Annual Report for Fixed Maturity Schemes - Tata Mutual Fund

Schedules forming part of the Accounts
Schedule VII - Statement of significant accounting policies and notes forming part of the financial statements of Tata Fixed Maturity Plan
Series 37 Scheme D as at 31st March, 2012 and for the period from 23rd November, 2011 (date of commencement) to 31st March, 2012.
A BACKGROUND
Tata Fixed Maturity Plan - Series 37 Scheme D (the “Scheme”) is an close 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. The investment objective of the scheme is to generate income and / or capital
appreciation by investing in wide range of Debt & Money Market instruments having maturity in line with the maturity of the respective schemes. The
maturity of all investments shall be equal to or less than the maturity of respective schemes. 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.
Investments purchased are initially recognised at cost of acquisition. Cost of acquisition includes transaction costs such as brokerage, stamp charges and
other charges customarily included in the brokers note.
Investments are derecognised when the rights to receive cash flows from the investments have expired or the Scheme has transferred substantially all the
risks and rewards of ownership.