit trust does not result in a proportional ownership of each type of security held by the unit trust. This is best demonstrated when a member exits a unit trust as described below.

Another negative aspect is that the costs are not fairly distributed between unit holders, in that the costs associated with a particular transaction can be borne by the entire unit trust even though some unit holders may have made no changes to their holdings.

A further negative aspect arises in the context of a member of the unit trust opting to leave the unit trust. Instead of the unit trust selling the member's exact holdings, typically the unit trust will maintain a 'cash float' which is used to pay out the member when they 'cash in' their units. However, if there is no such cash float it is common for the most liquid assets to be sold to pay the exiting member. Selling such liquid assets can have negative impacts on the remaining holders within the pooled investment fund, who are burdened with the less liquid securities. If a large scale exit from the unit trust takes place (for example, in a financial downturn), those who are first in line are more likely to be paid out, which unfairly affects those later in the line, who are left with a higher proportional ownership of the fund's less liquid and less desirable holdings. This becomes particularly problematic as it is possible to 'hide' such undesirable holdings amongst the other holdings of the unit trust. Since the unit holders have a right to their units, and not a proportion of all the underlying securities, there is lack of transparency in what the unit holder owns.

A further example of pooled investment fund is an exchange traded fund. In an exchange traded fund, the securities held by the fund typically correlate to a particular index. The costs associated with exchange traded funds are usually lower than other types of pooled investment funds because the costs arising from making decisions about which securities are to be held by the fund are less. Another important attribute of exchange traded funds is that shares of the fund are traded on the share market. This means that when an individual investor sells their shares, they do not cause the same problems as when an investor exits a unit trust referred to above. Typically, only authorised parties can buy and sell shares in the exchange traded fund with the fund manager, and such transactions are done in kind and in proportion to the holdings in the exchange traded fund. Again, this alleviates the problems which arise when an investor exits a unit trust. The consequential downside of this arrangement is that it is only a practical possibility for large scale investors, which means 'regular' investors are unable to trade with the exchange traded fund's fund manager. This is often referred to as authorised parties being 'market makers'.

Further to the above mentioned pooled investment funds, is the possibility of pooled investment schemes. The specialised investment entities which manage pooled investment funds may offer more than one pooled investment fund as part of a pooled investment scheme. Such schemes allow investors to invest across multiple pooled investment funds having individualised characteristics. Again, the downsides associated with some pooled investment funds arise in the context of pooled investment schemes, particularly when an investor moves between funds within the same scheme.

Another aspect of pooled investment funds and pooled investment schemes is that generally they can be very large, both in terms of value and the number of investors. The effect of this is that maintaining a record of each individual's holdings within the pooled investment fund or pooled investment scheme can become very complex, and requires intensive accounting and memory management when some of the above mentioned downsides of pooled investment funds are attempted to be offset. Typically, cujrent pooled investment schemes can report the proportional ownership of particular pooled investment funds and the securities held by the fund, but due to their method of operation cannot report upon the precise holdings of underlying securities of the individual investors. It is an object of the invention to provide an improved method and system for operating a pooled investment fund and scheme, particularly to meet the negative aspects of current pooled investment funds and schemes outlined above, or to at least provide the public with a useful choice. SUMMARY OF THE INVENTION

According to one exemplary embodiment there is provided a computer- implemented method of operating a pooled investment fund including: a first sub-fund, an account of which is maintained in a computer memory, for the purpose of accumulating incoming member contributions; a second sub- fund, an account of which is maintained in a computer memory, for the purpose of holding member contributions that are to be invested; and a third sub-fund, an account of which is maintained in a computer memory, for the purpose of holding invested member contributions; comprising the steps of: accumulating incoming member contributions from members in the first sub- fund; transferring incoming member contributions from the first sub-fund to the second sub-fund; establishing a target investment profile which specifies the composition of securities within the pooled investment fund; investing the member contributions within the second sub-fund in accordance with the target investment profile; rebalancing the third sub-fund in accordance with the target investment profile; after investing the member contributions in the second sub-fund and rebalancing the third sub-fund, consolidating the holdings within the second sub-fund and within the third sub-fund into a consolidated sub-fund, an account of which is maintained in a computer memory; and using a processing means to update the accounts of each sub- fund to effect or to reflect any changes made to a sub-fund.

According to another exemplary embodiment there is provided a computer- implemented method of operating a pooled investment fund including the steps of: separating the pooled investment fund into a plurality of sub-funds; using a first sub-fund, an account of which is maintained in computer memory, for the purpose of holding member contributions that are to be invested; using a second sub-fund, an account of which is maintained in computer memory, for the purpose of holding invested member contributions; establishing a target investment profile which specifies the composition of securities within the pooled investment fund; investing the uninvested member contributions within the first sub-fund in accordance with the target investment profile; rebalancing the second sub-fund in accordance with the target investment profile; after investing the uninvested member contributions and rebalancing the second sub-fund, consolidating the holdings within the first sub-fund and within the second sub-fund into a consolidated sub-fund, an account of which is maintained in a computer memory; and using a processing means to update the accounts of each sub- fund to effect or to reflect any changes made to a sub-fund.

According to a further exemplary embodiment there is provided a computer- implemented method of operating a pooled investment fund including the steps of: separating the pooled investment fund into a plurality of sub-funds; using a first sub-fund, an account of which is maintained in a computer memory, for the purpose of accumulating incoming member contributions; using a second sub-fund, an account of which is maintained in a computer memory, for the purpose of holding member contributions that are to be invested; transferring holdings from the first sub-fund to the second sub-fund; investing the member contributions within the second sub-fund; and using a processing means to update the accounts of each sub-fund to effect or to reflect any changes made to a sub-fund.

According to another exemplary embodiment there is provided a computer- implemented method of operating a pooled investment scheme including the steps of: establishing a plurality of pooled investment funds, accounts of which are maintained in a computer memory; apportioning a member's incoming contributions across the pooled investment funds according to a predetermined proportion; rebalancing a member's holdings across the pooled investment funds according to the predetermined proportion; and using a processing means to update the accounts of each sub-fund to effect or to reflect any changes made to a pooled investment fund.

According to a still further exemplary embodiment there is provided a computer-implemented method of reporting holdings in a pooled investment fund, which can comprise a plurality of sub-funds, or a pooled investment scheme, comprising a plurality of pooled investment funds, which can comprise a plurality of sub-funds, including the steps of: maintaining a record, maintained in a computer memory, of each member's proportional ownership of each sub-fund within each pooled investment fund; using market values to value each security within each sub-fund within each pooled investment fund; assigning a percentage ownership of each security within each sub-fund within each pooled investment fund to a member in accordance with their proportional ownership of the corresponding sub- fund; creating a summary of the corresponding ownership of each security for the member in accordance with their percentage ownership of each security; and incorporating the summary in a report that is made available to the member. According to a yet further exemplary embodiment there is provided an investment management system comprising: memory, including: a first memory containing a first plurality of component values; a second memory containing a second plurality of component values; a third memory containing a third plurality of component values; and a processing means which: records the first plurality of component values in the first memory; transfers first plurality of component values from the first memory to the second memory; receives a target investment profile; allocates the first plurality of component values within the second memory in accordance with the target investment profile and correspondingly converts the first plurality of component values into the second plurality of component values; rebalances the third plurality of component values in the third memory in accordance with the target investment profile; and after converting the first plurality of component values into the second plurality of component values and rebalancing the third plurality of component values in the third memory, consolidates the second plurality of component values within the second memory and third plurality of component values within the third memory into a consolidation memory.

According to a yet further exemplary embodiment there is provided an investment management system comprising: a first memory containing a first plurality of component values; a second memory containing a second plurality of component values; and a processing means which: receives a target investment profile; allocates a plurality of component values within the first memory in accordance with the target investment profile and correspondingly converts the plurality of component values into the first plurality of component values; rebalances the second plurality of component values in the second memory in accordance with the target investment profile; and after converting the plurality of component values into the first plurality of component values and rebalancing the second plurality of component values in the second memory, consolidates the first plurality of component values within the second memory and second plurality of component values within the second memory into a consolidation memory.

According to a yet further exemplary embodiment there is provided an investment management system comprising: a plurality of memories containing component values; and a processing means which: receives a predetermined proportion; allocates a plurality of component values in each memory according to the predetermined proportion; and rebalances the plurality of component values according to the predetermined proportion. It is acknowledged that the terms "comprise", "comprises" and "comprising" may, under varying jurisdictions, be attributed with either an exclusive or an inclusive meaning. For the purpose of this specification, and unless otherwise noted, these terms are intended to have an inclusive meaning - i.e. they will be taken to mean an inclusion of the listed components which the use directly references, and possibly also of other non-specified components or elements.

Where a method requires a number of steps to be performed these need not be performed in the sequence listed unless logically required.

Reference to any prior art in this specification does not constitute an admission that such prior art forms part of the common general knowledge.

BRIEF DESCRIPTION OF THE DRAWINGS

The accompanying drawings which are incorporated in and constitute part of the specification, illustrate embodiments of the invention and, together with the general description of the invention given above, and the detailed description of embodiments given below, serve to explain the principles of the invention.

Figure 1 shows a schematic representation of an embodiment of a pooled investment fund;

Figure 2 shows a schematic representation of the process by which value moves through a pooled investment fund;

Figure 3 shows a schematic representation of the process by which a member exits a pooled investment fund; Figure 4 shows a schematic representation of an embodiment of a pooled investment scheme; and

Figure 5 shows a schematic representation of an embodiment of an investment management system.

DETAILED DESCRIPTION OF EMBODIMENTS OF THE INVENTION

Method of Operating a Pooled Investment Fund

Though the invention is focused towards a computer-implemented method of operating a pooled investment fund, it is helpful to first look at the pooled investment fund itself. Referring to figure 1 there is shown a diagrammatic representation of a pooled investment fund 1 according to a first embodiment, including:

^■ A cash sub-fund 2;

^■ An investment sub-fund 3; and

^■ A fully-invested sub-fund 4.

According to this embodiment, there are three sub-funds which comprise the entire pooled investment fund. However, the invention is not limited to a pooled investment fund with just three sub-funds, and those skilled in the art will appreciate that other sub-funds may serve other purposes within the context of a pooled investment fund. Some alternative sub-funds will be discussed later in this description.

The pooled investment fund may be contributed to by a plurality of members. Those skilled in the art will appreciate that there are multiple ways in which an investor, (whether it be an individual, a corporation or any other type of entity) can become a member to a pooled investment fund, and the invention is not limited to any particular way.

In addition to members, this specification will also refer to investment entities and fund managers. Investment entity is being used to refer to an entity of any description that provides pooled investments as a service. Fund manager is being used to refer to those people, typically within the investment entity, which manages the pooled investments.

Each sub-fund serves a different purpose within the pooled investment fund 1 . At the invention's basic level of implementation, the sub-funds serve the following purposes:

^■ The cash sub-fund 2 accumulates incoming contributions from members who belong to the pooled investment fund. It will be appreciated that there are multiple ways by which a member may make contributions to the sub-fund. This can include, but is not limited to, cash deposits or bank transfers (eg from a bank account of the member to a specified bank account). Another possibility is that the contributions are made by a third party on behalf of the member (for example, a tax collecting entity that may contribute a portion of money collected to an investment entity). Typically, such contributions will be cash, but the sub-fund is not limited in this respect and the sub-fund can hold any ordinary contribution that an individual investor might make to a pooled investment fund.

^■ The investment sub-fund 3 receives transfers of the contributions held by the cash sub-fund. Having received such contributions, the contributions are then invested in securities; thereafter the investment sub-fund holds the resulting securities. 'Securities' is not limited to any specific type of financial instrument, commodity or asset; but it includes shares, stocks, bonds and currencies. Those skilled in the art will appreciate the breadth associated with the term in the context of investment and the term is used on that basis.

^■ The fully- invested sub-fund 4 receives transfers of the securities from the investment sub-fund. Thereafter, the fully-invested sub-fund continues to hold the securities.

As is apparent from the above overview, a cyclical process results from the purposes of the sub-funds, with value moving from the cash sub-fund to the investment sub-fund to the fully-invested sub-fund. Though it is possible for securities to be transferred from the fully-invested sub-fund (as will be described below), it is a likely outcome (where there is net investment in the fund) that after a number of iterations of the above cyclical process a majority of the pooled investment fund's value will be within the fully-invested sub- fund.

The sub-funds described above are maintained in accounts stored in the memory of a computer system. The account can be an array, database (or similar arrangement), which is an up-to-date record of the value associated with that sub-fund, whether it be cash or securities. The array, database or similar can be managed by a computer program operated by a user, with changes effected by a processing means. The account will be updated to ensure it corresponds to the actual value of the sub-fund (which is most likely held elsewhere, for example by a bank). Further, the account can include any other details relevant to the related sub-fund, such as:

• dates when cash enters a sub-fund;

• types of securities held by a sub-fund; and

• details related to securities (eg maturity dates, dividends accrued). Those skilled in the art will appreciate that there are any number of details that can be included in the account, and the invention is not limited to any.

Thus, it will be understood that the account of the sub-fund is a direct representation of the sub-fund itself. For example, the account of the cash sub-fund may represent actual cash held in bank accounts, or the account of the fully-invested sub-fund may represent actual securities held by a custodian. When value moves from one sub-fund to another sub-fund (ie in accordance with the cyclical process described above), there may not be movement of the cash or securities themselves, but rather the account of the sub-funds are updated to represent movement of cash or securities from one sub-fund to another. Therefore, when this specification refers to movement of value from one sub-fund to another, it can mean that the account of those sub-funds is changed to represent that movement. However, it is also possible that a transaction within a sub-fund or between a sub-fund, requires an actual transaction (for example, buying securities with cash) - in which case, the accounts sub-funds are updated to accord with the transaction before, as or after it happens. In addition to the accounts of each sub-fund, there are also records of each member's holdings across the sub-funds. Similarly, these records are maintained in the memory of a computer system. The record can be an array, database or similar arrangement, which is an up-to-date record of the value associated with that member as a proportion of a sub-fund, whether it be cash or securities, and which sub-fund that value is part of. The array, database or similar can be managed by a computer program operated by a user, with changes effected by a processing means. As those skilled in the art will appreciate, each record will be associated with one member, and can include other suitable information about the member, such as contact details and membership details. The accounts and records are intrinsically linked. Therefore, it will be understood by those skilled in the art, that where changes are made to an account, this will often require a corresponding change in associated records and vice versa.

It will also be appreciated that it is important that an account of a sub-fund is an accurate representation of actual value held by some holding institution (whether it be the investment entity, banks, custodians, brokers or any other similar institution). To ensure that the accounts accurately reflect actual value, those skilled in the art will appreciate that it may be necessary for the system to be adapted so as to receive data inputs from the various holding institutions relating to the value that they hold. For example, a bank may regularly update the investment entity on the amount of value in each of its bank accounts, and the accounts of the sub-funds will be adjusted to accord to the value in the bank accounts.

The focus of the invention is the computer-implemented method which effects the above described sub-funds, and thus is a computer-implemented method of operating a pooled investment fund. Each step in the method will be described separately; those skilled in the art will appreciate that in some instances it is necessary for the steps to happen sequentially and in other instances the timing of the step is not critical. It is important at this stage to elaborate upon the use of the word 'ownership'.

Though the value (whatever form it may take) within the pooled investment fund is typically held as property by a particular entity (for example, by the trustees of a unit trust), 'ownership' is used to convey the concept that value is attributable to a member of a pooled investment fund in proportion to their contributions to the fund, and is dependent on the value and timing of those contributions. For the avoidance of doubt, this includes any gains or losses realised upon a member's contributions. In this way Ownership' encompasses, but is not limited by, the concept of 'equitable ownership'.

In a first embodiment, the method includes the step of accumulating contributions in the cash sub-fund. In one embodiment, this involves receiving cash contributions from members and maintaining an account of the value within the cash sub-fund. A processing means determines changes in the account of the cash sub-fund as new cash enters. Data relating to actual cash held by, for example, a bank account may be input into the computer system, and in this way the account of the cash sub-fund maintained on the computer system will correlate to actual cash held elsewhere. In addition, the record of each member's proportional ownership of the value of the cash sub-fund is updated by a processing means. In a preferred embodiment, such ownership is directly proportional to the member's contribution as compared to the net value of the cash sub-fund. Contributions can be received at any frequency and any value.

In a first embodiment, the method includes the step of transferring the member contributions from the cash sub-fund to the investment sub-fund. Such a transfer will be effected by using a processing means to change an account of the cash sub-fund and to change an account of the investment sub-fund. The record of each member's proportion of the sub-funds will also be changed by the processing means to reflect this change. If necessary, the system may output instructions that are sent to a bank (or similar institution) to transfer the cash from one bank account to another bank account, or to another institution. In a preferred embodiment, the entire value of the cash sub-fund is transferred. However, it is also consistent with the invention that only a part of the value of the cash sub-fund is transferred, leaving a residual value in the cash sub-fund. In a preferred embodiment, the investment sub- fund has no contributions therein prior to the transfer. However, it is also possible that the investment sub-fund holds some contributions already. The account of the investment sub-fund will change accordingly. Similarly, the record of each member's proportional ownership of the investment sub-fund will comprise their proportional ownership of the transferred funds, and their proportional ownership of contributions that were already in the investment sub-fund at the time of transfer. In one embodiment, such a transfer takes place once every week. In another embodiment, such a transfer takes place once every calendar month.

In a first embodiment, the method includes the step of establishing a target investment profile. The target investment profile specifies the composition of securities within the pooled investment fund (for example, 40% shares in X, and 60% shares in Y). It is within the scope of the invention to limit this to a specific security (for example, 100% shares in X) or it can be any number of types of securities. In a preferred embodiment, the composition is specified by value as opposed to quantity. Since the values of securities are often not fixed (ie they fluctuate within the market), the target investment profile could be described as a 'desired' composition of securities within the pooled investment fund. In a preferred embodiment, the existence and value of the contributions from members within the pooled investment fund that have not been invested are excluded from the target investment profile. In a preferred embodiment, the target investment profile is established at the discretion of the fund manager, however the invention is not limited in this respect and the target investment profile can be established by any appropriate means. It is consistent with this invention for the target investment profile to include a priority weighting for some or all of the securities. Such priority weightings may help determine which securities are bought or sold should it not be possible to match the pooled investment fund perfectly to the target investment profile (as described below). The target investment weighting may also include tolerances for some or all of the securities (eg 10± 0.1 % shares in X). Once the target investment profile has been established it is not fixed, and can be changed as necessary. The target investment profile is entered into the computer system in any suitable format such that it can be used in accordance with the method.

In a first embodiment, the method includes the step of investing the member contributions in the investment sub-fund according to the target investment profile. Investing includes investing at the market, netting with other sub- funds in the pooled investment fund and netting with other holdings able to be netted with. The latter could include, by way of example, other investment funds managed by the same investment entity. Ultimately, if it is possible to acquire securities without having to incur brokerage fees, then this approach is likely to be preferred.

A processing means compares the target investment profile with the current holdings available to the pooled investment fund (for example, holdings within that pooled investment fund and other pooled investment funds available to the investment entity), and determines where netting is a possibility and where it is necessary to buy securities. It is consistent with the invention that this step may be undertaken by a suitable algorithm. Such an algorithm may be programmed so as to minimise limitations imposed by markets as described later in this specification. For example, it may not be possible to match the pooled investment fund perfectly to the target investment profile due to the discrete nature of stocks, or the rapidly changing market. Such an algorithm may be programmed to ensure that a security with a higher priority weighting is preferentially invested in. Similarly, such an algorithm may be programmed to ensure that a security does not fall outside any tolerance. In addition, this step may require the discretionary input of the fund manager or similar entity. If netting is required, the processing means will change the accounts of any affected sub-funds to effect the netting process. If it is necessary to invest at the market, then the cash in the investment sub-fund is used to buy securities. The computer system will produce an output instructing that certain securities be bought. In one embodiment, this can be done by means of a broker. However, there are many different systems that investment entities use to acquire securities and the invention is not limited to any. Where investing incurs cost, that cost is borne by those members whose contributions are being invested. In this way, the actions of investing members do not affect those members who have holdings in the other sub- funds. Having invested the contributions, the account of the investment sub- fund is updated by the processing means to reflect the newly acquired securities. The member's proportional ownership of these securities will be the same as their proportional ownership of the contributions prior to investing. In one embodiment, such investing takes place once every week. In another embodiment, such investing takes place once every calendar month.

In a first embodiment, the method includes the step of rebalancing the fully- invested sub-fund according to the target investment profile. It is a possibility that at the commencement of the pooled investment fund the fully-invested sub-fund may in fact be empty (ie zero value). The rebalancing step requires reinvesting the securities held by the fully-invested sub-fund as some securities may need to be sold or bought depending on the performance of the securities in the fully-invested sub-fund. Further, the target investment profile may have been changed since the fully-invested sub-fund was last rebalanced. Reinvesting the fully-invested sub-fund includes investing on the market, selling securities on the market, netting with other sub-funds and netting with other holdings able to be netted with. An example of when netting could take place would be if the investment sub-fund is investing in security A and the fully-invested sub-fund needs to sell some of security A. Again, since netting incurs no brokerage, it is a preferred way of investing. Also, as with the investment sub-fund, this step may be effected by the processing means, with discretionary input from the fund managers or similar entity. In one embodiment, this rebalancing takes place once every week. In another embodiment, this rebalancing takes place once every calendar month. In a preferred embodiment, it takes place approximately at the same time as the investment sub-fund is invested. This ensures that the netting as described earlier can be effected. Critically, it also ensures that the investment sub-fund and the fully-invested sub-fund contain the same proportional composition of securities (ie in accordance with the target investment profile). Throughout, the account of the fully- in vested sub-fund is updated by the processing means to reflect any changes to the securities within the fully-invested sub-fund. The record of each member's ownership of the sub-funds will also be updated to reflect any change.

In a first embodiment, the method includes the step of consolidating the investment sub-fund and the fully-invested sub-fund into a consolidated sub- fund. In a preferred embodiment, the consolidated sub-fund and the fully- invested sub-fund are the same, which in effect amounts to a transfer of the securities in the investment sub-fund to the fully-invested sub-fund. It is important that this step follows the investing and rebalancing steps of the investment and fully-invested sub-funds so that the investment sub-fund and the fully-invested sub-fund contain the same proportional composition of securities (ie in accordance with the target investment profile). In this way, the proportional composition of securities in the consolidated sub-fund will also be the same (ie in accordance with the target investment profile). An account of the consolidated sub-fund is changed by a processing means to reflect the change and the accounts of the investment and fully-invested sub- funds are also changed. The record of each member's proportional ownership of the consolidated fund will comprise the member's proportional ownership of the investment sub-fund and the proportional ownership of the fully-invested sub-fund prior to consolidation. In one embodiment, this consolidation takes place every week. In another embodiment, this consolidation takes place every calendar month.

At this stage, it is worthwhile to highlight a practical limitation on the perfect operation of the above described investment, rebalancing and consolidation process. In some instances, it may not be possible to have both the investment sub-fund and the fully- in vested sub-fund perfectly equate to the target investment profile as a consequence imposed by the practical realities of financial markets.

One such instance arises due to the discrete nature of some securities (for example, one cannot buy or sell 0.35 of a share). Often the quantity of securities held by the sub-funds will minimise this effect. For example, if the target investment profile required that there be 100.2 of share X in the investment sub-fund and 1999.6 of share X in the fully-invested sub-fund, then it is likely that 100 of share X will be invested in and the fully-invested sub-fund will be rebalanced to have 2000 shares.

Another instance arises in the context of securities which are not readily available. As an example, some bonds are made available at certain times with a fixed term. If such a bond were held by the fully-invested sub-fund, it may not be possible for the investment sub-fund to acquire the same bond. In which case, the investment sub-fund would acquire another security (for example, another type of bond). Upon consolidation, the consolidated sub- fund would then have the two bonds. A further problem arises in the context of securities which are unable to be sold because they are illiquid or some other reason. In this situation, the particular sub-fund could continue to hold the security until it is able to be sold.

Those skilled in the art will appreciate how the fund manager or other such entity is able to exercise their discretion to tackle the aforementioned limitations without undermining the essence of the operation of the method described herein. The discretion would ideally be exercised with the goal of minimising unfairness on each individual member within the pooled investment fund.

The essence of the preceding steps of the method, detail how value is brought into the pooled investment fund. As an example to demonstrate this process, referring to figure 2, there is shown three sub-funds within a pooled investment fund. Member B has $100 and member C has $300 already invested in the fully-invested sub-fund 6. The target investment profile (as indicated by the placement of the dotted line 7) is such that 40% of the value is within security X and 60% within security Y. Accordingly member B has a quarter and member B has a three-quarter proportional ownership of the fully-invested sub-fund. Thus, for example, member B has $40 worth of security X and $60 worth of security Y in the fully-invested sub-fund.

At the same time, the cash sub-fund 8 has accumulated contributions from members A and B. They have both contributed $200. Thus, they each have a half proportional ownership of the cash sub-fund. At some point, these contributions are transferred to the investment sub-fund 9. The member's record would now indicate their half proportional ownership of the contributions in the investment sub-fund. The contributions in the investment sub-fund are then invested to the target investment profile. As a result, members A and B now have a half proportional ownership of the securities X and Y within the investment sub- fund 10. For example, member A owns $80 worth of security X and $120 worth of security Y. In this example, the fully-invested sub-fund has not needed to be rebalanced because the value of the securities has remained static and the target investment profile has not changed. Were rebalancing required, then this could include netting between the investment sub-fund and the fully-invested sub-fund.

Now that both the investment sub-fund and the fully-invested sub-fund are invested to the target investment profile, they can be consolidated into the consolidated sub-fund, which in this example is the fully-invested sub-fund 1 1. As can be seen in the figure, the proportional ownership of the fully- invested sub-fund of each member is now different, but the value owned by each member has not been affected. In this example, member C was not burdened with the cost of the investing process in the investment sub-fund. The figure also shows how the target investment profile applies to both the fully-invested sub-fund as a whole and the member's holdings therein.

Another aspect of the invention details how value leaves the pooled investment fund, for example: when a member wishes to exit the pooled investment fund; when it is necessary for the pooled investment fund to pay fees, taxes, etc that from time to time it may accrue; or to reallocate a member's holdings across multiple pooled investment funds according to the method of operating a pooled investment scheme described below. This process will be described in the context of an exiting member, but those skilled in the art will appreciate how it can be made to apply to any situation where it is necessary for value to leave the pooled investment fund. When a member (or members) wishes to exit the pooled investment fund, the contributions within the cash sub-fund are netted with other sub-funds within the pooled investment fund, in accordance with the exiting member's proportional ownership of those other sub-funds. The exiting member then holds a proportion of the cash sub-fund directly related to their proportional holding of the entire value of the pooled investment fund. The proportional ownership of the other sub-funds held by the exiting member is then proportionally owned by those members whose contributions in the cash sub-fund were used to net with exiting member, and all corresponding accounts and records will be updated by a processing means to effect these changes. The computer system may then output an instruction that the bank (or similar) transfer the cash to the exiting member. In a preferred embodiment, this process takes place at the same time as the investing and rebalancing processes described above.

As an example to illustrate this referring to figure 3, if member A has contributed $50 to the cash sub-fund 12 and member B has contributed $150 to the cash sub-fund, then the cash sub-fund holds $200 (assuming there are only two members who have contributed since the value of the cash sub- fund was last transferred to the investment sub-fund), with A having 25% proportional ownership and B having 75% proportional ownership. If member C wishes to leave the fund and member C currently has $100 worth of securities (which will be in accordance with the target investment profile, which say for example is 40% security X and 60% security Y) in the fully- invested sub-fund 13, then there is a netting process between the cash sub- fund and the fully-invested sub-fund. After which A has $25 in the new cash sub-fund and $25 as securities (which will be in accordance with the target investment profile) in the fully-invested sub-fund. If A already had a proportional ownership of the fully-invested sub-fund worth $25, then their account will be adjusted to include the change to the fully-invested sub-fund. Similarly, B will have $75 in the cash sub-fund and $75 as securities in the fully- invested sub-fund. C will have $100 in the cash sub-fund, which can be paid to C. This leaves A and B's proportional ownership of the cash sub-fund intact (ie 25% and 75% respectively.) Having netted with exiting members, the remaining contributions in the cash sub-fund are duly transferred to the investment sub-fund in accordance with the method. In a further variation, if there were other members also in the fully-invested sub-fund, their holdings would be unaffected by the netting process. In the event that there are insufficient contributions in the cash sub-fund to net with the exiting member, it is then necessary to sell the member's proportional ownership of each sub-fund which cannot be netted. The exiting member's remaining proportional ownership of the other sub-funds is transferred to an outflow sub-fund (since such proportional ownership is in accordance with the target investment profile, this will require transferring the securities). An account for the outflow sub-fund is updated to reflect the introduction of the securities that are to be sold. The securities are then sold from the outflow sub-fund, and the resulting cash is transferred to the cash sub-fund. Thereafter the exiting member can be paid out. In a preferred embodiment, the outflow sub-fund is the investment sub-fund.

Again, the earlier described limitations of securities create problems with the ideal operation of the aforementioned exiting process. In the context of transferring securities to the outflow sub-fund, it may be necessary to round ownership of discrete securities to the nearest whole number. For example, if a member's proportional ownership of the fully- invested sub-fund equates to 4.4 of a particular share, then 4 shares could be transferred to the outflow sub-fund and sold. This 'loss' can be made up by rounding up another security or by some other suitable means. In such instances, it is expected that the discretion of the fund manager or other entity would be utilised to minimise the unfairness on each individual member of the pooled investment fund (including the exiting member). Those skilled in the art will appreciate that some flexibility is mandated by practical realities, but that nevertheless the essence of the method can be preserved.

A further problem arises in the context of securities which are unable to be sold because they are illiquid or some other reason. In this situation, the outflow sub-fund could continue to hold the security until it is able to be sold and thereafter the exiting member will be paid the resulting cash. In a preferred embodiment, the security would be transferred to an additional sub-fund analogous to that described in the following paragraph. Though this can delay the full exit of the member from the pooled investment fund, it is arguably fairer than the situation that would arise if the fund were operating as a unit trust. In a unit trust, the more liquid securities are sold to meet the demands of exiting members, with the remaining members being burdened with the less desirable and more illiquid securities. Conversely, this method ensures that all members are proportionally burdened with the illiquid security, and this fairly reflects that contributions from all members were invested in that particular security.

Another aspect consistent with the invention is the inclusion of additional sub-funds. Those skilled in the art will appreciate that there is a wide variety of scenarios where it might prove worthwhile to utilise an additional sub- fund, and the invention is not limited to any. One purpose can be to hold an illiquid or impaired security; a benefit being that it avoids the problem arising when a member with a security that cannot be sold chooses to exit the pooled investment fund by isolating the security before the member chooses to exit. If a security within the target investment portfolio is deemed illiquid or impaired, then the security can be transferred from the fully-invested sub- fund to an additional sub-fund. This change is achieved by updating the accounts of each sub-fund, effected by using a processing means. The security would also be removed from the target investment profile. Thus, the security would no longer be acquired by the pooled investment fund. Further, there would be transparency in that all members who hold the security would be aware of its status and 'isolation' from the remaining securities.

As can readily be seen from the above two processes, the downsides associated with unit trusts are avoided. In the event of a large scale exit from the pooled investment fund, then all exiting members will have their securities sold on the market (presuming netting is not a possibility). Since each member has a proportional ownership of the sub-funds in accordance with the target investment profile, they are not subjected to the selling of the most liquid securities within the pooled investment fund to meet the needs of other exiting members.

Method of Operating a Pooled Investment Scheme

Though the invention is focused towards a computer-implemented method of operating a pooled investment scheme, it is helpful to first look at the pooled investment scheme itself. Referring to figure 4 there is shown a schematic representation of a pooled investment scheme 14 according to a first embodiment including:

^■ a plurality of pooled investment funds 1 5; and

" a plurality of sub-funds within each pooled investment fund 16.

In a first embodiment, the method includes the step of establishing the pooled investment funds. In a preferred embodiment, the pooled investment funds each offer a unique investment direction. As an example, one pooled investment fund might be focused towards a growth investment direction and would therefore have a greater proportion of securities having higher risk and return characteristics such as shares; another pooled investment fund might be focused towards a conservative investment direction and would therefore have a greater proportion of securities having a lower risk and return characteristics such as bonds. In a further embodiment, the pooled investment funds are separated into a plurality of sub-funds, wherein those sub-funds serve different purposes. In one embodiment, the sub-funds include the cash, investment and fully- invested sub-funds described above. In a further embodiment, the pooled investment funds are managed according to the computer-implemented method of operating a pooled investment fund described above.

In a first embodiment, the method includes the step of apportioning a member's contribution across the pooled investment funds. As with the method of operating a pooled investment fund described above, those skilled in the art will appreciate that there are multiple ways in which an individual investor can become a member to a pooled investment scheme, and the invention is not limited to any particular way. The predetermined proportion can be specific to each member, and can be selected by the member or by some other means. It is also consistent with the invention for the member to be able to change their predetermined proportion at any time. As described below, this could be achieved by means of an internet-based member interface that provides an option for the member to change their predetermined proportion. For example, a predetermined proportion could dictate that 25% of a member's contribution to the pooled investment scheme is entered into a first pooled investment fund, and 75% of the member's contribution is entered into a second pooled investment fund. In a further embodiment, the apportioning of the member's contribution involves adding the contributions to the cash sub-funds within the pooled investment funds specified by the member's predetermined proportion and in accordance with the predetermined proportion. As with the pooled investment fund described above, a record of each member's ownership of each sub-fund is maintained.

In a first embodiment, the method further includes the step of rebalancing the member's holdings across the pooled investment funds in the pooled investment scheme according to the predetermined proportion. Rebalancing may be required if a member has changed their predetermined proportion or where the performance of the pooled investment funds has resulted in their holdings no longer being apportioned across the pooled investment funds according to their predetermined proportion. In a preferred embodiment, rebalancing is carried out by performing the process by which a member exits a pooled investment fund, as described above. For example, where part of a member's holdings needs to be removed from a first pooled investment fund that will be flagged and netted with the cash sub-fund of another pooled investment fund. Alternatively, if netting is not a practical possibility, then the part of the member's holdings which cannot be netted are sold into cash, and the cash is transferred to the other pooled investment fund. The result of this process is that value is moved between pooled investment sub-funds such that the apportionment of the member's holdings across the pooled investment funds is restored. In a further embodiment, this rebalancing process of the pooled investment scheme takes place at the same time as the investing and rebalancing process described in the context of the pooled investment fund. Where a member has changed their predetermined proportion, it may be flagged in the computer system so that it is effected the next time the pooled investment scheme is rebalanced. Method of Reporting Holdings

This computer-implemented method relates to reporting holdings within a pooled investment fund or a pooled investment scheme. Typically, a report of holdings will disclose either mere percentage ownership (such as in unit trusts, where the units equate to a certain proportion of ownership, and thus a percentage of the net value of the trust) or proportional ownership of actual securities. The method herein described achieves the latter and is suitable for pooled investment funds or pooled investment schemes with large numbers of investors. The report that is created as a result of this method is able to relate to a particular member a personalised representation of their proportional ownership of each security held by the pooled investment scheme. In a first embodiment, the method includes the step of maintaining a record of each member's proportional ownership within each sub-fund in the pooled investment fund or pooled investment scheme. These records are maintained in the memory of a computer system. The record can be an array, database (or similar arrangement), which is an up-to-date record of the value associated with that member, whether it be cash or securities, across any number of sub-funds and any number of pooled investment funds. The array, database or similar can be managed by a computer program operated by a user. As with the computer-implemented methods of operating a pooled investment fund and pooled investment scheme of the present invention, these records are updated so as to accord with any changes to the sub-funds.

In a first embodiment, each security within each sub-fund within each pooled investment fund is valued. In a preferred embodiment, such valuing takes place every month at some time prior to reporting holdings to members. Those skilled in the art will appreciate that there are many recognised methods of valuing securities, and the invention herein described is not limited to any. As an example, Bloomberg pricing functions can be used to provide values of listed equities. It is noted that the valuing of securities may require the input of the fund manager or similar entity, as the value of securities may need to be calculated based on market indicators. The values of the securities are entered into the computer system in any suitable format such that it can be used in accordance with the method.

In a first embodiment, members are assigned a percentage ownership of each valued security in accordance with their proportional ownership of each sub- fund. For example, if member A owns half of sub-fund X, and X contains security S which has been valued at $100, then member A is assigned 50% of security S within sub-fund X. In a first embodiment, the method includes the step of creating a summary of the member's ownership of each security. These summaries are maintained in the memory of a computer system. The summary can be an array, database or similar arrangement, which is an up-to-date record of the member's ownership of each security. The database or similar can be managed by a computer program operated by a user, with changes effected by a processing means. As those skilled in the art will appreciate, each summary will be associated with one member.

Taking the above example, the summary would note that member A has $50 of security S. In another embodiment, the summary does not differentiate between sub-funds, but notes a member's actual ownership of each security within the pooled investment fund and groups like securities together. Thus, in the above example, if member A also has a proportional ownership of sub- fund Y (which is within the same pooled investment fund as sub-fund X) and sub-fund Y also contains security S, then the summary will note that their ownership of security S will be something more than $50. In a further embodiment, the summary can be formatted in a suitable way such as a table which lists the securities and corresponding ownership for that member; however those skilled in the art will appreciate there are numerous ways in which a summary of holdings of securities can be formatted, and the invention is not limited to any.

In a first embodiment, the summary is incorporated into a report by a processing means, which is then made available to the member. The layout and detail of the summary may be adjusted by a user to present the information in a meaningful way to members. In a preferred embodiment, the report is prepared at monthly intervals and updates the member on their current holdings. In a further embodiment, the report is available to members on the internet by means of an online account which is accessible by the member. In this way, the member may view the report on a monitor associated with a terminal or can print off a hardcopy using a printer associated with a terminal. The online version of the report can be dynamic, with the member able to prescribe the manner in which information is presented. Another way in which the report can be made available to the member can be by printing off a hardcopy and sending the report by post. It is consistent with the invention for the report to include information in addition to the summary, for example: an overview of their holdings and to- date performance; commentary on the performance of the pooled investment scheme and pooled investment funds; transaction reports; and general administrative information.

Furthermore, it is consistent with the invention for the report to be prepared by a third party as opposed to the fund manager or similar entity. An example when this scenario might apply is when the pooled investment fund of the present invention is managed by the fund manager on behalf of another entity that has chosen to outsource all of its pooled investment fund services. In another scenario, the third party may wish to retain control over investment decisions, with the fund manager administering the pooled investment fund and effecting the investment decisions made by the third party. In any event, the third party may still wish to report to its clients their holdings with their own branding, market analysis and the like. The summaries of each member's holding could be made available to the entity by any suitable means. In one embodiment of the invention, the summary may be made available to the third party by a suitable application programming interface (API). Such an exchange would enable the third party to present the information relating to the members' holdings to their members as they see fit.

Investment Management System

Referring to figure 5, there is shown an investment management system 1 7, including a computer system 18, comprising:

• memory 19 comprising a plurality of component values, in which accounts 20, records 21 and summaries 22 are maintained, represented in figure 5 as three distinct memories;

• processing means 23, which changes component values of the memory to reflect changes to the accounts, records and summaries; and

• computer software 24, which provides an interface by which a user 25 can control the operation of the processing means.

Though the figure represents the system as a single unit, it is consistent with the present invention for the investment management system to be spread across multiple units according to any suitable distributed computer architecture. The computer system can be operated by a user 25.

The investment management system 1 7 is adapted to receive any suitable input, including:

• instructions 26 from members 28 or third parties 27, including instructions to enter a pooled investment fund, instructions to exit a pooled investment fund, and instructions to change the predetermined proportion in a pooled investment scheme; · the target investment profile 29, which may be determined at the discretion of the fund managers 30 or other suitable means;

• the value of securities 31 , based on their value in the market 32, determined from data from institutions that provide valuation services, 33 and valuation data from the fund manager 30 or similar entity; and · data 34 from any other associated institutions, such as banks 35, custodians 36 and brokers 37, which hold the various value associated with the pooled investment fund or pooled investment scheme, or any other institution with which the system may need to interact 38.

Those skilled in the art will appreciate that the investment management system 1 7 will be adapted so that the inputs described above are in a suitable format such that they can be used by the investment management system to effect the present invention, and the invention is not limited in this respect. The investment management system 1 7 is also adapted to produce any suitable outputs, including:

• instructions 39 for associated institutions, such as banks 35, custodians 36 and brokers 37, which hold the various value associated with the pooled investment fund or pooled investment scheme, or any other institution with which the system may need to interact 38;

• summaries 22 according to the above description that can be made available to third parties 27, who can then prepare reports 40;

• summaries 22 according to the above description that can further be incorporated into a report 40, which can then be printed with a printer 41 producing a hardcopy 42, or made available to a member 28 over the internet (or similar network) 43, with the member being able to view the report on a monitor 44 associated with a terminal 45 connected to the internet, or a hardcopy 42 printed from a printer 46 associated with the terminal.

Those skilled in the art will appreciate that though figure 5 represents the computer system 18 as being distinct from all other parts of the investment management system 1 7, as with any distributed architecture, it is possible, and indeed consistent with this invention, for some of those parts to be considered part of the computer system. For example, the reports 40 may be created and maintained in the computer system, before being made available to the member according to the embodiments described previously.

In a further aspect of the invention, the investment management system 1 7 can include a member interface 47 available on a terminal 45 that is connected to the computer system 18 by means of an internet or other suitable network connection 43. The member interface may be accessible by means of a suitable login. The member interface provides an interface by which a member can issue instructions 26 for the computer system (such as instructions to enter a pooled investment fund, instructions to exit a pooled investment fund, instructions to change the predetermined proportion in a pooled investment scheme, and instructions to change other data associated with the member). The member interface also provides an interface that allows the reports 40 prepared according to the invention to be accessible by the member 28. The member interface may provide means for the member 28 to prescribe the way in which reports are presented.

Wherein the computer system operates in accordance with the description of the method of operating a pooled investment fund, the method of operating a pooled investment scheme, and the method of reporting holdings described above. In alternative embodiments, the system includes additional memories to hold other information consistent with the alternative embodiments of the above described methods of operating a pooled investment fund. There are thus provided methods and systems for operating a pooled investment fund, which eliminates the cross-subsidisation which occurs in other types of pooled investment funds. The method and systems also facilitate better and more straightforward accounting of member's proportional ownership. There is also provided methods for operating a pooled investment scheme and for reporting member holdings within a pooled investment fund and a pooled investment scheme.

The approach of the above described methods and system provides a simple mechanism for correctly allocating ownership of investments that is scalable to very large numbers of members without requiring large processing capability or intensive memory management.

While the present invention has been illustrated by the description of the embodiments thereof, and while the embodiments have been described in detail, it is not the intention of the Applicant to restrict or in any way limit the scope of the appended claims to such detail. Additional advantages and modifications will readily appear to those skilled in the art. Therefore, the invention in its broader aspects is not limited to the specific details, representative apparatus and method, and illustrative examples shown and described. Accordingly, departures may be made from such details without departure from the spirit or scope of the Applicant's general inventive concept.