Performance Evaluation of ICB Mutual Funds

View With Charts And Images  

Chapter-1

INTRODUCTION.

1.3
OBJECTIVE OF THE STUDY

The objectives of the
internship program and this report are multiple and important. This report is
intended to let the author calibrate the skills acquired during the MBA
program. However the major objectives are as follows:

·
Analyze the management process of
Investment Corporation of Bangladesh.

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

·
To
relate our theoretical learning with the practical situation.

·
To
review the overall performance of ICB Mutual fund.

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

·
To
analyze the present investment scenario in Bangladesh.

1.4
METHODOLOGY

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

·
An inductive method has been followed in
preparing the report.

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

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

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

1.5
SCOPE OF THE STUDY

The scope of the report is
basically the operations and practice of Investment Corporation of Bangladesh
and to focus on the overall performance of the ICB Mutual Fund. The study was
confined only on the Head Office and gave more concentration on it. The data
comparison was based on published information and oral interview has performed
to get the real perception of the investor. The empirical part included only
published information & current practices of ICB.

1.6
SOURCES OF INFORMATION

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

 1.6.1 Primary Data

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

  1.6.2 Secondary Data

§  Economic
& business research wing of ICB.

§  Annual
report of ICB.

§  Annual
report of ICB mutual fund.

§  ICB
general regulations & ordinance. 

§  Research
Library.

§  Bangladesh
Bureau of Statistics.

§  Business
studies journals & articles.

§  Institute
of business administration journal.

1.7
LIMITATIONS OF THE STUDY

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

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

§  Secrecy
of the official’s.

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

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

Chapter -2

BACKGROUND
OF ICB

2.1
INTRODUCING ICB AS A FINANCIAL INSTITUTION

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

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

2.2
HISTORICAL BACKGROUND OF ICB

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

In the revised
investment policy, which was announced in December 1975. Government announced
its decision to reactivate the stock exchange and examine the question of
recreation of Investment Corporation of Bangladesh. Accordingly a committee of
officials examined the matter and recommended for re-creation of ICB. After the
recommendation the ICB was established on the 1st October 1976,
under the ordinance, 1976 (No. XL of 1976). The establishment of ICB was a
major step in a series of measures under taken by the Govt. to accelerate the
pace of industrialization and develop a well-organized and vibrant capital
market particularly securities market in Bangladesh. It caters to the need of institutional
support to meet the equity gap of the industrial enterprises. In view of the
national policy of increasing the rate of savings and investment to foster
self-reliant economy, ICB assumes an indispensable and far reaching role.  Through the enactment of the investment
corporation of Bangladesh (Amendment) Act, 2000 (XXIV of 2000), scope of ICB’s
activities through the formation and operation of subsidiaries has been
expanded.

2.3 MILESTONES OF ICB

Table-1

Particulars

Date of Establishment

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
Khulna Branch

10
September 1985

ICB
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 (Rajarbag)

11
December 1997

Participation
in equity of SARF

16 January
1998

Advance
against ICB Unit Certificates Scheme

12
October 1998

Lease
Financing Scheme

22 April
1999

“The
Investment Corporation of Bangladesh (Amendment) Act, 2000”

6 July
2000

Formation
& Registration of Three Subsidiary Companies

5
December 2000

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 /ICB AMCL Unit Certificates Scheme

21 June
2003

Consumer
Credit Scheme

15
February 2004

Venture
Capital Financing Scheme

26 April
2007

Purchase
of own Land (Agargoan)

3 March
2008

Equity
and Entrepreneurship Fund (EEF)

1 June
2009

2.4 OBJECTIVES OF
ICB

·
To encourage and broaden the base of
investment.

·
To develop the capital market.

·
To provide for matters ancillary
thereto.

·
To mobilize savings.

·
To promote and establish subsidiary
companies for business development.

2.5 BUSINESS POLICY OF
ICB

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

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

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

·
To develop and encourage
entrepreneurs.

·
To diversify investments.

·
To induce small and medium savers
for investment in securities.

·
To create employment opportunities.

·
To encourage Investment in IT
sector.

·
To encourage Investment in joint
venture capital/project.

2.6
BASIC FUNCTIONS OF ICB

  • Underwriting
    of initial public offering of shares and debentures
  • Underwriting
    of right issue of shares
  • Direct
    purchase of shares and debentures including Pre-IPO placement and equity
    participation
  • Providing
    lease finance to industrial machinery and other equipments singly or by
    forming syndicate
  • Managing
    investors’ Accounts
  • Managing
    Open End and Closed End Mutual Funds
  • Operating
    on the Stock Exchanges

·
Providing investment counsel to
issuers and investors

·
Participating in Government
divestment Program

·
Participating in and financing of,
joint-venture projects

·
Dealing in other matters related to
capital market operations

·
Trusty, Custodian, Bank Guarantee

2.7 ICB’S CAPITAL STRUCTURE

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

Capital Structure of ICB

(An
on 30 June 2010)

Table-2  

Particulars

Tk.
in Crore

Paid
up capital

200.60

Reserves

176.61

Retained
Profit

222.25

Long
term govt. Loan

3.50

Debentures

11.80

Others

10.60

Total

624.76

Figure1:


2.8 SHARE PRICE

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

2.9 TRANSFER OF SHARES

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

2.10 SUBSIDIARY COMPANIES OF ICB

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

§ 
ICB
capital Management Ltd.

§ 
ICB
Asset Management Ltd.

§ 
ICB
securities trading Co. Ltd.

2.10.1 ICB Capital
Management Limited (ICML)

ICB Capital Management Limited (ICML), started its journey as
a subsidiary company of Investment Corporation Bangladesh (ICB) on July 1,
2002. The authorized and paid-up capital of ICML as on 30 June 2010 stood at
Tk. 100.0 crore and Tk. 58.5 crore respectively. ICML has been playing an
important role in the development of capital market by carrying out the
functions of underwriting public issue of securities, portfolio management,
issue management and management of investment accounts with the objectives to
help mobilize savings and encourage and broaden the base of investment. The
Company has emerged as one of the fastest growing merchant bank in the country.

2.10.2 ICB Securities Trading Company Ltd. (ISTCL)

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

2.10.3 ICB Asset Management
Company Ltd. (ICBAMCL)

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

2.11
ORGANOGRAM OF THE ICB
(Figure 2)

2.12
FUNCTION OF EACH DEPARTMENT

2.12.1
Operations Wing

2.12.1.1
Investor’s Department

The main task of Investors’ Department
are:

§  Maintain
investment Accounts.

§  Sanction
loans against deposits in investment Accounts.

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

§  Implement
negotiated over the counter transaction between investment Account holders.

§  Counsel
investors in respect of building up their portfolios.

§  Withdraw
funds and shares from investment accounts.

§  Issue
income tax certificates, portfolio statement accounts statement etc.

§  Provide
service to investment account Holder.

§  Receive
direct applications against public issue of shares;

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

§  Receive
allotment letters from the companies.

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

§  Keep
financial records of all investment accounts.

§  Calculate
quarterly interest of all investors Accounts.

§  Make
periodical reconciliation of investment accounts.

§  Processing
of withdrawal of funds,

§  Confirm
fund position of individual Accounts.

§  Posting
of all transactions

§  Any
other assignment given by the management.

2.12.1.2
Shares Department

The main task of shares department:

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

§  Maintain
record of all the shares of above portfolios.

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

§  Register
and effect transfer of shares as and when required,

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

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

§  Physical
verification of shares before internal transaction,

§  Receive
& deliver the shares of branches

§  Send
shares to transaction department for sale;

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

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

2.12.1.3
Unit Repurchase Department

The main task of unit repurchase
department are listed below:

§  Act
as manager of Unit Fund.

§  Sell
and issue Unit Certificates to the applications.

§  Repurchase
unit Certificates.

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

§  Co-ordinate
activities of Bank Branches in respect of Unit sale and re-purchase;

§  Receive
check and authorized commission of sales by sales agents;

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

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

§  Transmit
units of deceased unit holder.

§  Split
and consolidate unit certificates as requested by unit holders;

§  Any
other assignments given by the management. 

2.12.1.4
Unit Registration and Procurement Department

The tasks of this department are listed
below:

§  Register
and transfer Unit Certificates.

§  Maintain
a separate Register for Unit holder under CIP.

§  Verify
signature of Transfer Deed.

§  Issue
dividend warrants and CIP Certificates to the holders.

§  Procure
Unit certificates of various denominations from the printing press;

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

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

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

§  Any
other assignments given by the management.

2.12.1.5 Mutual Fund Department

The tasks of this department are listed
below:

§  Act
as manager of all mutual funds.

§  Effect
transfer and registration of certificates.

§  Issue
dividend warrants to the holders of the certificates.

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

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

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

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

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

§  Any
other Assignment given by the management.

2.12.1.6
Loan Appraisal Department

The main activities of this department
are given below:

·
Receive Investment
proposals form sponsors;

·
Prepare appraisal
reports on projects;

·
Conduct meeting of the
project appraisal committee;

·
Place appraisal reports
to Board and the consortium;

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

·
Appraise management on
technical aspect of projects;

·
Issue sanction letters
to projects;

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

·
Any other assignments
given by the management.

2.12.1.7
Planning, Research & Business
Development Department

The major
functions of this department are:

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

·
Conduct
meeting of the securities purchase and sales committee.

·
Convey
securities sales or purchase decision to the merchandising division.

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

2.12.1.8 Securities
Reconciliation Department

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

2.12.1.9 System Analysis
Department

The functions of this department are –

§  System
administration of the entire network setup.

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

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

§  Any
other assignments given by the management.

2.12.1.10
Programming Department

This department’s functions are –

·
Developing new software
for ICB.

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

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

·
Any other assignments
given by the management.

2.12.1.11
Data Management Department

The functions of data management
department are –

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

§  Any
other assignments given by the management.

2.12.1.12 Dematerialization
Department

The main
functions of this department are:

§  Paper share converted to electronic share.

§  70-75 Companies share has completed to
dematerialization.

§  Converted to electronic share this department take
custody fee.

2.12.1.13 Management Information
Systems Department

This
department basically helps the organization in decision making by providing
information. The main works of this department are:

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

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

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

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

2.12.1.14 Securities Analysis
Department

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

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

§ 
Prepare 5
years performance appraisal reports of the listed companies.

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

2.12.1.15
Venture Capital Department

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

2.12.1.16 Organizations and Methods
Department

The
main functions of this department are given bellow:

·
To
prepare organizational manual of corporation.

·
To
prepare systematic manual of corporation.

·
To
prepare operation manual of corporation.

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

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

·
To
select the system of administration of corporate different schemes.

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

·
Any
other assignment given by the management.

2.12.1.17 Lien and Consumers Credit
Department

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

2.12.1.18 Leasing Department

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

2.12.2 Administration Wing

2.12.2.1 Personnel Department

The functions of the personnel
department are:

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

·
To
recruit personnel for appointment in the Corporation. 

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

·
Process
all promotion, time scale, encashment, etc. 

·
Process
resignation, retirement cases.

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

·
Control
attendance.

·
Handle
national pay scale, fixation, increment, etc.

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

·
Deal
with all types of disciplinary action.

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

·
Explore
more sources of financing of foreign training.

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

·
Arrange
training of new recruit institute of the Corporation.

·
Run
training institute of the Corporation.

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

·
Procure
training equipment and facilities for training manpower.

·
Deal
with all matters relating ICB employee’s Union.

·
Deal
with all matters relating to ICB officers Association. 

·
Any
other assignment given by the management.

 2.12.2.2 Establishment Department

The main functions, which the
establishment department accomplishes, are given below:

  • Collect stationery
    requirement of all departments.
  • Forecast the annual
    stationery requirement of the corporation.
  • Provide support facilities,
    such as, space, furniture, and stationery, printing materials to all
    departments/employees of the corporation including branches.
  • Procure and distribute fixed
    assets, stationery and printing materials of the corporation.
  • Process procurement of materials
    used in computers.
  • Process bills of computers.
  • Procure, distribute, inform,
    shoes, umbrellas etc.
  • Develop an inventory control
    mechanism to maintain economic order quantity (EOQ).
  • Maintain EOQ to meet the
    urgent necessity of stationery.
  • Supply stationery to the
    department.
  • Continuous cheek up to
    stationery used by the various departments.
  • Processes staff loans &
    advance.
  • Maintain and repair all
    types of fixed assets, including vehicles, photocopy machines, type
    writers and other fixed assets;
  • Maintain telephone intercom
    services, etc.
  • Provide staff bus
    facilities;
  • Deal with lease agreement of
    office premises and houses.
  • Provide medical retainer
    facilities.
  • Deal with group term
    insurance, subscriptions, donations, etc.
  • Deal with Benevolent Fund.
  • Process legal bills
    regarding legal services.
  • Install and repair all
    electrical equipment’s including fans and Air Conditioners.
  • Provide services to all
    types of meetings.
  • Process overtime, T.A./D.A.
    medical bill, WASA bills, electrical bills, etc.
  • Help employees in case of
    death, casualty distress and ameliorate sufferings;
  • Any other assignment given
    by the management.

2.12.2.3 Human Resources Department

The main
functions of this department are:

  • To give and complete the different steps of
    training for the officers/personnel’s in the corporation.
  • Inventing the foreign training and organize the
    training in the foreign countries.
  • To organize the internal training for
    personnel.
  • To organize the training for new appointed
    personnel.
  • To maintain the official training center.
  • To organize the seminar/workshop, symposium, if
    needed take specialist.
  • To collect the training tools and give
    facilities of the trainee.
  • To select the officer/personnel for attending
    the different type of important meeting, seminar and workshop.
  • According to need, others function given by
    administration.

 2.12.2.4 Central Accounts Department

The main tasks of this department
are –

  • Prepare income Tax return
    and matter relating to accounts.
  • Prepare bills including
    project Acco9unts and maintenance of project accounts;
  • Prepare, salary statements,
    overtime statements, etc.
  • Make payments of all bills
    and invoices.
  • Prepare final Accounts.
  • Keep accounts for government
    loan and debentures.
  • Keep Accounts of Unit fund
    and mutual funds;
  • Make correspondence with the
    government, financial institutions, branches
  • Maintain liaison with
    external audit and commercial audit;
  • Maintenance of investors’
    accounts & Portfolio ledgers;
  • Calculation of quarterly
    interest
  • Posting and balancing of
    ledgers
  • Preparation statement of
    accounts for investors
  • Furnishing of information to
    other department related to investors’ scheme.
  • Manage overall fund of the
    corporation
  • Determine sources of fund
    and raising of fund,
  • Ensure proper utilization of
    fund.
  • Prepare annual budget of the
    corporation.
  • Revise the budget as and
    when required,
  • Prepare fund flow statement
    of the corporation.
  • Ensure proper budgetary and
    cost control;
  • Take measure for control of
    expenditure.
  • Any other assignment given
    by the management.

2.12.2.5 Project Loan Accounts
Department

The main tasks of this department are
listed below:

  • Maintenance of loan ledgers
    for bridging & debenture loans;
  • Maintenance of registers for
    interest penal interest dues and over dues;
  • Calculation of interest and
    preparation of periodical bills
  • Preparation and dispatch of
    statement of Accounts.
  • Any other assignment given
    by the management.

2.12.2.6 Fund management department

The main
works of this department are:

·
Manage
overall fund of the corporation.

·
Different
organization provided FDR

·
Different
organization taken TDR

2.12.2.7 Law Department

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

  • Process all legal matters;
  • Prepare legal documents,
    advance agreements, shares agreements, demand, promissory Note, memorandum
    of Deposit of title deeds, etc.
  • Make correspondence with the
    company, prepare share certificates, debentures
  • Arrange execution of
    underwriting cum advance agreement, under writing agreement and
    supplementary documents, etc.
  • Perform all types of legal
    works relating to staff advances;
  • Process litigation cases,
    prepare legal notices, and refer cases to legal advisor and co-ordinate
    with legal advisor in the court.
  • Any other assignment given
    by the management from time to time.
  • Preserve, supervise and keep
    in safe custody of legal security documents in connection with
    underwriting advance, debenture loan and se4curities of unit fund
    portfolio, etc.
  • Coordinate with the
    management, ministries and other Government officers in respect of legal
    affairs;
  • Take necessary steps in
    respect of necessary announcements of ICB ordinance, General Regulations,
    ICB staff House Building Advance regulation, and ICB service regulations,
    etc.
  • Prepare necessary Board
    Members for placement in the Board meeting relating to litigation and
    legal affairs;
  • Represent management and the
    corporation in legal suits

2.12.2.8 Public Issue Department

The activities of this department are-

  • Visit and collect audited
    financial statement from the sponsors.
  • Analyze the financial
    statement ongoing project.
  • Advice, peruse sponsors for
    going for public issue.
  • Assist sponsors to prepare
    prospectus for issuing shares and debentures.
  • Examine the prospectus
    submitted by the sponsors and make arrangements for its approval.
  • Arrange no objection from
    the main loan financing institution;
  • Advise companies in issuing
    allotment letters and refund warrants;
  • Make necessary adjustments
    of bridging loan of concerned company.

2.12.2.9 Documentation Department

The
following are the main functions of this department are:

·
All
important documents are kept

·
Debenture
finance

·
Lease
finance

·
Asset
securitization

·
Equity/
Preferential share finance

2.12.2.10 Project Implementation and
Follow-up Department

The
following are the tasks of this department:

  • Placement of IPO.
  • Justify the projects terms
    and conditions.
  • Help implementation of
    sanctioned projects.
  • Review progress of
    implementation of projects and recommend disbursement of funds.
  • Submit progress reports to
    the management regarding implementation.
  • Process the case for
    cancellation of sanctioned projects.
  • Inspect the site and books of
    accounts of projects
  • Make recommendations for
    additional loans in appropriate cases and refer them to LDA.
  • Provide counseling for
    solution of any disputes and problems.
  • Inspire the project to go for
    public as far as possible after commercial operator.
  • Contract with the consortium
    member/main financer regarding implementation of the projects.
  • Take necessary steps to
    re-arrange the consortium commitment during implementation period if
    necessary.

2.12.2.11 Recovery Department

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

The main
functions of this department are:

  • To provide and reconcile
    statements of dues /over dues periodically.
  • To visit projects for
    evaluating operational performances.
  • To hold meeting with sponsors
    of ICB financed projects in connection with recovery of dues.
  • To furnish status reports on
    the sponsors of ICB assisted projects to different institutions.
  • To ensure recovery of dues
    /over dues from sponsors.
  • To recommend for making
    necessary provisions for bad and doubtful debts in the Annual Accounts of
    the Corporation.
  • To prepare memorandum for
    consideration of the Board of Directors for granting financial relief to
    projects facing various problems.
  • Analyze the problem of sick
    projects and put forward suggesting for salvation of the same.
  • Assist the Law Department of
    the Corporation to take legal actions against defaulting projects.
  • To furnish information to
    different departments of ICB regarding recovery of loans.

2.12.2.12 Trustee department

The main
functions of loan appraisal departments are:

  • One of the most important works is to save the
    self-keeping of the investor, bond holder, Debenture holder.
  • To reserve the resources of the trustee.
  • To maintain the account of trustee.
  • To give the monthly report in the SEC which are
    related to the trust maintaining
  • The savings money of the trustee is invested
    for short term.

2.12.2.13 Custodian Department

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

 2.12.2.14 Secretary’s Department

The
main of this department are as follows:

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

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

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

·
Maintain
attendance registers of Directors.

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

·
Send
decisions of the meetings for implementation of concerned departments.

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

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

·
Correspond
with the shareholders on different relevant matters.

·
Maintain
register of shareholders of the corporation.

·
Arrange
holding of Annual General Meeting of the corporation.

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

·
Make
payment of dividend to the shareholders.

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

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

·
Any
other assignments given by the Board/Management.

2.12.2.15
Public Relations Department

The main of this
department are as follows:

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

·
Help
publish all type of official advertisement.

·
Furnish
management with the relevant newspaper cuttings.

·
Help
focusing ICB through mass media.

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

·
Publish
internal newsletter of journal.

·
Appraise
the management of its overall relation to the public.

·
Any
other matters as may be assigned by the management.

Chapter 3

ACTIVITIES OF ICB

3.1 ICB AS MOTIVATOR IN STOCK MARKET

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

In the
reporting year, through the purchase and sale of securities for ICB’s
investment portfolio, unit fund and mutual funds portfolios and on behalf of
investment account holders ICB made significant contribution In maintaining
depth, stability, reliability and liquidity of the stock market. During 2009-10
the total trading of ICB and its subsidiary companies in both the bourses was
Tk. 12435.32 crore which was 129.24 percent higher than the previous year. In
the reporting year, ICB and its subsidiary companies contribution to total
turnover of Tk. 277870.91 crore of both the bourses was 4.48 percent which was
5.32 percent in the preceding year. As the rate of contribution of ICB and its
subsidiary companies to total turnover of both the bourses has increased,
simultaneously the transaction volume has increased significantly during the
year.

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

ICB has
taken steps to float two sectoral mutual funds of Tk. 500.0 crore each mainly
to develop the power sector of the country. The decision was taken in a Board
meeting held on 13 April 2010.

3.2
OPERATIONAL ACTIVITIES

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

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

 
i.
Direct
participation in equity

ii.
Purchase
of shares, debentures bonds and preference shares

iii.
Lease
financing

iv.
Venture
capital financing

v.
Advance
against equity

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

 3.2.1 Consideration of Applications

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

 3.2.2 Commitment

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

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

Table-3: Comparative
position of commitments during 2009-10 and 2008-09

(Tk. in crore)

Nature
of Financial Assistance

2009-10

2008-09

Increase/ Decrease in amount

(%)  

No. of Projects

Amount

No. of Projects

Amount

Pre-IPO
Placement of shares

4

21.00

1

2.00

950.00

Purchase
of preference share

1

50.00

1

20.00

150.00

Equity
participation

1

0.12

1

0.20

-40.00

Purchase
of debentures

9

45.50

9

84.50

-46.15

Lease
financing

3

79.00

3

30.35

160.30

Investment in bonds

1

14.00

Total

19

209.62

15

137.05

52.95

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

3.2.3
Cumulative Commitment

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

Table-4 Cumulative commitment of ICB as on
30 June 2010   (Tk. In Crore)

Nature of Commitment

2009-10

No of Projects

Amount

Bridging loan

306

116.48

Debenture loan

50

52.30

Sub Total

309*

123.28

Direct Underwriting:

Share

44

73.29

Debentures

6

14.00

Sub
Total

45**

87.29

Pre-IPO Placement:

Shares

37

82.57

Debentures

13

46.05

Purchase
of preference share

12

114.65

Purchase of debenture

47

247.35

Investment in bonds

8

68.34

Direct equity participation

16

21.37

Advance against equity

2

40.00

Lease financing

57

231.28

124***

852.06

Total

497

1062.63

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

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

***
  Commitments were given by ICB.

3.2.4
Disbursement

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

The following table shows
sector-wise cumulative disbursement of project loans by ICB:

 Table-5:  Position of sector-wise disbursement of
project loans   (Tk. in crore)

Sector

No.
of projects

bridging
loan

debenture
loan

Total

Percentage

Food & Allied products

99

17.22

2.10

19.32

16.87

Textile

58

43.72

1.00

44.72

39.05

Specialized Jute products, Jute
yarn, twine and carpets

33

14.85

0.53

15.38

13.43

Forest Products and Allied

1

0

0.15

0.15

0.13

Paper Board printing and
Publishing

11

3.39

0.10

3.49

3.05

Tannery, Leather and Rubber
Products

12

3.28

0.28

3.56

3.11

Chemical, pharmaceuticals and
Allied products

30

8.14

0.76

8.90

7.77

Glass, Ceramic and Other
Non-metallic Mineral products

9

3.60

0

3.60

3.14

Engineering

29

9.61

1.21

10.82

9.45

Services

6

1.60

0

1.60

1.40

Ships, Road and inland water
transport

16

1.45

0

1.45

1.27

Miscellaneous

4

1.33

0.20

1.53

1.34

Total

308

108.19

6.33

114.52

100.00

3.2.5
Computerization of ICB

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

The interested
investors at home and abroad can also obtain information about ICB as well as
its various schemes through the ICBs own web site,
www.invest-corp-bangladesh.com.

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

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

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

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

UPSs have been procured to
facilitate instant customer service.

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

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

The plan of phase-wise up
gradation of existing system of lCB has been undertaken. The design of phase
wise up gradation is being examined by competent authorities/organizations of
the computer field.

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

3.2.6
IT Planning Process in ICB

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

·
IT
friendly process that is easily adaptable to computer technologies.

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

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

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

·
enhancement
and development and system support.

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

Future
Roadmap

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

·
Establishing
ICB firmly on IT industry not only as a consumer but also as a formidable IT
solution provider especially in the financial sector. ICB believes its huge
experience over the years and infrastructure are something that can be offered
in the financial arena of Bangladesh and abroad on business basis in the future.

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

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

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

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

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

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

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

3.2.7
Participation in International Activities

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

3.2.7.1
ICB’s Involvement with South Asian Development Fund (SADF)

SAARC Fund for Regional Projects,
(SFRP) & SRF were established in 1991 with the collaboration of member
countries of the SAARC. The establishment of SADF was officially declared by
dissolving SFRP and SRF in a meeting of member countries held in Dhaka in June
1996. SADF is an Umbrella Fund comprising three windows: (i) Window for
Identification and Development of Projects, (ii) Window for Institutional and
Human Resource Development Projects and (iii) Window for Social and
Infrastructures Development Projects. ICB being the nodal DFI has been
representing Bangladesh in the governing board of SADF and proportionately
contributed to the fund. Up to 30 June 2003, the Seventh meetings of the
governing board of SADF were held. The Managing Director of ICB performed the
responsibilities of the First Chairman of the governing board of SADF and by
rotation, the Chief Executive of Nepal Industrial Development Corporation
(NIDC) is the current Chairman of the governing board of SADF. Under Window-1
of SADF, identification and feasibility studies of 16 projects have been completed
of which 7 projects are in Bangladesh and under Window-II of SADF one training
program was arranged in India.

 3.2.7.2 Investment in South Asia Regional Fund
(SARF)

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

3.3 SERVICES OF ICB

The following services are
rendered by ICB:

3.3.1
Private Placements

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

3.3.2
Custodian and Banker to the Issue

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

3.3.3
Lease Financing

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

3.3.4
Consumer Credit Scheme

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

3.3.5
ICB Mutual Fund

Mutual Funds are also known as
close ended Mutual Funds. The issued capital of a Mutual Fund is limited, that
is, a Mutual Fund offers a limited number of certificates for sale to the
public. The amount of capital and the number of certificates of each Mutual
Fund remains unchanged. ICB Mutual Funds are independent of one another. A
Mutual Fund being listed is traded on the Stock Exchanges. Price of Mutual Fund
certificates after IPO is determined on the Stock Exchanges through interaction
of supply and demand. The market price of a Mutual Fund certificates is
available in Stock exchange quotations and in newspapers.

3.3.6
Investors’ Scheme

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

 
3.3.7 Venture Capital Financing

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

3.3.8
Advances against ICB Mutual Fund Certificates Scheme

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

3.3.9
Advances against Unit Certificates Scheme

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

3.3.10
Bank Guarantee Scheme

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

 3.3.11
ICB Unit Fund

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

3.3.12
Managers and Acquisitions

Companies willing to expand their
business through mergers or acquisitions or to Disinvestment projects that no
longer viable into present capacity of operation can contact the Corporation.
ICB provides professional services & advices in respect of shaping up the
cost and financial structures to ensure best possible operational results.
Besides, in case of divestment, the corporation, through network and
established business relationship, bring buyers and sellers together, help them
to negotiate final agreement and advice on the emerging corporate structure.

3.3.13
Corporate Financial Advice

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

3.3.14
Trustee, Custodian and Issue Manager

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

Chapter-4

OVERVIEW
OF ICB MUTUAL FUNDS

4.1
MUTUAL FUND

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

4.2 LEGAL STATUS
AND OBJECTIVE OF THE FUND

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

4.3 NATURE OF
BUSINESS

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

4.4 THE MAIN
PURPOSE OF MUTUAL FUND

The
main purposes of the Mutual Funds are:

·
 Emphasis is on producing a steady flow of
dividend payment

·
Concentrates
on increasing the value of principal through appreciation of the stocks held

·
 Some combination of the first two approaches

4.5 OPERATIONAL
HIGHLIGHTS

4.5.1 Launching   Table-6

Mutual
Fund

Date
of Launching

Paid-up
Capital

(Taka in lac)

 First ICB Mutual Fund

25 April,1980

50.00

Second ICB Mutual
Fund

17 June,1984

50.00

Third ICB Mutual
Fund

19 May,1985

100.00

Fourth ICB Mutual
Fund

6 June, 1985

100.00

Fifth ICB Mutual
Fund

8 June, 1987

150.00

 Sixth ICB Mutual Fund

16 May,1988

500.00

 Seven ICB Mutual Fund

30 June,1995

300.00

 Eighth ICB Mutual Fund

23 July,1996

500.00

Total 1750.00

4.5.2
Portfolio Position, Market Price per Certificate and Number of Certificate
Holders
(as on 30
June 2010)

Table-7

Name of the
Fund

Cost of
portfolio

(Tk. In Lac)

Market Value
of the portfolio

(Tk. In Lac)

Market price
per certificate

(Taka)

No. of

Certificate-holders

First ICB
mutual fund

887.70

7791.87

8701.00

1105

Second ICB
mutual fund

312.98

1782.44

2578.75

1093

Third ICB
mutual fund

698.25

2547.87

1972.50

1502

Fourth ICB
mutual fund

748.52

2784.04

2139.75

1253

Fifth ICB
mutual fund

952.61

3662.00

1763.00

2560

Sixth ICB
mutual fund

1225.85

4162.39

647.75

6385

Seventh ICB
mutual fund

1341.95

4324.86

1063.00

2383

Eighth ICB
mutual fund

1538.86

5002.74

755.50

6735

Total

8006.72

32058.21

23016

4.5.3 Operational
Result:   Table-8

Name of the
Fund

Net Income

(tk. In Lac)

Distributable
income

Per
certificate

(Taka)

Ex-dividend

Intrinsic
value per Certificate (Taka)

First ICB
mutual fund

423.33

1006.53

9877.68

Second ICB
mutual fund

127.43

519.78

2788.41

Third ICB
mutual fund

184.38

376.89

2190.38

Fourth ICB
mutual fund

177.72

368.20

2387.84

Fifth ICB
mutual fund

213.52

220.71

2036.43

Sixth ICB
mutual fund

453.33

134.80

748.85

Seventh ICB
mutual fund

299.62

155.77

1180.13

Eighth ICB
mutual fund

463.64

137.17

864.95

4.5.4
Dividend Performance:


 (Tk. per Certificate)

Table-9

Mutual Funds

Financial
Year

2007-08

2008-09

2009-10

First ICB
mutual fund

265.00

310.00

400.00

Second ICB
mutual fund

75.00

95.00

200.00

Third ICB
mutual fund

65.00

85.00

140.00

Fourth ICB
mutual fund

60.00

80.00

125.00

Fifth ICB
mutual fund

45.00

56.00

100.00

Sixth ICB
mutual fund

30.00

37.00

75.00

Seventh ICB
mutual fund

30.00

32.00

70.00

Eighth ICB
mutual fund

25.00

32.00

65.00

4.6 CONSOLIDATED
PORTFOLIO STATEMENT

As
on 30 June 2010 cost price and market price of eight Mutual Funds were Tk.
8006.72 lac and Tk. 32058.21 lac respectively. A consolidated statement of the
portfolio of the Funds is given in the following table:

Table-10: Consolidated position of
portfolios of ICB Mutual Funds as on June 2010

Sl.no.

Particulars

1st Mutual Fund

2nd Mutual Fund

3rd Mutual Fund

4th Mutual Fund

5th Mutual Fund

6th Mutual Fund

7th Mutual Fund

8th Mutual Fund

1

No.
of  Companies

122

120

140

139

153

187

181

172

2

No.
of Securities

124

123

141

141

155

189

182

177

3

Total
investment at cost (Tk. In Lac)

887.70

612.98

698.25

748.52

952.61

1225.85

1341.95

1538.86

4

Market
Value

7791.87

1782.44

2547.87

2784.04

3662.00

4162.39

4324.86

5002.74

4.7 PRICE MOVEMENT

During
the year under review, certificates of eight Mutual Funds were actively traded
on the floor of the Dhaka Stock Exchange Ltd and Chittagong Stock Exchange Ltd.
The highest and lowest price of the eight Mutual Funds certificates on Dhaka
Stock Exchange Ltd and position of total transaction during 2009-10 are shown
in the following table:

Table-11:
Market prices of ICB Mutual Funds and Transactions during 2009-10

Sl.
No

Mutual  Funds

Highest
market price (Taka)

Lowest
market price (Taka)

Closing
Market Price (Tk
as on

30 June 2010

1

First
ICB Mutual Fund

9450.00

5790.00

8701.00

2

Second
ICB Mutual Fund

1100

721

2578.75

3

Third
ICB Mutual Fund

690

460.50

1972.50

4

Fourth
ICB Mutual Fund

700

458

2139.75

5

Fifth
ICB Mutual Fund

465

200

1763.00

6

Sixth
ICB Mutual Fund

350

175

647.75

7

Seven
ICB Mutual Fund

320

165.25

1063.00

8

Eight
ICB Mutual Fund

316

162

755.50

4.8 DETAILS DESCRIPTION
OF ICB’S EIGHT MUTUAL FUND

4.8.1
First ICB Mutual Fund

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

4.8.1.1
Dividend Income

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

4.8.1.2
Capital Gains on Sale of Investments

During 2009-10, the Fund earned
Tk. 375.65 lac as capital gains by selling securities of 78 companies.

4.8.1.3
Income, Expenses and Distribute Income

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

4.8.1.4
Dividend

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

4.8.1.5
Portfolio

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

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

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

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

4.8.2
Second ICB Mutual Fund

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

4.8.2.1
Dividend Income

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

4.8.2.2
Capital Gains on Sale of Investments

During 2009-10, the Fund has
earned Tk. 247.65 lac as capital gains by selling securities of 79 companies.

4.8.2.3
Income, Expenses and Distribute Income

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

4.8.2.4
Dividend

The Fund has declared dividend at
the rate of 200.00 per certificate of Tk. 100.00 each for the year 2009-10,
which was Tk. 95.00 per certificate in the previous year. After making
provision of Tk. 100.00 lac for payment of dividend the Fund has an undistributed
income of Tk 159.89 lac., details given in Appendix-A2.

4.8.2.5
Portfolio

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

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

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

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

4.8.3
Third ICB Mutual Fund

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

4.8.3.1
Dividend Income

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

4.8.3.2
Capital Gains on Sale of Investments

During 2009-10, the Fund has
earned Tk. 261.02 lac as capital gains by selling securities of 76 companies.

4.8.3.3
Income, Expenses and Distribute Income

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

4.8.3.4
Dividend

The Fund has declared dividend at
the rate of 140.00 per certificate of Tk. 100.00 each for the year 2009-10,
which was Tk. 85.00 per certificate in the previous year. After making provision
of Tk. 140.00 lac for payment of dividend the Fund has an undistributed income
of Tk 236.89 lac., details given in Appendix-A3.

4.8.3.5
Portfolio

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

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

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

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

4.8.4
Fourth ICB Mutual Fund

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

4.8.4.1
Dividend Income

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

4.8.4.2
Capital Gains on Sale of Investments

During 2009-10, the Fund has
earned Tk. 339.80 lac as capital gains by selling securities of 75 companies.

4.8.4.3
Income, Expenses and Distribute Income

During the year under review, the
Fund has earned a gross income of Tk. 391.99 lac. by way of dividend and
interest income from investment in securities of Tk. 45.89 lac. interest income
of Tk. 6.30 lac. on bank deposits and capital gains of Tk. 339.80 lac.  After deducting the total expenses of Tk. 214.27
lac. incurred as staff expenses, management fee, printing and stationery,
postage and telegram, interest on current account with ICB, bank charges, provision
against investment and others, the net income of the Fund stood at Tk. 177.72
lac. Taking into account the previous year’s undistributed income of Tk. 190.48
lac, the Fund had a net distributable income of Tk. 368.20 lac as on 30 June
2010 resulting in distributable income per certificate of Tk. 368.20.

4.8.4.4
Dividend

The Fund has declared dividend at
the rate of 125.00 per certificate of Tk. 100.00 each for the year 2009-10,
which was Tk. 80.00 per certificate in the previous year. After making provision
of Tk. 125.00 lac for payment of dividend the Fund has an undistributed income
of Tk 243.20 lac., details given in Appendix-A4.

4.8.4.5
Portfolio

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

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

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

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

4.8.5
Fifth ICB Mutual Fund

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

4.8.5.1
Dividend Income

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

4.8.5.2
Capital Gains on Sale of Investments

During 2009-10, the Fund has
earned Tk. 386.03 lac as capital gains by selling securities of 78 companies.

4.8.5.3
Income, Expenses and Distribute Income

During the year under review, the
Fund has earned a gross income of Tk. 451.70 lac. by way of dividend and
interest income from investment in securities of Tk. 59.84 lac. and interest
income of Tk. 6.19 lac. on bank deposits, capital gains of Tk. 386.03 lac.  After deducting the total expenses of Tk. 238.18
lac. incurred as staff expenses, management fee, printing and stationery,
postage and telegram, interest on current account with ICB, bank charges,
provision against investment and others, the net income of the Fund stood at
Tk. 213.52 lac. Taking into account the previous year’s undistributed income of
Tk. 117.54 lac, the Fund had a net distributable income of Tk. 331.06 lac as on
30 June 2010 resulting in distributable income per certificate of Tk. 220.71.

4.8.5.4
Dividend

The Fund has declared dividend at
the rate of Tk. 100.00 per certificate of Tk. 100.00 each for the year 2009-10,
which was Tk. 56.00 per certificate in the previous year. After making
provision of Tk. 150.00 lac for payment of dividend the Fund has an
undistributed income of Tk 181.06 lac., details given in Appendix-A5.

4.8.5.5
Portfolio

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

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

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

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

4.8.6
Sixth ICB Mutual Fund

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

4.8.6.1
Dividend Income

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

4.8.6.2
Capital Gains on Sale of Investments

During 2009-10, the Fund has
earned Tk. 501.23 lac as capital gains by selling securities of 83 companies.

4.8.6.3
Income, Expenses and Distribute Income

During the year under review, the
Fund has earned a gross income of Tk. 569.67 lac. by way of dividend and
interest income from investment in securities of Tk. 59.70 lac. interest income
of Tk. 8.74 lac. on bank deposits, capital gains of Tk. 501.23 lac.  After deducting the total expenses of Tk. 116.34
lac. incurred as staff expenses, management fee, printing and stationery,
postage and telegram, interest on current account with ICB, bank charges,
provision against investment and others, the net income of the Fund stood at
Tk. 453.33 lac. Taking into account the previous year’s undistributed income of
Tk. 220.65 lac, the Fund had a net distributable income of Tk. 673.98 lac as on
30 June 2010 resulting in distributable income per certificate of Tk. 138.80.

4.8.6.4
Dividend

The Fund has declared dividend at
the rate of Tk. 75.00 per certificate of Tk. 100.00 each for the year 2009-10,
which was Tk. 37.00 per certificate in the previous year. After making
provision of Tk. 375.00 lac for payment of dividend the Fund has an
undistributed income of Tk 298.98 lac., details given in Appendix-A6.

4.8.6.5
Portfolio

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

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

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

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

4.8.7
Seventh ICB Mutual Fund

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

4.8.7.1
Dividend Income

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

4.8.7.2
Capital Gains on Sale of Investments

During 2009-10, the Fund has
earned Tk. 607.87 lac as capital gains by selling securities of 89 companies.

4.8.7.3
Income, Expenses and Distribute Income

During the year under review, the
Fund has earned a gross income of Tk. 688.53 lac. by way of dividend and
interest income from investment in securities of Tk. 72.05 lac., interest
income of Tk. 8.61 lac. on bank deposits, capital gains of Tk. 607.87 lac.  After deducting the total expenses of Tk.
388.91 lac. incurred as staff expenses, management fee, printing and
stationery, postage and telegram, interest on current account with ICB, bank
charges, provision against investment and others, the net income of the Fund
stood at Tk. 299.62 lac. Taking into account the previous year’s undistributed
income of Tk. 167.69 lac, the Fund had a net distributable income of Tk. 467.31
lac as on 30 June 2010 resulting in distributable income per certificate of Tk.
155.77.

4.9.8.4
Dividend

The Fund has declared dividend at
the rate of Tk. 70.00 per certificate of Tk. 100.00 each for the year 2009-10,
which was Tk. 35.00 per certificate in the previous year. After making
provision of Tk. 210.00 lac for payment of dividend the Fund has an
undistributed income of Tk 257.31 lac., details given in Appendix-A7.

4.8.7.5
Portfolio

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

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

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

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

4.8.8
Eighth ICB Mutual Fund

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

4.8.8.1
Dividend Income

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

4.8.8.2
Capital Gains on Sale of Investments

During 2009-10, the Fund has
earned Tk. 670.68 lac as capital gains by selling securities of 87 companies.

4.8.8.3
Income, Expenses and Distribute Income

During the year under review, the
Fund has earned a gross income of Tk. 755.65 lac. by way of dividend and
interest income from investment in securities of Tk. 75.41 lac. interest income
of Tk. 9.56 lac. on bank deposits, capital gains of Tk. 670.68 lac.  After deducting the total expenses of Tk.
292.01 lac. incurred as staff expenses, management fee, printing and
stationery, postage and telegram, interest on current account with ICB, bank
charges, provision against investment and others, the net income of the Fund
stood at Tk. 463.64 lac. Taking into account the previous year’s undistributed
income of Tk. 222.23 lac, the Fund had a net distributable income of Tk. 685.87
lac as on 30 June 2010 resulting in distributable income per certificate of Tk.
137.17.

4.8.8.4
Dividend

The Fund has declared dividend at
the rate of Tk. 65.00 per certificate of Tk. 100.00 each for the year 2009-10,
which was Tk. 32.00 per certificate in the previous year. After making
provision of Tk. 325.00 lac for payment of dividend the Fund has an
undistributed income of Tk 360.87 lac., details given in Appendix-A8.

4.8.8.5
Portfolio

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

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

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

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

CHAPTER 5

PERFORMANCE
ASSESSMENT OF ICB MUTUAL FUNDS

Table
12:

5.1.1 Current Ratio

Figure
3:

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

5.1.2
Earning Per Share

Figure
4:

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

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

5.1.3 Price Earnings
Ratio

Figure
5:

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

5.1.4
Dividend Payout Ratio

Figure 6:

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

5.1.5 Capital Gain
on Investment

Figure
7:

In
the graph, we see that, the capital gain some are increases and some are
decreases. If it is maximize we can say it’s good. Authority and the committee
are working properly, but here we see in 3rd ICB Mutual Fund
decreases the capital gain 28.43% in 2008-09 and direct fall to 7.38% in year
of 2009-10. It’s a very bad sign of this sector.

5.1.6 Return on
Investment

Figure
8:

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

5.2 SWOT ANALYSIS

5.2.1 Strengths

  • Credit Quality: ICB has in its credit
    portfolio good exposure. The
    practice of good credit culture has ensured quality assets in its balance
    sheet.
  • Experienced Sponsors: Shareholders have arrived
    from respectable family. Well established business house, insurance
    company, leading industrialists are also in sponsorship at ICB. The paid
    up capital of ICB is largest in the industry among the investment
    companies.
  • Strong Management: ICB has the backing of a
    strong financial management group who advises on various management
    issues. Besides, people with rich financial background are managing the
    day to day affairs of the company.
  • Strong
    research and development.
  • Ability
    to manage strategic change.
  • Skill
    portfolio management.

5.2.2
Weaknesses

  • Poor
    Recovery of Rental Dues:
    The
    Company is suffering gradual in recovering its rental dues. If this
    continues, it may face fund crisis.
  • Low rate of dividend
    declared by the organization.
  • Growth without direction.
  • Weak network
  • Bureaucratic practice

5.2.3
Opportunities

  • Diversified
    Revenue Flow:
    Diversifying
    its product can be a good opportunity. Besides offering existing products,
    other activities can be funds management, merchant banking activities and
    other financial advisory services.
  • Technological
    Change:
    Officers
    can be computerized to increase the efficiency of its operation.
  • Finance
    on Small and Mid Level Enterprise:
    Long-term and medium term project loans,
    short-term working capital loans and financing for the establishment and
    expansion of micro, small and medium enterprises in the private sector can
    be catalysts to the profitability of ICB.
  • Government tries boost up
    capital market.

5.2.4
Threats

  • Economic
    Uncertainties:
    The
    economy of Bangladesh as well as that of the Investment Company is tied
    with that of the overseas. Rise in interest rate and events like terrorist
    attacks are likely to affect the Bangladesh economy and the margin of
    leasing companies.
  • Lack
    of Sufficient Legal Framework:
    The
    Lack of Sufficient Legal Framework
    to penalize the defaulter of bouncing check is resulting in the decrease
    of recovery rate of rental dues. It’s high time to implement adequate.
  • Increases in private
    substitute competitor.
  • Increase in foreign
    competition.

CHAPTER 6

FINDINGS,
RECOMMENDATIONS & CONCLUSION

6.1
FINDINGS OF THE RESEARCH

The following things are found:

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

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

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

·
Lengthy
and complicated transaction process

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

·
More
time required for taking the certificate.

·
Lack
of customer oriented innovative products

6.2
RECOMMENDATIONS

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

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

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

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

·
ICB
should reduce interest rate.

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

6.3
CONCLUSION

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

BIBLIOGRAPHY

·
ICB Annual Report 2008-09 & 2009-10

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

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

Ordinance and General Regulations of  ICB

·
I. M Pandey, “Financial Management”

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

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

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

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

·
Oxford Dictionary of Finance & Banking

www.icb.gov.bd

www.icbamcl.com.bd

www.investmentcorporationofbangladesh/mutual
fund

www.sharemarketbasics.com/mutual
fund

www.dsebd.com

·
en.wikipedia.org.