Annual Report for Fixed Maturity Schemes - Tata Mutual Fund

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.
1.6 Load Charges:
Load represents amounts charged to investors at the time of exit from the scheme.
The difference between the NAV and the repurchase price is disclosed as “Accumulated Load” which is not considered for computation
of the Net Asset Value.
In compliance with SEBI‟s Circular No. SEBI/IMD/CIR No. 4/ 168230/09 dated June 30, 2009, with effect from August 1, 2009:
• The Scheme has not charged any entry load on investments made into it (including additional purchases and switches into the Scheme
from other schemes) otherwise than through Systematic Investment Plans (“SIPs”) registered prior to July 31, 2009 (as the circular is
applicable to SIPs registered on or after August 1, 2009).
• In terms of SEBI Circular dated 9 th March, 2011, the load balance needs to be segregated into two separate accounts in the books of the
scheme. One account should reflect load balance as on 31 st July, 2009 and the other account should reflect accretions after 31 st July,
2009. Further as per the circular, the utilisation of load balance from the load account as of 31 st July, 2009 should be restricted to onethird
in each of the financial year and the said utilisation should be only for meeting marketing and selling expenses including
distributor's / agent's commissions. The accretions after 31 st July, 2009 can be utilised without any restrictions.