System and method for administering principal protected equity linked financial instruments

A computer-readable medium including a processing program for causing a computer to administer financial instruments, the processing program comprising:

• means for periodically computing price of trust units in a trust, each trust unit representing an interest in a bond having a maturity date and one or more equity security shares, the one or more equity shares defining a share ratio, the price of the trust units being based on the share ratio for a period and current values of the bond and the equity security shares;
• means for comparing the computed price of the trust units to a predetermined threshold price;
• means for determining a distribution to holders of the trust units based on the comparison, the distribution including cash payments that are paid in cash and based on share dividends of the equity security shares of the trust units and performance payments that are paid in a number of equity security shares and based on underlying asset appreciation;
• and
• means for adjusting the share ratio of the trust units to reflect the distribution.

A computer-based method for administering financial instruments, comprising:

• executing a processing program loaded on a computer, the processing program configured to establish a trust with trust units, each trust unit representing an interest in a fixed-income security that has a maturity date and one or more equity security shares, the one or more equity security shares defining a share ratio;
• and
• periodically performing the following steps by accessing, via one of the computer and a second computer, information stored in a database, the information in the database comprising at least trust information and equity security information, to enable the one of the computer and a second computer to:
• computing price of the trust units based on the share ratio for a period, current values of the fixed-income security and the one or more equity security shares;
• comparing the computed price of the trust units to a predetermined number, wherein the predetermined number is based on a par value of the trust at maturity;
• determining a distribution to holders of the trust units based on the comparison, the distribution including cash payments that are paid in cash and based on share dividends of the equity security shares of the trust units and performance payments that are paid in equity security shares and based on underlying asset appreciation;
• and
• (e) adjusting the share ratio of the trust units to reflect the distribution.

A computer-based method, comprising the steps of:

• executing a processing program loaded on a computer, the processing program receiving a selection of an equity security based on expectations for long-term capital appreciation and a selection of a long-term bond issue having a fixed maturity date and a predetermined face value and creating a trust having units, each unit representing an interest in a selected long-term bond issue and a predetermined number of shares of a selected equity security, the number of shares of the selected equity security defining a share ratio, the trust being associated with an account administrator having access to information about the trust and about customer accounts indicating ownership interest in the units;
• and
• accessing, via one of the computer and a second computer, information stored in a database, the information in the database comprising at least trust information and equity security information to enable the one of the computer and a second computer to periodically perform the following steps:
• determining a current value of the units using current market information about the selected long-term bond and the selected equity security;
• determining payments to customer accounts based on a difference between the current value and a predetermined number, wherein the predetermined number is based on a par value of the trust at maturity and the payments include cash payments that are paid in cash and based on share dividends of the shares of the selected equity security of the unit and performance payments that are paid in a number of equity security shares and based on underlying asset appreciation;
• and
• adjusting the share ratio of the units to reflect the payments.