Annual Report for Fixed Maturity Schemes - Tata Mutual Fund

Schedules forming part of the Accounts
Schedule VI Statement of significant accounting policies and notes forming part of the financial statements of Fixed Income
Portfolio Fund - Scheme A1 as at and for the year ended 31st March, 2012.
A BACKGROUND
TATA FIXED INCOME PORTFOLIO FUND - Scheme A1 (the “Scheme”) is an open ended scheme of Tata Mutual Fund (the
“Fund”). The Fund is registered with the Securities and Exchange Board of India (“SEBI”). The Scheme is managed by Tata Asset
Management Limited (“TAML” / the “Investment Manager”), an investment management company registered with SEBI.Investment
objective of the scheme is to generate returns and / or capital appreciation along with minimization of interest rate risk. In order to
achieve its investment objective, the scheme will invest predominantly in a portfolio of Debt & Money market instruments. For the
purpose of achieving the investment objective, each plan under the scheme will invest in a portfolio of securities normally having
maturity duration in line with the maturity duration of the respective plan. The scheme is sponsored by Tata Sons Limited (“TSL”) and
Tata Investment Corporation Limited (“TICL”).Tata Trustee Company Limited (“TTCL” / the “Trustee Company”) is the trustee
company of the Scheme.
B SIGNIFICANT ACCOUNTING POLICIES
1.1 Basis of Accounting
The Scheme maintains its books of account on an accrual basis.
1.2 Preparation of Financial Statements of the Scheme
The financial statements of the Scheme have been prepared in accordance with the requirements of Securities and Exchange Board of
India (Mutual Funds) Regulations, 1996, (the “SEBI Regulations”), the Ninth and Eleventh Schedules of which lay down the accounting
policies and standards to be adopted and the disclosures to be made.
The Expert Advisory Committee (the “EAC”) of the Institute of the Chartered Accountants of India (“ICAI”) have opined that the
Accounting Standards on Cash Flow Statement (“AS-3”), Segment Reporting (“AS-17”) and Related Party Disclosures (“AS-18”)
issued by the ICAI are applicable to the financial statements of schemes of mutual funds. The managements of the Investment Manager
and the Trustee Company are of the opinion that mutual funds are governed by a self-contained regulatory framework, i.e. the SEBI
Regulations, based on which the financial statements have been prepared.
The preparation of financial statements in conformity with the SEBI regulations requires the use of certain critical accounting estimates.
It also requires the Board of Directors of the Investment Manager to exercise its judgement in the process of applying the Fund‟s
accounting policies.
1.3 Portfolio Valuation
a. Classification
The Scheme classifies its investments in debt securities, as Non-Traded, Thinly Traded and Traded Securities.
Non-Traded Securities are those debt securities (not being Government Securities) that have not been traded on any such exchange on
the valuation date.
A debt security (other than a Government Security) is classified as thinly traded if, on the valuation date, there are no individual trades
(in the principle or other Stock Exchange) in that security in marketable lots(presently Rs. 5 crore).
Debt securities that do not fall within the Non Traded Securities or Thinly traded Securities are classified as Traded Securities.
b. Recognition, de-recognition and measurement
Regular purchases and sales of investments are recognised on the trade date – i.e. the date on which the Scheme‟s order of purchase or
sale of investment is executed. Investments include contracts for purchase of securities and exclude contracts for sale of securities, for
which deliveries are not received/collected.