An Appraisal

of Grameen
Mutual Fund
Grameen One: Scheme One
Grameen One: Scheme Two
 Course Name : Financial Institute and Market
Course Code : FIN 335
Semester : Summer 2010
Section : 2

Submitted To :

Dr. Tanbir Ahmed Chowdhury

Professor
Dept. of Business Administration
East West University

Submitted By :

Md. Badrul Alam Chowdhury

ID: 2007-1-10-105

Saikat Paul
ID: 2007-2-10-138

Rayhan Kabir
ID: 2006-3-10-081

Imran Maleqe
ID: 2008-10-10-135

Date Of submission: July 27, 2010

 Table of Contents

Chapter 1 .................................................................................................................................1
1.0 Introduction ......................................................................................................................................1
1.1 Origin of the Report ......................................................................................................................1
1.2 Objective of the Report..................................................................................................................1
1.3 Limitations ....................................................................................................................................1
1.4 Methodology.................................................................................................................................2
1.5 Definitions & Acronyms ................................................................................................................2
Chapter 2 .................................................................................................................................3
2.0 Grameen One Mutual Fund: Scheme One ........................................................................................3
2.1 Scheme One ..................................................................................................................................3
2.2 Formation, Management and Administration...............................................................................4
2.2.1 Sponsor of the Fund: Grameen Bank ....................................................................................4
2.2.2 Trustee of the Scheme: Grameen Fund ................................................................................4
2.2.3 Custodian of the Scheme ......................................................................................................6
2.2.4 Investment Manager of the Scheme .....................................................................................6
2.2.5 Auditors ................................................................................................................................8
2.3 Limitation of Expense ....................................................................................................................8
2.3.1 Management Fee...................................................................................................................9
2.3.2 Trustee Fee ...........................................................................................................................9
2.3.3 Custodial ...............................................................................................................................9
2.3.4 CDBL fee ................................................................................................................................9
2.3.5 Scheme Registration and Annual Fee ..................................................................................10
2.3.6 Listing Fee ...........................................................................................................................10
2.3.7 Audit Fee .............................................................................................................................10
2.4 Accounts and Information ..........................................................................................................10
2.5 Competitive Advantage in Investing in Grameen One ................................................................12
2.6 Investment Objective and Policy .................................................................................................13
2.6.1 Investment Restriction ........................................................................................................15
2.6.2 Investment Style .................................................................................................................16
 2.6.3 Borrowing Policy .................................................................................................................16
2.6.4 Distribution policy ...............................................................................................................17
2.6.5 Dividend Policy.....................................................................................................................17
2.7 Additional Measures to Improve Profitability .............................................................................18
2.7.1 Risk factors ..........................................................................................................................18
2.7.2 Investment Restriction ........................................................................................................20
2.7.3 Investment Management ....................................................................................................22
2.7.4 Investment Style .................................................................................................................22
2.7.5 Borrowing Policy .................................................................................................................22
2.7.6 Distribution Policy ...............................................................................................................23
2.7.7 Dividend policy ....................................................................................................................23
2.7.8 Valuation Policy ...................................................................................................................24
2.7.9 Redemption Policy ..............................................................................................................26
2.8 Additional Measures to Improve Profitability .............................................................................27
2.9 Annual Report .............................................................................................................................28
2.10 An Appraisal of Grameen One: Scheme One ............................................................................35
Chapter 3..............................................................................................................................................39
3.0 Grameen One Mutual Fund: Scheme Two ......................................................................................39
3.1 Scheme Two ................................................................................................................................39
3.2 Formation, Management and Administration.............................................................................39
3.2.1 Sponsor of the Fund: Grameen Bank ..................................................................................39
3.2.2 Trustee of the Scheme: Grameen Fund ..............................................................................40
3.2.3 Custodian of the Scheme ....................................................................................................41
3.2.4 Auditors ..............................................................................................................................43
3.3 Fees and Expenses ......................................................................................................................44
3.3.1 Issue and Formation Expenses ............................................................................................44
3.3.2 Management Fee.................................................................................................................45
3.3.3 Trustee Fee .........................................................................................................................45
3.3.4 Custodial .............................................................................................................................45
3.3.5 CDBL fee ..............................................................................................................................45
3.3.6 Scheme Registration and Annual Fee ..................................................................................45
3.3.7 Listing Fee ...........................................................................................................................46
 3.3.8 Audit Fee .............................................................................................................................46
3.4 Accounts and Information ..........................................................................................................46
3.4.1 Face Value and Market Lot .................................................................................................46
3.5 Investment Objective and Policy .................................................................................................47
3.5.1 Close and End Policy ...........................................................................................................48
3.5.2 Transaction Policy ...............................................................................................................48
3.5.3 Investment Restriction ........................................................................................................49
3.5.4 Investment Management ....................................................................................................50
3.5.5 Investment Style .................................................................................................................50
3.5.6 Borrowing Policy .................................................................................................................51
3.5.7 Distribution Policy ...............................................................................................................51
3.5.8 Dividend policy ....................................................................................................................52
3.5.9 Valuation Policy ...................................................................................................................52
3.5.10 Redemption Policy ............................................................................................................54
3.6 Additional Measures to Improve Profitability .............................................................................55
3.7 Annual Report .............................................................................................................................56
3.8 An Appraisal of Grameen Mutual Fund: Scheme Two ................................................................61
Chapter 4..............................................................................................................................................64
Suggestions for the Development of Grameen Mutual Fund: Scheme One & Two ..............................64
Conclusion ............................................................................................................................................65
Bibliography
East West University
43 Mohakhali C/A, Dhaka 1212
July 6, 2010

Md. Badrul Alam Chowdhury

Saikat Paul
Imran Maleqe
Rayhan Kabir

Dear students,

I would like to authorize you the students of FIN - 335 Sec-2 to prepare a report on “Grameen
Mutual Fund” In your study please concentrate on the topic properly and provide recent
information. If you need any kind of assistance from me please let me know without any
hesitation.

Submit the report by July 27, 2010

Sincerely

_____________________

Dr. Tanbir Ahmed Chowdhury

Professor
Dept. of Business Administration
East West University
To
Dr. Tanbir Ahmed Chowdhury
Professor
Dept. of Business Administration
East West University

Sub: Letter of Transmittal

Dear Sir

It is indeed a great pleasure for us to be able to hand over the result of our hardship of the FIN -
335 report on Grameen Mutual Fund. This report is the result of the knowledge which has been
acquired from the respective course.

We tried our level best for preparing this report. The information of this report is mainly based
on Internet information. Some other details were gathered from DSE and Annual Report of
Grameen Mutual Fund. All of us gave our hundred percent for making this report come together.

We, fervently hope that you will find this report worth reading. Hope you will appreciate our
hard work and excuse the minor errors.

Thanking you for your cooperation.

Sincerely,

Md. Badrul Alam Chowdhury Saikat Paul

ID: 20071-10-105 ID: 2007-2-10-138

Imran Maleqe Rayhan Kabir

ID: 2008-10-10-135 ID: 2006-3-10-081
 Acknowledgement

First of all we want to give thanks to Almighty Allah for giving us the opportunity to complete
this assignment.

After that we would like to express our gratitude to our teacher Dr. Tanbir Ahmed Chowdhury,
Professor Dept. of Business Administration for his generous help and day to day suggestion.
His advice helped us a lot to prepare a complete assignment and he never hesitate to give us
valuable time while preparing the assignment whenever we needed.

We like to give thanks especially to our friends and many individuals, for their enthusiastic
encouragements and helps during the preparation of this report us by sharing ideas regarding this
subject and for their assistance in typing and proof reading this manuscript.
 Executive Summary

Grameen Mutual Fund One’ was sponsored by the Nobel Prize winning Grameen Bank, founded
by the globally acclaimed micro-credit pioneer and himself a Nobel Laureate Professor
Muhammad Yunus, with the principal objective of facilitating micro-savers to invest in the
country’s high yielding capital market instruments. The Fund was launched primarily for the
benefit of the millions of borrowers of Grameen Bank, overwhelmingly most of whom are
women. Other institutional as well as small savers of the country also found ‘Grameen One,’ the
first close-ended balanced scheme of the fund a reliable investment vehicle. Grameen Mutual
Fund One is a team-managed all-weather closed-end balanced mutual fund enlisted at Dhaka and
Chittagong Stock Exchanges. Grameen Fund is the sponsor and trustee of the fund, while Standard
Chartered Bank is the custodian and Asset & Investment Management Services of Bangladesh Limited
(AIMS) is the asset manager.

The vision of Professor Mohammad Yunus has been to create a reliable financial instrument for
the poor clients of Grameen Bank, as well as the marginal people of the country, to integrate
them with the macro-economy, give them ownership in the leading enterprises, and take
advantage of the growth in different sectors of the economy.

‘Grameen One’, the Tk170 million first scheme of the Fund published Prospectus for Public
Offer on June 26, 2005, upon receiving consent from the SEC. At the close of its first full
accounting year after listing as at June 30, 2007, ‘Grameen One’ declared 29% cash dividend for
all unit holders. For with the overwhelming public response to the first scheme of the mutual
fund, the encouraging performance in the debut year and the respectable dividend pay-out
recorded by the Scheme, the Sponsor believe it is now possibly time to move another step
forward in gradually materializing the fundamental underlying objectives of floating the mutual
fund at the first place. ‘Grameen Mutual Fund One’, has been privileged to authorize AIMS of
Bangladesh Limited to seek consent from the regulatory authorities for flotation of ‘Grameen
One: Scheme Two’, the second scheme of the Fund, where various associate institutions and
enterprises of the Grameen family would also be participating for the first time.