Executive summary:

Investment Corporation of Bangladesh (ICB) being a statutory corporation is mainly an

investment bank. As an investment bank is a financial institution, which mobilizes fund from the
surplus economic units and develops funds to the deficit economic units.
The main objective of ICB is to encourage and broaden the bases of investment, to develop the
capital market and to accelerate the mobilization of fund.
The study has mainly concerned with the performance of ICB in three broad functional areas like:
pooling of funds, making of portfolios and formulating and implementing a sound dividend policy.
In doing the study, in depth analysis has been conducted on these three main issues. First of all,
the company analysis and the profiles has been done to have an idea about the company. In this
regard, The objectives of the company, basic functions, business policies, manpowers and
different business areas of ICB has been explained. Meanwhile, the companys management and
administration part has also been included in the begging part of the report where companys
institutional and regulatory framework has been explained along with the human resources.
ICB operates the business operations by the help of a huge numbers of departments in it. So, a
different chapter has been included to explain the functions and activities of those departments.
Due to the diversified functions performed by ICB, it consist of many departments. These
department are engaged in different activities to perform the business functions.
In this repot, ICBs operational and functional areas have also been explained to have a clear
idea about different functional areas of ICB. The operational areas have been explained with their
results in the related field. However, ICB in some cases increase and curtail its operational areas
according to its convenience and by the management decision. In this part, ICBs financial results
in these areas has also been discussed for the last two years. Among the different functional
areas IPO issuing and lease finance are common.
Among the three main issues of the report, one of them is mobilization of fund. ICB acts a very
important role in the mobilization of fund by collecting fund from the people who has excess fund
in their hand out of their expenditures. ICB collects those funds by two major ways. One of them
is ICB mutual fund and the other is ICB unit fund. Actually, ICB simultaneously raising fund from
the households investors by these two way. Till now, ICB has collected fund up to Eight ICB
mutual fund. Most recently ICB has created another mutual fund for the non-resident, which has
not been included in this report due to the lack of proper information.
ICBs another way of collecting fund from the households investors is ICB unit fund. This sort of
fund does the same job like ICB mutual fund. This is just another vehicle of raising fund from the
people and invests again in the capital market by making a good portfolio. The report consists of

the number of these issues by ICB including the reason why the individuals invest their fund in
the mutual and unit funds.
The second issue is the making of portfolio by ICB with the fund that has been collected from the
investors. This not an easy task so far. Because, in this regard, ICB has to take the decision
carefully in which areas it will invest he fund. First of all, ICB take decision in which industry it will
invest the funds. After taking the decision and section of the industry, ICB thinks about different
stocks of the companies. Once it takes its decision and determine its stocks of the company, ICB
then thinks about he weight it will provide in each of the stock. And this way ICB make the
portfolio. The detailed process of making portfolio has been explained in the report inside.
Dividend policy is one of the important decision by the ICB. Once it eared profit from its
investment, the management takes decision about the declaration of the dividend for the
investors. Here may be two scenarios, one is that, the management may declare the divined and
the other is further expansion. If the management takes decision for further investment it does not
declare any dividend for the investors. However the process of declaration has been discussed in
the report inside.
Background information and methodologies:
Overview:
Investment Corporation of Bangladesh (ICB) is a statutory corporation. It is mainly an investment
bank. As an investment bank is a financial institution, which mobilizes fund from the surplus
economic units through various mutual funds and sale of securities and develops funds for the
deficit economic units through purchase and/or underwriting of securities..
The Investment Corporation of Bangladesh (ICB) was established on 1 October 1976. under The
Investment Corporation of Bangladesh Ordinance, 1976 (No. XL of 1976). The establishment of
ICB was a major step in a series of measures undertaken by the government to accelerate the
pace of industrialization and to develop a well-organized and vibrant capital market particularly
securities market in Bangladesh. ICB caters to the need of institutional support to meet the equity
gap of the industrial enterprises. In view of the national policy of accelerating the rate of savings
and investment to foster self-reliant economy, ICB assumes an indispensable and pivotal role.
Though the enactment of the Investment Corporation of Bangladesh (Amendment) Act, 2000 (No.
of XXIV of 2000), reforms in operational, strategic and business polices have taken place by
establishing and operating subsidiary companies under ICB.
Statement of the problem:
ICB has a strong impact in the capital market in Bangladesh. It has diversified objectives since
its inception. The main concern of the present study is to assess the performance of ICB, i.e to

measure to what extent it has achieve its objectives and for this ICBs three major functional
areas have been evaluated. These are mobilization of funds, making of portfolios and formulating
and implementing a dividend policy that have contribution to

further expansion of the

organization.
Rationale of the study:
The study has been conducted to identify how ICB is performing in the three major functional
areas and in the same time how contribution it has in the development of the capital market. The
study has also assessed whether the other financial organizations and the individual investors
are benefited by its performance. Meanwhile, the study has also assessed how much contribution
it has in creating the bases of investment and mobilization of savings as part of its commitment.
Finally, the study has reflected how ICB is contributing to the financial market by its functions and
activities.
Objective of the study:
The broad objective of the study is to assess the performance of ICB in three broad functional
areas like: pooling of funds, making of portfolios and dividend policy as its contribution in the
financial market in Bangladesh. Investment Corporation of Bangladesh is a state-own statutory
organization, which was mainly, established to strengthen and reenergize the final market of
Bangladesh.
The specific objectives of the study are to assess:
1)

The role of ICB to broadening and encouraging the base of investment;

2)

The role of ICB in mobilization of savings from the households and channeling them to the

financial markets;
3)

Success of ICB in the development of the capital market;

4)

Performances of ICB in the recent years in the three major functional areas;

5)

Making of ICBs portfolios after mobilizing funds from the investors; and

6)

The dividend policy of ICB

Methodologies:
The evaluation has been made by assessing in three major areas of ICB. The study has been
designed in a way that, it reflects the details functions and activities of the organization of the
firm. The methodologies that have been used are- the mobilization of funds by the ICB from the
general households, the making of portfolios by the generated funds and the dividend policy and
further expansion
Besides the above-mentioned approach, the methodologies covered the following:

Sources of data: In conducting the study data and information have been collected from the
diversified sources. Firstly, data have been collected from the published financial statement and
prospectus of the company. Each and every year the firm published the financial report. So, this
information from the report has been used for the study. Again, many other published materials
are here in the collection of ICB. So, this information has also been used. Meanwhile, there are a
lot of published materials, which will also be used for this study purpose. The last but not the least
thing is that, assistance from the Internet has also be en taken for the study purpose. However, in
conducting the study, mainly the assistance from the financial statements and report of the firm
has been taken for the study.
Quality Control:
In the part of the quality control, throughout the data collection, quality control was the special
concern. Whenever, data have been collected, special care was given in this respect so that
accurate information can come for the accurate calculation. So, this thing has been done with
special care. Again in collecting the data from the financial statement of the firm, various years
data has been taken for the accurate calculation of the study. Meanwhile special care has been
devoted at the time of copying the digits from the financial statement to the calculations sheet. In
collecting the information, most recent published data and information has been taken from the
reliable sources for ensuring the quality control.
Data Processing:
Data that have been collected from different sectors was not be available in the processed form.
So, after getting the data the second job is to process those data into form so that they were in
the arranged form. In processing the data, most recent published data and information has been
taken from the reliable sources. For example, five years data has been taken for the performance
analysis of the firm. So, in taking the samples most recent data and information was taken for the
accurate measurement of the performance. At the time of processing the data special care was
given so that the digits are not changed mistakenly when they were shifted from the report to the
calculation sheet.
Expected outcome of the study and its use:
The study has been conducted to assess the performances of ICB. Among the many functional
areas of ICB three major areas have been evaluated to assess the performance of ICB. However,
so far he study has been done the information form the all groups of people to have an idea
about the ICB can use the report. The information can deliver the ideas about ICB in some of the
important functional areas. General investor can use the information from the study to determine
about their investment decision at ICB. As ICB pools fund from the general households and

invest this fund again in different areas, so the investor can have idea about it from this report.
Meanwhile, the information in the report can also been used for the further study.
Limitation of the study:

This report so far has some limitations in some areas. In preparing the report a lot of data and
information were required data, but sufficient information and data has not been found for the
report to be made really impressive. However, in spite of the scarcity, effort has been given much
to make the report acceptable and reliable. Meanwhile, to assess the performance of ICB, not all
the functional areas has been considered In this respect, three major areas were considered to
evaluate the performance of ICB.
Background:
Investment Corporation of Bangladesh (ICB) is a statutory corporation. It is mainly an investment
bank. As an investment bank is a financial institution, which mobilized fund from the surplus
economic units by savings securities and developed funds to the deficit economic unit also by
buying/underwriting securities. After liberation in view of social economic changes, the scope for
private sector investment in the economy was kept limited by allowing investment in projects up
to tk. 25 lac. The new investment policy, which was announced in July, 1972 provides for an
expanded role of private sector by allowing investment in a project up to tk. 3 crore. The ceiling
has further being raised to tk. 10 crore in spite of the adequate facilities and incentives provided
to the private sectors encouraging response was not for the coming. One of the reasons among
other was the lack of institutional facilities, which provides underwriting support (Like former ICB)
to industrial enterprise that was required to raise much need equity fund. Thus, the need for
reactivation for capital market, stock market was keenly felt.
The Investment Corporation of Bangladesh (ICB) was established on 1 October 1976. under The
Investment Corporation of Bangladesh Ordinance, 1976 (No. XL of 1976). The establishment of
ICB was a major step in a series of measures undertaken by the Government to accelerate the
pace of industrialization and to develop a well-organized and vibrant Capital Market particularly
securities market in Bangladesh. ICB caters to the need of institutional support to meet the equity
gap of the industrial enterprises. In view of the national policy of accelerating the rate of savings
and investment to foster self-reliant economy, ICB assumes an indispensable and pivotal role.
Though the enactment of the Investment Corporation of Bangladesh (Amendment) Act, 2000 (No.
of XXIV of 2000), reforms in operational strategic and business polices have taken place by
establishing and operating subsidiary companies under ICB.

Objective of ICB:

The objectives of the corporation are:

To encourage and broaden the base of investments,
To develop the capital market,
To mobilize savings,
To promote and establish subsidiaries for business development,
To provide for matters ancillary thereto.
Business policy:
The business policies of ICB are in the following:
To act on commercial consideration with due regard to the interest of industry, commerce,

depositors, investors and to the public in general,

To provide financial assistance to projects subject to their economic and commercial viability,
To arrange consortium of financial institutions including Merchant Banks to provide equity

support to projects,
To develop and encourage entrepreneurs,
To diversify investments,
To induce small and medium savers for investment in securities,
To create employment opportunities,
To encourage investment in Agro-based and IT sectors.

Basic functions:
In order to achieve the previously mentioned objectives, the corporation may carryout the
following functions:
Direct purchase of shares and debentures including placement and equity participation,
Participating in and financing of joint-ventures companies,
Providing lease finance singly and through syndication,
Managing existing Investors Accounts,
Managing existing Mutual Funds and Unit Fund,
Managing Portfolios,
Conducting computer training program,
Providing advance against ICB Unit and Mutual Fund certificates,
To act as Trustee and Custodian,
Providing Bank Guarantee,
Providing investment counseling to investors,
Participating in Government divestment program,
Introducing new business products suiting market demand,
Dealing in other matters related to Capital Market.
Organizations manpower:
The general direction and superintendence of corporation is created in a board of directors, which
consists of clever (11} persons including the chairman and managing director of ICB. This is the
most powerful board compare to other govt. financial institutions in terms of their experience and
knowledge. The managing director is the chief executive of the organization. Two general

managers assist him, viz. G.M. (Operation) and G.M. (Admin.). Total manpower of ICB at present
is 372.
Business area of ICB:
Private Placement: ICB is authorized to act as an agent of issuers and investors for private

placement of securities. Under this arrangement, ICB places securities to

individuals/institutions on behalf of the issuer for which it charges fees. ICB also acquires
shares/securities for its own portfolios.
Underwriting: In order to raise long-term debt equity from the primary market, the Government

bodies, enterprises, corporation or Companies may seek intermediary assistance from ICB in
the form of underwriting. Because of its long and proven experience, reputation, asset back up
and established network of regional offices, ICB is in an excellent position to attract the
potential investors to the proposed issue of shares, debenture and other securities for
successful floatation of IPO & placement.
Custodian and Banker to the Issues: To act as the custodian to the public issue of Open-end

& Mutual Funds, ICB provides professional services. It also acts as the Banker to the issues
and provides similar services through the network of its branches. Fees in this regard are
negotiable.
Merger and Acquisitions: Companies willing to expand their business through mergers or

acquisitions or to divest projects that no longer fit into present scale of operation contact the
corporation. ICB provides professional services & advice in respect of shaping up the cost and
financial structures to ensure best possible operation results.
Corporate Financial Advice: Companies and Government enterprises intending to go public

often seek professional & financial advice on corporate restructuring & reengineering. ICB
through its expertise provide such services.
Lease Financing: ICB provides lease finance mainly for machinery, equipment and transport.

ICB is in a position to provide professional advice and financial assistance to the intending
clients. The period of lease, rental, changes and other terms and conditions are determined on
the basis of assets and the extent of assistance required by the applicants.
Advanced against ICB Mutual Fund Certificates Scheme: Advanced against ICB Mutual

Fund Certificates Scheme was introduced in 2003, designed for the ICB Mutual Fund
certificate holder to meet their emergency fund requirement. One can borrow maximum of 50%
value of last one years weighted average market price of certificates at the time of borrowing
by deposing his/her certificates under lien arrangement from any of the ICBs offices. The rate
of interest on the loan is reasonable and also competitive.
Bunk Guarantee Scheme: As part of ICBs business diversification program, the corporation
introduced bank guarantee scheme during the year 2002-2003 ICB provides (1) bid bond for
enabling the business people to participate in any tender or bidding; (2) performance bond for
helping the business community to continue their business smoothly by fulfilling their
obligations promised by them to their clients; (3) customs guarantee for solving different
disagreements between the customs authority and the business classes at the initial stage.
The maximum limit of guarantee is tk. 2.00 crore and would be issued against at least 20%
cash and 80% easily encashable securities or against 100% cash margin. Re-guarantee from

other financial institutional is required for guarantee against the amount exceeding tk. 2.00
crore.
ICB Mutual Fund: ICB has so far floated eight close-ended Mutual Funds. The first ICB Mutual

Funds was floated on 25April, 1980, while the eight ICB Mutual Fund was floated on 23 July
1996. The aggregate size of these funds is tk. 17-5 crore. About 35,000 certificates holders
own these funds. Dividends declared on the funds were very attractive ranging from 13.5 to
180 per certificate for 2002-2003. Investors show overwhelming interest in all the ICB Mutual
Funds. One can invest in such funds through the stock exchanges with which these funds are
listed. Through corporate restructuring, new mutual funds are being floated through ICB Asset
Management Company Limited, subsidiary company of ICB.
ICB Unit Fund: It is an open-ended Mutual Fund scheme launched in April 1981, through

which the small and medium savers get opportunity to invest their savings in a balanced and
relatively low risk portfolio. ICB has so far declared attractive dividends on units every year
ranging from taka 12 to 25 per unit. Investment in units enjoys tax benefit, amount being
applicable as per law. However, under the ICBs restructuring program new unit certificate are
being sold by ICBs new subsidiary company ICB Asset Management Company Limited.
Investors Scheme: The Investors Scheme was introduced in June 1977. Over the years, this
scheme has grown tremendously. ICB, at its discretion, may grant up to times loan against the
assets of the account subject to a maximum limit of tk. 3 lac. An account holder may use the
combined balance of his/her equities and loan to buy shares/securities. To help the investors to
develop diversified and balanced portfolio to minimize risk and earn a reasonable return, ICB
provides professional advice and other support services. Under the restructuring program, ICB
operates and manage only the old accounts and new accounts are being opened and
managed by the ICB Capital Management Limited, a subsidiary of ICB.

Share Capital Ownership Pattern of ICB:

Classification of Shareholders as on 1 January 2004
Shareholder

No. Of

No. Of

Percentage

Shareholders

Shares

Government of Bangladesh

1350000

27.00

Nationalized Commercial Banks

1137220

22.74

Development Financial Institutions

681550

13.63

Insurance Corporations

628691

12.57

Bangladesh Bank

600000

12.00

Denationalized Private Commercial

454262.5

9.09

28571

0.57

Banks
Private Commercial Banks

Foreign Commercial Banks

42830

0.86

First BSRS Mutual Fund

6900

0.14

Other Institutions

13024

0.26

General Public

1026

56951.5

1.14

Total

1054

5000000

100.00

Source: ICB annual report 2005-06.

Milestone of ICB:
Milestones

Date/Establishment Commencement

Date of Establishment/ Commencement ICB

1st October 1976

lnvestors Scheme

13th June 1977

First ICB Mutual Fund

25th April 1980

ICB Unit Fund

10th April 1981

Second ICB Mutual Fund

17 June 1984

Third ICB Mutual Fund

19 May 1985

Fourth ICB Mutual Fund

6 June 1986

Fifth ICB Mutual Fund

8 June l987

Sixth ICB Mutual Fund

16 May 1988

Nomination as the countrys Nodal DFI in

7 May 1992

SADF
Seventh ICB Mutual Fund

30Junel995

Eighth ICB Mutual Fund

23 July 1996

Purchase of own Land & Building

11 December 1997

Participation in Equity of SARF

16 January 1998

Advance Against ICB Unit Certificates

12 October 1998

Scheme
Lease Financing Scheme

22 April 1999

The Investment Corporation of Bangladesh

5 and 6 July 2000

(Amendment)
Act, 2000 passed in the Jatiya Sangsad
(Parliament) and Honorable Presidents
assent thereof
Formation and Registration of 3 Subsidiary

5 December 2000

Companies of ICB
Computer Training Program

25 March 2001

Commencement of business operations of

the subsidiary companies
ICB Capital Management Ltd.

01 July 2002

ICB Asset Management Company Ltd.

01 July 2002

ICB Securities Trading Company Ltd.

13 August 2002

Registration as a Trustee with SEC

20 August 2002

Registration as a Custodian with SEC

20 August 2002

Bank Guarantee Scheme

21 June 2003

Advance Against ICB Mutual Fund Certificate

21 June 2003

Scheme
Consumers Credit Scheme

15 February 2004

Received BASIS-SEDF Best IT Use Award in

28 November 2004

SOFTEXPO,2004
Source: ICB annual report 2005-06.

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

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, 2000 (XXIV) of 2000, scope of ICBs
activities through the formation of subsidiaries, have been expanded. In addition to these, to
resume its duties and functions, it has to compelled by Companies Act 1994, trust Act 1882,
Insurance Act 1983. Security and Exchange Commission Act 1993, Banking Companies Act
1993, Foreign Exchange Regulation 1974, Income Tax Act etc.
It is to note that no provision of 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.

HISTORY OF MUTUAL FUND

The concept of Mutual Fund was developed in early nineteenth century. However, the first
modern day mutual fund was opened in America in 1924. The growth of the mutual fund industry
stalled due to great depression of 1930s like many other economic activities. Mutual Funds
became mainstream investments in the USA and the world in 1990s. The number of mutual fund
in the world stood at over 53500 at the end of June, 2003 of which maximum of 59% were in
America followed by 32% in Europe and 9% in Africa and Asia Pacific. By type of fund, 42% were
equity funds, 31% were debt fund and 21% were balanced/mixed fund, the rest 6% were
unclassified fund.
OBJECTIVES OF THE MUTUAL FUND
Providing regular, steady & Attractive dividend
Investing the funds both in capital & money market instruments
Stable the Capital Market
To encourage and broaden the base of investment
To develop the capital market.
To provide for matters ancillary thereto.
To mobilize savings.
To promote and establish subsidiaries for business development.
INVESTMENT STRATEGY & POLICIES
Performance rigorous and in depth analysis and evaluation are coned The Company Mostly
Follows an investment strategy, which focuses on income, value and growth. Funds investment
decisions were based on fundamental judgment and entry and exit strategy according to market

opportunities. Investments are generally made in securities with strong fundamentals, future
prospects in terms of return risk corporate management and other acted to pick securities for
investment. The investment portfolios have been designed in such a manner as to provide
sufficient liquidity to pay obligations as they become due. No concentration of investment in a
particular company or sector has been made, rather investment have been diversified in
accordance with the guidelines as laid down in the securities & Exchange Commission (Mutual
Fund) Ordinance, 2001.
RISK MANAGEMENT
Market Risk: The Funds primarily invest in shares of listed securities. Investment in shares
carries risk that is considered higher than that of investment in debt securities. Capital Invested in
the stock market could, in extreme circumstances, lose its entire value. The company manages
market risk by monitoring exposure to marketable securities by following the internal risk
management policies and investment guidelines approved by the Securities & Exchange
Commission and the board of Directors of the Company.
Credit Risk: The credit risk arising from the possibility of default by participants or failure of the
financial markets/stock exchange, the depositors, the settlements or clearing system, etc. is
covered by the internal risk management policies and investment guidelines.
Liquidity Risk: The Company manages the liquidity risk by investing a maximum portion of the
Funds assets in highly liquid shares and money market instruments.
Market Rate of Return Risk (MROR): MROR risk is the risk that the value of a financial
instrument will fluctuate due to changes in the market interest rates. The Fund has minimal
MROR exposure as it primarily invests in highly rated listed securities and money market
instruments.
TYPES OF MUTUAL FUNDS
1) Open-ended mutual fund
Open-ended mutual funds are those Funds where subscription and redemption of units are
allowed on a continuous basis. These schemes do not have a fixed maturity period. Investors can
buy or repurchase the units at any time at NAV /NAV based prices declared by the fund manager
on daily or weekly basis.
2) closed-end mutual fund
Closed-end mutual funds are those Funds where the shares are initially offered to the public and
are then traded in the secondary market.
3) Mutual fund by investment style

Over a period of time, the fund managers have developed a variety of products to cater to the
needs of the investors. They are:
Growth funds
This fund offers potential for appreciation in share value, rather than the dividend. Such funds
invest in stocks and have tendency to outperform other funds and other modes of savings over a
period of time.
Income funds
This funds, offers lucrative dividend but very little potential for growth. This fund mainly invests in
government paper, bonds issued by municipal or local bodies, corporate debts and in stocks
which offer regular dividend.
Balanced funds
The balanced funds offer prospects of both moderate appreciations in share value as well as
current income. The fluctuation in share price may be low. Such funds invest in stocks, corporate
debts and Government paper.
4) Money market mutual funds
Such funds have an objective of taking advantage of the volatility in interest rates in the money
market instruments. The funds are invested in certificate of deposits, inter-bank call money
market, commercial papers, T-bills and Short-term securities with a maturity period of less than
one year.
5) Index funds
The objectives of these Funds are to increase the value of the portfolio in line with the benchmark
index. The funds are invested in the shares of companies as included in the benchmark index in
the same proportion.
6) Leveraged funds
These funds have an objective of increasing the value of the portfolio and benefit the
shareholders by gains exceeding the cost of funds. The funds are invested in speculative and
risky investments like short sales to take advantage of declining market.
ADVANTAGES OF MUTUAL FUNDS
Diversification of risk
Mutual Funds substantially lower the investment risk of small investors through diversification

of investments in different sectors. The objectives of the funds are to maximize the return for a
given level of risk.
Liquidity
Mutual Funds mobilize the saving of small investors and channel them into lucrative investment
opportunities. As a result, mutual funds add liquidity to the market. Moreover, as the funds are
long term investment vehicles, they reduce market volatility by offering support to scrip prices.

Accessible
Mutual Funds provide the small investor access to the whole market which would be difficult to

achieve individually.
Reduction of transaction cost
The investors can save the transaction cost by purchasing a single share of mutual fund.
Flexibility
The investors can pick and choose a mutual fund to match his particular needs. They have the
option of transacting their holdings from one scheme to another, get updated information and
so on.

DISADVANTAGES OF MUTUAL FUNDS

Economic scenario
As the business and economic conditions do not remain constant, the mutual fund may face

some difficulties in future. Especially if the manager does not shuffle the investment portfolio
with the passage of time, or some other major unforeseen disaster/event changes the
investment scenario.
Management
As the portfolio of a mutual fund is managed by the fund managers, the investors have no say

in the affairs of a mutual fund although they are the owner of the fund.
Over diversification
There exists the danger of over-diversification which would inevitably lead to a reduced return
on the portfolio.

The Net Asset Value (NAV) of the different Mutual Funds as on 30, October 2012 is
enumerated below:
Sl. No

Particulars

Face Value

At Market Price
(Tk.)

1.

ICB AMCL Unit Fund

100

263.34

2.

ICB AMCL First Mutual Fund

10

34.71

3.

ICB AMCL Pension Holders Unit Fund

100

238.45

4.

ICB AMCL Islamic Mutual Fund

10

18.30

5.

ICB AMCL First NRB Mutual Fund

10

27.37

6.

ICB AMCL Second NRB Mutual Fund

10

11.35

7.

Prime Finance First Mutual Fund

10

12.42

8.

ICB AMCL Second Mutual Fund

10

7.92

9.

ICB Employees Provident Mutual Fund One: Scheme One

10

7.17

10.
11.

Prime Bank 1st ICB AMCL Mutual Fund

10

Phoenix Finance 1st Mutual Fund

10

7.14

Table 3.3 NAV

MUTUAL FUNDS
ICB Asset Management Company Ltd. has so far floated eleven closed-end mutual funds and
two open-end Mutual Funds through which the small and medium savers get opportunities to
invest their savings in a balanced and relatively low risk portfolio. The aggregate size of these
funds is around Tk. 815.00 crore.
Conventional Mutual Funds:
Sl.No.

Name of the Funds

Date of

Nature of

Size of

Launching

the Fund

the
Fund
(TK. in
crore)

1.
2.
3.
4.
5.
6.
7.

ICB AMCL First Mutual Fund

Prime Finance First Mutual Fund
ICB AMCL Second Mutual Fund
ICB Employees Provident Mutual Fund One:
Scheme One
Prime Bank 1st Mutual Fund
Phoenix Finance 1st Mutual Fund
ICB AMCl Unit Fund

16/06/2003

Close-end

10.00

04/01/2009

Close-end

20.00

09/08/2009

Close-end

50.00

22/11/2009

Close-end

75.00

06/12/2009

Close-end

100.00

07/03/2010

Close-end

60.00

21/06/2003

Open-end

150.00

Non-Conventional Mutual Funds:

Sl.No.

Name of the Funds

Date of

Nature of

Size of

Launching

the Fund

the Fund
(TK. in
crore)

1.
2.
3.

ICB AMCl Islamic Mutual Fund

ICB AMCL First NRB Mutual Fund
ICB AMCL Second NRB Mutual Fund

12/10/2004

Close-end

10.00

28/01/2007

Close-end

10.00

15/05/2008

Close-end

100.00

4.
5.
6.

ICB AMCL Third NRB Mutual Fund

ICB AMCL Pension Holders Unit Fund
IFIL Islamic Mutual Fund-1

28/03/2010

Close-end

100.00

18/10/2004

Open-end

30.00

26/09/2010

Close-end

100.00

Table 3.5 Conventional and Non-Conventional Mutual Funds

These funds received spectacular response from the investors. The business of the Islamic
mutual funds should be inconsistence with the Sharia Law. With a view to tapping the savings of
Non-Resident Bangladeshis (NRBs) for investment in the countrys capital market, ICB Asset
Management Company Ltd. lunched ICB AMCL First NRB Mutual Fund, ICB AMCL Second NRB
Mutual Fund and ICB AMCL Second NRB Mutual Fund. Investors have shown overwhelming
interest in all the mutual funds. ICB AMCL Unit Certificates and ICB AMCL Pension Holders Unit
Certificates are sold and repurchased on the counters of ICB AMCL Head Office and the branch
offices of ICB. ICB AMCL Pension Holders Unit Certificates are sold exclusively to the retired
pension holders. ICB along with some other banks and financial institutions extend loan facility
against lien of units. The company plans to launch some other conventional mutual funds named
First Agrani Bank Mutual Fund, Sonali Bank Limited 1st Mutual Fund and specialized open-end
mutual fund for NRBs named ICB AMCL NRB Unit Fund.
Financial Results
Total assets under management grew by 7.77% to BDT 25.37 billion.
Net operating profit decreased by 23.99% to BDT 255.57 billion
Net profit after tax BDT 233.27 billion
Key Figures

2011-12

2010-11

2009-10

BDT mn

BDT mn

BDT mn

total revenue income

309.79

388.02

371.14

operating revenue income

309.24

387.84

371.13

net operating profit

255.57

336.22

325.61

17.36

13.31

12.26

25370.56

23541.59

13894.9

operating cost -income ratio(%)

Total asset Under manament

Table 3.6 Financial Result 2011-12

Portfolio investment and management approach of ICB AMCL

Formation of portfolio
ICB AMCL forms portfolio by
Own 13 mutual funds
Unit fund
Equity participation shares
Investors account and
Government holdings.
Guidelines on investment:
1. No mutual shall invest more than 5% of its capital in any one companys shares
2. Investments by way of previously placed debentures, securitized debts and other
unquote debt instruments shall not respectively exceed ten percent of the total assets
of the scheme in case of growth schemes and forty percent of the total assets of the
relevant scheme in case of income schemes.
3. No individual scheme of the mutual fund should invest more than five percent of any
companys shares.
4. No mutual fund under all its scheme should own more than five percent of any
companys paid up capital carrying voting rights
5. No mutual fund under all its schemes taken together should investment more than ten
percent of the funds in the share, debentures or other securities of a single company.
6. No mutual fund under its entire scheme taken together should invest more than fifteen
percent of its funds in the shares and debentures of any one industry, provided that
provision shall not apply to a scheme which has been floated for investments in one or
more specified industries and declaration to that effect has been made in the offer
letter.
Portfolio investment
The purchase of stocks, bounds and money market instruments by foreigners for the purpose of
realizing a financial return, which does not result in foreign management, ownership, or legal
control, is called the portfolio investment
Some examples of portfolio investment are:
Purchase of shares in a foreign company.
Purchase of bonds issued by a foreign government.
Acquisition of assets in a foreign country.
Purchase of stocks in a foreign company.
Factors affection international portfolio investment:
Tax rates on interest or dividends (investors will normally prefer countries where the tax rates

are relatively low)

Interest rates (money tends to flow to countries with high interest rates)

Exchange rates (foreign investors may be attracted if the local currency is expected to
strengthen)

Portfolio investment is part of the capital account on the balance of payments statistics. A
portfolio investment is in contrast to a direct investment.
Portfolio Investment Criteria
Before investment investor follow some rules
1. Price- Earning Ratio- P/E Ratio
2. Dividend Yield
3. Closing Market Price
Trend Analysis
An aspect of technical analysis that tries to predict the future movement of a stock based on past
data. Trend analysis is based on the idea that what has happened in the past gives traders an
idea of what will happen in the future.
There are three main types of trends: short- short-, intermediate- and long-term.
Trend analysis tries to predict a trend like a bull market run and ride that trend until data suggests
a trend reversal (e.g. bull to bear market). Trend analysis is helpful because moving with trends,
and not against them, will lead to profit for an investor.
Portfolio management
Portfolio management is used to select a portfolio of new product development projects to
achieve the following goals:
maximize the profitability or value of the portfolio
provide balance
support the strategy of the enterprise
Portfolio management is the responsibility of the senior management team of an organization or
business unit. This team, which might be called the product committee, meets regularly to
manage the product pipeline and make decisions about the product portfolio. Often, this is the
same group that conducts the stage-gate reviews in the organization.
A logical starting point is to create a product strategy markets, customers, products, strategy
approach, competitive emphasis etc. the second step is to understand the budget or resources
available to balance the portfolio against. Third, each project must be assessed for profitability
(rewards), investment requirements (resources), risks, and other appropriate factors.
The weighting of the goals in making decisions about products varies from company. But
organizations must balance these goals: risk vs. profitability, new products vs. improvements,
strategy fit vs. reward, market vs. product line, long-term vs. short-term. Several types of
techniques have been used to support the portfolio management process:
Heuristic models

Scoring techniques
Visual or mapping techniques

The earliest portfolio management techniques optimized projects profitability or financial returns
using heuristic or mathematical models. However, this approach paid little attention to balance or
aligning the portfolio to the organizations strategy. Scoring techniques weight and score criteria
to take into account investment requirements, profitability risk and strategic alignment.
Portfolio management process of ICB Mutual Fund is shown in flow chart

For each of the mutual funds and unit fund ICB maintains separate portfolio to ensure higher gain
of the fund holders. ICB portfolio management activities involves
Selection of security to invest
Add newer potentially profitable security in the portfolio
Discard weak performing shares from the portfolio.
Securities analysis department does the following activities to do portfolio management
ICB maintains its own portfolio and managed portfolio following some rules and regulations. Lets
take some of its portfolios to evaluate ICB AMCL portfolio management efficiency.
Measuring the level of efficiency of ICB AMCL Portfolio Management

Among the 8 mutual funds the first mutual fund is having the largest value in the market. Where
the other portfolios are less valued. ICB follows the same portfolio management strategy for its
entire portfolio. Performance evaluation of this portfolio shows varying level of efficiency. I have
tried to measure this efficiency through
Treynor Model
Sharpe measure
Jensen measure
SWOT Analysis of the Organization
SWOT analysis means the analysis of strength, weakness, opportunity & threats. For ICB, it is
given below:
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 AMCL
The company surpassed all the previous records in its key areas like asset growth, profitability
growth and return to asset
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
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 offices and 6
nonofficial employees.
Customer service is not so enough. They dont give enough time to deal with customers and
clients.
short of space in the office for work and services
Opportunities
Low level of competition. Because they have competitors or rivals. So its a great opportunity to
sustain leadership.
the growth of mutual fund represents institutionalization of a development country.
Threats
There are no threats of the country. Because they have an competitors or rival.
FINDINGS, RECOMMANDATION AND CONCLUSION
FINDINGS
1. Among these mutual fund the portfolios of 1 st mutual fund shows the best combination of risk
and return that is high return and low risk. And it has lowest Coefficient of Variation. Trey nor

2.

3.

4.
5.
6.
7.
8.
9.

Portfolio performance measure of the Thirteen Mutual Funds of ICB AMCL shows that
1st Mutual Fund has the highest T value. And last of all comes 13 th because it has highest beta
value .48.This means this fund largely affected by market forces.
Sharpe Portfolio performance measure of the 13 th Mutual Funds of ICB AMCL shows that the
3rd NRB mutual fund is having the highest S value. It has 2 nd position in CV and Trey nor
measure result. Worst is 13 mutual funds.
Sharpe measure is more acceptable than neither they nor measure because it considers all the
market and non market neither risk that Trey nor do not consider. And it is also better than
Jensen measure.
Jensen Portfolio performance measure of the 13th Mutual Funds of ICB shows that the
3rd NRB mutual fund is having the highest J value
So lastly we see all four measures show that 3 rd NRB Mutual Fund performs best than all. And
11th Mutual Fund performs worst.
The most efficient combination of risk return is return=50% and risk=15%. This is measured by
coefficient of variation.
To achieve best risk return combination ICB AMCL Prime Finance Mutual fund should invest
26% of its fund in Eastland Insurance and 74% in Meghna Pet Industries.
ICB AMCL 3rd Mutual fund lies much below than the minimum variance portfolio risk return
point. ICB AMCL 3rdMutual fund did not try for achieving this level of efficiency.
Mutual fund regulations constrain ICB AMCL to go for the efficient frontier. It is almost
impossible to achieve that level in reality.

RECOMMENDATIONS
Recommendations of this report have been made on the basis of my working view on ICB AMCL
Mutual Fund; Head Office, Dhaka.ICB AMCL is a service-oriented organization. I involved on
Mutual Fund activities i.e. Data entry, Finding documents & providing the clients. Service and
other related services. I faced some problems providing my service and customers also faced
getting service. That is why the authority always should be aware about their service quality and
performance as service quality can lead to increased customer satisfaction. Despites these
problems, there is something that the ICB AMCL should look at:
The ICB AMCL should offer more facilities to the customers & Organizations such as providing

dividend home delivery & Online Transfer.

The internal environment of the ICB AMCL should make more attractive. And it should keep

neat & clean.

The ICB AMCL should provide one stop service to its customers.
The ICB AMCL should computerize all its function and should provide online Systems facility.
The employees should always take time to hear the problems of the customers. It will help

them to deliver the right service.

When a customer will go to the ICB AMCL with an unusual problem the employees will have to

act positively so that it creates confidence in the heart of the customer that his/her problem will
be solved.
Materials associated with the services should make more attractive.

The customers should give chance to complain about their dejection. For this the ICB AMCL

should have an active complaint system. From this the ICB AMCL can also get the customers
feedback.
The ICB AMCL should provide more service products to the customers.
The ICB AMCL should continue their service in the time of lunch and prayer.
The authority should recruit more employees to serve the customers. The can recruit

experienced employee as well as fresh graduate.

The ICB AMCL can allow the clients to pay their installments at any branches the customer

finds convenient.
The ICB AMCL should increase the promptness of services.

Though my report is on ICB AMCL Mutual Fund, I tried hard to cover all about the customer and
their behavior with the Organization. By ensuring the above recommendations the management
of ICB AMCL. Can improve their service quality and create a good image in the customers mind.
CONCLUSIONS
ICB is a unique name in our country as an investment bank, but ICB AMCL is a subsidiary of
ICB. It is a playing pivotal role to develop the countrys capital Market, ICB as the National
Investment house, is the organization to perform the activities by creating demand for securities
and on the other hand to ensure the supply of securities in the Capital Market. ICB AMCL
investors scheme helps to boost up domestic economy through facilitating to invest into the
capital market. At a stage, this made an important effect on the capital market and excellent
response from the investors. The floatation of mutual funds and issuance of unit certificates by
the ICB AMCL strengthens the supply of attractive securities in Bangladesh capital market.
Mutual fund management can manage the activities of mutual fund. Recently ICB has floated
Bangladesh Fund to overcome the problem of stock market in Bangladesh on 10 th October, 2011.
Mutual fund department should be innovative, explorative and dynamism. ICB AMCL should
specially emphasize on the operations and management of mutual fund because most of the
small investors are key clients of mutual fund. So, ICB AMCL should concentrate to increase the
performance of its mutual fund and way to find out the path for overcoming the problems of
operations. So, lastly we see all three measures show that 3rd NRB ICB AMCL Mutual Fund
performs best than all. And ICB AMCL Employees Mutual Fund performs worst.
We are quite optimistic that recent improvement in transaction procedure, new fund,
computerized system and online service in transaction procedure, support of CDBL, efficient
workforce shall reach the ICB AMCL in apex position and efficiently contribute in the rapid
development of Bangladesh capital market.