Introduction

Mutual fund is an investment company that pools money from shareholders and invests
in a variety of securities, such as stocks, bonds and money market instruments. Most
open-end Mutual funds stand ready to buy back (redeem) its shares at their current net
asset value, which depends on the total market value of the fund's investment portfolio
at the time of redemption. Most open-end Mutual funds continuously offer new shares to
investors. Also known as an open-end investment company, to differentiate it from a
closed-end investment company. Mutual funds invest pooled cash of many investors to
meet the fund's stated investment objective. Mutual funds stand ready to sell and
redeem their shares at any time at the fund's current net asset value: total fund assets
divided by shares outstanding.

In Simple Words, Mutual fund is a mechanism for pooling the resources by issuing units
to the investors and investing funds in securities in accordance with objectives as
disclosed in offer document.

Investments in securities are spread across a wide cross-section of industries and

sectors and thus the risk is reduced. Diversification reduces the risk because all stocks
may not move in the same direction in the same proportion at the same time. Mutual
fund issues units to the investors in accordance with quantum of money invested by
them. Investors of Mutual funds are known as unit holders. The profits or losses are
shared by the investors in proportion to their investments. The Mutual funds normally
come out with a number of schemes with different investment objectives which are
launched from time to time. In India, A Mutual fund is required to be registered with
Securities and Exchange Board of India (SEBI) which regulates securities markets
before it can collect funds from the public. In Short, a Mutual fund is a common pool of
money in to which investors with common investment objective place their contributions
that are to be invested in accordance with the stated investment objective of the
scheme. The investment manager would invest the money collected from the investor in
to assets that are defined/ permitted by the stated objective of the scheme. For
example, an equity fund would invest equity and equity related instruments and a debt
fund would invest in bonds, debentures, gilts etc. Mutual fund is a suitable investment
for the common man as it offers an opportunity to invest in a diversified, professionally
managed basket of securities at a relatively low cost.

The growth and maturation of mutual fund industry is the greatest investment story
of the twentieth century. With the introduction of innovative products, the world of
mutual funds nowadays has a lot to offer to its investors. With the introduction of
diverse options, investors need to choose a mutual fund that meets his risk
acceptance, his risk capacity levels and has similar investment objectives as the
investor. There are a large number of schemes available in the market to cater to
the different needs of the investor. As on 29th Feb, 2008, there were 5343 mutual
fund schemes in the market.

The market has been bullish in past few months & has given huge returns. Even the
retail investors started investing in a big way expecting the rally to continue. But
with change in the global scenario, there has been a sudden & unexpected downfall
in the market which sunk the investors’ expectations, creating a negative sentiment
in the market. This has also affected the mutual fund investments.

Since Indian economy is no more a closed market, and has started integrating with
the world markets, external factors which are complex in nature are also affecting
us. Factors such as Sub-prime problem, expected US recession, an increase in
short-term US interest rates, the hike in crude prices and many other factors
have made Indian market volatile. The market has shown a downfall of --% in past
3 months. There has been sharp fall in the sales of mutual funds in past 2 months,
since January. The average asset under management (AUM) of the mutual fund
industry has declined sharply by 6.62% in March 2008, according to data released
by Association of Mutual Funds in India (AMFI). This shows that there has been a
change in the investors’ sentiments & expectations.

 Indian Mutual Fund Industry:

The Indian mutual fund industry is dominated by the Unit Trust of India which has
a total corpus of Rs700bn collected from more than 20 million investors. The UTI
has many funds/schemes in all categories i.e. equity, balanced, income etc with
some being open-ended and some being closed-ended. The Unit Scheme 1964
commonly referred to as US 64, which is a balanced fund, is the biggest scheme
with a corpus of about Rs200bn. UTI was floated by financial institutions and is
governed by a special act of Parliament. Most of its investors believe that the UTI
is government owned and controlled, which, while legally incorrect, is true for all
practical purposes.

The second largest category of mutual funds is the ones floated by nationalized
banks. Canbank Asset Management floated by Canara Bank and SBI Funds
Management floated by the State Bank of India are the largest of these. GIC AMC
floated by General Insurance Corporation and Jeevan Bima Sahayog AMC floated
by the LIC are some of the other prominent ones. The aggregate corpus of funds
managed by this category of AMCs is about Rs150bn.

The third largest categories of mutual funds are the ones floated by the private
sector and by foreign asset management companies. The largest of these are
Prudential ICICI AMC and Birla Sun Life AMC. The aggregate corpus of assets
managed by this category of AMCs is in excess of Rs250bn

The growth and development of Indian Mutual Fund Industry can be broadly
divided into four phases:-
First Phase (1964-87):
Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was
set up by the Reserve Bank of India and functioned under the Regulatory and
administrative control of the Reserve Bank of India. In 1978 UTI was de-linked
from the RBI and the Industrial Development Bank of India (IDBI) took over the
regulatory and administrative control in place of RBI. The first scheme launched by
UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs. 6,700 crores of assets
under management.

Second Phase (1987-1993):

Highlight of phase was entry of Public Sector Funds. In 1987 marked the entry of
non- UTI, public sector mutual funds set up by public sector banks and Life
Insurance Corporation of India (LIC) in June 1989 and General Insurance
Corporation of India (GIC) In Dec. 1990.
Public Sector Bank also established their own Mutual Funds:-
SBI Mutual Fund (June 1987)
Canbank Mutual Fund (Dec 87)
Punjab National Bank Mutual Fund (Aug 89)
Indian Bank Mutual Fund (Nov 89)
Bank of India (Jun 90)
Bank of Baroda Mutual Fund (Oct 92).
By the end of 1993, the mutual fund industry had assets under management of Rs.
47,004 crores.
Third Phase (1993 – 2003):
With the entry of private sector funds in 1993, a new era started in the Indian
mutual fund industry, giving the Indian investors a wider choice of fund families.
Also, 1993 was the year in which the first Mutual Fund Regulations came into
being, under which all mutual funds, except UTI were to be registered and
governed. The erstwhile Kothari Pioneer (now merged with Franklin Templeton)
was the first private sector mutual fund registered in July 1993.

The number of mutual fund houses went on increasing, with many foreign mutual
funds setting up funds in India and also the industry has witnessed several mergers
and acquisitions. As at the end of January 2003, there were 33 mutual funds with
total assets of Rs. 1, 21,805 crores. The Unit Trust of India with Rs. 44,541 crores of
assets under management was way ahead of other mutual funds.

Fourth Phase – since February 2003:

In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was
bifurcated into two separate entities. One is the Specified Undertaking of the Unit
Trust of India with assets under management of Rs. 29,835 crores as at the end of
January 2003, representing broadly, the assets of US 64 scheme, assured return
and certain other schemes. The Specified Undertaking of Unit Trust of India,
functioning under an administrator and under the rules framed by Government of
India and does not come under the purview of the Mutual Fund Regulations
Fund Regulations, and with recent mergers taking place among different
private sector funds, the mutual fund industry has entered its current phase of
consolidation and growth. As at the end of September, 2004, there were 29 funds,
which manage assets of Rs.153108 crores under 421 schemes

 About The Organisation:

COMPANY’S HISTORY

The Standard Chartered Group was formed in 1969 through a merger of two banks:
The Standard Bank of British South Africa founded in 1863 and the Chartered
Bank of India, Australia and China, founded in 1853.

The Chartered Bank

Founded by James Wilson following the grant of a Royal Charter by Queen

Victoria in 1853.
Chartered opened its first branches in Mumbai (Bombay), Calcutta and
Shanghai in 1858, followed by Hong Kong and Singapore in 1859.
Traditional business was in cotton from Mumbai (Bombay), indigo and tea
from Calcutta, rice in Burma, sugar from Java, tobacco from Sumatra, hemp
in Manila and silk from Yokohama.
Played a major role in the development of trade with the East which
followed the opening of the Suez Canal in 1869 and the extension of the
telegraph to China in 1871.
In 1957 Chartered Bank bought the Eastern Bank together with the Ionian
Bank's Cyprus Branches. This established a presence in the Gulf.

The Standard Bank

Founded in the Cape Province of South Africa in 1862 by John Paterson.

Commenced business in Port Elizabeth, South Africa, in January 1863.
Was prominent in financing the development of the diamond fields of
Kimberley from 1867 and later extended its network further north to the new
town of Johannesburg when gold was discovered there in 1885.
Expanded in Southern, Central and Eastern Africa and by 1953 had 600
offices.
In 1965, it merged with the Bank of West Africa expanding its operations
into Cameroon, Gambia, Ghana, Nigeria and Sierra Leone.

From the early 1990s, Standard Chartered has focused on developing its strong
franchises in Asia, the Middle East and Africa using its operations in the United
Kingdom and North America to provide customers with a bridge between these
markets. Secondly, it would focus on consumer, corporate and institutional banking
and on the provision of treasury services - areas in which the Group had particular
strength and expertise.

Through global network of over 1,700 branches and outlets, SCB offer personal
financial solutions to meet the needs of more than 14 million customers across
Asia, Africa and the Middle East.
The various services offered by SCB include:

1) Personal Banking
2) SME Banking
3) Wholesale Banking
4) Islamic Banking
5) Private Banking

Private Bank advisors and investment specialists provide customized solutions to

meet the unique needs and aspirations of investors. The various products offered by
Private banking include:

Mutual funds
Capital protected products
Derivative Arbitrage Products
Equity Advisory Services
Fixed income products

Mutual funds have huge potential. Standard Chartered bank deals in more than
2000 mutual funds. They offer a huge range of funds for varied customers. Initially
they make investors fill the customers so that they can understand the requirements
of the customers and thus provide services accordingly. This project basically
covers the mutual funds investors’ sentiments, to understand them and make
recommendations to SCB.