Performance evaluation of icb mutual funds (main body)

Performance Evaluation of ICB Mutual Funds

Chapter-1

INTRODUCTION 1.1 ORIGIN OF THE REPORT Practical knowledge makes a man expertise in the real life situation. Only theoretical orientations can not make one suitable is his life. Keeping in view acquiring practical knowledge, each business student is sent to any organization for an internship program. This report has been primed as a requisite of the MBA Internship of Department of Business Administration, Stamford University Bangladesh under the supervision and guidance of Ms. Farjana Yeshmin, Assistant Professor, Department of Business Administration, Stamford University Bangladesh. This report largely imparts the author’s experience during the attachment with Investment Corporation of Bangladesh (ICB).

1.2 BACKGROUND OF THE STUDY Industrialization is one of the prime pre-requisites for development. Industrialization needs Investment, because fund is the life blood of business. ICB broaden the base & scope of investments by mobilizing savings.

ICB is virtually the only investment bank in the country engaged in operating Investment Scheme. The corporation has completed about two decades of operation in fulfillment of its objective. During its long period of operations the corporation has a success story on the one hand and also some failure story on the others hand. The investors’ scheme (IS) provides institutional support to small investor for purchases and sales of securities by rendering necessary services and advice so that small investors are in a position to make their investment decision on sound premises.

As I am doing my internship program in the investment banking institution so it is a greater opportunity for me to find out the overall Performance Evaluation of ICB Mutual Funds.

1.3 OBJECTIVE OF THE STUDY The objectives of the internship program and this report are multiple and important.

This report is intended to let the author calibrate the skills acquired during the MBA program. However the major objectives are as follows: 

Analyze the management process of Investment Corporation of Bangladesh.



To learn the practical aspect of the Investment Corporation of Bangladesh.



To relate our theoretical learning with the practical situation.



To review the overall performance of ICB Mutual fund.



To gather knowledge that how ICB floats and manage the mutual funds.



To analyze the present investment scenario in Bangladesh.

1.4 METHODOLOGY 

A conceptual framework was developed through review of existing literature on investment.

 

An inductive method has been followed in preparing the report.

The data has been collected by investigation of records from annual reports and other published documents of the corporation.



Different forms of statistical configurations such as tables, percentages, rates, ratios and diagrams have been used to make the study meaningful.



After collecting data, the data was first carefully scrutinized. Then the data was organized with the help of statistical tool pack in MS Excel. The data then analyzed & interpreted.

1.5 SCOPE OF THE STUDY The scope of the report is basically the operations and practice of Investment Corporation of Bangladesh and to focus on the overall performance of the ICB Mutual Fund. The study was confined only on the Head Office and gave more concentration on it. The data comparison was based on published information and oral

interview has performed to get the real perception of the investor. The empirical part included only published information & current practices of ICB.

1.6 SOURCES OF INFORMATION For the purpose of preparing this report, I have carefully observed all of the departments of ICB and got some information from the responsible officers at certain department. Sources of data collection are as follows:

1.6.1 Primary Data The primary sources of data were face to face communications & interview with ICB personnel.

1.6.2 Secondary Data 

Economic & business research wing of ICB.



Annual report of ICB.



Annual report of ICB mutual fund.



ICB general regulations & ordinance.



Research Library.



Bangladesh Bureau of Statistics.



Business studies journals & articles.



Institute of business administration journal.

1.7 LIMITATIONS OF THE STUDY The report may suffer from limitations, which are completely unintentional on the author’s part. The study had to be completed under certain constraints, which barred it to be more effective. Some of these constraints are listed below – 

ICB has 7 branches in the country. I could not able to visit all these branch offices.



Secrecy of the official’s.



I had to go to every Department of ICB as a part of the Internship program which is very difficult short span of time to get in-depth knowledge about a large organization like ICB.



For my limited practical knowledge and experience, this report may not cover all areas and may have unintentional errors & omissions.

Chapter -2

BACKGROUND OF ICB 2.1 INTRODUCING ICB AS A FINANCIAL INSTITUTION The striking contradiction in most of the underdeveloped world including Bangladesh is the large availability of local capital on the one hand and a relatively small use of such capital in industry on the other hand. Thus application of a sound policy regime and development of the financial institutions such as investment finance companies, Stock exchange & mutual find etc. are very crucial in mobilizing capital for industrial finance as well as development of capital market. Traditionally Bangladesh is an agrarian economic country. The Establishment of Investment Corporation of Bangladesh (ICB) was one of the significant measures taken by the government to accelerate the pace of industrialization and developed well-organized capital market.

ICB is a statutory corporation, the corporate hub of government. It acts as an investment bank. An investment bank is a financial institution, which mobilizes funds from the surplus economic units by selling securities and deployed funds to the deficit economic units also by buying & under writing securities.

2.2 HISTORICAL BACKGROUND OF ICB The emergence of Bangladesh as a sovereign country in 1971 is the culmination of the nine-month long heroic struggle of its people. Then the govt. of the infant country nationalized almost all the industries under the Bangladesh Industrial enterprise (nationalization) order 1972 popularly known as PO 27. After liberation in view of socioeconomic changes the scope for private sector investment in the economy was kept limited by allowing investment in projects up to Tk. 2.5 million. The new investment policy which was announced in July 1972, provided for an expanded role of private by allowing investment in a project up to Tk. 30 million. In spite of the adequate facilities and incentives to the sector, encouraging response was not forth coming. One of he reason among others, was the institutional facilities, which provided underwriting support (like former investment corporation of Pakistan, ICP) to industrial enterprises that was required to raise the much needed equity fund. Thus the need for reactivation of capital market / stock market was keenly felt.

In the revised investment policy, which was announced in December 1975.

Government announced its decision to reactivate the stock exchange and examine the question of recreation of Investment Corporation of Bangladesh. Accordingly a committee of officials examined the matter and recommended for re-creation of ICB. After the recommendation the ICB was established on the 1 st October 1976, under the ordinance, 1976 (No. XL of 1976). The establishment of ICB was a major step in a series of measures under taken by the Govt. to accelerate the pace of industrialization and develop a well-organized and vibrant capital market particularly securities market in Bangladesh. It caters to the need of institutional support to meet the equity gap of the industrial enterprises. In view of the national policy of increasing the rate of savings and investment to foster self-reliant economy, ICB assumes an indispensable and far reaching role.

Through the enactment of the investment corporation of

Bangladesh (Amendment) Act, 2000 (XXIV of 2000), scope of ICB’s activities through the formation and operation of subsidiaries has been expanded.

2.3 MILESTONES OF ICB Table-1 Particulars ICB Investors’ Scheme ICB Chittagong Branch First ICB Mutual Fund ICB Unit Fund ICB Rajshahi Branch Second ICB Mutual Fund Third ICB Mutual Fund ICB Khulna Branch ICB Sylhet Branch Fourth ICB Mutual Fund Fifth ICB Mutual Fund Sixth ICB Mutual Fund ICB Barisal Branch Nomination as the Country’s Nodal DFI in SADF Seventh ICB Mutual Fund Eighth ICB Mutual Fund ICB Bogra Branch ICB Local Office,Dhaka Purchase of Own Land & Building (Rajarbag) Participation in equity of SARF Advance against ICB Unit Certificates Scheme Lease Financing Scheme “The Investment Corporation of Bangladesh (Amendment) Act, 2000” Formation & Registration of Three Subsidiary Companies ICB Capital Management Ltd.

Date of Establishment 1 October 1976 13 June 1977 1 April 1980 25 April 1980 10 April 1981 9 February 1984 17 June 1984 19 May 1985 10 September 1985 15 December 1985 6 June 1986 8 June 1987 16 May 1988 31 May 1988 7 May 1992 30 June 1995 23 July 1996 6 October 1996 15 April 1997 11 December 1997 16 January 1998 12 October 1998 22 April 1999 6 July 2000 5 December 2000 1 July 2002

ICB Asset Management Company Ltd. ICB Securities Trading Company Ltd. Registration as a Trustee with SEC Registration as a Custodian with SEC Bank Guarantee Scheme Advance Against ICB Mutual Fund /ICB AMCL Unit Certificates Scheme Consumer Credit Scheme Venture Capital Financing Scheme Purchase of own Land (Agargoan) Equity and Entrepreneurship Fund (EEF)

1 July 2002 13 August 2002 20 August 2002 20 August 2002 21 June 2003 21 June 2003 15 February 2004 26 April 2007 3 March 2008 1 June 2009

2.4 OBJECTIVES OF ICB •

To encourage and broaden the base of investment.

•

To develop the capital market.

•

To provide for matters ancillary thereto.

•

To mobilize savings.

•

To promote and establish subsidiary companies for business development.

2.5 BUSINESS POLICY OF ICB •

To act on commercial consideration with due regard to the interest of industry, commerce, depositors, investors and to the public in general.

•

To provide financial assistance to projects subject to their economic and commercial viability.

•

To arrange consortium of financial institutions including merchant banks to provide equity support to projects and thereby spread the risk of underwriting.

•

To develop and encourage entrepreneurs.

•

To diversify investments.

•

To induce small and medium savers for investment in securities.

•

To create employment opportunities.

•

To encourage Investment in IT sector.

•

To encourage Investment in joint venture capital/project.

2.6 BASIC FUNCTIONS OF ICB •

Underwriting of initial public offering of shares and debentures

•

Underwriting of right issue of shares

•

Direct purchase of shares and debentures including Pre-IPO placement and equity participation

•

Providing lease finance to industrial machinery and other equipments singly or by forming syndicate

•

Managing investors' Accounts

•

Managing Open End and Closed End Mutual Funds

•

Operating on the Stock Exchanges

•

Providing investment counsel to issuers and investors

•

Participating in Government divestment Program

•

Participating in and financing of, joint-venture projects

•

Dealing in other matters related to capital market operations

•

Trusty, Custodian, Bank Guarantee

2.7 ICB’S CAPITAL STRUCTURE ICB is a merchant bank as well as a statutory corporation. It has own ordinance 1976 (No XL of 1976). It is also public limited company. It is constructed by Company Act. of 1949. The main source of capital is issuing shares to the public, long term loans and debentures. The capital structure of ICB is given below:

Capital Structure of ICB (An on 30 June 2010)

Table-2 Particulars Paid up capital Reserves Retained Profit Long term govt. Loan Debentures Others Total

Tk. in Crore 200.60 176.61 222.25 3.50 11.80 10.60 624.76

Figure1:

2.8 SHARE PRICE Market price of a share of ICB of Tk. 100 each varied from lowest Tk. 2170.5 to highest Tk. 5700.0 on the stock exchanges during the year. As on 30 June 2010, the market price of an ICB share was Tk. 4991.75 on DSC and Tk. 5020.0 on CSE.

2.9 TRANSFER OF SHARES The volume of shares transferred increased substantially during the year. A total of 665 shares were transferred during 2009-10 as against 99987 shares in 2008-09.

2.10 SUBSIDIARY COMPANIES OF ICB “The investment corporation of Bangladesh (Amendment) Act, 2000” (XXIV of 2000) for Amendment of ICB ordinance 1976, ICB has been given power to create subsidiaries under the said amendment and accordingly 3 subsidiary companies have been created namely --

ICB capital Management Ltd.



ICB Asset Management Ltd.



ICB securities trading Co. Ltd.

2.10.1 ICB Capital Management Limited (ICML) ICB Capital Management Limited (ICML), started its journey as a subsidiary company of Investment Corporation Bangladesh (ICB) on July 1, 2002. The authorized and paid-up capital of ICML as on 30 June 2010 stood at Tk. 100.0 crore and Tk. 58.5 crore respectively. ICML has been playing an important role in the development of capital market by carrying out the functions of underwriting public

issue of securities, portfolio management, issue management and management of investment accounts with the objectives to help mobilize savings and encourage and broaden the base of investment. The Company has emerged as one of the fastest growing merchant bank in the country.

2.10.2 ICB Securities Trading Company Ltd. (ISTCL) ICB Securities Trading Company Limited (ISTCL) provides direct trading facilities for buying and selling securities listed with the exchanges. The company has extended its online trading and other brokerage services for general investors alongside the institutional investors through its head office at Dhaka branch offices at Uttara (of Dhaka), Chittagong, Sylhet, Barisal, Rajshahi, Khulna and Bogra.

2.10.3 ICB Asset Management Company Ltd. (ICBAMCL) ICB Asset Management Company Ltd. a subsidiary company of ICB was registered under the companies Act 1994 as a public company limited by shares on 5 December 2000. The company started its functions for management of mutual funds from July 1, 2001.

2.11 ORGANOGRAM OF THE ICB (Figure 2)

2.12 FUNCTION OF EACH DEPARTMENT 2.12.1 Operations Wing 2.12.1.1 Investor’s Department The main task of Investors’ Department are: 

Maintain investment Accounts.



Sanction loans against deposits in investment Accounts.



Buy and sell shares on behalf of the investor both from the primary and secondary market.



Implement negotiated over the counter transaction between investment Account holders.



Counsel investors in respect of building up their portfolios.



Withdraw funds and shares from investment accounts.



Issue income tax certificates, portfolio statement accounts statement etc.



Provide service to investment account Holder.



Receive direct applications against public issue of shares;



Prepare a list of applications and send it to the companies along with applications and money.



Receive allotment letters from the companies.



Collect commission as Banker to the issue and Brokerage commission from the companies.



Keep financial records of all investment accounts.



Calculate quarterly interest of all investors Accounts.



Make periodical reconciliation of investment accounts.



Processing of withdrawal of funds,



Confirm fund position of individual Accounts.



Posting of all transactions



Any other assignment given by the management.

2.12.1.2 Shares Department The main task of shares department: 

Act as safe custodian of all shares of investment accounts, mutual funds, unit fund, ICB portfolio and all securities deposited in ICB as collateral security.



Maintain record of all the shares of above portfolios.



Split and consolidate shares from the companies as and when required,



Register and effect transfer of shares as and when required,



Allocate dividends, bonus and right shares of all companies funds, and portfolios among the holders;



Posting of any transaction of share in customer ledger and company ledger



Physical verification of shares before internal transaction,



Receive & deliver the shares of branches



Send shares to transaction department for sale;



Make Delivery of shares of investors as requisitioned by investors department.



Receive and allot allotment letters / shares certificates of various companies to investment accounts and portfolios.

2.12.1.3 Unit Repurchase Department The main task of unit repurchase department are listed below: 

Act as manager of Unit Fund.



Sell and issue Unit Certificates to the applications.



Repurchase unit Certificates.



Issue new Unit Certificate in lieu of mutilated lost or defaced Unit certificates.



Co-ordinate activities of Bank Branches in respect of Unit sale and repurchase;



Receive check and authorized commission of sales by sales agents;



Make, official correspondences regarding unit certificates & issue of direct mail shots, etc.



Determine sale and repurchase prices of unit certificates and communicate it to Bank Branches and ICB Branches.



Transmit units of deceased unit holder.



Split and consolidate unit certificates as requested by unit holders;



Any other assignments given by the management.

2.12.1.4 Unit Registration and Procurement Department The tasks of this department are listed below: 

Register and transfer Unit Certificates.



Maintain a separate Register for Unit holder under CIP.



Verify signature of Transfer Deed.



Issue dividend warrants and CIP Certificates to the holders.



Procure Unit certificates of various denominations from the printing press;



Issue Unit Certificates to ICB sale offices/ Branches as well as appointed Bank Branches.



Evolve various prescribed forms and registers, print them and distribute them among ICB Branches and Bank Branches as per requirement.



Co-ordinate all activities relating to procurement and issue of Unit Certificates.



Any other assignments given by the management.

2.12.1.5 Mutual Fund Department The tasks of this department are listed below: 

Act as manager of all mutual funds.



Effect transfer and registration of certificates.



Issue dividend warrants to the holders of the certificates.



Make correspondences with the branches of the corporation, Banks and certificate holders;



Arrange for payment of brokerage and commission to the Stock Exchange members for successful applications submitted under their membership seals and bankers to the issue respectively.



Arrange for splitting the share scripts as and when necessary in accordance with the stock exchange rules.



Issue duplicate allotment letters/Certificates in case these are lost torn or hurt or mutilated.



Arrange for revalidating the date of payment of dividend on Dividend Warrants;



Any other Assignment given by the management.

2.12.1.6 Loan Appraisal Department The main activities of this department are given below: 

Receive Investment proposals form sponsors;



Prepare appraisal reports on projects;



Conduct meting of the project appraisal committee;



Place appraisal reports to Board and the consortium;



Conduct Consortium Meeting and co-ordinate with the members of the consortium.



Appraise management on technical aspect of projects;



Issue sanction letters to projects;



Maintain liaison with commercial banks / financial institutions / Ministry / Agency.



Any other assignments given by the management.

2.12.1.7 Planning, Research & Business Development Department The major functions of this department are: 

To make the portfolio management decision in favor of the organization as well as small investors.



Conduct meeting of the securities purchase and sales committee.



Convey securities sales or purchase decision to the merchandising division.



Perform all activities related to South Asian Development Fund (SADF).

2.12.1.8 Securities Reconciliation Department This department is involved in reconciliation of the securities if any discrepancy rises among the settle number of securities and the balance of the ledger. In case of sale concern department go through by the help of shares department for the conformation of physical existence of shares.

2.12.1.9 System Analysis Department The functions of this department are – 

System administration of the entire network setup.



Performing system analysis wherever ICB feels the need for periodic change in computerization setup.



Performing miscellaneous small hardware and software related servicing tasks on the many workstations, network system, server, and other components and provide training to staff of other departments about computer usage.



Any other assignments given by the management.

2.12.1.10 Programming Department This department’s functions are – 

Developing new software for ICB.



Customizing the software developed in the present computerization phase according to the changes of the requirements of the ICB with time.



Provide active assistance to the staff of system Analysis department for training of the staff of other department about computer usage.



Any other assignments given by the management.

2.12.1.11 Data Management Department The functions of data management department are – 

Handling peak load of data entry and data processing work for all other departments of ICB.



Any other assignments given by the management.

2.12.1.12 Dematerialization Department The main functions of this department are: 

Paper share converted to electronic share.



70-75 Companies share has completed to dematerialization.



Converted to electronic share this department take custody fee.

2.12.1.13 Management Information Systems Department This department basically helps the organization in decision making by providing information. The main works of this department are: 

Prepare and distribute Annual Report of ICB, Mutual Funds and Unit Funds.



Make arrangement for off loading of government portion of shares in different companies and state owned institutions.



Manage the business development cell, which is established to explore the possibility of business diversification.



Maintain liaison with ministry of finance, Bangladesh Bank and provide ICB related information to interested parties.

2.12.1.14 Securities Analysis Department This department basically analysis the securities in the market and upcoming securities into the market. The basic task of this department is as follows: 

Collect information about DSE, CSE, Public issue and half yearly accounts of the listed company.



Prepare 5 years performance appraisal reports of the listed companies.



Prepare board memo regarding declaration of divisions on ICB’s own portfolio, Unit and Mutual funds.

2.12.1.15 Venture Capital Department With a view to encourage rapid industrialization of high risk but potential industries of the country ICB as part of business diversification has launched venture capital financing scheme. Up to 30 June 2010 ICB has received 5 applications for financing of Tk. 76.62 crore.

2.12.1.16 Organizations and Methods Department The main functions of this department are given bellow: 

To prepare organizational manual of corporation.



To prepare systematic manual of corporation.



To prepare operation manual of corporation.



To maintain and coordinate of the directions and information’s regarding corporations policy decisions.



To reform, correct and extension of corporate existing manuals of different sections.



To select the system of administration of corporate different schemes.



To take permission and to inform the authority regarding the correction, extension and changing the list of instruments and the organization chart.



Any other assignment given by the management.

2.12.1.17 Lien and Consumers Credit Department As part of business diversification programme ICB has introduce Consumer Credit Scheme in 2003-04 to meet the needs of various household appliances of different professionals of govt., semi-govt., autonomous bodies and some established private sector organizations. Under this scheme one can enjoy minimum of Tk. 10 lac but maximum of Tk. 5 lac credit facilities. The rate of interest on the loan is reasonable and competitive.

2.12.1.18 Leasing Department ICB extends lease finance mainly for machinery, equipment and transport. ICB has the capacity to provide professional advice and financial assistance to the prospective clients. The period of lease, rentals, charges and other terms and conditions are determined on the basis of types of assets and the extent of assistance required by the applicants. Since introduction of this scheme in 1999 good response has been received from the intending lessees.

2.12.2 Administration Wing 2.12.2.1 Personnel Department The functions of the personnel department are: 

To make necessary rules regulation policies for efficient administration of the Corporation.



To recruit personnel for appointment in the Corporation.



To handle all personnel matters including confirmation, posting, transfer, fixation, leaves etc.



Process all promotion, time scale, encashment, etc.



Process resignation, retirement cases.



Deal with retirement benefits including gratuity, pension, provident Fund etc.



Control attendance.



Handle national pay scale, fixation, increment, etc.



Process A.C.R confirmation of employees, etc.



Deal with all types of disciplinary action.



Prepare long-term and short-term plans for executive development in the corporation.



Explore more sources of financing of foreign training.



Arrange in service training where, among other, foreign-trained officers will in turn train other officers though lecturers.



Arrange training of new recruit institute of the Corporation.



Run training institute of the Corporation.



Arrange seminars / symposium / workshops where experts in the line may be invited to deliver lectures.



Procure training equipment and facilities for training manpower.



Deal with all matters relating ICB employee’s Union.



Deal with all matters relating to ICB officers Association.



Any other assignment given by the management.

2.12.2.2 Establishment Department The main functions, which the establishment department accomplishes, are given below: 

Collect stationery requirement of all departments.



Forecast the annual stationery requirement of the corporation.



Provide support facilities, such as, space, furniture, and stationery, printing materials to all departments/employees of the corporation including branches.



Procure and distribute fixed assets, stationery and printing materials of the corporation.



Process procurement of materials used in computers.



Process bills of computers.



Procure, distribute, inform, shoes, umbrellas etc.



Develop an inventory control mechanism to maintain economic order quantity (EOQ).



Maintain EOQ to meet the urgent necessity of stationery.



Supply stationery to the department.



Continuous cheek up to stationery used by the various departments.



Processes staff loans & advance.



Maintain and repair all types of fixed assets, including vehicles, photocopy machines, type writers and other fixed assets;



Maintain telephone intercom services, etc.



Provide staff bus facilities;



Deal with lease agreement of office premises and houses.



Provide medical retainer facilities.



Deal with group term insurance, subscriptions, donations, etc.



Deal with Benevolent Fund.



Process legal bills regarding legal services.



Install and repair all electrical equipment’s including fans and Air Conditioners.



Provide services to all types of meetings.



Process overtime, T.A./D.A. medical bill, WASA bills, electrical bills, etc.



Help employees in case of death, casualty distress and ameliorate sufferings;



Any other assignment given by the management.

2.12.2.3 Human Resources Department The main functions of this department are: 

To

give

and

complete

the

different

steps

of

training

for

the

officers/personnel’s in the corporation. 

Inventing the foreign training and organize the training in the foreign countries.



To organize the internal training for personnel.



To organize the training for new appointed personnel.



To maintain the official training center.



To organize the seminar/workshop, symposium, if needed take specialist.



To collect the training tools and give facilities of the trainee.



To select the officer/personnel for attending the different type of important meeting, seminar and workshop.



According to need, others function given by administration.

2.12.2.4 Central Accounts Department The main tasks of this department are – 

Prepare income Tax return and matter relating to accounts.



Prepare bills including project Acco9unts and maintenance of project accounts;



Prepare, salary statements, overtime statements, etc.



Make payments of all bills and invoices.



Prepare final Accounts.



Keep accounts for government loan and debentures.



Keep Accounts of Unit fund and mutual funds;



Make correspondence with the government, financial institutions, branches



Maintain liaison with external audit and commercial audit;



Maintenance of investors’ accounts & Portfolio ledgers;

•

Calculation of quarterly interest

•

Posting and balancing of ledgers

•

Preparation statement of accounts for investors

•

Furnishing of information to other department related to investors’ scheme.

•

Manage overall fund of the corporation

•

Determine sources of fund and raising of fund,

•

Ensure proper utilization of fund.

•

Prepare annual budget of the corporation.

•

Revise the budget as and when required,

•

Prepare fund flow statement of the corporation.

•

Ensure proper budgetary and cost control;

•

Take measure for control of expenditure.

•

Any other assignment given by the management.

2.12.2.5 Project Loan Accounts Department The main tasks of this department are listed below: 

Maintenance of loan ledgers for bridging & debenture loans;



Maintenance of registers for interest penal interest dues and over dues;



Calculation of interest and preparation of periodical bills



Preparation and dispatch of statement of Accounts.



Any other assignment given by the management.

2.12.2.6 Fund management department The main works of this department are: 

Manage overall fund of the corporation.



Different organization provided FDR



Different organization taken TDR

2.12.2.7 Law Department Law department handles any kinds of legal affairs of ICB. The functions of this department are as follows: 

Process all legal matters;



Prepare legal documents, advance agreements, shares agreements, demand, promissory Note, memorandum of Deposit of title deeds, etc.



Make correspondence with the company, prepare share certificates, debentures



Arrange execution of underwriting cum advance agreement, under writing agreement and supplementary documents, etc.



Perform all types of legal works relating to staff advances;



Process litigation cases, prepare legal notices, and refer cases to legal advisor and co-ordinate with legal advisor in the court.



Any other assignment given by the management from time to time.



Preserve, supervise and keep in safe custody of legal security documents in connection with underwriting advance, debenture loan and se4curities of unit fund portfolio, etc.



Coordinate with the management, ministries and other Government officers in respect of legal affairs;



Take necessary steps in respect of necessary announcements of ICB ordinance, General Regulations, ICB staff House Building Advance regulation, and ICB service regulations, etc.



Prepare necessary Board Members for placement in the Board meeting relating to litigation and legal affairs;



Represent management and the corporation in legal suits

2.12.2.8 Public Issue Department The activities of this department are

Visit and collect audited financial statement from the sponsors.



Analyze the financial statement on going project.



Advice, peruse sponsors for going for public issue.



Assist sponsors to prepare prospectus for issuing shares and debentures.



Examine the prospectus submitted by the sponsors and make arrangements for its approval.



Arrange no objection from the main loan financing institution;



Advise companies in issuing allotment letters and refund warrants;



Make necessary adjustments of bridging loan of concerned company.

2.12.2.9 Documentation Department The following are the main functions of this department are: 

All important documents are kept



Debenture finance



Lease finance



Asset securitization



Equity/ Preferential share finance

2.12.2.10 Project Implementation and Follow-up Department The following are the tasks of this department: 

Placement of IPO.



Justify the projects terms and conditions.



Help implementation of sanctioned projects.



Review progress of implementation of projects and recommend disbursement of funds.



Submit progress reports to the management regarding implementation.



Process the case for cancellation of sanctioned projects.



Inspect the site and books of accounts of projects



Make recommendations for additional loans in appropriate cases and refer them to LDA.



Provide counseling for solution of any disputes and problems.



Inspire the project to go for public as far as possible after commercial operator.



Contract

with

the

consortium

member/main

financer

regarding

implementation of the projects. 

Take necessary steps to re-arrange the consortium commitment during implementation period if necessary.

2.12.2.11 Recovery Department Loan recovery and follow-up department is the key operation as it ensures the recovery of funds provided as credit. There remains two ‘Task forces’ and the ‘Review & Monitoring Committee’ for giving necessary guidelines for accelerate process of recovery.

The main functions of this department are: 

To provide and reconcile statements of dues /over dues periodically.



To visit projects for evaluating operational performances.



To hold meeting with sponsors of ICB financed projects in connection with recovery of dues.



To furnish status reports on the sponsors of ICB assisted projects to different institutions.



To ensure recovery of dues /over dues from sponsors.



To recommend for making necessary provisions for bad and doubtful debts in the Annual Accounts of the Corporation.



To prepare memorandum for consideration of the Board of Directors for granting financial relief to projects facing various problems.



Analyze the problem of sick projects and put forward suggesting for salvation of the same.



Assist the Law Department of the Corporation to take legal actions against defaulting projects.



To furnish information to different departments of ICB regarding recovery of loans.

2.12.2.12 Trustee department The main functions of loan appraisal departments are: 

One of the most important works is to save the self-keeping of the investor, bond holder, Debenture holder.



To reserve the resources of the trustee.



To maintain the account of trustee.



To give the monthly report in the SEC which are related to the trust maintaining



The savings money of the trustee is invested for short term.

2.12.2.13 Custodian Department To ace as the custodian to the public issue of open-end & closed-end mutual funds, ICB provides professional services. It also acts as banker to the issues and provides similar services through the network of its branches. Fees in this regard are negotiable.

2.12.2.14 Secretary’s Department The main of this department are as follows: 

Arrange meetings of the Board of Directors, Executive committee and other committee.



Issue notices of Board, E.C., and other committee meetings, prepare agenda and memos, etc.



Place working papers to the members of the Board/Committee.



Maintain attendance registers of Directors.



Obtain signature of the chairman in the minute’s book.



Send decisions of the meetings for implementation of concerned departments.



Send minutes of the meeting to the members of the Board and Government of Bangladesh.



Correspond with the Govt. regarding share capital/ debenture, etc.



Correspond with the shareholders on different relevant matters.



Maintain register of shareholders of the corporation.



Arrange holding of Annual General Meeting of the corporation.



Make arrangement for holding of election of the Board of Directors;



Make payment of dividend to the shareholders.



Arrange transfer, splitting of shares and issuance of duplicate certificates;



Deal with and put up papers to the MD on the Board meetings of other institutions where the Government nominates the MD as Director.



Any other assignments given by the Board/Management.

2.12.2.15 Public Relations Department

The main of this department are as follows: 

Maintain close liaison with the ministry of Finance and other concerned officers,



Help publish all type of official advertisement.



Furnish management with the relevant newspaper cuttings.



Help focusing ICB through mass media.



Meet all adverse comments about the corporation published in different newspapers and periodicals.



Publish internal newsletter of journal.



Appraise the management of its overall relation to the public.

•

Any other matters as may be assigned by the management.

Chapter 3 ACTIVITIES OF ICB 3.1 ICB AS MOTIVATOR IN STOCK MARKET ICB has been one of the architects of the capital market, particularly the securities market in Bangladesh. ICB undertakes diverse activities with the objectives of quickening the pace of industrialization on the one hand and on the other hand, bolster the capital market. ICB and its three subsidiary companies play impressive roles in maintaining a buoyant and sustainable capital market in the country. In this regard ICB participates both in primary and secondary markets. As on 30 June 2010, the number of ICB assisted securities was 139 out of 279 listed securities (excluding 171 Govt. treasury bonds) of Dhaka Stock Exchange Ltd. Out of 232 listed securities of Chittagong Stock Exchange were 100.

In the reporting year, through the purchase and sale of securities for ICB’s investment portfolio, unit fund and mutual funds portfolios and on behalf of investment account holders ICB made significant contribution In maintaining depth, stability, reliability and liquidity of the stock market. During 2009-10 the total trading of ICB and its subsidiary companies in both the bourses was Tk. 12435.32 crore which was 129.24 percent higher than the previous year. In the reporting year, ICB and its subsidiary

companies contribution to total turnover of Tk. 277870.91 crore of both the bourses was 4.48 percent which was 5.32 percent in the preceding year. As the rate of contribution of ICB and its subsidiary companies to total turnover of both the bourses has increased, simultaneously the transaction volume has increased significantly during the year.

The activities pertaining to merchant banking, mutual fund operations and stock brokerage functions by the three subsidiary companies of ICB, namely ICB Capital Management Ltd.ICB Asset Management Company Ltd. and ICB Securities Trading Company Ltd. has been remarkable during the year. During the year, all the mutual funds and unit funds managed by ICB Asset management Company Ltd. a subsidiary of ICB declared much higher dividend over 2008-09. ICB motivates companies to float bonds in the securities market. Up to 30 June 2010, 11 bonds of 8 companies of Tk.1007.95 crore have been floated of which one is a listed corporate bond. Ten out of these eleven bonds were floated under trusteeship of ICB. ICB has taken steps to float two sectoral mutual funds of Tk. 500.0 crore each mainly to develop the power sector of the country. The decision was taken in a Board meeting held on 13 April 2010.

3.2 OPERATIONAL ACTIVITIES ICB has continued to provide financial and other assistance to companies in different forms with a view to accelerating the pace of Industrialization as well as to developing a well-organized and vibrant securities market in the country. In this regard ICB undertakes diverse activities.

ICB’s existing financial and other activities for capital market development and industrialization include: i.

Direct participation in equity

ii.

Purchase of shares, debentures bonds and preference shares

iii.

Lease financing

iv.

Venture capital financing

v.

Advance against equity

vi.

To act as trustee as well as custodian to the issue of debentures, bonds, mutual funds etc.

3.2.1 Consideration of Applications In 2009-10, ICB received 29 applications for financial assistance amounting to Tk. 604.33 crore. There were 29 pending applications at the end of 2008-09. As a result, ICB had a total of 58 applications for processing in 2009-10 out of which 19 applications were approved, 28 were rejected and 11 were under consideration.

3.2.2 Commitment During 2009-10, ICB made commitment of total financial assistance of Tk. 209.62 crore to 19 projects. In 2008-09, ICB's commitment of total financial assistance was Tk. 137.05 crore to 15 projects.

Details of commitments made by ICB during 20099-10 and 2008-09 are shown in the following table:

Table-3: Comparative position of commitments during 2009-10 and 2008-09 (Tk. in crore) Nature of Financial Assistance

2009-10 No.

of

2008-09 Amount

Projects

No.

of

Increase/ Amount

Decrease in amount

Projects

(%) Pre-IPO Placement of shares

4

21.00

1

2.00

950.00

Purchase of preference share

1

50.00

1

20.00

150.00

Equity participation

1

0.12

1

0.20

-40.00

Purchase of debentures

9

45.50

9

84.50

-46.15

Lease financing

3

79.00

3

30.35

160.30

1

14.00

-

-

19

209.62

15

137.05

Investment in bonds Total

52.95

In addition, ICB committed to act as trustee to the issue of bonds of a company of Tk. 250.00 crore during the year. ICB also committed to act as trustee as well as custodian to the issue of 7 close-end mutual funds of Tk. 755.00 crore.

3.2.3 Cumulative Commitment Upto 30 June 2010, cumulative commitment by ICB for financial assistance stood at Tk. 1062.63 crore to 497 projects. A summarized statement of cumulative commitments made by ICB as on 30 June 2010 is given below:

Table-4 Cumulative commitment of ICB as on 30 June 2010 Nature of Commitment

(Tk. In Crore)

2009-10 No of Projects

Amount

Bridging loan

306

116.48

Debenture loan

50

52.30

Sub Total

309*

123.28

Share

44

73.29

Debentures

6

14.00

Direct Underwriting:

Sub Total

45**

87.29

Pre-IPO Placement: Shares

37

82.57

Debentures

13

46.05

Purchase of preference share

12

Purchase of debenture

47

247.35

Investment in bonds

8

68.34

Direct equity participation

16

21.37

Advance against equity

2

Lease financing

57

114.65

40.00 231.28 124***

Total

497

852.06 1062.63

*

Include 38 projects which were given commitment for both bridging loans and debenture loans.

**

Include 5 projects which were given commitment for direct underwriting of shares and debentures.

***

Commitments were given by ICB.

3.2.4 Disbursement The cumulative disbursement of project loans of ICB stood at Tk. 114.52 crore to 308 projects. ICB discontinued bridge financing from 1997.

The following table shows sector-wise cumulative disbursement of project loans by ICB: Table-5: Position of sector-wise disbursement of project loans No.

Sector

of

bridging loan

projects

debenture

(Tk. in crore)

Total

Percentage

loan

Food & Allied products

99

17.22

2.10

19.32

16.87

Textile

58

43.72

1.00

44.72

39.05

Specialized Jute products, Jute yarn, 33

14.85

0.53

15.38

13.43

0

0.15

0.15

0.13

and 11

3.39

0.10

3.49

3.05

Rubber 12

3.28

0.28

3.56

3.11

8.14

0.76

8.90

7.77

3.60

0

3.60

3.14

twine and carpets Forest Products and Allied Paper

Board

1

printing

Publishing Tannery,

Leather

and

Products Chemical,

pharmaceuticals

and 30

Allied products Glass, Ceramic and Other Non- 9 metallic Mineral products Engineering

29

9.61

1.21

10.82

9.45

Services

6

1.60

0

1.60

1.40

1.45

0

1.45

1.27

Ships, Road and inland water 16 transport Miscellaneous

4

1.33

0.20

1.53

1.34

Total

308

108.19

6.33

114.52

100.00

3.2.5 Computerization of ICB ICB completed computerization of most of its business activities with the help of its own computer set-up. The screen based online trading on DSE & CSE also continued smoothly during the year. With the implementation of computerization program of ICB, the standard of customer service, work efficiency of the employees and overall working environment have substantially improved. ICB's branches have been using the merchandising software.

The interested investors at home and abroad can also obtain information about ICB as

well as its various schemes through the ICBs own web site, www.invest-corpbangladesh.com.

Recently ICB inaugurated on test basis its telephonic transaction and inquiry system (TTIS). The TTIS when fully implemented will facilitate investors to collect any information particularly that of Investors Account portfolios, current balance and other information from outside ICB premise. This, in turn, will help investors to save time and money.

ICB developed a set of software to automate and support its main business and management operations. The software are Merchandising Operations Management system, Mutual Funds Scrip and Ownership Management system, Stock Exchange Index Publication, IPO Management, Personnel Management Information System, Project Information Management System, Meeting Minutes Storage & Retrieval and Law suit Tracking, Unit Sales & Repurchase Management System, Financial Feasibility Analysis for Projects, Accounting Application, Unit Reconciliation, Mutual Fund Reconciliation, Share Reconciliation etc.

The existing system was installed in 1998. To coup with the urgent needs and demands and to avoid any technological hazards a new server has been installed on rental basis to provide supportive services until phase-wise up gradation is completed.

Local Area Network (LAN) has been installed and all the branches are now connected through E-mail. The demand for computer is increasing as the volume of work of ICB has expanded. During the year 10 IBM computers with pentium 4 processor and 10 UPSs have been procured to facilitate instant customer service.

ICB had extended helps to its subsidiary companies by developing and supplying required software and providing hardware trouble shooting services for their day to day functions through computer. Besides, subsidiary companies are being provided with all sorts of technical supports relating to computer as and when needed.

A plan of establishing a linkage between the server of subsidiary companies and that of the ICB Head Office is under consideration so that information can be exchanged between ICB and subsidiary companies as and when it is warranted.

The plan of phase-wise up gradation of existing system of lCB has been undertaken.

The design of phase wise up gradation is being examined by competent authorities/organizations of the computer field.

Taking connection of broadband system of Internet is under active consideration of management and is expected to be installed soon. This system will facilitate broader scope to share/utilize the information available through Internet.

3.2.6 IT Planning Process in ICB ICB has emerged as one of the leaders in computerization and software developers in Bangladesh. ICB initiated computerization program in 1985. Thus it is one of the very first local financial institutions to adopt computers and computing software systems in Bangladesh. Since then ICB has been continuously upgrading the system according to specific long-term plans to keep pace with modern financial world. When planning for long-term sustainable IT framework throughout the organization the prime factors ICB always considered are. 

IT friendly process that is easily adaptable to computer technologies.



A solid computerization environment and platform of choices, which will serve for a long time and con be easily tailored for future enhancements/up gradation.



A solid hardware and network platform that is stables, scalable and have high performance with a special focus on future business diversification, mean-time-toresponse.



Scope of future enhancement both in terms of business process and in terms of IT infrastructure so that ICB can always keep pace with the fast changing world of financial operations.



enhancement and development and system support.



The computerization plan should put emphasis on selection of hardware, network technology and platform software like RDBMS choice management support.

Future Roadmap A great deal of planning effort of the Corporation has been towards future IT structure and related operations In the road map the following goals have been set •

Establishing ICB firmly on IT industry not only as a consumer but also as a formidable IT solution provider especially in the financial sector. ICB

believes its huge experience over the years and infrastructure are something that can be offered in the financial arena of Bangladesh and abroad on business basis in the future.

•

ICB is in tile line of a unified system with end-to-end operational activity solution and MIS. With this in mind there is a plan for future integration and re-engineering of the existing software system into an integrated resources Planning (ERP).

•

ICB is planning to connect all its branch operation online with its head office system Online integrated branch with the central data depository in head office based on a strong WAN connection is the next in line.

•

ICB is planning to provide web-based online services to its clients. The online system will incorporate a business to client service for end-users and a business-to-business service for corporate sector and other business associates.

•

In the long run, ICB may consider establishing a separate business entity on IT, if found viable.

•

ICB is considering to go for starting full pledged activity in the field of IT area

•

ICB is actively considering providing web-based online services to its clients.

ICB is also actively considering to connect all its branches through WAN with head office. So that Customers at any corner of the country can get instant services.

3.2.7 Participation in International Activities ICB is the glittering star in our national economic sky. But it crosses its national boundary and become internationalize to some aspect. ICB’s involvement with South Asian Development Fund (SADF) and in South Asia Regional Fund (SARF) is two worth mentioning issue.

3.2.7.1 ICB’s Involvement with South Asian Development Fund (SADF) SAARC Fund for Regional Projects, (SFRP) & SRF were established in 1991 with the collaboration of member countries of the SAARC. The establishment of SADF

was officially declared by dissolving SFRP and SRF in a meeting of member countries held in Dhaka in June 1996. SADF is an Umbrella Fund comprising three windows: (i) Window for Identification and Development of Projects, (ii) Window for Institutional and Human Resource Development Projects and (iii) Window for Social and Infrastructures Development Projects. ICB being the nodal DFI has been representing Bangladesh in the governing board of SADF and proportionately contributed to the fund. Up to 30 June 2003, the Seventh meetings of the governing board of SADF were held. The Managing Director of ICB performed the responsibilities of the First Chairman of the governing board of SADF and by rotation, the Chief Executive of Nepal Industrial Development Corporation (NIDC) is the current Chairman of the governing board of SADF. Under Window-1 of SADF, identification and feasibility studies of 16 projects have been completed of which 7 projects are in Bangladesh and under Window-II of SADF one training program was arranged in India.

3.2.7.2 Investment in South Asia Regional Fund (SARF) The Commonwealth Summit was held in 1997, declared a US$ 200 million Development Fund namely, South Asia Regional Fund (SARF) to facilitate investments in SAARC member countries. The Fund is managed by a wholly owned subsidiary of Commonwealth Development Corporation (CDC) incorporated in Mauritius. In addition, CDC has made equity investments to the tune of US$ 50 million in this Fund. The objective of the Fund is to achieve long term benefit through direct equity and equity related investments in private sector companies of SAARC region. ICB has made investment of US$ 1 million in SARF from ICB Unit Fund and in exchange the SAARF has issued 1,000 Ordinary 'A' shares and 1,000 8% Preference shares in favor of ICB Unit Fund. ICB Unit Fund had received in 2001-02 US$ 19,606.72 and in 2002-03 US$ 15471.72 as redemption value of 16 (sixteen) & 11 (eleven) preference shares respectively. During this period SARF made investment in 13 (Thirteen) high technology projects including one Bangladeshi Cellular Phone Company, Grameen Phone Ltd.

3.3 SERVICES OF ICB The following services are rendered by ICB:

3.3.1 Private Placements ICB is authorized to act as an agent of the issuers and investors for private placements of securities. Under this arrangement, ICB places securities to individuals/institutions on behalf of the issuers for which it charges fees. ICB also acquires shares/securities for its own portfolio.

3.3.2 Custodian and Banker to the Issue To act as the custodian to the public issue of open-end &closed-end mutual funds, ICB provides professional services. It also acts as banker to the issues and provides similar services through the network of its branches. Fees in this regard are negotiable.

3.3.3 Lease Financing ICB extends lease finance mainly for machinery, equipment and transport. ICB has the capacity to provide professional advice and financial assistance to the clients.

The period of lease, rentals, charges and other terms and conditions are determined on the basis of type of assets and the extent of assistance required by the applicants.

Since introduction of this scheme in 1999 good response has been received from the intending lessees.

3.3.4 Consumer Credit Scheme As part of business diversification program, ICB has introduced "Consumers Credit Scheme" in 2003-04 considering at the need of various household commodities of different employees of govt., semi-govt., autonomous bodies and some established private sector organizations. Under this scheme one can enjoy minimum Tk 1.0 lac but maximum 5 lac credit facilities. The rate of interest on the loan is reasonable and competitive.

3.3.5 ICB Mutual Fund Mutual Funds are also known as close ended Mutual Funds. The issued capital of a Mutual Fund is limited, that is, a Mutual Fund offers a limited number of certificates for sale to the public. The amount of capital and the number of certificates of each

Mutual Fund remains unchanged. ICB Mutual Funds are independent of one another.

A Mutual Fund being listed is traded on the Stock Exchanges. Price of Mutual Fund certificates after IPO is determined on the Stock Exchanges through interaction of supply and demand. The market price of a Mutual Fund certificates is available in Stock exchange quotations and in newspapers.

3.3.6 Investors’ Scheme The investors’ Scheme was introduced in June 1977. Over the years, this scheme has grown tremendously. ICB, at its discretion, may grant up to two times loan against the assets of the account subject to a maximum limit of tk. 3 lac. An account holder may use the combined balance of his/her equities and loan to buy shares/securities. To help the investors to develop diversified and balanced portfolio to minimize risk and earn a reasonable return, ICB provides professional advice and other support services. Under the restructuring program, ICB operates and manages only the old accounts and new accounts are being opened and managed by the ICB capital Management Ltd., a subsidiary of ICB.

3.3.7 Venture Capital Financing As part of business diversification and to encourage rapid industrialization of nontraditional, risky but potential industries in the country ICB has launched Venture Capital Financing scheme.

3.3.8 Advances against ICB Mutual Fund Certificates Scheme Advance against ICB Mutual Fund Certificates Scheme was introduced in 2003, designed for the ICB mutual fund certificate holders to meet their emergency fund requirements. One can borrow maximum of 50 percent value of last one year’s weighted average market price of certificates at time of borrowing by depositing his/her certificates under lien arrangement from any of the ICB offices. The rate of interest on the loan is reasonable and also competitive.

3.3.9 Advances against Unit Certificates Scheme

Advance against ICB Unit Certificates Scheme was introduced in 1998, especially designed for the ICB unit- holders to meet their emergency fund requirements. One can borrow maximum Tk. 85 per unit by depositing his/her unit certificates under lien arrangement from any of the ICB offices where from such unit certificates were issued. The rate of interest on the loan is reasonable and competitive.

3.3.10 Bank Guarantee Scheme As part of ICB’s business diversification program, the Corporation introduced Bank Guarantee scheme during the year 2002-2003. ICB provides (1) Bid Bond for enabling the business people to participate in any tender or bidding; (2) Performance Bond for helping the business community to continue their business smoothly by fulfilling their obligations promised by them to their clients; (3) Customs Guarantee for solving different disagreements between the customs authority and the business classes at the initial stage. The maximum limit of guarantee is Tk. 2.00 crore and would be issued against at least 20% cash and 80% easily encashable securities or against 100% cash margin. Re-guarantee from other financial institution is required for guarantee against the amount exceeding Tk. 2.00 crore.

3.3.11 ICB Unit Fund It is an open-ended Mutual Fund scheme Launched in April 1981, through which the small and medium savers get opportunity to invest their savings in a balanced and relatively low risk portfolio. ICB has so far declared attractive dividends on Units every year ranging from Tk. 12 to Tk. 25 per unit. Investment in Units enjoys tax benefit, amount being applicable as per law. However, under the ICB’s restructuring program new unit certificates are being sold by ICB’s new subsidiary company “ICB Asset Management Company Ltd.”

3.3.12 Managers and Acquisitions Companies willing to expand their business through mergers or acquisitions or to Disinvestment projects that no longer viable into present capacity of operation can contact the Corporation. ICB provides professional services & advices in respect of shaping up the cost and financial structures to ensure best possible operational results.

Besides, in case of divestment, the corporation, through network and established

business relationship, bring buyers and sellers together, help them to negotiate final agreement and advice on the emerging corporate structure.

3.3.13 Corporate Financial Advice Companies and Government enterprises intending to go public often seek professional & financial advice on corporate restructuring & reengineering. ICB through its expertise provide such services.

3.3.14 Trustee, Custodian and Issue Manager ICB is acting as trustee to the issue of debenture and securitized bonds. Up to 30 June 2010 ICB acted as trustee to the debenture issues of 17 companies involving Tk. 184.15 crore and issues of 10 bonds of 7 companies involving Tk. 874.36 crore. ICB also undertook the responsibilities of trustee to 18 mutual funds involving Tk. 1280.00 crore.

Chapter-4

OVERVIEW FUNDS

OF

ICB

MUTUAL

4.1 MUTUAL FUND A Mutual Fund offers a limited number of certificates for sale to the public. The amount of capital and the number of certificates of each Mutual Fund remains unchanged. ICB Mutual Funds are independent of one another. A Mutual Fund being listed is traded on the Stock Exchanges. A Mutual Fund certificates is available in Stock exchange quotations and in newspapers. Price of Mutual Fund certificates after IPO is determined on the Stock Exchanges through interaction of supply and demand.

4.2 LEGAL STATUS AND OBJECTIVE OF THE FUND Investment Corporation of Bangladesh (ICB) was established in 1976 with the objectives of acceleration industrialization and economic development of the country through development of capital market by mobilizing savings and encouraging and improving the investment climate in the country with particular emphasis placed on broadening the base and scope of investment as well as tapping marginal investors.

4.3 NATURE OF BUSINESS

The business of the Fund is to mobilize savings from the investors by way of selling certificates and investing the funds in securities so as to ensure maximum return for certificate holders. This is a closed-end Fund invested in securities as a single account. Income, net of expenses, is distributable to certificate holders on a yearly basis.

4.4 THE MAIN PURPOSE OF MUTUAL FUND The main purposes of the Mutual Funds are: • • •

Emphasis is on producing a steady flow of dividend payment Concentrates on increasing the value of principal through appreciation of the stocks held Some combination of the first two approaches

4.5 OPERATIONAL HIGHLIGHTS 4.5.1 Launching Mutual Fund

Table-6 Date of Launching

Paid-up Capital (Taka in lac)

First ICB Mutual Fund

25 April,1980

50.00

Second ICB Mutual Fund

17 June,1984

50.00

Third ICB Mutual Fund

19 May,1985

100.00

Fourth ICB Mutual Fund

6 June, 1985

100.00

Fifth ICB Mutual Fund

8 June, 1987

150.00

Sixth ICB Mutual Fund

16 May,1988

500.00

Seven ICB Mutual Fund

30 June,1995

300.00

Eighth ICB Mutual Fund

23 July,1996

500.00 Total

1750.00

4.5.2 Portfolio Position, Market Price per Certificate and Number of Certificate Holders (as on 30 June 2010) Table-7 Name of the Fund

Cost of portfolio (Tk. In Lac)

Market Value of the portfolio (Tk. In Lac)

Market price per certificate (Taka)

No. of Certificateholders

First ICB mutual fund

887.70

7791.87

8701.00

1105

Second ICB mutual fund

312.98

1782.44

2578.75

1093

Third ICB mutual fund

698.25

2547.87

1972.50

1502

Fourth ICB mutual fund

748.52

2784.04

2139.75

1253

Fifth ICB mutual fund

952.61

3662.00

1763.00

2560

Sixth ICB mutual fund

1225.85

4162.39

647.75

6385

Seventh ICB mutual fund

1341.95

4324.86

1063.00

2383

Eighth ICB mutual fund

1538.86

5002.74

755.50

6735

Total

8006.72

32058.21

23016

4.5.3 Operational Result: Name of the Fund

Table-8

Net Income (tk. In Lac)

First ICB mutual fund Second ICB mutual fund Third ICB mutual fund

423.33 127.43 184.38

Distributable income Per certificate (Taka) 1006.53 519.78 376.89

Fourth ICB mutual fund Fifth ICB mutual fund Sixth ICB mutual fund Seventh ICB mutual fund Eighth ICB mutual fund

177.72 213.52 453.33 299.62 463.64

368.20 220.71 134.80 155.77 137.17

Ex-dividend Intrinsic value Certificate (Taka) 9877.68 2788.41 2190.38 2387.84 2036.43 748.85 1180.13 864.95

per

4.5.4 Dividend Performance: (Tk. per Certificate) Table-9 Mutual Funds

Financial Year

First ICB mutual fund

2007-08 265.00

2008-09 310.00

2009-10 400.00

Second ICB mutual fund

75.00

95.00

200.00

Third ICB mutual fund

65.00

85.00

140.00

Fourth ICB mutual fund

60.00

80.00

125.00

Fifth ICB mutual fund

45.00

56.00

100.00

Sixth ICB mutual fund

30.00

37.00

75.00

Seventh ICB mutual fund

30.00

32.00

70.00

Eighth ICB mutual fund

25.00

32.00

65.00

4.6 CONSOLIDATED PORTFOLIO STATEMENT As on 30 June 2010 cost price and market price of eight Mutual Funds were Tk. 8006.72 lac and Tk. 32058.21 lac respectively. A consolidated statement of the portfolio of the Funds is given in the following table: Table-10: Consolidated position of portfolios of ICB Mutual Funds as on June 2010

Sl.n o.

Particulars

1st Mutual Fund

2nd Mutual Fund

3rd Mutual Fund

4th Mutual Fund

5th Mutual Fund

6th Mutual Fund

7th Mutual Fund

8th Mutual Fund

1

No. of Companies

122

120

140

139

153

187

181

172

2

No. of Securities

124

123

141

141

155

189

182

177

3

Total investment at cost (Tk. In Lac)

887.70

612.98

698.25

748.52

952.61

1225.85

1341.95

1538.86

4

Market Value

7791.87

1782.44

2547.87

2784.04

3662.00

4162.39

4324.86

5002.74

4.7 PRICE MOVEMENT During the year under review, certificates of eight Mutual Funds were actively traded on the floor of the Dhaka Stock Exchange Ltd and Chittagong Stock Exchange Ltd. The highest and lowest price of the eight Mutual Funds certificates on Dhaka Stock Exchange Ltd and position of total transaction during 2009-10 are shown in the following table: Table-11: Market prices of ICB Mutual Funds and Transactions during 2009-10 Sl. No

Mutual Funds

Highest market price (Taka)

Lowest market price (Taka)

Closing Market Price (Tk as on 30 June 2010

1

First ICB Mutual Fund

9450.00

5790.00

8701.00

2

Second ICB Mutual Fund

1100

721

2578.75

3

Third ICB Mutual Fund

690

460.50

1972.50

4

Fourth ICB Mutual Fund

700

458

2139.75

5

Fifth ICB Mutual Fund

465

200

1763.00

6

Sixth ICB Mutual Fund

350

175

647.75

7

Seven ICB Mutual Fund

320

165.25

1063.00

8

Eight ICB Mutual Fund

316

162

755.50

4.8 DETAILS DESCRIPTION OF ICB’S EIGHT MUTUAL FUND 4.8.1 First ICB Mutual Fund The First ICB Mutual was established in April 1980, under regulation 29A of ICB (General) Regulation with a total capital of Tk. 50,000 certificates of Tk. 100 each. In the financial year 2006-07, one bonus certificates were issued against two certificates and capital fund raised by Tk. 25, 00,000. Now the paid-up capital of the fund stood at Tk. 75,00,000 divided into 75000 certificates. The manager of the Fund is vested with ICB.

4.8.1.1 Dividend Income The Fund has earned an amount of Tk. 85.70 lac as dividend from 47 securities during 2009-2010 of which a sum of Tk. 74.69 lac (87.15 percent) was received in cash within 30 June 2010.

4.8.1.2 Capital Gains on Sale of Investments During 2009-10, the Fund earned Tk. 375.65 lac as capital gains by selling securities of 78 companies.

4.8.1.3 Income, Expenses and Distribute Income During the year under review, the Fund has earned a gross income of Tk. 469.34 lac. by way of dividend income of Tk. 85.70 lac. interest income of Tk. 7.99 lac. on bank deposits, capital gains of Tk. 375.65 lac. and other income. After deducting the total expenses of Tk. 46.01 lac. incurred as staff expenses, interest on current account with ICB, management fee, printing and stationery, postage and telegram, bank charges, provision against investment and others the net income of the Fund stood at Tk. 423.33 lac. Taking into account the previous year’s undistributed income of Tk. 331.57 lac. the Fund had a net distributable income of Tk. 754.90 lac. as on 30 June 2010 resulting in distributable income per certificate of Tk. 1006.53.

4.8.1.4 Dividend The Fund has declared dividend at the rate of 400.00 percent which was 310.00 percent for the previous year. After making provision of Tk. 300.00 lac for payment of dividend the Fund had an undistributed income of Tk 454.90 lac. The Year –wise dividend the Fund had an undistributed income of Tk. 454.90 lac., details given in Appendix-A1.

4.8.1.5 Portfolio

During 2009-10, the Fund has made an investment of Tk. 168.43 lac in securities of 24 companies. As on 30 June 2010 the Fund had securities of 122 companies in its portfolio with a total cost of Tk. 887.70 lac, the market value of which was Tk. 7791.87 lac.

The ex-dividend net asset value per certificate of Tk. 100.00 each of First Mutual Fund stood at Tk. 9877.68 as on 30 June 2010.

The opening and closing market price per certificate of First ICB Mutual Fund of Tk. 100.00 each of the fund was Tk.5783.00 and Tk. 8701.00 as respectively in 2009-10.

The number of certificate holders of the fund was 1105 as on 30 June 2010.

4.8.2 Second ICB Mutual Fund The Second ICB Mutual was established in June 1984, under regulation 29A of ICB (General) Regulation with a total capital of Tk. 50,00,000 dividend into 50000 certificates of Tk. 100 each. The manager of the Fund is vested with ICB.

4.8.2.1 Dividend Income The Fund has earned an amount of Tk. 29.67 lac as dividend and interest from 44 securities during 2009-2010 of which, Tk. 26.81 lac (90.50 percent) was received in cash within 30 June 2010.

4.8.2.2 Capital Gains on Sale of Investments During 2009-10, the Fund has earned Tk. 247.65 lac as capital gains by selling securities of 79 companies.

4.8.2.3 Income, Expenses and Distribute Income During the year under review, the Fund has earned a gross income of Tk. 282.53 lac. by way of dividend and interest income from investment in securities of Tk. 29.67 lac. interest income of Tk. 5.21 lac. on bank deposits, capital gains of Tk. 247.65 lac. and other income. After deducting the total expenses of Tk. 155.10 lac. incurred as staff expenses, management fee, printing and stationery, postage and telegram, interest on current account with ICB, bank charges, provision against investment and others, the net income of the Fund stood at Tk. 127.43 lac. Taking into account the previous year’s undistributed income of Tk. 132.46 lac the Fund had a net distributable income of Tk. 259.89 lac as on 30 June 2010 resulting in distributable income per certificate of Tk. 519.78.

4.8.2.4 Dividend The Fund has declared dividend at the rate of 200.00 per certificate of Tk. 100.00 each for the year 2009-10, which was Tk. 95.00 per certificate in the previous year.

After making provision of Tk. 100.00 lac for payment of dividend the Fund has an undistributed income of Tk 159.89 lac., details given in Appendix-A2.

4.8.2.5 Portfolio

During 2009-10, the Fund has made an investment of Tk. 119.06 lac in securities of 24 companies. As on 30 June 2010 the Fund had securities of 120 companies in its portfolio with a total cost of Tk. 612.98 lac, the market value of which was Tk. 1782.44 lac.

The ex-dividend net asset value per certificate of Second ICB Mutual Fund of Tk. 100.00 each stood at Tk. 2788.41 as on 30 June 2010.

The opening and closing market price per certificate of Second ICB Mutual Fund of Tk. 100.00 each was Tk.2244.75 and Tk. 2578.75 respectively during 2009-10.

The number of certificate holders of the fund was 1093 as on 30 June 2010.

4.8.3 Third ICB Mutual Fund The Third ICB Mutual was established in May 1985, under regulation 29A of ICB (General) Regulation with a total capital of Tk. 1,00,00,000 dividends into 100000 certificates of Tk. 100 each. The manager of the Fund is vested with ICB.

4.8.3.1 Dividend Income The Fund has earned an amount of Tk. 36.41 lac dividend and interest from 53 securities during 2009-2010 of which, Tk. 32.46 lac (89.15 percent) was received in cash within 30 June 2010.

4.8.3.2 Capital Gains on Sale of Investments During 2009-10, the Fund has earned Tk. 261.02 lac as capital gains by selling securities of 76 companies.

4.8.3.3 Income, Expenses and Distribute Income During the year under review, the Fund has earned a gross income of Tk. 302.81 lac. by way of dividend and interest income from investment in securities of Tk. 36.41 lac. interest income of Tk. 5.38 lac. on bank deposits, capital gains of Tk. 261.02 lac. and other income. After deducting the total expenses of Tk. 118.43 lac. incurred as staff expenses, management fee, printing and stationery, postage and telegram, interest on current account with ICB, bank charges, provision against investment and others, the net income of the Fund stood at Tk. 184.38 lac. Taking into account the previous year’s undistributed income of Tk. 192.51 lac the Fund had a net distributable income of Tk. 376.89 lac as on 30 June 2010 resulting in distributable income per certificate of Tk. 376.89.

4.8.3.4 Dividend The Fund has declared dividend at the rate of 140.00 per certificate of Tk. 100.00 each for the year 2009-10, which was Tk. 85.00 per certificate in the previous year.

After making provision of Tk. 140.00 lac for payment of dividend the Fund has an undistributed income of Tk 236.89 lac., details given in Appendix-A3.

4.8.3.5 Portfolio

During 2009-10, the Fund has made an investment of Tk. 121.36 lac in securities of 23 companies. As on 30 June 2010 the Fund had securities of 140 companies in its portfolio with a total cost of Tk. 698.25 lac, the market value of which was Tk. 2547.87 lac.

The ex-dividend net asset value per certificate of Third ICB Mutual Fund of Tk. 100.00 each stood at Tk. 2190.38 as on 30 June 2010.

During 2009-10, the opening and closing market price per certificate of Third ICB Mutual Fund of Tk. 100.00 each was Tk.921.00 and Tk. 1972.50 respectively.

The number of certificate holders of the fund was 1520 as on 30 June 2010.

4.8.4 Fourth ICB Mutual Fund The Fourth ICB Mutual was established in June 1986, under regulation 29A of ICB (General) Regulation with a total capital of Tk. 1,00,00,000 dividend into 1,00,000 certificates of Tk. 100 each. The manager of the Fund is vested with ICB.

4.8.4.1 Dividend Income The Fund has earned an amount of Tk. 45.89 lac as dividend and interest from 59 securities during 2009-2010 of which, Tk. 38.43 lac (83.74 percent) was received in cash within 30 June 2010.

4.8.4.2 Capital Gains on Sale of Investments During 2009-10, the Fund has earned Tk. 339.80 lac as capital gains by selling securities of 75 companies.

4.8.4.3 Income, Expenses and Distribute Income During the year under review, the Fund has earned a gross income of Tk. 391.99 lac. by way of dividend and interest income from investment in securities of Tk. 45.89 lac. interest income of Tk. 6.30 lac. on bank deposits and capital gains of Tk. 339.80 lac.

After deducting the total expenses of Tk. 214.27 lac. incurred as staff expenses, management fee, printing and stationery, postage and telegram, interest on current account with ICB, bank charges, provision against investment and others, the net income of the Fund stood at Tk. 177.72 lac. Taking into account the previous year’s undistributed income of Tk. 190.48 lac, the Fund had a net distributable income of Tk. 368.20 lac as on 30 June 2010 resulting in distributable income per certificate of Tk. 368.20.

4.8.4.4 Dividend The Fund has declared dividend at the rate of 125.00 per certificate of Tk. 100.00 each for the year 2009-10, which was Tk. 80.00 per certificate in the previous year.

After making provision of Tk. 125.00 lac for payment of dividend the Fund has an undistributed income of Tk 243.20 lac., details given in Appendix-A4.

4.8.4.5 Portfolio During 2009-10, the Fund has made an investment of Tk. 121.32 lac in securities of 23 companies. As on 30 June 2010 the Fund had securities of 141 companies in its portfolio with a total cost of Tk. 748.52 lac, the market value of which was Tk. 2784.04 lac.

The ex-dividend net asset value per certificate of Fourth ICB Mutual Fund of Tk. 100.00 each stood at Tk. 2387.84 as on 30 June 2010.

During 2009-10, the opening and closing market price per certificate of Fourth ICB Mutual Fund of Tk. 100.00 each was Tk.1236.25 and Tk. 2139.75 respectively.

The number of certificate holders of the fund was 1253 as on 30 June 2010.

4.8.5 Fifth ICB Mutual Fund The Fifth ICB Mutual was established in June 1986, under regulation 29A of ICB (General) Regulation with a total capital of Tk. 15,000,000 dividend into 150,000 certificates of Tk. 100 each. The manager of the Fund is vested with ICB.

4.8.5.1 Dividend Income The Fund has earned an amount of Tk. 59.84 lac as dividend and interest from 58 securities during 2009-2010 of which, Tk. 51.34 lac (85.80 percent) was received in cash within 30 June 2010.

4.8.5.2 Capital Gains on Sale of Investments During 2009-10, the Fund has earned Tk. 386.03 lac as capital gains by selling securities of 78 companies.

4.8.5.3 Income, Expenses and Distribute Income During the year under review, the Fund has earned a gross income of Tk. 451.70 lac. by way of dividend and interest income from investment in securities of Tk. 59.84 lac. and interest income of Tk. 6.19 lac. on bank deposits, capital gains of Tk. 386.03 lac.

After deducting the total expenses of Tk. 238.18 lac. incurred as staff expenses, management fee, printing and stationery, postage and telegram, interest on current account with ICB, bank charges, provision against investment and others, the net income of the Fund stood at Tk. 213.52 lac. Taking into account the previous year’s undistributed income of Tk. 117.54 lac, the Fund had a net distributable income of Tk. 331.06 lac as on 30 June 2010 resulting in distributable income per certificate of Tk. 220.71.

4.8.5.4 Dividend The Fund has declared dividend at the rate of Tk. 100.00 per certificate of Tk. 100.00 each for the year 2009-10, which was Tk. 56.00 per certificate in the previous year.

After making provision of Tk. 150.00 lac for payment of dividend the Fund has an undistributed income of Tk 181.06 lac., details given in Appendix-A5.

4.8.5.5 Portfolio

During 2009-10, the Fund has made an investment of Tk. 159.93 lac in securities of 20 companies. As on 30 June 2010 the Fund had securities of 153 companies in its portfolio with a total cost of Tk. 952.61 lac, the market value of which was Tk. 3662.00 lac.

The ex-dividend net asset value per certificate of Fifth ICB Mutual Fund of Tk. 100.00 each stood at Tk. 2036.43 as on 30 June 2010.

The opening and closing market price per certificate of Fifth ICB Mutual Fund of Tk. 100.00 each was Tk.1230.00 and Tk. 1763.00 respectively during 2009-10.

The number of certificate holders of the fund was 2560 as on 30 June 2010.

4.8.6 Sixth ICB Mutual Fund The Sixth ICB Mutual was established in June 1986, under regulation 29A of ICB (General) Regulation with a total capital of Tk. 50,000,000 dividend into 5,00,000 certificates of Tk. 100 each.

4.8.6.1 Dividend Income The Fund has earned an amount of Tk. 59.70 lac as dividend and interest from 69 securities during 2009-2010 of which, Tk. 55.69 lac (92.28 percent) was received in cash within 30 June 2010.

4.8.6.2 Capital Gains on Sale of Investments During 2009-10, the Fund has earned Tk. 501.23 lac as capital gains by selling securities of 83 companies.

4.8.6.3 Income, Expenses and Distribute Income During the year under review, the Fund has earned a gross income of Tk. 569.67 lac. by way of dividend and interest income from investment in securities of Tk. 59.70 lac. interest income of Tk. 8.74 lac. on bank deposits, capital gains of Tk. 501.23 lac.

After deducting the total expenses of Tk. 116.34 lac. incurred as staff expenses, management fee, printing and stationery, postage and telegram, interest on current account with ICB, bank charges, provision against investment and others, the net income of the Fund stood at Tk. 453.33 lac. Taking into account the previous year’s undistributed income of Tk. 220.65 lac, the Fund had a net distributable income of Tk. 673.98 lac as on 30 June 2010 resulting in distributable income per certificate of Tk. 138.80.

4.8.6.4 Dividend The Fund has declared dividend at the rate of Tk. 75.00 per certificate of Tk. 100.00 each for the year 2009-10, which was Tk. 37.00 per certificate in the previous year.

After making provision of Tk. 375.00 lac for payment of dividend the Fund has an undistributed income of Tk 298.98 lac., details given in Appendix-A6.

4.8.6.5 Portfolio During 2009-10, the Fund has made an investment of Tk. 291.08 lac in securities of 23 companies. As on 30 June 2010 the Fund had securities of 187 companies in its portfolio with a total cost of Tk. 1225.85 lac, the market value of which was Tk. 4162.39 lac.

The ex-dividend net asset value per certificate of Sixth ICB Mutual Fund of Tk. 100.00 each stood at Tk. 748.85 as on 30 June 2010.

The opening and closing market price per certificate of Sixth ICB Mutual Fund of Tk. 100.00 each was Tk.679.25 and Tk. 647.75 respectively during 2009-10.

The number of certificate holders of the fund was 6385 as on 30 June 2010.

4.8.7 Seventh ICB Mutual Fund The Seventh ICB Mutual was established in June 1986, under regulation 29A of ICB (General) Regulation with a total capital of Tk. 3,00,00,000 dividends into 300000 certificates of Tk. 100 each.

4.8.7.1 Dividend Income The Fund has earned an amount of Tk. 72.50 lac as dividend and interest from 70 securities during 2009-2010 of which, Tk. 63.27 lac (92.28 percent) was received in cash within 30 June 2010.

4.8.7.2 Capital Gains on Sale of Investments During 2009-10, the Fund has earned Tk. 607.87 lac as capital gains by selling securities of 89 companies.

4.8.7.3 Income, Expenses and Distribute Income During the year under review, the Fund has earned a gross income of Tk. 688.53 lac. by way of dividend and interest income from investment in securities of Tk. 72.05 lac., interest income of Tk. 8.61 lac. on bank deposits, capital gains of Tk. 607.87 lac.

After deducting the total expenses of Tk. 388.91 lac. incurred as staff expenses, management fee, printing and stationery, postage and telegram, interest on current account with ICB, bank charges, provision against investment and others, the net income of the Fund stood at Tk. 299.62 lac. Taking into account the previous year’s undistributed income of Tk. 167.69 lac, the Fund had a net distributable income of Tk. 467.31 lac as on 30 June 2010 resulting in distributable income per certificate of Tk. 155.77.

4.9.8.4 Dividend The Fund has declared dividend at the rate of Tk. 70.00 per certificate of Tk. 100.00 each for the year 2009-10, which was Tk. 35.00 per certificate in the previous year.

After making provision of Tk. 210.00 lac for payment of dividend the Fund has an undistributed income of Tk 257.31 lac., details given in Appendix-A7.

4.8.7.5 Portfolio

During 2009-10, the Fund has made an investment of Tk. 218.46 lac in securities of 24 companies. As on 30 June 2010 the Fund had securities of 181 companies in its portfolio with a total cost of Tk. 1341.95 lac, the market value of which was Tk. 4324.86 lac.

The ex-dividend net asset value per certificate of Seventh ICB Mutual Fund of Tk. 100.00 each stood at Tk. 1180.13 as on 30 June 2010.

The opening and closing market price per certificate of Seventh ICB Mutual Fund of Tk. 100.00 each was Tk.892.50 and Tk. 1063.00 respectively during 2009-10.

The number of certificate holders of the fund was 2383 as on 30 June 2010.

4.8.8 Eighth ICB Mutual Fund The Sixth ICB Mutual was established in June 1986, under regulation 29A of ICB (General) Regulation with a total capital of Tk. 5,00,00,000 dividends into 500000 certificates of Tk. 100 each.

4.8.8.1 Dividend Income The Fund has earned an amount of Tk. 75.41 lac as dividend and interest from 66 securities during 2009-2010 of which, Tk. 68.63 lac (91.01 percent) was received in cash within 30 June 2010.

4.8.8.2 Capital Gains on Sale of Investments During 2009-10, the Fund has earned Tk. 670.68 lac as capital gains by selling securities of 87 companies.

4.8.8.3 Income, Expenses and Distribute Income During the year under review, the Fund has earned a gross income of Tk. 755.65 lac. by way of dividend and interest income from investment in securities of Tk. 75.41 lac. interest income of Tk. 9.56 lac. on bank deposits, capital gains of Tk. 670.68 lac.

After deducting the total expenses of Tk. 292.01 lac. incurred as staff expenses, management fee, printing and stationery, postage and telegram, interest on current account with ICB, bank charges, provision against investment and others, the net income of the Fund stood at Tk. 463.64 lac. Taking into account the previous year’s undistributed income of Tk. 222.23 lac, the Fund had a net distributable income of Tk. 685.87 lac as on 30 June 2010 resulting in distributable income per certificate of Tk. 137.17.

4.8.8.4 Dividend The Fund has declared dividend at the rate of Tk. 65.00 per certificate of Tk. 100.00 each for the year 2009-10, which was Tk. 32.00 per certificate in the previous year.

After making provision of Tk. 325.00 lac for payment of dividend the Fund has an undistributed income of Tk 360.87 lac., details given in Appendix-A8.

4.8.8.5 Portfolio

During 2009-10, the Fund has made an investment of Tk. 249.19 lac in securities of 21 companies. As on 30 June 2010 the Fund had securities of 175 companies in its portfolio with a total cost of Tk. 1538.86 lac, the market value of which was Tk. 5002.74 lac.

The ex-dividend net asset value per certificate of Eighth ICB Mutual Fund of Tk. 100.00 each stood at Tk. 864.95 as on 30 June 2010.

The opening and closing market price per certificate of Eighth ICB Mutual Fund of Tk. 100.00 each was Tk.632.76 and Tk. 755.50 respectively during 2009-10.

The number of certificate holders of the fund was 6735 as on 30 June 2010.

CHAPTER 5 PERFORMANCE ASSESSMENT OF ICB MUTUAL FUNDS

Table 12:

5.1.1 Current Ratio Figure 3:

According to the chart, the First Mutual Fund was the highest in 2009-10 while the Fifth Mutual Fund was the lowest in the same year. Every Mutual Fund was increased in 2009-10 except Fifth and Seventh Mutual Funds.

5.1.2 Earning Per Share Figure 4:

8th 7th 6th 5th 2008-09

4th

2009-10

3rd 2nd 1st 0

100

200

300

400

500

600

In the graph, maximum earn from per share shows the maximum profit and company’s growth is well.

Here we see that, Earning Per Share is increases in 2009-10 from previous year of 2008-09. It is a good sign for a company. And here most EPS comes from 1 st ICB Mutual Fund.

5.1.3 Price Earning Ratio Figure 5:

8th 7th 6th 5th

2008-09

4th

2009-10

3rd 2nd 1st 0

5

10

15

20

In the figure, we see that, some Price Earning ratios are flow down and some are flow up. Price Earning ratio gives an idea of what the market is willing to pay for the company’s earnings. Lower PE ratio indicates the lower risk for investors. And higher ratio not better for investors. Most of the ICB Mutual Fund’s Price Earning ratio goes down. That means investors are less willing to pay for the mutual funds.

5.1.4 Dividend Payout Ratio Figure 6:

84.00% 82.00% 80.00% 78.00% 76.00% 74.00%

2009-10

72.00%

2008-09

70.00% 68.00% 66.00% 64.00% 62.00% 1st

2nd

3rd

4th

5th

6th

7th

8th

In the graph, we see that, 1st, 5th and 8th ICB Mutual Fund is decreases and other Mutual Funds ration is increases. If dividend pay out ratio is increases this is indicates increasing capability of ICB to invest fund. And other hand if it’s decreases which indicates decreasing capability of ICB to invest fund.

5.1.5 Capital Gain on Investment Figure 7:

In the graph, we see that, the capital gain some are increases and some are decreases.

If it is maximize we can say it’s good. Authority and the committee are working

properly, but here we see in 3rd ICB Mutual Fund decreases the capital gain 28.43% in 2008-09 and direct fall to 7.38% in year of 2009-10. It’s a very bad sign of this sector.

5.1.6 Return on Investment Figure 8:

50.00% 45.00% 40.00% 35.00% 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00%

2009-10 2008-09

1st

2nd

3rd

4th

5th

6th

7th

8th

In the figure, in every mutual fund’s return on investment are increases in 2009-10 from year of 2088-09. It is a very good scenario. Every company wants to maximize the return on investment.

5.2 SWOT ANALYSIS 5.2.1 Strengths •

Credit Quality: ICB has in its credit portfolio good exposure. The practice of good credit culture has ensured quality assets in its balance sheet.

•

Experienced Sponsors: Shareholders have arrived from respectable family.

Well established business house, insurance company, leading industrialists are also in sponsorship at ICB. The paid up capital of ICB is largest in the industry among the investment companies.

•

Strong Management: ICB has the backing of a strong financial management group who advises on various management issues. Besides, people with rich financial background are managing the day to day affairs of the company.

•

Strong research and development.

•

Ability to manage strategic change.

•

Skill portfolio management.

5.2.2 Weaknesses •

Poor Recovery of Rental Dues: The Company is suffering gradual in recovering its rental dues. If this continues, it may face fund crisis.

•

Low rate of dividend declared by the organization.

•

Growth without direction.

•

Weak network

•

Bureaucratic practice

5.2.3 Opportunities •

Diversified Revenue Flow: Diversifying its product can be a good opportunity. Besides offering existing products, other activities can be funds management, merchant banking activities and other financial advisory services.

•

Technological Change: Officers can be computerized to increase the efficiency of its operation.

•

Finance on Small and Mid Level Enterprise: Long-term and medium term project loans, short-term working capital loans and financing for the establishment and expansion of micro, small and medium enterprises in the private sector can be catalysts to the profitability of ICB.

•

Government tries boost up capital market.

5.2.4 Threats •

Economic Uncertainties: The economy of Bangladesh as well as that of the Investment Company is tied with that of the overseas. Rise in interest rate and events like terrorist attacks are likely to affect the Bangladesh economy and the margin of leasing companies.

•

Lack of Sufficient Legal Framework: The Lack of Sufficient Legal Framework to penalize the defaulter of bouncing check is resulting in the decrease of recovery rate of rental dues. It’s high time to implement adequate.

•

Increases in private substitute competitor.

•

Increase in foreign competition.

CHAPTER 6

FINDINGS, RECOMMENDATIONS & CONCLUSION 6.1 FINDINGS OF THE RESEARCH The following things are found: •

Most of the Mutual Funds of ICB bear comparatively low risk.

•

Most of the ICB investor’s Accounts are dormant/ inoperative because of: •

Granting loan facility of the investor account holders and charging higher rate of interest against loan account.

•

Lengthy and complicated transaction process

•

Most of the companies do not declare dividend up to satisfactory level which is very harmful for the mutual fund.

•

More time required for taking the certificate.

•

Lack of customer oriented innovative products

6.2 RECOMMENDATIONS In view of the forgoing analysis and in the light of the above mentioned problem the following suggestions are recommended for the improvement of ICB and its Mutual Funds: •

For high amount of reserve from the current income, the present investors are being deprived. So the management should keep minimum reserve in consistent with the net asset value.

•

Mutual Fund management should be free from all kinds of political and government unfair influence.

•

To be established operation management system software for increasing the work effectiveness.

•

ICB should reduce interest rate.

•

Management should look for sources of less costly funds and reduce expenses and increase income.

6.3 CONCLUSION Bangladesh traditionally an agrarian economy is gradually shifting toward industrialization. Investment plays a vital role in this emergent stage of the country.

Investment ensures development. The investment corporation of Bangladesh (ICB) is virtually the only investment bank in Bangladesh. In a broader sense ICB is both investment bank and development finance institutions. ICB plays its important role for the gaining of the investor’s confidence on the capital market and further industrial growth in our country and the development & stabilization of the capital market. Operations of investment accounts under investors’ scheme were the corner stone of merchandising operations of ICB. This scheme played significant role in the country’s capital market. The small investor may effectively participate in the industrialization of the economy along with entrepreneurial group. Over the years, this scheme has grown tremendously with a success & failure story. Under the restructuring program, ICB should specially continue the operations and management of mutual fund and also concentrate to increase the performance of its mutual fund.

BIBLIOGRAPHY •

ICB Annual Report 2008-09 & 2009-10

•

ICB Mutual Funds, Annual Report 2008-09 & 2009-10

•

ICB AMCL Mutual Funds, Annual Report 2008-09 & 2009-10

•

Ordinance and General Regulations of ICB

•

I. M Pandey, “Financial Management”

•

George Foster, “Financial Statement Analysis”, 2nd Edition.

•

Ross Westerfield, “Fundamental of corporate finance”, 3rd edition.

• Kane and Marcus “Investments”, 4th edition.

•

Weygand J. Jerry, Kieso E Donald, Kimmel D Paul, “Accounting Principle”, 7th Edition.

•

Oxford Dictionary of Finance & Banking

•

www.icb.gov.bd

•

www.icbamcl.com.bd

•

www.investmentcorporationofbangladesh/mutual fund

•

www.sharemarketbasics.com/mutual fund

•

www.dsebd.com

•

en.wikipedia.org.

ABREVIATION ICB SEC

= Investment Corporation of Bangladesh. = Securities and Exchange Commission.

DSE

= Dhaka Stock Exchange.

SEC

= Chittagong Stock Exchange.

EBR = Economic and Business Research.

CDBL = Central Depository Bangladesh Limited.

IPO

= Initial Public Offering.

ICT

= Information and Communication Technology.

BB

= Bangladesh Bank.

BDBL = Bangladesh Development Bank Ltd. BSRS = Bangladesh Shilpa Rin Sangstha.

IAS

= International Accounting Standards.

OTC = Over the Counter.

ICML = ICB Capital Management Limited.

AMCL= Asset Management Company Limited.

ISTCL = ICB Securities Trading Company Limited.

CDS

= Central Depository System.

ICAB = Institute of Chartered Accountants of Bangladesh.

ITS

= Internal Transfer of Shares.

IT

= Information Technology.

MIS

= Management Information System.

CMDP = Capital Market Development Program.

CIP

=Cumulative Investment Plan

APPENDIX A 1: First ICB Mutual Fund -Year wise dividend performance Financial Year

Dividend Per Certificate

Financial Year

Dividend Per Certificate

1980-81

20

1995-96

60

1981-82

20

1996-97

70

1982-83

20

1997-98

70

1983-84

25

1998-99

100

1984-85

35

1999-00

125

1985-86

38

2000-01

170

1986-87

41

2001-02

175

1987-88

48

2002-03

180

1988-89

49

2003-04

200

1989-90

49

2004-05

210

1990-91

35

2005-06

210

1991-92

31

2006-07

190 (1B:2)

1992-93

31

2007-08

265

1993-94

45

2008-09

310

1994-95

50

2009-10

400

A 2: Second ICB Mutual Fund -Year wise dividend performance Financial Year

Dividend Per Certificate

Financial Year

Dividend Per Certificate

1984-85

21

1997-98

30

1985-86

23

1998-99

32

1986-87

25

1999-2000

35

1987-88

28

2000-01

40

1988-89

29

2001-02

42

1989-90

29

2002-03

45

1990-91

22

2003-04

50

1991-92

22

2004-05

55

1992-93

21

2005-06

55

1993-94

27

2006-07

62

1994-95

40

2007-08

75

1995-96

42

2008-09

95

1996-97

45

2009-10

200

A 3: Third ICB Mutual Fund -Year wise dividend performance Financial Year

Dividend Per Certificate

Financial Year

Dividend Per Certificate

1985-86

21

1997-98

35

1986-87

22.50

1998-99

38

1987-88

25.50

1999-2000

40

1988-89

26

2000-01

45

1989-90

26

2001-02

50

1990-91

19

2002-03

50

1991-92

19

2003-04

50

1992-93

18

2004-05

52

1993-94

22

2005-06

52

1994-95

27

2006-07

56

1995-96

28

2007-08

65

1996-97

38

2008-09

85

2009-10

140

A 4: Fourth ICB Mutual Fund -Year wise dividend performance Financial Year

Dividend Per Certificate

Financial Year

Dividend Per Certificate

1986-87

21.5

1998-99

35

1987-88

23

1999-2000

36

1988-89

23.50

2000-01

38

1989-90

23

2001-02

40

1990-91

17

2002-03

40

1991-92

18

2003-04

45

1992-93

17

2004-05

48

1993-94

40

2005-06

48

1994-95

41

2006-07

52

1995-96

41

2007-08

60

1996-97

45

2008-09

80

1997-98

32

2009-10

125

A 5: Fifth ICB Mutual Fund -Year wise dividend performance Financial Year

Dividend Per Certificate

Financial Year

Dividend Per Certificate

1987-88

20

1998-99

20

1988-89

20.50

1999-2000

21

1989-90

20.50

2000-01

23

1990-91

10

2001-02

24

1991-92

11

2002-03

24

1992-93

12

2003-04

24

1993-94

25

2004-05

27

1994-95

28

2005-06

27

1995-96

30

2006-07

33

1996-97

35

2007-08

45

1997-98

22

2008-09

56

2009-10

100

A 6: Sixth ICB Mutual Fund -Year wise dividend performance Financial Year

Dividend Per Certificate

Financial Year

Dividend Per Certificate

1988-89

15.50

1999-2000

16

1989-90

13.25

2000-01

17

1990-91

6

2001-02

17.50

1991-92

6

2002-03

17.50

1992-93

-

2003-04

17.50

1993-94

16

2004-05

18.50

1994-95

18

2005-06

18.50

1995-96

20

2006-07

23

1996-97

24

2007-08

30

1997-98

18

2008-09

37

1998-99

15

2009-10

75

A 7: Seventh ICB Mutual Fund -Year wise dividend performance Financial Year

Dividend Per Certificate

Financial Year

Dividend Per Certificate

1995-96

18

2002-03

14.50

1996-97

21

2003-04

15

1997-98

14

2004-05

16

1998-99

13

2005-06

16

1999-2000

13.50

2006-07

22.50

2000-01

14

2007-08

30

2001-02

14.50

2008-09

35

2009-10

70

A 8: Eighth ICB Mutual Fund -Year wise dividend performance Financial Year

Dividend Per Certificate

Financial Year

Dividend Per Certificate

1996-97

18

2003-04

14

1997-98

12

2004-05

15

1998-99

12

2005-06

15

1999-2000

12.50

2006-07

18

2000-01

13

2007-08

25

2001-02

13.50

2008-09

32

2002-03

13.50

2009-10

65