A project paper on:

Performance in Pooling of funds, making of

portfolios and Dividend policy of Investment
Corporation of Bangladesh (ICB).

Submitted to:
Dr. S.M. Mahfuzur Rahman
Professor
Department of Finance
University of Dhaka.

Submitted by:
Rayhan -Al Islam
MBA 6th batch
Roll No. 237.
Department of Finance
University of Dhaka.

LETTER OF TRANSMITTAL
March 17, 2007
Dr. S. M. Mahfuzur Rahman
Professor
Dept. of Finance,
University of Dhaka.
Subject: Letter regarding submission of project paper on Performance in
Pooling of funds, making of portfolios and Dividend policy of Investment
Corporation of Bangladesh (ICB).
Dear Sir,
It is my great pleasure that, I have got the opportunity to submit the
project paper report on the topic cited above as part of my course
curriculum. In preparing the repot, your kind co-operation helped
me in doing the report accurately.
In this regard, I am very much thankful to you, as you have helped
me in all the times to prepare the report flawlessly. With due respect
and humble submission, I am submitting the report to you for
evaluation.
Thanking you,

Rayhan Al Islam
Roll no. 237
M.B.A 6th Batch
Department of Finance
University of Dhaka

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.

Table of contents
Executive summary
Topic
page
no.
Chapter 1Background information and methodologies
1.1 Overview
1
1.2 Statement of the problem
2
1.3 Rationale of the study
2
1.4 Objective of the study
2
1.5 Methodologies
3
1.6 Expected outcome of he study and its use
4
1.7 Limitation of the study
5
Chapter 22.1 Background
2.2 Objective of ICB
2.3 Business policy
2.4 Basic functions
2.5 Organizations manpower
2.6 Business area of ICB
2.7 Share Capital Ownership Pattern of ICB
2.8 Milestone of ICB
Chapter 33.1 Institutional framework
3.2 Regulatory framework
3.3 Management of ICB
3.4 Administration and Human resources
3.5 Board of directors
3.6 Future contrivance of the organization
Chapter 44.1 Personnel department
4.2 Central accounts department
4.3 Loan appraisal department
4.4 Economic and business research department
4.5 Unit sales department
4.6 Unit registration and procurement department
4.7 Mutual fund department
4.8 Investors department
4.9 Share department
4.10 System analyst department
4.11 Public issue department
4.12 Law department

Company profiles
6
7
7
8
8
11
12
Company information
14
14
14
15
15
15
Departments
17
17
18
18
18
19
19
19
20
20
20
21

4.13 Project implementation department

4.14 Recovery and follow up department
4.15 Secretary department
4.16 Public relation department
4.17 Audit department

21
21
22
22
22

Chapter 5Operational and functional areas and results

5.1 ICBs role in the financial market
23
5.2 Operational activities
23
5.3 Other operational activities
24
5.4 Merchandising operation
24
5.5 Recovery and rehabilitation activities
24
5.6 Participation in international activities
24
5.7 Financial results
25
Chapter 6Mobilization of fund
6.1 ICB mutual fund
27
6.1.1 Roles and Performance of ICB Mutual Fund in the
Capital Market
27
6.1.2 Comparative Performance of ICB Mutual Funds
27
6.1.3 First ICB Mutual Fund
28
6.1.4 Second ICB Mutual Fund
28
6.1.5 Third ICB Mutual Fund
29
6.1.6 Fourth ICB Mutual Fund
29
6.1.7 Fifth ICB Mutual Fund
29
6.1.8 Sixth ICB Mutual Fund
29
6.1.9 Seventh ICB Mutual Fund
30
6.1.10 Eight ICB Mutual Fund
30
6.1.11 Cause Behind Investing in ICB Mutual Fund
30
6.2 ICB Unit fund
31
6.2.1 Objectives of the unit fund
31
6.2.2 Advantages of investing in ICB unit fund
32
6.2.3 Management of the ICB Unit Fund
32
6.2.4 Issue of Unit Certificates
34
6.2.5 Role and Performance of Unit Fund in the Capital Market
36
6.2.6 Comparative Position of ICB Unit Fund
36
6.2.7 Cost of Investment and Market price of Investment of ICB
Unit Fund
37
6.2.8 Gross Issue and Repurchase of ICB Unit Fund
38
Chapter 7Portfolio Making and management
7.1 Making of portfolio
39
7.2 Choosing investment areas
39
7.3 Allocating funds in different investment
39
7.4 Pre IPO placement
39
7.5 Investment in marketable securities
40

Chapter 8Dividend policy

8.1 Dividend or further expansion
41
8.2 Market Capitalization of ICB Mutual Fund in the Capital Market 41
8.3 Dividend Declared By ICB Mutual Fund in the Capital Market 42
8.4 No. Of Certificate Holders of ICB Mutual Fund
43
8.5 Market price Per Certificate of ICB Mutual Fund in DSE
44
8.6 Market Value of Portfolio of ICB Mutual Fund in the
Capital Market
45
8.7 Dividend Per Unit Declared By ICB Unit Fund
46
8.8 No. Of Securities Held in the Portfolio
46

Findings

47

Justification

48