tata floating rate fund - kotak mahindra bank … · mumbai - 400 001. trustee ... issue of units...

Mulla House, 51, M. G. Road,Mumbai - 400 001.

TRUSTEE

Tata TD Trustee Company Private Limited

Mulla House, 51, M. G. Road,Mumbai - 400 001.

ASSET MANAGEMENT COMPANY

Tata TD Asset Management Private Limited

Issue of Units of Tata Floating Rate Fund of face value of

Rs. 10/- each at par with applicable loads during the initial

offering period and thereafter at NAV based resale

price with applicable loads, if any.

An Offering of Tata Floating Rate Fund (An Open-ended Debt Fund)OFFERING CIRCULAR

Issue of units of Tata Floating Rate Fund of face value of Rs. 10/- each at NAV based resale price with applicable loads, if any.

The Offering Circular sets forth concisely the information about the Scheme that a prospective Investor ought to know before investing. This Offering Circular should be retained for future reference.

The terms of this Offering Circular have been prepared in accordance with the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended till date, and filed with the Securities and Exchange Board of India, and the units being offered for public subscription have not been approved or disapproved by the Securities and Exchange Board of India nor has the Securities and Exchange Board of India certified the accuracy or adequacy of the Offering Circular.

This Offering Circular shall remain effective till a 'material change' (other than change in fundamental attributes and within the purview of the Offering Circular) occurs and thereafter, the changes shall be filed with SEBI and circulated to the unitholders along with Quarterly/Half-yearly reports.

New Fund Offer Opened on : 12th December, 2003

New Fund Offer Closed on : 22nd December, 2003

Continuous Offer Re-opened on : 29th December, 2003

TATA FLOATING RATE FUND

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Item Table of Contents PageNo.

I. HIGHLIGHTS 2

II. DEFINITIONS 2

III. RISK FACTORS 4

IV. DUE DILIGENCE BY THE ASSETMANAGEMENT COMPANY 6

V. EXPENSES 7

i) Present Scheme 7

VI. CONDENSED FINANCIAL INFORMATION 9

VII. CONSTITUTION OF TATA MUTUAL FUND 15

i. Constitution: 15

ii. The Sponsors: 15

iii. The Trustee Company 15

i. Investment Objective : 18

ii. Investment Strategy and Risk Management 19

iii. Investment Pattern and Risk Profile 19

iv. Trading in Derivatives 20

v. Portfolio Turnover 20

vi. Change in Investment Pattern 21

vii. Restrictions on Investments(as per schedule 7 of SEBI Regulations 1996) 21

viii. Investment by the Fund and theAsset Management Company 21

ix. Securities lending by the Mutual Fund 21

xi. Fundamental Attributes 22

IX. MANAGEMENT OF THE FUND 22

i. The Asset Management Company 22

ii. Key Employees of the AMC andrelevant experience 25

iii. The Custodian 27

iv. The Registrar 27

v. The Auditor 27

vi. Bankers 27

vii. List of Authorised Investor Service Centres 27

X. UNITS & OFFER

i. Offer of Units 28

ii. Minimum Application 28

iii. Refund 28

iv. Despatch of Account Statement andUnit Certificates 28

v. Listing, Transfer & Pledge of Units 28

vi. Nomination Facility 28

v. Applications with Additional Holders 28

vi. Systematic Investment Plan (SIP) 29

vii. Systematic Withdrawal Plan (SWP) 29

viii. Systematic Transfer Plan (STP) 29

ix. Duration of the Scheme 29

x. Winding Up 29

xi. Procedure for Winding Up 29

Item Table of Contents PageNo.

XI. SALE OF UNITS BEING OFFERED

i. Application Details: 29

ii. Procedure for application 30

iii. General Instructions 31

XII. DIVIDENDS/BONUS & DISTRIBUTIONS 32

XIII. INTER SCHEME TRANSFERS 32

XIV. ASSOCIATE TRANSACTIONS 33

XV. BORROWING BY THE MUTUAL FUND 40

XVI. COMPUTATION OF NAV & VALUATION OF ASSETS 40

i. Computation & Determination of Net Asset Value 40

ii. NAV Information 40

iii. Valuation of Assets 40

XVII. REPURCHASE, RESALE & SWITCH OF UNITS 42

i. Relevant NAV for Repurchase, Resale &Switch of Units 42

ii. Repurchase of Units of Tata Floating Rate Fund 43

iii. Possible Deferral of Repurchase Requests andCompulsory Repurchase 43

iv. Centres where repurchase/resale/switch requests can be given : 43

v. Sale of Units on an ongoing basis 44

vi. Spread between Sale and Repurchase Price 44

vii. Switch of Units within the Funds / Schemes /Plans of Tata Mutual Fund 44

viii. Suspension of ongoing Sale, Repurchase orSwitch of Units 44

ix. Unclaimed Redemption/Dividend Amount 44

XVIII. ACCOUNTING POLICIES 44

Accounts and Audit 44

XIX. TAX TREATMENT OF INVESTMENTS INMUTUAL FUNDS 45

i. Tax Benefits to the Mutual Fund 45

ii. Tax Benefits to the Unitholders 45

iii. Capital Gains Tax 46

XX. INVESTORS’ RIGHTS & SERVICES 47

i. Rights 47

ii. Services 48

iii. Information regarding the Scheme 48

iv. Meeting and consent of Unitholders 48

v. Benefits to the Unitholders 48

vi. Documents available for inspection 48

XXI. INVESTOR GRIEVANCES REDRESSAL MECHANISM 48

XXII. PENALTIES PENDING LITIGATION ORPROCEEDINGS, FINDINGS OF INSPECTIONS ORINVESTIGATIONS FOR WHICH ACTION MAYHAVE BEEN TAKEN OR IS IN THE PROCESS OFBEING TAKEN BY ANY REGULATORY AUTHORITY 49


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I. HIGHLIGHTS

A Mutual Fund - sponsored by Tata Sons Limited (TSL) andTata Investment Corporation Limited (TICL).

The Scheme is managed by Tata Asset Management Limited(TAML).

An open ended pure debt scheme, investing only in debt andmoney market instruments.

An open ended scheme offering two investment Options:

Long Term Option, Short Term Option and Short TermInstitutional Plan. Each option has a Bonus/Income and GrowthPlan.

Bonus/IncomeThe fund does not assure any targeted annual income to theunitholder, but may distribute/capitalise the earnings under thisplan.

Bonus/Income distribution is at the discretion of the Trustees.

GrowthThere will be no distribution of income under this choice. Earningof the scheme will be reflected in the NAV.

Transparency of Operation : Determination of Net Asset Value(NAV) on all business days.

Minimum Application:For Short Term and Long Term Option the minimum applicationis Rs. 10,000/- and in multiples of Re.1/- thereafter.

For additional investment Rs.1,000/- and in multiples of Re. 1/-thereafter.

For Short Term Institutional Plan the minimum application isRs. 1 Crore and in multiples of Re. 1/- thereafter.

For additional investment for Short Term Institutional PlanRs.1,00,000/- and in multiples of Re. 1/-thereafter.

Applicable LoadsFor Long Term and Short Term Option No entry and exit load.

Resale / Repurchase/Switch at prevailing NAV with theapplicable loads.

NRIs are also eligible to invest.

Earning of the Fund totally exempt from income tax underSection 10(23D) of the Income Tax Act, 1961.

This is not a money market mutual fund scheme.

II. DEFINITIONS

1 “Business Day” Any day on which the Mumbai Head Office of Tata Asset Management Limited is open forbusiness purposes and the Banks in Mumbai/RBI clearing is functional.

2 “Business Hours” Business hours are from 9.30 A.M. to 3.00 P.M. on any Business Day.

3 “Citi Bank N.A “or “Custodian” Citi Bank N. A., a bank incorporated in the United States of America with limited liabilityand includes its successors.

4 “Calendar Year” A Calendar Year shall be 12 full English Calendar months commencing from 1st January andending on 31st December.

5 “Day” Any day as per English Calendar viz. 365 days in a year.

6 “Financial Year” A Financial Year shall be 12 full English Calendar months commencing from 1st April andending on 31st March.

7 “Group” As defined in sub-clause (ef) of clause 2 of MRTP Act, 1961.

8 “IMA” Investment Management Agreement dated 9th May, 1995, as amended from time to time,between the TTCPL & TAML.

9 “Investor” An investor means any resident or non-resident person whether individual or not (legal entity),who is eligible to subscribe units under the laws of his/her/their country of incorporation,establishment, citizenship, residence or domicile and under the Income Tax Act, 1961 includingamendments thereto from time to time and who has made an application for subscribingunits under the Scheme. Unless the context implies otherwise, a unit holder shall be deemedto be an investor.

10 “Net Asset Value” or “NAV” (a) In case of winding up of the Fund:

In respect of an Unit, the amount that would be payable to the holder of that Unit on anydate if the fund were to be wound up and its assets distributed on that date (valuingassets and liabilities in accordance with the normal accounting policies of the Fund, butexcluding net distributable income of the current financial year and winding up expenses).

(b) On daily basis, under normal circumstances, for ongoing Sale / Redemption / Switch:

In respect of a unit, an amount that would be payable by an intending subscriber / investorfor sale / switch or to an investor on redemption / switch computed on any valuation dateby dividing the Net Assets of the scheme by the number of outstanding units on thatvaluation date.

11 “Net Assets” Net Assets of the Scheme / Plan at any time shall be the value of the Fund’s total assets lessits liabilities taking into consideration the accruals and the provisions at that time.

12 “Non- Resident” Any person who is not a resident as defined herein.

13 “Permissible Investments” Investments made on account of the Unitholders of the Scheme in securities and assets inaccordance with the SEBI Regulations.


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14 “Portfolio” Portfolio at any time shall include all Permissible Investments and Cash.

15 “Redemption / Resale Load” Amount collected to cover the cost of providing Redemption / distribution related service tothe Scheme on a continuous basis.

16 “Regulations” Regulations imply SEBI Regulations and the relevant rules and provisions of the Securitiesand Exchange Board of India (Depositories and participants) Regulations 1996, Public DebtAct 1944,the relevant notifications of the Government of India Ministry of Finance Departmentof Revenue, (Central Board of Direct Taxes), the Income Tax Act, 1961; Wealth Tax Act,1957, Gift Tax Act, 1958, Foreign Exchange Management Act, 1999 as amended from timeto time and shall also include any Circulars, Press Releases or Notifications that may beissued by SEBI or the Government of India or the Reserve Bank of India from time to time.

17 “Resident” A resident means any person resident in India under the Foreign Exchange ManagementAct,1999 and under the Income Tax Act,1961, including amendments thereto from time totime.

18 “Scheme” The offer made by Tata Mutual Fund through this Offering Circular, viz., Tata Floating RateFund.

19 “SEBI” The Securities & Exchange Board of India established under the Securities & ExchangeBoard of India Act, 1992.

20 “SEBI Regulations” The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amendedfrom time to time and shall also include any Mutual Fund Regulations, Circulars, PressReleases, or Notifications that may be issued by SEBI or the Government of India to regulatethe activities and growth of Mutual funds.

21 “TAML” or “Asset Tata Asset Management Limited, the Asset Management Company (AMC), a companyManagement Company” within the meaning of the Companies Act, 1956 (1 of 1956) andincludes its successors and permitted assigns.

22 “TICL” Tata Investment Corporation Limited, a sponsor of the TMF and a shareholder of TAML,a company within the meaning of the Companies Act, 1956 and includes its successors andpermitted assigns.

23 “TMF” or “Fund” Tata Mutual Fund, a trust established under a Trust Deed dated 9th May, 1995, under theprovisions of The Indian Trusts Act, 1882, bearing SEBI registration No. MF/023/95/9.

24 “Total Assets” Total Assets of the Scheme at any time shall be the total value of the Schemes assetstaking into consideration the accruals.

25 “Trust Deed” The Trust Deed of the Mutual Fund dated 9th May, 1995, as amended from time to time,made between TSL and TICL as the settlors, and TTCPL as the Trustee.

26 “TSL” Tata Sons Limited, a sponsor of TMF and a shareholder of TAML, a company within themeaning of the Companies Act, 1956 and includes its successors and permitted assigns.

27 “TTCPL or Trustee Company” Tata Trustee Company Private Limited, a company within the meaning of the Companies Act,1956 and includes its successors and permitted assigns.

28 “Unitholder” An Unitholder means any resident or non-resident person whether individual or not (legalentity), who is eligible to subscribe to the Scheme and who has been allotted Units under theScheme based on a valid application.

29 “Units” The security representing the interests of the Unitholders in the Scheme. Each Unit representsone undivided share in the assets of the Scheme as evidenced by any letter/ advice or anyother statement / certificate / instrument issued by TMF.

30 “Year” A Year shall be 12 full English Calendar months.


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III. A. RISK FACTORS

Mutual Funds and securities investments are subject to marketrisks and there can be no assurance and no guarantee that theScheme will achieve its objective.

As with any investment in stocks, shares and securities, theNAV of the Units under this Scheme can go up or down,depending on the factors and forces affecting the capital markets.

Past performance of the previous Schemes, the Sponsors or itsGroup/Affiliates is not indicative of and does not guarantee thefuture performance of the Scheme.

Tata Floating Rate Fund is only the name of the Scheme anddoes not in any manner indicate either the quality of the Scheme,its future prospects or the returns. Investors therefore are urgedto study the terms of the Offer carefully and consult theirInvestment Advisor before they invest in the Scheme.

B. SCHEME SPECIFIC RISK FACTORS AND SPECIAL CONSIDERATIONS1. Basis Risk (Interest Rate Movement): During the life of floating

rate security or a swap the underlying benchmark index maybecome less active and may not capture the actual movementin interest rates or at times the benchmark may cease to exist.These type of events mayresult in loss of value in the portfolio.

2. Spread Risk: In a floating rate security the coupon is expressedin terms of a spread or mark up over the benchmark rate.However depending upon the market conditions the spreadsmay move adversely or favourably leading to fluctuation in NAV.

3. In case of downward movement of interest rates, floating ratedebt instruments will give a lower return than fixed rate debtinstruments.

Liquidity and Settlement Risks

The liquidity of the Scheme’s investments may be inherentlyrestricted by trading volumes, transfer procedures and settlementperiods. From time to time, the Scheme will invest in certainsecurities of certain companies, industries, sectors, etc. based oncertain investment parameters as adopted internally by TAML. Whileat all times the Asset Management Company will endeavour thatexcessive holding/investment in certain securities of industries,sectors, etc. by the Scheme is avoided, the funds invested by theScheme in certain securities of industries, sectors, etc. may acquirea substantial portion of the Scheme’s investment portfolio andcollectively may constitute a risk associated with non-diversificationand thus could affect the value of investments. Reduced liquidity inthe secondary market may have an adverse impact on market priceand the Scheme’s ability to dispose of particular securities, whennecessary, to meet the Scheme’s liquidity needs or in response toa specific economic event or during restructuring of the Scheme’sinvestment portfolio. Furthermore, from time to time, the AssetManagement Company, the Custodian, the Registrar, any Associate,any Distributor, Dealer, any Company, Corporate Bodies, Trusts,any Retirement and Employee Benefit Funds or any Associate orotherwise, any scheme / mutual fund managed by the AssetManagement Company or by any other Asset ManagementCompany may invest in the Scheme. While at all times the TrusteeCompany and the Asset Management Company will endeavour thatexcessive holding of Units in the Scheme among a few Unitholdersis avoided, however, the funds invested by these aforesaid personsmay acquire a substantial portion of the Scheme’s outstanding Unitsand collectively may constitute a majority unitholder in the Scheme.Redemption of Units held by such persons may have an adverseimpact on the value of the Units of the Scheme because of thetiming of any such redemptions and this may impact the ability ofother Unitholders to redeem their respective Units.

Investment Risks

The value of, and income from, an investment in the Scheme candecrease as well as increase, depending on a variety of factors

which may affect the values and income generated by the Scheme’sportfolio of securities. The returns of the Scheme’s investments arebased on the current yields of the securities, which may be affectedgenerally by factors affecting capital markets such as price andvolume, volatility in the stock markets, interest rates, currencyexchange rates, foreign investment, changes in Government andReserve Bank of India policy, taxation, political, economic or otherdevelopments, closure of the Stock Exchanges etc. Investors shouldunderstand that the investment pattern indicated, in line withprevailing market conditions, is only a hypothetical example as allinvestments involve risk and there is no assurance that the Scheme’sinvestment objective will be attained or that the Scheme be in aposition to maintain the model percentage of investment patternparticularly under exceptional circumstances.

Different types of securities in which the scheme would invest inthe offer document carry different levels and types of risk.Accordingly the scheme’s risk may increase or decrease dependingupon its investment pattern. e.g corporate bonds carry a higheramount of risk than Government securities. Further even amongcorporate bonds, bonds which are AAA rated are comparativelyless risky than bonds which are AA rated.

The Scheme will endeavour to invest in highly researched growth/value stocks with high dividen yield. However the growth associatedwith equities is generally high as also the erosion in the value ofthe investments/portfolio in the case of the capital markets passingthrough a bearish phase is a distinct possibility. The NAV of thescheme is largely dependent on the performance of the companiesand the sectors wherein the investment has been made.

The scheme may use techniques and instruments ( as disclosed inthe clause “portfolio turnover”) for efficient portfolio managementand to attempt to hedge or reduce the risk of such fluctuations.However these techniques and instruments if imperfectly used havethe risk of the scheme incurring losses due to mismatchesparticularly in a volatile market. The Fund’s ability to use thesetechniques may be limited by market conditions, regulatory limitsand tax considerations (if any). The use of these techniques isdependent on the ability to predict movements in the prices ofsecurities being hedged and movements in interest rates. Thereexists an imperfect correlation between the hedging instrumentsand the securities or market sectors being hedged. Besides, thefact that skills needed to use these instruments are different fromthose needed to select the Fund’s / Scheme’s securities. There is apossible absence of a liquid market for any particular instrument atany particular time even though the futures and options may bebought and sold on an organised exchange. The use of thesetechniques involves possible impediments to effective portfoliomanagement or the ability to meet repurchase / redemption requestsor other short-term obligations because of the percentage of theScheme’s assets segregated to cover its obligations.

Risk Associated with Securitised DebtScheme may invest in domestic securitized debt such as assetbacked securities (ABS) or mortgage backed securities (MBS).Asset Backed Securities (ABS) are securitized debts where theunderlying assets are receivables arising from automobile loans,personal loans, loans against consumer durables, etc. Mortgagebacked securities (MBS) are securitized debts where the underlyingassets are receivables arising from loans backed by mortgage ofresidential / commercial properties. ABS/MBS instruments reflectthe undivided interest in the underlying pool of assets and do notrepresent the obligation of the issuer of ABS/MBS or the originatorof the underlying receivables. The ABS/MBS holders have a limitedrecourse to the extent of credit enhancement provided. If thedelinquencies and credit losses in the underlying pool exceed thecredit enhancement provided, ABS/MBS holders will suffer creditlosses. ABS/MBS are also normally exposed to a higher level ofreinvestment risk as compared to the normal corporate or sovereign


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debt. At present in Indian market, following types of loans areamortised :

Auto Loans (cars / commercial vehicles /two vehicles)

Residential Mortgages or Housing Loans

Consumer Durable Loans

Personal Loans

The main risks pertaining to each of the asset classes above aredescribed below:

Auto Loans (cars / commercial vehicles /two vehicles)

The underlying assets (cars etc) are susceptible todepreciation in value whereas the loans are given at highloan to value ratios. Thus, after a few months, the value ofasset becomes lower than the loan outstanding. Theborrowers, therefore, may sometimes tend to default on loansand allow the vehicle to be repossessed.

These loans are also subject to model risk. ie if a particularautomobile model does not become popular, loans given forfinancing that model have a much higher likelihood of turningbad. In such cases, loss on sale of repossession vehicles ishigher than usual.

Commercial vehicle loans are susceptible to the cyclicalityin the economy. In a downturn in economy, freight rates dropleading to higher defaults in commercial vehicle loans.Further, the second hand prices of these vehicles also declinein such economic environment.

Housing Loans

Housing loans in India have shown very low default rateshistorically. However, in recent years, loans have been givenat high loan to value ratios and to a much younger borrowerclasses. The loans have not yet gone through the fulleconomic cycle and have not yet seen a period of decliningproperty prices. Thus the performance of these housing loansis yet to be tested and it need not conform to the historicalexperience of low default rates.

Consumer Durable Loans

The underlying security for such loans is easily transferablewithout the bank’s knowledge and hence repossession isdifficult.

The underlying security for such loans is also susceptible toquick depreciation in value. This gives the borrowers a highincentive to default.

Personal Loans

These are unsecured loans. In case of a default, the bankhas no security to fall back on.

The lender has no control over how the borrower has usedthe borrowed money.

Further, all the above categories of loans have the following commonrisks:

All the above loans are retail, relatively small value loans.There is a possibility that the borrower takes different loansusing the same income proof and thus the income is notsufficient to meet the debt service obligations of all theseloans.

In India, there is no ready database available regarding pastcredit record of borrowers. Thus, loans may be given toborrowers with poor credit record.

In retail loans, the risks due to frauds are high.

Securities Lending RisksIt may be noted that this activity would have the inherent probabilityof collateral value drastically falling in times of strong downwardmarket trends, rendering the value of collateral inadequate untilsuch time as that diminution in value is replenished by additionalsecurity. It is also possible that the borrowing party and/or theapproved intermediary may suddenly suffer severe business setbackand become unable to honour its commitments. This, along with asimultaneous fall in value of collateral would render potential lossto the Scheme. Besides, there is also be temporary illiquidity of thesecurities that are lent out and the scheme will not be able to sellsuch lent out securities until they are returned.

Interest Rate Risk

As with debt instruments, changes in interest rate may affect theScheme’s net asset value. Generally the prices of instrumentsincrease as interest rates decline and decrease as interest ratesrise. Prices of long-term securities fluctuate more in response tosuch interest rate changes than short-term securities. Indian debtand government securities markets can be volatile leading to thepossibility of price movements up or down in fixed income securitiesand thereby to possible movements in the NAV.

Credit Risk

Credit risk or Default risk refers to the risk that an issuer of a fixedincome security may default (i.e. the issuer will be unable to maketimely principal and interest payments on the security). Because ofthis risk corporate debentures are sold at a higher yield above thoseoffered on Government Securities which are sovereign obligationsand free of credit risk. Normally, the value of a fixed income securitieswill fluctuate depending upon the changes in the perceived level ofcredit risk as well as any actual event of default. The greater thecredit risk, the greater the yield required for someone to becompensated for the increased risk.

Reinvestment Risk

This risk refers to the difference in the interest rate levels at whichcash flows received from the securities in the schemes arereinvested. The additional income from reinvestment is the “intereston interest” component. The risk is that the rate at which interimcash flows are reinvestment may be lower than that originallyassumed.

Risks associated with Derivatives

Derivative products are specialised instruments that requireinvestment techniques and risk analysis different from thoseassociated with stocks and bonds. Derivatives require themaintenance of adequate controls to monitor the transactionsentered into, the ability to assess the risk that a derivative add tothe portfolio and the ability to forecast price of securities beinghedged and interest rate movements correctly. There is a possibilitythat a loss may be sustained by the portfolio as a result of thefailure of another party (usually referred to as the “counterparty”) tocomply with the terms of the derivatives contract. Other risks inusing derivatives include the risk of mis-pricing or improper valuationof derivatives and the inability of derivatives to correlate perfectlywith underlying assets, rates and indices.

Disclosure / Disclaimer

To the best of the knowledge and belief of the Directors of the TrusteeCompany, information contained in this Offering Circular is inaccordance with the SEBI Regulations and facts and does not omitanything likely to have a material impact on the importance of suchinformation.

Neither this Offering Circular nor the Units have been registered inany jurisdiction. The distribution of this Offering Circular in certainjurisdictions may be restricted or subject to registration requirementsand, accordingly, persons who come into possession of this OfferingCircular are required to inform themselves about, and to observe,


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any such restrictions. No persons receiving a copy of this OfferingCircular or any accompanying application form in any suchjurisdiction may treat this Offering Circular or such application formas constituting an invitation to them to subscribe for Units, nor shouldthey in any event use any such application form, unless in therelevant jurisdiction such an invitation could lawfully be made tothem and such application form could lawfully be used withoutcompliance with any registration or other legal requirements.Accordingly, this Offering Circular does not constitute an offer orsolicitation to anyone in any jurisdiction in which such offer orsolicitation is not lawful or in which the person making such offer orsolicitation is not qualified to do so or to anyone to whom it is unlawfulto make such offer or solicitation. It is the responsibility of anypersons in possession of this Offering Circular and any personswishing to apply for Units pursuant to this Offering Circular to informthemselves of, and to observe, all applicable laws and Regulationsof such relevant jurisdiction.

Prospective investors should review / study this Offering Circularcarefully and in its entirety and should not construe the contentshereof or regard the summaries contained herein as advice relatingto legal, taxation, or financial / investment matters and are advisedto consult their own professional advisor(s) as to the legal or anyother requirements or restrictions relating to the subscription, gifting,acquisition, holding, disposal (sale, transfer, switch or redemptionor conversion into money) of Units and to the treatment of income(if any), capitalisation, capital gains, any distribution, and other taxconsequences relevant to their subscription, acquisition, holding,capitalisation, disposal (sale, transfer, switch, redemption orconversion into money) of Units within their jurisdiction of nationality,residence, domicile etc. or under the laws of any jurisdiction to whichthey or any managed funds to be used to purchase/gift Units aresubject, and (also) to determine possible legal, tax, financial or otherconsequences of subscribing / gifting to, purchasing or holding Unitsbefore making an application for Units.

No person has been authorised to give any information or to makeany representations not confirmed in this Offering Circular inconnection with the New fund offer / Subsequent Offer of Units,and any information or representations not contained herein mustnot be relied upon as having been authorised by the Mutual Fund orthe Asset Management Company or the Trustee Company.Statements made in this Offering Circular are based on the law andpractice currently in force in India and are subject to change therein.Neither the delivery of this Offering Circular nor any sale madehereunder shall, under any circumstances, create any impressionthat the information herein continues to remain true and is correctas of any time subsequent to the date hereof.

Notwithstanding anything contained in the Offering Circular theprovisions of SEBI(Mutual Funds) Regulations 1996 and guidelinesthereunder shall be applicable. The Trustee Company would berequired to adopt / follow any regulatory changes by SEBI / RBI etcand /or all circulars / guidelines received from AMFI from time to timeif and from the date as applicable. The Trustee Company in such acase would be obliged to modify / alter any provisions / terms of theOffering Circular during / after the launch of the scheme by followingthe prescribed procedures in this regard.

Compulsory Winding Up

As per the SEBI circular no. SEBI/IMD/CIR No. 10/22701/03 dt.December 12, 2003 Open ended schemes/plan(s) already in ex-istence would required to comply with the following conditions assoon as possible but not later than December 31, 2004:

1) Each scheme and individual plan(s) under the schemes shouldhave a minimum of 20 investors and no single investor shouldaccount for more than 25% of the corpus of the scheme/plan(s).

2) In each subsequent calendar quarter thereafter, on an averagebasis, the schemes/plans should meet with both the conditionsi.e. a minimum of 20 investors and no single investor shouldaccount for more than 25% of the corpus of the scheme/plan(s), failing which the provisions of Regulation 39 (2) (c) ofSEBI (Mutual Funds) Regulations, 1996 would becomeapplicable automatically without any reference from SEBI.Accordingly, schemes /plans shall be wound up by followingthe guidelines laid down by SEBI.

The aforesaid Circular would be applicable at the Portfolio level.

Determining the breach of the 25% limit by an Investor – Theaverage net assets of the scheme would be calculated daily andany breach of the 25% holding limit by an investor would bedetermined. At the end of the quarter, the average of daily holdingby each such investor is computed to determine whether thatinvestor has breached the 25 % limit over the quarter. If there is abreach of limit by any investor over the quarter, a rebalancing periodof one month would be allowed and thereafter the investor who isin breach of the rule shall be given 15 days notice to redeem hisexposure over the 25 % limit. Failure on the part of the said investorto redeem his exposure over the 25 % limit within the aforesaid 15days would lead to automatic redemption by the Mutual Fund onthe applicable Net Asset Value on the 15th day of the notice period.

IV. DUE DILIGENCE BY THE ASSET MANAGEMENTCOMPANY

The following Due Diligence Certificate has been submitted toSEBI:

It is confirmed that:

(i) the draft Offering Circular is in accordance with theSEBI(Mutual Funds)Regulations, 1996 and the guidelinesand directives issued by SEBI from time to time.

(ii) all legal requirements connected with the launching ofthe Scheme as also the guidelines, instructions, etc.issued by the Government and any other competentauthority in this behalf, have been duly complied with.

(iii) the disclosures made in the Offering Circular are true,fair and adequate to enable the investors to make a wellinformed decision regarding investment in the proposedscheme.

(iv) the intermediaries named in the Offering Circular areregistered with SEBI and till date, such registration isvalid.

For Tata Asset Management Limited

Place: Mumbai Hormuz A. BulsaraDate: 25

th November, 2005 Chief Operating Officer


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V. EXPENSES

A) Unitholders Transactions Expenses (Load)

Type of Transactions Levy upto % ofrelevant NAV

Maximum sales load imposedon ongoing sales 7.00

Maximum Sales load on issueof units in lieu of dividends 7.00

Maximum Contingent deferred sales load 7.00

Maximum redemption / repurchase load 7.00

Maximum switchover load 7.00

The repurchase price shall not be lower than 93% of the NAV andthe sale price shall not be higher than 107% of the NAV and thedifference between the repurchase price and sale price shall notexceed 7% on the sale price.

Current Load Structure (as a % of relevant NAV)Under normal circumstances based on the Schemes’ potentialperformance in the market environment existing as of the date of theOffering Circular, the Fund intends to charge the following load.Entry Load: NILExit Load: NIL

The Trustee Company may levy a Sales Load on fresh sales and aRedemption Load on repurchases. The Trustee Company mayhowever, from time to time review and modify the Sales Load andRedemption Load. However under normal circumstances, based onthe Scheme’s potential performance in the market environmentexisting as of the date of this offering circular, the Fund may levyupto 3% sales load and redemption load.

The AMC reserves the right to change/modify entry/exit/switchoverload (including zero load), depending upon the circumstancesprevailing at any given time. However any change in the load structureshall be applicable on prospective investment only. The AMC maycharge an entry/exit load for switch of units one plan/option to another

plan/option within the scheme(s) to and/or switch over load dependingupon the circumstances prevailing at any given time. The switchoverload may be different for different plans/options and the switchoverload may be different from the entry and /or exit load charged forsale and/or repurchasde units. The load charged could also bedifferent as regards the amount/tenor of investment, etc.

All loads including CDSC for each scheme shall be maintained in aseparate account and may be utilized towards meeting the sellingand distribution expenses. Any surplus in this account may be creditedto the scheme, whenever felt appropriate by the AMC.

B) Initial Issue expensesi) Present SchemeTata Floating Rate Fund is a Scheme of Tata Mutual Fund launchedon 12th December, 2003.

The new fund offer expenses were born by the scheme. The detailsare as under :

Nature of New Fund Offer Expenses

Estimated as per Actuals as perOffering Circular Accounts

Rs. in % of Rs. in % ofCrore Targeted Crore Resources

Amount Mobilised

Advertising 0.40 0.40 – –

Commission toAgents/Brokers 0.75 0.75 – –

Registrar’s Expenses 0.15 0.15 – –

Printing & Marketing Expenses 0.25 0.25 0.04 0.02

Postage & Misc. Expenses 0.10 0.25 – –

Bank Charges 0.25 0.25 – –

Other Expenses 0.25 0.25 0.01 0.01

Total 2.15 2.15 0.05 0.03

As per SEBI Regulations, the maximum limit for the new fund offerexpenses is 6% of the amount collected.

New Fund Offer Expenses for the past schemes

Total new fund offer New fund offer expenses New fund offer expensesexpenses incurred borne by the scheme borne by AMC

Scheme % of amount Amount % of amount Amount % of amount Amountmobilised (Rs. In crores) mobilized (Rs. In crores) mobilised (Rs. In crores)

Tata Short Term Bond Fund 0.0044 0.0045 0.00 0.00 0.0044 0.0045Tata Income Plus Fund 0.00498 0.1108 0.00498 0.1108 0.00 0.00Tata Index Fund 0.25 0.02 0.00 0.00 0.25 0.02Tata Fixed Horizon Fund 0.49 0.0025 0.00 0.00 0.49 0.0025Tata Dynamic bond Fund 0.03 0.05 0.03 0.05 0.00 0.00Tata Floating Rate Fund 0.03 0.05 0.03 0.05 0.00 0.00Tata MIP Plus Fund 1.48 5.57 1.48 5.57 0.00 0.00Tata Equity P/E Fund 2.72 2.79 2.72 2.79 0.00 0.00Tata Dividend Yield Fund 1.11 4.49 1.11 4.49 0.00 0.00Tata Infrastructure Fund 1.75 13.31 1.75 13.31 0.00 0.00Tata Service Industries Fund 1.32 4.16 1.32 4.16 0.00 0.00Tata Hixed Horizon Fund Series 1(Plan A), (Plan C) 0.00 0.00 0.00 0.00 0.00 0.00Tata Mid Cap Fund 2.70 11.26 2.70 11.26 0.00 0.00Tata Floater Fund 0.00 0.00 0.00 0.00 0.00 0.00


8

C) ANNUAL SCHEME RECURRING EXPENSESThe ongoing fees and expenses of operating the Scheme on anannual basis including for the new fund offer period expressed as apercentage of the amount of the Scheme’s weekly average net assetsare estimated to be as follows:

Long Term Option

Description % of dailyaverage net assets

Investment Management Fee 1.25Trustee Fee 0.05Custodian Fee 0.10Marketing & Selling 0.35Registrar & Transfer Agent 0.15Audit costs 0.05Costs of Investor Communications 0.10Costs of transaction, A/C Statements, Dividend etc. 0.05Cost of Statutory Advertisements 0.05Banking /Other Expenses 0.10

Total 2.25

Short Term Option

Description % of dailyaverage net assets

Investment Management Fee 1.00Trustee Fee 0.05Custodian Fee 0.10Marketing & Selling 0.10Registrar & Transfer Agent 0.15Audit costs 0.05Costs of Investor Communications 0.10Costs of transaction, A/C Statements, Dividend etc. 0.05Cost of Statutory Advertisements 0.05Banking /Other Expenses 0.10

Total 1.75

Investment Management fees charged by TAML shall be 1.25% ofthe daily average net assets for net assets upto Rs. 100 crores and1.00% of the daily average net assets on the balance amount aboveRs. 100 crores. This fee is in conformity with SEBI Regulations &shall be payable monthly in arrears. TAML shall not charge any feeson its investment in Units of the Funds/Schemes/Plans in TMF orany other Mutual Fund.

The above estimates of annual Scheme recurring expenses havebeen made in good faith as per the information available to the AssetManagement Company and are subject to change as per actuals.The said estimates have been given to assist the Unitholder inunderstanding the various costs and expenses that an Unitholder inthe Scheme will bear directly or indirectly. However, the annual totalof all charges and expenses of Tata Mutual Fund, except forbrokerage, commission, stamp duties and other (transaction)expenses directly associated with the purchase, sale and registrationof transfer of TMF’s investment/securities and except for expensesassociated with the initial offer of Units of the Scheme, and exceptfor selling expenses which are directly met / set off against sale &redemption load (as stated in the clause on Unitholder TransactionExpenses) shall be subject to the following limits :

On the first Rs.100 Crores of the average daily net assets: 2.25%

On the next Rs.300 Crores of the average daily net assets: 2.00%

On the next Rs.300 crores of the average daily net assets: 1.75%

On the balance of the assets: 1.50%

The above is the maximum limit under Regulation 52 (6) of the SEBI(Mutual Funds) Regulations, 1996 in respect of the scheme investingonly in debt. The Fund will strive to reduce the level of these expensesso as to keep them well within the maximum limits allowed by SEBIand any expenditure in excess of the above limits shall be borne byTata Asset Management Limited and/or Tata Trustee Company PrivateLimited. Besides only those expenses as given above under theclause “Annual Scheme Recurring Expenses”. shall be charged tothe Scheme.


9

VI. CONDENSED FINANCIAL INFORMATION

Brief Note on Schemes launched:

TMF has so far launched twenty six open-ended schemes and oneclosed ended scheme.Tata Balanced Fund (TBF) (formerly knownas Tata Equity Growth Fund), is the maiden scheme of Tata MutualFund launched in August-September 1995. Tata Young Citizens’Fund (TYCF) initially close-ended Scheme and converted into anopen ended scheme on 30th October 1998, also launched in thesame period was the first scheme structured by a private sectormutual fund exclusively for children with an added automatic benefitof Personal Accident Insurance Cover. Tata Tax Saving Fund (TTSF)initially a close ended Equity linked Savings Scheme for residentslaunched in December 1995 and converted into an open endedscheme on 1st April 1999 offers growth besides tax saving and aphased investment plan, for cash flow planning. Tata Select EquityFund (TSEF) launched in April-May 1996 was the first close endedScheme structured by a private sector Mutual fund for investmentsexclusively in the equity of core sector companies. Tata IncomeFund (TIF) launched in March - April 1997 offered assured semi-annual income of 15% per annum (for the first financial year) alongwith possible capital appreciation under Regular Income Optionand accumulated the earnings in the Scheme thus providing mediumto long term capital gains in the case of Appreciation Option. TataIncome Fund w.e.f. 27th April 2000 also offers Monthly Income andQuarterly Income options. The Monthly Income Option was hivedof as seperate scheme namely Tata Monthly Income Fund w.e.f.23rd December, 2002. Tata Twin Option Fund (TTOF) launched inMarch 1998 offered the Unitholder, the option to invest in equitiesof large cap companies and the balanced portfolio option whichinvests in both debt and equity. On 14th February 2000 BalancedPortfolio Option of Tata Twin Option Fund got merged with TataEquity Growth Fund and the Tata Equity Growth Fund was renamedas Tata Balanced Fund. while the equity option was renamed asTata Pure Equity Fund. Tata Liquid Fund launched in August 1998offered an ideal debt based (income and growth) investment forshort duration investors. Tata Life Sciences & Technology Fund asectoral fund investing in fast growing Life Science and TechnologySectors comprising of Engineering, Tele-communications, Space,Computers, Software, Pharmaceuticals, Information Technology,Electronics and Electricals, Agrochemicals, Fertilizers, Fast MovingConsumer Goods, and various other allied Industries, etc. waslaunched in June 1999. Tata Gilt Securities Fund, a fundpredominantly investing in securities issued by Central/ StateGovernment was launched in August 1999. This fund also offersquarterly income distribution and also growth options. Under TataLiquid Fund two short known-maturity plans were floated. Tata LiquidFund Serial Plan I was launched on 8.12.2000 and Tata Liquid FundSerial Plan II on 3.1.2001 and quarterly dividends were declaredunder these plans. On 8th August, 2002 Tata Short Term Bond Fundwas launched. On 11th November, 2002 the Tata Income Plus Fundwas launched. Tata Fixed Horizon Fund was launched 10th January,2003,and Tata Index Fund on 20th February, 2003. On 29th March2003 Tata Ind Tax Shield was converted into on open ended scheme(with no ELSS benefits) and named Tata Equity Opportunities Fund,Tata Dynamic Bond Fund was launched on 1st September, 2003,Tata Floating Rate Fund was launched on 12th December, 2003.Tata MIP Plus Fund was launched on 27th January 2004. Tata EquityP/E Fund was launched on 17th May, 2004. On 28th September2004 Tata Dividend Yield was Launched, Tata Infrastructure Fundwas launched on 25th November, 2004, Tata Service IndustriesFund was launched on 9th February, 2005, Tata Fixed Horizon Fund

Series 1 (Plan A) was Launched on 21st March, 2005, Tata MidCap Fund was launched on 19th May, 2005, Tata Floater Fund waslaunched on 23rd August, 2005, Tata Contra Fund was launchedon 26th September, 2005. TMF has so far launched twenty six open-ended schemes and one closed ended scheme. Each Scheme offersspecial innovative benefits to Unitholders by way of SystematicInvestment Plan, Systematic Withdrawal Plan, etc.

In November 2001, Tata Mutual Fund and Indian Bank Mutual Fundentered into an agreement for takeover of the following close ended,running schemes of Indian Bank Mutual Fund viz : Ind Shelter (PlanA&B), Ind Tax Shield (Plan A&B) and Ind Navratna. Subsequent tothe takeover the names of the schemes were changed to Tata IndShelter (Plan A&B), Tata Ind Tax Shield (Plan A&B) and Tata IndNavratna . The consideration and all direct expenses in this regardwere directly borne by the respective parties to the Agreement,and not debited to the Scheme accounts. An exit option at NAV,without load was provided to unitholders in view of change in theTrustee and the Asset Management Company, as well as certainmodifications in scheme attributes such as issue of AccountStatement instead of Unit Certificates, changing NAV relatedtransactions to prospective from the earlier principle of prior weekNAV, etc. Thereafter, with effect from 22nd November 2001, the TataTrustee Company Private Limited is the Trustee and Tata AssetManagement Ltd. is the Asset Management Company for thesefunds. Tata Ind Shelter Fund Plan A and B were redeemed on31.3.2002. On 29th March 2003 Tata Ind Tax Shield was made openended and named Tata Equity Opportunities Fund. Tata Ind Navratnawas converted in to an open ended fund on 31st March, 2004 andwas named as Tata Growth Fund.

Date of allotment : TBF (8/10/95), TYCF (14/10/95), TTSF (1/4/96),TSEF (24/5/96), TIFR & TIFA (2/5/97), TIFQ and TIFM (27/4/2000),TPEF (7/5/98), TLSTF (18/6/99), TLFR (2/8/99) & TLFA (30/8/98),TGSFR & TGSFA (4/8/99) TLSP1 (8/12/2000), TLSP2 (3/1/2001),TSTBF (12/08/02), TIPF(2/12/02), (TIF) (4/03/03), TDBF (03/09/03), TFRF (22/12/03), TMPF (17/03/04), TEQPEF (29/6/04),TDYF(22/11/04), TISF(31/12/04), TFHFS1 (Plan A) (28/03/05),TSIF (05/04/05), TMCF (29/06/05), (TFF) (06/09/05),TFHFS1 (Plan C) (30/09/05),TCF(14/11/05).

TBF - Tata Balanced Fund, TYCF - Tata Young Citizens’ Fund, TTSF- Tata Tax Saving Fund, TSEF - Tata Select Equity Fund, TIFR -Tata Income Fund (Half-Yearly Income Option), TIFQ - Tata IncomeFund (Quarterly Income Option), TIFM - Tata Income Fund (MonthlyIncome Option),TIFA - Tata Income Fund (Appreciation Option),TPEF - Tata Pure Equity Fund, TLSTF - Tata Life Sciences &Technology Fund, TLFR - Tata Liquid Fund (Regular Income Option),TLFA - Tata Liquid Fund (Appreciation), TGSFR - Tata Gilt SecuritiesFund (Regular Income Option), TGSFA - Tata Gilt Securities Fund(Appreciation Option), TSTBFR - Tata Short Term Bond Fund(Regular Income), TSTBFA - Tata Short Term Bond Fund(Appreciation Option), TIPF(A) - Tata Income Plus Fund Option A,TIPF(B) - Tata Income Plus Fund Option B, TFHF - Tata FixedHorizon Fund, TMIF - Tata Monthly Income Fund, TIF - Tata IndexFund, TDBF - Tata Dynamic Bond Fund, TFRF - Tata Floating RateFund. TMPF - Tata MIP Plus Fund, TGF - Tata Growth Fund,TEQPEF- Tata Equity P/E Fund, TDYF - Tata Dividend Yield Fund,TISF - Tata Infrastructure Fund, TFHFS1 - Tata Fixed Horizon FundSeries 1 (Plan A), TSIF - Tata Service Industries Fund,TMCF - Tata Mid Cap Fund, TFF - Tata Floater Fund, TFHFS1 -Tata Fixed Horizon Fund Series 1 (Plan A), TCF - Tata Contra Fund.


10

Condensed Financial Information for the schemes launched during the last three financial years.

Sr. Historical Per TLFNo. Unit Statistics 31/10/05 31/03/05 31/03/04 31/03/03

1 NAV at the beginning RIPGR-1537.4450 RIPGR-14.7135 TLF-DIV-11.1256 R-11.06of the year/period RIPFN-122.1411 RIPFN-11.1415 GR-14.0270 G-13.13

RIPDD-1116.7808 RIPDD-11.1449 TLHIF-10.0527 HG-10.00HIPGR-1105.3854 HIPGR-10.5672HIPDD-1114.3008 HIPDD-11.1199

HIPWLY-1123.7048 HIPWLY-11.1556HIPMLY-1008.5241 HIPMLY-10.0407

SHIPGR-1216.5547 SHIPGR-11.5948SHIPDD-1114.4904 SHIPDD-11.1200

SHIPWLY-1126.8847 SHIPMLY-11.1654SHIPMLY-1128.3585 SHIPWLY-11.1670

2 Net Income per unit 33.12 57.91 0.4300 0.96

3 Dividends RIPFN-0.3958 RIPFN-6.5654 RIPFN-0.4384 R-0.66RIPDD-4.8303 RIPDD-4.8667 RIPDD-0.3841HIPDD-4.9733 HIPDD-4.9839 HPDD-0.4088

HIPWLY-4.6025 HIPWLY-3.8035 HIPWLY-0.3475HIPMLY-4.1644 HIPMLY-3.6217 HIPMLY-0.3918

SHIPDD-5.2147 SHIPDD-5.3655 SHIPDD-0.4188SHIPWLY-4.7945 SHIPWLY-3.8988 SHIPWLY-0.3665SHIPMLY-4.3836 SHIPMLY-4.1538 SHIPMLY-0.3501

4 Transfer to reserves (if any) – – – –

5 NAV at the end of the year RIPGR-1584.5328 RIPGR-1537.4450 RIPGR-14.7135 R-11.13RIPFN-1128.8164 RIPFN-122.1411 RIPFN-11.1415 G-14.03RIPDD-1116.7902 RIPDD-1116.7808 RIPDD-11.1449 HG-10.05HIPGR-1139.9661 HIPGR-1105.3854 HIPGR-10.5672HIPDD-1114.3168 HIPDD-1114.3008 HIPDD-11.1199

HIPWLY-1131.0490 HIPWD-1123.7048 HIPWLY-11.1556HIPMLY-1012.6060 HIPMD-1008.5241 HIPMLY-10.0407

SHIPGR-1256.1566 SHIPGR-1216.5547 SHIPGR-11.5948SHIPDD-1114.5014 SHIPDD-1114.4904 SHIPDD-11.1200

SHIPWLY-1134.7356 SHIPWD-1126.8847 SHIPWLY-11.1670SHIPMLY-1135.3642 SHIPMD-1128.3585 SHIPMLY-11.1654

6(a) Annualised return (%) * RIPGR 6.36 RIPGR 6.75 RIPGR 7.15 RIPGR 7.66HIPGR 5.01 HIPGR 4.90 HIPGR-5.14

SHIPGR 5.14 SHIPGR 4.99 SHIPGR-5.01

6(b) Benchmark returns (%) * RIPGR- NA RIPGR- NA RIPGR-NA NAHIPGR 4.37 HIPGR 4.29 HIPGR-4.40

SHIPGR 4.26 SHIPGR 4.14 SHIPGR-3.52

Crisil Liquid Fund Index

7 Net Assets at the end of 3378.47 2317.17 1129.48 125.21the period (Rs. Crores)

8 Ratio of Recurring Expenses 0.35 0.45 0.64 0.86to Avg. Net Assets (%)

* Returns for period less than 1 year are absolute returns and for period more than 1 year are compounded annualised return (CAGR)


11

Sr. Historical Per Unit Statistics TEQPEF TSTBFNo. 31/10/05 31/03/05 31/10/05 31/03/05 31/03/04 31/03/03

1 NAV at the beginning of the year/period D 13.0898 – D 10.7942 D 10.6401 D 10.5288 10.00G 13.6684 – G 11.7267 G 11.1663 G 10.5462

2 Net Income per unit 3.41 1.95 0.19 1.84 1.6700 2.213 Dividends – 0.50 0.0417 0.8115 0.43974 Transfer to reserves (if any) – – – – – –5 NAV at the end of the year D 16.3311 D 13.0898 D 10.9190 D 10.7942 D-10.6401 R-10.53

G 17.0553 G 13.6684 G 12.1906 G 11.7267 G-11.1663 G-10.556(a) Annualised return (%) * G 48.96 G 36.69 G 6.32 G- 6.20 G-6.93 G 5.466(b) Benchmark returns (%) * 44.02 34.11 4.97 4.93 6.09 6.71

BSE SENSEX Crisil Short Term Bond Fund7 Net Assets at the end of 98.17 102.82 781.24 13.60 93.85 60.56

the period (Rs. Crores)8 Ratio of Recurring Expenses 2.45 1.77 0.91 0.82 0.90 0.90

to Avg. Net Assets (%)

* Returns for period less than 1 year are absolute returns and for period more than one year are compounded annualised return (CAGR)

Sr. Historical Per Unit Statistics TMPF TDBFNo. 31/10/05 31/03/05 31/03/04 31/10/05 31/03/05 31/03/041 NAV at the beginning of the year/period DM 10.1555 DM 10.0404 – RD 10.1381 RD 10.1267 –

DQ 10.1435 DQ 10.0403 – RG 10.6672 RG 10.4235 –DS 10.0776 DS 10.0404 – HD 10.1473 HD 10.1411 –GR 10.3983 GR 10.0404 – HG 10.6860 HG 10.4402 –

2 Net Income per unit 0.77 0.51 0.0371 0.40 1.28 1.273 Dividends – DM 0.2411 0.0000 – RD 0.1229 0.0715

DQ 0.2537 HD 0.1229 0.2306DS 0.1003

4 Transfer to reserves (if any) – – – – – –5 NAV at the end of the year DM 10.3525 DM 10.1555 10.0404 RD 10.3328 RD 10.1381 10.1267

DQ 10.3867 DQ 10.1435 10.0403 RG 11.1776 RG 10.6672 10.4235DS 10.3563 DS 10.0776 10.0404 HD 10.3267 HD 10.1473 10.1411GR 10.9811 GR 10.3983 10.0404 HG 11.1972 HG 10.6860 10.4402

6(a) Annualised Return (%) * GR 5.93 GR 3.83 GR 0.40 RG 5.29 RG 4.17 RG 4.24HG 5.37 HG 4.30 HG 4.40

6(b) Benchmark returns (%) * 4.97 -2.85 0.58 3.21 2.19 3.74Crisil MIP Blended Index Crisil Composite Bond Fund

7 Net Assets at the end of 90.11 163.79 418.19 32.76 7.17 62.06the period (Rs. Crores)

8 Ratio of Recurring Expenses 1.91 1.89 1.97 1.25 1.25 1.25to Avg. Net Assets (%)


Sr. Historical Per Unit Statistics TDYF TISF TFRLTFNo. 31/10/05 31/03/05 31/10/05 31/03/05 31/10/05 31/03/05 31/03/04

1 NAV at the beginning of D 10.5838 – D 10.6002 – D 10.0874 D 10.0038 10.0000the year/period G 10.9798 G 10.5940 G 10.4828 G 10.1015

2 Net Income per unit 0.76 0.87 0.86 0.25 0.33 0.26 0.063 Dividends – – – – 0.0238 0.2720 0.0804

4 Transfer to reserves (if any) – – – – – – –

5 NAV at the end of the year D 12.3248 D 10.5838 D 12.0784 D 10.6002 D 10.1747 D 10.0874 D 10.0038G 12.7906 G 10.9798 G 12.5579 G 10.5940 G 10.7325 G 10.4828 G 10.1015

6(a) Annualised return (%) * 27.91 9.80 25.58 5.94 3.87 G 3.77 G 1.02

6(b) Benchmark returns (%) * 32.34 7.59 19.53 (1.66) 4.30 4.14 1.24 BSE SENSEX BSE SENSEX Crisil Liquid Fund Index

7 Net Assets at the end of 273.5 324.48 684.56 738.70 9.26 12.72 8.87the period (Rs. Crores)

8 Ratio of Recurring Expenses 2.29 2.24 2.12 2.12 0.75 0.74 0.73to Avg. Net Assets (%)

* Returns for period less than 1 year are absolute returns and for period more than one year are compounded annualised return (CAGR)


12

Sr. Historical Per Unit TFRSTF TIPFNo. Statistics 31/10/05 31/03/05 31/03/04 31/10/05 31/03/05 31/03/04 31/03/03

1 NAV at the beginning RD 10.0579 D 10.0053 10.0000 RID 10.1565 RID 10.1800 RID 10.2467 –of the year/period RG 10.6168 G 10.1185 RIA 11.2288 RIA 11.2564 RIA 10.2342 –

ID 10.0105 HID 10.1621 HID 10.1862 HID 10.2489 –IG 10.3015 HIA 11.2579 HIA 11.2864 HIA 10.2470 –

IID 10.5660IIA 11.3247

2 Net Income per unit 0.34 0.39 0.11 0.67 0.66 1.25 0.39

3 Dividends RIPWLY 0.0480 RIP WD 0.4166 0.0932 – – HID-0.9428 –IIPDD 0.0461 IIP DD 0.2853 RID-0.9428 –

IID-0.6609 –

4 Transfer to reserves (if any) – – – – – – –

5 NAV at the end of the year RD 10.0939 RD 10.0579 D- 10.0053 RID 10.3669 RD 10.1565 RID-10.1800 RIR-10.2466RG 10.9573 RG 10.6168 G- 10.1185 RIA 11.7471 RG 11.2288 RIA-11.2564 RIA-10.2342ID 10.0103 ID 10.0105 HID 10.4115 HD 10.1621 HID-10.1862 HIR-10.2489IG 10.6404 IG 10.3015 HIA11.7788 HG 11.2579 HIA-11.2864 HIA-10.2475

IID-10.5660 –IIA-11.3247 –

6(a)Annualised return (%) * 5.04 G 4.81 G- 1.19 RIA 5.57 RIA 4.98 RIA-8.91 RIR-2.47HIA 5.66 HIA 5.09 HIA-9.11 RIA-2.34

IIA-7.45 HIR-2.49HIA-2.47

6(b)Benchmark returns (%) * 4.30 4.14 1.24 RIA 5.14 RIA 5.10 RIA-8.79 3.28HIA 5.14 HIA 5.10 HIA-8.79

IIA-6.87

Crisil Liquid Fund Index Crisil Composite Bond Fund



* Returns for period less than 1 year are absolute returns and for period more than 1 year are compounded annualised return (CAGR).

Sr. Historical Per Unit TIFN TIFSNo. Statistics 31/10/05 31/03/05 31/03/04 31/03/03 31/10/05 31/03/05 31/03/04 31/03/03

1 NAV at the beginning NA 11.7234 NA 10.1030 NA-9.2519 10.00 SA 17.1762 SA 14.4606 SA-9.2644 10.00of the year/period NB 16.6571 NB-9.2333 SB 17.0617 SB-9.2605

2 Net Income per unit 0.60 30.37 8.44 (0.01) 2.90 85.30 8.37 (0.03)

3 Dividends – – 6.00 – – – 2.50 –

4 Transfer to reserves (if any) – – 0.00 – – – – –

5 NAV at the end of the year NA 14.1885 NA 11.7234 NA-10.1030 NA-9.25 SA 20.5680 SA 17.1762 SA-14.4606 SA-9.27NB 0.0000 NB-16.6571 NB-9.23 SB 0.0000 SB-17.0617 SB-9.26

6(a)Annualised Return (%) * 36.51 NA 35.97 NA 57.13 NA (7.48) 38.68 SA 39.45 SA 61.43 SA (7.36)NB 59.29 NB (7.67) SB 62.82SB-(7.40)

6(b)Benchmark returns (%) * 35.22 36.8 60.43 (7.33) 38.70 38.48 62.53 (7.11)

S&P NIFTY BSE SENSEX

7 Net Assets at the end of 1.24 0.96 29.70 6.55 0.35 0.28 2.46 10.62the period (Rs. Crores)

8 Ratio of Recurring Expenses 1.47 0.89 1.42 NA-1.50 0.78 0.87 0.84 SA-1.50to Avg. Net Assets (%) NB-0.75 SB-0.75



13

Sr. Historical Per TFHF A3 TFHF A4 TFHF A6

No. Unit Statistics 31/10/05 31/03/05 31/10/05 31/03/05 31/10/05 31/03/05

1 NAV at the beginning G 10.2031 – G 10.1451 – D 10.0124 –of the year/period G 10.0124

2 Net Income per unit 0.33 0.22 0.32 0.18 0.36 0.01

3 Dividends – – – – – 0.80

4 Transfer to reserves (if any) – – – – – –

5 NAV at the end of the year G 10.5465 G 10.2031 G 10.4906 G 10.1451 D 10.3901 D 10.0124

G 10.3803 G 10.0124

6(a) Annualised Return (%) * 5.47 2.03 4.91 1.45 G 3.80 G 0.12

6(b) Benchmark returns (%) * 5.43 2.31 4.23 1.20 2.74 0.04

Crisil Short Term Bond Fund Index Crisil Liquid Fund Index

7 Net Assets at the end of 108.64 115.45 175.74 339.91 230.07 221.94the period (Rs. Crores)

8 Ratio of Recurring Expenses 0.30 0.30 0.30 0.30 0.3 0.15to Avg. Net Assets (%)


Sr. Historical Per Unit Statistics TFF TSIF TFHFS1 A8No. 31/10/05 31/10/05 31/10/05

1 NAV at the beginning – – –of the year/period

2 Net Income per unit 0.11 1.10 0.05

3 Dividends – – –

4 Transfer to reserves (if any) – – –

5 NAV at the end of the year DD 10.0020 D 11.7142 D 10.0460

DWLY 10.0143 G 11.6990 G 10.0460G 10.0767

6(a) Annualised Return (%) * G 0.77 G 16.99 G 0.46

6(b) Benchmark returns (%) * 0.76 20.49 0.75

Crisil Liquid Fund Index BSE SENSEX Crisil Liquid Fund Index

7 Net Assets at the end of 129.57 217.67 130.07the period (Rs. Crores)

8 Ratio of Recurring Expenses 0.26 1.81 0.00to Avg. Net Assets (%)



14

Sr. Historical Per Unit TGSF TGSMFNo. Statistics 31/10/05 31/03/05 31/03/04 31/03/03 31/10/05 31/03/05 31/03/04

1 NAV at the beginning ANNX GR-12.6063 GR-123782 GR-11.89 DIV- 10.0418 NA NAof the year/period GA-22.3430 GA-19.4883 GA-16.75 GR- 11.0216 NA NA

HG-10.002 Net Income per unit 0.29 (0.25) 9700 2.37 0.23 0.17 0.323 Dividends – RIP-0.3535 RIP-1.3411 1.26 – 0.1500 0.2674

HIP-0.3535 HIP-0.62474 Transfer to reserves (if any) – – – – – – –5 NAV at the end of the year ANNX ANNX ANNX GR-12.38 D 10.0781 DIV-10.0418 DIV-10.4290

GA-19.49 G 11.3140 GR-11.0216 GR-10.74676(a) Annualised Return (%) * ANNX HIP 2.26 RIP-19.23 G20.57 G 4.90 G 5.00 7.47

HIP-8.116(b) Benchmark returns (%) * ANNX HIP 3.63 RIP-NA N.A. G 5.45 G 5.29 11.12

I Sec Composite Index HIP-6.57




ANNX

TATA GILT SECURITIES FUND (Including Retirement Planning Series)

RIP - Gr HIP - Gr 2006 DIV 2006 GRW 2007 DIV 2007 GRW 2008 DIV 2008 GRW

Inception Date 3-Aug-99 3-Aug-99 6-Oct-03 4-Dec-03 9-Oct-03 15-Jan-04 31-Oct-03 21-Oct-03

NAV on Allotment 10.0000 10.0000 10.0000 10.0000 10.0000 10.0000 10.0000 10.0000

NAV as on 31/3/05 21.4724 13.1573 9.7899 9.8974 9.7362 9.7363 9.8049 9.6795Annualised Return (%) * 14.71 2.26 -1.42 -0.78 -1.79 -2.19 -1.38 -2.23Benchmark Return (%) * NA 3.63 1.54 1.44 1.24 0.88 1.43 1.03NAV as on 31/10/05 22.0363 13.5030 10.0513 10.1580 9.9990 9.9927 10.0652 9.9349Annualised Return (%) * 13.69 2.83 0.26 1.58 0.00 -0.04 0.33 -0.32Benchmark Return (%) * NA 4.22 2.78 2.99 2.57 2.52 2.74 2.44

2009 DIV 2009 GRW 2010 DIV 2010 GRW 2011 GRW 2013 DIV 2013 GRW

Inception Date 3-Feb-04 27-Nov-03 23-Mar-04 27-Oct-03 27-Nov-03 10-Dec-03 24-Nov-03

NAV on Allotment 10.0000 10.0000 10.0000 10.0000 10.0000 10.0000 10.0000

NAV as on 31/3/05 9.7557 9.8129 9.7899 9.8049 9.8150 9.9045 9.8193Annualised Return (%) * -2.12 -1.40 -2.76 -1.37 -1.38 -0.73 -1.34Benchmark Return (%) * 1.06 1.49 0.05 1.49 1.49 1.69 1.54NAV as on 31/10/05 10.0228 10.0716 10.0993 10.0696 10.0756 10.1951 10.1253Annualised Return (%) * 1.30 0.37 0.01 0.35 3.85 1.03 0.64Benchmark Return (%) * 2.69 2.84 2.18 2.78 2.83 3.00 2.86

2014 GRW 2015 GRW 2016 GRW 2018 DIV 2025 DIV 2025 GRW

Inception Date 30-Jan-04 29-Dec-03 2-Jan-04 10-Dec-03 9-Oct-03 26-Dec-03

NAV on Allotment 10.0000 10.0000 10.0000 10.0000 10.0000 10.0000

NAV as on 31/3/05 9.7763 9.7428 9.7237 9.9018 9.7093 9.7330Annualised Return (%) * -1.92 -2.06 -2.23 -0.75 -1.98 -2.12Benchmark Return (%) * 1.04 0.92 0.86 1.69 1.24 1.03NAV as on 31/10/05 10.1096 10.0004 9.9799 10.1892 9.9646 9.9885Annualised Return (%) * 0.63 0.00 -0.11 0.99 -0.17 -0.06Benchmark Return (%) * 2.67 2.51 2.56 3.01 2.57 2.58


Data for Crisil Bond Fund Index, Crisil Liquid Fund index, Crisil Balanced Fund Index and Crisil MIP blended index were not available priorto 30th March, 2002.

Borrowings during the last financial year i.e financial year 2004-2005.

Scheme Amount (Crores) % of NAV Purpose Period

TLF 40 1.41 To meet redeemptions 1 day

TLF 100 3.63 To meet redeemptions 4 days


15

VII. CONSTITUTION OF TATA MUTUAL FUND

i. Constitution:Tata Mutual Fund (TMF) has been constituted as a Trust inaccordance with the provisions of The Indian Trusts Act, 1882 (2 of1882) and is registered as a Trust under The Indian Registration Act,1908. TMF was registered with Securities & Exchange Board of India(SEBI) and commenced operation by launching its first scheme on30th August 1995. Tata Sons Limited(TSL) and Tata InvestmentCorporation Ltd (TICL) are the Sponsors and the Settlors and TataTrustee Company Private Limited is the Trustee Company. The TrusteeCompany has appointed Tata Asset Management Limited (TAML) asthe Asset Management Company. TSL and TICL have made anaggregate initial contribution of Rs.1 lac towards setting up of TMF.

Share holding pattern of Tata Asset Management Ltd (TAML) andTata Trustee Company Pvt Ltd (TTCPL)

TAML TTCPL

Tata Sons Ltd 67.91% 50%

Tata Investment Corporation Ltd 32.09% 50%

ii. The Sponsors:Tata Sons Limited (TSL)

Tata Sons Limited is the promoter and the principal investment holdingcompany of the Tata group. Established as a trading firm in 1868, itis the promoter of major companies of the Tata group and holds thepromoter shareholding along with other entities in listed companiessuch as India’s largest IT Services company, Tata ConsultancyServices Limited, Tata Motors Limited, Tata Steel Limited, Tata PowerCompany Limited and Tata Tea Limited, to name a few. It is also themajority shareholder in unlisted companies such as Tata AssetManagement Limited, Tata AIG Life Insurance Company Limited andTata AIG General Insurance Company Limited - in the financialservices segment.

The Tata group today accounts for about 3% of the Indian GDP andcontributes about 5% to the country’s exports. The group presentlyhas the highest market capitalisation amongst all Indian businessgroups with around 2 million shareholders. Tata Sons is also theowner of the TATA name and the TATA Trade Marks which areregistered in India and several other countries.

Financial performance of TSL(Rs. in crores)

2002-03 2003-04 2004-05

Total Income 5158.87 6476.68 3735.69

Profit after tax 816.84 1291.96 3273.61

Preference Share Capital 31.25 16.10 66.10

Equity Share Capital 40.41 40.41 40.41

Free reserves 3965.98 4981.50 7928.60

Net worth 4006.39 5021.91 7969.01

Dividend on Preference Shares 4.09 2.00 3.45

Dividend on Ordinary Shares 131.35 242.49 282.90

Earnings per share (face valueRs.1000 per share) (Rs.) 20107 31912 80904

2. Tata Investment Corporation Limited (TICL)Tata Investment Corporation Ltd. was promoted by Tata Sons Ltd. in1937, with the main objective of being an investment company, andwas initially called The Investment Corporation of India Ltd. It remainedclosely held till 1959, when it was listed on the Bombay StockExchange. Over the years, TICL has built up a portfolio of investmentsof quoted and unquoted securities of a book value of Rs. 516.52crores as on 31st March, 2005. Its realizable value of investment ason 31st March, 2005. was Rs. 1490.05 crores, spread over 237companies.

Financial performance of TICL :Last three financial years.

(Rs. in crores)

2002-03 2003-04 2004-05

Total Income 52.80 90.37 119.18

Profit after tax 45.82 80.56 112.38

Equity Share Capital 22.97 22.97 22.97

Free reserves 325.16 379.46 463.57

Net worth/Book 151.53 175.17 211.79Value per Share

Earnings per share 21.71 35.06 48.92

Dividend paid (%) 60.00 101.00 120.00

iii. The Trustee CompanyConstitutionTata Trustee Company Private Limited, through its Board of Directors,discharges the obligations as Trustee of TMF. The Trustee Companymay, amend the terms of the offer of the Units, the terms of theScheme and the terms of the Fund from time to time as per theprovisions contained in SEBI Regulations. The Trustee Company isentitled to fees as stated in the clause on “Trustee Fee”. The TrusteeCompany has appointed TAML as the Asset Management Company,Citi Bank N.A as the Custodian and CAMS as the Registrar andTransfer Agent, the details of which are given in the Clause“Management of the Fund”.

Board of Tata Trustee Company Private Limited:

Mr. S. M. Datta (Chairman), Address: Peerless General Finance &Investment Company Limited, 11-A, Mittal Tower, ‘A’ wing, FirstFloor, Nariman Point, Mumbai 400 021. Status: IndependentOccupation: Industrialist, Other Directorships : Chairman CastrolIndia Limited, IL&FS Investment Managers Limited, Philips IndiaLimited, E. I. D. Parry (India) Limited, Director Zodiac ClothingCompany Limited, TIL Limited, Peerless General Finance &Investment Company Limited, BOC India Limited, Goodlass NerolacPaints Limited, M. Visvesvaraya Industrial Research & DevelopmentCentre, Transport Corporation of India Limited, Atul Limited,Bhoruka Power Corporation Limited. Other Memberships :Chairman - Indian Institute of Management, Bangalore, Chairman- Goa Institute of Management, Advisor - Army Group InsuranceFund, Trustee - India Brand Equity Fund Trust, Member - Council ofEU Chambers of Commerce, Member – ACME, Chairman - SIESInstitute of Management Studies, Director – Supervisory Board ofthe Eicher Group of Companies, Governor – Woodlands Hospital &Medical Research Centre Limited, Chairman of Governing Board:Indian Institute of Health Management Research.

Mr. I. Hussain (Director), Address: Tata Sons Limited, BombayHouse, 24, Homi Mody Street, Mumbai 400 001. Status: Associ-ate, Occupation: Industrialist, Other Directorships : ChairmanVoltas Limited, Tata Finance Limited, Director Tata Sons Limited,Tata Iron & Steel Company Limited, Titan Industries Limited, TataInc., Tata Teleservices Limited, Tata Industries Limited, The IndiaGrowth Fund Inc., Tata AIG Life Insurance Co. Limited, Tata AIGGeneral Insurance Co. Limited, Idea Cellular Limited, CMC Lim-ited, Videsh Sanchar Nigam Limited, Speech & Software Technolo-gies (India) Pvt. Limited, Space TV Limited, Tata Refractories Ltd.

Mr. J. N. Godrej (Director), Address: Godrej & Boyce Manufactur-ing Company Limited, Pirojshanagar, Vikhroli, Mumbai - 400 079.Status: Independent, Occupation: Industrialist, OtherDirectorships : Chairman Geometric Software Solutions Com-pany Limited, Chairman & Managing Director Godrej & BoyceManufacturing Company Limited, Director Godrej Properties & In-vestments Limited, Godrej Agrovet Limited, Godrej Sara Lee Lim-ited, Godrej Foods Limited, Godrej Tea Limited, Godrej IndustriesLimited, 3D PLMSoftware Solutions, Godrej Consumer Products


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Limited, Bajaj Auto Limited, Antrix Corporation Limited, Godrej Up-stream Limited, Godrej Investments Private Limited, Lawkim Lim-ited, Illinois Institute of Technology (India) Private Limited, Godrej(Singapore) Pte. Limited, Godrej (Malaysia) Sdn. Bhd., Godrej (Vi-etnam) Company Limited, Godrej & Khimji (Middle East) LLC,Muscat, Haldia Petrochemicals Limited, Breach Candy HospitalTrust. Other Memberships : Past President & Member of the Na-tional Council - Confederation of Indian Industry, Past Chairman ofthe Western Regional Council- Confederation of Indian Industry,Past President & Member of the Executive Committee - IndianMachine Tool Manufacturers’ Association, Member of the Govern-ing Council - Central Manufacturing Technology Institute, Bangalore,Founder Member & Member of the Executive Council - Tool GaugeManufacturers’ Association.

Dr. N. A. Kalyani (Director) Address: Shangrilla Gardens, B&CWings, 1st Floor, Bund Garden Road, Pune 411 001. Status:Independent, Occupation: Industrialist Other Directorships :Executive Chairman Kalyani Forge Limited, Chairman KalyaniSecurities Private Limited, Shakuntal Engineering & EquipmentsPrivate Limited, Kautilya Engineering & Manufacturing PrivateLimited, Gajanan Investment Private Limited, Aboli InvestmentPrivate Limited, Zendu Investment Private Limited, Uttara AgroPrivate Limited, Purva Agro Private Limited, Anuradha AgrotechPrivate Limited, Punarvasu Agro Private Limited, Vishakha AgroPrivate Limited, Kalyani Floritech Private Limited, Ashlesha AgroPrivate Limited, Uttarashadha Agro Private Limited, DhanishthaAgro Private Limited, Purvashadha Agro Private Limited, SaraswatiAgrotech Private Limited, Rohini Agrotech Private Limited, KalyaniAgro and Exports Private Limited, Bhadrapada Agro Private Limited,Jeshtha Agro Private Limited, Shattarka Agro Private Limited,Kalyani Horticulture Private Limited, Pushya Agro Private Limited,Bramhaputra Agrotech Private Limited, Jamuna Agrotech PrivateLimited, Chinab Agrotech Private Limited, Director: KineticEngineering Company Limited, Kirloskar Oil Engines Limited,Finolex Industries Limited, Finolex Cables Limited, SudarshanChemical Industries Limited, Hindustan Construction CompanyLimited, Dronacharya Investment and Trading Private Limited,Dandakarayanya Investment and Trading Private Limited, HastinapurInvestment and Trading Private Limited, Campanula Investment andFinance Private Limited, Cornflower Investment and Finance PrivateLimited, Other Memberships : Chairman – Kalyani Institute ofScientific Research, Pune, Chairman – Kalyani Medical Foundation,Pune, Chairman – Kalyani Institute of Poultry Research, Pune,Member - Executive Committee, Mahratta Chamber of Commerceand Industries, Pune, Member - Executive Committee, Federationof Indian Chamber of Commerce and Industry.

Duties and Responsibilities of the Trustee Company(1) The trustees and the asset management company shall with

the prior approval of the Board enter into an investmentmanagement agreement.

(2) The investment management agreement shall contain suchclauses as are mentioned in the Fourth Schedule and suchother clauses as are necessary for the purpose of makinginvestments.

(3) The trustees shall have a right to obtain from the assetmanagement company such information as is considerednecessary by the trustees.

(4) In carrying out his/her responsibilities as a member of the Boardof Trustee, each Trustee shall maintain an arms’ lengthrelationship with other companies, or institutions or financialintermediaries or any body corporate with which he mayassociated in any transaction also involving the mutual fund.

(5) No Trustee shall participate in the meetings of the Board ofTrustee when any decisions for investments in which he/shemay be interested are taken.

(6) All the Trustee shall furnish to the Board of Trustee, particularsof interest which he/she, may have in any other company, orinstitution or financial intermediary or any corporate by virue ofhis/her position as director, partner or with which he/she maybe associated in any other capacity.

(7) The trustees shall ensure before the launch of any scheme thatthe asset management company has:-

(a) systems in place for its back office, dealing room andaccounting:

(b) appointed all key personnel including fund manager(s) forthe scheme(s) and submitted their bio-data which shallcontain the educational qualifications, past experience inthe securities market with the trustees, within 15 days oftheir appointment:

(c) appointed auditors to audit its accounts:

(d) appointed a compliance officer to comply with regulatoryrequirement and to redress investor grievances:

(e) appointed registrars and laid down parameters forsupervision:

(f) prepared a compliance manual and designed internalcontrol mechanisms including internal audit systems:

(g) specified norms for empanelment of brokers and marketingagents.

(8) The trustees shall ensure that an asset management companyhas been diligent in empanelling the brokers, in monitoringsecurities transactions with brokers and avoiding undueconcentration of business with any broker.

(9) The trustees shall ensure that the asset management companyhas not given any undue or unfair advantage to any associatesor dealt with any of the associates of the asset managementcompany in any manner detrimental to interest of the unitholders.

(10) The trustees shall ensure that the transactions entered into bythe asset management company are in accordance with theseregulations and the scheme.

(11) The trustees shall ensure that the asset management companyhas been managing the mutual fund schemes independently ofother activities and have taken adequate steps to ensure thatthe interest of investors of one scheme are not beingcompromised with those of any other scheme or of otheractivities of the asset management company.

(12) The trustees shall ensure that all the activities of the assetmanagement company are in accordance with the provisionsof these regulations.

(13) Where the trustees have reason to believe that the conduct ofbusiness of the mutual fund is not in accordance with theseregulations and the scheme they shall forthwith take suchremedial steps as are necessary by them and shall immediatelyinform the Board of the violation and the action taken by them.

(14) Each trustee shall file the details of his transactions of dealingin securities with the Trust on a quarterly basis.

(15) The trustees shall be accountable for, and be the custodian of,the funds and property of the respective schemes and shallhold the same in trust for the benefit of the unit holders inaccordance with these regulations and the provisions of trustdeed.

(16) The trustees shall take steps to ensure that the transactions ofthe mutual fund are in accordance with the provisions of thetrust deed.

(17) The trustees shall be responsible for the calculation of anyincome due to be paid to the mutual fund and also of any incomereceived in the mutual fund for the holders of the units of anyscheme in accordance with these regulations and the trust deed.


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(18A) The trustees shall obtain the consent of the unitholders -

(a) whenever required to do so by the Board in the interest ofthe unitholders: or

(b) whenever required to do so on the requisition made bythreefourths of the unit holders of any scheme: or

(c) when the majority of the trustees decide to wind up orprematurely redeem the units: or

(18B) The trustees shall ensure that no change in the fundamentalattributes of any scheme or the trust or fees and expensespayable or any other change which would modify the schemeand affects the interest of unitholders, shall be carried outunless:-

(i) a written communication about the proposed change issent to each unitholder and an advertisement is given inone English daily newspaper having nationwide circulationas well as in a newspaper published in the language of theregion where the Head Office of the mutual fund is situated;and

(ii) the unitholders are given an option to exit at the prevailingNet Asset Value without any exit load.”

(19) The trustees on a quarterly basis shall call for the details oftransactions in securities by the key personnel of the assetmanagement company in his own name or on behalf of theasset management company and shall report to the Board, asand when required.

Explanation:To comply with the requirement of sub-regulation (1) of regulation 18of the SEBI (Mutual Funds) Regulations, 1996, the trustees shallcall for the details of transactions in securities by the key personnelof the asset management company in their own name or on behalfof the AMC on a six monthly basis.

(20) The trustees shall quarterly review all transactions carried outbetween the mutual funds, asset management company andits associates.

(21) The trustees shall quarterly review the networth of the assetmanagement company and in case of any shortfall, ensure thatthe asset management company make up for the shortfall asper clause (f) of sub-regulation (1) of regulation 21.

(22) The trustees shall periodically review all service contracts suchas custody arrangements, transfer agency of the securities andsatisfy itself that such contracts are executed in the interest ofthe unitholders.

(23) The trustees shall ensure that there is no conflict of interestbetween the manner of deployment of its networth by the assetmanagement company and the interest of the unitholders.

(24) The trustees shall periodically review the investor complaintsreceived and the redressal of the same by the assetmanagement company.

(25) The trustees shall abide by the Code of Conduct as specified inthe Fifth Schedule.

(26) The trustees shall furnish to the Board on a half yearly basis:-

(a) a report on the activities of the mutual fund covering thedetail as prescribed by SEBI.

(b) a certificate stating that the trustees have satisfiedthemselves that there have been no instances of selfdealing or front running by any of the trustees, directorsand key personnel of the asset management company:

(c) a certificate to the effect that the asset managementcompany has been managing the schemes independently

of any other activities and incase any activities of the naturereferred to in sub-regulation (2) of regulation 24 have beenundertaken by the asset management company and hastaken adequate steps to ensure that the interest of theunitholders are protected.

(27) The independent trustees referred to in sub-regulation (5) ofregulation 16 shall give their comments on the report receivedfrom the asset management company regarding theinvestments by the mutual fund in the securities of groupcompanies of the sponsor.

(28) Trustees shall exercise due diligence as under:

A. General Due Diligence(i) the Trustees shall be discerning in the appointment of the

directors on the Board of the asset management company.

(ii) Trustees shall review the desirability of continuance of theasset management company if substantial irregularitiesare observed in any of the schemes and shall not allowthe asset management company to float new schemes.

(iii) The trustees shall ensure that the trust property is properlyprotected, held and administered by proper persons andby a proper number of such persons.

(iv) The trustee shall ensure that all service providers areholding appropriate registrations from the Board orconcerned regulatory authority.

(v) The trustees shall arrange for test checks of servicecontracts.

(vi) Trustees shall immediately report to the Board of anyspecial developments in the mutual fund.

B. Specific Due Diligence:

The Trustees shall:

(i) Obtain internal audit reports at regular intervals fromindependent auditors appointed by the Trustees.

(ii) Obtain compliance certificates at regular intervals from theasset management company

(iii) Hold meeting of trustees more frequently.

(iv) Consider the reports of the independent auditor andcompliance reports of asset management company at themeetings of trustees for appropriate action.

(v) Maintain records of the decisions of the Trustees at theirmeetings and of the minutes of the meetings.

(vi) Prescribe and adhere to a code of ethics by the Trustees,asset management company and its personnel.

(vii) Communicate in writing to the asset management companyof the deficiencies and checking on the rectification ofdeficiencies.

(29) Notwithstanding anything contained in sub-regulations (1) to(25), the trustees shall not be held liable for acts done in goodfaith if they have exercised adequate due diligence honestly.

(30) The independent directors of the trustees or asset managementcompany shall pay specific attention to the following, as maybe applicable, namely:

(i) the Investment Management Agreement and thecompensation paid under the agreement.

(ii) Service contract with affiliates – whether the assetmanagement company has charged higher fees thanoutside contractors for the same services.

(iii) Selection of the asset management company’sindependent directors.


18

(iv) Securities transactions involving affiliates to the extent suchtransactions are permitted.

(v) Selecting and nominating individuals to fill independentdirectors vacancies.

(vi) Code of ethics must be designed to prevent fraudulent,deceptive or manipulative practices by insiders inconnection with personal securities transactions.

(vii) The reasonableness of fees paid to sponsors, assetmanagement company and any others for servicesprovided.

(viii) Principal underwriting contracts and their renewals.

(ix) Any service contract with the associates of the assetmanagement company.

(31) No amendments to the trust deed shall be carried outwithout the prior approval of the SEBI and unitholders’approval would be obtained where it affects the interests ofthe unitholders.

Supervision over TAML:

The Trustee Company monitors the activities of TAML on an ongoingbasis by having in place, a number of checks and balances andasking for various reports besides periodic review of the variousactivities of TAML. Specific amongst such systems is the periodicMIS reporting to be submitted by TAML at each Meeting of the Boardof Directors of the Trustee Company (held at least once every twomonths), which includes:

1. NAV calculations, movement of Net Assets and Valuation matrix/methodology.

2. Balance sheet and Revenue & Expenditure Accounts

3. Schemewise breakup of Industry Exposure in Equities/Securities.

4. Investments in Associate/Group Companies(alongwithjustification)

5. Investment in Corporates who have invested in the Scheme.6. Companywise List of Investments7. Broker-wise transactions.

Besides, the quarterly compliance reports which are submitted byTAML to SEBI are also placed before the Board of Directors of theTrustee Company and discussed. Reports of the independent Internalauditors(currently M/s C.C.Chokshi & Co., Chartered Accountants,Mafatlal Centre, Backbay Reclamation, Mumbai 400 020)are sentdirectly to the Chairman of the Trustee Company and also placedbefore the Audit Commitee of Directors, who seek explanation andclarifications from TAML on the points brought out in the report andthereafter report the same to the main Board. Periodic declarationsare taken from the staff and Directors of TAML and placed before theBoard of Directors of the Trustee Company to peruse and to ascertainthat there have been no instances of self dealing or front running.Meetings of the Board of Directors of the Trustee Company are held(atleast) once every two months and atleast six such meetings shallbe held in every year wherein atleast one independent Director isrequired along with other Directors to form effective quorum.

During the year ended October 2005 there were six Board Meetingsof the Trustee Company.

Power to make rules:The Trustee company may, from time to time, as per provisions ofSEBI Regulations (with the prior permission from the Unitholders incase of change of fundamental attributes in accordance with Clause15 of Regulation18 of the SEBI (Mutual Funds) Regulations, 1996and otherwise to be in conformity with the SEBI Regulations or toreflect the change in rules and regulations generally applicable tomutual funds or trusts), prescribe such forms and make such rulesfor the purpose of giving effect to the provisions of the Scheme, withthe power to the Trustee Company/Asset Management Company to

add to, alter or amend all or any of the forms and rules that may beframed from time to time.

The trustees shall ensure that no change in the fundamental attributesof any scheme or the trust or fees and expenses payable or anyother change which would modify the scheme and affect the interestsof unitholders, shall be carried out unless :-

(i) a written communication about the proposed change is sent toeach unitholder and an advertisement is given in one Englishdaily newspaper having nationwide circulation as well as in anewspaper published in the language of the region where theHead Office of the mutual fund is situated; and

(ii) the unitholders are given an option to exit at the prevailing NetAsset Value without any exit load.

Power to remove difficulties:If any difficulty arises in giving effect to the provisions of the Scheme,the Trustee Company may take such steps which are not inconsistentwith these provisions, which appear to them to be necessary orexpedient, for the purpose of removing the difficulties.

VIII. INVESTMENT OBJECTIVE AND POLICIES

i. Investment Objective :

The primary objective of the Scheme is to generate stable returnswith a low risk strategy by creating a portfolio that is substantiallyinvested in good quality floating rate debt or money marketinstruments, fixed rate debt or money market instruments swappedfor floating returns and fixed rate debt and money market instruments.

There can be no assurance that the investment objective of theScheme will be realised.

Investment FeaturesThe funds available under the Scheme will be invested primarily insecurities such as

Securities created and issued by the Central and StateGovernments and/or repos/reverse repos in such GovernmentSecurities as may be permitted by RBI (including but not limitedto fixed or floating coupon bearing bonds, zero coupon bondsand treasury bills).

Securities guaranteed by the Central and State Government(including but not limited to fixed or floating coupon bearingbonds, zero coupon bonds and treasury bills).

Debt obligations of domestic Government agencies andstatutory bodies, which may or may not carry a Central/StateGovernment guarantee (including but not limited to fixed orfloating coupon bearing and zero coupon securities).

Corporate debt and securities (of both public and private sectorundertakings) including Bonds, Debentures, Notes, Strips etc.(including but not limited to fixed or floating coupon bearingand zero coupon securities).

Obligations of banks (both public and private sector) anddevelopment financial institutions (including but not limited tofixed or floating coupon bearing and zero coupon securities).

Fixed/Floating rate money market instruments permitted bySEBI/RBI, having maturities of up to one year and more thanone year, in the call money market or in alternative investmentsfor the call money market as may be provided by RBI to meetthe liquidity requirements.

Certificate of Deposits, Commercial Paper

Securitiesed Debt obligations. Investments in such securitieswill not exceed 70% of the net assets of the Scheme or suchother limit as may be prescribed from time to time.

The non-convertible part of convertible securities.

Any other domestic fixed/floating income securities includingStructured Obligations.


19

Pass through, Pay through or other Participation Certificatesrepresenting interest in a pool of assets including receivables.

Any other like instruments as may be permitted by RBI/SEBI/such other Regulatory Authority from time to time.

The above investment policies are in conformity with the provisionsof various constitutional documents viz. MOA/AOA of the AMC/TrusteeCompany. IMA and the Trust Deed.

As per SEBI Regulations, the Scheme shall not make any investmentsin any un-listed securities of associate / group companies of theSponsors. The Fund will also not make investment in privately placedsecurities issued by associate / group companies of the Sponsor.The Scheme may invest not more than 25% of the net assets inlisted securities of Group companies.

ii. Investment Strategy and Risk ManagementThe Scheme would invest in companies based on various criteriaincluding sound professional management, track record, industryscenerio, growth prospectus, liquidity of the securities, etc. TheScheme will emphasise on well managed, good quality companieswith above average growth prospectus whose securities can bepurchased at a good yield and whose debt securities are concernedinvestments (wherever possible) will be mainly in securities listed asinvestments grade by a recognised authority like The Credit Ratingand Information Services of India Limited (CRISIL), ICRA Limited(formerly, Investment Information and Credit Rating Agency of IndiaLimited), Credit Analysis and Research Limited (CARE) etc. In caseof investments in debt instruments that are not rated, specific approvalof the Board will be taken except in case of Government Securitiesbeing sovereign bonds. However, in case of investment in unratedsecurities prior board approval is not necessary if investment is withinthe parametres as stipulated by the board.

Any change in the asset allocation affecting the investmentprofile of the scheme shall be effected only in accordance withthe provisions of regulations 18-15A of SEBI.

iii. Investment Pattern and Risk ProfileUnder normal circumstances, funds of the Scheme, shall (afterproviding for all ongoing expenses) generally be invested / theindicative asset allocation shall be as follows considering the objectiveof the Scheme :

Short Term Option / Short Term Institutional Plan

Type of Security % of Corpus Risk ProfileLikely around

Fixed Rate Debt 0 - 35 Low toSecurities (including Mediumsecuritised debt & moneymarket instruments)

Floating rate debt* 65 - 100 Low toinstruments (including MediumSecuritised debt & moneymarket instruments)

* Floating rate debt instruments include fixed rate instrumentsswapped for floating rate returns.

Investment by the scheme in securitised debt will not normally exceed70% of the net assets of the scheme.

Under this option, average residual maturity of the portfolio will notexceed 18 months.

Long Term Option






Under this option, there will not be any cap on the average residualmaturity of the portfolio.

The port folio of the Short Term Term Option will normally be skewedtowards short term maturities and the portfolio of the Long TermOption will be normally skewed towards longer term maturities.

If permitted by SEBI under extant regulations / guidelines, not morethan 25% of the net assets of the scheme shall be deployed insecurities lending. The Scheme would limit its exposure, with regardsto securities lending., for a single intermediary, to the extent of 5%of the total net assets of the scheme at the time of lending.

The Fund Manager would decide on the appropriate asset allocationfor the Scheme depending on market conditions. In bullish conditions,the exposure to Fixed Rate Debt Securities (including securitiseddebt & money market instruments) would be increased and in bearishconditions the exposure to Floating Rate debt instruments (includingsecuritised debt & money market instruments) would be increasedthus providing and effective hedge against adverse movements. Theasset allocation pattern may be modified in the interest of investors;and to protect the NAV of the Schemes, however, the same will bereviewed by the trustee on a quarterly basis and will be rebalancedto its normal position in a time frame as permitted by the trustee.However, the AMC will endeavour to achieve a normal asset allocationpattern in a maximum period of 6 months.

Investment in derivative instruments may be done for hedging andPortfolio balancing.

The Trustee Company may from time to time, for a short term periodon defensive consideration, modify / alter the investment pattern /asset allocation, the intent being to protect the Net Asset Value ofthe Scheme and Unitholders interests, without seeking consent ofthe unitholders.

Overview of Debt Market:The major players in the Indian Debt Markets are banks, financialinstitutions, insurance companies and mutual funds. Theinstruments in the market can be broadly categorized as thoseissued by corporate, banks, financial institutions and those issuedby state/central governments. The risk associated with anyinvestments are – credit risk, interest rate risks and liquidity risk.While corporate papers carry credit risk due to changing businessconditions, government securities are perceived to have zero creditrisk. Interest rate risk is present in all debt securities and depends ona variety of macroeconomic factors. The liquidity risk in corporatesecurities market is higher compared to those of governmentsecurities. Liquidity in the corporate debt market has been improvingdue to the entry of more players and due to various measures takenby the regulators in this direction over a period of time. SEBI’sdirective of a compulsory rating by a rating agency for any publicissuance over 18 months is a case in point. In times to come,dematerialization, entry of private insurance companies and growth


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of fixed income mutual funds are expected to enhance liquidity incorporate debt market.

Expected Yields on Debt Securities

Instruments Current Yields* Liquidity (% p.a.)

Central/State Short Term 5.65% - 6.55% Very HighGovernment Long Term 6.55% - 7.55%SecuritiesPSU Bonds/ Short Term 6.50% - 6.75% Medium - HighCorporate Long Term 7.15% - 7.50%Debentures

Securitised Short Term 6.00% - 7.00% Low - Mediumdebt Long Term 7.00% - 8.00%

Commercial Papers/Certificates of Deposit 6.00% - 6.30% HighRepo 5.00% - 5.50% Very High

iv. Trading in DerivativesSubject to SEBI (Mutual Fund) Regulations, 1996, the Scheme mayuse techniques and instruments such as trading in derivativeinstruments to hedge the risk of fluctuations in the value of theinvestment portfolio. The Scheme shall enter into derivativetransactions for the purpose of hedging and portfolio balancing. Inaccordance with the guidelines issued by the SEBI.

A derivative is an instrument whose value is derived from the valueof one or more of the underlying assets which can be commodities,precious metals, bonds, currency, etc. Common examples ofDerivative instruments are Interest Rate Swaps, Forward RateAgreements, Futures, Options, etc.

The scheme may use derivative instruments like Interest Rate Swaps,Forward Rate Agreements or such other derivative instruments asmay be introduced from time to time and as may be permitted underthe SEBI (Mutual Fund) Regulations.

Interest Rate Swaps: An Interest Rate Swap is an agreement wherebytwo parties agree to exchange periodic interest payments. The amountof interest payments exchanged is based on some predeterminedprincipal, called notional principal amount. The amount eachcounterparty pays to the other upon periodic interest rate multipliedby the notional principal amount. The only amount that is exchangedbetween the parties is the interest payment, not the notional principalamount.

Forward Rate Agreements (FRA): This is an agreement between twocounterparties to pay or to receive the difference between an agreedfixed rate (the FRA rate) and the interest rate prevailing on a stipulatedfuture date based on the notional amount, for an agreed period.

The interest rate benchmarks that are commonly used for floatingrate in interest rate swaps are those on various Money MarketInstruments. In Indian markets, the benchmark most commonly usedis MIBOR.

Risks associated with DerivativesDerivative products are specialised instruments that requireinvestment techniques and risk analysis different from thoseassociated with stocks and bonds. Derivatives require themaintenance of adequate controls to monitor the transactions enteredinto, the ability to access the risk that a derivative add to the portfolioand the ability to forecast price of interest rate movements correctly.There is a possibility that a loss may be sustained by the portfolio asa result of the failure of another party (usually referred to as the“counterparty”) to comply with the terms of the derivatives contract.Other risks in using derivatives include the risk of mis-pricing orimproper valuation of derivatives and the inability of derivatives tocorrelate perfectly with underlying assets, rates and indices.

Example : IRS (Intrest Rate Swaps)Assuming the Scheme is having 10% of the portfolio in cash. Thefund manager has a view that the interest rate scenario is soft andcall rates are unlikely to spurt over the next three months. The fundmanager would therefore prefer to receive a higher rate of returnon his cash, which he is lending in the overnight call market. Inother words, he would like to move to a 91 days fixed interest ratefrom overnight floating rate.

1. Say Notional Amount : Rs. 2 crores

2. Benchmark : NSE MIBOR

3. Tenor : 91 Days

4. Fixed Rate : 10.25%

5. At the end of 91 days;

6. The Scheme pays : compounded call rates for 91 daysis 9.90%

7. TMF receives : Fixed rate at 10.25% for 91 days.

In practice, however the difference of the two amounts is settled.Here the Scheme receives Rs. 2,00,00,000 x 0.35% x91 / 365 =17,452. The players in IRS are scheduled commercial banks, primarydealers, corporate, mutual funds and All India Financial Institutions.

v. Portfolio Turnover

The portfolio will consist of both Money Market Instruments as wellas debt instruments as explained in the clause Investment patternand risk profile.

The Scheme is an open-ended debt Scheme. It is expected thatthere would be a number of subscriptions and redemptions on adaily basis. Consequently, it is difficult to estimate with anyreasonable measure of accuracy, the likely turnover in the portfolio.However, being a money market and debt instrument orientedScheme, a high portfolio turnover would not significantly affect thebrokerage and transaction costs.

The Asset Management Company will invest in securities of shortermaturities to maintain liquidity and also in longer term maturityinstruments so as to give a higher return to the Unitholder.

As part of the fund management exercise, the Trustee Companymay permit the use of any investment techniques (includingderivatives) and instruments that may be permitted and / or thatmay become permissible under SEBI / RBI Regulations and / orany statutory modification or re-enactment thereof.

Fixed income analysis involves reviewing expected spreads, anassessment of fair value of appropriate benchmarks, besidesanalysing the yield curve as to duration, cycle effects, creditdifferences, etc. The analysis of expected spreads, yield curve, etc.results into holding-period return analysis. The Asset ManagementCompany will invest in securities of shorter or longer maturity at itsdiscretion. However, given the lack of depth in the domestic debt/money market, the emphasis is likely to be in favour of shortermaturities.

Pursuant to Schedule IX read with Regulation 50 of the SEBI (MutualFunds) Regulations 1996, the cost of investments acquired orpurchased shall include brokerage, stamp, charges and any othercharge customarily included in the broker’s bought note while thesale proceeds of investments sold or redeemed shall be net ofbrokerage, stamp charges and any other charge customarilyincluded in the broker’s sale note. Therefore, brokerage, stampcharges and any other charge customarily included in broker’s noteshall form part of the purchase or the sale value of investment,including value of the portfolio securities owned by the Scheme,and the resultant portfolio turnover rate.


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The portfolio turnover rates are only an indication of the Scheme’spotential performance in the market environment existing as of thedate of this Offering Circular based on the investment objectivesand policies of the Scheme and as such there is no guarantee thatthis portfolio turnover rates can be achieved. The expected spreadsof the securities are based on the current yield / maturity values ofthe instruments, which may change from time to time dependingupon the factors affecting capital markets such as price and volume,volatility in the stock markets, interest rates, currency exchangerates, foreign investment, changes in government and Reserve Bankof India policy, taxation, political, economic or other developmentsand closure of the stock exchanges.

vi. Change in Investment PatternThe Trustee Company may from time to time modify the investmentstrategy and pattern provided such modification is in accordancewith the Scheme objective and SEBI (Mutual Funds) Regulations,1996, and as amended from time to time including by way of Circulars,Press Releases, or Notifications issued by SEBI or the Governmentof India to regulate the activities and growth of Mutual Funds, theintent being to protect the Net Asset Value of the Scheme andUnitholders’ interest.

The asset allocation pattern may be modified in the interest ofinvestors; and to protect the NAV of the Schemes, however, the samewill be reviewed by the trustee on a quarterly basis and will berebalanced to its normal position in a time frame as permitted by thetrustee. However, the AMC will endeavour to achieve a normal assetallocation pattern in a maximum period of 6 months.

vii. Restrictions on Investments (as per schedule 7 of SEBIRegulations 1996)1. A mutual fund scheme shall not invest more than 15% of its

NAV in debt instruments issued by a single issuer which arerated not below investment grade by a credit rating agencyauthorised to carry out such activity under the Act. Suchinvestment limit may be extended to 20% of the NAV of thescheme with the prior approval of the Board of Trustees and theBoard of asset management company.

Provided that such limit shall not be applicable for investmentsin government securities and money market instruments.

Provided further that investment within such limit can be madein mortgaged backed securitised debt which are rated not belowinvestment grade by a credit rating agency registered with theBoard.”

1A. A mutual fund scheme shall not invest more than 10% of itsNAV in unrated debt instruments issued by a single issuer andthe total investment in such instruments shall not exceed 25%of the NAV of the scheme. All such investments shall be madewith the prior approval of the Board of Trustees and the board ofasset management company.

Debentures irrespective of any residual maturity period (above orbelow 1 year) shall attract the investment restrictions as applicablefor debt instruments as specified under clause 1 and 1A above.

2. Transfers of investments from one scheme to another scheme inthe same mutual fund shall be allowed only if:-

(a) such transfers are done at the prevailing market price forquoted instruments on spot basis.

Explanation- “ spot basis” shall have same meaning asspecified by stock exchange for spot transactions.

(b) the securities so transferred shall be in conformity with theinvestment objectivee of the scheme to which such transferhas been made.

3. A scheme may invest in another scheme under the same assetmanagement company or any other mutual fund withoutcharging any fees, provided that aggregate interscheme

investment made by all schemes under the same managementor in schemes under the management of any other assetmanagement company shall not exceed 5% of the net assetvalue of the mutual fund.

4. The initial issue expenses in respect of any scheme may notexceed six per cent of the funds raised under that scheme.

5. Every mutual fund shall buy and sell securities on the basis ofdeliveries and shall in all cases of purchases, take delivery ofrelative securities and in all cases of sale, deliver the securitiesand shall in no case put itself in a position whereby it has tomake short sale or carry forward transaction or engage in badlafinance.

Provided that mutual funds shall enter into derivativestransactions in a recognised stock exchange for the purpose ofhedging and portfolio balancing, in acceptance with theguidelines issued by the Board.

6. Every mutual fund shall, get the securities purchased ortransferred in the name of the mutual fund on account of theconcerned scheme, wherever investments are intended to beof long term nature.

7. Pending deployment of funds of a scheme in securities in termsof investment objectives of the scheme a mutual fund can investthe funds of the scheme in short term deposits of scheduledcommercial banks.

8. No mutual fund scheme shall make any investment in;a) any unlisted security of an associate or group company of

the sponsor; or

b) any security issued by way of private placement by anassociate or group company of the sponsor; or

c) the listed securities of group companies of the sponsorwhich is in excess of 25% of the net assets of theschemes.

viii. Investment by the Fund and the Asset Management CompanyThe Scheme may invest in another Scheme under the managementof AMC or of any other Asset Management Company. The aggregateIntersceme investment by TMF under all its Schemes (includingthe present Scheme) taken together, in another Scheme managedby AMC or in any other Scheme of any other Mutual Fund, shall notbe more than 5% of the net asset value of the Fund. AMC may, onan ongoing basis invest, in Units of the Funds / Schemes / Plans inTMF (the existing Funds / Schemes / Plans including the presentScheme and others from time to time). AMC shall not charge anyfees on the investment by the Scheme in another Scheme underthe management of AMC or of any other Asset ManagementCompany and also on its (AMC’s) own investment in Units of theFunds / Schemes / Plans in TMF.

The objective of the Scheme in investing in Schemes of TMF orany other Mutual Fund will be primarily to gain better yields in theshort term as compared to other short term instruments in the moneymarket.

ix. Securities lending by the Mutual FundSubject to the SEBI Regulations as applicable from time to time, theFund may, if the Trustee permits, engage in Stock Lending. StockLending means the lending of securities to another person or entityfor a fixed period of time at a negotiated compensation in order toenhance returns of the portfolio. The securities lent will be returnedby the borrower on the expiry of the stipulated period. The AMC willadhere to strict limits should it engage in Stock Lending. Not morethan 25% of the net assets of the scheme can generally be deployedin stock lending and not more than 5% of the scheme can be can bedeployed in Stock lending to any single counterparty. Collateral wouldalways be obtained by the approved intermediary from such borrower.Collateral value would always be more than the value of the security


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lent. Collateral can be in form of cash, bank guarantee, andgovernment securities, as may be agreed upon with the approvedintermediary.

Example:A fund has a AAA debenture or bond which it would wish to hold fora long period of time as a core holding in the portfolio or even tillmaturity. In that case the investors would be benefited only to theextent of the coupon rate which it would earn.. If the fund is enabledto lend the said security to a borrower who would be wanting to takeadvantage of the market fluctuations in its price and return thesecurity to the lender at a stipulated time or on demand for anegotiated compensation the fund unitholders can enhance theirreturns to the extent of the compensation it will earn for lending thesame.. But an adequate security or collateral will have to bemaintained by the intermediary,. which should always be higher thanthe cost of the security. Thus it is in the interest of the investors thatreturns can be enhanced by way of stock lendingThus, to summarize, stock lending would be done by the schemeonly in the following circumstances:

a) If permitted by trustees and the extent SEBI regulations in thatregard, from time to time.

b) If such activity generates additional returns for the scheme andhelps to enhance the scheme returns.

If considering the above and other factors all considered in totality,such activity is in the interest of unitholders in the scheme.

xi. Fundamental AttributesThe information set out below should be read in conjunction with thefull text of this Offering Circular.

1. Structure and Type of Scheme:An open-ended Pure Debt Scheme providing Long Term, ShortTerm Options and Short Term Institutional Plan.

2. Scheme:Tata Floating Rate Fund is a separate and distinct Schemewithin Tata Mutual Fund representing interests in a definedportfolio of assets and liabilities.

3. Investment:The investment objective of the Scheme will be to provideincome/bonus distribution along with possible capitalappreciation while at all times emphasing the importance ofcapital preservation.

4. Investment Pattern and Risk Profile:Short Term Option / Short Term Institutional Plan






Under this option, average residual maturity of the portfolio will notexceed 18 months.

Long Term Option






Under this option, there will not be any cap on the average residualmaturity of the portfolio.

5. Offer Price:The offer price will be based on the Net Asset Value (NAV) withapplicable loads as per SEBI (Mutual Funds) Regulations, 1996.

6. Minimum Application:For Long Term and Short Term Option the minimum application isRs.10,000/- and in multiples of Re.1/- for additional investmentRs.1,000/- and in multiples of Re. 1/-.



7. Repurchase/ Resale / Switch / Listing:Repurchase/ Resale is at Net Asset Value (NAV) related priceswith repurchase/ resale loads as applicable (within limits) asspecified under SEBI Regulations 1996, the repurchase price shallnot be lower than 93% of the NAV, the sale price will not be higherthan 107% of the NAV and further that the difference between thesale and repurchase price shall not exceed 7% calculated on the saleprice.

Listing is not envisaged as the Scheme is an open-ended Scheme,with the Fund providing for sales and repurchase on a continuousbasis.

The trustees shall ensure that no change in the fundamental attributesof any scheme or the trust or fees and expenses payable or anyother change which would modify the scheme and/or affect theinterest of unitholders, shall be carried out unless:-

(i) a written communication about the proposed change is sent toeach unitholder and an advertisement is given in one Englishdaily newspaper having nationwide circulation as well as in anewspaper published in the language of the region where theHead Office of the mutual fund is situated; and

(ii) the unitholders are given an option to exit at the prevailing NetAsset Value without any exit load.”

IX. MANAGEMENT OF THE FUND

i. The Asset Management CompanyConstitution

The Trustee Company has appointed TAML as the AssetManagement Company for TMF. The shareholders of TAML are TSLand TICL. TAML has entered into an Investment ManagementAgreement dated 9th May, 1995 with TTCPL, pursuant to which TAMLwill run the operations of TMF and manage the assets of TMF’sSchemes. TAML, having its registered office at, Fort House, 221 Dr.D. N. Road, Mumbai 400 001 is a Company incorporated under theCompanies Act, 1956 on 15th March 1994 and was approved to act


23

as an Asset Management Company for TMF by SEBI on 30th June,1995. The networth of TAML as on October 31, 2005 is aboutRs.64.98 crores. TAML is currently managing twenty six open-endedschemes and one closed ended scheme the details of which arestated in the clause on “Previous Schemes of Tata Mutual Fund &Condensed Financial Information”. The Asset Management Companyshall be entitled to fees as stated in the clause on “InvestmentManagement Fee”. The appointment of TAML as the AssetManagement Company can be terminated with the approval of SEBIand upon resolution by the Trustee Company, or by 75% of theUnitholders of the Scheme.

The members of the Board of Directors of Tata AssetManagement Limited are :

Mr. F. K. Kavarana (Chairman), Address: Tata Sons Limited, Bom-bay House, 24, Homi Modi Street, Mumbai 400 001, Status: Associ-ate, Occupation: Company Director, Other Directorships: Chair-man Tata Projects Limited, Tata AIG Life Insurance Co. Limited, TataAIG General Insurance Co. Limited, Exegenix Canada Inc., Sitel In-dia Limited, Tata Tea Inc., Tatatech Inc., Tata America InternationalCorporation, Inter Consumer Goods AG, Executive Chairman TataInfotech Limited, Vice Chairman Tata International AG, Tata AG,Tata Enterprises (Overseas) AG, Tata Enterprises Overseas Lim-ited, Tata Limited, Director Tata Sons Limited, Tata Industries Lim-ited, Tata Tea Limited, Titan Industries Limited, Trent Limited, AkzoNobel Coatings India Private Limited, Sika Properties Private Lim-ited, Tata Overseas Development Company Limited, Tata Interna-tional (UK) Limited, TKS - Teknosoft S.A., QUARTZ Software Tech-nology AG, TKS – Banking Solutions SA, Tata Precision Industries(Pte) Limited, Tata Technologies Pte Limited, Tata Technology In-vestments (Pte) Limited, Tata Projects (Malaysia) Sdn. Bhd., TitanInternational Marketing Limited, Titan International Holdings B. V.,Titan International Investments B.V., ELXSI Corporation, St. JamesCourt Hotel Limited, Tetley Group, Consilience Technologies,

Mr. S. S. Marathe (Director), Address: “Vinay”, 9, Sahajeevan Co-op Hsg. Society, Off. Ganeshkhind Road, Pune – 411 007, Status:Independent, Occupation: Economist, Other Directorships : Chair-man Life & General Associates (Pvt) Limited, Synise TechnologiesPvt. Limited, GDA Trustee and Consultancy Private Limited, ViceChairman Sandvik Asia Limited, Director Automotive Axles Lim-ited, Bajaj Tempo Limited, Bharat Forge Limited, Deepak Fertilisers& Petrochemicals Corporation Limited, Finolex Industries Limited,Larsen and Toubro Limited, Futura Polyesters Limited, Kirloskar Broth-ers Limited, Mandovi Pellets Limited, Pan Gulf Group Limited, Chan-nel Islands, Kinetic Motors Limited, Other Memberships : FormerEconomic Adviser to the Government of India, India’s former Alter-nate Executive Director on the International Monetary Fund, Wash-ington, Former Minister for Economic and Commercial Affairs, Em-bassy of India, Washington, Former Chairman, Bureau of IndustrialCost & Prices, Former Secretary to the Government of India, Minis-try of Industry.

Mr. M. L. Apte (Director), Address: Apte Amalgamations Ltd., 14A –The Club, Near Mangal Anand Hospital, Swastik Park, Chembur,Mumbai 400 071, Status: Independent, Occupation: Industrialist,Other Directorships : Chairman & Managing Director Apte Amal-gamations Limited, Director Bajaj Hindustan Limited, Kulkarni PowerTools Limited, Lintas India Private Limited, The Bombay BurmahTrading Corporation Limited, New Phaltan Sugar Works Limited,Standard Industries Limited, The Raja Bahadur Poona Mills Limited,Grasim Industries Limited, Zodiac Clothing Company Limited, Dr.Writer’s Food Products Private Limited.

Mr. A. Hasib (Director), Address : A/42, Ocean Gold, Twin TowersRoad, Bombay Bank Compound, Prabhadevi, Mumbai - 400 025.Status: Independent, Occupation: Company Director Other Mem-berships : Former Executive Director - RBI, Consultant - NationalBank for Agriculture and Rural Development, Consultant - World Bank,

Consultant - UNDP, Former I.M.F. Adviser - Central Bank of Iraq,Former I.M.F. Adviser - Reserve Bank of Fiji, Author of a few booksand a number of articles on Economic Policy.

Mr. A. R. Gandhi (Director), Address: Tata Sons Limited, BombayHouse, 24, Homi Modi Street, Mumbai 400 001, Status: Associate,Occupation: Company Director, Executive Director: Tata Sons Ltd.Other Directorships: Tata Infotech Limited, Benares Hotels, Limited,Bayer Diagnosics India Limited, Raychem RPG Limited, PaperProducts Limited, Ultra Teh Cememt Co Ltd, Tata Tea (GB) Ltd, TataTea Inc. Ltd, Trustee: Lintas Employees Professional DevelopmentTrust, Lintas Employees Family Plannig Asistance Trsut, LintasEmployees Education Trust. Other Memberships: Panel Memberof the Arbitrators of the Indian Merchants’ Chamber, Member ofAdvisory Council of Premcband Roychand Group of Companies,Former Member of the Local Advisory Board of the Toronto-Dominion Bank, India, Was associated with the Local Advisory board(LAB) of Abu Dhabi Commercial Bank for 8 years (4 years as theChairman of LAB), Former Member of Research Committee &Accounting Standards Board of the Institute of CharteredAccountants of India, Former Member of SEBI’s Takeover Panel forexemption under the Takeover Code.

Mr. Ved Prakash Chaturvedi (Managing Director), Address: TataAsset Management Limited, Fort House, 221 Dr D. N. Road, Mumbai400001. Status : Associate, Occupation : Company Executive,Director : Financial Planning Standards Board India.

Duties and Obligations of TAML(1) The asset management company shall take all reasonable steps

and exercise due diligence to ensure that the investment offunds pertaining to any scheme is not contrary to the provisionsof these regulations and the trust deed.

(2) The asset management company shall exercise due diligenceand care in all its investments decisions as would be exercisedby other persons engaged in the same business.

(3) The asset management company shall be responsible for theacts of commissions or omissions by its employees or theirpersons whose services have been procured by the assetmanagement company.

(4) The asset management company shall submit to the trusteesquarterly reports of each year on its activities and the compliancewith these regulations.

(5) The trustees at the request of the asset management companymay terminate the assignment of the asset managementcompany at any time:

Provided that such termination shall become effective only afterthe trustees have accepted the termination of assignment andcommunicated their decision in writing to the asset managementcompany.

(6) Notwithstanding anything contained in any contract or agreementor termination, the asset management company or its directorsor other officers shall not be absolved of liability to the mutualfund for their acts of commission or omissions, while holdingsuch position or office.

(7) (a) An asset management company shall not through anybroker associated with the sponsor, purchase or sellsecurities, which is average of 5% or more of the aggregatepurchases and sale or securities made by the mutual fundin all its schemes.

Provided that for the purpose of this sub-regulation,aggregate purchase and sale of securities shall excludesale and distribution of units issued by the mutual fund.

Provided further that the aforesaid limit of 5% shall applyfor a block of any three months


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(b) An asset management company shall not purchase or sellsecurities through any broker [ other than a broker referredto in clause (a) of sub-regulation (7)] which is average of5% or more of the aggregate purchases and sale ofsecurities made by the mutual fund in all its schemes,unless the asset management company has recorded inwriting the justification for exceeding the limit of 5% andreports of all such investments are sent to the trustees ona quarterly basis.

Provided that the aforesaid limit shall apply for a block ofthree months.

(8) An asset management company shall not utilise the servicesof the sponsor or any of its associates, employees or theirrelatives, for the purpose of any securities transaction anddistribution and sale of securities:

Provided that an asset management company may utilise suchservices if disclosure to that effect is made to the unit holdersand the brokerage or commission paid is also disclosed in thehalf yearly annual accounts of the mutual fund.

Provided further that the mutual funds shall disclose at the timeof declaring half-yearly and yearly results:

(i) any underwriting obligations undertaken by the schemesof the mutual funds with respect to issue of securities ofassociate companies.

(ii) Devolvement, if any;

(iii) Subscription by the schemes in the issues lead managedby associate companies.

(iv) Subscription to any issue of equity or debt on privateplacement basis where the sponsor or its associatecompanies have acted as arranger or manager.

(9) The asset management company shall file with the trusteesthe details of transactions in securities by the key personnel ofthe asset management company in their own name or on behalfof the asset management company and shall also report to theBoard, as and when required by the Board.

(10) In case the asset management company enters into anysecurities transactions with any of its associates a report to

that effect shall be sent to the trustees at its next meeting.

(11) In case any company has invested more than 5 per cent of thenet asset value of a scheme, the investment made by thatscheme or by any other scheme of the same mutual fund inthat company or its subsidiaries shall be brought to the noticeof the trustees by the asset management company and bedisclosed in the half yearly and annual accounts of the respectiveschemes with justification for such investment provided thelatter investment has been made within one year of the date ofthe former investment calculated on either side.

(12) The asset management company shall file with the trusteesand the Board :-(a) detailed bio-data of all its directors alongwiththeir interest in other companies within fifteen days of theirappointment ;and (b) any change in the interests of directorsevery six months.(c) a quarterly report to the trustees givingdetails and adequate justification about the purchase and saleof the securities of the group companies of the sponsor or theasset management company as the case may be, by the mutualfund during the said quarter."

(13) A statement of holdings in securities of the directors of the assetmanagement company shall be filed with the trustees with thedates of acquisition of such securities at the end of each financialyear.

(14) The asset management company shall not appoint any personas key personnel who has been found guilty of any economicoffense or involved in violation of securities laws.

(15) The asset management company shall appoint registrars andshare transfer agents who are registered with the Board.Provided if the work relating to the transfer of units is processedin-house, the charges at competitive market rates may bedebited to the scheme and for rates higher than the competitivemarket rates, prior approval of the trustees shall be obtainedand reasons for charging higher rates shall be disclosed in theannual accounts.

(16) The asset management company shall abide by the Code ofConduct as specified in the Fifth Schedule.


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ii. Key Employees of the AMC and relevant experience (All key employees are based in Mumbai)

Employee Age Designation Qualifications Total Type & Nature of ExperienceExp.(yrs.) Assignments held during the last 10 yrs

Ved Prakash Chaturvedi 40 Managing BE (Engg), 17 yrs. December 1994 to August 1998 - Head of Research andDirector PGDM (IIM – Fund Manager at Sun F&C AMC Ltd - Reporting to CIO.

Bangalore) August 1998 to November 1999 – Chief Investment Officerat SBI Funds Management Ltd - Reporting to the ManagingDirector.December 1999 to January 2002 – Chief Executive ofCholamandalam Asset Management Company Ltd -Reporting to the Board of Directors.

January 2002 to date - Chief Executive Officer at TataAsset Management Ltd. Appointed as Managing Directorwith effect from October 2004. He is the overall incharge ofthe Company - Reporting to the Board of Directors.

Hormuz A Bulsara 42 Sr. Vice FCA., F. C. S., 21 yrs. June 1994 to date – Chief Operating Officer at Tata AssetPresident F.I.C.W.A., Management Ltd. He looks after the Compliance, Finance,(Finance) & B. Com (Hons) Systems, Investor Services, Human Resources andCompany LL. B Administrative functions of the Fund House. He has beenSecretary involved in the setting up of the Tata Mutual Fund since its

inception and has contributed in the setting up of the varioussystems, compliance procedures and controls and is theCorporate Quality Head - Reporting to the ManagingDirector.

Isaac C Jacob 52 Vice MA (Econ), 27 yrs. January 1995 to April 2001 - Senior VP at SSC & B LintasPresident & Masters in - Reporting to the President.Head Marketing May 2001 to June 2002 - President at FortuneMarleting Mgmt, Dip in Communication (JWT subsidiary) - Reporting to Board of

Advertising Directors.

July 2002 to December 2002 - President (BusinessDevelopment) at Interlink Consultancy - Reporting to Boardof Directors.

January 2003 to date – Vice President & Headof Marketing at Tata Asset Management Ltd - Reporting tothe Managing Director.

Latha Rajaraman 48 First Vice B. Sc, CAIIB 25 yrs. July 1995 to date – As head of Invester Services, has beenPresident directly interfacing with various investors at the corporateInvestor and retail level and looks after Registrar and InvestorServices related matters at Tata Asset Management Ltd - Reporting

to the Chief Operating Officer.

Murthy Nagarajan 36 First Vice M.COM, 14 yrs. June 1991 to July 1994 - Worked in the Accounts(Fund Manager for President & PGPMS Department at UTI - Reporting to the Manager.

the current scheme) Head November 1996 to August 1999 - Worked as Asst. ViceFixed Income President in the investment department at PNB Gilts Ltd -

Reporting to the Senior Vice President.

August 1999 to date : Working with Tata AssetManagement Limited in the Investment Department as theFund Manager for certain Tata Mutual Fund debt schemes -Reporting to the Managing Director.

Venugopal M. 34 Senior Fund MBA (Finance) 12 yrs. August 1995 to September 1997 - Gained goodManager BSC understanding of the stock market having worked as dealerEquities (Mathematics) at Tata Asset Management Ltd for about two years after which

he assumed equity fund management responsibilty. Hascleared the certification exam of the BSE Training Institute, forparticipating in the derivatives market. Has good exposure tolarge number of industries and companies having donefundamental research over the years. Currently is the FundManager of certain equity schemes of Tata Mutual Fund -Reporting to the Managing Director.


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Employee Age Designation Qualifications Total Type & Nature of ExperienceExp.(yrs.) Assignments held during the last 10 yrs

Raghav Iyengar 37 Vice BCom., ACA, 14 yrs. January 1994 to September 1995 - Manager- ProjectPresident & Grad. CWA Financeat Kanoria Plaschem, involved project funding -Head Reporting to the Director.

Institutional October 1995 to June 1997 - Associate Manager at VCKSales Capital Markets Ltd., marketing Financial products -

Reporting to the General Manager.

July 1997 to March 1998 - Sr. Manager at DSP Merrill LynchLtd Marketing Financial products - Reporting to theExecutive Director.

April 1998 to August 2000 - Associate Vice President atPrudential ICICI Asset Management, mutual fund sales -Reporting to SVP & Head – Sales.September 2000 to June 2002 - Head - Marketing at JFAsset Management -Mutual Fund sales - Reporting to theDirector.

July 2002 to date - Vice President & Head - Institutional Salesat Tata Asset Management Ltd. Is responsible for salesstrategy and managing sales channels & sales to largeinvestors - Reporting to the Managing Director.

Abhay Nagar 32 Vice MBA (Finance), 10 yrs. September 1995 to August 2002 - In various capacities suchPresident & B. Com(Hons.) as Head of Mutual Fund Desk, Regional Head (west), AsttHead Vice President- Retail Distribution and Vice President & AllRetail Sales India Head(Sales and Distribution) at RR Financial

Consultants Ltd - Reporting to the Managing Director.

September 2002 to date - As Regional Head (North) andPresently is Vice President & Head of Retail Sales at TataAsset Management Ltd - Reporting to the Managing Director.

Bhupinder Sethi 36 Senior Fund B.E, MBA from 11yrs. June 1994 to March 1997 – Equity Analyst, Department ofManager F.M.S, Delhi International Finance at UTI – Reporting to the DeputyEquities General Manager.

March 1997 to February 2000 – Fund Manager of India Fund(India’s first offshore fund, listed on the London StockExchange), Department of International Finance, UTI –Reporting to the General Manager.

February 2000 to December 2002 – Fund Manager at DundeeMutual Funds, sponsored by Dundee Bancorp Inc., Canada– Reporting to the President.

September 2003 to February 2005 – As Vice PresidentInvestments at Jacob Ballas Capital India, subsidiary ofExcelfin Pte. Limited, Singapore and Investment Advisor tothe New York Life International India Fund – Reporting to theManaging Director.

March 2005 to date – As Senior Fund Manager Equities atTata Asset Management Ltd, he is the Fund Manager ofcertain equity schemes of Tata Mutual Fund - Reporting tothe Managing Director.

Sameer Mistry 31 Fund B.E, MBA 6 yrs August 1999 to September 2003 – Started his career with TataManager (Finance) Asset Management Limited as a management trainee in

equity – Reporting to the Fund Manager.

October 2003 to November 2004 – Deputy ManagerInvestments at SBI Life Insurance – Reporting to CIO.

November 2004 till date – As Fund Manager at Tata AssetManagement Limited, he is the Fund Manager for certain TataMutual Fund Schemes – Reporting to the Sr.Fund Manager.


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Fund Management :The People :The investment operations of the schemes (including this scheme)of Tata Mutual Fund are managed by TAML’s investment team, com-prising six people (excluding dealing personnel). The profession-ally qualified Fund Management Team members (described ingreater detail above) are Mr. M. Venugopal and Mr. Murthy Nagarajanand are backed by a team of research / investment personnel, pos-sessing collectively within them a vast and varied knowledge baseculled out of research, market analysis, physical on-site visits, train-ing in portfolio management, derivatives, AMFI course on MutualFunds, and so on. The members of the equity research team andtheir past experience is Mr. M. Venugopal, who apart from being aFund Manager is also the Head of the Research, has been withTAML for the past 9 years and prior to that he was associated witha member of the Stock Exchange as an Equity Analyst, Mr. ArunKhurana has an experience of ten years in the Capital Market ofwhich around 6years has been in Equity Research with variousreputed members of the Stock Exchange, Mr. Pradeep S. Gokhalewho has an experience of 10 years in Debt Research and 4yearsin Corporate Finance and Mr. Marzban Irani who has started hiscareer with TAML and has spent 4 years with the Company.

The Investment Process :

According to the terms of the respective offer document of eachscheme under consideration, decisions regarding the debt assetallocation, industry selection, stock selection, etc are taken.

The investment committee of the AMC (comprising MD / CIO, FundManagers and Analysts) is in overall charge of formulating broadinvestment policies, strategies and is responsible for itsimplementation. Based on the in house research / external research,Fund Manager prepares the strategy and proposal to buy/sell thesecurities keeping in view the specific mandate and objectives ofthe schemes. Investment committee discusses the same andapproves / rejects the recommendations of fund manager.

The existing portfolio is reviewed regularly by the InvestmentCommittee and the respective Fund Manager(s) and based on thediscussions (which would involve fundamental reasons such as pastperformance, future outlook etc.), decisions are taken to add/ reduce/exit from securities.

Justification for all investment decisions are recorded in writing. SEBInorms regarding maximum exposure per scrip, investment withrespect to the investment in group companies, etc are strictly adheredto. Interscheme transfers are made as per the market price or thevaluations being followed, so that neither of the schemes is benefitedor adversely affected.

Perfomance of the scheme and complete portfolio statementelaborating various classifications, limits and valuations is placedfor scrutiny before the Board of Directors of the AMC and the TrusteeCompany at their Board Meetings.

Bench Mark Index :Crisil Liquid Fund Index is the benchmark index for Tata FloatingRate Fund.

iii. The CustodianThe Trustee Company has entered into a Custodial Agreement withCITI Bank N. A, pursuant to which Citi Bank shall be the custodianfor the Scheme. The custodian is registered with SEBI and the SEBIRegn. No. IN/CUS/004 and its address is:

CITI Bank N. A.77 Ramnord House,Dr. Annie Besant Road,Worli, Mumbai 400 018.

The custodian does not have the power or authority to sell or disposeof or deal in the securities / investments held by it on behalf of the

Fund except as instructed by the Trustee Company / AssetManagement Company The salient features of the custodialagreement and the responsibilities of the custodian include :

Keeping in safe custody all the securities and such otherinstruments belonging to the Scheme segregated from theother assets of the custodian and from the assets of otherclients of the custodian and shall be held in the name of theTrustee Company A/c Fund or in such other manner as maybe mutually agreed

Ensuring the smooth inflow / outflow of securities and suchother instruments as and when necessary, in the best interestsof the Unitholders.

Ensuring that the benefits due to the holdings are recovered.

Responsibility for loss of or damage to the securities due tofraud, bad faith, negligence or willful neglect or default or willfuldefault on its part or on the part of its approved agents.

TMF shall pay Citi Bank, custodian fees for its services @ 0.06% ofthe value of each buy and @0.06% approximately, of the value ofeach sell transaction. Citi Bank will also be reimbursed all reasonableout of pocket expenses incurred by it, in the performance of its duties.The custodian agreement may be terminated by serving a 60 daysprior written notice, subject to the non-objection of such terminationby SEBI, or earlier upon certain circumstance such as persistentbreach of / default in or negligence in performance of its duty.

iv. The RegistrarComputer Age Management Services (Private) Limited, A&BLakshmi Bhavan, 609, Anna Salai, Chennai – 600 006 (Cams) hasbeen appointed as Registrar for the Scheme. The Registrar isregistered with SEBI under registration number INR000002813. AsRegistrar to the Scheme, Cams will handle communications withinvestors and despatch account statements during the New FundOffer Period. TAML and TTCPL have satisfied themselves that theRegistrar can provide the services required and have adequatefacilities and system capabilities. As Registrar to the Scheme, theywill accept and process Unitholders applications and inform TAMLas to the amounts received for subscriptions (duly reconciled) duringthe New Fund Offer Period and also during the ongoing subscriptionperiod.

v. The Auditor

TTCPL shall have the financial statements for the Scheme auditedby such Chartered Accountant(s) as may be appointed for thatpurpose by the Trustee Company. S.B.Billimoria & Co. CharteredAccountants, Mafatlal Centre, Backbay Reclamation,Mumbai 400020, have been appointed in such capacity.

vi. Bankers

ICICI Bank Ltd.(SEBI Registration Number: 100000004)

vii. List of Authorised Investor Service CentresThe Registrar, Computer Age Management Services (Private)Limited, have set up a special Investor service cell for quickredressal of Unitholder grievances (if any). All correspondence,including change in the name, address, designated bank accountnumber and bank branch, loss of Unit Certificate, AccountStatement, etc. should be addressed to :

Computer Age Management Services (Private) Limited, A&BLakshmi Bhavan, 609, Anna Salai, Chennai – 600 006.

For providing clarifications/help to the Unitholders at Computer AgeManagement Services (Private) Limited the Registrar CAMS hasappointed N. K. Prasad, Head, Process Management, as theCompliance Officer (Investor Services) and he is available at theabove-mentioned address.


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X. UNITS & OFFER

i. Offer of UnitsTata Floating Rate Fund was launched as an open ended debtscheme on 12th December, 2003. The units are now offered atNAVbased price with allpicable loads.

ii. Minimum ApplicationFor Short Term and Long Term Option the minimum application isRs. 10,000/- and in multiples of Re.1/- thereafter.

For additional investment Rs.1,000/- and in multiples of Re. 1/-thereafter.



iii. RefundRefund of subscription money to applicants whose applications areinvalid for any reason whatsoever, will be without incurring any liabilitywhatsoever for interest or other sum.

iv. Despatch of Account Statement and Unit CertificatesAn Account Statement will be despatched to each Unitholder statingthe number of Units held, etc. within a maximum of thirty days fromthe Date of Allotment.

On request from the unitholders, the Asset Management Companyshall within 6 weeks issue the Unit Certificate. The request can bemade to any of the Authorised Investor Service Centres. The costfor issuing the Unit Certificate in lieu of Account Statement will beborne by the Scheme and will form part of its annual ongoingexpenses.

v. Listing, Transfer & Pledge of UnitsBeing an open ended scheme, the units of the scheme are notproposed to be listed on any Stock Exchange. The Trustee may, atits sole discretion, cause the units under the scheme to be listedon one or more Stock Exchange. Notification of the same will bemade through Investor Service Centers or the AMC and as may berequired by the respective Stock Exchanges.

As the Fund will be repurchasing and issuing the Units on anongoing basis, no transfer facility is required.

Units under Tata Dynamic Bond Fund can be pledged (convertedinto money) with scheduled banks, financial institutions, NBFCs,or any other body by the unitholders as security for raising loans.TMF will take note of such pledge / charge in its records. A standardform / appropriate documentation has been drafted for this purposeand is available on request. However, disbursement of such loanswill be at the entire discretion of scheduled banks, financialinstitutions, NBFCs, or any other body concerned and TMF assumesno responsility therefor.

vi. Nomination FacilityIf an application is made in the name of a single individual holder,the Unitholders under this scheme, can write to Cams AuthorisedInvestor Service Centres requesting for a Nomination Form tonominate a successor to receive the Units upon his / her death, asprovided in the Regulations. All payments and settlements made tosuch nominee and a receipt thereof shall be a valid discharge by theFund. Unitholders being either parent or lawful guardian on behalf ofa minor and power of attorney holder of an eligible institution,societies, Funds, bodies corporate, partnership firms and HUF shallhave no right to make any nomination. Nomination in favour of Non-Residents will be governed by the rules formulated by Reserve Bankof India from time to time.

The provisions for nomination with regard to Mutual Funds would beas per Section 56 and Section 69 (regarding the right of the

beneficiary to transfer possession )of the Indian Trusts Act, 1882since the Mutual Fund is formed as a Trust under the said Act.

The AMC has provided this nomination facility as an additional feature.By provision of this facility the AMC is not in any way attempting togrant any rights other than those granted by law to the nominee. Anomination in respect of the Units does not create an interest in theproperty after the death of the Unitholder. The nominee shall receivethe units only as an agent and trustee for the legal heirs or legateesas the case may be. It is hereby clarified that the nominees under thenomination facility provided herein shall not necessarily acquire anytitle or beneficial interest in the property by virue of this nomination &the transmission of units would normally be governed as persuccession certificate/probate of the will.

Nomination can be made only by individuals applying / holding unitson their own behalf singly or jointly. Non-individuals including society,trust, body corporate, partnership firm, Karta of Hindu UndividedFamily, holder of Power of Attorney cannot nominate. If the units areheld jointly all joint holders will sign the nomination form. A minor canbe made a nominee and the name and address of the guardian ofthe nominee minor shall be provided by the unitholder. A non-residentIndian can be a nominee subject to exchange controls in force formtime to time. Nomination can also be made in favour of the CentralGovernment, State Government, a local authority, any persondesignated by virtue of his office or a religious or charitable trust.

Nomination in respect of units stands cancelled upon transfer of units.Nominee shall be a valid discharge by the Asset ManagementCompany against the legal heir. The cancellation of nomination canbe made only by those individuals who hold units on their own behalfsingly or jointly and who made the original nomination. On cancellationof nomination the nomination shall stand rescinded and the assetmanagement company shall not be under any obligation to transferthe units in favour of the nominee.

v. Applications with Additional HoldersAn application may be made in sole or more names (not more thanthree) on first holder basis. The Units can be held under single /additional holding / any one or survivor. The first named unitholderhas the option to add/delete name of one person subsequent to theinvestment. In case the unitholder (i.e. the first holder) wants to changethe names/ order of the additional holders, he can write to AuthorisedInvestor Service Centres requesting for the prescribed form to alterthe order of additional holdings. However, the Units will be continuedto be held by the Unitholder on first holder basis. In the case of refunds,income distributions, repurchase proceeds, and other distributions,etc. will be made out in favour of, and all communications will beaddressed to the Unitholder whose name appears first and at his /her address as already available with the Fund. However, it shouldbe noted that if the Unitholder has an Unit Certificate, suchintroduction/ alteration of additional holders shall attract stamp dutyand the cost of stamp duty will be borne by the Scheme itself and willform part of its annual ongoing expenses.

In all such cases and in all matters concerning the Fund, it shall bedeemed that the first of such persons, that is the original Unitholder,is the holder of the Units and all correspondence, if any, shall becompetent only by and to the first of such person.

All payments and settlements made to the first holder and a receiptthereof shall be a valid discharge to the Fund;

The Fund shall for all purposes correspond only with the first holderand all communications with the first holder including information onthe working of the Fund shall be deemed to be a valid discharge tothe Fund of its obligations;

In the event of death of the first holder, the person next in the orderas stated in the application form, (unless changed) shall be the onlyperson(s) recognised by the Fund as having any title or interest inthe Units on first holder basis.


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For the convenience of the investors, we wish to allow units of anyScheme of Tata Mutual Fund to be held under any one or survivorand to add/delete name of one person subsequent to investment.

vi. Systematic Investment Plan (SIP) The investors can benefit by investing specified Rupees amountsat regular intervals after scheme reopens for ongoing sales. TheSIP allows the unitholders to invest a fixed amount of Rupees atregular intervals for purchasing additional units of the scheme atNAV based prices. Investment can be done with the minimum /maximum amount and number of cheques specified by AMC fromtime to time. The cheques will be presented on the dates mentionedon the cheque and subject to realization. Units will be allotted atthe applicable NAV along with applicable load.

vii. Systematic Withdrawal Plan (SWP)This facility available to the unitholders of the scheme enables themto withdraw fixed sums from their unit accounts at periodic intervals.The amount withdrawn under SWP by redemption shall be convertedinto the Scheme units at the Repurchase price and such units will besubtracted from the unit balance of that unitholder. In case the datefalls during a book closure period the immediate next Business daywill be considered for this purpose.

The Authorised Investor Service Center may terminate SWP onreceipt of a notice from the unitholder. It will terminate automaticallyif all units are liquidated or withdrawn from the account or upon thereceipt of notification of death or incapacity of the unitholder.

viii. Systematic Transfer Plan (STP)A unitholder may establish a Systematic Transfer Plan (STP) andchoose to transfer on a monthly or a quarterly basis from one TMFScheme to another TMF Scheme on a date prescribed by theInvestment Manager. The amount thus withdrawn by redemption shallbe converted into units at the applicable NAV on the scheduled dayand such units will be substracted from the unit balance of thatunitholder. Unitholders may change the amount, not below thespecified minimum, by giving two weeks prior written notice to theregistrars. STP may be terminated automatically if the balance fallsbelow the minimum account balance or upon the receipt of notificationof death or incapacity of the unitholders by the fund. Rules relating tothe plan may be changed from time to time by the InvestmentManager.

ix. Duration of the SchemeThe Scheme has been structured like an open-ended Scheme.Investors can invest on an ongoing basis on Business Days atprevailing NAV related price. The Units under the Scheme standredeemed on happening of various events as stated elsewhere inthe Offering Circular. As such except on the happening of any eventas stated in the clause relating to winding up, the Scheme hasperpetual existence and therefore there is no fixed duration of theScheme.

x. Winding Up

1) in accordance with the SEBI Regulations, the Scheme may bewound up:

on the happening of any event which, in the opinion of theTrustee Company, requires the Scheme to be wound up;or

if seventy five percent of the Unitholders of a Scheme passa resolution that the Scheme be wound up; or

if the SEBI so directs in the interests of the Unitholders.

2) Where a Scheme is to be wound up pursuant to the aboveRegulation, the Trustee Company shall give notice of thecircumstances leading to the winding up of the Scheme-

To SEBI; and

in two daily newspapers having circulation all over India

and also in a vernacular newspaper circulating at the placewhere the Fund is established.

xi. Procedure for Winding UpThe Trustee Company shall call a meeting of the Unitholders toconsider and pass necessary resolutions by simple majority of theUnitholders present and voting at the meeting for authorising theTrustee Company or any other person to take steps for winding upthe Scheme. The Trustee Company or the person authorised as above,shall dispose off the assets of the Scheme concerned in the bestinterests of the Unitholders of the Scheme.

The proceeds of sale made in pursuance of the above shall in thefirst instance be utilised towards the discharge of such liabilities asare properly due and payable under the Scheme and after makingappropriate provision for liability and for meeting the expensesconnected with such winding up, the balance shall be paid to theUnitholders in proportion to their respective interest in the assets ofthe Scheme as on the date when the decision for winding up wastaken.

On the completion of the winding up, the Trustee Company shallforward to SEBI and the Unitholders a report on the winding upcontaining particulars such as circumstances leading to the windingup, the steps taken for disposal of assets of the Scheme beforewinding up, expenses of the Scheme for winding up, net assetsavailable for distribution to the Unitholders and a certificate from theAuditors of the Fund.

Notwithstanding anything contained herein, the provisions of the SEBIRegulations in respect of disclosures of half- yearly reports and annualreport shall continue to apply.

After the receipt of the report referred to above under “Procedure forWinding Up”, if SEBI is satisfied that all measures for winding up ofthe Scheme have been completed, the Scheme shall cease to exist.

XI. SALE OF UNITS BEING OFFERED

i. Application Details:

(a) Minimum investment:

Short Term Option : Rs. 10,000/- and in multiples of Re. 1/-thereafter.

Long Term Option : Rs. 10,000/- and in multiples of Re. 1/-thereafter.

For additional investment Rs.1,000/- and in multiples ofRe. 1/-.

Short Term Institutional Plan: Rs. 1 Crore and in multiples ofRe. 1/- thereafter.


(b) Eligibility for applicationThe following persons (subject, wherever relevant to, Sale ofUnits being permitted under their respective constitutions andrelevant State Regulations) are eligible to apply for the purchaseof the Units:

Adult individuals, either singly or more than one (notexceeding three) on first holder basis.

Parents, or other lawful Guardians on behalf of Minors.

Companies, corporate bodies, public sector undertakings,trusts, wakf boards or endowments, funds, institutions,associations of persons or bodies of individuals andsocieties (including co-operative societies) registered underthe Societies Registration Act, 1860 (so long as thePurchase of Units is permitted under their respectiveconstitutions).

Mutual Funds (including any Scheme managed by TAMLor any Scheme of any other Mutual Fund); (in accordance


30

with Regulation 44(1) read with Clause 4 of Schedule VII,of the Securities & Exchange Board of India (Mutual Funds)Regulations, 1996).

Asset Management Company (TAML; (in accordance withRegulation 24(3) of the Securities & Exchange Board ofIndia (Mutual Funds) Regulations, 1996).

Partnership firms, in the name of the partners.

Hindu Undivided families (HUF) in the sole name of theKarta.

Financial and Investment Institutions/ Banks.

Army/ Navy / Air Force, para military Units and other eligibleinstitutions.

Religious and Charitable Trusts provided these are allowedto invest as per statute and their by-laws.

Scientific and Industrial Research organisations (so longas the Purchase of Units is permitted under their respectiveconstitutions)

Provident / Pension (Gratuity/ Superannuation and suchother retirement and employee benefit and other similarfunds (so long as the Purchase of Units is permitted undertheir respective constitutions.)

Non-resident Indians/persons of Indian origin residingabroad (NRIs) on a full repatriation basis.

Foreign Institutional Investors registered with SEBI (FIIs).

Overseas Financial Organisations which have entered intoan arrangement for investment in India, inter-alia, with aMutual Fund registered with SEBI and which arrangementis approved by the Central Government.

International Multilateral Agencies approved by theGovernment of India.

If a person resident of India at the time of subscription becomes aperson resident outside India subsequently, he will have the optionto either be paid repurchase value of Units, or continue into theScheme if he/ she so desires and is otherwise eligible. However, theperson who desires to continue in the Scheme shall not be entitledto any interest or any compensation during the period it takes for theFund to record the change in Address and the Residential Status.Notwithstanding the aforesaid, the Trustee Company reserves theright to close the Unitholder account and to pay the repurchase valueof Units, subsequent to his becoming a person resident outside India,should the reasons of expediency, cost, interest of Unitholders andother circumstances make it necessary for the Fund to do so. Insuch an event, no resident Unitholders who have subsequentlybecome resident outside India shall have a right to claim the growthin capital and/ or income distribution.

Tata Floating Rate Fund has not been registered in any countryoutside India. To ensure compliance with any Laws, Acts,Enactments, etc. including by way of Circulars, Press Releases, orNotifications of Government of India, the Fund may require/giveverification of identity/any special/additional subscription-relatedinformation from /of the Unitholders(which may result in delay indealing with the applications, Units, benefits, distribution, etc./givingsubscription details, etc). Each Unitholder must represent and warrantto the Trustee Company/TAML that, among other things, he is ableto acquire Units without violating applicable laws. The TrusteeCompany will not knowingly offer or sell Units to any person to whomsuch offer or sale would be unlawful, or might result in the Fundincurring any liability or suffering any other pecuniary disadvantageswhich the Fund might not otherwise incur or suffer. Units may not beheld by any person in breach of the law or requirements of anygovernmental, statutory authority including, without limitation,Exchange Control Regulations. The Trustee company may,

compulsorily redeem any Units held directly or beneficially incontravention of these prohibitions. In view of the individual nature ofinvestment portfolio and its consequences, each Unitholder is advisedto consult his/her own professional advisor concerning possibleconsequences of purchasing, holding, selling, converting or otherwisedisposing of the Units under the laws of his/her State/country ofincorporation, establishment, citizenship, residence or domicile.

ii. Procedure for applicationHow to applyApplication forms complete in all respects, accompanied by or cheque/ draft are to be submitted to any of the Authorised Investor ServiceCentres, as stated in the Offering Circular or as may be declared. Allcheques and bank drafts accompanying the application form shouldcontain the application form number and the name of the applicanton its reverse. For additional instructions, investors are requested toread the application form carefully. All cheques/ drafts by the applicantsshould be made out in favour of “TFF - Tata Floater Fund” respectivelyand crossed “A/c Payee and Not Negotiable”.

The Authorised Investor Service Centres/Marketing Associates whoreceive the application form shall stamp and return the“Acknowledgement Slip” of the application form, therebyacknowledging receipt of the application form. The investors arerequested to preserve the acknowledgement slip duly stamped bythe Authorised Investor Service Centres / Marketing Associates. Thisshall be subject to final verification and scrutiny by the TrusteeCompany / Asset Management Company that the cheque / demanddraft and application form are in order / valid.

Any application for subscription of units of the total value of Rs 50,000/- or more without a valid PAN / Form No. 60 will be liable to be rejectedby the Mutual Fund.

For validation purposes investors are required to submit xerox of PANCard or any other communication received from the Income Taxdepartment specifying name and PAN No of the investor.

For ongoing subscription, applications completed in allrespects, must be submitted only at the Investors ServiceCenters.

Application form (duly completed), along with a cheque (drawn onChennai) / DD (payable at Chennai) may also be sent by Mail directlyto the Registrar viz. Computer Age Management Services (Private)Limited, Unit : Tata Mutual Fund, A&B Lakshmi Bhavan, 609, AnnaSalai, Chennai – 600 006, superscribing the envelope as “ Tata MutualFund - Application form - TFRF”.

If there is no Authorised Investor Service Centres where the investorresides, he/she may purchase a Demand Draft from any other Bankin favour of Tata Floating Rate Fund” and crossed “A/c Payee andNot Negotiable” respectively payable at Mumbai, after deductingbank charges / commission (not exceding rates prescribed by StateBank of India) from the amount of investment. If such bank charges/ commission are not deducted by the applicant, then the samemay not be reimbursed by the Trustee Company. Such bank charges/ commission will be treated as an ongoing expense. However incase of application along with local Cheque or Bank Draft payableat Mumbai, at / from locations where TMF has its designatedAuthorised Investor Service Centres, Bank Draft charges/commission may have to be borne by the applicant. In such casesthe Trustee Company is entitled, in its sole and absolute discretion,to reject or accept any application.

Example:If an amount of Rs. 10,000/- is being invested in Tata Floating RateFund by an investor resident in India having no specified collectioncentre near his / her residence, the Demand Draft charges that he /she can deduct has been illustrated below:


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INVESTMENT DEMAND DRAFT THE CORRECT AMOUNTMADE (RS.) CHARGES (RS.) OF PAYMENT AFTER(say) RECOVERY OF DEMAND

DRAFT CHARGES (RS.)

10,000 50.00 9950

Please note that Stockinvests and Postdated Cheques, MoneyOrders and Postal Orders would not be accepted.

Subscription by NRIsIn terms of Schedule 5 of Notification no. FEMA 20/2000 dated May3, 2000, RBI has granted general permission to NRIs to purchase,on a repatriation basis units of domestic mutual funds. Further, thegeneral permission is also granted to NRIs to sell the units to themutual funds for repurchase or for the payment of maturity proceeds,provided that the units have been purchased in accordance with theconditions set out in the aforesaid notification.For the purpose ofthis section, the term “mutual funds” is as referred to in Clause (23D)of Section 10 of Income-Tax Act 1961. However, NRI investors, if sodesired, also have the option to make their investment on a non-repatriable basis.

Subscription by FIIs

In terms of Schedule 5 of Notification no. FEMA 20/2000 dated May3, 2000. RBI has granted general permission to a registered FII topurchase on a repatriation basis units of domestic mutual fundssubject to the conditions set out in the aforesaid notification. Further,the general permission is also granted to FIIs to sell the units to themutual funds for repurchase or for the payment of maturity proceeds,provided that the units have been purchased in accordance with theconditions set out in the aforesaid notification. For the purpose ofthis section, the term “mutual funds” is as referred to in Clause (23D)of Section 10 of Income-Tax Act 1961.

Mode of Payment on Repatriation basis

NRIs

In case of NRIs and persons of Indian origin residing abroad, paymentmay be made by way of Indian Rupee drafts purchased abroad andpayable at Mumbai or by way of cheques drawn on Non-Resident(External) (NRE) Accounts payable at par at Mumbai. Paymentscan also be made by means of rupee drafts payable at Mumbai andpurchased out of funds held in NRE / FCNR Accounts.

In case Indian rupee drafts are purchased abroad or from ForeignCurrency Accounts or Non-resident Rupee Accounts an account debitcertificate from the Bank issuing the draft confirming the debit shallalso be enclosed.

FIIs

FIIs may pay their subscription amounts either by way of inwardremittance through normal banking channels or out of funds held inForeign Currency Account or Non-resident Rupee Accountmaintained by the FII with a designated branch of an authorizeddealer with the approval of the RBI subject to the terms and conditionsset out in the aforesaid notification.

All cheques/drafts should be made out in favour of “Tata FloatingRate Fund” and crossed “Account Payee Only”. In case Indian Rupeedrafts are purchased abroad or from FCNR/NRE A/c. an accountdebit certificate from the Bank issuing the draft confirming the debitshall also be enclosed.

Mode of payment on Non-Repatriation basisIn case of NRIs/Persons of Indian origin seeking to apply for Unitson a non-repatriation basis, payments may be made by cheques/demand drafts drawn out of Non-Resident Ordinary (NRO) accounts/Non-Resident Special Rupee (NRSR) accounts and Non ResidentNon-Repatriable (NRNR) accounts payable at the city where theApplication Form is accepted.

Refunds, interest and other distribution (if any) and maturity proceeds/repurchase price and /or income earned (if any) will be payable inIndian Rupees only. The maturity proceeds/repurchase value of unitsissued on repatriation basis, income earned thereon, net of taxesmay be credited to NRE/FCNR account (details of which should befurnished in the space provided for this purpose in the ApplicationForm) of the non-resident investor or remitted to the non-residentinvestor. Such payments in Indian Rupees will be converted into USdollars or into any other currency, as may be permitted by the RBI, atthe rate of exchange prevailing at the time of remittance and will bedispatched through Registered Post at the unitholders risk. The Fundwill not be liable for any loss on account of exchange fluctuations,while converting the rupee amount in US dollar or any other currency.Credit of such proceeds to NRE/FCNR account or remittance thereofmay be permitted by authorized dealer only on production of acertificate from the Fund that the investment was made out of inwardremittance or from the Funds held in NRE/FCNR account of theinvestor maintained with an authorized dealer in India. However, thereis no objection to credit of such proceeds to NRO/NRSR account ofthe investor if he so desires.

Subscription by Multilateral Funding Agencies, on full repatriationbasis, is subject to approval by the Foreign Investment PromotionBoard.

Rejection of applicationsApplications not complete in any respect are liable to be rejected.The Trustee Company may reject any application not in accordancewith the terms of the Scheme.

iii. General InstructionsDocuments to be submittedIn the case of applications under Power of Attorney

If any application or any request for transmission is signed by a personholding a valid Power of Attorney, the original Power of Attorney or acertified copy duly notarised should be submitted with the applicationor the transmission request, as the case may be, unless the Powerof Attorney has already been registered with the Fund / Registrar.

In the case of applications by limited Company or a corporate bodyor an eligible institution or a registered society or a Trust or a Fund ora FII etc.

In the case of applications by limited Company or a corporate bodyor an eligible institution or a registered society or a trust or a fund ora FII, a certified true copy of the Board resolution of the ManagingBody authorising transactions in Units including authority granted infavour of the officials signing the application for Units and theirspecimen signature etc. alongwith a certified copy of theMemorandum and Articles of Association and / or bye-laws and / ortrust deed and / or partnership deed and Certificate of Registrationshould be submitted. The officials should sign the application underthe official designation. In the case of a Trust/ Fund, it shall producea resolution from the Trustee(s) authorising such purchases.

The above mentioned documents or duly certified copy thereof mustbe lodged separately at the office of the Registrar to the Offer, quotingthe serial number of the application / folio number.

In case of non submission of the above mentioned documents, theTrustee Company is entitled, in its sole and absolute discretion, toreject or accept any application.

Availability of Application Forms and Offering CircularApplication forms and copies of Offering Circular may be obtainedfrom the office of Tata Asset Management Ltd., Offices of theAuthorised Investor Service Centres on Back Cover Page of thisOffering Circular or any agents of TMF.


32

Bank Account DetailsIt shall be mandatory for the Unitholders to mention their bank accountnumbers in their applications/requests for redemptions. Unitholdersare requested to give the full particulars of their Bank Account i.e.nature and number of account, name, Account Number, Nine digitBank Code Number (For Electronic Credit Facility), branch addressof the bank at the appropriate space in the application form.

For faster dissemination of information, Unitholders arerequested to provide their e-mail ID.

Any application for subscription /request for redemption withoutBank account details will be rejected by the mutual fund.

PAN Number Details of the InvestorsAs per SEBI Circular SEBI/MD/CIR. No6/ 4213/04 dated March 1,2004 Whenever an application is for total value of Rs. 50,000/- ormore, the applicant or in case of application is in joint names, eachof the applicants, should mention his/her permanent accountnumber (PAN) allotted under the Income Tax Act, 1961. As per Rule114B of The Income Tata Rules 1962, every person shall quote hispermanent account number (PAN) in all documents pertaining topayment of an amount of Rupees Fifty Thousand or more to aMutual Fund for purchase of its units. In case the person making thepayment is a minor who does not have any income chargeable toincome tax, he shall quote the permanent account number of hisfather or mother or guardian, as the case may be. Any person whodoes not have a permanent account number and who enters intoany transaction specified in this rule shall make a declaration inForm No. 60 / 61 giving therein the particulars of such transaction.

In case of a joint holding, PAN / Form No. 60 / 61 is required for allthe joint holders.

Any application for subscription of units of the total value of Rs50,000/- or more without a valid PAN / Form No. 60 / 61 will beliable to be rejected by the Mutual Fund.

For validation purposes investors are required to submit xeroxof PAN Card or any other communication received from theIncome Tax department specifying name and PAN No of theinvestor.

Note: Investors are urged to refer The Income Tax Rules, 1962 orconsult their Tax Advisors for further details.

Unique Identification Number (UIN) Requirement

In case of a body corporate: As per the SEBI Notification No. MRD/DOP/MAPIN/Cir –26 /2004

dt. August 16, 2004 no specified investor being a body corporateshall buy, sell or deal in any securities which are listed on anyrecognized stock exchange or in units of a mutual fund or acollective investment scheme or subscribe to securities whichare proposed to be listed in any recognized stock exchange orunits of a mutual fund or a collective investment scheme unlesssuch specified investor, its promoters and directors have beenallotted UIN by December 31, 2004. Further, vide Press ReleasePR No.344/2004 dt. 31st December, 2004 SEBI has specified31st December, 2005 as the notified date for the purpose ofobtaining Unique Identification Number for specified investorsbeing bodies corporate whose promoters or directors are personsresident outside India. For this purpose, the words person residentoutside India shall have the same meaning as is assigned u/s2(w) of Foreign Exchange Management Act, 1999.

In case of other investors: As per the Gazette Notification S.O. No. 1077 (E). dt. 28th

September, 2004, published by SEBI all resident investors otherthan a body corporate shall quote UIN number in all applicationfor any transaction in units of mutual funds of value of one lakhrupees or more effective from January 1, 2006.

In case of a joint holding UIN of all the joint holders should bementioned in the application form.

As per SEBI Notification No. MAPIN/Cir –13/2005 dt. July 1, 2005the above requirement of UIN has been temporarily discontinued.

XII. DIVIDENDS/BONUS & DISTRIBUTIONS

In case of Growth Plan the income / profits received / earned wouldbe accumulated by the Fund as capital accretion, aimed at achievingmedium to long term and also short term capital growth as reflectedin the NAV. In case of a bonus/income plan the profits received /earned and so retained and reinvested may be distributed as Income/bonus at appropriate rates (after providing for all relevant ongoingexpenses, etc.) and at appropriate intervals as may be decided bythe AMC and/or Trustee Company will be distributed to the unitholderswho hold the units on the record date of declaration of the Income/bonus. The Income/bonus distribution warrants/certificate shall bedespatched within 30 days of the declaration of the Income. Guidedby the philosophy of value-oriented returns, the Trustee Companymay periodically capitalise net earnings of the Scheme (includinginterest income and realised gains on the Securities) by way ofallotment/credit of bonus Units to the Unitholders Accounts, the intentbeing to protect the Net Asset Value of the Scheme and Unitholders’interests.

The Fund does not assure any targeted annual return / income norany capitalisation ratio. Accumulation of earnings and / orcapitalisation of bonus units and the consequent determination ofNAV, may be suspended temporarily or indefinitely under any of thecircumstances as stated in the clause “Suspension of Ongoing Sale,Repurchase or Switch of Units.”

Dividend Reinvestment Option :In order to reduce the expenses of the scheme and also for theconvenience of the investors it is proposed to reinvest dividend withinthe scheme at the applicable ex-dividend NAV if dividend amount isless than Rs. 250/- (or any other amount as may be specified by theAMC from time to time). This will be applicable to the above mentionedschemes of Tata Mutual Fund.

Unitholders under this Option also have the facility of reinvestmentof the income so declared, if so desired. Income Distribution Warrantswill not be despatched to such Unitholders. The income declaredwould be reinvested in the Scheme on the immediately following ex-dividend date.

Certificates for Tax Deduction at Source (TDS) :Certificate for tax deduction at source will be issued one month afterthe end of the current financial year.

XIII. INTER SCHEME TRANSFERS

Transfers of investments from one Scheme to anotherScheme(including the present Scheme) under Tata Mutual Fund,shall be allowed only if:

such transfers are made at the prevailing market price for quotedsecurities or, Fair value in case of non-quoted/non-tradedsecurities on spot basis;

the securities so transferred shall be in conformity with theinvestment objective of the Scheme to which such transfer hasbeen made.


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XIV. ASSOCIATE TRANSACTIONSi) As per SEBI Regulations, the Fund shall not make any investments in any unlisted securities of associate/group companies of the

sponsors. The Fund will also not make investment in privately placed securities issued by Associate/Group companies of the Sponsors.The Fund may invest not more than 25% of the net assets (of all the Schemes of the Fund) in listed securities of Group companies.

ii) Market value of investments made in companies which have invested more than 5% of the Net Assets of a scheme and investmentsmade by that or any other scheme of Tata Mutual Fund in such company or its subsidiaries within one year of the latter investmentcalculated on either side in terms of Regulation 25(11) as on 31st October, 2005 as given.

Rs. lacs.Company which has Invested Schemes in Schemes Aggregate Cost Outstanding

which Companies which of Acquisition as athave invested have during the 31st October, 05more than 5% invested period ended at Fair /of the Net Assets 31st October, 05 Market Value

TATA CONSULTANCY SERVICES LTD TSTBF TSEF 127.45 0.00TFHFS1 A6 TBF 233.66 0.00

TEOF 649.68 0.00TEQPEF 209.56 0.00TIFN 9.56 7.86TIFS 1.54 0.84TGF 82.6 0.00TLSTF 73.58 121.21TMIF 1152.2 0.00TMPF 932.27 0.00TPEF 284.82 235.35TTSF 99.98 0.00TYCF 211.89 97.01

TATA MOTORS LIMITED TFHFS1 A6 TSEF 50.58 0.00TFHF A3 TDYF 74.01 0.00TFHF A4 TBF 249.96 0.00

TEOF 3046.89 0.00TIFN 364.87 2.08TIFS 14.02 0.70TGF 28.25 0.00TMIF 110.21 0.00TMPF 363.82 0.00TPEF 572.90 0.00TTSF 85.12 0.00

JET AIRWAYS (I) LTD TFRSTF TSEF 29.91 0.00TBF 45.46 0.00TEOF 128.22 0.00TIFN 1.16 1.02TGF 17.15 0.00TISF 1457.82 903.33TMIF 72.56 0.00TMPF 78.21 0.00TSIF 788.18 642.23TPEF 87.04 0.00TTSF 22.79 0.00TYCF 46.95 43.29

TATA IRON & STEEL LTD TFHFA3 TSEF 411.56 0.00TFHFA4 TDYF 1673.00 0.00TFHFS1 A6 TBF 445.75 0.00TFHFS1 A8 TEOF 4968.49 0.00TLF TEQPEF 1240.20 0.00TFRSTF TIFN 358.32 2.20TFF TIFS 15.62 0.88

TGF 294.31 0.00TISF 2468.53 169.50TMIF 614.65 0.00TMPF 1193.75 0.00TSTBF 2072.24 2055.35TPEF 2937.72 0.00TTSF 647.93 0.00TYCF 193.23 0.00

TATA CHEMICALS LIMITED TFHFS1 A8 TDYF 1113.54 1341.09TIFN 63.27 0.48TTSF 63.10 0.00


34

Company which has Invested Schemes in Schemes Aggregate Cost Outstandingwhich Companies which of Acquisition as athave invested have during the 31st October, 05more than 5% invested period ended at Fair /of the Net Assets 31st October, 05 Market Value

HERO HONDA MOTORS LTD TGSMF TSEF 248.28 0.00TDYF 693.28 0.00TBF 269.02 0.00TEOF 1276.84 0.00TIFN 206.05 1.09TIFS 6.44 0.39TGF 1.56 0.00TMIF 318.32 0.00TMPF 262.44 0.00TPEF 321.17 0.00TYCF 174.68 0.00

HINDALCO INDUSTRIES LTD TFRSTF TSEF 302.38 0.00TDYF 52.79 0.00TBF 207.54 0.00TEOF 477.74 0.00TEQPEF 429.05 385.48TFF 510.63 0.00TFHF A4 2091.62 2038.89TIF 1514.72 0.00TIFN 291.41 1.24TIFS 11.55 0.49TGF 357.45 142.63TIPF 514.65 0.00TISF 1277.97 1580.38TLF 158.25 0.00TMIF 4236.93 0.00TMPF 3347.92 0.00TSTBF 3058.73 1539.14TPEF 540.03 0.00TTSF 437.16 0.00TYCF 600.41 1028.28

HINDUSTAN ZINC LIMITED TFHF A4 TSEF 207.93 0.00TFHF A3 TBF 119.75 0.00

TFF TEOF 217.57 0.00

TISF 444.75 0.00TMPF 152.45 0.00

TPEF 287.92 0.00

HCL TECHNOLOGIES LTD TFHFS1 A8 TSEF 118.09 104.44TFHFS1 A6 TDYF 1470.91 292.43TFHF A3 TBF 547.91 168.04

TEOF 2501.68 563.96TEQPEF 157.32 0.00TIFN 205.10 1.57TGF 110.95 0.00TLSTF 290.91 54.31TMCF 234.28 108.03TMIF 116.40 0.00TMPF 224.64 0.00TSIF 719.92 0.00TPEF 1225.94 375.98TTSF 482.29 0.00TYCF 54.31 0.00

VIDESH SANCHAR NIGAM LTD TSTBF TSEF 402.73 145.25TDYF 449.53 0.00TBF 155.73 0.00TIFN 106.99 0.97TISF 2412.26 1467.83TMPF 204.93 0.00TSIF 915.60 682.68TTSF 575.46 290.50TYCF 139.41 101.68


35


ITC LTD TFRSTF TSEF 147.10 0.00TSTBF TDYF 1120.29 65.38

TBF 309.94 150.38TEOF 2875.71 660.43TEQPEF 176.64 0.00TIFN 586.19 5.27TIFS 26.37 1.97TGF 487.00 168.42TLSTF 308.26 92.27TMCF 796.58 210.53TMIF 567.36 0.00TMPF 171.70 90.23TPEF 2275.73 673.68TTSF 757.41 264.66TYCF 56.96 0.00

MARUTI UDYOG LTD TFRSTF TSEF 171.01 0.00TDYF 1220.86 0.00TBF 226.67 0.00TEOF 4816.32 0.00TEQPEF 763.03 0.00TIFN 311.06 1.85TIFS 7.36 0.30TGF 253.59 0.00TMIF 540.37 0.00TMPF 998.59 0.00TPEF 2311.84 0.00TTSF 295.98 0.00TYCF 40.61 0.00

HCL INFOSYSTEMS LTD TFF TDYF 239.07 224.51TBF 220.43 103.16TEOF 402.25 425.95TGF 110.78 0.00TMCF 576.26 590.04TSIF 445.97 422.44TPEF 113.31 112.53TYCF 168.72 157.02

STERLITE INDUSTRIES (INDIA) LTD TDBF TBF 20.95 0.00TEQPEF 331.79 223.93TGF 161.48 0.00TISF 831.99 758.32TLF 2000.00 0.00TMPF 123.31 0.00

TATA TEA LTD TFHFS1 A8 TSEF 250.75 0.00TFF TDYF 788.22 646.88

TEOF 1528.27 374.90TEQPEF 399.60 343.43TIFN 49.96 0.49TGF 146.45 0.00TLSTF 137.67 100.28TMCF 944.05 784.40TMIF 361.64 0.00TMPF 297.57 0.00TPEF 935.06 272.38TTSF 262.05 0.00

BRITANIA INDUSTRIES LTD TFHFS1 A8 TIFN 36.89 0.00

INDO GULF FERTILIZER LTD TDBF TEQPEF 118.30 178.92


36


STATE BANK OF INDIA TMCF TDBF 614.00 0.00TDYF 4186.59 0.00TBF 830.18 159.27TEOF 3537.14 335.30TEQPEF 656.89 544.86TFHF A3 2757.05 1022.39TFHF A4 4225.47 2044.77TIF 2287.99 511.19TIFN 678.61 5.16TIFS 17.30 1.25TGF 391.05 0.00TISF 3240.13 1299.29TMIF 3305.98 0.00TMPF 1376.13 0.00TSIF 947.54 427.51TSTBF 522.16 0.00TPEF 2362.10 544.86TTSF 347.24 0.00TYCF 61.52 0.00

WIPRO LTD TLF TBF 568.32 145.88TEOF 983.00 638.23TIFN 918.05 6.01TIFS 16.68 0.64TGF 271.55 200.59TLSTF 281.04 145.88TMIF 445.65 87.53TMPF 909.50 94.82TSIF 955.92 623.64TPEF 854.33 310.00TTSF 373.12 0.00TYCF 140.21 0.00

All the above companies are growth oriented blue chip companies with a proven track record.


37

iii) Total investment in securities of Associate/Group companies under all schemes is disclosed below. No investment was made in unlisted securities of Group companies after the amendment of the SEBI Regulations in January 1998. Most of such equity shares, debentures,etc. were purchased from the open secondary market at relevant market prices over a period of time based on the approved investment strategy. All these securities pertain to highly traded Blue chip companies. In keeping with the investmentobjective of the Schemes,these companies offer good investment potential.

Rs. in lacs

Scheme As on 31.03.03 As on 31.03.04 As on 31.03.05 As on 31.10.05

Amount %ge Amount %ge Amount %ge Amount %ge

TBF 1146.86 13.93 1184.63 12.10 1057.28 9.77 425.60 3.61

TYCF 648.65 10.22 836.96 8.76 1197.88 10.73 628.34 6.24

TTSF 318.97 13.59 375.12 8.59 687.77 13.13 964.36 12.22

TSEF 563.32 26.58 874.27 16.29 960.77 15.57 756.66 14.53

TIF(A) 302.89 1.42 – – – – – –

TPEF 464.19 17.75 1644.46 13.04 2538.25 13.26 1646.42 7.81

TLSTF 55.07 3.31 202.19 6.50 497.24 13.07 380.69 13.29

TGF 535.25 21.37 540.30 14.11 573.29 14.54 70.87 1.65

TIFS 4.01 7.79 36.66 14.91 3.70 13.23 4.01 11.4

TIFN 3.42 7.81 340.02 11.19 17.65 18.32 18.22 14.74

TMIF 33.07 3.11 525.78 1.15 727.62 5.63 74.26 0.93

TEOF 77.89 15.92 – – 2872.24 10.88 819.65 2.8

TMPF – – 953.53 2.28 508.80 3.10 173.05 1.92

TEQPEF 1149.81 11.17 463.02 4.72

TDYF 6102.13 18.81 5148.38 18.83

TLF 1009.41 0.44 – –

TISF 4820.74 6.53 8263.77 12.07

TSIF – – 4061.33 18.66

TFHF (A4) 3057.43 17.99 3033.24 17.26

TFHFS1 – –

TMCF 3922.03 11.56

iiv) The following amounts were paid/provided for as selling commission by the respective schemes to Associate Companies for theirmarketing efforts in mobilising subscriptions for the units of such schemes.

As on 31/03/2003 Rs. in lacs

Schemes Tata Tata Share Tata Tata Tata Sons Tata Panatone Eureka Trent Tata Inv. Taj Inv.Securities Registry Chemicals Sons & Serv. Empl. Investment Finance Forbes Brands & Fin. & Fin.

Ltd. Ltd. Ltd. Ltd. Welfare Trust Corpn. Ltd. Ltd. Co. Ltd. Ltd.

TBF 3.37 0.10 – 0.16 – – – 1.37 – – –TYCF 1.69 0.08 – – – – – – – – –TTSF 1.69 0.06 – – – – – – – – –TSEF 2.27 0.11 – 0.03 – – 0.03 – – – –TIFA 33.91 1.17 0.36 2.23 – 0.16 – – – 1.22 –TPEF 3.59 0.20 – 0.01 – – – – – – –TLF 15.06 0.01 – 0.23 – – – 0.18 0.32 – 0.63TLSTF 2.11 0.08 – 0.01 – – – 0.08 – – –TGSF 6.15 0.21 – 0.66 0.07 – – – – – –TSTBF 7.88 0.01 – – – – – 0.01 0.18 – –TIPF 12.24 0.01 – – – – – – – – 0.08TMIF 1.51 0.06 – – – – – – – – –TLHIF 0.60 – – – – – – – – – –TIFNA 0.07 – – – – – – – – – –TIFSA 0.12 – – – – – – – – – –TEOF 0.14 – – – – – – – – – –

TINR 1.10 – – – – – – – – – –


38

AS on 31/03/2004 Rs. in lacs

Scheme Taj Inv. & Tata Tata Share TataFinance Co. Ltd. Finance Ltd. Registry Ltd. Securities Ltd.

TIFR 0.91 0.00 1.15 23.22

TLF 0.03 0.00 0.00 30.42TBF 0.00 0.12 0.10 3.00

TIPF 0.00 0.01 0.05 43.83

TGSF 0.00 0.00 0.24 24.79TMIF 0.00 0.00 0.10 8.96

TPEF 0.00 0.00 0.27 4.37

TSEF 0.00 0.00 0.12 1.66TTSF 0.00 0.00 0.09 0.67

TYCF 0.00 0.00 0.08 1.91

TDBF 0.00 0.00 0.00 14.74TEOF 0.00 0.00 0.00 4.98

TIXF 0.00 0.00 0.00 0.53

TLSTF 0.00 0.00 0.10 2.07TSTBF 0.00 0.00 0.00 13.76

TFRF 0.00 0.00 0.00 0.90

TMPF 0.05 0.00 0.00 2.02

AS on 31/3/2005 Rs. in lacs

Scheme Tata Tata Share Taj Inv. & TataFinance Ltd Registry Ltd Finance Co. Ltd. Securities Ltd

TBF 0..04 0.04 0.00 1.09

TDBF 0.00 0.00 0.00 0.20

TDYF 0.00 0.00 0.00 7.52TEOF 0.00 0.01 0.00 2.22

TEQPEF 0.00 0.00 0.00 0.73

TFHF 0.00 0.00 0.00 6.67TFRSTF 0.00 0.03 0.00 5.06

TFRLTF 0.00 0.00 0.00 0.02

TGSF 0.00 0.04 0.00 8.95TGSMF 0.00 0.00 0.00 0.79

TGF 0.00 0.00 0.00 0.05

TIF 0.00 0.25 0.08 3.22TIPF 0.00 0.02 0.00 0.30

TIXF 0.00 0.00 0.00 0.01

TISF 0.00 0.00 0.00 4.92TLSTF 0.00 0.05 0.00 1.19

TLF 0.00 0.00 0.02 32.18

TMPF 0.00 0.00 0.05 0.65TMIF 0.00 0.04 0.00 2.86

TPEF 0.00 0.12 0.00 1.65

TSEF 0.00 0.08 0.00 0.89TSTBF 0.00 0.00 0.00 0.58

TTSF 0.00 0.05 0.00 0.30

TYCF 0.00 0.04 0.00 0.88


39

As on 31/10/2005 Rs. in lacs

Scheme Tata Tata Share TataFinance Ltd. Registry Ltd. Securities Ltd.

TBF 0.08 0.06 0.82TDBF 0.00 0.00 1.83TDYF 0.00 0.00 2.32TEOF 0.00 0.03 0.80TEQPEF 0.00 0.00 0.30TFHF 0.00 0.00 8.95TFHFS1 0.00 0.00 1.63TFF 0.00 0.00 1.20TFRSTF 0.00 0.00 8.64TFRLTF 0.00 0.07 0.01TGSF 0.00 0.03 3.63TGSMF 0.00 0.00 0.55TGF 0.00 0.00 0.11TIF 0.00 0.14 2.48TIPF 0.00 0.02 0.28TIXF 0.00 0.00 0.02TSEF 0.00 0.14 0.99TLSTF 0.00 0.00 1.25TLF 0.00 0.01 28.14TMPF 0.00 0.00 0.42TMIF 0.00 0.05 0.33TPEF 0.00 0.18 2.31TSTBF 0.00 0.00 3.67TTSF 0.00 0.08 0.50TISF 0.00 0.00 2.34TSIF 0.00 0.00 1.54TYCF 0.00 0.06 1.36TMCF 0.00 0.00 1.45

v. The following amounts were paid/provided for to Tata ShareRegistry Ltd., for utilization of their services as R&T Agent.

Rs.in lacs

Scheme As on As on As on31.03.03 31.03.04 31.03.05

TBF 4.37 – –

TYCF 6.82 – –

TTSF 2.37 – –

TSEF 1.33 – –

TIF 6.88 – –

TPEF 1.53 – –

TLSTF 0.94 – –

vi. Total percentage of broking business given and the brokeragepaid(and included in the cost of investments) to Associatebrokers is disclosed below. The brokerage paid to the Associatebrokers compare with that prevailing in the Capital market forbuying/selling of securities.

Rs. in Lacs

Name As on As on As on31.03.03 31.03.04 31.03.05

%ge Rs. %ge Rs. %ge Rs.

TataSecurities Ltd. 3.95 6.39 1.43 4.81 – –(Formerly Tata TDWaterhouse Securities Ltd.)

vii. The Fund has not undertaken any Underwriting obligationswith respect to any Public Issue of Associate Companies.During last 3 fiscal years the Fund has not subscribed to anyissue lead managed by an Associate Company

TBF : Tata Balanced FundTYCF : Tata Young Citizens’ FundTTSF : Tata Tax Saving FundTSEF : Tata Select Equity FundTIFR : Tata Income Fund (Regular Income Option)TIFA : Tata Income Fund (Appreciation Option)TPEF : Tata Pure Equity FundTLF : Tata Liquid FundTLSTF : Tata Life Sciences & Technology FundTGSFA : Tata Gilt Securities Fund (Appreciation Option)TGSFR : Tata Gilt Securities Fund (Regular Income Option)TSTBF : Tata Short Term Bond FundTGF : Tata Growth FundTIPF : Tata Income Plus FundTMIF : Tata Monthly Income FundTIFNA : Tata Index Fund NiftyTIFSA : Tata Index Fund SensexTEOF : Tata Equity Opportunities FundTDBF : Tata Dynamic Bond FundTGSF : Tata Gilt Securities FundTIXF : Tata Index FundTEQPEF : Tata Equity P/E FundTMPF : Tata MIP Plus FndTFRSTF : Tata Floating Rate Short Term FundTFRLTF : Tata Floating Rate Long Term FundTDYF : Tata Dividend Yield FundTISF : Tata Infrastructure FundTSIF : Tata Service Industries FundTFHFS1 : Tata Fixed Horizon Fund Series 1TMCF : Tata Mid Cap FundTFF : Tata Floater FundTCF : Tata Contra Fund


40

XV. BORROWING BY THE MUTUAL FUNDIn accordance with Regulation 44(2) of the SEBI (Mutual Funds)Regulations, 1996, to meet the temporary liquidity needs of theScheme for the purposes of Redemptions / redemptions or incomedistribution to the Unitholders, the Fund / Scheme may borrow fromany Body Corporate including TAML and Commercial Banks, notmore than 20% of the net assets of the Scheme on satisfactoryterms as to interest, security and collateral without encumberingits assets. The duration of such a borrowing shall not exceed aperiod of six months.

XVI. COMPUTATION OF NAV & VALUATION OF ASSETS

i. Computation & Determination of Net Asset Value

Net Asset Value (“NAV”) of the Units shall be determined daily asof the close of each Business Day on which the Bombay StockExchange is open for trading.

NAV shall be calculated in accordance with the following formula :

Market Value of Scheme’s Investments + Accrued Income+ Receivables + Other Assets + Unamortised portion ofnew fund offer expenses - Accrued Expenses - Payables -Other Liabilities

NAV= —————————————————————————-Number of Units Outstanding

The unamortised portion of new fund offer expenses will be includedin the calculation of NAV in accordance with the terms mentionedelsewhere in the Offering Circular.

The computation of Net Asset Value, valuation of Assets,computation of applicable Net Asset Value (related price) for ongoingSale, Redemption, Switch and their frequency of disclosure shallbe based upon a formula in accordance with the Regulations andas amended from time to time including by way of Circulars, PressReleases, or Notifications issued by SEBI or the Government ofIndia to regulate the activities and growth of Mutual Funds.

ii. NAV InformationThe Scheme’s NAV will be available on all Business Days at theAuthorised Investor Service Centres. The Fund will endeavour topublish the Scheme’s NAV on all Business Days in atleast 2 DailyNewspapers. Further the fund will also endeavour to publish thesale and Redemption price on all Business Days in atleast twoDaily Newspaper. In the event NAV cannot be calculated and / orpublished, such as because of the suspension of trading on theBombay Stock Exchange, during the existence of a state ofemergency and / or a breakdown in communications, the Board ofTrustees may temporarily suspend determination and / or publicationof the NAV of the Units.

NAV will also be updated on a daily basis on Association of MutualFund India (AMFI) website.

Sale Price = Applicable NAV *(1 + Sales Load, if any)

Repurchase Price = Applicable NAV *(1 - Exit Load, if any)

Example : if the applicable NAV is Rs. 10.00; sales/entry load is 2per cent and the exit/repurchase load is 2 per cent then the salesprice will be Rs. 10.20 and the repurchase price will be Rs. 9.80.

iii. Valuation of AssetsNAV of the Scheme as stated in the foregoing clause for“Computation & Determination of NAV” will be determined bydividing the net assets of the Scheme by the number of outstandingUnits on the valuation date.

Pursuant to Regulation 77 of the SEBI (Mutual Funds) Regulations,1996, the following investment valuation norms are applicable tothe Scheme:1. Traded Securities :

1. The securities shall be valued at the last quoted closingprice on the stock exchange.

2. When the securities are traded on more that onerecognised stock exchange, the securities shall be valuedat the last quoted closing price on the stock exchangewhere the security is actively traded. It would be left tothe AMC to select the appropriate stock exchange, butthe reasons for the selection should be recorded in writing.There should however be no objection for all scrips beingvalued at the prices quoted on the stock exchange wherea majority in value of the investments are principally tradedsuch as the National Stock Exchange (NSE) or The StockExchange, Mumbai (BSE).

3. Once a stock exchange has been selected for valuationof a particular security, reasons for change of theexchange shall be recorded in writing by the AMC.

4. When on a particular valuation day, a security has notbeen traded on the selected stock exchange; the valueat which it is traded on another stock exchange may beused.

5. When a security (other than Government Securities) isnot traded on any stock exchange on a particular valuationday, the value at which it was traded on the selected stockexchange or any other stock exchange, as the case maybe, on the earliest previous day may be used providedsuch date is not more than thirty days prior to valuationdate in case of equity and equity related instruments and15 days in case of debt securities.

2 Thinly Traded Debt Securities:

A debt security (other than Government Securities) shall beconsidered as a thinly traded & security, if on the valuation datethere are no individual trades in that security in marketable lots(current Rs. 5 crore) on any stock exchange.

A thinly traded debt security as defined above would be valuedas per the norms set for non-traded debt security.

3. Non Traded Securities :

When a debt security (other than Government Securities) is nottraded on any stock exchange for a period of 15 days prior tothe valuation date the scrip must be treated as a ‘non traded’security.

VALUATION OF NON-TRADED / THINLY TRADED SECURITIES

Non traded/ thinly traded securities shall be valued “in good faith” bythe asset management company on the basis of the valuationprinciples laid down below :

(i) (a) Non Traded /Thinly Traded Debt Securities of Upto 182Days to Maturity :

As the money market securities are valued on the basis ofamortization (cost plus accrued interest till the beginning of the dayplus the difference between the redemption value and the cost spreaduniformly over the remaining maturity period of the instruments) thesame process should be adopted for non-traded debt securities withresidual maturity of upto 182 days, in the absence of any otherstandard benchmarks in the market. All other non traded NonGovernment debt instruments should be valued using the methodsuggested in (ii)(b) hereof.

(i) (b) Non Traded/ Thinly Traded Debt Securities of Over 182Days to Maturity.For the purpose of valuation, all Non Traded Debt Securities wouldbe classified into “Investment grade” and “Non Investment grade”securities based on their credit ratings. The non-investment gradesecurities would further be classified as “Performing” and “NonPerforming” assets

All Non Government investment grade debt securities, classifiedas not traded, shall be valued on yield to maturity basis asdescribed below.


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All Non Government non investment grade performing debtsecurities would be valued at a discount of 25% to the facevalue

All Non Government non investment grade non performing debtsecurities would be valued based on the provisioning norms.

Valuation of non-traded/thinly traded debt securities with floatingrate of interest Non Traded/ Thinly Traded Floating rate DebtSecurities upto 182 Days to the Interest Reset Date / Maturity:

The non-traded / thinly traded floating rate debt securities with upto182 days to the next reset date/maturity will be valued at amortization(cost plus accrued interest till the beginning of the day plus thedifference between the redemption value and the cost spreaduniformly over the remaining interest reset period of the instruments)in the absence of any other standard benchmarks in the market.

Non Traded/ Thinly Traded Floating rate Debt Securities of over182 Days to Maturity/Interest Reset Date:

Non traded/ Thinly traded Floating rate debt securities over 182 Daysto the next reset date shall be first classified into ‘Investment grade’and ‘Non-Investment grade’ securities based on their credit ratings.The non-investment grade securities shall be further classified as‘Performing’ and ‘Non- Performing’ assets. The securities shall bevalued on the basis of the valuation principles laid down in the SEBIcircular no.MFD/CIR/8/92/2000 dated September 18, 2000 asamended from time to time in the absence of any other guidelinesfrom SEBI for the valuation of such floating rate debt instruments.

Ø All such floating rate Non Government investment grade debtsecurities, classified as not traded/thinly traded, shall be valuedon yield to next reset date basis based on the yield to maturitybasis as described in the SEBI circular no.MFD/CIR/8/92/2000dated September 18, 2000.

Ø All Non Government non investment grade performing floatingrate debt securities would be valued at a discount of 25% to theface value.

Ø All Non Government non investment grade non performingfloating rate debt securities would be valued based on theprovisioning norms.

Floating Rate Debt Securities with Put/Call options

The floating rate debt securities with put /call options shall be valuedin terms of the Valuation Guidelines specified above taking intoconsideration the next interest rate reset date instead of the finalmaturity date, in the absence of any other guidelines from SEBI.

The approach in valuation of non traded debt securities is based onthe concept of using spreads over the benchmark rate to arrive atthe yields for pricing the non traded security.

The Yields for pricing the non traded debt security would be arrivedat using the process as defined below.

Step AA Risk Free Benchmark Yield is built using the government securities(GOI Sec) as the base. GOI Secs are used as the benchmarks asthey are traded regularly; free of credit risk; and traded across differentmaturity spectrums every week.

Step B

A Matrix of spreads(based on the credit risk) are built for marking upthe benchmark yields. The matrix is built based on traded corporatepaper on the wholesale debt segment of an appropriate stockexchange and the primary market issuances. The matrix is restrictedonly to investment grade corporate paper.

Step CThe yields as calculated above are Marked-up/Marked-down for ill-liquidity risk

Step D

The Yields so arrived are used to price the portfolio

METHODOLOGY

A. Construction of Risk Free Benchmark

Using Government of India dated securities, the Benchmarkshall be constructed as below :

Government of India dated securities will be grouped intothe following duration buckets viz., 0.5-1 years, 1-2 years,2-3 years, 3-4 years, 4-5 years, 5-6 years and 6 years andthe volume weighted yield would be computed for eachbucket. Accordingly, there will be a benchmark YTM foreach duration bucket.

The benchmark as calculated above will be set weekly,and in the event of any change in the Reserve Bank ofIndia (RBI) policies affecting interest rates during the week,the benchmark will be reset to reflect any change in themarket conditions.

Note : The concept of duration over tenor has been chosenin order to capture the reinvestment risk. It is intended togradually move towards a methodology that incorporatesthe continuous curve approach for valuation of suchsecurities. However, in view of the current lack of liquidityin the corporate bond markets, a continuous curveapproach to valuation would be necessarily based onlimited data points, and this would result in out of linevaluations. As an interim methodology therefore it isproposed that the Duration Bucket approach be adoptedand continuously tracked in order to fine tune the durationbuckets on a periodic basis. Over the next few years it isexpected that with the deepening of the secondary markettrading, it would be possible to make a gradual move fromthe Duration Bucket approach towards a continuous curveapproach.

B . Building a Matrix of Spreads for Marking-up the BenchmarkYield

Mark up for credit risk over the risk free benchmark YTM ascalculated in step A, will be determined using the trades ofcorporate debentures/bonds of different ratings. All trades onappropriate stock exchange during the fortnight prior to thebenchmark date will be used in building the corporate YTM andspread matrices. Initially these matrices will be built only forcorporate securities of investment grade. The matrices aredynamic and the spreads will be computed every week. Thematrix will be built for all duration buckets for which thebenchmark GOI matrix is built to effectively link the corporatematrix with the GOI securities matrix. Accordingly:

All traded paper (with minimum traded value of Rs. 1 crore)will be classified by their ratings and grouped into 7 durationbuckets; for rated securities, the most conservative publiclyavailable rating will be used;

For each rating category, average volume weighted yieldwill be obtained both from trades on the appropriate stockexchange and from the primary market issuances

Where there are no secondary trades on the appropriatestock exchange in a particular rating category and noprimary market issuances during the fortnight underconsideration, then trades on appropriate stock exchangeduring the 30 day period prior to the benchmark date willbe considered for computing the average YTM for suchrating category;

If the matrix cannot be populated using any or all of theabove steps, then credit spreads from trades on appropriatestock exchange of the relevant rating category over theAAA trades will be used to populate the matrix;


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In each rating category, all outliers will be removed forsmoothening the YTM matrix;

Spreads will be obtained by deducting the YTM in eachduration category from the respective YTM of the GOIsecurities;

In the event of lack of trades in the secondary market andthe primary market the gaps in the matrix would be filledby extrapolation. If the spreads cannot be extrapolated forthe reason of practicality, the gaps in the matrix will befilled by carrying the spreads from the last matrix.

C. Mark-up/Mark-down Yield

The Yields calculated would be marked-up/marked –down toaccount for the ill-liquidity risk, promoter background, financecompany risk and the issuer class risk. As the level of ill-liquidityrisk would be higher for non rated securities the marking processfor rated and non rated securities would be differentiated asfollows

C(I) Adjustments for Securities rated by external rating agencies

The Yields so derived out of the above methodology could beadjusted to account for risk mentioned above.

A Discretionary discount/premium of upto +100/-50 BasisPoints for securities having a duration of upto 2 years andupto +75/- 25 Basis Points for securities having duration higherthan 2 years will be permitted to be provided for the abovementioned types of risks. The rationale for the above discountstructure is to take cognizance of the differential interest raterisk of the securities. This structure will be reviewedperiodically.

C (II) Adjustments for Internally Rated Securities

To value an un-rated security, the fund manager has to assignan internal credit rating, which will be used for valuation. Sinceun-rated instruments tend to be more illiquid than ratedsecurities, the yields would be marked up by adding +50 basispoint for securities having a duration of upto two years and+25 basis point for securities having duration of higher thantwo years to account for the illiquidity risk.

Valuation of securities with Put/Call Options

The option embedded securities would be valued as follows:Securities with call option :

The securities with call option shall be valued at the lower of thevalue as obtained by valuing the security to final maturity and valuingthe security to call option.

In case there are multiple call options, the lowest value obtained byvaluing to the various call dates and valuing to the maturity date is tobe taken as the value of the instrument.

Securities with Put option

The securities with put option shall be valued at the higher of thevalue as obtained by valuing the security to final maturity and valuingthe security to put option

In case there are multiple put options, the highest value obtained byvaluing to the various put dates and valuing to the maturity date is tobe taken as the value of the instruments.

Securities with both Put and Call option on the same day.

The securities with both Put and Call option on the same day wouldbe deemed to mature on the Put/Call day and would be valuedaccordingly.

(ii) (c) Government securities Government securities will be valuedat prices released by an agency suggested by AMFI.

(iii) Liquid Securities :

(a) Aggregate value of “illiquid securities” of scheme, which are

defined as non-traded, thinly traded and unlisted equity shares,shall not exceed 15% of the total assets of the scheme and anyilliquid securities held above 15% of the total assets shall beassigned zero value.

Provided that in case any scheme has illiquid securities in excessof 15% of total assets as on September 30, 2000 then such ascheme shall within a period of two years bring down the ratioof illiquid securities within the prescribed limit of 15% in thefollowing time frame:

(i) all the illiquid securities above 20% of total assets of thescheme shall be assigned zero value on September 30,2001.

(ii) All the illiquid securities above 15% of total assets of thescheme shall be assigned zero value on September 30,2002.

(b) All funds shall disclose as on March 31 and September 30 thescheme-wise total illiquid securities in value and percentage ofthe net assets while making disclosures of half yearly portfoliosto the unitholders. In the list of investments, an asterisk markshall also be given against all such investments which arerecognised as illiquid securities.

(c) Mutual Funds shall not be allowed to transfer illiquid securitiesamong their schemes w.e.f. October 1, 2000.

(d) In respect of closed ended funds, for the purposes of valuationof illiquid securities, the limits of 15% and 20% applicable toopen-ended funds should be increased to 20% and 25%respectively.

(e) Where a scheme has illiquid securities as at September 30,2000 not exceeding 15% in the case of an open-ended fundand 20% in the case of closed fund, the concessions of givingtime period for reducing the illiquid security to the prescribedlimits would not be applicable and at all time the excess over15% or 20% shall be assigned nil value.

Valuation of Money Market Instruments:

Investments in call money, bills purchased under rediscountingscheme and short term deposits with banks shall be valued at costplus accrual; other money market instruments shall be valued at theyield at which they are currently traded. For this purpose, non-tradedinstruments that is instruments not traded for a period of seven dayswill be valued at cost plus interest accrued till the beginning of theday plus the difference between the redemption value and the costspread uniformly over the remaining maturity period of theinstruments.

Valuation of Derivative Product:

1. The traded derivative shall be valued at market price inconformity with the stipulations of sub clauses (I) to (V) of clause1 of the eighth Schedule to the Securities and Exchange Boardof India (Mutual Funds) Regulations, 1996, as amended by SEBIcircular no. MFD/CIR/8/92/2000 dated September, 18, 2000.

2. The valuation of untraded derivatives shall be done inaccordance with the valuation method for untraded investmentsprescribed in sub clauses (I) and (II) of clause 2 of the EighthSchedule to the Securities and Exchange Board of India (MutualFunds) Regulations, 1996, as amended by SEBI circular no.MFD/CIR/8/92/2000 dated September, 18, 2000.

XVII. REPURCHASE, RESALE & SWITCH OF UNITS

i. Relevant NAV for Repurchase, Resale & Switch of Units

For Long Term Plan

The relevant NAV for Repurchase, Sale, Switch will be the closingNAV of the business day of receipt of the Repurchase/Switch/Salerequest provided. The date of receipt of a request for fresh Sale,Repurchase, Switch will be the actual business day of the Mail


43

receipt at any of the Authorised Investor Service Centers stated inthis offering circular and / of in-person request if received upto3.00pm on any business day.

Valid application for “switch out” shall be treated as redemptionand for “switch in” shall be treated as purchases and therelevant NAV for “switch in” and “switch out” shall be applicableaccordingly.

Outstation cheques/demand drafts will not be accepted at centersother than at Mumbai.

Relevant NAV for subscription application received along with andoutstation cheque/demand draft will be NAV of the closing of theday on which cheque/demand draft is credited to account.

Relevant NAV For Short Term Plan and Short Term InstitutionalPlan

Subscription

Application received upto 1 p.m. on any business day – closing NAVof the day immediately previous to the day on which funds are availablefor utilization.

Application received after 1 p.m. by the Mutual Fund and the fundsare available for utlisation by the fund on the same day -closing NAV of the day immediately previous to the next businessday.

RepurchaseIn respect of repurchase requests received upto 10 a.m. on anybusiness day – closing NAV of the previous day.

In respect of repurchase requests received after 10 a.m. on anybusiness day - closing NAV of the day immediately previous to thenext business day.

Switch TransactionsValid application for “switch out” shall be treated as redemptionand for “switch in” shall be treated as purchases and the relevantNAV of “Switch in” and “Switch Out” shall be applicableaccordingly.

Above cut off timings shall also be applicable to investmentsmade through ‘Sweep‘modeOutstation cheques/demand drafts will not be accepted at centersother than Mumbai.

Relevant NAV for subscription application received along with andoutstation cheque/demand draft will be NAV of the closing of the dayon which cheque/demand draft is credited to account.

ii. Repurchase of Units of Tata Floating Rate FundRequests for repurchase can be submitted after initial lock-in periodon any Business Days of the Month, at our Authorised ServiceCentres(mentioned in this Offer Document). The repurchase requestcan be made for a minimum of Rs. 1000/- / 100 units or in multiplesof Rs.1000/- / 100 Units or for all the Units. The Units will berepurchased (sold back to the Fund) at the relevant NAV (as statedin the foregoing clause(s) for “Relevant NAV for repurchase, resale &switch of units”), less any administrative cost and other chargestermed as Repurchase Load and which shall be the applicableRepurchase price / NAV related price. The repurchase price will bein accordance with Regulation 49(3) of the Securities & ExchangeBoard of India (Mutual Funds) Regulations, 1996, which shall not belower than 93% of the NAV and further that the difference betweenthe sale and repurchase price shall not exceed 7% calculated on thesale price. The Trustee Company may however, from time to timereview and modify the repurchase load for each choice of investmentas stated in the foregoing clause on “Unitholder TransactionExpenses”. The Units if partially repurchased would be subtractedfrom the Unit balance of that Unitholder on “First In First Out” basisi.e. the Units that were offered / allotted first would be the first to berepurchased. In case amount is withdrawn, the same will be convertedinto Units at the applicable Repurchase price / NAV related price and

the number of Units so arrived at will be subtracted from the Unitbalance of that Unitholder on “First In First Out” basis. The repurchasewould be permitted to the extent of credit balance in the Unitholder’saccount.

The repurchase cheque will be issued in the name of the firstunitholder. Under normal circumstances, the Fund will ensure thatthe repurchase cheques are despatched within ten business daysfrom the date of receipt of the repurchase request. In the event ofpartial repurchase, the Fund shall despatch the revised AccountStatement for the balance number of Units still being held by theUnitholder along with the repurchase cheque. Credit balances in theaccount of a Non- Resident Unitholder on maturity or otherwise,(where RBI final approval and any other approval (if any required)has been obtained) may be repurchased by the Fund by suchUnitholder in accordance with the procedure described above andalso subject to any procedures laid down by RBI and any other agency.Such repurchase proceeds will be paid by means of a Rupee chequepayable to the NRE/ NRO account of the Unitholder or subject to RBIprocedures and approvals, such payment in Indian Rupees will beconverted into US Dollars or into any other currency, as may bepermitted by RBI, at the rate of exchange prevailing at the time ofremittance and will be despatched at the applicants’ risk, or at therequest of the applicants’ will be credited to their NRE/ NRO Accounts,details of which are to be furnished in the space provided for thispurpose in the Repurchase Form. The Fund will not be liable for anydelays or for any loss on account of exchange fluctuations, whileconverting the rupee amount in US Dollar or any other currency. TheFund (if required) may also make arrangements to obtain RBIapprovals on a case-by-case basis on behalf o the Unitholder, subjectto the Unitholder providing the Fund with the necessary documentsrequired.

iii. Possible Deferral of Repurchase Requests and CompulsoryRepurchase

Whilst every effort will be made to ensure that the Scheme will havesufficient liquidity to enable the repurchase cheques to be collected/despatched within the deadline stated in the foregoing Clause,Unitholders should note that where the Scheme is obliged to arrangefor the disposal of the underlying securities / borrow, in order to satisfyredemption / repurchase requests, Unitholders may experience somedelays in receiving repurchase cheques, reflecting the time involvedin settling the underlying sales of securities / borrowing. However, inany case, the Fund will ensure that the collection/despatch ofrepurchase cheques is not delayed beyond ten working days (whenTMF is open for business) from the date of receipt of the repurchaserequest in accordance with Regulation 53(b) of the SecuritiesExchange Board of India (Mutual Funds) Regulations, 1996.

The Fund may mandatorily redeem all the Units of any Unitholder:

if the value of the account falls below the minimum Accountbalance of Rs.10,000/- (based on prevailing NAV) and / or 1000Units in the normal repurchase/switch and the unitholders failsto invest sufficient funds or to purchase sufficient units to bringthe value of the account upto the minimum level within 30 daysafter a written intimation in this regard is sent by the fund to thatunitholder; or

where the Units are held by a Unitholder in breach of anyregulations.

iv. Centres where repurchase/resale/switch requests can begiven :

1. Authorised Investor Service Centres :For the list of Authorised Investor Service Centres, please refer tothe Back Cover Page of this Offering Circular.

All locations from where an empanelled distributor of the AMCis empowered and able to use the transaction screens providedby the Registrar, in association with the banking facilities offeredby the AMC, in accordance with procedures laid out by and


44

agreed with our Registrar, to submit electronic transactionswithin the cutoff time.

v. Sale of Units on an ongoing basisRequests for fresh Units can be submitted on any business day ofthe month at our Authorised Investor Service Centres, by filling inthe prescribed form. Unitholders can also subscribe additional Unitsunder their existing Folio. Fresh subscription of Units will be at therelevant NAV (as stated in the foregoing clauses(s) for “RelevantNAV for Repurchase / Resale & Switch of Units”) plus a Sales Load,which shall be the applicable sale price. The Offer price / NAV relatedprice will be accordance with Regulation 49(3) of the Securities &Exchange Board of India (Mutual Funds) Regulations, 1956, whichshall not be higher than 107% of the NAV and further that thedifference between the sale and repurchase price shall not exceed7% calculated on the sale price. The Trustee company may however,from time to time review and modify the sale load for each choice ofinvestment as stated in the foregoing clause on “UnitholderTransaction Expenses”.

Sale on an ongoing basis by any investor shall individually be for aminimum of Rs.10,000/- and in multiples of Re. 1/- thereafter.Additional subscription by an existing unitholder it shall be for Rs.1,000/- and in multiples of Re. 1/- or as may be decided by the AssetManagement Company / Trustee Company from time to time. TheTrustee Company may however stipulate a different minimum amountper application for members of co-operative society, etc. Requestsfor Sale of Units on an ongoing basis can be made only by specifyingthe amount to be invested and not the number of Units in theprescribed form. The total number of Units will be determined withreference to the applicable sale price, and fractional Units may becreated. Fractional Units will be computed and accounted for uptothree decimal places. Units will be allotted on the date of receipt /realisation of cheque (deemed date of allotment). A (fresh) AccountStatement will be despatched to the address as indicated in theprescribed form by the investor, reflecting the updated holding of theUnitholder normal circumstances, the Account Statement will bedespatched after five Business Days or after clearance of cheque(whichever is later). However, the despatch of Account Statementshall bot be delayed beyond six weeks from the date of receipt ofrequest from the unitholder as per Regulation 36 of SEBI Regulations.

vi. Spread between Sale and Repurchase PriceThe spread between the sale and repurchase price will be inaccordance with Regulation 49(3) of the Securities & Exchange Boardof India (Mutual Funds) Regulations, 1996. Accordingly, therepurchase price shall not be lower than 93% of the NAV while thesale price shall not be higher than 107% of the NAV and further thatthe difference between the sale and repurchase price shall not exceed7% calculated on the Sale price. Please also refer to the Clause on“Unitholder Transaction Expenses”.

vii. Switch of Units within the Funds / Schemes / Plans of TataMutual Fund

After the reopening of the scheme, Unitholders under Tata FloaterFund may exchange their Units for Units of the other Funds/ Schemes/ Plans in Tata Mutual Fund (the existing Funds / Schemes / Plansand others as may be announced / launched from time to time) onthe basis of the terms / rules / Regulations / provisions prevalent forthe relevant Funds / Schemes / Plans, of the respective Units (of therelevant Funds / Schemes / Plans) to be exchanged.

Requests for switch may be submitted on any Business Day of theMonth, at our Authorised Investor Service Centres. The Units will beswitched at the relevant NAV (as stated in the foregoing clause(s) for“Relevant NAV for repurchase / resale & switch of units”), plus anyadministrative cost and other charges and which shall be theapplicable resale / NAV related price. The Units thus switched wouldbe subtracted from the Unit balance of that Unitholder on “First InFirst Out” basis i.e. the Units that were offered / allotted first wouldbe the first to be switched unless otherwise indicated by unitholders.

In case amount is switched the same will be converted into Units atthe applicable resale / NAV related price and the number of Units soarrived at will be subtracted from the Unit balance of that Unitholderon “First In First Out” basis unless otherwise instructed by theUnitholder. The minimum amount / number of Units that may beexchanged for amount / Units of the other Funds / Schemes / Plansin Tata Mutual Fund will be the minimum amount / number of Unitsas applicable to the relevant Funds / Schemes / Plans to be exchangedof this Scheme.

Unitholder should note that each exchange represents the sale ofUnits from one Scheme (which may produce a capital gains or loss)and the purchase of Units in another Scheme and for NRI/ FIIunitholder is also subject to any final approval and procedures laiddown by RBI and any other agency (if any).

viii. Suspension of ongoing Sale, Repurchase or Switch of Units

The ongoing sale, repurchase or switch of Units may besuspended temporarily or indefinitely under any of the followingcircumstances:

Stock markets stop functioning or trading is restricted.

Periods of extreme volatility in the capital / stock markets, whichin the opinion of the Asset Management Company is prejudicialto the interests of the Unitholders.

A complete breakdown or dislocation of business in the majorfinancial markets.

Natural calamities.

Declaration of war or occurrence of insurrection, civil commotionor any other serious or sustained financial, political or industrialemergency or disturbance.

SEBI, by order, so directs.

On a requisition made by three-fourths of the Unitholders.

The Fund also reserves the right, to withdraw sale of Units in theScheme temporarily or indefinitely, if the Asset ManagementCompany / Trustee Company views that increasing the Scheme’ssize further may prove detrimental to the existing/new Unitholders ofthe Scheme. An offer for fresh subscription of Units is not binding onand may be rejected by the Asset Management Company / TrusteeCompany, unless it has been confirmed in writing by the AssetManagement Company / Trustee Company and payment has beenreceived.

Suspension of repurchase facility under the scheme shall be madeapplicable only after the approval from the Board of Directors of theAMC and Trustee Company. The approval from the AMC & TrusteeCompany Boards giving details of circumstances and justificationfor the proposed actions shall be informed to SEBI in advance.

ix. Unclaimed Redemption/Dividend AmountThe unclaimed Redemption amount and Dividend amount may bedeployed by the Mutual Fund in Call Money Market or Money MarketInstruments only and the investor who claims these amounts duringa period of three years from the due date shall be paid at the prevailingNet Asset Value. After a period of three years, this amount will betransferred to a pool account and the investor can claim the amountat NAV prevailing at the end of third year. The income on such fundswill be used for the purpose of investor education. The AMC willmake continuous efforts to remind the investors through letters totake their unclaimed amount. Further, the investment managementfee charged by the AMC for managing unclaimed amounts shall notexceed 50 basis points.

XVIII. ACCOUNTING POLICIES

i. Accounts and Audit

TAML will keep and maintain the books of accounts, records anddocuments for the Scheme so as to explain its transactions and to


45

disclose the financial position of the Scheme. The Board of TAMLshall arrange for the financial statements of the Scheme to beaudited as of every 31st March and shall prepare an annual reportand annual statement of account. The Board of TTCPL shall havethe financial statements for the Scheme audited by such CharteredAccountant(s) as may be appointed for that purpose by the TrusteeCompany. S.B.Billimoria & Co. Chartered Accountants, have beenappointed in such capacity.

Pursuant to Regulation 50 of the SEBI (Mutual Funds) Regulations,1996, the following accounting policies are applicable to the Scheme:

a) For the purposes of the financial statements, the Fund shallmark all investments to market and carry investments in thebalance sheet at market value. However, since the unrealisedgains arising out of appreciation on investments cannot bedistributed, provision shall be made for exclusion of this itemwhen arriving at distributable income.

b) In respect of all interest-bearing investments, income shall beaccrued on a day to day basis as it is earned. Therefore whensuch investments are purchased, interest paid for the periodfrom the last interest due date upto the date of purchase shallnot be treated as a cost of purchase but shall be debited toInterest Recoverable Account. Similarly, interest received at thetime of sale for the period from the last interest due date uptothe date of sale shall not be treated as an addition to sale valuebut shall be credited to Interest Recoverable Account.

c) In determining the holding cost of investments and the gains orloss on sale of investments, the “average cost” method shall befollowed.

d) Transactions for purchase or sale of investments shall berecognised as of the trade date and not as of the settlementdate, so that the effect of all investments traded during a financialyear are recorded and reflected in the financial statements forthat year. Where investment transactions take place outsidethe Stock Market, for example, acquisitions through privateplacement or purchases or sales through private treaty, thetransaction would be recorded, in the event of a purchase, asof the date on which the Scheme obtains any enforceableobligation to pay the price or, in the event of a sale, when theScheme obtains an enforceable right to collect the proceeds ofsale or an enforceable obligation to deliver the instruments sold.

e) Where income receivable on investments has been accruedand has not been received for a period of 3 months beyond thedue date, provision shall be made by debit to the revenueaccount for the income so accrued and no further accrual ofincome shall be made in respect of such investment.

f) When in the case of an open-ended Scheme (like the presentScheme) Units are sold, the difference between the sale priceand the face value of the Unit, if positive, shall be credited toreserves and if negative shall be debited to reserves, the facevalue being credited to Capital Account. Similarly, when inrespect of such a Scheme (like the present Scheme), Units arerepurchased, the difference between the purchase price andface value of the Units, if positive shall be debited to reservesand if negative, shall be credited to reserves, the face valuebeing debited to the Capital Account.

g) In the case of an open-ended Scheme (like the presentScheme), when Units are sold an appropriate part of the saleproceeds shall be credited to an Equalisation Account and whenUnits are repurchased an appropriate amount shall be debitedto Equalisation Account. The net balance on this account shouldbe credited or debited to the Revenue Account. The balance onthe Equalisation Account debited or credited to the RevenueAccount should not decrease or increase the net income of theFund but is only an adjustment to distributable surplus. It shalltherefore be reflected in the Revenue Account only after thenet income of the Fund is determined.

h) The cost of investments acquired or purchased would includebrokerage, stamp charges and any charge customarily included

in the broker’s bought note. In respect of privately placed debtinstruments any front-end discount offered should be reducedfrom the cost of the investment.

i) To provide appropriate details of the Schemewise deploymentof the assets of the Fund, certain accounting policies andstandards in accordance with the appropriate guidance notesissued by the Institute of Chartered Accountants of India maybe adopted by TAML, and amended from time to time. TheTrustee Company/ TAML may alter these above statedaccounting policies and standards from time to time, and alsoto the extent the guidance notes issued by the Institute ofChartered Accountants of India, and the SEBI (Mutual Funds)Regulations, 1996 change, so as to permit the Scheme to givea true and fair view of its state of affairs. As such the accountingpolicies and standards, and the preparation of the annual reportand annual statement of account of the Scheme will be inaccordance with SEBI (Mutual Funds) Regulations, 1996,including Schedule IX and XI thereof.

XIX. TAX TREATMENT OF INVESTMENTS IN MUTUAL FUNDS

Certain tax benefits as described below are available, under presenttaxation laws to the Unitholders holding the Units as an investment.The information set out below is included for general informationpurposes only and does not constitute legal or tax advice. In viewof the individual nature of the tax consequences, each investor isadvised to consult his or her own tax consultant with respect tospecific tax implications arising out of their participation in theScheme. Income Tax benefits to the mutual fund and to theunitholder is in accordance with the prevailing tax laws as certifiedby S.B. Billimoria & Co., Chartered Accountants, the Auditors ofthe Scheme.

i. TAX BENEFITS TO THE MUTUAL FUND

Tata Mutual Fund is a Mutual Fund registered with the Securitiesand Exchange Board of India and hence the entire income of theFund will be exempt from income-tax in accordance with theprovisions of Section 10(23D) of the Income-tax Act, 1961 (the Act).

The Fund is entitled to receive all income without any deduction oftax at source under the provisions of Section 196(iv), of the Act.

However, as per the taxation laws in force, read with Chapter VII ofthe Finance (No. 2) Act, 2004 pertaining to Securities TransactionTax (STT), it is provided that on income distribution, if any, made bythe Fund, on or after 1 April, 2004, to its Unitholders, beingIndividuals and Hindu Undivided Family, income-tax will be payableunder Section 115R of the Act, at the rate of 14.025 % (inclusive ofsurcharge and additional surcharge called Education Cess onincome-tax), and to other Unitholders at the rate of 22.44% (inclusiveof surcharge and additional surcharge called Education Cess onincome-tax), except, inter alia, in the case of open-ended equity-oriented funds, (i.e. such fund where the investible funds are investedby way of equity shares in domestic companies to the extent ofmore than 50% of the total proceeds of such Fund), where no suchtax will be payable.

ii. TAX BENEFITS TO THE UNITHOLDERS

Income Tax

All Unitholders

Income received in respect of units of a mutual fund, where incomedistribution is made on or after 1 April, 2003, would be exempt fromincome-tax in the hands of the unitholders under Section 10(35) ofthe Act.

Tax Deduction at Source

All Unitholders

In view of the exemption of income in the hands of the unitholders, noincome tax is deductible at source, on income distribution by the MutualFund, under the provisions of Sections 194K and 196A of the Act.


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iii. Capital Gains Tax

All Unitholders

Under Section 10(38) of the Act, capital gains arising on transfer ofa long-term capital asset held for a period of more than twelvemonths, inter alia, being a unit of an equity-oriented fund (as definedtherein) would be exempt from income-tax, if sale of such unit ismade on or after 1st October, 2004, and such transaction has beenchargeable to securities transaction tax under Chapter VII of theFinance (No. 2) Act, 2004 pertaining to Securities Transaction Tax(STT). The Finance Act, 2005 has increased the STT rates from0.15% to 0.20% on sale of units to the mutual fund and from 0.075%to 0.10% for delivery-based sale through stock exchange.

Under Section 54EC of the Act and subject to the conditions specifiedtherein, taxable capital gains, arising on transfer of a long- termcapital asset, shall not be chargeable to tax to the extent such capitalgains are invested in certain notified bonds within six months fromthe date of transfer. No deduction from the amount of income withreference to such investment shall be allowed under section 80Cafter the 1st day of April 2005.

Under Section 54ED of the Act and subject to the conditions specifiedtherein, taxable capital gains (subject to the exemption of long-termcapital gains provided for in section 10(38) of the Act, discussedelsewhere in this Statement) arising from transfer of long termassets, inter alia, being listed securities or units shall not bechargeable to tax to the extent such gains are invested in acquiringequity shares forming part of an “eligible issue of share capital”within six months from the date of transfer of the long-term assets.Eligible issue of share capital has been defined as an issue of equityshares which satisfies the following conditions:

the issue is made by a public company formed andregistered in India; and

the shares forming part of the issue are offered forsubscription to the public.

No deduction from the amount of income with reference to suchinvestment shall be allowed under section 80C after the 1st day ofApril 2005.

Under Section 54F of the Act and subject to the conditions specifiedtherein, in the case of an individual or a HUF, capital gains (subjectto the exemption of long-term capital gains provided for in section10(38) of the Act, discussed elsewhere in this Statement) arisingon transfer of a long term capital asset (not being a residential house)are not chargeable to tax if the entire net consideration received onsuch transfer is invested within the prescribed period in a residentialhouse. If part of such net consideration is invested within theprescribed period in a residential house, then such gains would notbe chargeable to tax on a proportionate basis. For this purpose, netconsideration means full value of the consideration received oraccruing as a result of the transfer of the capital asset as reducedby any expenditure incurred wholly and exclusively in connectionwith such transfer.

The following amounts would be deductible from the full value ofconsideration, to arrive at the amount of capital gains :

cost of acquisition of Units (excluding the Securities TransactionTax, if any paid on acquisition) as adjusted by Cost InflationIndex notified by the Central Government in case of long termcapital gain, and

expenditure incurred wholly and exclusively in connection withsuch transfer.

Under the provisions of Section 94(7) of the Act, loss arising onacquisition/sale/transfer of Units, which are acquired/sold/transferswithin three months prior/after the record date (i.e. the date fixed bythe Mutual Fund for the purposes of entitlement of the Unitholdersto receive the income or additional units without any consideration,

as the case may be) and sold within nine months after the recorddate, shall be ignored for the purpose of computing incomechargeable to tax to the extent of exempt income received orreceivable on such Units.

Under the provisions of Section 94(8) of the Act, where units whichare bought and additional units are allotted without any paymentwithin three months prior to the record date, which are sold withinnine months after the record date, the loss arising on sale on suchunits bought shall be ignored for the purpose of computing incomechargeable to tax and such loss shall be treated as the cost ofacquisition of such additional units.

Foreign Institutional Investors

Long-term capital gains on sale of Units, other than units of anequity oriented fund referred to above, would be taxed at the rateof 10% under Section 115AD of the Act. Such gains, would becalculated without indexation of cost of acquisition.

Short-term capital gains on sale of units of an equity-oriented fundarising after 1 October 2004, would also be taxable under Section111A of the Act, at the rate of 10% if the sale of such unitschargeable to securities transaction tax. Other short-term capitalgains would be taxed at the rate of 30% (subject to the concessionalrate of tax provided for in Section 111A of the Act, discussedelsewhere in this Statement).

The above tax rates would be increased by applicable surcharge,in case of, non-corporate Unitholders, at the rate of 10% thereof,where their income exceeds Rs.10,00,000/- and at the rate of 2.5%thereof in case of all corporate Unitholders.

In all cases, additional surcharge at 2%, called Education Cess,will be levied on the aggregate of tax and applicable surcharge, socalculated.

Other Unitholders

Long-term capital gains in respect of Units, other than units of anequity oriented fund referred to above, held for a period of morethan twelve months, will be chargeable under Section 112 of theAct, at concessional rate of tax, at the rate of 20%, as increasedby the applicable surcharge. An additional surcharge at the rate of2%, called Education Cess, on the aggregate of tax and surchargeis to be levied under the Finance Act.

In case of resident Individuals and Hindu Undivided Families, wheretaxable income, as reduced by long-term capital gains, is belowthe basic exemption limit, the long-term capital gains will be reducedto the extent of the shortfall and only the balance long-term capitalgains will be subjected to the flat rate of income tax (plus applicablesurcharge and education cess).

However, where the tax payable on such long-term capital gains,computed before indexation, exceeds 10%, as increased by theapplicable surcharge and additional surcharge, being EducationCess, as provided by the Finance Act, of the amount of capitalgains, such excess tax shall not be payable by the unitholder.

Short-term capital gains in respect of all Units, held for a period ofnot more than twelve months, will be aggregated with other incomeand taxed at rates of tax, including surcharge, applicable to normalincome. However Section 111A, provides that such gains, in respectof equity oriented fund, will be taxable only at 10% as increased bythe applicable surcharges, if such gains arise after 1st October,2004, and the sale of unit has been chargeable to the securitiestransaction tax.

Tax Deduction at Source

Domestic Unitholders

No income tax is deductible at source from income by way of capitalgains under the present provisions of the Act However, the


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provisions of section 195 of the Act may apply to non-residents(other than Foreign Institutional Investors and long-term capital gainsexempt under section 10(38) of the Act).

Foreign Institutional Investors

Under Section 196D of the Act, no deduction shall be madefrom any income by way of capital gains, in respect of transferof securities referred to in Section 115AD of the Act.

Other Non-resident Unitholders

Part II of the First Schedule to the Act, provides for deduction of taxat source from taxable capital gains at the rate of 20%, where theyrelate to long-term capital gains unless a lower withholding taxcertificate is obtained from the tax authorities, and at the marginalrates, viz. at 30% in case of non-corporate Unitholders unless alower withholding tax certificate is obtained from the tax authorities,and at the rate of 40% unless a lower withholding tax certificate isobtained from the tax authorities, in case of foreign corporateUnitholders, in case of short-term capital gains. Surcharge onincome-tax will be levied at the rate of 10%, on such tax, in respectof non-corporate Unitholders, where their income exceedRs.10,00,000/- and at the rate of 2.5% thereof in case of all corporateUnitholders. An additional surcharge at the rate of 2% is also to belevied under the Finance Act in all cases on the aggregate of taxand surcharge, so calculated.

Deduction under section 80C

As per the Act, section 80C is inserted from the financial yearcommencing on and from April 01, 2005. As per the section, subjectto the provisions, an individual/HUF is entitled to a deduction fromGross Total Income upto Rs. 1,00,000/- (along with other prescribedinvestments) for amounts invested in any units of a mutual fundnotified under section 10(23D) of the Act, under any plan formulatedin accordance with such scheme as the Central Government maynotify.

Rebate under section 88E

Section 88E provides that where the total income of a personincludes income chargeable under the head “Profits and gains ofbusiness or profession” arising from sale of units of equity orientedfunds, he shall get rebate equal to the securities transaction taxpaid by him in the course of his business. Such rebate is to beallowed from the amount of income tax in respect of suchtransactions calculated by applying average rate of income tax.

Securities Transaction Tax

All Unit holders

As per Chapter VII of the Finance (No. 2) Act, 2004 pertaining to STT,the STT shall be payable by the seller at the rate of 0.15 per cent onthe sale of a unit of an equity-oriented fund to the mutual fund. TheFinance Act 2005 has increased the rate from 0.15% to 0.2%.

Other Benefit

Investments in Units of the Mutual Fund will rank as an eligibleform of investment under Section 11(5) of the Act read with Rule 17Cof the Income Tax Rules, 1962, for Religious and Charitable Trusts.

Tax Treaty Benefits

An investor has an option to be governed by the provisions of theAct or the provisions of a Tax Treaty that India has entered into withanother country of which the investor is a tax resident, whichever ismore beneficial.

Wealth Tax

Units held under the Schemes of the Fund are not treated as assetsas defined under Section 2(ea) of the Wealth Tax Act, 1957 andtherefore would not be liable to wealth tax.

Gift Tax

The Gift-tax Act, 1958, has ceased to apply to gifts made on orafter 1 October 1998. Gifts of Units, purchased under the Schemes,would therefore, be exempt from gift-tax.

XX. INVESTORS’ RIGHTS & SERVICES

i. Rights

An abridged schemewise annual report shall be mailed to allthe unitholders not later than six months from the date of closureof the relevant accounting year and the full annual report shallbe available for inspection at the head office of the fund and thecopy shall be made available to the unitholders on request onpayment of nominal fees if any.

Before expiry of one month from the close of each half year, i.e.on 31/3 and 30/9, the fund will publish its unaudited financialresults in the prescribed format as per SEBI Circular MFD/CIR/1/200/2001 dated April 20, 2001 in one national English dailynewspaper and in a newspaper in the language of the regionwhere the HO of the fund is situated.

Before expiry of one month from the close of each half year thatis on 31/3 and 30/9, the fund will publish its scheme portfolio inthe prescribed format as per SEBI Circular MFD/CIR/9/120/2000dated November 24, 2000 in one national English dailynewspaper and in a newspaper in the language of the regionwhere the HO of the fund is situated, or send a copy of thescheme portfolio to all the unitholders.

Unitholders under the Scheme have a proportionate right in thebeneficial ownership of the assets of TMF under the Scheme.

The Unitholders have a right to ask the Trustee Company aboutany information which may have an adverse bearing on theirinvestments, and the Trustee Company shall be bound todisclose such information to the Unitholders as stated in theclauses “NAV Information” & “Information regarding theScheme”.

The Unitholders have a right to receive audited annual reportsetting forth the financials of the Scheme as on 31st Marchalong with the entire portfolio in detail.

The appointment of the Asset Management Company can beterminated by majority of the trustees or by 75% of theunitholders of the scheme.

The trustees shall ensure that no change in the fundamentalattributes of any scheme or the trust or fees and expensespayable or any other change which would modify the schemeand affects the interest of unitholders, shall be carried outunless:-

(i) a written communication about the proposed change issent to each unitholder and an advertisement is given inone English daily newspaper having nationwide circulationas well as in a newspaper published in the language of theregion where the Head Office of the mutual fund is situated;and

(ii) the unitholders are given an option to exit at the prevailingNet Asset Value without any exit load.”

Unitholders have the right to inspect all the documents listedunder the clause “Documents Available for Inspection”.

Under normal circumstances, the Redemption proceeds shallbe despatched within ten Business Days from the date ofRedemption, while income distribution warrants shall bedespatched within 30 days of the declaration of income.


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ii. Services

Register of Unitholders

A register of Unitholders shall be maintained at the office of theAsset Management Company and also at the office of theRegistrar and at such other places as the Trustee Companymay decide and such register shall be conclusive evidence ofownership. The register shall contain the following particulars :

The names and addresses of the Unitholders

The number of Units held by each such holder

The date from which the Unit(s) are held in the name of theholder(s)

The option opted for making investment

The register may be closed for such time and for such period as theTrustee Company may determine so. However, the register shall notremain closed for more than 45 business/ working days in any oneyear. In the event of a closure of the register for a period or periods,notice shall be given by way of publication in newspaper(s) or othermedia. Requests for fresh/ ongoing sales, Redemption, switch willnot be accepted during the period when the register is closed. Exceptwhen the register is closed, the register shall during the businesshours subject to such reasonable restrictions as the Trustee Companymay impose, but not less than two hours on each business day, bekept open for inspection by any Unitholder. Subject to the provisionsherein contained, the Trustee Company and TAML shall neitherreceive notice in respect of any Unit of any trust express, implied, orconstructive, nor shall they be bound to enter any such notice inrespect of any Unit in the register except when so directed by aCourt of Competent jurisdiction.

Each Unitholder will receive an updated Account Statement, alongwith a A. S. Number (for control purposes) each time fresh / ongoingsale, partial redemptions / Redemption / switch of Units are made orany other distributions (other than Income Distribution), if any, inrespect of Units are declared and paid. Fractional Units will becomputed and accounted for upto three decimal places.

iii. Information regarding the Scheme

TMF will publish annually, as soon as possible after31st March each year but not later than six months thereafter as theTrustee Company may decide, an audited annual report setting forththe financials of the Scheme as on 31st March. The Scheme’s entireportfolio in detail will also be disclosed half-yearly. TMF shall beforethe expiry of one month from the close of each half year i.e.31stMarch and 30th September publish, by means of an advertisementin one English language national daily newspaper and in a vernacularlanguage newspaper published in Mumbai, the Scheme’s unauditedfinancial results. The Board shall also make such periodic disclosuresto the Unitholders as are required by the SEBI Regulations and areessential to keep them informed about any information which mayhave an adverse bearing on the Scheme. As such, the disclosure ofinformation, etc. of the Scheme will be in accordance with SEBIRegulations including Schedule XI & XII thereof.

An abridged Schemewise annual report shall be mailed to allunitholders not later than six months from the date of closure of therelevant accounting year and the full annual report shall be availablefor inspection at TAML; a copy shall be made available to theunitholders on request, on payment of nominal Fees, if any. TheAnnual Report and abridged summary thereof shall contain detailsas specified in the Eleventh Schedule of the SEBI Regulations andsuch other details as are necessary for the purpose of providing atrue and fair view of the operations of the mutual fund; Provided thatthe abridged schemewise annual report mailed to unitholders neednot contain full portfolio disclosure, if the full accounts are publishedin newspapers, but should contain details of group company

investments such as the name of the company, the amount ofinvestment made in each company of the Group by each schemeand the aggregate investments made by all schemes in the groupcompanies of the sponsor.

The Annual Report of the Asset Management Company will also bedisplayed on the website of the AMC.

Annual Report, Half Yearly Results and Half Yearly Portfolio Statementof Mutual Fund will also be displayed on the website of AMC andAMFI.

Mutual Funds can send account statements annual report, portfoliostatements and other correspondence to the unit holders using e-mail as an alternate mode of communication, with the consent oftheir unitholders.

iv. Meeting and consent of Unitholders

Pursuant to Clause 15 of Regulation 18 of the SEBI (Mutual Funds)Regulations, 1996 (the SEBI Regulations), the Trustee Company shallcall for a meeting and obtain the consent of the Unitholders of theScheme (entirely at the option of the Trustee Company, either at ameeting of the unitholders or through postal ballot or any other modeof communication in conformity with the Regulations and/or SEBIRegulations) under any of the following circumstances:

whenever required to do so by SEBI in the interest of theUnitholders.

upon the request of three-fourths of the Unitholders of theScheme.

if the Trustee Company determines to wind up the Scheme orprematurely redeem the units.

v. Benefits to the Unitholders

All benefits accruing / earned under the Scheme in respect of income( not included in NAV ), capital, reserves and surpluses, if any, at thetime of their declaration or otherwise under the Scheme shall beavailable only to the Unitholders who hold the Units at the time of its/ their declaration.

vi. Documents available for inspection

Following documents will be available for inspection by the prospectiveinvestors / Unitholders on all Business Days between 11.00 am and1.00 p.m. at the Office of Tata Asset Management Ltd..

A copy of Memorandum & Articles of Association of TAML.

A copy of the Custodian Agreement.

Consent from the Auditors to act in the said capacity.

SEBI (Mutual Funds) Regulations, 1996.

A copy of the Offering Circular.

Copy of the Trust Deed.

Copy of Memorandum & Articles of Association of TrusteeCompany.

Copy of Investment Management Agreement.

Copy of Registration Certificate from SEBI.

Copy of Agreement with Registrars

Indian Trusts Act, 1882

XXI. INVESTOR GRIEVANCES REDRESSAL MECHANISM

The complaints by investors are usually received at CAMS, AuthorisedInvestor Service Centres. If the complaints are queries like non-receiptof certificate, change of address etc. which are only redressable bythe Mumbai office they are answered by the same. Complaints/


49

queries solvable at the local Authorised Investor Service Centres areaddressed accordingly.

A complete record of complaints received and attended is maintainedand a review is carried out periodically by TAML to ensure promptredressal of complaints.

Yearwise breakup of Investor Complaints

Up to Opening Letters Total Letters LettersBalance Received Attended Balance

31/03/2003 0 15373 15373 15364 9

31/03/2004 9 6966 6975 6975 0

31/03/2005 0 2287 2287 2287 0

31/10/2005 0 1362 1362 1341 21

Conflict of interest

The Trustee Company, the Asset Management Company, theCustodian, the Registrar, any Associate, any Distributor, Dealer, othercompanies within the Tata group, etc. may from time to time act(individually and / or jointly) as manager, custodian, registrar,administrator, investment adviser, distributor or dealer or agent ormarketing associate, respectively in relation to, or be otherwiseinvolved in, other Schemes / Funds / Activities (in the same or differentcapacity) (to the extent permitted under various relevant Regulations),which may have similar investment objectives to those of the Scheme/Fund. The Asset Management Company, may for example, makeinvestments for other permitted business activities or on its own behalfwithout making the same available to the Scheme / Fund. The AssetManagement Company/Trustee Company will, at all times, haveregard in such event to its obligations to act in the best interests ofthe Scheme / Fund so far as is practicable, having regard to itsobligations to other permitted business activities and will ensure thatsuch transactions are conducted with / by the Scheme / Fund purelyon commercial terms / on an arm’s length basis as principal toprincipal.

TAML may, utilise the services of the Companies stated in the clause“Associate Transactions” (& to whom selling commission has beenpaid/provided for their marketing efforts in mobilising subscriptionfor the units of the previous schemes of the Fund)and/or the Sponsors,Associates, other Companies within the TATA group, Employees ortheir relatives, etc. for the purpose of any securities transactions anddistribution and sale of Units / securities, provided that any deal insecurities through any broker associated with the Sponsors shouldnot be beyond 5% of the quarterly aggregate purchase and sale ofsecurities by TMF, as per SEBI Regulations and the brokerage orcommission paid as per prevailing market practice and/or approvedrates is disclosed in the half yearly annual accounts of the Fund .TAML may, invest in Units of the Funds / Schemes in TMF (the existingFunds / Schemes including the present Scheme and others as maybe announced / launched from time to time), only after full disclosureof its intention to invest has been made in the Offering Circulars.TAML shall not charge any fees on its investment in Units of theFunds / Schemes in TMF.

TAML shall not act as a Trustee of any Mutual Fund and shall notundertake any other business activities except activities in the natureof management and advisory services to offshore funds, pensionfunds, provident funds, venture capital funds, management ofinsurance funds, financial consultancy and exchange of research oncommercial basis, if any of such activities are not in conflict with theactivities of the Fund. Provided that TAML may itself or through itssubsidiaries undertake such activities if it satisfies SEBI that its key

personnel, the systems, back office, bank and securities accountsare segregated activity wise and there exist systems to prohibitaccess to inside information of various activities. Provided furtherthat TAML shall meet capital adequacy requirements, if any,separately for each such activity and obtain separate approval, ifnecessary under the relevant Regulations. Please refer to the clauseson “The Asset Management Company” and “Investment Limitations”.

XXII. PENALTIES PENDING LITIGATION OR PROCEEDINGS,FINDINGS OF INSPECTIONS OR INVESTIGATIONS FORWHICH ACTION MAY HAVE BEEN TAKEN OR IS IN THEPROCESS OF BEING TAKEN BY ANY REGULATORYAUTHORITY

1. Cases of penalties awarded by SEBI Act or any of its regulationsagainst the Sponsor of the Mutual Fund or any companyassociated with the Sponsor in any capacity including the AssetManagement Company, Trustee Company/Board of Trustees,or any of the Asset Management Company and TrusteeCompany. For Sponsor and its associates, other than thepenalties as mentioned above, the penalties for defaults inrespect of shareholders, debentureholders and depositors shallalso be disclosed. Additionally, penalties awarded for anyeconomic offence and violation of any securities laws shall bedisclosed.

A fine of Rs. 2 lacs has been paid by Tata Asset ManagementLimited. to SEBI (on behalf of the AMC and the Mutual Fund)for disclosure of portfolio statement to Unitholders not being inthe exact format as prescribed by SEBI.

2. Pending material litigation proceedings incidental to the businessof the Mutual Fund to which the Sponsor of the Mutual Fund orany company associated with the Sponsor in any capacityincluding the AMC, Board of Trustee/Trustee Company or anyof the directors or key personnel is a party. Any pending criminalcases against the Sponsor or any company associated withthe Sponsor in any capacity including the AMC, Board of Trustee/Trustee Company or any of the directors or key personnel shouldbe also be disclosed separately.

“SEBI has filed a writ petition before the Bombay High Courtseeking direction to the Additional Metropolitan Magistrate (theMagistrate) to expedite the case in a criminal complaint (foralleged insider trading) initiated by them earlier againstHindustan Lever Ltd. (HLL) and its five Executive Directors whoheld such office in March 1996. Thereafter, the Magistrate hastaken congnizance of SEBI’s complaint and has directed theissue of summons to HLL and the five Executive Directors Mr.S.M. Datta, a director of the Tata Trustee Company Pvt. Ltd.,was one of the five Executive Directors of HLL who are beingproceeded against.”

3. Deficiency in the systems and operations of the Sponsor of theMutual Fund or any company associated with the sponsor inany capacity including the AMC or the Trustee Company whichSEBI has specifically advised to be disclosed in the offerdocument, or which has been notified by any other regulatoryagency, shall be disclosed. – NIL.

4. Enquiry/adjudication proceedings under the SEBI Act and theRegulations made thereunder, that are in progress against theSponsor of the Mutual Fund or any company associated withthe Sponsor in any capacity including the AMC, Board of Trustee/Trustee Company or any of the Directors of key personnel ofthe Asset Management Company shall be disclosed. – NIL.


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MISCELLANEOUS

Statements in this Offering Circular are, except where otherwisestated, based on the law and practice currently in force in Indiaand are subject to changes therein. The information contained inthis Offering Circular regarding taxation is for general informationpurposes only and is in conformity with the relevant provisions ofthe Income Tax Act, 1961, Wealth Tax Act, 1957, and Gift Tax Act,1958, respectively and has been included relying upon adviceprovided to the Fund by S.B.Billimoria & Co. Chartered Accountants,auditors of TMF, based on the relevant prevailing provisions. Furtherinvestments by NRI will also be in accordance with the provisionsof Foreign Exchange Management Act, 1999 and RBI directionsand permissions for offer of units to NRIs/ FIIs. All necessary andrequired permissions have been / are being taken and resolutionshave been / are being passed. This Offering Circular is approvedby the Trustee Company on 27th November, 2002.

The contents of the Offering Circular including figures, data, yields,etc. have been checked and are factually correct.

All points mentioned in the SEBI (Mutual Fund) Circular MFD/CIR/06/275/2001 dated July 9, 2001 and revised as on December26, 2003 have been included in this Offering Circular.

Notwithstanding anything contained in the offer document theprovisions of the SEBI (Mutual Funds) Regulations, 1996 and theguidelines thereunder shall be applicable.

By orderBoard of Directors

Tata Asset Management Limited.

Place: Mumbai H. A. BulsaraDate: 30

th November, 2005 Chief Operating Officer


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