Performance Evaluation of Mutual Funds of Investment Corporation of Bangladesh (ICB)

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					                             Investment Corporation of Bangladesh




                                      Table of Contents


Chapter 1
Introduction & Conceptual Framework of
The Study                                             2-4
1.1 Background of the Report                          2
1.2 Objectives of the Report                          2
1.3 Coverage of the Report                            3
1.4 Source and Methodology of Data Collection 3
1.5 Limitations of the Report                         4

Chapter 2
Investment Corporation of Bangladesh (ICB)            6-11
2.1 Background of ICB                          6
2.2 Objectives of ICB                                 6
2.3 Business Policies of ICB                          6
2.4 Functions of ICB                                  7
2.5 Capital Structure of ICB                          7
2.6 Shareholding Position of ICB                      8
2.7 Management of ICB                                 9
2.8 Share Price                                10
2.9 Transfer of Shares                                10
2.10    Milestone of ICB                              10

Chapter 3
Organizational Features of ICB                        13-14
3.1 Regulatory Framework of ICB                       13
3.2 Institutional Framework                           13
3.3 Manpower                                          13
3.4 Number of Branches of ICB                         14
3.5 Training of Employees                             14
Chapter 4
Functions of Various Departments of ICB               16-27
4.1 Administrative Division                           17
4.2 Merchandising Division                            18



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                             Investment Corporation of Bangladesh



4.3 Funds Division                                    19
4.4 Accounts and Finance Division                     20
4.5 Computer Division                                 22
4.6 Loan Appraisal Division                           22
4.7 Implementation & Recovery                         24
4.8 Legal Affairs Division                            24
4.9 Audits and Method Department                      25
4.10 Secretary‟s Division                             25
4.11 Branch and Subsidiary Control Division           26
4.12 Activities of Subsidiary Company‟s               26


Chapter 5
Introduction of ICB Mutual Funds                      29-36
5.1 Introduction                               29
5.2 What Is Mutual Fund                               29
5.3 Types of Mutual Funds                             30
5.4 Classification of Mutual Fund                     31
5.5 Mutual Fund Returns                               31
5.6 Advantages of Mutual Fund                         32
5.7 Launching Of ICB Mutual Funds                     33
5.8 Regulatory Set-Up of ICB Mutual Fund              33
5.9 Mutual Fund Management                            34
5.10 How to Buy or Sale Mutual Funds                  34
5.11 Registration of Mutual Fund                      34
5.12 Causes Behind Investing In ICB Mutual Fund       34
5.13 How Mutual Funds Work                            35
5.14 Contribution in Mutual Fund by Asset
Management Company Limited (AMCL)                     35
Chapter 6
Performance Evaluation & Analysis of ICB
Mutual Funds                                          38-51
6.1 Mutual Funds of ICB                               38
6.2 Comparative Performance of ICB Mutual Funds       38
6.3 Portfolio Position                                39
6.4 Operational Results                               39



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6.5 Dividend Performance                            40
6.6 Consolidated Position of Portfolios of ICB
Mutual Fund                                         40
6.7 Formula Used For Evaluation                     41
6.8 Calculation of Three Years Performance of
ICB Mutual Funds                                    42
6.9 Performance Analysis of ICB Mutual Fund         45


Chapter 7
Concluding Part                                     53-56
7.1 Problems Related to Mutual Fund                 53
7.2 Recommendation                                  54
Conclusions                                         56
References                                          57




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                     Investment Corporation of Bangladesh



                                  PART-A

                               CHAPTER - ONE

                               INTRODUCTION



1.1 Background of the Report
1.2 Objectives of the Report
1.3 Coverage of the Report
1.4 Source and Methodology of Data Collection
1.6 Limitations of the Report




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                          Investment Corporation of Bangladesh



                                    INTRODUCTION

1.1 BACKGROUND OF THE REPORT:
In accordance with the industrialization in Bangladesh, entrepreneurship development
and investment decision, the author was placed in Investment Corporation of Bangladesh
(ICB) for internship to analyze activity of ICB. In Bangladesh, problem of active
participation of medium and small server in investment do not organize properly. So,
financial institutions cannot accelerate the wheel of the industry as by expectation. On
the other hand, medium and small server is increasing. So there is a strong distinction
participation in the capital market by the financial institutions, and help to judge
investment decision critically. Mutual funds were established as an important part of the
ICB. ICB has played a pioneering role in the development of close-ended Mutual Funds
in Bangladesh. Mutual fund such a fund which is formed as a trust and whose objective
is to collect money from people by selling unit certificate one or more scheme and
invests its fund in a diversified portfolio of stock, bonds and securities.
But there are some problems in the mutual funds management. These problems need to
be solved and to solve the problems it is necessary to find out them first. This report will
help to explore the problems. To the end of the report some recommendation will be
presented to overcome the problems of the problems of operation and management of
ICB‟s mutual fund.


1.2 OBJECTIVES OF THE REPORT:
The objectives of the report are:
   i.   To relate theoretical learning with the practical situation.
  ii.   To review the practical aspect of the Investment Corporation of Bangladesh.
 iii.   To go through all departments of the corporation and observe how the works are
        going on.
 iv.    To investigate the different functions performed by different departments of ICB.
  v.    To know how ICB floats and manage the mutual funds.
 vi.    To explore the problems of ICB‟s mutual fund operation.
vii.    To help the potential investors for assessing invest decision.
viii.   To evaluate the mutual funds for taking investment decision.




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                         Investment Corporation of Bangladesh



1.3 COVERAGE OF THE REPORT:
The main focus of the study is "The Performance Evaluation of the ICB Mutual Fund".
But the report has tried to cover overview of ICB objectives, functions, management,
business policy and other things. This report has also mentioned some problems of ICB‟s
mutual fund and its solutions. The empirical part include only the published information
and current practices of the Investment Corporation of Bangladesh


1.4 SOURCE AND METHODOLOGY OF DATA COLLECTION:
The scope of the report was basically the operation and practice of Investment
Corporation of Bangladesh and the performance of their Mutual funds. On the other
hand, methodology can be termed as underlying principles and rules of organization or
the philosophical systems that work at the backdrop of any study. It clarifies the
problems involving the research in a very ordered and systematic fashion. Strategic are
determined at this stage for future implementation. In this report decisions and
calculations have been made basing on past experiences and the available data of past
activities. These data can be collected in any one or more of the following ways.

Approaches and the methods that have been used to prepare the report arc as follows:
Personal Interview: I interviewed some departmental officials especially those related
to the financial operations of ICB.
Briefing sessions: Departmental heads or their approved officials gave briefs about their
respective departments. Information gathered from these sessions has been used in this
report.
Selection of the sample: The sample area of this report covers the head office of ICB
and mutual fund department since the central financial activities arc done under the
surveillance of the head office of ICB the selection of sample of this study is justifiable.
Data collected from the different divisions of ICB are all equally important segments of
sample used in this study. ICB as a national investment institution has added a huge
tempo in developing the capital market of Bangladesh. As a result of this importance the
selection of ICB as the sample area of this study is presumably the demand of the time.




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1.6 LIMITATIONS OF THE REPORT:
Limitations are obvious in any study so do here. Since this is an internship report, the
limitations regarding the internship program have acted as the limitations of the study.
Among others the main limitations are:


       I had to go to almost every Department of ICB as part of the internship program.
        Three is a very short span of time to get in-depth knowledge about a massive
        organization like ICB.


       Officials of ICB maintain a very busy schedule. So they were not always able to
        provide enough time to enlighten the internee students every time, even if they
        had the intention to do so.


       The area covered by the report "Performance Evaluation of ICB mutual Fund"
        concerns a huge number of activities, and it is very difficult to sketch a total
        picture of the financial activities in a report of this scale.

In spite of all these limitations, we have tried to put in my efforts as far as possible.




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                        Investment Corporation of Bangladesh



                                    PART -A

                               CHAPTER – TWO

      INVESTMENT CORPORATION OF BANGLADESH (ICB)



2.1 Background of ICB
2.2 Objectives of ICB
2.3 Business Policies of ICB
2.4 Functions of ICB
2.5 Capital Structure of ICB
2.6 Shareholding Position of ICB
2.7 Management of ICB
2.8 Share Price
2.9 Transfer of Shares
2.9 Milestones of ICB




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                         Investment Corporation of Bangladesh



      INVESTMENT CORPORATION OF BANGLADESH (ICB)

2.1 BACKGROUND OF ICB:


"The Investment Corporation of Bangladesh (ICB) was established on 1 October 1976,
under "The Investment Corporation of Bangladesh Ordinance, 1976" (no. XL of 1976).
The establishment of ICB was a major step in a series of measures undertaken by the
Government to accelerate the pace of industrialization and to develop a well-organized
and vibrant Capital Market particularly securities market in Bangladesh. ICB caters to
the need of institutional support to meet the equity gap of the companies. In view of the
national policy of accelerating the rate of savings and investment to foster self-reliant
economy, ICB assumes an indispensable and pivotal role. Through the enactment of the
Investment Corporation of Bangladesh (Amendment) Act, 2000 (no. 24 of 2000},
reforms in operational strategies and business policies have been implemented by
establishing and operating subsidiary companies under ICB.



2.2 OBJECTIVES OF ICB:
   ICB has several objectives. These are:
    To encourage and broaden the base of investments.
    To develop the capital market
    To mobilize savings
    To promote and establish subsidiary companies for business expansion
    To provide for matters ancillary there to.

2.3 BUSINESS POLICIES 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 equity and loans singly or through consortium of financial institutions
     including banks.
    To develop and encourage entrepreneurs to diversify investments
    To inspire small and medium savers for investment in securities
    To create employment opportunities



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                         Investment Corporation of Bangladesh



   To encourage more on investment in Agro-based and Information &
    Communication (ICT) sectors


2.4 FUNCTIONS OF ICB:


      Direct purchase of shares and debentures including placement and equity
         participation
      Participating in and financing of joint-venture companies
      Providing lease finance singly and through syndication
      Managing existing Investment Accounts Managing existing mutual funds and
         unit fund Managing Portfolios of existing businesses Conducting Computer
         Training Programs
      Providing advance against ICB Unit and Mutual Fund certificates
      To act as Trustee and Custodian
      Providing Bank Guarantee
      Providing Consumer Credit
      Providing investment counseling to investors
      Participating in Government Divestment Program
      Introducing new business products suiting market demand
      Dealing in other matters related to Capital Market
      To supervise and control the activities of the subsidiary companies



2.5 CAPITAL STRUCTURE OF ICB:


                                                                   Increase/ decrease
                                        As on 30 June
Particulars                                                        (Percentage)
                                        2009        2008
Authorized Capital                      100.00      100.00
Paid-Up Capital                         100.00      50.00          100
Reserves                                164.61      214.61         -23.30
Retained Profit                         128.08      16.33          684.32
Long-Team Govt. Loan                    3.85        4.20           -8.33
Debentures                              21.80       31.80          -31.45
Others                                  12.07       15.05          -14.09
Total                                   430.41      330.99         30.04


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                        Investment Corporation of Bangladesh




                                        Table 01

             Debentures Long-Team    Others
                5%      Govt. Loan    3%
                           1%                 Paid-Up
                                              Capital
                          Retained
                                               23%
                           Profit
                            30%

                                                    Reserves
                                                      38%




                         Capital Structure as on 30 June, 2009.
                                        Graph 01


2.6 SHAREHOLDING POSITION OF ICB:


The shareholding position as on 30 June 2009 was as follows:
                                                        No. of                 % of
SL.                                                                 No. of
                    Shareholders                         Share               Sharehold
No.                                                                 Shares
                                                        holders                  ers
1.      Government of Bangladesh                           1      2700000      27.00
2.      State owned Commercial Banks                       4      2272700      22.73
3.      Development Financial Institution                  2      2563100      25.63
4.      Insurance Corporations                             2      1235562      12.36
5.      Denationalized Private Commercial                  2      908525        9.08
        Banks
6.      Private Commercial Banks                           2      27352        0.28
7.      Mutual Fund                                        1      10200        0.10
8.      Other Institutions                                13      14308        0.14
10.     General Public                                   1377     268253       2.68
Total                                                    1404     10000000    100.00

                                        Table 02
                                Shareholder’s position




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                           Investment Corporation of Bangladesh




                             Shareholder’s position
         Government of Bangladesh                  State owned Commercial Banks
         Development Financial Institution         Insurance Corporations
         Denationalized Private Commercial Banks   Private Commercial Banks
         Mutual Fund                               Other Institutions
         General Public
                                        0% 0% 3%
                                             9%      27%
                                     12%

                                     26%                23%




                                             Graph 02


2.7 MANAGEMENT OF ICB:


The Head office of the corporation as per the requirement of the ordinance of ICB is
located at Dhaka. The general direction & superintendence of the corporation is created
in a board of directors, which consists of 11 directors including the chairman &
managing Director of ICB. The Board of Directors consists of the following directors:

      Chairman to be appointed by the government.

      The Directors to be appointed by the government from among persons servicing
       under the Government.

      The Directors nominated by Bangladesh Bank.

      The Managing Directors, Bangladesh Development Bank Limited.

      Four other directors to be elected by the shareholders.

       The managing directors of ICB to be appointed by the government. The board is
       discharging its functions acts on commercial considerations with due regard to
       the interest of the industry & commerce, investment climate, capital market,
       depository, investors & to the public interest. The managing director is the Chief


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                        Investment Corporation of Bangladesh



       Executive of the corporation. The corporation has an executive comprised of 5
       persons including Managing Director.


2.8 SHARE PRICE


Market price of a share of ICB of Tk. 100.00 each varied from lowest Tk. 1795.31 to
highest Tk. 4861.64 in the stock exchanges during the year. As on 30 June 2009, the
market price of share was Tk. 2478.16 and Tk. 2325.75 in the DSE and CSE
respectively.


2.9 TRANSFER OF SHARES
The volume of shares transferred increased substantially during the year. 99987 shares
were transferred during 2008-09 as against 46103 shares transferred in 2007-08.

2.10 MILESTONES OF ICB:

Milestones
                                                Date of establishment /commencement
ICB                                                      1 October 1976
Investors' Scheme                                        13 June 1977
ICB Chittagong Branch                                    1 April 1980
First ICB Mutual Fund                                    25 April 1980
ICB Unit Fund                                            10 April 1981
ICB Rajshahi Branch                                      9 February 1984
Second ICB Mutual Fund                                   17 June 1984
Third ICB Mutual Fund                                    19 May 1985
ICB Khufna Branch                                        10 September 1985
tCB Sylhet Branch                                        15 December 1985
Fourth ICB Mutual Fund                                   6 June 1986
Fifth ICB Mutual Fund                                    8 June 1987
Sixth ICB Mutual Fund                                    16 May 1988
ICB Barisal Branch                                       31 May 1988
Nomination as the country's
Nodal DFI in SADF                                       7 May 1992
Seventh ICB Mutual Fund                                 30 June 1995
Eighth ICB Mutual Fund                                  23 July 1996
ICB Bogra Branch                                        6 October 1996
ICB Local Office, Dhaka                                 15 April 1997
Purchase of own Land & Building                         11 December 1997
Participation in equity of SARF                         16 January 1998
Advance against ICB Unit
Certificates scheme                                     12 October 1998


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                       Investment Corporation of Bangladesh



Lease Financing Scheme                                22 April 1999
The Investment Corporation of Bangladesh
(Amendment) Act, 2000                                 6 July 2000
Formation and Registration of
three Subsidiary Companies                            5 December 2000
Computer Training Programme                           25 March 2001
Commencement of operations of Subsidiaries:
ICB Capital Management Ltd.                           1 July 2002
ICB Asset Management Company Ltd.                     1 July 2002
ICB Securities Trading Company Ltd.                   13 August 2002
Registration as a Trustee with SEC                    20 August 2002
Registration as a Custodian with SEC                  20 August 2002
Bank Guarantee Scheme                                 21 June 2003
Advance against ICB Mutual Fund
certificates scheme                                   21 June 2003
Consumer Credit Scheme                                15 February 2004




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                    Investment Corporation of Bangladesh



                                PART –A

                            CHAPTER- THREE

               ORGANIZATIONAL FEATURES OF ICB



3.1 Regulatory Framework of ICB
3.2 Institutional Framework
3.3 Manpower
3.4 Number of Branches of ICB
3.5 Training of Employees




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                         Investment Corporation of Bangladesh



   Organizational Features of Investment Corporation of Bangladesh


3.1 REGULATORY FRAMEWORK OF ICB
As mentioned earlier the regulatory framework of ICB is the, Investment Corporation
Bangladesh Ordinance, 1976. This ordinance and regulations laid under the authority of
the ordinance is the source of all power and authority of ICB. Through the recent
enactment of " The Investment Corporation of Bangladesh (Amendment) Act, 2000"
((XXIV) of 2000 scope of ICB's activities through the formation of subsidiaries have
been expanded .In addition to these, to resume its duties and functions, it has to
compelled by Companies Act 1994, trust Act 1882, Insurance Act 1983, security and
exchange commission Act 1993, Banking Companies Act 1993, Foreign Exchange
Regulation 1974 Income Tax Act etc.
It is to note that no provision of laws relating to the winding up of companies or bank
shall apply to the corporation and the corporation and the corporation shall not be wound
up save by order of the government and in such manner as it may direct.


3.2 INSTITUTIONAL FRAMEWORK:
Investment Corporation of Bangladesh is a corporate body as per section 3 of Investment
Corporation of Bangladesh Ordinance, 1976 and deemed to be a banking company
within the meaning of the Banking Companies Ordinance, 1962 (L VII of 1962). The
shares of corporation are listed with the stock exchange. ICB is an authorized broker of
DSE.

3.3 MANPOWER:

The Corporation's manpower strength enhanced by 60 persons through recruitment of 35
officers and 25 employees at different levels during 2008-09. This appointment was
made mainly to add dynamism and efficiency in overall activities of ICB through the
uses of computer technology. On the other hand, four officers resigned and one officer
retired from the services of ICB. One officer got promotion as General Manager and
joined in another bank. The total manpower as on 30 June 2009 stood at 485, which was
418 on the same date of last year. Out of 485 persons, 264 were officers and 162 non-
officer employees. The total number of female employees was 78, including 47 officers,
representing 14.9 per cent of the total manpower.




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                         Investment Corporation of Bangladesh



3.4 NUMBER OF BRANCHES OF ICB:

ICB is a statutory corporation & selling securities. In order to perform these activities
effectively ICB has group of skilled manpower. For these purposes ICB has established
seven branches in Bangladesh. Total branches are as follows:
      Chittagong Branch
      Sylhet Branch
      Barisal Branch
      Khulna Brunch
      Bogra Branch
      Rajshahi Branch
      Local office, Dhaka

3.5 TRAINING OF EMPLOYEES:

     There are two types of training
        1. Local Training
        2. Foreign Training
3.5.1 Local Training:
During 2008-09, as part of human resource development programmer, ICB took steps to
develop skill, knowledge and professional competence of its manpower by arranging
various in-house and local training courses. During the year, 35 officers and 24
employees of ICB received local training on different subjects including Grassroots
Training Course, Financial Institutions Development Project (FIDP), IDA Credit no.
3285 BD: Securitization Workshop, Financing Homeownership Experience with Public-
Private partnership, Leadership Training Course for Women, International workshop on
the Development of Bond Market in Bangladesh, Joint Leadership Training Course for
Finance Sector, Trade Union Course for Youth Member, National Training Course on
Public Procurement Management, Marketing of Bank Products, Corporate Governance,
Departmental Inquiry, Asset Securitization Role of Trustee, Database Administration
with SQL Server-2000, Securitization, Bond Market and Commercial Papers: Primary
and Secondary Market Development, Factoring for SME Financing, The Stock Market in
Bangladesh with Particular Reference to the Operation of the Exchanges and Regulatory
Issues Related to Market Safety, etc.

3.5.2 Foreign Training
During 2008-09, 5 officers participated in a training course held in India on
Identification and Rehabilitation of Sick Projects.


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                       Investment Corporation of Bangladesh




                                   PART -A

                              CHAPTER – FOUR

             FUNCTIONS OF VARIOUS DEPARTMENTS


4.1 Administrative Division
4.2 Merchandising Division
4.3 Funds Division
4.4 Accounts and Finance Division
4.5 Computer Division
4.6 Loan Appraisal Division
4.7 Implementation & Recovery
4.8 Legal Affairs Division
4.9 Audits and Method Department
4.10 Secretary’s Division
4.11 Branch and Subsidiary Control Division
4.12 Activities of Subsidiary Company’s




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               FUNCTIONS OF VARIOUS DEPARTMENTS


Functions of various departments under the various divisions of ICB:

Divisions                                    Departments
4.1 Administrative                              A. Personnel
                                                B. Establishment
4.2 Merchandising                              A. Investors
                                               B. Shares
                                               C. Transaction
4.3 Funds                                       Units sales
                                                A. Unit registration & procurement
                                                B. Mutual Funds
4.4 Accounts & Finance                          A. Central accounts
                                                B. Projects Loan account
4.5 Computer                                    A. Systems analysis
                                                B. Programming
                                                C. Data management
4.6 Loan Appraisal                              A. Loan appraisal
                                                B. Economic & Business Research

4.7 Implementation & Recovery                   A. Project implementation
                                                B. Recovery & follow up
4.8 Legal Affairs                               A. Public issue
                                                B. Law
4.9 Audit & Methods                             A. Audit & methods
4.10 Secretary‟s                                A. Secretary‟s
                                                B. Public relations
4.11 Branch & Subsidiary Control                A. Branch Control
4.12Activities of Subsidiary Companies          A. ICB Capital Management Ltd.
                                                B. ICB Asset Management co. Ltd.
                                                C. ICB Securities Trading co. Ltd.




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                          Investment Corporation of Bangladesh


4.1 ADMINISTRATIVE DIVISION
4.1. A. Personnel Department:
This department deals with the human resources of the organizational makes the rules
and regulation of the right person to the right place. The process may be held two ways:
1. Direct recruitment
2. Promotion

This department takes disciplinary action gradually to that employee who violates the
rules and regulation of the organization. This action is two types:
    A. Light punishment,
    B. Heavy punishment the other functions of this department are as follows:

• To make necessary rules, regulations, policies for efficient administration of the
corporation;
• To handle all personnel matters including confirmation, posting, transfer, fixation,
leaves;
• To process all promotion, time-scale encashment;
• To process registration, retirement cases; To deal with retirement benefits including
gratuity, pension, provident fund etc;
• To handle national pay scale, fixation, increment etc;
• To explore more sources of financing of foreign training; to arrange
seminar/symposia/workshops where experts in the line may be invited to deliver lectures;
• To procure training equipments and facilities for training manpower;
• To deal with all matters relating to ICB employees Union and ICB officers Association.


4.1. B. Establishment Department:
This department deals with purchase and sales of office supplies, office equipment etc.
They also maintain the utility service like telephone bill, electricity bill etc. This
department dividends cost into two categories. These are:
1. Revenue cost
2. Fixed cost
For fixed cost, depreciation is charged at a straight-line basis. There are two purchase
committees do the purchase. There remains a quality control committee to examine the
quality of the product purchased. For the purchase of the products, this department gives
tender offer to the listed suppliers. In case selling of scraps and wastage, the tender offer
is also followed.




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                          Investment Corporation of Bangladesh



4.2 MERCHANDISING DIVISION:
Department under Merchandising division are showing in the following figure:
   A. Investor Department
   B. Shares Department
   C. Transaction Department

4.2. A. Investors Department:

The main task of Investors Department is to accumulate the investment of small and new
investors of the capital market by helping them open an investment account in the
concern department. This department deals with "Investors Scheme.
The following are the main functions of this department:
     Open and maintain Investment accounts
     Sanction loans against deposits in Investment Accounts:
     Buy and sale shares on behalf of the investors;
     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;
     Collect commission as a banker to the issue and brokerage commission from the
      companies;
     Keep financial records of all Investment Account;
     Processing of withdrawal of funds;
     Confirm fund position of individual accounts and
     Posting of all transactions

4.2. B. Shares Department:

The shares act as the custodian of securities. These department facilities the physical
transfer of shares. For performing the above mentioned activities Share Department is
divided into five sections. These sections are:
     Investors portfolio section
     Sale and withdrawal section
     Fund‟s portfolio section
     Securities reconciliation section
     Procurement section




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4.2. C. Transaction Department:

Transaction Department executes the sales and purchase order of shares of the following
different portfolios; ICB, Unite Fund, Mutual Fund and Government portfolio and the
order from investors of investment arid the order from ICB's branches.

For the portfolios order the securities purchase and sale committee take decision every
morning what share be bought and what should be sold for that day. The sale and
purchase orders of the investors constitute demand for execution in this regard. Before
execution, in case of sale, this department has to get aware about the physical existence
of shares from the share--department.

4.3 FUNDS DIVISION:
Department under Funds Divisions are showing in the following figure:
   A. Mutual Funds Department
   B. Unit Sales department
   C. Unit Registration & Procurement Department

4.3. A. Mutual Funds Department:
     Broadly the functions of Mutual Funds Department consist of:
     Act as manager of all mutual funds;
     Maintenance of ledger with the name, address and number of certificates alone;
        with distinct folio number for each Mutual Funds separately;
     Verify the signature of the holders in the 117 forms;
     Preparation of dividend list from the ledger position;
     Issue dividend warrants to the holders of the certificates;
     Distribution of final dividend warrants to the certificate holders after completing
        necessary formations;
     In case of change of ownership of mutual funds certificate holder facilities the
       transfer process;
      Make arrangement for re-issue or duplicate copy of certificate in case of loss or
       damages of certificates;
      Receiving application for the change of address, correction of names and
       forwarding the same to the computer department;
      Arrange for splitting the share scraps as and when necessary in accordance with
       the stock exchange rules;
      Arrange for revalidating the date of payment of dividend on dividend warrant.




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4.3. B. Unite Sales Department:

ICB unit is an open end Mutual Fund through which the small and medium savers get
opportunity to invest their savings in a balanced and relatively low risk portfolio. It
ensures a continuous and regularly flows of incomes for the holders and is easily
encashable. The responsibility undertaken for managing the fund, management fee
charges @ Tk. 1.00 per unit sold. Units are sold through ICB offices and other
authorized bank branches. In lieu of cash dividend, one can reinvest his/her dividend
income under Cumulative Investment Plan (CIP) to purchase additional units with a
price rebate. ICB stopped selling of unit certificates from 1st day of July after the
business operation starts of ICB Asset Management Company Limited. The main
functions of this department are to sale, repurchase and transfer of Unit Certificates.



4.3. C. Unit Registration and Procurement Department:

The following are the functions of this department:
Registration 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 officers/branches as well as appointed bank
       branches;



4.4 ACCOUNTS AND FINANCE DIVISION:

Departments under Account and Finance Division are showing in the following figure:
Account and Finance
   A. Central Account Department
   B. Project Loan Accounts Department

4.4. A. Central Accounts Department:

All kinds of receipts and payments of ICB are done by the Central Account Department.
The bill of all departments end destination is account department. Account department
holds and maintain all accounts separately. For this reason adjustment and rectification


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                          Investment Corporation of Bangladesh



of any transaction of all departments become easier to this department. The functions of
this department are to:
    Prepare income tax return and matters relating to accounts;
    Prepare bills including projects accounts and maintenance of project accounts;
    Prepare salary statements, overtime statements etc;
    Prepare final accounts;
    Keep accounts for Govt. loan and debentures;
    Keep accounts of Unit and Mutual Funds;
    Make correspondence with the Government, financial institutions, branches etc.;
    Maintain liaison with external audit and commercial audit;
    Maintenance of investors accounts and portfolio ledgers;
    Calculation of quarterly interests;
    Posting and balancing of ledgers;
      Furnishing of information to other departments related to Investor's Scheme;
      Determine sources of fond, raising of fund ensure proper utilization of fund;
      Prepare fund flow statement of the Corporation;
      Ensure proper budgetary and cost control.



4.4. B. Project Loan Accounts Department:

The function of this department is to maintain project loan accounts and supply the
management up to-date relevant information of the project. In addition to this the
department is to:
     Issue check to the project after getting disbursement order from the project
        implementation department & any recoverable amount in the disbursement.
     Calculate interest on the disburse amount (half-yearly compounded cyclic
        interest rate using days average).
     Maintain loan ledger, interest suspense ledger etc.
     Classify the loan as per rules and make appropriate provision. ;
     Prepare necessary statement related to project loan.
     Make necessary account adjustment for interest waved as per decision of the
        authority.




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                         Investment Corporation of Bangladesh



4.5 COMPUTER DIVISION:

4.5. A. System Analysis Department:

The main 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, sever and other components and provide
      training to staff of other departments about computer usage,
    Any other assignment given by the management.

4.5. B. Programming Department:

The following are the main functions of this department 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.
    Handling peak load of data entry and data processing work for all other
     department of ICB.

4.5. C. Data Management Department:

The following are the functions of this department:
    Handling peak load of data entry and data processing work for all other
       departments of ICB.
    Any other assignments given by the management.

4.6 LOAN APPRAISAL DIVISION

Department under Loan Appraisal Division are showing in the following figure:
   A. Loan Appraisal Dept. ':
   B. Economic and Business Research Department




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                          Investment Corporation of Bangladesh



4.6. A. Loan Appraisal Department:

ICB provide credit facilities to the public limited companies to meet heir equity gap.
There are two modes by which ICB provides credit facilities to the prospective public
limited companies, through:

1.    Direct underwriting for BMRE and
2.    Underwriting through bridge financing

The main functions of loan appraisal department are:

        Received investment proposal from sponsors
        Place appraisal reports to the board
        Appraise management on technical aspect of the projects
        Prepare appraisal report on project appraisal committee
        Issue sanction letters to the projects
        Conduct meeting of the project appraisal committee
        To develop capital market
        Placement of share and debenture
        Participating in bond financing
        Act as trustee on debenture on behalf of the bondholder



4.6. B. Planning Research and Business Development:

In a simple term PRBD is the spokesman of ICB. Basically it is decision making
decision. The major functions of this department are:

      To take part in the portfolio management decision
      Collect information about OS Li, CS Li, public issue and half yearly
       accounts of the listed companies etc.
      Prepare and distribute annual report of ICB, Mutual funds and unit funds
      Conduct meeting of the securities purchase and sales committee
      Convey securities sales or purchase decision to the merchandising division.
      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.
      Make arrangement for offloading of government portion of shares



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                          Investment Corporation of Bangladesh



     in different companies and state owned institutions.
    Maintain liaison with ministry of finance, Bangladesh Bank and provide ICB
     related information to interested parties


4.7 IMPLEMENTATION AND RECOVERY DEVISION

4.7. A. Project implementation:

The following are the tasks of this department:
    Help implementation of the sanctioned projects.
    Process the case for cancellation of sanctioned project.
    Follow-up the project until the start of commercial operation.
    Inspire the project to go for additional loans and refers them to LAD.
    Send the projects for recovery of dues to recovery department.

4.7. B. Recovery & Follow-up Department:

The followings are the functions of this department:
    Recover the principle and interest due on the sanctioned project.
    Check the financial statements and analyze the sectional study review and
     individual project review.
    Send letter to the project for making payments and reminds if necessary.
    Provide counseling to go for the public issue.
    Rehabilitation of projects through approved reschedules of loan and waiver of
     overdue, interest etc.



4.8 LEGAL AFFAIRS DIVISION

4.8. A. Public Issue Department:

Recently ICB has adopted certain strategic changes in sanctioning bridge loans to
unsatisfactory recovery of loans sanctioned by corporation, Bridge loan would only be
considered for very selective sectors. Priority has given to direct underwriting, direct
investment in debenture and equity participation through placement of share. The
ultimate objective of providing direct underwriting and placement of shares is to help the
projects to go for public issue.




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                         Investment Corporation of Bangladesh



4.8. B. Law department:

Law department handles any kind of legal affairs of legal affairs of ICB. The functions of
this department are as follows:

      Prepare legal document, advance agreements, share agreements, demand
       promissory notes, memorandum and deposit of little deed etc.
      Arrange exception of underwriting-cum-advance agreement, underwriting
       agreement and supplementary documents etc.
      Process litigation cases, prepare legal notice and refer cases to legal advises and
       coordinate with legal advisor in the court.
      Prepare necessary memos for placement in the board meeting relating litigation
       and legal affairs.
      Handle the legal issue related to employee‟s loan facilities and other issues
       related to law.

4.9 AUDITS AND METHOD DEPARTMENT:

   Managing director is the head of Audit and Method Department. Without the
   approval of this department no transaction is done. It checks out the problems and
   brings clarity of the job and its transparency. This department with regard to ICB
   does three kinds of audit, such as internal audit, external audit and commercial audit.
   The main functions of this department are:
    Checking out that all rules are properly maintained or not.

    Advising of new methods of ICB.

    This department f8inds out the fault done by other departments.



4.10 SECRETARY’S DIVISION

4.10. A. Secretary’s Department:
    Arrange meeting 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.

    Send decisions of the meetings for implementation-concerned departments.

    Correspond with the shareholders on different relevant matters, etc.




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                         Investment Corporation of Bangladesh



4.10. B. Public Relations:
    Maintain the close relation with the Ministry of Finance and other concerned

    Help publish all types of official advertisement

    Help focusing ICB through mass-media.

    Publish internal news letter or journal, etc.



4.11 BRANCH AND SUBSIDIARY CONTROL DIVISION:

   Branch Office Control Department:
          Conduct audit and inspect all branches of the Corporation within and outside
           Bangladesh.
          Have overall check on any irregular observed in any branch.



4.12 ACTIVITIES OF SUBSIDIARY COMPANY’S:

4.12. A. ICB Capital Management Limited:

ICB Capital Management Limited can act all types of merchant banking business and to
act as a member of financial markets, portfolio managers issuer, underwriting, co-
underwriters, sub-underwriters, lending activities, to finance venture capital leasing
activities, bridge financing and provide long-term loan, discounting bill of exchange,
providing credit facilities through credit cards, internet counsel regarding investment and
industrial entity.



4.12. B. ICB Asset Management Company Limited:

ICB Asset Management Company Limited can manage assets of any trustee or funds of
any type and/or character and to hold, acquire, sell or deal in such assets or any trusts or
funds, to manage and administer provident or pension funds, to organize various
schemes of different types for trusts or funds, to take part on the management of mutual
fund operations, to operate, conduct, accomplish and establish services for industrial,
trading and commercial activities, to invest funds in shares and securities, to carry on
business as financial and monetary agents to merchandise shares and other securities.




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                         Investment Corporation of Bangladesh



4.12. C. ICB Securities Trading Company Limited:

ICB Securities Trading Company Limited acts as a member of Stock Exchange and has
over-the-counter markets, to carry out business broker, CDs broker, jobbers or dealers in
stock shares, securities, commodities, papers, bonds, obligations, debentures stocks,
foreign currencies, treasury bills in Bangladesh and abroad. To open and maintain
investors account or margin accounts and purchase and sell shares. To carry on business
as financers, promoters, capitalists, financial and monetary agent to merchandise shares
and other securities and to provide professional counsel regarding investment and
manage industrial entity.




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                     Investment Corporation of Bangladesh



                                 PART -B

                            CHAPTER - FIVE

             INTRODUCTION OF ICB MUTUAL FUNDS

5.1 Introduction
5.2 What Is Mutual Fund
5.3 Types of Mutual Funds
5.4 Classification of Mutual Fund
5.5 Mutual Fund Returns
5.6 Advantages of Mutual Fund
5.7 Launching Of ICB Mutual Funds
5.8 Regulatory Set-Up of ICB Mutual Fund
5.9 Mutual Fund Management
5.10 How to Buy or Sale Mutual Funds
5.11 Registration of Mutual Fund
5.12 Causes Behind Investing In ICB Mutual Fund
5.13 How Mutual Funds Work
5.14 Contribution in Mutual Fund by Asset Management Company Limited
(AMCL)




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                          Investment Corporation of Bangladesh



                INTRODUCTION OF ICB MUTUAL FUNDS

5.1 INTRODUCTION:


It is a recognized principle that diversification of investment reduces risk. An individual
may not have the time, expertise and resources to undertake such diversification. Here
arises the advantage of a Mutual Fund. Mutual Funds pool the savings of a great number
of investors and make investments in a wide array of securities. In Bangladesh ICB has
pioneered Mutual Funds for the sake of investors and of the capital market. Country„s
first Mutual Fund the “First ICB Mutual Fund “was floated on 25th April 1980. Since
then ICB has, over the years, floated 8 Mutual Funds with the total capital of Tk. 17.50
crore. ICB Mutual Funds continued to command the confidence and attraction of
investors as lucrative and rewarding investment in terms of steady dividend performance.

ICB has been able to declare attractive dividends on its Mutual Funds during 2008-2009
as previous year. Among the 8 Mutual Funds the highest dividend of 310 percent was
declared on the First ICB Mutual Fund. The dividend declared by seven other mutual
funds ranged from 95.00 percent followed by 85.00 percent on the Second and Third
ICB Mutual Funds. The rates dividend for the previous year ranged from 265 percent to
18 percent. Strong performance of the funds is reflected in the market prices of the funds.
All the mutual funds were traded significantly above par value in both the bourses.

The portfolios of all the mutual funds were managed with diligence and prudence to
ensure maximization of return of risk in the interest of investors.

5.2 WHAT IS MUTUAL FUND?

Mutual funds has been defined by different authors in different words meaning one & the
same thing i.e., it is a non-deposition or non-banking financial intermediary which acts
as important vehicle for bringing wealth holders & deficit units together indirectly.



Mutual funds “are corporation which accepts dollars from savers & then use these dollars
to buy stocks, long-term bonds, and short-term debt. Instruments issued by business or
Govt. unit, these corporations pool funds & thus reduce risk by diversification.”



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                         Investment Corporation of Bangladesh




Mutual funds sell equity shares to investors & use these funds to stocks and/ or bonds.
They tend to specialize in denomination & default risk intermediates. Mutual funds sell
relatively small denomination securities to wealthy holders & use the proceeds to
purchase the market securities of deficit units. These also gain economics of scale, which
lower the cost of analyzing securities managing portfolio & trading in stocks & bonds.

Mutual funds earned income by way of interest or dividend or both from the securities it
holds. It deducts fee, operating expenses & a management income & then passes the
remainder to wealth holder through dividends on the mutual fund share. The dividend
fluctuates with the income on mutual funds investment



5.3 TYPES OF MUTUAL FUNDS:

There are 2 types of Mutual Fund:
           a) Open-end mutual fund
           b) Close-end mutual fund

5.3. A. Open-end Mutual Fund:

The holders of the shares in fund can resell them to the issuing mutual fund company at
anytime. They receive in turn the net assets value (NAV) of the shares at the time of
resale. Such mutual funds companies place their funds in the secondary securities
market. The open-end mutual fund companies buy or sell their own shares. These
companies sell new shares at NAV plus a loading or management fee & redeem shares at
NAV.

5.3. B. Close-end Mutual Fund:

Close-end fund Investment Company has a definite target amount for the funds & cannot
sell more shares after its initial offerings. Its shares are issued like any other company‟s
new issue listed & quoted at stock exchange. The shares of close-end fund are not
redeemable of their NAV as are in open-end fund. These shares are traded in secondary
market prices that may be above or below their NVA. The objectives of close-end funds
may differ as compared to open-end fund. The prices of close end mutual fund shares are
denominated by demand & supply & not by NAV. The examples of close-end funds
include can stock, can share, master-share, magnum etc. which have the above figures.




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                         Investment Corporation of Bangladesh



5.4 CLASSIFICATION OF MUTUAL FUND:

Each mutual fund has its specific investment policy to serve specific investors. So,
mutual fund can be classified by investment policy they are as follow:

5.4. A. Money Market fund.

This fund is invested in short-term debt securities like commercial paper, Treasury bill.
Net Assets Value is fixed and there is no tax implication with the redemption share.

5.4. B. Equity funds:
These are the funds that are invested in income stocks.

5.4. C. Fixed income funds:
These funds are invested in bonds like treasury bonds, municipal bond. Here is no risk
for the investors because they get fixed income from it.

5.4. D. Income funds:
From these funds investors can maximize income from investment.

5.4. E. Balanced funds:
These funds are invested in both bonds and stocks. Here an investor risk is low and the
investors get current income.

5.4. F. Asset-Allocation Funds:
These funds may include foreign equity, real estate shares, natural resources companies
etc.

5.4. G. Specialized sector funds:
These funds are involved in particular and specific industries like housing,
telecommunication, utilizes or precious metals.


5.5 MUTUAL FUND RETURNS:

     There are three types of mutual fund returns:

    I. Dividends: The dividend income to mutual fund company from investments in
       shares, both equity & preference, are passed on to holders. Their dividends are
       subject to tax deduction as per income Tax Laws.




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                        Investment Corporation of Bangladesh



  II. Capital gains: Mutual fund holders or owners also get benefits of capital gain,
      which are realized & distribute in cash or hand. There are subject to tax in the
      same way as gain or uses of directly hold securities.
 III. Increase or decrease in net assets value: The increase or decreases in net assets
      value are the results of unrealized gains & losses on portfolio holdings. They are
      not tax until released.


5.6 ADVANTAGES OF MUTUAL FUND:

      Mutual fund substantially lowers the investment risks of lower investors through
      diversification in which funds are spread out into various sectors, companies,
      securities as well as entirely different market.


     Mutual fund mobilizes the savings of small investors & channels them into
      lucrative investment opportunities. As a result, mutual fund adds liquidity to the
      market. Moreover, given that the funds are long-term investment vehicles, they
      reduce market volatility by offerings support to scrip price.


     Mutual fund provides the small investor‟s access to the whole market that, at an
      individual level, would be difficult if not impossible to achieve.


     Mutual funds are one of the most strictly regulated investment vehicles. The laws
      governing fund require exhaustive disclosure to the SEC as well as the general
      public. The laws also entail continuous regulations of fund operations by the
      Trustee.


     Mutual fund is the only vehicle which operates simultaneously both at the
      demand as well as the supply side of the market. One the supply side, the mutual
      funds being itself a listed security at the SEC, introduces a good & reliable
      instrument in the capital market for the small investor.


     The investor can pick & chase a mutual fund to match his or her particulars
      needs.


     The investors save a great deal in transaction cost given that he /she has access to
      a large number of securities by purchasing single share of a mutual fund.




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                              Investment Corporation of Bangladesh



    5.7 LAUNCHING OF ICB MUTUAL FUNDS:

Name of the fund                      Date of launching             Paid-up capital
                                                                    (Tk. 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
Forth ICB Mutual Fund                 06 June, 1986                 100.00
Fifth ICB Mutual Fund                 08 June, 1987                 150.00
Sixth ICB Mutual Fund                 16 May, 1988                  500.00
Seventh ICB Mutual Fund               30 June, 1995                 300.00
Eighth ICB Mutual Fund                23 July, 1996                 500.00
                                      Total=                        1750.00



    5.8 REGULATORY SET-UP OF ICB MUTUAL FUND:

    When ICB took the initiative of floating mutual fund in Bangladesh, there was no
    organized and recognized regulatory set-up for managing of mutual funds in Bangladesh.
    ICB had to formulate the necessary regulatory set-up and rules for the management of
    mutual funds; the regulatory set-up for ICB Mutual funds is explicitly explained in the
    ICB Regulation-1977. The main features of th8is regulatory set-up are mentioned below:

            The corporation might form the ICB mutual funds of such denominations and
             securities in such each case as the board may determine.

            ICB Mutual Fund certificates will be listed and quoted in the stock exchange in
             Bangladesh and the board may determine subject to the permission of the stock
             exchange.

            ICB Mutual funds certificate shall be movable property and freely transferable.

            ICB Mutual fund certificates may be offered for sale or subscription to the
             general public or to institution, individuals or class individuals or to all or some
             of them and in such manner as the board may in case determine.

            ICB Mutual fund certificate will be sold or offered for subscription with the
             prior consent of the government.




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                         Investment Corporation of Bangladesh



5.9 MUTUAL FUND MANAGEMENT:

There is a decision making board in order to manage different mutual funds. As per
board‟s decision securities are sold brought under different mutual funds. At the same
way securities are sold. In case of new mutual fund subscribes for public issue. ICB
authority is made portfolio earlier by its own finance & given it name. After that it is
published on any newspaper as prospectus, which shares & debentures have been,
brought under these mutual fund shows in the prospectus. By studying this prospectus
public response whether they will buy the mutual fund or not.



5.10 HOW TO BUY OR SALE MUTUAL FUNDS:

Mutual fund is a close-end fund. So anybody that wants to buy mutual fund he/she has to
buy it from Dhaka Stock Exchange or Chittagong Stock Exchange through any
stockbroker. In the same way he/she can sale it.

5.11 REGISTRATION OF MUTUAL FUND:

In order to receive dividend or to be shareholder of mutual funds anybody who has
purchased it must registrar his then name & address to company registration book
without book closing date. Mutual fund department register shareholders name &
address. As per the name & address Mutual Fund Department sent dividend warrant to
shareholders.

5.12 CAUSES BEHIND INVESTING IN ICB MUTUAL FUND.

ICB mutual fund is regarded as the most trusted medium of investment in the country &
it is very much popular with the small & medium of investment in the country & it is
very much popular with small & medium investors. The reasons of investing in ICB
mutual fund are as follow:

   i.   Free from Tax: Investment in mutual fund free from income tax.

 ii.    High Return: Most small & medium investor seeks a smooth return from their
        investment. The dividend payment against each certificate was very much
        attractive. This brings satisfaction to the investors.

 iii.   Free from Harassment: Investment want to avoid harassment in the investment
        process. Mutual fund of ICB reluctant the investors from such type of pressure.


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                         Investment Corporation of Bangladesh




 iv.   Risk Free: Small & medium investors are very much cautions about the security
       of their investment & they found that there is not chance to loss their savings &
       no doubt about the institution that is will not close its operation without any
       notification.

5.13 HOW MUTUAL FUNDS WORK:

A mutual fund is a separate company. It has a structure that offers several safeguards for
investors. The structure is stated in the following.
            i)     Shareholder ownership: Since the investors bear the fund‟s
                   investment risk so they are owners of the corporation.
            ii)    Board of Director: Shareholders elect Board of Directors.
            iii)   Management Company: Management Company handles daily
                   administration. It may serve as the investment advisor, buying &
                   selling of portfolio.
            iv)    Adviser: According to the objects of the funds adviser runs the
                   portfolio.
            v)     Independent Custodian: The funds asset (stock, Bond‟s cash) is kept
                   by an independent custodian. This protects shareholders against theft
                   by management.
            vi)    Transfer agent: The transfer agent handles sales & redemption of
                   fund shares; handle dividend & capital gain distribution.
            vii)   Principal underwriter (fund distributor): The underwriter helps to
                   distribute fund shares to investing public.



5.14 CONTRIBUTION IN MUTUAL FUND BY ASSET MANAGEMENT
COMPANY LIMITED (AMCL):

AMCL is the subsidiary company of ICB AMCL first mutual fund was established under
a trust deed executed between the ICB and Capital Management limited (ICML) as
„sponsor‟ & the Investment Corporation of Bangladesh (ICB) as „trustee‟ the trust deed
executed on 23rd April 2003. The fund was registered with the Securities & Exchange
Commission (SEC) on 24 may, 2003. Under the Securities & Exchange Commission
(Mutual Fund) Rules, 2001 the SEC approved the prospectus on 04 June 2003 in
accordance with the Securities & Exchange Commission (Mutual Fund) Rules, 2001.
The prospectus of the fund was published on 9th June 2003 & units over allotted on 21st
July 2003, ICB AMCL first mutual fund is a close-mutual fund of 10 years tenure. The
fund is listed with Dhaka Exchange Limited (DSE) & Chittagong Stock Exchange



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                         Investment Corporation of Bangladesh



Limited (CSE). After that ICB AMCL second mutual fund was published. Then ICB
AMCL first, second, third NRB mutual fund are circulated. The units of the fund are
transferable. Income is tax-free up to contain level. Investment is qualified for tax credit
as per Income Tax Ordinance, 1974.

5.14.1 Operational Highlights:

Name                        Year of              Nature of the    Size of the Fund
                            Launching.           Fund             ( TK. In crore)
ICB AMCL 1st Mutual         2003                 Close-end        10.00
Fund
ICB AMCL 2nd Mutual         2009                 Close end        50.00
Fund
ICB AMCL 1st NRB            2007                 Close end        10.00
Mutual fund
ICB AMCL 2nd NRB            2008                  ,,     ,,       100.00
Mutual fund
ICB AMCL 3rd NRB            2010                  ,,     ,,       100.00
Mutual fund

5.14.2 Inclusion of two non-traditional products in the country’s stock market.

During 2004-05, ICB Asset Management Company Limited a subsidiary of ICB Floated
two different types of mutual funds, for the first time in Bangladesh, which added a new
dimension in the country stock market:

a. ICB AMCL Islamic Mutual Fund:

It is a close-end mutual fund, which is governed by the Islamic shariah Law. The size of
the fund is Tk 10.0 crore. The fund would cater to the demand of the investors who wish
to invest only in shariah based financial products.

b. ICB AMCL Pension Holders’ Unit fund:

 It is an open-end mutual fund with an initial capital of TK. 10.0 crore. The fund has
been constituted only for the pensions who retire from their service under pension. Or
gratuity scheme from government, semi-government, autonomous bodies, sector
corporations, nationalized commercial banks, financial institutions and insurance
corporations.




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                     Investment Corporation of Bangladesh



                                 PART - B

                             CHAPTER - SIX

     PERFORMANCE EVALUATION & ANALYSIS OF ICB’S
                  MUTUAL FUNDS


6.1 Mutual Funds of ICB
6.2 Comparative Performance of ICB Mutual Funds 2008-09
6.3 Portfolio Position
6.4 Operational Results
6.5 Dividend Performance
6.6 Consolidated Position of Portfolios of ICB Mutual Fund
6.7 Formula Used For Evaluation
6.8 Calculation of Three Years Performance of ICB Mutual Funds
6.9 Performance Analysis of ICB Mutual Fund




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                                      Investment Corporation of Bangladesh



                  PERFORMANCE EVALUATION & ANALYSIS OF ICB’S
                               MUTUAL FUNDS


            6.1 MUTUAL FUNDS OF ICB

            In the developed countries like Bangladesh, mutual funds are popular & gained
            confidence of not only the investors but also Government. In Bangladesh mutual fund
            came through ICB in 1980. The total paid up capital of mutual funds is Tk. 17.50 crore.
            The ICB mutual fund is more than other funds. Other funds divided rates are attractive.

            6.2 COMPARATIVE PERFORMANCE OF ICB MUTUAL FUNDS 2008-09

                                                2008-09                                               2007-08
                Size of      Per certificate         As on 30 June 2009             Per certificate        As on 30 June 2008
  Name of        fund
  Mutual          (Tk     Distribut   Dividend       Market        Market        Distribut-   Dividen       Market        Market
   Funds        crore)        -       Payment       price per    capitalizatio      able         d         price per    capitaliza
                            able         Tk        certificate     n (Tk in       Income      payment     certificate    tion (Tk
                          Income                       Tk           crore)           Tk         Tk            Tk        in crore)
                             Tk
First    ICB     0.75      752.10      310.00       5783.00         15.25         637.27      210.00       2500.00        12.50
Mutual Fund
Second ICB       0.50      359.93      95.00        2244.75          3.83         191.28       55.00       599.25         3.00
Mutual Fund
Third ICB        1.00      277.52      85.00        1259.50          5.45         150.74       52.00       698.00         6.98
Mutual Fund
Fourth ICB       1.00      270.48      80.00        1236.25          7.78         135.37       48.00       500.00         5.00
Mutual Fund
Fifth    ICB     1.50      134.36      56.00        1230.00         12.46          32.45       27.00       320.00         4.80
Mutual Fund
Sixth    ICB     5.00      81.13       37.00        679.25          11.60          22.25       18.50       194.00         9.72
Mutual Fund
Seventh ICB      3.00      90.90       35.00        892.50          14.93          23.44       16.00       180.00         5.40
Mutual Fund
Eighth ICB       5.00      76.44       32.00        632.75          15.44          21.55       15.00       167.25         8.36
Mutual Fund




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                            Investment Corporation of Bangladesh



    6.3 PORTFOLIO POSITION
    ( as on 30 June 2009)

Name of the Fund               Cost of      Market Value       Market price       No. of
                              Portfolio     of the Portfolio       Per          Certificate-
                             (Tk. in lac)     (Tk. in lac)      Certificate      holders
                                                                 (Taka)
1st ICB Mutual Fund            875.02          4852.32           5783.00            1055
2nd ICB Mutual Fund            643.10          1148.43             2244.75          1045
3rd ICB Mutual Fund             721.46          1462.21            1259.50          3010
4th ICB Mutual Fund             792.53          1664.85            1236.25          2051
5th ICB Mutual Fund            1003.85          2422.01            1230.00          4120
6th ICB Mutual Fund            1229.13          2588.65             679.25          9019
7th ICB Mutual Fund            1394.62          2904.38             892.50          3120
8th ICB Mutual Fund            1570.26          3256.62             632.75          8313
Total                          8229.97         20299.47                            31733

    6.4 OPERATIONAL RESULTS
    (2008-09)

  Name of the Fund          Net income      Distributable income       Ex-dividend intrinsic
                            (Tk. in Lac)      per Certificates          value          per
                                                   (Taka)                   Certificate
                                                                              (Taka)
1st ICB Mutual Fund           288.93                752.10                   5862.15
2nd ICB Mutual Fund            67.77                359.93                   1389.00
3rd ICB Mutual Fund           121.40                277.52                   1037.13
4th ICB Mutual Fund           114.28                270.48                   1171.92
5th ICB Mutual Fund           117.84                134.36                   1133.27
6th ICB Mutual Fund           250.00                 81.13                    417.78
7th ICB Mutual Fund           150.00                 90.90                    659.21
8th ICB Mutual Fund           214.24                 76.44                    418.72




                                                                                       42
                                          Investment Corporation of Bangladesh



            6.5 DIVIDEND PERFORMANCE
                  (Tk. per Certificate)

            Mutual Funds                                      Financial Years
                                            2005-06       2006-07        2007-08     2008-09
             st
            1 ICB Mutual Fund                210.00        190.00         265.00      310.00
                                                        (1B:2,240.00)
            2nd ICB Mutual Fund              55.00          62.00          75.00      95.00
            3rd ICB Mutual Fund              52.00          56.00          65.00      85.00
            4th ICB Mutual Fund              48.00          52.00          60.00      80.00
            5th ICB Mutual Fund              27.00          33.00          45.00      56.00
            6th ICB Mutual Fund              18.50          23.00          30.00      37.00
            7th ICB Mutual Fund              16.00          22.50          30.00      35.00
            8th ICB Mutual Fund              15.00          18.00          25.00      32.00




            6.6 CONSOLIDATED POSITION OF PORTFOLIOS OF ICB MUTUAL
            FUND
            (as on 30 June 2009)

Sl.   Particulars      1st ICB            2nd ICB 3rd ICB 4th ICB 5th ICB           6th ICB    7th ICB    8th ICB
no.                    Mutual             Mutual  Mutual  Mutual  Mutual            Mutual     Mutual     Mutual
                       Fund               Fund    Fund    Fund    Fund              Fund       Fund       Fund
1.    No. of companies    104                103     118     121     112               145     141           140

2.    No. of Securities        106          106        122       125       116        149      146          142

3.    Total investment       875.02        643.10     721.46    792.53    1003.85   1229.13    1394.62    1570.26
        at cost (Tk. in
             lac)
4.      Market Value        4852.32       1148.43     1462.21   1664.85   2422.01   2588.65    2904.38    3256.62
       (30 June 2009)




                                                                                                     43
                       Investment Corporation of Bangladesh



6.7 FORMULA USED FOR EVALUATION:

     Average price= (Year high price+ year law price)/2

     Pay-out Ratio= {Dividend per share (DPS)/Earnings per share (EPS)}100
     Dividend Yield Ratio= {Dividend per certificate (DPC)/ Market price per
      certificate (MPC)}100
     Chagrining dividend % = current year dividend – previous year dividend)/
      value of previous year100
     Growth Rate (Based Year) = {Value of current year – value of previous year}
      100
     Net Asset = Total Assets – Total liabilities.
     Expense Ratio = Total Expense/ Net Assets.
     Price- Earning (P/E) Ratio = (MPC/EPC)
     Dividend pay-out Ratio = (DPC/EPC) 100




                                                                              44
                                          Investment Corporation of Bangladesh



          6.8 CALCULATION OF THREE YEARS PERFORMANCE OF ICB
          MUTUAL FUNDS:
                                                        1st Mutual fund
Year   CP          MV of      GR of     MP /      EPC       DPC   Numb     P/E     DP      Divi    Net       Avg.        No.
       Portfoli    Portfoli   MV        Certi     Tk.       Tk.   ers of   Ratio   Ratio   den     Asset     MP/         Certi
       o           o          Base      ficate                    Share            (%)     d       Tk. in    Certific    ficat
       Tk. in      Tk. in     Year      Tk.                       s                        Yiel    lac       ate         e
       lac         lac        (%)                                                          d                 Tk.         Hold
                                                                                           (%)                           ers
2009   872.02      4852.32     40.27     5783     385.24    310   75000    15.00   80.47   5.36    869.08    6419.50     1055

2008   687.02      3459.20     41.29     2655     331.03    265   50000    24.08   80.05   3.32    680.90    5285.49     989

2007   501.23      2448.33     30.34     2500     240.82    190   50000    14.26   78.89   5.35    381.37    3499.32     1066


                                                        2nd Mutual Fund
Year   CP         MV of       GR of    MP /        EPC      DP    Numb     P/E     DP      Divid    Net       Avg.        Cert
       Portfol    Portfoli    MV       Certific    Tk.      C     ers of   Ratio   Ratio   end      Asset     MP/         ifica
       io         o           Base     ate                  Tk.   Shares           (%)     Yield    Tk. in    Certific    te
       Tk. in     Tk. in      Year     Tk.                                                 (%)      lac       ate         Hol
       lac        lac         (%)                                                                             Tk.         ders
2009   643.10     1148.43     28.67    2244.75     135.55   95    50000    16.56   70.08   4.23     473.34    2285.5      104
                                                                                                                          5
2008   539.63     892.56      13.65    1485.66     107.14   75    50000    31.46   70.00   2.22     412.79    1648.83     994

2007   418.87     785.34      7.89     1276.73     76.15    62    50000    11.83   81.42   6.89     401.45    1486.36     107
                                                                                                                          4



                                                        3rd Mutual Fund
Year   CP         MV of       GR       MP /       EPC       DP    Numb     P/E     DP      Divid   Net        Avg.       Certi
       Portfol    Portfolio   of       Certific   Tk.       C     ers of   Ratio   Ratio   end     Asset      MP/        ficate
       io         Tk. in      MV       ate                  Tk.   Share            (%)     Yield   Tk. in     Certifi    Hold
       Tk. in     lac         Base     Tk.                        s                        (%)     lac        cate       ers
       lac                    Year                                                                            Tk.
                              (%)
2009   721.46     1462.21     20.12    1259.50    121.40    85    10000    10.37   70.02   6.75    381.38     1270.5     3010
                                                                                                              0
2008   510.31     1218.34     10.89    1167.98    92.86     65    10000    17.54   70.00   3.99    324.99     1184.2     2784
                                                                                                              7
2007   423.65     1098.72     8.47     1036.47    69.11     56    10000    9.47    81.03   8.55    289.56     1046.1     2952
                                                                                                              8




                                                                                                               45
                                       Investment Corporation of Bangladesh



                                                   4th Mutual Fund
Year   CP         MV of      GR      MP /       EPC       DP     Numb     P/E      DP       Divi    Net        Avg.      No.
       Portfol    Portfoli   of      Certific   Tk.       C      ers of   Ratio    Ratio    dend    Asset      MP/       Certi
       io         o          MV      ate                  Tk.    Shares            (%)      Yiel    Tk. in     Certifi   ficate
       Tk. in     Tk. in     Base    Tk.                                                    d       lac        cate      Hold
       lac        lac        Year                                                           (%)                Tk.       ers
                             (%)
2009   792.53     1664.85    44.32   1236.25    114.28    80     10000    10.82    70.00    6.47    379.59     1350.5    2051
                                                                                                               0
2008   599.55     1153.59    23.40   1372.34    85.73     60     10000    20.21    69.99    3.46    325.32     1289.3    2152
                                                                                                               2
2007   453.47     934.83     12.84   927.54     63.10     52     10000    9.95     82.41    8.28    284.83     1037.5    1973
                                                                                                               7


                                                   5th Mutual Fund

Year   CP         MV of      GR      MP /       EPC      DP     Number    P/E      DP       Divi    Net        Avg.      No.
       Portfoli   Portfoli   of      Certific   Tk.      C      s of      Ratio    Ratio    den     Asset      MP/       Certifi
       o          o          MV      ate                 Tk.    Shares             (%)      d       Tk.in      Certifi   cate
       Tk. in     Tk. in     Base    Tk.                                                    Yiel    lac        cate      Holde
       lac        lac        Year                                                           d                  Tk.       rs
                             (%)                                                            (%)
2009   1003.8     2422.01    62.84   1230.00    78.56    56     150000    15.66    71.28    4.55    243.83     1575.     4120
       5                                                                                                       00
2008   762.50     1487.37    28.05   936.32     64.26    45     150000    33.57    70.03    2.09    210.27     1245.     3923
                                                                                                               63
2007   582.73     1161.58    25.17   837.67     41.00    33     150000    11.06    80.49    7.28    183.71     977.6     4114
                                                                                                               8

                                                   6th Mutual Fund


Year   CP         MV of      GR of    MP /      EPC      DP     Numbers    P/E      DP      Divid     Net       Avg      No.
       Portfoli   Portfoli   MV       Certifi   Tk.      C      of         Ratio    Ratio   end       Asset     MP/      Certif
       o          o          Base     cate               Tk.    Shares              (%)     Yield     Tk. in    Certif   icate
       Tk. in     Tk. in     Year     Tk.                                                   (%)       lac       icate    Holde
       lac        lac        (%)                                                                                Tk.      rs
2009   1229.13    2588.65    38.88    679.25    50.00    37     500000     13.59    74.00   5.45      182.8     694.0    9019
                                                                                                      7         0
2008   982.89     1863.93    16.90    482.14    42.64    30     500000     20.87    70.36   3.37      162.8     208      9712
                                                                                                      7
2007   858.70     1594.46    12.48    371.56    26.05    23     500000     10.73    88.29   8.83                177.1    1007
                                                                                                                2




                                                                                                                 46
                                         Investment Corporation of Bangladesh



                                                        7th Mutual Fund


Year   CP         MV of       GR of     MP          EPC       DPC       Numbe     P/E     DP      Divi     Net       Avg      No.
       Portfoli   Portfoli    MV        /Certif     Tk.       Tk.       rs of     Ratio   Ratio   dend     Asset     MP/      Certi
       o          o           Base      icate                           Shares            (%)     Yiel     Tk. in    Certif   ficat
       Tk. in     Tk. in      Year      Tk.                                                       d        lac       icate    e
       lac        lac         (%)                                                                 (%)                Tk.      Hold
                                                                                                                              ers
2009   1394.62    2904.38     21.15     892.50      50.00     35.00     300000    17.85   70.00   3.92     190.9     1003.    3120
                                                                                                           5         13
2008   1109.48    2397.36     26.45     636.92      42.86     30.00     300000    33.17   70.00   2.11     170.9     834.8    3029
                                                                                                           5         6
2007   1000.74    1895.88     23.58     529.30      27.52     22.50     300000    10.30   81.76   7.94     136.5     557.8    3335
                                                                                                           8         3


                                                        8th Mutual fund:


Year   CP         MV of      GR       MP /        EPC       DPC       Numb     P/E     DP      Divid     Net        Avg.      No.
       Portfoli   Portfol    of       Certifi     Tk.       Tk.       ers of   Ratio   Ratio   end       Asset      MP/       Certi
       o          io         MV       cate                            Shares           (%)     Yield     Tk. in     Certifi   ficate
       Tk. in     Tk. in     Base     Tk.                                                      (%)       lac        cate      Hold
       lac        lac        Year                                                                                   Tk.       ers
                             (%)
2009   1570.26    3256.6     43.13    632.75      42.85     32.00     50000    14.77   74.68   5.06      176.45     660.00    8313
                  2                                                   0
2008   1202.26    2275.8     22.72    587.30      35.70     25.00     50000    24.47   70.03   2.86      158.60     532.86    8125
                  7                                                   0
2007   864.96     1854.9     21.53    412.75      22.13     18.00     50000    12.30   81.34   6.61      148.75     397.75    8268
                  8                                                   0




                                                                                                                     47
                           Investment Corporation of Bangladesh



6.9 PERFORMANCE ANALYSIS OF ICB’ MUTUAL FUND

Tables and Graph used for Analysis:
                                a) Price Earnings Ratio
           st      nd        rd
Year     1       2         3          4th     5th            6th       7th       8th
2009     15.00   16.56     10.37      10.82 15.66            13.59     17.85     14.77
2008     24.08   31.46     17.54      20.21 33.57            20.87     33.17     24.47
2007     14.26   11.83     9.47       9.95    11.06          10.73     10.30     12.30




The P/E gives an idea of what the market is willing to pay for the company‟s earnings.
The higher the P/E the more the market is willing to pay for the company‟s earnings.
Some investors read a high P/E as an overpriced stock and that may be the case, however
it can also indicate the market has high hopes for this stock‟s future and has bid up the
price.

Conversely, a low P/E may indicate a “vote of no confidence” by the market or it could
mean this is a sleeper that the market has overlooked. Known as value stocks, many
investors made their fortunes spotting these “diamonds in the rough” before the rest of
the market discovered their true worth.

Here, all the mutual fund has higher PE ration in the year of 2008 and after that in 2009
the PE ratio goes down. That means investors are less willing to pay for the mutual
funds.


       35
       30
       25
       20                                                                           2009
       15                                                                           2008
       10                                                                           2007
        5
        0
              1st    2nd      3rd     4th    5th    6th      7th     8th



                               Graph: Price Earnings Ratio




                                                                                      48
                            Investment Corporation of Bangladesh




                               b)      Earnings per certificate
                                                                           (Taka)
                                      rd
 Year          1st      2nd       3                4th       5th     6th       7th     8th
 2009        385.24   135.55    121.40           114.28    78.56   50.00     50.00   42.85
 2008        331.03   107.14    92.86            85.73     64.26   42.64     42.86   35.70
 2007        240.82   76.15     69.11            63.10     41.00   26.05     27.52   22.13



Earning per certificate means that how much mutual fund is earning from a particular
certificate within a year. When the performance of mutual funds is well than it is
automatically increase the earning per share.


      400
      350
      300
      250
                                                                                        2009
      200
                                                                                        2008
      150
                                                                                        2007
      100
        50
         0
               1st    2nd       3rd        4th       5th     6th   7th      8th

                               Graph: Earnings per certificate

The ratio of Mutual fund has increased in 2009. From the investor‟s point of view, if
EPC increase, dividend per share will increase & the investors will be benefited from
both capital gain & dividend. But, if EPC creases then price per certificate will decrease,
dividend per share will decrease & it will be bad for the investors.

From the funds point of view, increase of EPC is also good because the investors will
have confidence on the fund & management team for their efficiency on the maintenance
of the portfolio. It EPC decrease then it is bad because, investors will have no confidence
on the fund & management team.




                                                                                         49
                               Investment Corporation of Bangladesh



                                 c) Dividend per Certificate
                                                                                         (Taka)
              st          nd         rd          th          th      th          th      th
Year         1           2         3            4           5       6           7       8
2009             310     95        85           80          56      37          35.00   32.00
2008             265     75        65           60          45      30          30.00   25.00
2007             190     62        56           52          33      23          22.50   18.00



DPC means that how much dividend a mutual fund is declaring against per certificate for
a particular period. DPC is generally depends upon EPC. It is because when earning is up
it is automatically leads to a better payment to shareholders as divided.


       350
       300
       250
       200                                                                               2009

       150                                                                               2008

       100                                                                               2007

       50
         0
                   1st   2nd      3rd     4th         5th    6th   7th    8th

                                  Graph: Dividend per Certificate

We see that 1st mutual fund declared highest rate of dividend i.e., Tk. 310 per certificate
and 8th mutual fund declared lowest rate dividend i.e., Tk. 32 per certificate. 1st, 2nd, 3rd,
& 4th mutual funds are good but dividend declared for these funds are low. Whereas,
earnings per share 8th, 7th, 6th & 5th are low, but dividend declared for the funds are high
compared to others. So, the dividend policy of ICB mutual funds is not fair.




                                                                                              50
                          Investment Corporation of Bangladesh




                          d) Dividend Pay-out Ratio (%)

Year        1st     2nd        3rd           4th      5th     6th       7th     8th
2009        80.47   70.08      70.02         70.00    71.28   74.00     70.00   74.68
2008        80.05   70.00      70.00         69.99    70.03   70.36     70.00   70.03
2007        78.89   81.42      81.03         82.41    80.49   88.29     81.76   81.34

Dividend payout ratio is the percentage of dividend per certificate distributed to the
shareholders against earnings per certificates. If dividend payout ratio is low, then
generally it is good for the mutual fund because, the fund may reinvest the earnings,
which is not distributed to the securities. But depends on industry-to-industry & other
factors, such as fund‟s income or its dividend policy.


       90
       80
       70
       60
       50                                                                         2009
       40                                                                         2008
       30                                                                         2007
       20
       10
        0
              1st   2nd      3rd       4th      5th    6th    7th     8th

                              Graph: Dividend Payout Ratio

The dividend payout ratio of 6th mutual funds is the highest among all other mutual
funds. And DP ration of 1st mutual for the year 2007, 2008 and 2009 is more or less
same.




                                                                                    51
                                Investment Corporation of Bangladesh




                                             e)   Dividend Yield Ratio (%)
                                                                                                 (Taka)
              st           nd           rd            th           th          th       th       th
Year      1            2            3                4            5           6        7        8
2009      5.36         4.23         6.75             6.47         4.55        5.45     3.92     5.06
2008      3.32         2.22         3.99             3.46         2.09        3.37     2.11     2.86
2007      5.35         6.89         8.55             8.28         7.28        8.83     7.94     6.61

It evaluates the shareholder return in relation to the market value of the share. The
investors always will show his/her interest the share, which dividend yield is high.


              10
               8
               6
                4                                                                                 2009
                2                                                                                 2008
                 0
                                                                                                  2007
                     1st    2nd   3rd        4th     5th    6th         7th   8th

                                     Graph: Dividend yield ratio

                            f) Market Price per Certificate
                                                                                                 (Taka)
           st              nd           rd            th           th          th       th
Year      1            2            3                4            5           6        7        8th
2009          5783     2244.75      1259.50          1236.25      1230.00     679.25   892.50   632.75
2008          2655     1485.66      1167.98          1372.34      936.32      482.14   636.92   587.30
2007          2500     1276.73      1036.47          927.54       837.67      371.56   529.30   412.75

If the market price of a certificate increases, then the investors automatically expect high
dividend or they may make gain from selling that certificate.




                                                                                                       52
                                 Investment Corporation of Bangladesh




       6000

       5000

       4000
                                                                                                    2009
       3000                                                                                         2008

       2000                                                                                         2007


       1000

            0
                   1st     2nd          3rd         4th      5th     6th    7th      8th

                                   Graph: Market price per certificate

Here, from the graph we can see that the market price of 1st mutual fund in the year 2009
goes much higher which is Tk. 5783 compare to other mutual funds, not only that the
price of the fund is the highest relative to previous years. So, the market price of a
certificate of a fund is very important for the investors. Because it shows the future
growth, the investors are confident on the fund.

                                 g) Growth Rate of Market Value (%)

Year            1st       2nd            3rd              4th       5th      6th           7th      8th
2009             40.27    28.67          20.12            44.32     62.84    38.88         21.15    43.13
2008             41.29    13.65          10.89            23.40     28.05    16.90         26.45    22.72
2007             30.34    7.89           8.47             12.84     25.17    12.48         23.58    21.53

Market value means the fund is valued how much in the market. It is determined through
demand & supply.

       70
       60
       50
       40                                                                                    2009
       30                                                                                    2008
       20
                                                                                             2007
       10
        0
                  1st    2nd      3rd         4th     5th     6th    7th    8th

                    Graph: Growth rate of Market value


                                                                                                           53
                         Investment Corporation of Bangladesh



If the market value goes up it is better for the fund & whom it is down, it is bad for the
fund.
Here, in the graph we can see that the growth rate of 6th mutual fund is much higher than
that of others.




                                                                                       54
                     Investment Corporation of Bangladesh



                                 PART - C

                          CHAPTER - SEVEN

                         CONCLUDING PART


7.1 Problems Related to Mutual Fund

7.2 Recommendation

Conclusions




                                                            55
                          Investment Corporation of Bangladesh



       PROBLEMS, RECOMMANDATION AND CONCLUSION


7.1 PROBLEMS RELATED TO MUTUAL FUND:

Mutual funds are managed and run by a professional management team, the success and
growth of the mutual funds depend future profitability and investor‟s confidence also
depend on the management performance.

During the internship at ICB, I have found some problems, which can affect the fund
future and the confidence of the investors. There are some problems related to fund.
They are as follows:

From depositors‟ point of view:

    The services provided by the related personnel are not prompt. It is taking more
       than required time for giving the service.

    Same laggard procedure is also taking place at the time of execution of order.

    Withdrawal of any funds of securities is also very lengthy and complicated
       process and inefficiently managed.

From Portfolio investment point of view:

ICB has not yet done any systematic analysis for measuring how they are doing. ICB has
not identified any key variables to size up all its diversified performance.

From Capital market point of view:

    Dividend is one of the sources of income for the mutual fund. Most of the
       companies do not declare dividend up to satisfactory level.

    The rate of supply of fundamentally strong securities is very low.

    Political unsteady position also hearts the investor‟s sentiment in the market and
       thereby leads to flat the stock market.



                                                                                        56
                          Investment Corporation of Bangladesh



    Using costly borrowing capital for the investment on securities is another factor
       causing problem for high expenditure of maintenance of funds, which affects the
       income of funds.



7.2 RECOMMENDATION

Recommendations are suggested on the basis of problems. There are:
    Reserve should be kept at a minimum level. It may vary fund to fund but not
     more than 25% o f a fund‟s income.

      Dividend policy should be fair to all funds so that the investors may be satisfied.
       Dividend policy should be earning basis, not year basis.

      Investing by costly borrowing funds should be reduced. Management may look
       for source of less costly funds & reduce expenses & increase income.

      ICB may fix redemption date of each fund, it may redeem, 1st, 2nd &3rd mutual
       fund. Because, these funds are established for more than 15 years.

      ICB may take initiative & decision to float more funds for the stabilization of
       capital market & for gaining of investment confidence to invest in the capital
       market.

      Investment in any company‟s shares will need to proceed with conscious &
       investor‟s interest, should the first priority. Any decision which will affect the
       interest the investors will not be complimented, though there are some external
       pressures.

      Unnecessary documentation & levels in the process of withdraw or securities
       should be eliminated. For this computerization is needed & training is must.

      More employees are recruiting for better service & according to the skill &
       education background of employee needs to be positioned.

      Office of mutual fund has to establish within the head office of ICB.

      Office curriculums have to be modernized.




                                                                                       57
                     Investment Corporation of Bangladesh



   Employees should set up proper positioned according their skill and educational
    background.

   To properly monitor and evaluate the mutual fund.




                                                                                58
                          Investment Corporation of Bangladesh



                                   CONCLUSIONS

ICB is a unique name in our country as an investment bank. It is playing a pivotal role to
develop the country's capital Market, ICB as the National Investment house, is the e
organization to per from the activities by creating demand for securities and on the other
hand to ensure the supply of securities in the Capital Market. ICB investor's scheme
helps to boost up domestic economy through facilitating to invest into the capital market.
At a stage, this made an important effect on the capital market and excellent response
from the investor's. The floatation of mutual funds and issuance of unit certificates by the
ICB strengthens the supply of attractive securities in Bangladesh capital market. Mutual
fund management can manage the activities of mutual fund.

Mutual fund department should be innovative, explorative and dynamism. ICB should
specially emphasize on the operations and management of mutual fund because most of
the small investors are key clients of mutual fund.

So, ICB should concentrate to increase the performance of its mutual fund and way to
find out the path for overcoming the problems of operations.

We are quite optimistic that if the given recommendations of this paper are implemented
then ICB mutual fund may be able to overcome its present problems and may contribute
in the rapid development of Bangladesh capital market.




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                     Investment Corporation of Bangladesh



                               REFERENCE:

1.   Annual Reports 2008-09, 2007-08, 2006-07 of ICB.
2.   Annual Reports 2008-09, 2007-08, 2006-07 of ICB Mutual Fund.
3.   The Investment Corporation of Bangladesh Ordinance 1976 (No. XL of 1976)
4.   Annual report of ICB AMCL June 30, 2009.
5.   ICB general regulation.
6.   www.icb.gov.bd
7.   www.stockbangladesh.com
8.   www.dsebd.org




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DOCUMENT INFO
Description: Investment Corporation of Bangladesh (ICB) is a statutory corporation. It is mainly an investment bank. As an investment bank is a financial institution, it mobilized fund from the surplus economic units by savings securities and developed funds to the deficit economic unit also by buying or underwriting securities. The Investment Corporation of Bangladesh was established on 1st October 1976, under “The Investment Corporation of Bangladesh Ordinance, 1976 “(NO. XL of 1976). There are several departments in ICB, which are involved in managing investors, accounts, mutual funds, unit funds and other matters related to capital market. My main focus on this report is ICB’s mutual funds. ICB floated eight mutual funds, which are close-end mutual funds. Total paid up capital of eight mutual funds is Tk. 17.75 crore. Mutual funds are traded in the secondary market i.e., through stock exchange. Price is determined on the basis of demand & supply. The DSE price index is dependent on the movement of the funds. When the price of the fund is increase DSE price index is also increase or vice-versa. So, mutual funds have strong impact on the security market. Performance of mutual funds depends on the performance of the securities under each portfolio & how the portfolio is effectively managed. As on 30 June, 2009, the total cost of portfolio of mutual funds is Tk. 82.30 crore and the market value of the portfolio is Tk. 202.99 crore. The cost of portfolio of 1st mutual funds is Tk. 875.02 lac but market value is Tk. 4852.32 lac, which is more than cost price. On the other hand cost price of 8th mutual fund is Tk. 1570.26 lac and market value is Tk. 3256.62 lac, which is also more than cost price. In case of this inclusion and exclusion from year to year it is shown that all these activities is done judiciary or not and what be the best alternative though market performance, Fundamental and technical analysis. From the analysis we found that the fund, which was floated earlier,