BARODA PIONEER MUTUAL FUND

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2 BARODA PIONEER MUTUAL FUND ANNUAL REPORT OF THE BOARD OF TRUTEES FOR THE YEAR ENDED The Board of Trustees of Baroda Pioneer Mutual Fund (formerly known as BOB Mutual Fund) have pleasure in presenting their fifteenth Annual Report with Audited Accounts of the Schemes of BOB Mutual Fund for the year ended March 31, The goal of Baroda Pioneer Mutual Fund has been Customer Satisfaction. We always put our best effort that is directed towards improving performance, investor services and investment option to achieve desired goal. Baroda Pioneer Mutual Fund BOB Mutual Fund, which has been renamed as Baroda Pioneer Mutual Fund ( the Mutual Fund or the Fund ) has been constituted as a Trust in accordance with the provisions of the Indian Trusts Act, 1882 (2 of 1882).The trust deed has been registered under the Indian Registration Act, The Mutual Fund is registered with SEBI under Registration No. MF/018/94/2, dated November 24, BOB Mutual Fund was established by Bank of Baroda by execution of a Trust Deed dated October 30, Pioneer Global Asset Management SpA has acquired 51% of the shareholdings of BOB Asset Management Company Limited and become the co- sponsor of the BOB mutual Fund. SEBI has approved the name of the fund to Baroda Pioneer Mutual Fund vide its letter IMD/RB/134922/08 dated August 12, The Sponsor is not responsible for any loss resulting from the operation of the Schemes beyond the initial contribution of the said sum of Rupees Ten lac made by it towards setting up of BOB Mutual Fund and such other accretions/additions to the same. The address of Baroda Pioneer Mutual Fund is 105, Makers Chambers III, Nariman Point, Mumbai BOARD OF TRUSTEES Name Occupation Residential/office Address Directorship Mr. R. L. Baxi Retired Director & C 23/24, Modinagar, ESS DEE Aluminum Ltd. Chairman General Manager, Adarsh Co-op Society, GIC Asset Management (Independent) The New India Off Mathuradas Road, Company Limited Assurance Co. Ltd. Kandivli (West), Mumbai Mr. V. H. Bhatia Retired General Manager 101, Cypress Woods, Nil (Independent) Bank of Baroda 1st Floor, 16 Road, Near Shivsagar, Bandra (W), Mumbai Mr. Shrinivas Ex Dy. DGM, A 904, Shagun Tower, Nil Suvarna Bank of Baroda Gen. A. K. Vaidya Marg, (Independent) Goregaon(E) Mumbai Mr. Debabarat General Manager Bank of Baroda, Nil Sarkar Bank of Baroda Geater Mumbai Zone (Associate) Mumbai The Trustees of Baroda Pioneer Mutual Fund seek to supervise the role of Baroda Pioneer Asset Management Co. Ltd., Investment Manager, through the reporting mechanism calling for compliances of SEBI (MF) Regulation 1996 and the investment policy of Baroda Pioneer Mutual Fund. The investment policy also incorporates guidelines and restrictions to be followed by the Investment Manager. The compliance of SEBI Regulations is reported by the AMC on a bi-monthly basis as required by the compliance manual of Baroda Pioneer Mutual Fund. The Investment Manager also files a quarterly report on its activities with the Trustees. The Trustees have formed an Audit Committee of the Trustees to review the internal audit system of Baroda Pioneer Mutual Fund and the recommendations of the internal and statutory auditors. The Committee is chaired by an Independent Trustee. 2

3 ANNUAL REPORT BARODA PIONEER ASSET MANAGEMENT COMPANY LIMITED Baroda Pioneer Asset Management Company Limited, formerly known as as BOB Asset Management Company Ltd, has been incorporated under the provisions of the Companies Act, The company was a wholly owned subsidiary of Bank of Baroda. On 27 th June 2008, Pioneer Global Asset Management SpA, Italy acquired a 51% shareholding of BOB Asset Management Company Limited, Subsequently, the name of the AMC was changed to Baroda Pioneer Asset Management Company Limited. As per the SEBI (Mutual Funds) Regulations, 1996, at least 50% of the Board of Directors are Independent members and the remaining are nominated for appointment by the Sponsor of the AMC. The net worth of BOBAMC as on 31 st March 2008 is Rs Crore. BOARD OF DIRECTORS The Company has at present the following ten Directors, out of whom five Directors are Non-Executive Independent Directors. Dr. Anil K Khandelwal Chairman Prof B B Bhattacharya Independent Director Dr. P N Khandwalla Independent Director Mr G P Gupta Independent Director Mr. Shiv Dayal Independent Director Mr. Rohit Arora Independent Director Mr. Dario Frigerio Associate Director Mr. Angus Stening Associate Director Mr. B A Prabhakar Associate Director Mr. S. Bhattacharya Associate Director Mr. B A Prabhakar has been appointed as an Additional Director of the Company since January 22, 2008 and he is entitled to hold office up to the date of the next Annual General Meeting. Mr. G. P. Gupta, Prof B B Bhattacharya, Dr P N Khandwalla, Mr. Shiv Dayal and Mr. Rohit Arora have been appointed as Additional Director as well as Independent Director of the Company since June 27, 2008 and they are entitled to hold office up to the date of the next Annual General Meeting. Dr. Anil K Khandelwal, Mr. Dario Frigerio and Mr. Angus Stening have been appointed as Additional Director of the Company since June 28, 2008 and they are entitled to hold office up to the date of the next Annual General Meeting. Mr. S. Bhattacharya, who was the Managing Director of the Company since 20 th July 2006, resigned from the post of Managing Director of the Company wef 8 th July 2008 and he continues as a Director of the Company Mr. Suresh Jivandas Pabari and Mr. Bhagawati Prasad Managal who had been appointed as Additional Director as well as Independent Director of the Company since November 22, 2007 resigned from the Directorship of the Company wef June 27, Mr. Bhagirat B. Merchant and Mr. S.D.Abhayankar resigned from the Directorship of the Company on October 10, 2007 and Mr. S. S. Mundra resigned from the Directorship of the Company on January 17, MUTUAL FUND INDUSTRY The mutual fund industry recorded a healthy growth in the financial year Gross mobilizations by the industry during the year amounted to Rs.44,67,943 crore as against Rs.19,41,347 crore in the previous year, registering a growth of 130%. The Industry also witnessed a gross redemption of Rs. 43,12,979 crore representing 134% increase over the previous year figure of Rs. 18,46,198 crore On a net basis, there was an inflow of Rs. 1,54,964 crore as against Rs. 95,149 crore in the last year registering a growth of 63%. The Average Assets Under Management of the industry as on March 31, 2008 stood at Rs. 5,42,389 crore as against Rs. 3,61,254 crore the previous year recording an increase of over 50%. A combination of investor friendly and market-related products, extension of branch network, favourable market conditions for much of the year and investor awareness campaigns by fund houses contributed to the increased inflow. There is also an increasing trend towards tapping non-metro and rural markets. 3

4 BARODA PIONEER MUTUAL FUND PERFORMANCE OF BOB MUTUAL FUND AND FUTURE OUTLOOK As on the total net assets under the various schemes were Rs crore. The overall performance of the Schemes were satisfactory. As per rating awarded by the Economic Times for the quarter ended March 2008, our equity schemes BOB ELSS 96 scheme, BOB Growth Scheme and BOB Diversified Scheme were rated in the Gold, silver and Bronze category respectively. Also our Debt Schemes BOB Income Fund and BOB MIP rated in Lead Category and BOB Balance Fund in Bronze Category. During the current year, your Mutual Fund plans to come out with schemes to cater to specific investment needs. FUTURE OUTLOOK According to a report of McKinsey, a global consultancy firm, the Indian Asset Management business is expected to grow at least 33% annually. The main drivers will be the retail segment and institutional investor segment. AUM as a percentage of GDP works out to only 8% in India as compared with 79% in the US, and 39% in Brazil. AUM as a percentage of bank deposits is also abysmally low in India, at 25%, while it is 140% in the US and 96% in Brazil. SEBI has recently withdrawn the flexibility of charging the initial issue expenses to the new close-ended funds and amortising it over a period of 5 years. In view of this, the initial issue expenses incurred for the launch of the new funds will be confined to the extent of the entry load collected and any expenses in excess will be borne by the company. In addition, Asset Management Companies cannot charge anyentry load in respect direct investments pursuant to SEBI circular. Your company believes the measures will be in the long-term interest of all stakeholders in the mutual funds business. In the near-to-medium term, the measures could impact on the profitability of the company. With the entry of new players in the mutual fund industry, competition is likely to Intensify. Baroda Pioneer Asset Management will strive to provide well-defined products that cater to a diverse range of risk, return and liquidity preferences of investors. Your company is confident of a robust growth in AUM on the back of consistent performance, a well thought-out marketing and distribution strategy, enhanced geographical reach and quality customer service. It is proposed that the branch network of the Bank, especially in the rural and semi-urban areas would be used for broadening investor base. ACKNOWLEDGEMENT Baroda Pioneer Mutual Fund is grateful to its unit holders for reposing faith and confidence in it. The Fund expresses its deep gratitude to Securities and Exchange Board of India, Association of Mutual Funds of India, Reserve Bank of India, Auditors, Registrars, Custodians, Bankers, Agents and Brokers for their continued support, advice and co-operation. Last but not the least, the Fund places on record its appreciation for the excellent services rendered by the Directors and staff of Baroda Pioneer Asset Management Company Limited in managing the affairs of the Fund. For and on behalf of the Board of Trustees R. L. Baxi Chairman Place : Date : Mumbai 4

5 ANNUAL REPORT SCHEMEWISE SUMMARY STATEMENT BARODA PIONEER GLOBAL FUND (Formerly known as BOB Global Fund) Baroda Pioneer Mutual Fund (earlier known as BOB Mutual Fund) launched Baroda Pioneer Global Fund (earlier known as Baroda Global Fund) Scheme on 06 th February This Scheme is an Open Ended Equity Scheme, which aims to generate medium to long-term capital appreciation by investing in a diversified portfolio of equity & Equity related securities of large, mid, small cap companies and money market instruments. The initial offer of the scheme was open from 06 th February 2006 to 07 th March 2006 and the scheme again opened for on-going sale or repurchase from 27 th March As on , the net assets of the scheme stood at Rs.3.25 Crore. The per unit NAV of the Scheme under the Dividend Plan as well as Growth Plan was Rs and Rs as on 31st March, Mutual Funds and securities investments are subject to market risks & the NAV and redemption value of the Units and income from them can go up or down with the fluctuations in the market value of its underlying investments. The Board of Trustees, BOB Mutual Fund, Mumbai. Dear Sirs, We have audited the attached Balance Sheet of BARODA GLOBAL FUND of BOB MUTUAL FUND, as at 31st March, 2008 and also the Revenue Account for the year ended 31st March, 2008 annexed thereto. These financial statements are the responsibility of the Management of the Asset Management Company and the Trustees. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. Based on the above, we report that : 1. We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purpose of our audit. 2. In our opinion, proper books of account as required by law have been kept by the Scheme so far as appears from our examination of those books. 3. The Balance Sheet and the Revenue Account are in agreement with the books of account. 4. The statement of accounts has been prepared in accordance with accounting policies and standards as specified in the Ninth Schedule to the Securities and Exchange Board of India (Mutual Funds) Regulations, In our opinion the methods adopted to value non-traded securities are fair and reasonable. 6. In our opinion and to the best of our information and according to the explanations given to us, the accounts read with the Statement on Significant Accounting Policies and Notes on Accounts attached thereto give a true and fair view in conformity with the accounting principles generally accepted in India : a) in the case of the Balance Sheet of the state of affairs of BARODA GLOBAL FUND as at 31st March, 2008 and b) in the case of the Revenue Account of the surplus of the Scheme for the year ended on that date. 5 For and on behalf of BORKAR & MUZUMDAR CHARTERED ACCOUNTANTS Rajesh C. Batham Place : Mumbai Partner Date : (M. No )

6 BARODA PIONEER MUTUAL FUND BARODA GLOBAL FUND BALANCE SHEET AS ON 31ST MARCH, 2008 Schedule (RS.IN LAKH) (RS.IN LAKH) LIABILITIES :- Unit Capital A Reserves & Surplus B Current Liabilities & Provisions C TOTAL ASSETS :- Investments D Deposits E Other Current Assets F TOTAL SIGNIFICANT ACCOUNTING POLICIES NOTES ON ACCOUNTS G H The Schedules referred to above form an integral part of the Balance Sheet As per our report of even date For and on behalf of BORKAR & MUZUMDAR For BOB Asset Management Co. Ltd. For BOB Mutual Fund Chartered Accountants Rajesh C. Batham S. Bhattacharya R. L. Baxi Partner Managing Director Chairman (M.No ) V. H. Bhatia M. B. Samant Place : MUMBAI S. K. Suvarna Date : Trustees 6

7 ANNUAL REPORT BARODA GLOBAL FUND REVENUE ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2008 Schedule (RS.IN LAKH) (RS.IN LAKH) INCOME :- Interest Dividend Appreciation in value of Investments Profit on Sale of Investments (Net) Other Income TOTAL EXPENSES & LOSSES :- Loss on Sale of Investments (Net) Depreciation in value of investments (Net) Management Fees Trusteeship Fees Office and Administrative Expenses Commission to Agents (3.10) 8.62 Audit Fees Advertisement exps Registration Fees Other Operating Expenses Custodian Charges Registrar Charges Surplus / (Deficit) for the year TOTAL Surplus / (Deficit) for the year (Less) / Add : Equalisation Account (135.93) (156.47) Add :Surplus/(Deficit) brought forward from the previous year (23.59) (66.18) Surplus/(Deficit) carried to Balance Sheet (23.59) The Schedules referred to above form an integral part of the Revenue Account As per our report of even date For and on behalf of BORKAR & MUZUMDAR For BOB Asset Management Co. Ltd. For BOB Mutual Fund Chartered Accountants Rajesh C. Batham S. Bhattacharya R. L. Baxi Partner Managing Director Chairman (M.No ) V. H. Bhatia M. B. Samant Place : MUMBAI S. K. Suvarna Date : Trustees 7

8 BARODA PIONEER MUTUAL FUND BARODA GLOBAL FUND SCHEDULES FORMING PART OF THE BALANCE SHEET AS ON (RS.IN LAKH) (RS.IN LAKH) Schedule A UNIT CAPITAL Unit Capital Total No. of units of face value Rs. 10/- each Schedule B RESERVES AND SURPLUS Surplus / (Deficit) as per Revenue Account (23.59) Unit Premium Reserve Opening Balance (1.64) Add: Additions / (Deductions) during the year (9.04) Total Schedule C CURRENT LIABILITIES & PROVISIONS Sundry Creditors Others Total Schedule D INVESTMENTS Equity Shares Reverse Repos Total Schedule E DEPOSITS Deposit with Companies / Institutions Total Schedule F OTHER CURRENT ASSETS Balance with Banks Outstanding and accrued Income Receivable from sale of Investments Advances Total

9 ANNUAL REPORT NOTES ATTACHED TO AND FORMING PART OF THE BALANCE SHEET AS AT 31st Mar.,2008 I HISTORICAL PER UNIT STATISTICS PARTICULARS (Rupees) (Rupees) a) Net Asset Value GROWTH PLAN DIVIDEND PLAN b) Break up of Gross Income per unit i) Income other than profit on sale of investments ii) Income from profit on interscheme sale/transfer of investments iii) Income from profit on sale of investment to third party iv) Transfer to revenue account from past years reserve v) Unrealised appreciation of Investments (I) c) i) Aggregate of Expenses, write off, amortisation and charges ii) Loss on interscheme sale/transfer of investments iii) Loss on sale of investment to third party iv) Depreciation in value of investments (net) (II) d) Net Income (I) - (II)

10 BARODA PIONEER MUTUAL FUND SCHEDULE G : SIGNIFICANT ACCOUNTING POLICIES FORMING PART OF THE ACCOUNTS OF BARODA GLOBAL FUND FOR THE YEAR ENDED 31ST MARCH, INCOME RECOGNITION a) Dividend on quoted shares is recognised on the date the respective shares are quoted on Ex- Dividend basis. In case of unquoted shares the dividend is recognised on the date of declaration. b) Profit or loss on sale of investments is arrived at by applying weighted average cost method and is recognised on the trade date. c) In respect of securities including those purchased on Reverse-Repo basis, interest income on investments is accounted for on accrual basis. d) Other income of miscellaneous nature is accounted for, if realised. e) Provision is made for income, which is not realised within 12 months from the date of accrual in accordance with the SEBI Regulations. f) Unrealised appreciation/depreciation in the value of investments, if any, is credited/charged to Revenue Account. However, such appreciation is excluded in the considerations for income distributions. 2. EXPENSES Expenses are accounted for on accrual basis. 3. INVESTMENTS a) Accounting of Investment Transactions i. Transactions for purchase/sale of investments are accounted for on trade dates at cost including brokerage, stamp charges and any customary charge included in the broker s bought note. ii. iii. Bonus shares to which the scheme becomes entitled are recognised only when the original shares on which the bonus entitlement accrues are traded on the stock exchange on an exbonus basis. Similarly rights entitlements are recognised only when the original shares on which the right entitlement accrues are traded on the stock exchange on an ex-rights basis. In respect of purchase of interest bearing investments, accrued interest receivable is debited to the Interest Receivable account and not added to the cost of investment. b) Valuation of Investments i. All traded Securities (other than Government securities) are valued at the closing market price on the Bombay Stock Exchange (BSE) on the last trading day of the financial year. ii. Where a security is not traded on the BSE, the security is valued at the price quoted at the exchange where it is principally traded. Where a security is not traded on the last trading day of the financial year, the value at which it is traded on the earliest previous day prior to the valuation date is used, provided such date is not more than thirty days prior to the valuation date. iii. All other investments are stated at their fair value as determined by BOB Asset Management Co. Ltd. using the basis as approved by the Trustees in accordance with the SEBI Regulations. iv. Money market obligations are valued at cost and interest accrued thereon. a. Where instruments have been bought on Reverse - Repo basis, the instrument is valued at the resale price after deduction of applicable interest upto the date of resale. b. Investments which have provided no returns in the form of dividend or interest for a period specified in the guidelines issued by SEBI, are regarded as Non Performing Investments and valued accordingly. 10

11 11 ANNUAL REPORT UNIT PREMIUM RESERVE ACCOUNT The difference between the face value and the purchase/sale price of the units purchased/sold is credited or debited, as the case may be, to Unit Premium Reserve Account. 5. NET ASSET VALUE (NAV) The NAV for the units issued under the various Plans like Growth Plan, Dividend Plan etc. is determined separately, wherever applicable. For reporting NAV for Plans, daily income earned of the scheme is apportioned between the Plans in the proportion of the Net Assets of each of the Plans. 6. EQUALISATION ACCOUNT When units are sold an appropriate part of the sale proceeds is credited to Equalisation Account and when units are repurchased an appropriate amount is debited to Equalisation Account. The balance in this account is credited or debited to the Revenue Account. SCHEDULE H : NOTES FORMING PART OF THE ACCOUNTS OF BARODA GLOBAL FUND FOR THE YEAR ENDED 31ST MARCH, Perspective historical per unit statistics for the years ended 31st March 2008 and 31 st March As on As on Rs. Rs. A) Net Asset Value Growth Plan Dividend Plan B) Break-up of Gross Income i) Income other than profit on sale and unrealised appreciation of investments ii) Income from profit on inter scheme Sale/transfer of investments NIL iii) Income from profit on sale of investments to third party iv) Transfer to revenue account from past year s reserve NIL v) Unrealised appreciation of investments NIL - (l) C) i) Aggregate of expenses, write off, amortisation and charges ii) Loss on inter scheme sale/transfer of investments NIL iii) Loss on sale of investments to third party NIL iv) Depreciation in the value of investments (net) (ll) D) Net Income/(Loss) (l) - (ll) ============ E) Ratio of expenses to average net asset by percentage 0.96% 1.82% F) Ratio of gross income to average net asset by percentage 34.83% 9.78% G) The highest and the lowest repurchase prices of the unit during the period are as under :- Growth Option Highest Lowest Dividend Option Highest Lowest

12 BARODA PIONEER MUTUAL FUND H) The highest and the lowest Sale prices of the unit during the period are as under:- Growth Option Highest Lowest Dividend Option Highest Details of Assets as at 31 st March 2008 are as under : Lowest Name of the Instrument Rating Mkt. Value % To Total (Rs, in Lakh) Assets Tata Steel Preference Shares % Equity & Equity related Listed Hindustan Lever Ltd IDBI 10, Infosys Technologies Ltd L & T Ltd Ranbaxy Labs Ltd Reliance Industries Ltd Jain Irrigation Systems Ltd RCVL Areva T & D Ltd Bharat Forge Ltd House of Pearl Fashions Prithvi Information Soln Ltd Reliance Power Ltd Tata Steel Co. Ltd Essel Propack Ltd. 24, Subtotal Reverse Repo Other receivable Cash & Cash receivables Total Assets The particulars of industry group which constitute not less than 5% of the total assets in the major classification are : a) Diversified 20.25% b) Industrl Capital Goods 9.51% c) Industrial Products 11.01% d) Petroleum Products 17.40% e) Pharmaceuticals 9.44% f) Software g) Telecom services 7.03% 4. The Management Fees have been calculated on a daily 1.25% per annum on the daily average net assets. Daily Average Net Asset Value as at 31 st March 2008 = Rs. 3,37,30,702 Provision for Management Fees for the quarter ended 31/03/2008 = Rs. 86,916 12

13 13 ANNUAL REPORT The aggregate value of purchases and sales of investments during the period are as under : Amount (Rs.) % of Daily Avg. NAV a) Value of purchases 99,87,52, % b) Value of sales 100,17,83, Movement in unit capital is as under : GROWTH PLAN DIVIDEND PLAN TOTAL (Rs. in lakh) No. of units No. of units No. of units Balance as on 31st March, ,39, ,47, ,87, Add :-Sales 9, , , Less :- Redemptions 53,73, ,16, ,90, Balance as on 31st March, ,76, ,65, ,41, From 27 th March 2006 the Fund has commenced repurchase of units of the Scheme at the repurchase price determined on a daily basis. 8. Bank of Baroda, the Sponsor, has invested in excess of 5% of the Net Assets of BOB Liquid Fund, BOB Growth Fund, BOB Balance Fund, BOB Gilt Fund and Baroda Global Fund of BOB Mutual Fund. 9. BOB Asset Management Co. Ltd. has invested in excess of 5% of the Net Assets of BOB Balance Fund, Baroda Global Fund, BOB Diversified Fund, BOB Growth Fund, BOB Income Fund, BOB Liquid Fund. 10. During the period there were no transactions pertaining to derivatives and foreign securities. 11. No provision for taxation is required as BOB Mutual Fund is a recognised Mutual Fund under Section 10 (23D) of the Income Tax Act, a. The Scheme has not undertaken any underwriting obligations with respect to issue of securities of associate companies. b. The Scheme has not subscribed to any issues where any of its associate companies is a lead manager. c. The Scheme has not subscribed to any issue of equity or debt on private placement basis where the sponsor or associate companies have acted as arranger or manager. 13. Details of each item of expenditure accounting for more than 10% of total expenditure are as under : Nature of Expenditure Percentage Management Fees 93.78% 14. Details of large holding (over 25% of NAV of the schemes) are as under : a. No. of investors : 2 b. Total holdings by such investors as % of the NAV : 59.84% 15. Previous year figures have been reclassified / regrouped wherever necessary to conform with the current year s presentation. For and on behalf of BORKAR & MUZUMDAR For BOB Asset Management Co. Ltd. For BOB Mutual Fund Chartered Accountants Rajesh C. Batham S. Bhattacharya R. L. Baxi Partner Managing Director Chairman (M.No ) V. H. Bhatia M. B. Samant Place : MUMBAI S. K. Suvarna Date : Trustees

14 BARODA PIONEER MUTUAL FUND SCHEMEWISE SUMMARY STATEMENT BARODA PIONEER DIVERSIFIED FUND (Formerly known as BOB ELSS 95) Baroda Pioneer Mutual Fund ( formerly known as BOB Mutual Fund) launched BOB ELSS 95 Scheme on , which had an initial corpus of Rs Crore. This Scheme was a close-ended Equity Linked Savings Scheme offering tax benefit under Section 88 of the Income Tax Act, 1961 with an investment objective to generate medium to long term capital appreciation by investing in a diversified portfolio of equity and equity related securities of large, medium and small companies. On its Maturity, the Scheme was converted into BOB Diversified Fund (now known as Baroda Pioneer Diversified Fund) w.e.f March 23, As on , the net assets of the scheme were Rs Crore. The per unit NAV of the Scheme under the Dividend Plan was Rs as on 31st March Mutual Funds and securities investments are subject to market risks & the NAV and redemption value of the Units and income from them can go up or down with the fluctuations in the market value of its underlying investments The Board of Trustees, BOB Mutual Fund, Mumbai. Dear Sirs, We have audited the attached Balance Sheet of BOB DIVERSIFIED FUND of BOB MUTUAL FUND (Formerly known as BOB ELSS 95), as at 31st March, 2008 and also the Revenue Account for the year ended on that date annexed thereto. These financial statements are the responsibility of the Management of the Asset Management Company and the Trustees. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. Based on the above, we report that : 1. We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purpose of our audit. 2. In our opinion, proper books of account as required by law have been kept by the Scheme so far as appears from our examination of those books. 3. The Balance Sheet and the Revenue Account are in agreement with the books of account. 4. The statement of accounts has been prepared in accordance with accounting policies and standards as specified in the Ninth Schedule to the Securities and Exchange Board of India (Mutual Funds) Regulations, In our opinion the methods adopted to value non-traded securities are fair and reasonable. 6. In our opinion and to the best of our information and according to the explanations given to us, the accounts read with the Statement on Significant Accounting Policies and Notes on Accounts attached thereto give a true and fair view in conformity with the accounting principles generally accepted in India : a) in the case of the Balance Sheet of the state of affairs of BOB DIVERSIFIED FUND as at 31st March, 2008 and b) in the case of the Revenue Account of the surplus of the Scheme for the year ended on that date. For and on behalf of BORKAR & MUZUMDAR CHARTERED ACCOUNTANTS Rajesh C. Batham Place : Mumbai Partner Date : (M. No ) 14

15 ANNUAL REPORT BOB DIVERSIFIED FUND (Formerly Known as BOB ELSS 95) BALANCE SHEET AS ON 31ST MARCH, 2008 Schedule (RS.IN LAKH) (RS.IN LAKH) LIABILITIES :- Unit Capital A Reserves & Surplus B Current Liabilities & Provisions C TOTAL ASSETS :- Investments D Other Current Assets E TOTAL SIGNIFICANT ACCOUNTING POLICIES F 0.00 NOTES ON ACCOUNTS G The Schedules referred to above form an integral part of the Balance Sheet For and on behalf of BORKAR & MUZUMDAR For BOB Asset Management Co. Ltd. For BOB Mutual Fund Chartered Accountants Rajesh C. Batham S. Bhattacharya R. L. Baxi Partner Managing Director Chairman (M.No ) V. H. Bhatia M. B. Samant Place : MUMBAI S. K. Suvarna Date : Trustees 15

16 BARODA PIONEER MUTUAL FUND BOB DIVERSIFIED FUND REVENUE ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2008 Schedule (RS.IN LAKH) (RS.IN LAKH) INCOME :- Dividend Interest Profit on Sale of Investments (Net) Appreciation in value of Investments TOTAL EXPENSES & LOSSES :- Depreciation in Value of Investments Management Fees Trusteeship Fees Office and Administrative Expenses Registration Fees Publicity Expenses Audit Fees Other Operating Expenses Brokerage Custodian Fees Registrar Charges Surplus / (Deficit) for the year (108.77) TOTAL Surplus / (Deficit) for the year (108.77) Surplus / (Deficit) brought forward from the previous year Amount Available for Appropriation 2, , APPROPRIATIONS : Dividend Distributed to Unit Holders Add/(Less) Equalisation A/c (10,743.97) Surplus/(Deficit) carried to Balance Sheet 7, , SIGNIFICANT ACCOUNTING POLICIES G NOTES ON ACCOUNTS H The Schedules referred to above form an integral part of the Revenue Account For and on behalf of BORKAR & MUZUMDAR For BOB Asset Management Co. Ltd. For BOB Mutual Fund Chartered Accountants Rajesh C. Batham S. Bhattacharya R. L. Baxi Partner Managing Director Chairman (M.No ) V. H. Bhatia M. B. Samant Place : MUMBAI S. K. Suvarna Date : Trustees 16

17 ANNUAL REPORT BOB DIVERSIFIED FUND SCHEDULES FORMING PART OF THE BALANCE SHEET AS ON (RS.IN LAKH) (RS.IN LAKH) Schedule A UNIT CAPITAL Unit Capital Total No. of units of face value Rs. 10/- each Schedule B RESERVES AND SURPLUS Unit Premium Reserve Account Opening Balance (446.34) (217.25) Add: Additions/ (Deductions) during the year 10, (229.09) 10, (446.34) (Deficit) / Surplus as per Revenue Account (7,773.93) 2, Total 2, , Schedule C CURRENT LIABILITIES & PROVISIONS Sundry Creditors Unclaimed Dividend Others Total Schedule D INVESTMENTS Equity Shares (INV written in TB) Reverse Repo Total Schedule E OTHER CURRENT ASSETS Balance with Banks Contracts for sale of Investments Advances Others Total

18 BARODA PIONEER MUTUAL FUND NOTES ATTACHED TO AND FORMING PART OF THE BALANCE SHEET AS AT 31st Mar.,2008 I HISTORICAL PER UNIT STATISTICS PARTICULARS (Rupees) (Rupees) a) Net Asset Value b) Break up of Gross Income per unit i) Income other than profit on sale of investments ii) Income from profit on interscheme sale/transfer of investments iii) Income from profit on sale of investment to third party iv) Transfer to revenue account from past years reserve v) Unrealised appreciation of Investments (I) c) i) Aggregate of Expenses, write off, amortisation and charges ii) Loss on interscheme sale/transfer of investments iii) Loss on sale of investment to third party iv) Depreciation in value of investments (net) (II) d) Net Income/(Loss) (I) - (II) 7.02 (1.16) 18

19 19 ANNUAL REPORT SCHEDULE F : SIGNIFICANT ACCOUNTING POLICIES FORMING PART OF THE ACCOUNTS OF BOB DIVERSIFIED FUND FOR THE YEAR ENDED 31ST MARCH, INCOME RECOGNITION a) Dividend on quoted shares is recognised on the date the respective shares are quoted on Ex- Dividend basis. In case of unquoted shares the dividend is recognised on the date of declaration. b) Profit or loss on sale of investments is arrived at by applying weighted average cost method and is recognised on the trade date. c) In respect of securities including those purchased on Reverse-Repo basis, interest income on investments is accounted for on accrual basis. d) Other income of miscellaneous nature is accounted for, if realised. e) Provision is made for income, which is not realised within 12 months from the date of accrual in accordance with SEBI Regulations. f) Unrealised appreciation/depreciation in the value of investments, if any, is credited/charged to Revenue Account. However, such appreciation is excluded in the considerations for income distributions. 2. EXPENSES Expenses are accounted for on accrual basis. 3. INVESTMENTS a) Accounting of Investment Transactions a. Transactions for purchase/sale of investments are accounted for on trade dates at cost including brokerage, stamp charges and any customary charge included in the broker s bought note. b. Bonus shares to which the scheme becomes entitled are recognised only when the original shares on which the bonus entitlement accrues are traded on the stock exchange on an ex-bonus basis. Similarly rights entitlements are recognised only when the original shares on which the right entitlement accrues are traded on the stock exchange on an ex-rights basis. c. In respect of purchase of interest bearing investments, accrued interest receivable is debited to the Interest Receivable account and not added to the cost of investment. b) Valuation of Investments i. All traded Securities (other than Government securities) are valued at the closing market price on the Bombay Stock Exchange (BSE) on the last trading day of the financial year. ii. Where a security is not traded on the BSE, the security is valued at the price quoted at the exchange where it is principally traded. Where a security is not traded on the last trading day of the financial year, the value at which it is traded on the earliest previous day prior to the valuation date is used, provided such date is not more than thirty days prior to the valuation date. iii. All other investments are stated at their fair value as determined by BOB Asset Management Co. Ltd. using the basis as approved by the Trustees in accordance with the SEBI Regulations. iv. Money market obligations are valued at cost and interest accrued thereon. a. Where instruments have been bought on Reverse - Repo basis, the instrument is valued at the resale price after deduction of applicable interest upto the date of resale. b. Investments which have provided no returns in the form of dividend or interest for a period specified in the guidelines issued by SEBI, are regarded as Non Performing Investments and valued accordingly. 4. UNIT PREMIUM RESERVE ACCOUNT The difference between the face value and the purchase/sale price of the units purchased/sold is credited or debited, as the case may be, to Unit Premium Reserve Account. 5. NET ASSET VALUE (NAV) The NAV for the units issued under the various Plans like Growth Plan, Dividend Plan etc. is determined separately, wherever applicable. For reporting NAV for Plans, daily income earned of the scheme is apportioned between the Plans in the proportion of the Net Assets of each of the Plans.

20 BARODA PIONEER MUTUAL FUND 6. EQUALISATION ACCOUNT When units are sold an appropriate part of the sale proceeds is credited to Equalisation Account and when units are repurchased an appropriate amount is debited to Equalisation Account. The balance in this account is credited or debited to the Revenue Account. SCHEDULE G : NOTES FORMING PART OF THE ACCOUNTS OF BOB DIVERSIFIED FUND SCHEME FOR THE YEAR ENDED 31ST MARCH, 2008 As on As on As on Rs. Rs. Rs. 1. Perspective historical per unit statistics for the last 3 years : A) Net Asset Value B) Break-up of Gross Income Income other than profit on sale and unrealised appreciation of investments Income from profit on inter scheme sale/transfer of investments i) Income from profit on sale of investments to third party ii) Transfer to revenue account from past year s reserve iii) Unrealised appreciation of Investments (l) C) i) Aggregate of expenses, write off, amortisation and charges ii) Loss on inter scheme sale/transfer of investments iii) Loss on sale of investments to third party iv) Depreciation in value of investments (net) (ll) D) Net Income/(Loss) (l) - (ll) 7.02 (1.16) =============================== E) Ratio of expenses (excluding net unrealised Depreciation in value of Investments) to average net asset by percentage 1.72% 1.76% 2.40% F) Ratio of gross income (excluding net unrealised Appreciation in value of Investments) to average net asset by percentage 19.62% 16.81% 19.74% G) The highest and the lowest repurchase prices of the unit during the year are as under :- Highest Lowest H) The highest and the lowest sale prices of the unit during the year are as under:- Highest Lowest

21 21 ANNUAL REPORT Details of assets as at 31st March 2008 are as under : A. Equity Shares Name of the Scrip Quantity Market Value % to Assets (Rs.in Lakh) Tata Steel Pref Shares 11, % ACC Ltd. 6, % Bharat Heavy Electricals Ltd. 21, % Gammon India Ltd % Hdfc Bank Ltd. 6, % Hindustan Lever Ltd. 5, % ICICI Bank 3, % IDBI 27, % ITC Ltd. 19, % Larsen & Toubro Ltd. 15, % NTPC Ltd % Ranbaxy Laboratories Ltd. 23, % Reliance Inds Ltd 1, % Tata Motors Ltd 18,000 I % Tata Steel Ltd. 17, % ABB Ltd. 18, % Alok Industries ltd. 45, % Aventis Pharma Limited 7, % Bartronics India ltd % Escorts Ltd % Geometrics Software Sol. Co. Ltd. 58, % GTL Ltd % HCL technologies Ltd % ICRA 2, % Indian Oil Corpn 8, % Jaiprakash Associates Ltd. 15, % Mahanagar telephone Nigam ltd. 20, % Mahindra & Mahindra. Ltd. 5, % Mphasis BFL Ltd % Mundra Port % Orchid chem. & Pharma. Ltd % Power Grid Corp Ltd. 35, % Reliance Petro 15, % Shipping Corp of India Ltd. 10, % Siemens Ltd % Silverline Technologies Ltd % Sterlite Inds 6, % Sterlite Optical tec. Ltd % Sun Pharmaceutical Ind. Ltd. 5, % Tata Chemicals Ltd. 9, % Bharat Forge Ltd. 9, % BOC India ltd % Bombay Rayon Ltd. 10, % Hanil Era Textiles Ltd 30, % Henkel India Ltd % Himachal Futuristic Comm. Ltd % House of Pearl Fashions Ltd. 11, % KLG Systel 2, % Paramount Communications L % Pentamedia Graphics Ltd Prithvi Info Solns %

22 BARODA PIONEER MUTUAL FUND 2. Details of assets as at 31st March 2008 are as under : (Contd.) A. Equity Shares Name of the Scrip Quantity Market Value % to Assets (Rs.in Lakh) RCVL 14, % Reliance Energy % Reliance Power 4, % Rural Electrification Co Ltd 10, % Simbhaoli Sugar Mills Ltd % SPARC 12, % Spice Jet Ltd 23, % Tech Mahindra 6, % UTV Software Communication 8, % **Western Pacques (India) ltd **Accord Cotsyn Ltd **Amex Carb. & Chem. Ltd **Classic Global Impex Ltd **Kansal Fibres Ltd **Dsq software LTD **Suncity Synthetics Ltd **Gowri Polymers Ltd **Royal Industries Ltd **Soni Medicare Ltd **SIV Industries Ltd SUB TOTAL(A) represents securities whose % to NAV is less than 0.01%an ** Thinly traded / not traded / illiquid securities B. Others Repo Investments % Other Assets % TOTAL(A+B) % 3. The particulars of industry group which constitute not less than 5% of the total assets in the major classification are as under : Equity Shares : Industry % age Industry % age Industrial Capital Goods Pharmaceuticals 8.05 Diversified Software 6.91 Power The Management Fees have been calculated and paid on a quarterly 1.25% of the daily average net assets outstanding in each quarter excluding the deferred revenue expenditure capitalised. Daily Average Net Asset Value as at = Rs.38,63,86,670 Provision for Management Fee for the quarter ended 31 March 2008 = Rs. 14,43, The aggregate value of purchases and sales of investments during the year are as under : Amount (Rs.) % of Daily Avg. NAV a) Value of purchases 5,90,09,20, % b) Value of sales 5,87,71,28, % 6. Movement in unit capital is as under : GROWTH PLAN DIVIDEND PLAN TOTAL (Rs. in lakh) No. of units No. of units No. of units Balance as on 31st March, , ,42, ,98, Add: Sales , ,60, Less:- Redemption 9,79, ,60, ,26, Balance as on 31st March, , ,23, ,32,

23 23 ANNUAL REPORT From 1st April, 1998 the Fund has commenced repurchase of units of the Scheme at the repurchase price determined on daily basis. The units so offered for repurchase have been paid in time. 8. Bank of Baroda, the Sponsor, has invested in excess of 5% of the Net Assets of BOB Liquid Fund, BOB Growth Fund, BOB Balance Fund, BOB Gilt Fund and Baroda Global Fund of BOB Mutual Fund. 9. BOB Asset Management Co. Ltd. has invested in excess of 5% of the Net Assets of BOB Balance Fund, Baroda Global Fund, BOB Diversified Fund, BOB Growth Fund, BOB Income Fund, BOB Liquid Fund. 10 a) In accordance with the Fund s investment strategy of investing in sound investments with good growth/ income potential, the Fund has invested through BOB Diversified scheme in equity shares of Bank of Baroda to the extent of Rs. Nil (P.Y. Rs. Nil)-. b) The aggregate investments made by all the schemes of BOB Mutual Fund in the equity shares of Bank of Baroda amounts to Rs. Nil (P.Y. Rs.Nil), which is within the prescribed limit. 11. During the year there were no transactions pertaining to derivatives and foreign securities. 12 No provision for taxation is required as BOB Mutual Fund is a recognised Mutual Fund under Section 10 (23D) of the Income Tax Act, a) The Scheme has not undertaken any underwriting obligations with respect to issue of securities of associate companies. b) The Scheme has not subscribed to any issue of equity or debt on private placement basis where the sponsor or associate companies have acted as arranger or manager. 14. Details of Non Performing Investments are as under : Cost of Investment Market Value Type of (Rs.) (Rs.) Investment 1,40,01,498.58* Equity Shares *Non-traded, amount written off 15. Details of Dividends Unclaimed by unit holders are as under : Particulars Amount (Rs.) Unclaimed Dividends 36,31, Details of each item of expenditure accounting for more than 10% of total expenditure are as under : Nature of Expenditure Percentage Management Fees 83.79% 17. Details of large holding (over 25% of NAV of the schemes) are as under : a. No. of investors : Nil b. Total holdings by such investors as % of the NAV : Nil 18. Previous year figures have been reclassified/regrouped wherever necessary to conform with the current year s presentation. For and on behalf of BORKAR & MUZUMDAR For BOB Asset Management Co. Ltd. For BOB Mutual Fund Chartered Accountants Rajesh C. Batham S. Bhattacharya R. L. Baxi Partner Managing Director Chairman (M.No ) V. H. Bhatia M. B. Samant Place : MUMBAI S. K. Suvarna Date : Trustees

24 BARODA PIONEER MUTUAL FUND SCHEMEWISE SUMMARY STATEMENT BARODA PIONEER ELSS'96 (Formerly known as BOB ELSS 96) Baroda Pioneer ELSS 96 is an open-ended equity linked saving scheme. This Scheme was initially a closed ended Scheme, which offered tax benefit under Section 88 of the Income Tax Act, 1961 along with possibility for income and long-term capital growth. This Scheme also provides Personal Accidental Death Insurance Cover. The Investment objective of the scheme is to provide investors long-term capital growth as also Tax benefit under section 80C of Income Tax Act, The Net Assets of the Scheme as on 31st March 2008 was Rs crore. The per unit NAV of the Scheme under the Dividend Plan was Rs as on 31st March Mutual Funds and securities investments are subject to market risks & the NAV and redemption value of the Units and income from them can go up or down with the fluctuations in the market value of its underlying investments The Board of Trustees, BOB Mutual Fund, Mumbai. Dear Sirs, We have audited the attached Balance Sheet of BOB ELSS 96 SCHEME of BOB MUTUAL FUND, as at 31st March, 2008 and also the Revenue Account for the year ended on that date annexed thereto. These financial statements are the responsibility of the Management of the Asset Management Company and the Trustees. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. Based on the above, we report that : 1. We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purpose of our audit. 2. In our opinion, proper books of account as required by law have been kept by the Scheme so far as appears from our examination of those books. 3. The Balance Sheet and the Revenue Account are in agreement with the books of account. 4. The statement of accounts has been prepared in accordance with accounting policies and standards as specified in the Ninth Schedule to the Securities and Exchange Board of India (Mutual Funds) Regulations, In our opinion the methods adopted to value non-traded securities are fair and reasonable. 6. In our opinion and to the best of our information and according to the explanations given to us, the accounts read with the Statement on Significant Accounting Policies and Notes on Accounts attached thereto give a true and fair view in conformity with the accounting principles generally accepted in India : a) in the case of the Balance Sheet of the state of affairs of BOB ELSS 96 SCHEME as at 31st March, 2008 and b) in the case of the Revenue Account of the surplus of the Scheme for the year ended on that date. 24 For and on behalf of BORKAR & MUZUMDAR CHARTERED ACCOUNTANTS Rajesh C. Batham Place : Mumbai Partner Date : (M. No )