Annual Report for Monthly Income Schemes - Tata Mutual Fund

Subsequent to initial recognition, all investments are measured at fair values reflective of the realisable value of the securities / assets. Gainsor losses on sale of investments are determined using the "average cost method" and are recognised in the Revenue Account in the period inwhich they arise either within "Income" if it is a gain or within "Expenses and Losses" if it is a loss. Changes in the unrealised diminutionin the value of investments, if any, between two balance sheet dates is recognised in the Revenue Account as "Provision/(Reversal) fordiminution in value of investments". Changes in the unrealised appreciation in the value of investments, if any, between two balance sheetdates is disclosed under appropriation account as "Increase / (Decrease) in unrealised appreciation in the value of investments". Unrealisedgain in the value of investment is reduced from distributable income at the time of income distribution.b Fair value estimationEquity SecuritiesThe Scheme classifies its investments in equity securities as Non-Traded, Thinly Traded and Traded Securities.Non-Traded equity securities are those equity and equity related securities that have not been traded on any Stock Exchange for a period ofthirty days prior to the valuation date.When trading in an equity and equity related security (such as convertible debentures, equity warrants, etc.) in a month is less than Rs.500,000 and the total volume (in all recognised Stock Exchanges) is less than 50,000 shares, the security is classified as Thinly Traded.Equity securities that do not fall within the Non-Traded Securities or Thinly Traded Securities are classified as Traded Securities.Traded securities are valued at the last quoted closing price on the principal stock exchange (Bombay Stock Exchange Limited - "BSE") onwhich the security is traded on valuation date. When on a particular valuation day, a security has not been traded on the BSE; the value atwhich it is traded on National Stock Exchange ("NSE") is used.When an equity security is not traded on any stock exchange on a particular valuation day, the value at which it was traded on theprincipal stock exchange or any other stock exchange, as the case may be, on the earliest previous day is used provided such date is notmore than 30 days prior to the valuation date.Where a traded equity or equity related security is demerged into two or more entities and one of those entities continues to be listed, thevalue of the unlisted entity is determined to be the difference between the closing price of the listed entity on the ex-date (after demerger)and the previous trading date (before demerger) until listing of the other entity.The fair values of Non-Traded and Thinly Traded equity and equity related securities are determined in each case by appropriatelydiscounting (by 15%) the average of the net worth per share based on its latest audited annual financial statements and the capitalisedearning values of those shares (i.e. the product of the earnings per share of the entity based on its latest audited annual financial statementsand 25% of the average PE multiple for the industry). Where audited annual financial statements of the entity are not available within 9months from the year end, unless the accounting year has changed, the equity securities are valued at zero.The Scheme does not have any Non-Traded or Thinly Traded equity or equity related securities accounting for more than 5% of its totalassets.