The Contribution of ICB Unit Fund and Mutual Fund

Executive summary

ICB is a distinctive institution in Bangladesh. Its main function is to make money and financial market active and efficient. It has profit making objective also by operating mainly the small & medium investments in the capital market. So, it is important to evaluate the performance of it so, I make an analysis of their performances.

The performance of unit fund is very much acceptable. The liquidity, leverage & profitability situation is good but P/E & dividend payout ratio is not impressive. The performance of mutual funds are good .All of them, 1^st mutual fund is in best position. The performance of ICB & its subsidiaries are excellent according to liquidity & leverage situation. Profitability situation is also good but dividend yields ratio is not attractive.

In 2006-2007 Performance was not very satisfactory level because that year net profit after tax (PAT) was 30.23% .Capital market was bearish at that time. But next three years, 2007-2008, 2008-2009 and 2009-2010 was 101.19, 111.63 and  213.05% PAT respectively proved outstanding result.

The  depth  of  investment  opportunities  in  Bangladesh  is  very  narrow  and  inadequate.  However, Investment Corporation of Bangladesh (ICB) as the state owned Investment Bank has positive role to play in this respect. Fund management is an important and complex factor to develop the capital market. There are large amount of local capital available in the hand of small and medium investors and comparatively low use of such fund is a major problem of our country.

In some areas ICB should focus on price earning, dividend payout & dividend yield ratios .And it should implement the fundamental analysis, focus more on long term view, and try more to make market efficiency of strong level.

Origin of the Report:

Internship means receiving practical training through attending particular work physically. Practically training means a way through which a person or a trainee can gather experience about the related subjects and be able to apply his theoretical experience in the field of real life action. Practical training is necessary to achieve complete knowledge about something. Internship program is actually a form of practical training.

As a student of MBA, major in marketing, internship is an academic requirement. For doing internship every student is required to work in a selected institution to enhance ones practical knowledge and experiences.

For my internship I was sent to the Investment Corporation of Bangladesh (ICB), under the supervision of Dr. Tahmina Khatun, Professor, Department of Accounting & Information Systems, and University of Dhaka. My Supervisor asked me to prepare a report on one or two specific departments of ICB that’s why I have chosen the topic “Performance of ICB Unit Fund and Mutual fund. I have done the internship at ICB from January 02, 2011 to 03.03.2011

Objective of the Study:

The Objectives of the report are:

• To fulfill the requirement of MBA program as necessitated by Department of Accounting & Information Systems, Faculty of Business Studies,  University of Dhaka.
• To analyze the performance of ICB, it’s Image and its role in the capital market of Bangladesh.
• To relate our theoretical learning with the practical situation.
• To learn the practical aspect of the Investment Corporation of Bangladesh.
• To get aware about the working environment in advance that will help in adjusting a student with the future working life.
• To review the overall performance of ICB Unit fund & Mutual fund.
• To gather knowledge of how ICB floats and manages the Mutual Fund and Unit Fund.
• To focus on the overall performance of the ICB Mutual Fund and Unit Fund.
• To know the product of ICB at the securities market in Bangladesh.

Methodology of the Study:

Methodology can be termed as underlying principles and rules of organization that work at the background of the study. It clarifies the problem involving the research in an ordered and systematic way. For this study data and other information can be collected by the following ways:

Importance of the Study:

There are a number of situations in which the evaluation of portfolio performance becomes necessary and important, such as

a)   Self – Evaluation:      To evaluate how well one has done as individual investor with a view to refining one’s skills and improving one’s performance over period of time.

b)   Evaluation of Managers:      To evaluate portfolio managers by an investment company or asset management company in order to compare performance of these managers among several such managers each running a separate fund or sub-fund within an organization or the performance of portfolio manager over a number of years.

c)   Evaluation of Mutual Fund: To evaluate the various mutual funds operating in the country in order to take decision by the investor which , if any , of these should be chosen for investment or to evaluate the efficacy by the individuals or organization who engage external agencies for portfolio advisory services  and

d)         Evaluation Groups: To evaluate the academics or researchers the performance of a whole group of investors and compare it with another group of investors who use different techniques or who have different skills or access to different information.

Thus, one important reason for doing performance evaluation is to help in correcting errors of portfolio management and improving the performance over a period of time.

But data constraint is a common problem in evaluating performance of any portfolio. On the other hand, by law mutual funds must publicity disclose their operating results? The accepted advantages of the Mutual Funds –diversification and professional management –are appealing to many who have no time to devote to selecting and managing a portfolio. But there is a difficulty in choosing a consistency successful fund among as number of mutual funds with differing sizes, availability, market prices, objectives etc. This study of evaluating mutual fund performance would help identify the best performing mutual fund for the investors, as well as show how the fund managers have done their professional services

Sources and Methods of Collecting Primary data:

i)                  Personal Interview: This is the most effective way to collect primary data. Through this process the Trainee can confront a number of officials of ICB and share holders. I interviewed them by asking financial operation of ICB.

ii)                Briefing Session: In case of corporate organization, this method is very useful. During internship period we visited different departments of ICB and took part briefing session .The head of departments gave briefs the trainees which were very much useful for us and we gathered some valuable information from their briefing.

iii)             By Observation: This process is very useful for gathering primary data. This process is very costly, time consuming. Through this process limited but accurate data can be collected.

Sources and Methods of Collecting Secondary data:

The secondary data had been collected with several relevant articles of the ICB.

These are given below:

1.   ICB Annual Report (2007-08).
2.   Annual Report of Mutual Fund (2008-09).
3.   Annual Report of Unit Fund (2009-10).
4.   Others materials of the Investment Corporation.
5.   Other sources.

Limitations of this Study:

In preparing this report I faced some limitations. During this Internship I worked all the departments of ICB one after another for twelve weeks. ICB is a large autonomous corporation, but three months study time is too short in an organization like ICB and this was the main limitation of my Internship Program.

Other constraints that I faced during the course of my internship are as follows:

1.   Official secrecy of ICB was also a problem to me.
2.   Relevant papers and documents were not available sufficiently.
3.   At the time of face to face discussion with officials, there were no sufficient chairs and tables.
4.   Inadequate information.

Historical Background of ICB

The Investment Corporation of Bangladesh was established on 1^st October 1976, under “The Investment Corporation of Bangladesh Ordinance, 1976 “(NO. XL of 1976). The establishment of ICB was major step in a series of measures undertaken by the Government to accelerate the pace of industrialization and to develop a well organized and vibrant Capital market particularly securities market in Bangladesh. ICB caters to the need of institutional support to meet the equity gap of the industrial enterprises. In view of the notional policy of accelerating the rate of savings and investment to foster enactment of the Investment Corporation of Bangladesh (Amendment) Act, 2000 (No. XXXIV of 2000), reforms in operational strategies and business policies have been taken place by establishing and operating subsidiary companies under ICB.

Objectives of the ICB

The main objectives of ICB are as follows:

1. To encourage and broaden the base of investments.
2. To develop the capital market.
3. To mobilize savings.
4. To promote and establish   subsidiary companies for business development.
5. To provide for matters ancillary thereto.

Business Policy of the ICB

The Corporation has adopted a realistic business policy framework within which its operation is conducted. The corporation in its operating acts on commercial considerations with regard to the interest of industry and commerce, investment climate, capital market depositors, investors and to the public interest generally.

The operational policies of the Corporation are as follows:

1. To provide financial assistance to projects subjects to their economic and commercial viability.
2. To arrange equity and loans singly or through consortium of financial institutions including banks.
3. Equity Support to projects and there by spreads the risks of understanding.
4. To develop and encourage entrepreneurs.
5. To diversify investments.
6. To inspire small and medium savers for investment in securities.
7. To create employment opportunities.
8. To encourage more investment in Agro-based and Information and Communication Technology (ICT) sectors.

Sources of Capital of ICB:

Every organization has some sources of capital. It may be from own sources or may be other sources. In case of Investment Corporation of Bangladesh it is a public limited company issuing shares to the public, loans and debentures are the main sources of ICB. The present capital structures are given to following;

Capital Structure (Tk. in crore )

As on 30^th June, 2010

 Functions of ICB

The functions of ICB are given below:

Functions of ICB

• Direct purchase of shares and debentures including placement and equity participation
• Participating in and financing of  joint-venture companies
• Providing lease finance singly and through syndication
• Managing existing investment accounts
• Managing Mutual funds and Unit funds.
• Managing Portfolios of existing shares
• Conducting computer training programmers
• Providing advance against ICB Unit and Mutual Fund certificates
• To act as Trustee and Custodian
• Providing Bank Guarantee
• Providing Consumer Credit
• Operating on the stock exchanges.
• Providing investment counseling to issuers and investors.
• Participating in and financing of joint venture projects.
• Dealing in other matters related to capital market operation.
• Introducing new business products suiting market demand
• To supervise and control the activities of the subsidiary companies.

Share Price

Market price of ICB’s Share price of tk. 100.00 each varied from  lowest Tk. 2170.5 to highest Tk. 5700.00 0n the stock exchanges during the year. As on 30 June 2010, the market price of per share was Tk. 4991.75.00 on the DSE and tk. 5020.00 on CSE respectively.

Transfer of Shares

A total of 665shares of ICB were transferred during 2009-20010 as against 99987shares transferred in 2008-2009.

 Division & Department of ICB

The entire organization of ICB is functionally divided into two broad groups namely Wing and Administration Wing.

• The functions of Operation wing is involved in the activities related to Project Financing Research, Computer, Launching of Unit Fund and Mutual Fund. Maintenance of investors Accounts, Shares, Transaction etc.
• The functions of administration Wing is involved with the activities relating to Administration, Accounts. Implementation and monitoring of projects, recovery, public issue and Legal matters.

The functions of the two wings are looking after by two General Manager who are responsible to the Managing Director. All branches are supervised by General Manager (GM) Administration Division.

Each Wing is functionally sub-divided into divisions which are headed by Deputy General Manager besides the above two major wings there are two divisions which are direct under supervision of Managing Director i.e. Audit and Methods Division ,Secretary’s Division .The description of  the Division and Department are given below.

Direct Supervision under Managing Director:

1)          Secretary’s Division

a)                  Secretary’s Department

b)                  Public Relation Department

2)          Audit and Methods Division

Head Office Control Department

Wings under Supervision of General Manager (operation):

1)       Loan Appraisal Division:

a)         Loan Appraisal Department

b)         EBR Department

2)        Fund Division:

a)         Unit Sales Department

b)         Unit Registration and Procurement Department

c)            Mutual Fund Department

3)          Merchandising Division:

a)                  Investors Department

b)                  Shares Department

c)                  Transaction Department

4)          Computer Division:

a)                  System Analysis Department

b)                  Programming Department

c)                  Data Management Department

Wings under Supervision of General Manager    (Administration):

1)    Administration Division:

a)   Personnel Department.

b)    Establishment Department.

2)   Accounts and Finance Division:

A) General Accounts Department.

B) Project Loan Accounts Department.

3)    Legal Affairs Division

a)                  Law Department

b)                  Public Issue Department

4)    Implementation and Recovery Division

a)                  Implementation Department

b)                  Recovery and Follow up Department

5)    Branches: There are seven branches of ICB .These are Located in various places of Bangladesh such as:

a)                  Chittagong Branch

b)                  Rajshahi Branch

c)                  Khulna Branch

d)                 Barisal Branch

e)                  Sylhet Branch

f)                   Bogra Branch

g)                 Local office Dhaka

 Management of ICB

The Head office of the corporation as per the requirement of the ordinance of ICB is located at Dhaka. The general direction and superintendence of the corporation created in a board of directors, which consists of persons including the chairman and managing director of ICB

The board of directors consists of the following directors:

a)                  The Chairman to be appointed by the government.

b)                 The directors to be appointed by the government from among persons serving under the government.

c)                 One director to be nominated by the Bangladesh Bank

d)                 The managing directors, Bangladesh Development Bank Ltd. (BDBL),

e)                 The managing directors & CEO of  Sonali Bank Ltd.

f)                  The managing directors & CEO of  Agrani Bank Ltd.

g)                 The managing directors & CEO of  Janata Bank Ltd.

h)                 The managing director ( additional charge) Sadharaan Bima Corporation.

i)                   The managing director of ICB to be appointed by the government.

Administrative, Human Resource

Investment Corporation of Bangladesh (ICB), providing different categories of financial and banking services. Nature of different division/departments vary, such that Economic and Business Research (EBR) Department requires teamwork, Loan Appraisal division requires professional work, Funds division needs chain work. Managing Director is entrusted with authority to transact the regular business of the organization; he may delegate some authority to the officials of the corporations. However most of the policy decision are taken by the different committee with the approval of managing director and where required of the Board. It is the discretionary authority of the Board to constitute the executive committee and to nominate its Chairman to assist the Board in the discharging of the function stated under the ordinance.

The Board may appoint such other committee as it thinks fit to assist it in the efficient discharge of its functions. So far, board has appointed two such committees-Economic and Business Research committee and loan appraisal committee headed by General Manager.

ICB Milestones

Overall Evaluation of the ICB Mutual Fund

ICB Mutual Fund

Introduction

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

ICB has been able to declare attractive dividends on its Mutual Funds during 2006-2007 as previous year. Among the 8 Mutual Funds the highest dividend of 240.00 percent was declared on the First ICB Mutual Fund  Including190.00 percent in cash and 50.00 percent in stock.  The dividend declared by seven other mutual funds ranged from 62.00 percent followed by 18.00 percent on the Second and Third ICB Mutual Funds. The rates dividend for the previous year ranged from 210.00 percent to 15.00 percent. Strong performance of the funds is reflected in the market prices of the funds. All the mutual funds were traded significantly above par value in both the bourses.

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

What is 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. .

Types of Mutual Fund:

Any Mutual Fund could be of either of the following two kinds

• Open-end Mutual Fund

• Close-end Mutual Fund

Open-end Mutual Fund:

Open-end investment company is a fund that continues to sale and repurchases their shares after their initial public offering. They stand ready to sell additional number of shares and thus keep going larger. The open-end fund company can by or sale their own shares.

Close-end Mutual Fund:

A close-end investment company operates like any other public firm. Their stock is traded on regular secondary market and the market price of its shares is determined by the supply and demand. It has a definite target amount for the founds and cannot sell more shares after its initial offering. Its growths in terms of number of shares are issued like any other company’s new issues listed and quoted it stock exchange.

Objective of Mutual Fund:

The objective of any fund would fit into one of three broad categories.

i) Income: The emphasis is on producing a steady flow of dividend payment.

ii) Capital gain: The manager concentrates on increasing the value of principal through appreciation of the stocks held.

iii) Income and capital gain: Some combination of the first two approaches.

 Advantages of Mutual Fund:

• Mutual Fund substantially minimizes the investment risk of small investors through diversification in which funds are spread out into various sectors, companies, securities as well as entirely different market.
• Mutual Fund mobilizes the savings of small investor and channels them into lucrative investment opportunities. As a result, Mutual Fund adds liquidity to the market.
• Mutual Fund provides the small investors access to the whole market that at an individual level, would be difficult if not impossible to achieve.
• Because funds are professionally managed, investors are relieved from the emotional strain associated with the day to day management of the fund.
• The investors save a great deal in transaction costs given that s/he has access to a large number of securities by purchasing a single share of a Mutual Fund.
• The investors can pick and chase a Mutual Fund to match his/her particular needs.
• Mutual Fund is the only vehicle which operates simultaneously both at the demand as well as the supply side of the market. On the supply side, the Mutual Fund being itself security at the SEC introduces a good and reliable instrument in the capital market for the small but astute investor.
• Mutual Fund is one of the most strictly regulated investment vehicles. The laws governing Mutual Fund require exhaustive disclosure to the SEC as well as the general public. The laws also entail continuous regulations of fund operations by the Trustee.

Launching of ICB Mutual Fund:

Launch Mutual Fund in different period with different paid up capital.

Details Description of the ICB Mutual Fund

Consolidated Portfolio Statement:

. A consolidated statement of the portfolio of the Funds is given in the following table:

Consolidated position of portfolios of ICB Mutual Funds as on June 2010

Price Movement and Transactions

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 2003-04 are shown in the following table:

Market prices of ICB Mutual Funds and Transactions during 2006-07

How to buy existing Mutual Funds

An investor can purchase any of the existing eight ICB Mutual Funds certificates through the Stock Exchanges at the prevailing Market Price. However, if an investor buys Mutual Fund certificates through the Stock Exchanges he/she must be careful to submit the certificates along with duly filled-in transfer deed at ICB Head Office to ensure that the certificates are registered in his/her name.

Advance against 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 requirement. One can borrow maximum of 50% 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 ]CB offices. The rate of interest on the loan is reasonable and also competitive.

Management  Fee, Charge etc.

At present management fee @ 1% on the paid up capital of the Fund is charged annually. No amount is charged on account of custodial and trust services. Part of operating expenses are charged to the respective Mutual Funds on pro rata basis

Assets of ICB Mutual Funds

ICB Mutual Funds Certificates holders shall have unfettered ownership in the assets of the Fund to which they are related. In case of winding up of the Corporation the assets belonging to any ICB Mutual Fund shall not be treated as the assets of the Corporation.

Tax Concessions

(a) Investment in Certificates provides the same tax exemptions as an investment qualifying under Section 44 of the Income Tax Ordinance, 1984.

(b) Capital gains received on investment in the Fund Certificates shall not be included in the total income of a Certificate holder within the limits specified in the Income Tax Ordinance, 1984.

(c) Dividends received on investment in the Fund will be treated as dividend income under Income Tax Act, and will be exempted from tax with the limits specified in the Act.

(d) The Fund incomes are to be exempted from all taxes as granted by the Government as per SRO No 80-L/80 dated April, 1980.

Management of the Funds

There is a decision making board in order to manage different Mutual Funds. As per board’    s decision securities are bought under different Mutual Funds. At the same way securities are sold. In case of new Mutual Fund subscribes for public issue. ICB authority is made portfolio earlier by its own finance and given it name. After that it is published on any newspaper as prospectus. By studying this prospectus public response whether they will buy the Mutual Fund or not.

Declaration of Dividend

The net income received on investments of Funds on account of dividend, bonus, interest, capital gain etc. are distributed amongst the Certificate holders as per decision of the Board of Directors of ICB. Board declares such income in the form of dividend at the end of July each year. Dividends declared by ICB in the past on the Mutual Funds were very attractive. The year-wise per certificate dividend performance of the Funds is given below.

Rate of the Dividend per Certificate (Taka)

Performance Evaluation of ICB Mutual Funds

Mutual Funds substantially lower the investment risk of small investors, through diversification, in which funds are spread out in to various sectors. Because of funds are professionally managed, investors are relived from the emotional strain associated with the management of the fund. For the betterment of small and medium investors up to September,2005 ICB floated eight close ended Mutual Fund , with total paid up capital of Tk 17.50 crore and going to float the ninth very soon.

These funds are very popular with the small and medium investors because of having scope of capital gain as well as attractive return in terms of dividend.

It is not an easy task for the portfolio manager to manage the mutual funds, because its performance is directly related with the security market and many macroeconomic variables. But due to the efficient management of ICB officials, they (MF) become attractive investment decision.

Now we will analyze the past performance of the eight mutual funds and try to evaluate them.

Different Types of ICB Mutual Funds

Different types of ICB mutual funds are available for consumers. These funds lunched in different period of time and different rate of interests are given on the mutual funds. These are shortly described below:

First ICB Mutual Fund

The 1^st ICB Mutual Fund was floated at 25^th April, 1980. It is the most attractive mutual fund among the others.

Dividend Income:

The Fund have earned dividend per certificate tk.400  where size of the fund size is 0.75 crore and income per certifiates is tk. 564.44  during 2009-20010 where as tk. 310 and 385.24 were respectively in 2008-2009.  The growth rate is 29.03 % such performenance proved that dividend and income has significantly increased.

Capital Gains on Sale of Investments:

During 2009-10the Fund earned Tk. 94, 82,425.00 as capital gains by securities of 21 companies as shown in the following table:

Dividend:

The Fund declared dividend at the rate of Tk.400.00 per certificate of Tk. 100.00 each for the year 2009-10 as compared to Tk. 310.00 declared in the previous year. After making provision of Tk. 1,20,00,000.00 for payment of dividend the Fund had an undistributed income of Tk. 2,25,62,292.00 .The Year –wise dividend performance of the Fund is shown in the following table.

Year –wise dividend Performance of ICB Mutual fund

Portfolio:

As on 30 June 2010 the Fund had securities of 60 companies in its portfolio with a total cost of Tk. 324.26. lac. During 2009-2010 the Fund made additional investment of tk. 91.91 lac in securities of 16 companies .The market value of the portfolio as on 30 June 2010 was Tk. 1524.69 lac .

The ex-dividend net asset value per certificate of Tk. 100.00 each of First Mutual Fund stood at Tk. 2700.00 And tk 3433.25 as on 30 June 2010

The market price per certificate of Tk. 100.00 each of the fund was Tk.1672.50 and Tk. 2500.00 as on 2 July 2007 and 30 June 2008 respectively.

The number of certificate holders of the fund was 988 as on 30 June 2010

Second ICB Mutual Fund

The 2^nd ICB Mutual Fund was floated at 17^th june , 1984. It  is also one of  the most attractive mutual fund among the others.

Dividend Income and Interest Income:

The Fund have earned dividend per certificate tk.200.00 where size of the fund size is 0.50 crore and income per certifiates is tk. 254.86  during 2009-20010 where as tk. 95.00 and 135.54 were respectively in 2008-2009.  The growth rate is 110.53 % such performenance proved that dividend and income has significantly increased.

Capital Gains on Sale of Investments:

During 2009-2010, the Fund earned Tk. 62, 07,855.00 as capital gains by securities of 16 companies as shown in the following table.

Statement of Capital Gains during 2009-20101

Dividend:

The Fund declared dividend at the rate of Tk.200.00 per certificate of Tk. 100.00 each for the year 2009-20010 as compared to Tk. 95.00 declared in the previous year. After making provision of Tk. 31,00,000.00 for payment of dividend the Fund had an undistributed income of Tk. 96,11,852.00 .The Year –wise dividend performance of the Fund is shown in the following table;

Portfolio:

As on 30 June 2010 the Fund had securities of 70 companies in its portfolio with a total cost of Tk. 327.06 lac. During 2009-2010 the Fund made additional investment of tk. 84.65 lac in securities of 18 companies .The market value of the portfolio as on 30 June 2010 was Tk. 383.40 lac .

The ex-dividend net asset value per certificate of Tk. 100.00 each of second Mutual Funds stood at Tk 418.34 as on 30 June 2010

The market price per certificate of Tk. 100.00 each of the fund was Tk.721.00 and Tk. 900.50 as on 2 July 2009 and 30 June 2010 respectively.

The number of certificate holders of the fund was 989 as on 30 June 2010.

Third ICB Mutual Fund

Dividend Income and Interest Income:

The Fund have earned dividend per certificate tk.140.00 where size of the fund size is 1.00 crore and income per certifiates is tk. 184.38 during 2009-20010 where as tk. 85.00and 121.40 were respectively in 2008-2009.  The growth rate is 64.71 % such performenance proved that dividend and income has significantly increased.

Capital Gains on Sale of Investments:

During 2009-2010, the Fund earned Tk. 1, 16, 16,086.00 as capital gains by securities of 21 companies as shown in the following table.

Statement of Capital Gains during 2008-2010

Dividend:

The Fund declared dividend at the rate of Tk.140.00 per certificate of Tk. 100.00 each for the year 2009-2010 as compared to Tk. 85.00 declared in the previous year. After making provision of Tk. 56,00,000.00 for payment of dividend the Fund had an undistributed income of Tk. 1,28,25,585.00 .The Year –wise dividend performance of the Fund is shown in the following table;

Year –wise dividend Performance of ICB Third Mutual fund

Portfolio:

As on 30 June 2010 the Fund had securities of 83 companies in its portfolio with a total cost of Tk. 418.11. lac. During 2009-2010 the Fund made additional investment of tk 101.74 lac in securities of 22 company’s .The market value of the portfolio as on 30 June 2010was Tk. 545.04 lac.

The ex-dividend net asset value per certificate of Tk. 100.00 each of Third ICB Mutual Fund stood at Tk 359.06. As on 30 June ,2010.

The market price per certificate of Tk. 100.00 each of the Third ICB Mutual fund was Tk.500.00 and Tk. 654.75 as on 3 July 2009 and 30 June 2010 respectively.

Fourth ICB Mutual Fund

Dividend Income and Interest Income:

The Fund have earned dividend per certificate tk.125.00 where size of the fund size is 1.00 crore and income per certifiates is tk. 177.72 during 2009-20010 where as tk. 80.00 and 114.28were respectively in 2008-2009.  The growth rate of dividend is 56.25 % such performenance proved that dividend and income has significantly increased.

Capital Gains on Sale of Investments:

During 2009-2010, the Fund earned Tk. 94, 24,084.00 as capital gains by securities of 22 companies.

Dividend:

The Fund declared dividend at the rate of Tk.125.00 per certificate of Tk. 100.00 each for the year 2009-2010 as compared to Tk. 80.00 declared in the previous year. After making provision of Tk. 52, 00,000.00 for payment of dividend the Fund had an undistributed income of Tk. 1, 30, 47,151.00.

The Year –wise dividend performance of the Fund is shown in the following table:

Year –wise dividend Performance of ICB Fourth Mutual fund

Portfolio:

As on 30 June 2010 the Fund had securities of 91 companies in its portfolio with a total cost of Tk. 483.86 lac. During 2009-2010 the Fund made additional investment of tk. 160.27 lac in securities of 22 companies .The market value of the portfolio as on 30 June 2010 was Tk. 778.64 lac .

The ex-dividend net asset value per certificate of Tk. 100.00 each of Fourth ICB Mutual Fund stood at Tk 534.37 as on 30 June 2010.

The market price per certificate of Tk. 100.00 each of the fund was Tk.478.00 and Tk. 628.00 as on July 2009 and 30 June 2010 respectively.

The number of certificate holders of the fund was 1955 as on 30 June 2010

Fifth ICB Mutual Fund

Dividend Income and Interest Income:

The Fund have earned dividend per certificate tk.100.00 where size of the fund size is 1.50 crore and income per certifiates is tk. 142.34 during 2009-20010 where as tk. 56.00 and 78.56 were respectively in 2008-2009.  The growth rate of dividend is 78.57 % such performenance proved that dividend and income has significantly increased.

Capital Gains on Sale of Investments:

During 2009-2010, the Fund earned Tk.1, 30, 50,047.00 as capital gains by securities of 25 companies.

Dividend:

The Fund declared dividend at the rate of Tk.100.00 per certificate of Tk. 100.00 each for the year 2009-2010 Which was also Tk. 56.00 per certificate paid the previous year. After making provision of Tk. 49, 50,000.00 for payment of dividend the Fund had an undistributed income of Tk. 54, 81,909.00.

The Year –wise dividend performance of the Fund is shown in the following table:

Year –wise dividend Performance of ICB Fifth Mutual fund

Portfolio:

As on 30 June 2010 the Fund had securities of 102 companies in its portfolio with a total cost of Tk. 752.58 lac. During 2009-2010 the Fund made additional investment of tk. 162.75 lac in securities of 23 companies .The market value of the portfolio as on 30 June 2010was Tk. 1246.17 lac .

The ex-dividend net asset value per certificate of Tk. 100.00 each of Fifth ICB Mutual Fund stood at Tk 475.07 as on 30 June2010

The market price per certificate of Tk. 100.00 each of the fund was Tk.277.25 and Tk. 453.50. As on July 2, 2009 and 30 June 2010 respectively.

The number of certificate holders of the fund was 3685 as on 30 June 2010

Sixth ICB Mutual Fund

Dividend Income and Interest Income:

The Fund have earned dividend per certificate tk.75.00 where size of the fund size is 5.00 crore and income per certifiates is tk.90.67 during 2009-20010 where as tk. 37.00 and 50.00 were respectively in 2008-2009.  The growth rate of dividend is 102.70 % such performenance proved that dividend and income has significantly increased.

Capital Gains on Sale of Investments;

During 2009-2010, the Fund earned Tk. 2, 03, 47,268.00 as capital gains by securities of 30 companies.

Dividend:

The Fund declared dividend at the rate of Tk.75.00 per certificate of Tk. 100.00 each for the year 2009-2010 Which was also Tk. 37.00 per certificate paid the previous year. After making provision of Tk. 11, 50,000.00 for payment of dividend the Fund had an undistributed income of Tk. 92, 45,355.00

The Year –wise dividend performance of the Fund is shown in the following table;

Year –wise dividend Performance of ICB Sixth Mutual fund

Portfolio:

As on 30 June 2010 the Fund had securities of 135 companies in its portfolio with a total cost of Tk 896.91 lac. During 2009-2010 the Fund made additional investment of tk. 185.42 lac in securities of 25 companies .The market value of the portfolio as on 30 June 2010 was Tk1,160.94 lac .

The ex-dividend net asset value per certificate of Tk. 100.00 each of Sixth ICB Mutual Fund stood at Tk 109.24 as on 30 June 2010.

The market price per certificate of Tk. 100.00 each of the fund was Tk.160.00 and Tk. 194.50 as on 2 July 2007 and 30 June 2008 respectively.

The number of certificate holders of the fund was 10076 as on 30 June 2010

Seventh ICB Mutual Fund

Dividend Income and Interest Income:

The Fund have earned dividend per certificate tk.70.00 where size of the fund size is 3.00 crore and income per certifiates is tk.99.87 during 2009-2010 where as tk. 35.00 and 50.00 were respectively in 2008-2009.  The growth rate of dividend is 100.00 % such performenance proved that dividend and income has significantly increased.

Capital Gains on Sale of Investments;

During 2009-2010, the Fund earned Tk. 1, 95, 50,858.00 as capital gains by securities of 32 companies.

Dividend:

The Fund declared dividend at the rate of Tk.70.00per certificate of Tk. 100.00 each for the year 2009-2010 Which was also Tk. 37.00 per certificate paid the previous year. After making provision of Tk. 67,50,000.00 for payment of dividend the Fund had an undistributed income of Tk. 84,12,572.00

The Year –wise dividend performance of the Fund is shown in the following table;

Year –wise dividend Performance of ICB Seventh Mutual fund

Portfolio:

As on 30 June 2010 the Fund had securities of 132 companies in its portfolio with a total cost of Tk 1,130.41 lac. During 2009-2010 the Fund made additional investment of tk. 203.67 lac in securities of 27 companies .The market value of the portfolio as on 30 June 2010 was Tk 1,493.72lac .

The ex-dividend net asset value per certificate of Tk. 100.00 each of Seventh ICB Mutual Fund stood at Tk249.20 as on 30 June 2010.

The market price per certificate of Tk. 100.00 each of the fund was Tk.179.00 and Tk. 283.00 as on 2 July 2009 and 30 June 2010 respectively.

The number of certificate holders of the fund was 2797 as on 30 June 2010.

Eighth ICB Mutual Fund

Dividend Income and Interest Income:

The Fund have earned dividend per certificate tk.65.00 where size of the fund size is 5.00 crore and income per certifiates is tk.92.73 during 2009-2010 where as tk. 32.00 and 42.85 were respectively in 2008-2009.  The growth rate of dividend is 103.13 % such performenance proved that dividend and income has significantly increased.

Capital Gains on Sale of Investments:

During 2009-2010, the Fund earned Tk 2, 16, 53,796.00 as capital gains by securities of 29 companies

Dividend:

The Fund declared dividend at the rate of Tk.65.00 per certificate of Tk. 100.00 each for the year 2009-2010 Which was also Tk. 32.00 per certificate paid the previous year. After making provision of Tk. 90,00,000.00 for payment of dividend the Fund had an undistributed income of Tk. 1,14,47,668.00

The Year –wise dividend performance of the Fund is shown in the following table;

Year –wise dividend Performance of ICB Eighth Mutual fund

Portfolio:

As on 30 June 2010 the Fund had securities of 126 companies in its portfolio with a total cost of Tk 1, 171.93 lac. During 2009-2010 the Fund made additional investment of tk. 223.66 lac in securities of 26 companies .The market value of the portfolio as on 30 June 2010 was Tk 1,544.30 lac .

The ex-dividend net asset value per certificate of Tk. 100.00 each of Seventh ICB Mutual Fund stood at Tk 197.37 as on 30 June 2010.

The market price per certificate of Tk. 100.00 each of the fund was Tk.172.00 and Tk. 272.25 as on 3 July 2009and 30 June 2010 respectively.

The number of certificate holders of the fund was 7537 as on 30 June 2010.

Problems Related to ICB Unit Fund

Bangladesh is a least developed country. Its economy depends on agriculture more than 60%. Now it can be understood that its industrialization is in infant stage. So, for the better growth of industrialization, capital market is so important of our country. Because of this, ICB has been established in 1976 under the ordinance no. XL of 1976 with a view to develop capital market, to mobilize savings and to broaden the base investment and ultimately help growing industrialization in the country. Because of this reason, ICB has floated Unit fund (close ended) in our country and dominating the industry.

Unit funds are managed and run by a professional management team, the success and growth of the unit funds depend on future profitability and investors confidence also depend on the management performance.

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

1. Reserve is an important part of any business. For the funds, reserve is kept of the future uncertainty, funds liquidation and use for buying securities without borrowing costly capital. Reserve is kept from income as un-distributable income . But the question is how much a fund may keep reserve from income. I think ICB’s reserve policy for the close end funds is not correct. Because it keeps huge amount of reserve from funds.

2. The dividend policy of Unit Fund is not fair. Because, if we see dividend rate and earnings of the funds, it will become clear to us.

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

4. Management of ICB is sometimes inefficient in taking bold decision and has failed to stabilize the capital market.

Problem Related to the ICB Mutual Fund:

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

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

From depositor’s Point of view:

• The services provided by the related personnel are not prompt. It is taking more than required time for giving the service.
• Same laggard procedure is also taking place at the time of execution of order.
• Withdrawal of any funds of securities is also very lengthy and complicated process and inefficiently managed.

From Portfolio investment point of view:

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

From Capital market point of view:

• Dividend is one of the sources of income for the mutual fund. Most of the companies do not declare dividend up to satisfactory level.
• The rate of supply of fundamentally strong securities is very low.
• Political unsteady position also hearts the investor’s sentiment in the market and thereby leads to flat the stock market.
• Using costly borrowing capital for the investment on securities is another factor causing problem for high expenditure of maintenance of funds, which affects the income of funds.

Recommendations ICB Unit Funds are suggested are on the basis of the problems. These are:

1. Reserve should be kept at a minimum level but not more than 25% of a fund’s income.

2. Dividend policy should be fair so that the investors may be satisfied .Dividend policy should be earnings basis, not year basis.

3. investing by costly borrowing funds should be reduced.

4. Orders are to be executed quickly.

5. Unnecessary documentation and levels in the process of withdraw or securities should be eliminated.

Recommendations ICB Mutual Funds are suggested are on the basis of the problems. These are:

1. The interest of making portfolio of proposed funds and the existing ICB unit mutual fund profitable and attractive, it is imperative to design balance portfolio of securities. As the supply of securities is not adequate, I think, the portfolio is envisaged to be designed and developed from the following sources:

• Shares of multinational companies
• Shares of public enterprises
• Primary issue of securities by companies
• Secondary market operation.

Share of public enterprises means government has been pursuing policy of divesting 49% shares of government enterprises of public subscription. In this regard govt. should reserve 30% of all new issues in all cases for ICB.

1. Reserve should be kept at a minimum level; it may vary fund to fund, but not more than 25% of a fund’s income.
2. Investing in costly borrowing funds should be reduced. Management may look for sources of less costly funds and reduce expenses and increase income.
3. ICB should fix redemption date of each fund. I may redeem 1^st, 2nd, and 3^rd mutual fund. Because these funds are established for more than 15 years.
4. ICB may take initiative and decision to float more funds for the stabilization of capital market and for gaining of investor’s confidence to invest in the capital market.
5. ICB should reduce interest rate.
6. Orders are to be executed quickly.
7. Training program should be arranged for developing of management efficiency.

Conclusion:

ICB is a unique name in our country as an investment Bank. It has skill and experienced labor force and professional and dedicated management team that enable to pursue the ICB’s goals and objectives. ICB is helping to the industrial growth in our country by mobilizing the small savings from investors to the capital market. ICB should be concerned about its investors, because the investors are the risks takers. ICB has great influence in the capital market. ICB should play its important role for gaining of the investor’s confidence on the capital market and further industrial growth in our country and the development and stabilization of the capital market in country

There remains a huge gap between institutional investors and general investors.  Institutional investors are far ahead from the general investors in respect of technical know-how, knowledge and risk taking propensity. ICB as an institutional investor manages its portfolio by doing three major activities: asset allocation, weighting shift across major asset classes and securities selection within asset classes. In financial terms it means ensuring maximum return with minimum level of risk. At present the gap between the institutional investors and general investors, ICB should concentrate well in portfolio management to uplift the interest of the general investors.