Annual Report for Fixed Maturity Schemes - Tata Mutual Fund

Non-Traded / thinly traded debt securities and Money Market instruments with residual maturity of upto 91 days are valued on an
amortisation basis (i.e. at cost / last valuation price (as applicable) plus the difference between the redemption value and cost / last
valuation price (as applicable) spread uniformly over the remaining maturity period of the instrument).
In the case of floating rate securities with floor and caps on coupon rate and residual maturity of upto 91 days, the valuation on an
amortisation basis is determined taking the floor as the coupon rate.
Government Securities and Treasury Bills:
Upto 31st August, 2010, Government Securities (not being Treasury Bills) were being valued at the prices released by CRISIL, which
was the agency approved by AMFI for the purpose.
Consequent to the guidance provided by AMFI, on and from 1st September, 2010, such securities are valued at the average of the
prices released by CRISIL and ICRA, which are now the agencies approved by AMFI for the purpose.
Upto 4th August, 2010, Treasury Bills were being valued at the last quoted closing price on the principal stock exchange (National
Stock Exchange of India Limited) on which it was traded or at amortised cost (i.e. at cost / last valuation price (as applicable) plus
the difference between the redemption value and cost / last valuation price (as applicable) spread uniformly over the remaining
maturity period of the instrument), if not traded.
Consequent to guidance provided by AMFI, on and from 5th August, 2010, Treasury Bills are valued at the weighted average price at
which they are traded on the particular valuation day on the principal stock exchange (National Stock Exchange of India Limited) on
which it is traded. In the absence of such trade, Treasury Bills having a residual maturity greater than 91 days are valued at the
average of the prices released by CRISIL and ICRA, the approved agencies for the purpose and Treasury Bills having a residual
maturity not exceeding 91 days, are valued on an amortisation basis (i.e. at cost / last valuation price (as applicable) plus the
difference between the redemption value and cost / last valuation price (as applicable) spread uniformly over the remaining maturity
period of the instrument.
1.4 A) Income Recognition:
a) Income is recognised when the right of receipt is established and there is a reasonable certainty of collection.
b) Profit or loss on sale of investments is recognised on trade dates. The cost of investments sold is determined on “weighted average
cost basis”.
c) Interest on investments is recognised on an accrual basis.
d) Discounts / premium on debt securities are amortised on a straight-line basis over the period upto redemption.
1.4 B) Expenses:
Expenses directly attributable and identifiable to particular scheme, are charged to the respective scheme. Investor related expenses
viz: Registrar expenses, investor communications, investor meets etc.are allocated to the schemes in proportion to the number of live
folios in the schemes.Other expenses,which are not identifiable to specific schemes, are allocated to the schemes in proportion to
their net assets.
1.5 Unit Premium Reserve (“UPR”) and Income Equalisation
On issue / repurchase of units, the portion of the premium which is attributable to realised gains is credited / debited to the Revenue
Account for the period as Income Equalisation. It is reflected in the Revenue Account after the net surplus / deficit of the scheme is
determined. The balance portion of the premium that is not attributable to realised gains is credited / debited to the UPR.
If units are sold at a price lower than the face value the difference is debited to the Revenue Account as Income Equalisation.
The distributable amount is determined by deducting from the balance in the Revenue Reserve as at the end of the period, the net
unrealised appreciation in the value of investments as at the end of the period. Credit balance in the UPR is considered to be at par
with unit capital and is not taken into account in the determination of the distributable surplus. Dividend is declared only when the
Revenue Reserve is positive.