Annual Report for Fixed Maturity Schemes - Tata Mutual Fund

Subsequent to initial recognition, all investments are measured at fair values reflective of the realisable value of the securities / assets. Gains or losses
on sale of investments are determined using the “average cost method” and are recognised in the Revenue Account in the period in which they arise
either within “Income” if it is a gain or within “Expenses and Losses” if it is a loss. Changes in the unrealised diminution in the value of investments,
if any, between two balance sheet dates is recognised in the Revenue Account as “Provision/(Reversal) for diminution in value of investments”.
Changes in the unrealised appreciation in the value of investments, if any, between two balance sheet dates is disclosed under appropriation account as
“Increase / (Decrease) in unrealised appreciation in the value of investments”. Unrealised gain in the value of investment is reduced from distributable
income at the time of income distribution.
Fair value estimation
Debt securities (including asset backed securities and money market instruments but excluding Government securities and Treasury Bills):
Traded:
Traded debt securities 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 the security is traded.
Non-traded, thinly-traded:
Based on the procedures determined by the Investment Manager and approved by the Trustee Company, the fair values of thinly traded and
non- traded debt securities have been determined as under:
Non-traded / thinly traded debt securities (including floating rate securities) and Money Market Instruments of over 91 days to maturity are valued
based on yields arrived at by using a matrix of spread over the risk free benchmark yield. The risk free benchmark yield and matrix of spread is
obtained from CRISIL and ICRA (both agencies being entrusted for the purpose by AMFI), which are aggregated to arrive at the average yield for
valuation.
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:
Government 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.
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.