Page 1

Performance Evaluation of ICB Mutual and Unit Fund

Literature Review The modern mutual fund was first introduced in Belgium in 1822. This form of investment soon spread to Great Britain and France. Mutual funds became popular in the United States in the 1920s and continue to be popular since the 1930s, especially open-end mutual funds. Mutual funds experienced a period of tremendous growth after World War II, especially in the 1980s and 1990s. An open-ended fund operated by an investment company which raises money from shareholders and invests in a group of assets, in accordance with a stated set of objectives. mutual funds raise money by selling shares of the fund to the public, much like any other type of company can sell stock in itself to the public. Mutual funds then take the money they receive from the sale of their shares (along with any money made from previous investments) and use it to purchase various investment vehicles, such as stocks, bonds and money market instruments. In return for the money they give to the fund when purchasing shares, shareholders receive an equity position in the fund and, in effect, in each of its underlying securities. For most mutual funds, shareholders are free to sell their shares at any time, although the price of a share in a mutual fund will fluctuate daily, depending upon the performance of the securities held by the fund. Benefits of mutual funds include diversification and professional money management. Mutual funds offer choice, liquidity, and convenience, but charge fees and often require a minimum investment. A closed-end fund is often incorrectly referred to as a mutual fund, but is actually an investment trust. There are many types of mutual funds, including aggressive growth fund, asset allocation fund, balanced fund, blend fund, bond fund, capital appreciation fund, clone fund, closed fund, crossover fund, equity fund, fund of funds, global fund, growth fund, growth and income fund, hedge fund, income fund, index fund, international fund, money market fund, municipal bond fund, prime rate fund, regional fund, sector fund, specialty fund, stock fund, and taxfree bond fund. ICB initiated the mutual fund industry in Bangladesh. ICB has played the pioneering role in the development of mutual in the country. The country’s first mutual fund the “First ICB Mutual Fund” was launched on 25April1980. Since then ICB HAD floated 8 mutual funds up to 1986. ICB Mutual fund have become very popular with the investor due to among other payment of attractive dividends regularly. Like previous years ICB also declared excellent dividend on its mutual fund during the year. The highest dividend of 265.0 percent declared on the first ICB Mutual Fund. The Dividend declared in 2007-08 by seven other mutual funds have also been very good. These are 75.0 percent in second, 65.0 percent in third, 60.0 percent in Forth, 45.0 percent in fifth, 30.0 percent in sixth, 30.0 percent in seventh and 25.0 percent in eighth ICB Mutual Fund. The rate’s of dividend for the previous year ranged from 18.0 percent to 240.0(190%, 1B:2) percent. During the year strong performance was manifested in the market price of ICB Mutual Funds. All the mutual funds were traded significantly above per value in both the bourses. During the year, the portfolios of all the funds were reshuffled and managed judiciously to maximize return and minimize risk for the mutual fund holders.


ICB Unit Fund (an open –end fund) was launched in 10 th April, 1981.After commencement of business of ICB Asset Management Company Ltd. from 1July 2002 ICB has stopped sale of units except issuance of certificate under cumulative investment plan (CIP). However, the existing portfolio of ICB Unit Fund is managed by ICB. During 2007-2008, a total of 2526177 units of Tk.29.56 core were repurchased and 1910998 units of tk.20.45 core were issued under CIP .As on 30 June 2008, net units stood at 39008365 of tk.445.14 core The numbers of unit holder were 23506 as on 30 June 2008, of which majority were small and medium savers. An amount of Tk.91.91 core was invested by the fund in 97 securities during 2007-20008 and 166 securities worth Tk. 173.23 core were sold. As a result the net investment of the fund stood at tk. 563.39 core in 304 securities, market value of which was tk. 1053.8 core as on 30 June 2008. In 2007-2008, total income of the fund amounting to tk 342.18 core earned by way of dividend and interest on debenture, capital gained, interest on bank deposit, premium on issuance of units, etc. on the other hand expenses totaling tk. 231.01 core was incurred on account of management fee commission, printing, and stationery, postage, provision against investment, etc. resulting in the fund net income of tk.111.17 core. This income together with the previous year undistributed income of tk. 36.32 cores stood at a total distributable income of tk. 147.49 cores. The distributable income per unit was thus tk. 37.81 as on 30 June 2008. Dividend at the rate of tk.20.0 per unit was declared on the Fund for 2007-2008 as compared to tk. 13.0 per unit in 2006-2007 showing an increase of 53.85 per cent. The remaining distributable income of tk. 17.81 per certificate was retained. Organizational Profile Institutional Framework of ICB: Investment Corporation of Bangladesh is a corporate body as per section 3 of Investment Corporation of Bangladesh Ordinance, 1976 and deemed to be a banking company within the meaning of the Banking Companies Ordinance, 1962 (L VII of 1962). The shares of corporation are listed with the stock exchange. ICB is an authorized broker of DSE. Regulatory Framework of ICB: As the mentioned earlier the regulatory framework of ICB is the, Investment Corporation Bangladesh Ordinance, 1976. This ordinance and regulations laid under the authority of the ordinance is the source of all power and authority of ICB. Through the recent enactment of “The Investment corporation of Bangladesh (Amendment) Act, 200” (XXIV) of 2000, scope of ICB’s activities through the formation of subsidiaries have been expanded. In addition to these, to resume its duties and functions, it has to compel by Companies Act 1994, Trust Act 1882, Insurance Act 1983, Security and exchange commission Act 1993, banking companies Act 1993, Foreign exchange regulation 1974, Income Tax act etc. It is to note that no provision of law relating to the winding up of companies or bank shall apply to the corporation and the corporation shall not be wound up save by order of the government and in such manner as it may direct. 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 is created in a board of directors, which consist of 11 persons including the chairman and managing director of ICB. The board of directors consists of the following directors: • The chairman to be appointed by the government.


The directors to be appointed by the government from among persons serving under the government. • One director to be nominated by the Bangladesh Bank. • The managing directors, Bangladesh Shilpa Bank, Ex-Office. • The managing directors, Bangladesh Shilpa Rin Sangstha, Ex-office. • Four other directors to be elected by the share holders other than the government, BB, BSB, & BSRS. • The managing directors of ICB to be appointed by the government. The board in discharging its functions acts on commercial consider rations with due regard to the interests of industry and commerce, investment climate, capital market, depositors, investors and to the public interest generally and is guided in question policy by the institutions, if any, given to by government which shall be sole judged as to whether a question is a questio9n of policy or not. The managing director is the chief executive of the corporation. The corporation has an executive comprised of 5 people including managing director. Administration, Human Resource: Investment Corporation of Bangladesh (ICB) is providing different category of financial and banking services. Nature of the different division departments vary, such that Economic and Business Research (EBR) department requires teamwork, Lone Appraisal division requires professional work. Funds divisions need chain work. Managing director is entrusted with authority to transact the regular business of the organization; he may delegate some authority to officials of the Corporations. However, most of the policy decisions 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 execute committee and to maintain its Chairman to assist the board in the discharging of the function stated under the ordinance. The board may appoint such other committee (s) as it thinks fit to assist it in the efficient discharge of its function. So far, board has appointed two such committees. Economic and Business Research (EBR) committee and Loan Appraisal committee is headed by General Manager. Organogram of ICB:


Evaluation of ICB Mutual Fund and Unit Fund Overall Evaluation of the 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 25th April 1980. Since then ICB has, over the years, floated 8 Mutual Funds with the total capital of Tk. 17.50 crore. ICB Mutual Funds continued to command the confidence and attraction of investors as lucrative and rewarding investment in terms of steady dividend performance. ICB has been able to declare attractive dividends on its Mutual Funds during 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 o o

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 found 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. Mutual Fund

Date of Floatation

Paid up capital (Tk. In lack)

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

Source: ICB Annual Report 2007-2008 Details Description of the ICB Mutual Fund Consolidated Portfolio Statement: As on 30 June 2005cost price and market price of eight Mutual Funds were Tk. 4815.15 lac and Tk 5864.83 lac respectively. 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 2007

2nd Mutual Fund

3rd Mutual Fund

4th Mutual Fund

5th Mutual Fund

6th Mutual Fund

7th Mutua l Fund

8th Mutua l Fund

No. of 60 Companies

69

83

90

102

135

129

126

2

No. of 60 Securities

71

84

91

103

136

132

128

3

Total investment at cost(lac)

324.26

327.06

418.11

483.86

752.58

896.51

1130.4 1

1171. 93

4

Market Value(30 June 2007)

1524.69

383.40

545.04

778.64

1246.1 7

1160.94

1493.7 2

1544. 30

Sl.no

Particulars

1

1st Mutual Fund

Performance of ICB mutual fund SL NO

2007 – 2008

Size of Fund Name of mutual fund Tk in crore

Per certificate Income Dividend Tk

Tk

As on 30 June 2008 Market Market price per Capitalization certificate on DSE

1

First ICB 0.75 Mutual Fund

331.03

265.00

7970.25

59.78

2

Second ICB 0.50 Mutual Fund

107.14

75.00

3371.00

16.85

3

Third ICB 1.00 Mutual Fund

92.86

65.00

1629.00

16.29


4

Fourth ICB 1.00 Mutual Fund

85.73

60.00

1733.00

17.33

5

Fifth ICB 1.50 Mutual Fund

64.26

45.00

2157.00

32.35

6

Sixth ICB 5.00 Mutual Fund

42.85

30.00

889.75

44.49

7

Seven ICB 3.00 Mutual Fund

42.86

30.00

1421.50

42.65

8

Eight ICB 5.00 Mutual Fund

35.70

25.00

873.50

43.65

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 Annual Sl . no

Lowest transaction

Mutual Funds

Highest market market price(taka)* price(taka)*

Number

Amount (Tk. In lac)

1

First ICB Mutual 3500.00 Fund

2650.00

1263

36.31

2

Second ICB 1100.00 Mutual Fund

721.00

1582

13.89

3

Third ICB Mutual 690.00 Fund

460.00

6620

37.96

4

Fourth ICB 700.00 Mutual Fund

458.00

10882

60.64

5

Fifth ICB Mutual 465.00 Fund

200.00

13020

48.27

6

Sixth ICB Mutual 350.00 Fund

175.25

131900

338.31

7

Seven

165.25

74432

187.93

ICB 320.00


Mutual Fund 8

Eight ICB Mutual 316.00 Fund

162.00

87470

211.39

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 filledin transfer deed at ICB Head Office to ensure that the certificates are registered in his/her name.


Comparative position of ICB mutual fund 2007 - 2008

As on 30 June 2008 Name of

Cost price of the

Market Value of

mutual fund

portfolio

the portfolio

(Tk in crore)

Ex dividend net asset value per certificate

No. of certificate holder

(Tk)

First ICB

2008

2007

2008

2007

2008

2007

2008

2007

5.80

3.24

33.64

15.25

4209.48

2737.58

975

988

4.37

3.27

7.33

3.83

930.51

356.24

971

989

5.10

4.18

9.93

5.45

779.27

303.06

2740

2740

6.00

4.84

12.53

7.79

930.33

482.37

1940

1955

7.62

7.53

19.44

12.46

999.06

442.07

3602

3685

9.83

8.97

18.96

11.61

324.75

150.03

8817

8995

10.54

11.30

20.52

14.94

482.90

226.70

2739

2797

12.02

11.72

24.16

15.44

389.97

179.37

7477

7537

Mutual Fund Second ICB Mutual Fund Third ICB Mutual Fund Fourth ICB Mutual Fund Fifth ICB Mutual Fund Sixth ICB Mutual Fund Seventh ICB Mutual Fund Eight ICB Mutual Fund

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, Charges 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) FY

Funds

1 st

1980-81

20

1981-82

20

1982-83

20

1983-84

25

1984-85

35

2 nd

21

3 rd

4 th

5 th

6 th

7 th

8 th


1985-86

38

23

21

1986-87

41

25.5

22.5

21.5

1987-88

48

28

25.5

23

1988-89

49

29

26

23.5

20.5 15.5

1989-90

49

29

26

23.5

20.5 13.25

1990-91

35

22

19

17

10

6

1991-92

31

22

19

18

11

6

1992-93

31.5 21

18

17

12

-

1993-94

45

27

22

40

25

16

1994-95

50

40

27

41

28

18

1995-96

60

42

28

41

30

20

18

1996-97

70

45

38

45

35

24

21

18

1997-98

70

30

35

32

22

18

14

12

1998-99

100

32

38

35

20

15

13

12

1999-2000

125

35

40

36

21

16

13.5

12.5

2000-2001

170

40

45

38

23

17

14

13

2001-2002

175

42

50

40

24

17.50 14.50 13.50

2002-2003

180

45

50

40

24

17.50 14.50 13.50

2003-2004

200

50

50

45

24

17.50 15

14

2004-2005

210

55

52

48

27

18.50 16

15

2005-2006

210

55

52

48

27

18.50 16

15

2006-2007

190

62

56

52

33

23.00 22.50 18

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 1st ICB Mutual Fund was floated at 25 th April, 1980. It is the most attractive mutual fund among the others. Dividend Income: The Fund had earned dividend of Tk. 37, 22,439.00 from 34 securities during 2006-2007 of which a sum of Tk. 21, 28,407.00(57.18 percent) was received in cash within 30 June 2007. Capital Gains on Sale of Investments: During 2006-07 the Fund earned Tk. 94, 82,425.00 as capital gains by securities of 21 companies as shown in the following table: Sl. No

Name of the company

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21

Altex industries Ltd. Apex foods Ltd. AB Bank Ltd. Ashraf textile mills Ltd. BATBC Ltd. Bangladesh industrial finace co. Ltd. Beximco pharmacuticals Ltd. BOC Bangladesh Ltd. BRAC Bank Ltd. Dhaka electric supply co. Ltd. Golden son Ltd. IPDC Ltd. ICB AMCL first mutual fund Ltd. Langka bangla finance Ltd. Miracle Industries Ltd. Mutual Trust Bank Ltd. One Bank Ltd. Power Grid co. Bangladesh Ltd. Shahjalal Islami Bank Ltd. Standard Bank Ltd. The Premier Bank Ltd.

No.of sold 1800 850 200 31500 24150 200 15650 3150 2800 3300 200 1400 200 10000 5000 300 50 24550 100 1600 2800

Securities Capital gain(taka) 41240. 141628. 274570. 221755 1251400 1251400 510105. 361779. 1191600 508657 1251400 289650 32500 103200 55950 103737 10554 3241 12400 406966 681312.50

Income, Expenses and Distributable Income During the year 2006-2007 under review , the Fund earned a gross income of Tk. 1,41,73,493.00 by way of dividend income of Tk. 37,22,439.00,interest income of Tk. 1,86,629.00 on bank deposits , interest of Tk. 7,79,646.00 on current account with ICB, capital gains of k. 94.82.425.00 and other income of Tk. 2354.00. After deducting the total expense of Tk. 21, 32,711.00 incurred as staff expenses, management fee, printing and stationary, postage and telegrams, provision against investment and others, the net income of the fund stood at Tk. 1, 20, 40,782.00. Taking into account the previous year’s undistributed income of Tk. 2, 25, 21,510.00 the Fund had net distributable income of Tk.3, 45, 62,292.00 as on 30 June 2007 resulting in distributable income per certificate of Tk. 691.24 for 2006-2007. Dividend:


The Fund declared dividend at the rate of Tk.240.00 per certificate of Tk. 100.00 each for the year 2006-07 as compared to Tk. 210.00 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 Financial Year

Dividend Per Certificate

1995-96 1996-1997 1997-1998 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2006-2007

60.00 70.00 70.00 100.00 125.00 170.00 175.00 180.00 200.00 210.00 190.00

Portfolio: As on 30 June 2007 the Fund had securities of 60 companies in its portfolio with a total cost of Tk. 324.26. lac. During 2006-2007 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 2007 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 2007. 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 2003 and 30 June 2004 respectively. The number of certificate holders of the fund was 988 as on 30 June 2007.


Second ICB Mutual Fund Dividend Income and Interest Income: The Fund had earned dividend and interest income of Tk. 17, 27,757.00 from 34 securities during 2006-2007 of which a sum of Tk. 15, 66,512.00(90.66 percent) was received in cash within 30 June 2007.

Capital Gains on Sale of Investments: During 2006-2007, the Fund earned Tk. 62, 07,855.00 as capital gains by securities of 16 companies as shown in the following table. Sl. no

Statement of Capital Gains during 2006-2007 Name of the company No. of Securities sold Capital gain(taka)

1

Altex industries Ltd.

250

6277.50

2

Apex foods Ltd.

330

43003.70

3

Ashraf textile mills Ltd

25100

159,262.00

4

BIFC

300

33,600.00

5 6

Bangladesh Electrodes BRAC Bank Ltd.

7 8

welding 11500

250,450.00

2900

1,234,225.00

Dhaka Electric Supply

2750

435,837.00

Golden son Ltd

2000

13,800.00

IPDC Ltd.

900

195,500.00

ICB AMCL first mutual fund 100 Ltd Langka bangla finance Ltd. 8500

18,500.00

Miracle Industries Ltd.

8000

76,220.00

One Bank Ltd

100

21,240.00

Power Grid Bangladesh

22950

3,116,500.00

Standard Bank Ltd

800

187,314.00

Premier Bank Ltd

1150

294,275.00

TOTAL

6,207,854.70

121,850.00

Income, Expenses and Distributable Income During the year under review, the Fund earned a gross income of Tk. 79, 95,448.00 by way of dividend income of Tk. 17, 27,757.00, interest income of 58,186.00Tk. 17,27.00 on bank deposits , with ICB , capital gains of Tk. 62,07,855.00 and other income of Tk. 1650.00. After deducting the total expense of Tk. 16, 26,236.00 incurred as staff expenses, management fee, printing and stationary, postage and telegrams, provision against investment and others, the net income of the fund stood at Tk. 41, 87,736.00. Taking into account the previous year’s undistributed income of Tk. 89,


04,140.00the Fund had net distributable income of Tk.1, 27, 11,852.00as on 30 June 2007 resulting in distributable income per certificate of Tk. 254.24 for 2006-07. Dividend: The Fund declared dividend at the rate of Tk.62.00 per certificate of Tk. 100.00 each for the year 2006-2007 as compared to Tk. 55.00 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;

Financial Year 1995-96 1996-1997 1997-1998 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007

Dividend Per Certificate 42.00 45.00 30.00 32.00 35.00 40.00 42.00 45.00 50.00 55.00 55.00 62.00

Portfolio: As on 30 June 2007 the Fund had securities of 70 companies in its portfolio with a total cost of Tk. 327.06 lac. During 2006-2007 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 2007 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 2007. 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 2006 and 30 June 2007 respectively.


The number of certificate holders of the fund was 989 as on 30 June 2007. Third ICB Mutual Fund Dividend Income and Interest Income: The Fund had earned dividend and interest income of Tk. 22, 09,865.00 from 40 securities during 2006-2007 of which a sum of Tk. 18, 39,350.00(83.23 percent) was received in cash within 30 June 2007. Capital Gains on Sale of Investments: During 2006-2007, 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 2004-2005 Sl. No 1 2 3

No.of Securities sold 600 32000 500

Capital gain(taka) 649,233.00 170,785.00 56,800

4 5 6 7 8 9 10 11 12 13

Name of the company AB Bank Ltd. Ashraf textile mills Ltd. Bangladesh industrial finance co. Ltd. Bangladesh welding Electrodes Bank Asia BRAC Bank Ltd. Dhaka Bank Ltd. Dhaka electric supply co. Ltd. Eastern Housing Ltd. Eastland Insurance Company Ltd Golden son Ltd. IPDC Ltd. Langka bangla finance Ltd

14500 100 3250 150 3400 3900 100 4000 1800 20000

294,100 34,032.00 1,378,112.50 47,861.50 543,172.50 175,989.00 7,233.00 28,700 37,13,000 2,69,050

14 15 16 17 18 19 20 21

Miracle Industries Ltd. One Bank Ltd. Power Grid co. Bangladesh Ltd Premier Bank Ltd. Pubali Bank Ltd. Southeast Bank Ltd. Standard Bank Ltd United Leasing Co. Ltd.

9000 200 22800 1500 1815 700 1400 160 Total

82,910 41,218 31,24,125 3,84,125 11,57,929 1,24,823 3,32,254 31,887.20 9,305,540.60

Income, Expenses and Distributable Income During the year under review , the Fund earned a gross income of Tk. 1,16,16086.00.00 by way of dividend and interest income from investment in securities of Tk. 22,09,865.00,interest income of Tk. 99,360.00 on bank deposits , capital gains of Tk. 93,05,541.00 and other income of Tk. 1320.00. After deducting the total expense of Tk. 47,05,206.00 incurred as staff expenses, management fee ,


printing and stationary ,postage and telegrams , provision against investment and others , the net income of the fund stood at Tk. 69,10,880 .00. Taking into account the previous year’s undistributed income of Tk. 1,15,14,705.00 the Fund had net distributable income of Tk.1,84,25,585.00 as on June 2007 resulting in distributable income per certificate of Tk. 184026 for 2006-2007. Dividend: The Fund declared dividend at the rate of Tk.56.00 per certificate of Tk. 100.00 each for the year 2006-2007 as compared to Tk. 52.00 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 Financial Year Dividend Per Certificate 1995-1996 28.00 1996-1997 38.00 1997-1998 35.00 1998-1999 38.00 1999-2000 40.00 2000-2001 45.00 2001-2002 50.00 2002-2003 50.00 2003-2004 50.00 2004-2005 52.00 2005-2006 52.00 2006-2007 56.00 Portfolio: As on 30 June 2007 the Fund had securities of 83 companies in its portfolio with a total cost of Tk. 418.11. lac. During 2006-2007 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 2007 was 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 2007. 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 2006 and 30 June 2007 respectively. Fourth ICB Mutual Fund Dividend Income and Interest Income: The Fund had earned dividend and interest income of Tk. 2140,664.00 from 45 securities during 2006-2007 of which a sum of Tk. 14,29,180.00(66.80 percent) was received in cash within 30 June 2007. Capital Gains on Sale of Investments: During 2006-2007, the Fund earned Tk. 94,24,084.00 as capital gains by securities of 22 companies as shown in the following table. Statement of Capital Gains during 2006-2007 Sl. No

Name of the company

1 2 3

Mutual Trust Bank Ltd One Bank Ltd First Lease International ltd

No.of sold 5000 500 400

Securities Capital gain(taka) 1,75,000.50 58,500.00 12,425.00


4 5 6 7 8 9

BATBC Ltd Padma Oil Company Ltd Eastern Lubricant Blenders Ltd Glaxco Smithkliny Bangladesh Ltd Bangladesh Online Ltd Monno Ceramic Industries Ltd

25000 5100 350 31850 1000 3400 Total

24,12,860.00 9,58,698.00 8,113.00 29,12,827.00 11,150.00 5,94,669.50 71,44,243.00

Income, Expenses and Distributable Income During the year under review , the Fund earned a gross income of Tk. 1,16,63,579.00 by way of dividend and interest income from investment in securities of Tk. 21,40,664.00,interest income of Tk. 97,907.00 on bank deposits , capital gains of Tk. 94,24,084,.00 and other income of Tk. 924.00. After deducting the total expense of Tk. 53,53,118.00 incurred as staff expenses , management fee , printing and stationary ,postage and telegrams , provision against investment and others , the net income of the fund stood at Tk. 63,10,461.00. Taking into account the previous years undistributed income of Tk. 1,19,36,690.00 the Fund had net distributable income of Tk1,1,82,47,151.00 as on June 2007 resulting in distributable income per certificate of Tk. 182.47 for 2006-07 Dividend: The Fund declared dividend at the rate of Tk.52.00 per certificate of Tk. 100.00 each for the year 2006-2007 as compared to Tk. 48.00 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 Financial Year 1995-96 1996-1997 1997-1998 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007

Dividend Per Certificate 41.00 45.00 32.00 35.00 36.00 38.00 40.00 40.00 45.00 48.00 48.00 52.00

Portfolio: As on 30 June 2007 the Fund had securities of 91 companies in its portfolio with a total cost of Tk. 483.86 lac. During 2006-2007 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 2007 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 2007. The market price per certificate of Tk. 100.00 each of the fund was Tk.478.00 and Tk. 628.00 as on 9July 2006 and 30 June 2007 respectively. The number of certificate holders of the fund was 1955 as on 30 June 2007


Fifth ICB Mutual Fund Dividend Income and Interest Income: The Fund had earned dividend and interest income of Tk. 33,66,365.00 from 51 securities during 2006-2007 of which a sum of Tk. 25,85,505.00(76.80 percent) was received in cash within 30 June 2007. Capital Gains on Sale of Investments; During 2006-2007, the Fund earned Tk.1,30,50,047.00 as capital gains by securities of 25 companies as shown in the following table. Statement of Capital Gains during 2004-2005 Sl. No 1 2 3 4 5 6 7 8 9

Name of the company Mutual Trust Bank Ltd Standard Bank Ltd One Bank Ltd First Lease International ltd Mercantile Bank Ltd ICB Amcl First Mutual Fund BATBC Ltd BOC Bangladesh Ltd Padma oil company Ltd

No.of Securities sold 9050 4000 2300 3000 1000 1500 22350 1650 5600

Capital gain(taka) 4,62,687.50 2,88,000.00 1,93,800.00 20,175.00 1,03,375.00 71,000.00 10,71,831.50 16,745.00 11,37,676.00

10 11 12 13 14

Beximco Pharmaceuticals Ltd Wata chemicals Ltd Padma Textile Mills Ltd Bata Shoe company BD Ltd Monno Ceramic Industries Ltd

5000 860 10000 500 1060 Total

43,650.00 29,540.00 87,500.00 64,785.00 1,73,366.00 37,64,131.00

Income, Expenses and Distributable Income During the year under review , the Fund earned a gross income of Tk. 1,64,88,507.00 by way of dividend and interest income from investment in securities of Tk. 33,66,365.00,interest income of Tk. 72,095.00 on bank deposits , capital gains of Tk. 1,30,50,047.00 . After deducting the total expenses of Tk. 1,03,38,254.00 incurred as staff expenses , management fee , printing and stationary ,postage and telegrams , provision against investment and others , the net income of the fund stood at Tk. 61,50,253.00. Taking into account the previous years undistributed income of Tk. 42,81,656.00 the Fund had net distributable income of Tk 1,04,31,909.00 as on June 2007 resulting in distributable income per certificate of Tk. 69.55 for 2006-2007. Dividend: The Fund declared dividend at the rate of Tk.33.00 per certificate of Tk. 100.00 each for the year 2006-2007 Which was also Tk. 27.00 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. The Year –wise dividend performance of the Fund is shown in the following table: Year –wise dividend Performance of ICB Fifth Mutual fund Financial Year

Dividend Per Certificate


1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007

20.00 21.00 23.00 24.00 24.00 24.00 27.00 27.00 33.00

Portfolio: As on 30 June 2007the Fund had securities of 102 companies in its portfolio with a total cost of Tk. 752.58 lac. During 2006-2007 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 2007 was 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 June2007 The market price per certificate of Tk. 100.00 each of the fund was Tk.277.25 and Tk. 453.50. as on 2 July 2006 and 30 June 2007 respectively. The number of certificate holders of the fund was 3685 as on 30 June 2007. Sixth ICB Mutual Fund Dividend Income and Interest Income: The Fund had earned dividend and interest income of Tk. 46,77,148.00 from 62 securities during 2006-2007 of which a sum of Tk. 38,18,689.00(81.65. percent) was received in cash within 30 June 2007. Capital Gains on Sale of Investments; During 2006-2007, the Fund earned Tk. 2,03,47,268.00 as capital gains by securities of 30 companies. Income, Expenses and Distributable Income During the year under review , the Fund earned a gross income of Tk. 2,51,50,020.00 by way of dividend and interest income from investment in securities of Tk. 46,77,148.00,interest income of Tk. 1,25,582.00 on bank deposits , capital gains of Tk. 2,03,47,268.00 and other income of Tk00.00. After deducting the total expenses of Tk.1,21,27,248.00 incurred as staff expenses , management fee , printing and stationary ,postage and telegrams , provision against investment and others , the net income of the fund stood at Tk. 1,30,22,772.00. Taking into account the previous years undistributed income of Tk. 77,22,583.00 the Fund had net distributable income of Tk 2,07,45,355.00.00 as on June 2007 resulting in distributable income per certificate of Tk. 41.49 for 2006-2007. Dividend: The Fund declared dividend at the rate of Tk.23.00.00 per certificate of Tk. 100.00 each for the year 2006-2007 Which was also Tk. 18.50 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,,45,355.0 The Year –wise dividend performance of the Fund is shown in the following table; Year –wise dividend Performance of ICB Sixth Mutual fund


Financial Year 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-20007

Dividend Per Certificate 15.00 16.00 17.00 17.50 17.50 17.50 18.50 18.50 23.00

Portfolio: As on 30 June 2007 the Fund had securities of 135 companies in its portfolio with a total cost of Tk896.91 lac. During 2006-2007 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 2007 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 2007. 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 2003 and 30 June 2005 respectively. The number of certificate holders of the fund was 10076 as on 30 June 2005.

Seventh ICB Mutual Fund Dividend Income and Interest Income: The Fund had earned dividend and interest income of Tk. 47,67,683.00 from 66 securities during 2006-2007 of which a sum of Tk. 37,53,542.00(78.73 percent) was received in cash within 30 June 2007. Capital Gains on Sale of Investments; During 2006-2007, the Fund earned Tk. 1,95,50,858.00 as capital gains by securities of 32 companies. Income, Expenses and Distributable Income During the year under review , the Fund earned a gross income of Tk. 2,44,16,675.00 by way of dividend and interest income from investment in securities of Tk. 47,67,683.00,interest income of Tk. 98,090.00 on bank deposits , capital gains of Tk. 1,95,50,858.00. After deducting the total expenses of Tk1.61,59,269.00 incurred as staff expenses , management fee , printing and stationary ,postage and telegrams , provision against investment and others , the net income of the fund stood at Tk. 82,57,406.00. Taking into account the previous years undistributed income of Tk20,69,05,165.00 the Fund had net distributable income of Tk 1,51,62,572.00.00 as on June 2007 resulting in distributable income per certificate of Tk. 50.54 for 2006-07. Dividend: The Fund declared dividend at the rate of Tk.22.50.per certificate of Tk. 100.00 each for the year 2006-2007 Which was also Tk. 16.00 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 Financial Year Dividend Per Certificate 1998-1999 13.00


1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007

13.50 14.00 14.50 14.50 15.00 16.00 16.00 22.50

Portfolio: As on 30 June 2007 the Fund had securities of 132 companies in its portfolio with a total cost of Tk 1,130.41 lac. During 2006-2007 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 2007 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 2007. 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 2006 and 30 June 2007 respectively. The number of certificate holders of the fund was 2797 as on 30 June 2007.

Eighth ICB Mutual Fund Dividend Income and Interest Income: The Fund had earned dividend and interest income of Tk.52,58,000.00 from 64 securities during 2006-2007 of which a sum of Tk. 42,44,897.00(80.73 percent) was received in cash within 30 June 2007. Capital Gains on Sale of Investments: During 2006-2007, the Fund earned Tk 2,16,53,796.00 as capital gains by securities of 29 companies. Income, Expenses and Distributable Income During the year under review , the Fund earned a gross income of Tk2,70,22,457.00dividend and interest income from investment in securities of Tk. 52,58,000.00 ,interest income of Tk. 1,10,639.00 on bank deposits , capital gains of Tk.2,16,53,796.00. After deducting the total expenses of Tk 1,59,59,504.00 incurred as staff expenses , management fee , printing and stationary ,postage and telegrams , provision against investment and others , the net income of the fund stood at Tk1,10,62,953.00. Taking into account the previous years undistributed income of Tk 93,84,715.00 the Fund had net distributable income of Tk 2,04,47,668.00 as on June 2007resulting in distributable income per certificate of Tk.40.90 for 2006-2007. Dividend: The Fund declared dividend at the rate of Tk.18.00 per certificate of Tk. 100.00 each for the year 2006-2007 Which was also Tk. 15 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 Financial Year 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007

Dividend Per Certificate 12.00 12.50 13.00 13.50 13.50 14.00 15.00 15.00 18.00

Portfolio: As on 30 June 2007the Fund had securities of 126 companies in its portfolio with a total cost of Tk1, 171.93 lac. During 2006-2007 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 2007 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 2007. 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 2006 and 30 June 2007 respectively. The number of certificate holders of the fund was 7537 as on 30 June 2007.

← Overall Evaluation of ICB Unit Fund Introduction Sponsored by the Government of Bangladesh, ICB Unit Fund was established on April 10, 1981. Its main objective is to mobilize savings through sale of its units to small investors and invest these funds in marketable securities. The scheme provides a potential source of equity and debt to industrial and commercial concerns and thus contributes to the industrial development of the country. Unit fund is an open ended Mutual Fund. It provides an opportunity to the unit holders to invest their funds in a well managed and diversified portfolio with a high degree of security of capital and reasonable yearly returns. ICB units are securities within the meaning of Trust Act. 1882. Details Description of the ICB Unit Fund What is Unit Fund? It is an open -end mutual fund scheme launched in April 1981, through which the small and medium savers get opportunities to invest their savings in a balanced and relatively low risk portfolio. ICB has so far declared attractive dividends on units every year Issue, Transfer and Surrender of Unit Certificates


(I) Units are available in 1, 5, 10, 50, 100, 500, 1000, & 5000 denominations. The names with addresses of the holders are recorded and dividends are dispatched to them accorded and dividends are dispatched to them accordingly. (II) Units may be transferred through prescribed transfer form duly filled in and signed by the transferor and transferee. No stamp duty is required for such transfers. (III) Units may be encased by way of surrendering the certificates along with the prescribed surrender forms duly filled in and signed by the registered holders and no prior notice is required. The certificates are required to be surrendered at the prevailing Repurchase Price. Registration Number Units are issued as registered certificates. An existing Unit holder is required to mention the previous registration number on the specified column of the application form when he/she intends to buy Units again. Price Fixation Charges in sale and repurchase prices of units are notified through the newspapers and price of a Unit is fixed periodically by ICB as its fund manager. Among others, valuation of the assets of the Fund is taken into consideration while fixing price of a unit.

Advance 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 of 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 purchased. The rate of interest on the loan is reasonable and competitive. Public Participation The Fund is divided into units which are generally known as "ICB Unit". Each Unit bears a certain value in the assets of the Fund. The Unit holders are the owners of the fund and only they are benefited from it. Unit certificates can be purchased in single or joint name (s). At present maximum of 10,000 Units can be purchased in a single or joint name(S) at a time. Units are not sold to institutions. Professional Counseling Professional Counseling is rendered to the prospective & existing investors who are eager to purchase ICB Units through ICB offices and authorized Bank branches. Advantages of Investment in Unit Fund: Investment in Unit Funs offers the following advantages: a)

Investment in Unit certificates is secured.


b)

It enjoys liquidity.

c)

It is transferable.

d)

Bank Loan is available against pledge of units.

e)

It offers attractive regular return.

f)

Investment allowance for Income Tax is available.

g)

Dividend is Income Tax exempted.

Investment by Bangladeshi Citizens Abroad The Bangladeshi citizens living abroad may invest in certificates on fulfillment of the following terms and conditions: (I) Value of Units purchased is to be remitted through bank channel, (II) The money invested in Units and benefits thereon are not allowed to be repatriated, (III) The investors must mention their local and bank addresses in Bangladesh for convenience of registration of Units. Investment by Foreigners Residing in Bangladesh The foreign nationals residing in Bangladesh may also invest in Unit Certificates, provided they produce certificates to the effect that money being invested are their own savings and is not borrowed as loan or overdraft from any bank. These certificates are to be collected from a Gazetted Officer or a Banker not below the rank or Deputy General Manager.

Fund Management

The responsibility of managing the fund rests on ICB for which management fee @ Tk. 1.25 per Unit (net outstanding) is charged. The Corporation also discharges the responsibility of loading and unloading of securities in and from the portfolio in the interest of the Unit holders. It is also the custodian of all assets of the fund. Dividend The total income earned on investment/ deployment of funds, net of expenditures incurred, in a financial year is distributed among the unit holders as dividend. Dividend is normally declared at the end of July each year by the Board of Directors of ICB. Dividend Warrants are dispatched soon after declaration of dividend. Since launching of the scheme in 1981 till FY 1997-98 the rates of yearly dividend declared/ paid are as under:

Financial Year

Rate of dividend per Financial Year unit (Tk.)

Rate of dividend per unit (Tk.)


1980-81

15.00

1993-94

17.40

1981-82

16.00

1994-95

17.50

1982-83

16.25

1995-96

17.00

1983-84

17.00

1996-97

17.50

1984-85

20.00

1997-98

14.00

1985-86

21.00

1998-99

12.00

1986-87

24.0

1999-2000

12.00

1987-88

24.00

2000-2001 2001-2002

12.00 12.30

1988-89

25.00 2002-2003

12.30

1989-90

25.00 2003-2004

11.50

2004-2005

11.50

2005-2006

12.00

2006-2007

13.00

1990-91

18.00

1991-92

16.70

1992-93

17.00

Tax Benefits (I) Investment in Units enjoys the benefit of Investment Allowance under Sec. 44 of Income Tax ordinance 1984. (II) Units are treated as approved securities in accordance with the Section 2993 of the Companies Act., 1994 and Insurance Act, 1938. These are also treated as Securities as per Sec. 20 of the Trust Act, 1882. Cumulative Investment Plan (CIP) Under this scheme a holder instead of receiving dividend may reinvest such dividend income accrued for purchasing Unit at a concessional rate. In such case, Units are issued at Tk. 1.00 less than the opening price of the financial year. Duplicate Dividend Warrants


Incase dividend warrants are not received in time, it should be communicated to ICB head office immediately. Duplicate warrants are issued subject to completion of required formalities and execution of an Indemnity Bond on non-judicial stamp as applicable. Change of Address Unit holders should immediately communicate any charge of address to the issuing offices so that no problem arises in dispatching dividends and surrendering the certificates. Transaction Hours Transactions are held during banking hours every day excepting Thursday and holidays. Transactions do not take place during the month of July each year due to book-closure. Where Units are Available Units are sold/purchased at ICB Head Office and at its Branches at Dhaka, Chittagong, Rajshahi, Khulna, Sylhet, Barisal and Bogra. Fifty seven branches of Sonali Bank, Agrani Bank, Janata Bank, Rupali Bank Ltd., Uttara Bank Ltd., Pubali Bank Ltd., IFIC Bank Ltd., Bangladesh Krishi Bank, Prime Bank Ltd., Dhaka Bank Ltd., Bangladesh Shipla Rin Shangstha, United Commercial Bank Ltd., The City Bank Ltd., and Estern Bank Ltd. locate at important cities all over the country, are also engaged in selling and repurchasing of unit certificates. Statements of Gross sale Repurchase and Net Sale of Units Issue and Repurchase of Units During FY 2006-07, 1786559 Units of Tk.18.22 crore were issued under the Cumulative Investment Plan(CIP) while Units of Tk. 25.61 crore were repurchased .The following table shows the comparative position of gross issue (CIP) , repurchase and net issue of Units during 2005-2006 and 2006-2007:

Position of Units issue (CIP), repurchase and net Issue particula

2006-07

rs Gross Issue Repurchase Net Issue

Unit 17,86,559 24,15,837 (6,29,278)

Amount 18.20 25.61 (7.93)

(Tk. In crore) 2005 - 06 Cumulative up to 30 June 2007 Unit Amount Unit Amount 16,88,190 17.89 8,72,18,740 976.39 17,90,340 19.34 4,75,95,256 522.14 (1,05,977) (1.45) 3,96,23,484 454.25

Sources of the Income of the Fund Dividend and Interest Income In FY 2006-07 the Fund earned dividend amounting to Tk. 21.91 crore from 133 companies and interest on Debenture securities amounting to Tk. 2.14 crore from 5 companies resulting in total dividend and interest income of Tk.24.05 crore of which 74.55% i.e Tk. 17.93 crore was received in cash . The total dividend and interest income during 2005-06 was Tk. 22.12 crore.


Capital gains on Sale of Investment During FY 2006-2007 the Fund earned an amount of Tk. 61.14 crore as capital gain by selling securities of 92 companies as compared to Tk. 53.15 crore earned in 2005- 06 by selling securities of 60 companies. Interest on Bank deposits: In 2006-07 the Fund earned Tk. 0.27 crore as interest on bank deposits which was Tk. 0.25 crore in 2005-2006. Premium Income on Gross Sale of Units: In 2006-07 the Fund earned Tk. 0.71 crore as premium on gross issued Units as against Tk. 0.67 crore in 2005-2006. Income and Expenditure: During the year under review , the Fund earned a total income of Tk. 87.08 crore by way of dividend , interest on debenture securities , capital gains , interest on bank deposits , premium on sale of units and others , After deducting the total expenses of Tk.30.47 crore on account of management fee, interest on current account with ICB , commission and brokerage , printing and stationary, postage , Bank charges ,provision against investment and others the fund had a net income of Tk . 56.61. crore, Together with the previous year’s undistributed income of TK 31.22 crore, the Fund had a net distributed income of Tk. 87.83 crore in aggregate and Tk 22.17 per unit. As on 30 June, 2007 the Fund had 39623484 units outstanding against 40252762 Units at the same date of the preceding year. Year –wise dividend Payment Performance Dividend Declared: The Board of Director of ICB in its meeting held on 30 July 2007 declared dividend at the rate of 13.00 per unit, involving Tk.51.51 crore for 2006-2007. The unit holders whose names appeared in he register on 30 June, 2007 were entitled to this dividend. The rest amount of Tk. 36.32 crore would be carried forward as undistributed income.

Table shows dividend performance and dividend yield of the Fund for the period from 1992-93 to 2006-2007. Financial Year 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05

Dividend per Unit (Taka) 17.00 17.40 17.50 17.00 17.50 14.00 12.00 12.00 12.00 12.30 12.30 11.50 12.00

Dividend Yield on opening price (percentage) 15.18 15.54 15.35 14.53 14.58 11.66 10.53 11.01 11.11 11.60 11.39 10.65 11.01


2005-06 2006-07

12.00 13.00

10.90 12.26

Portfolio: As on 30 June 2007 the net Investment of the Fund at cost price stood at Tk. 631.73 crore in 289 securities , the market value of which was Tk. 707.52 crore . Summary of investments as on 30 June 2007 SL.no.

Parties

(A) Share

1. Listed companies 2.Non listed companies (under guaranteed return) 1. Investment in SARF ( in foreign currency ) 1. Listed companies 2. Non listed companies

(B) Debenture Total Investment

No.of securities 265 17

(Tk. in crore) Total Cost Total market value 612.52 5.64

684.74 6.95 0.006

1

.005

2 4

0.98 12.59

2.17 13.66

289

631.73

707.52

Summary of investments Pattern as on June 2008

, 1.2 Total 631.73, 1.4 (B) Debenture(A) Share 13.565, 3.2618.165, 8.2

Classification of Unit holders: The number of Unit holders as on 30 June, 2007 was 34,720 whose occupation –wise classification is as follows: SL.no 1 2 3 4 5 6 7 8 9 10

Occupation / Institution Govt.& Non- Govt. Employees Business man and agriculturists Engineers and Doctors, Lawyers etc. Retired person (all categories) Defense personal House wives Others Bangladeshis Residing Abroad Workers and Students Institutional Provident Fund Total

No. of Unit holders 15080 2350 2015 1806 1730 802 643 290 270 36 25022

Percentage 60.27 9.39 8.05 7.22 6.91 3.21 2.57 1.16 1.08 0.14


It may be observed from the above the table that out of the total Unit holders as on 30 June 2005. Public and Private sector employees accounted for maximum of 58.75 percent who are mainly of small and medium size income group. It indicates that the Unit Fund has been succeeded in attracting small and medium size savers. Findings 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 with a view to develop capital market, to mobilize savings and to broaden the base investment and ultimately help growing industrialization in the country. After that ICB established three subsidiary companies. And the 100% ownership of these companies goes to ICB. Among three subsidiary companies ICB Asset Management Company Limited is the topic of this report. Here, include some overall findings of ICB AMCL which I observed during my internship program. • The activities of ICB AMCL has invigorated the Mutual Fund industry and has already established itself as one of the fast expending Asset Management Company in this Country. • Dividend payment of closed end mutual fund is higher than open end mutual fund. Closed end mutual fund gives Tk. 20 per unit where the high rate for open end mutual fund is Tk.13.50 per unit. • The company has a bright future. Because the company surpassed all the previous records in its key areas like asset growth, profitability growth, and return to assets compared to 2005-06, Net Profit. EPS, NAV and dividend have increased from Tk. 364.79 Lacs to Tk. 402.44 Lacs, Tk. 72.96 to Tok. 80.49, Tk. 232.70 to Tk. 293.19 and 20 percent to 25 percent respectively in 200607. • As part of continuous effort, two new mutual funds (i) ICB AMCL Second Mutual Fund of Tk. 20 crore, (ii) ICB AMCL NRB Mutual Fund of Tk. 100 crore are designed the year 2007. And the ICB Second NRB Mutual Fund has already lunched this year, 2008, which is for Non Residual of Bangladesh. • The subsidiary companies established as a part of intellectual thinking and steps of ICB. Because, ADB forced by Bangladesh Bank to ICB to stop their monopoly business of Mutual Fund. • Using of costly borrowing capital for the investment on securities is a factor causing problem for high expenditure of maintenance of fund, which affects the income of funds. • Dividend is one of the sources of income for the mutual fund. Most of the companies do not declare dividend up to satisfactory level. • Political unsteady position also hearts the investor’s sentiment in the market and thereby leads to flat the stock market. • Short of space for ICB AMCL office. SWOT Analysis The Strength, Weakness, Opportunity and Threats of ICB Asset Management Company Limited are as follows: Strength: • The activities of ICB AMCL has invigorated the Mutual Fund industry and has already established itself as one of the fast expending Asset Management Company in this Country. • ICB AMCL gives high dividend payment Tk. 25.00 than Subsidiary Company ICB CML. • The company surpassed all the previous records in its key areas like asset growth, profitability growth, and return to assets.


• Always creative in activities. The company designed two new mutual funds. And already one has lunched in this year which is ICB AMCL Second NRB Mutual Fund. • The board of the company comprised of professional people, maintained high ethical and professional standards in discharging its responsibilities. Weakness: • There are no branches of ICB AMCL where ICB CML has four branches. • The manpower is very short and few than other two subsidiaries. It has only 10 officers and 6 nonofficer employees. • Customer service is not so enough. They don’t give enough time to deal with customers and clients. • Short of space in the office for work and services. Opportunity: • Low level of competition. Because they have no competitors or rivals. So it’s a great opportunity to sustain leadership. • The growth of Mutual Fund represents institutionalization of Capital Market which is a future of Capital Market of a developed country. • Threats: • There are no threats of the company. Because they have no competitors or rivals. Product Life Cycle Product Life Cycle: After launching the new product, management wants the product to enjoy a long and happy life. Although it does not expect the product to sell forever, the company wants to earn a decent profit to cover all the effort and risk that want into launching it. The product life cycle is the course that a products sales and profits take over its lifetime. The product life cycle has include Introduction stage, growth stage, maturity stage and Decline stage

In the above figure we can say that ICB has staying a maturity stage. In the case of ICB has strong sales and profits up to this point will encourage others firms to market .Their main product unit fund and mutual fund. During 2006-2007 net sale 7.39 crore and 2007-2008 net sale 9.11 and cumulative up to 30june 2008 in (44514 in 2007-2008 total income of the fund taka 342.18 crore earned by way of dividend and interest on debenture. Capital gains, interest on bank deposit etc, and total expenses cost taka 231.01 core. There are some operational or promotional activities like advertising, disbursement, commitment etc. These sorts of activities increase their profits and reputation. During 2007-2008 the total trading of ICB and its subsidiary companies taka 62344.76 core which was 6.52% in the preceding year and total turnover of taka 62344.76 core. Simultaneously transaction volume has increased. Obviously ICB sales, profit and other promotional activities staying at maturity stage, not a decline stage. In the above circumstances we can easily says that ICB staying at maturity stage.


Recommendation & Conclusion 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 less risk takers. ICB has great influence in the capital market. ICB should play its important role for the gaining of the investors’ confidence on the capital market and further industrial growth in our country and the development and stabilization of the capital market in country. To conclude this report it can be said that it was a great opportunity for me to study the operational activities of the biggest investment bank as well as merchant bank in Bangladesh. I have learned a lot about investment and the capital market of the country. 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 Financial Institution (DFI). ICB plays a vital role to encourage and broaden the base of investments and thereby to help develop the capital market in Bangladesh. The study is the first time for me to get the opportunity for conducting such and elaborate study in a different field. Hence, I do not know how far I am successful in writing this report. But it is true; I have tried sincerely to discharge my duties with zeal and enthusiasm and to the best of my satisfaction. However, I express my deepest regret for any error or omission which may have happened unwillingly. Recommendations: 1. To mobilize the savings of the small and medium investors, it is necessary to inform them through different media. 2. Should prepare a booklet on rules and regulations of Capital Market, which will help investors to take proper steps. 3. Should give percentage to the staff of the ICB who will bring investors. 4. Should increase the activity in stock market. 5. Many investors is now dissatisfied as the dividend payment ratio is decreasing. So, should try to increase the dividend payment ratio by keeping a strong portfolio. 6. Officers dealing with the investors should give more attention and should behave well with them. 7. The procedure to obtain Bank loan against Unit Certificate should be easy and should inform all investors about this opportunity. 8. Should have the facility to make nominee of the Unit Certificate though it has the opportunity to buy Certificate in a Joint name. 9. The corporation should have a training institute. 10. Records, documents, paper of share department should be eliminated. Therefore, it must be computerized. 11. The Central Depository System (CDS) is essential in ICB. It also needs Internal Transfer of Shares (ITS). 12. The newly formed Business Development Cell contemplates to undertake the following additional functions: i) Introduction of “Best Efforts” underwriting system whereby ICB will only sell a public issue without the obligation of take up. ii) Management of portfolios of other institutions or funds for predetermined Fee or commission. iii) Floatation of close-end Mutual Fund exclusively for the wage earners living abroad.


13.

Should appoint some experts who have the ability to evaluate supplied appraisal report which are now lacking.

Performance evaluation of icb mutual and unit fund  

The modern mutual fund was first introduced in Belgium in 1822. This form of investment soon spread to Great Britain and France. Mutual fund...

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