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.

ICB Mutual Funds

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.

How to Buy existing Mutual Funds

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

Management of the Funds

The Mutual Funds are managed by ICB as fund manager for which receives commission @1% .

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.

Management Fee, Charge etc.

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

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 ICB Mutual

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

1980-1981 20              

1981-1982 20              

1982-1983 20              

1983-1984 25              

1984-1985 35 21            

1985-1986 38 23 21          

1986-1987 41 25.5 22.5 21.5        

1987-1988 48 28 25.5 23        

1988-1989 49 29 26 23.5 20.5 15.5    

1989-1990 49 29 26 23.5 20.5 13.25    

1990-1991 35 22 19 17 10 6    

1991-1992 31 22 19 18 11 6    

1992-1993 31.5 21 18 17 12 -    

1993-1994 45 27 22 40 25 16    

1994-1995 50 40 27 41 28 18    

1995-1996 60 42 28 41 30 20 18  

1996-1997 70 45 38 45 35 24 21 18

1997-1998 70 30 35 32 22 18 14 12

1998-1999 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(1B:2,240) 62 56 52 33 23 22.50 18

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.

 

Investment Corporation of Bangladesh:

Objectives

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.

Business Policy

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

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

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

To develop and encourage entrepreneurs.

To diversify investments.

To induce small and medium savers for investment in securities.

To create employment.

To encourage Investment in IT sector.

To encourage Investment in joint venture capital/project.

Basic Functions

Underwriting of initial public offering of shares and debentures

Underwriting of right issue of shares

Direct purchase of shares and debentures including Pre-IPO placement and equity participation

Providing lease finance to industrial machinery and other equipments singly or by forming syndicate

Managing investors' Accounts

Managing Open End and Closed End Mutual Funds

Operating on the Stock Exchanges

Providing investment counsel to issuers and investors

Participating in Government divestment Program

Participating in and financing of, joint-venture projects

Dealing in other matters related to capital market operations

Trusty, Custodian, Bank Guarantee

Consumer Credit

Information Technology and Management

 The advanced and user-friendly ICT system deployed by ICB has won appreciation of all its stake holders. The comprehensive computer strategy encompassing all the features of an effective and intelligent structure employs modern and appropriate hardware and software. The system is also equipped with built-in flexibility for rapid transformation and adjustment as and when the situation warrants. The above developments and efforts have helped ICB to computerize its overall activities in an orderly manner. Utmost priority is given to recruitment of skilled and qualified manpower to run the system smoothly with time bound approach.

Sufficient numbers of computers, printers and other hardwares are procured every year. Computer personnel working in ICB has developed a large number of customized software in-house which are being used regularly. In addition, some software requiring sophisticated and extraneous, inputs have also been procured from outside sources. These software handle a wide array of activities of various departments at the head office and of the branches. The important ones of these software are Merchandising Operation Management System, Mutual Funds Scrip and Ownership Management System, Stock Exchange Index Publication, IPO Management System, Personnel Management Information System, Project Information Management System, Meeting Minutes Storage & Retrieval, Law Suits Tracking, Unit Sale and Repurchase Management System, Financial Feasibility Analysis for Projects, Accounting Application (General Ledger, Staff Loan, Payroll, Unit Lien, FDR/TDR, Lease Finance, Project Loan, Fixed Asset Management, Inventory), Unit Reconciliation, Mutual Fund Reconciliation, Share Reconciliation and Telephonic Transaction and Inquiry System (TTIS).

As a result of dematerialization of securities in growing numbers related to bigger number of companies under CDS, scrip-less trading is increasing quite fast. The relevant software have been modified accordingly.

ICB has taken broad band internet connection to get access to internet for its head office and branch

IT Planning Process in ICB

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

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

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

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

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

•  A separate division dedicated to IT with enough expertise to carry on future enhancement and development process and system support.

Computer hardware installation

In 1998 latest model multi users & Multi tasking computer and high-speed network systems were installed. The systems comprise of Two Unix Servers with Pentium Pro multiprocessors, One RAID (Redundant Array of Independent Disk) Subsystems, Two Windows NT Servers and 90 PCs. are procured phase by phase to cater to the need of customers. The system has been upgraded by the latest available technology. The new set-up is a cluster server system consisting of two powerful servers.

Network Systems

Four (Two 48 ports and Two 24 ports) network switches are installed for networking of four floors and two backbone switches are used to interconnect the Four network switches.

RDBMS Software

As most of the systems of ICB is data entry with high transaction rate and high MIS payload, Oracle7 was chosen as the RDBMS system. Now Oracle 10g, the latest version of Oracle is being used.

Computerization of Branch Offices

Oracle based customized software's are installed in the ICB branch offices. Necessary training was given to officers of branches offices for smooth operations of the installed software.

Customized Software

Thirteen (13) customized software's have been developed for total automation of Operational activities of ICB.

Web-page and Tele-banking

ICB's own web-page was launched and TTIS (Telephonic Transaction and Inquiry System) Software was installed to provide better service to the investors of all levels at home and abroad. Many Investors have done registration with the Investor's Department to get the service.

Internet

Head office and branch offices are connected with internet. Any department or branch office can download required information from website web server.

Manpower Support

Corporation has built up a strong technical and managerial manpower setup in its IT area. To cope with the latest development in IT, extensive training is being given to the IT personnel regularly.

With all these in mind, in 1996 ICB decided to restructure and refurnish its IT infrastructure in a whole new way taking advantage of the-then latest technologies with an estimated financial involvement of Tk. 3.00 crore (approx.). Today's ICB computerization is the result of the above systematic planning.

Future Roadmap

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

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

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

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

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

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

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

ICB Asset Management Company Ltd.

BASIC FACTS

Backgrund

ICB Asset Management Company Ltd. was created as part of the restructuring programme of ICB under Capital Market Development Programme (CMDP) initiated by the Government of Bangladesh and the Asian Development Bank. The Company was incorporated as a public limited company with an authorized capital of Tk. 100 crore and a nominal paid up capital of Tk. 2.00 lac, which was subsequently increased to Tk. 7.50 crore, under the Companies Act, 1994 with the Registrar of Joint Stock Companies and Firms on December 05, 2000. The Company obtained license on October 14, 2001 from the Securities and Exchange Commission(SEC) under

to carry out the mutual fund

activities. The company started its operation from July 01, 2002 upon issuance of Govt. gazette notification.

Business

The company is engaged in investment management; more specifically floating and managing both open-end and closed end mutual funds, provident funds etc. The company is dedicated towards development of mutual fund industry as well as the capital market of Bangladesh.

Capital Structure

(Taka in Lacs)                        

Particulars June 30, 2008 June 30, 2007

Authorized Capital 10000.00 10000.00

Paid up Capital 500.00 500.00

Reserve 740.00 490.00

Retained Profit 377.03 475.95

Total 1617.03 1465.95

MUTUAL FUNDS

ICB Asset Management Company Ltd. has so far floated five 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. 230.00 crore.

Closed-end Mutual Funds:

The closed-end mutual funds are, namely, ICB AMCL First Mutual Fund of Tk. 10.00 crore, ICB AMCL Islamic Mutual Fund of Tk. 10.00 crore and ICB AMCL First NRB Mutual Fund of Tk. 10.00 crore, ICB AMCL Second NRB Mutual Fund of Tk. 100.00 crore and Prime Finance First Mutual Fund of Tk. 20.00 crore. One can invest in the closed-end mutual funds through the stock exchanges. Islamic mutual fund is a specialized mutual fund. The business of the fund should be in consistence with the Sharia` Law. With a view to tapping the savings of Non-Resident Bangladeshis (NRBs) for investment in the country’s capital market ICB Asset Management Company Ltd.

launched ICB AMCL First NRB Mutual Fund and ICB AMCL Second NRB Mutual Fund. These funds received spectacular response from the investors. The Company plans to launch another specialized closed-end mutual fund for NRBs named ICB AMCL Third NRB Mutual Fund of Tk. 100.00 crore and convensional Mutual Fund named ICB AMCL Second Mutual Fund of Tk. 50.00 crore which is under active consideration of SEC.

Open-end Mutual Funds:

The open-end mutual funds are, namely, ICB AMCL Unit Fund of Tk. 70.00 crore and ICB AMCL pension Holders' Unit Fund of initial capital of Tk. 10.00 Crore. 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 extends loan facility against lien of units. Some other banks and financial institution also extends loan facility against lien of units.