Equity Market Update Debt Market Update

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1 Equity Market Update In the month of June, BSE 30 Sensex witnessed a strong upward trend gaining 4.46% and closing at 17,700. Robust GDP growth in Q4 March 2010, above-average IIP numbers, higher advance tax payment for the first quarter and a recovery in world equity markets helped the markets to rally. Government earned a total revenue of Rs.1,06,336 Cr from 3G auctions and BWA. This should help in bringing down the fiscal deficit to GDP ratio for FY 2011 to 4.5% from the earlier estimates of 5.5%. Government announced it intention to deregulate auto fuel prices and raised the price of kerosene and LPG. These reforms are a positive move, but pose a risk of high inflation, which has been one of the key concerns for India. Industrial production for the month of April registered a growth of 17.6% YoY vs. 1.1% last year. The growth was way ahead of consensus expectation of 14%. May headline WPI inflation at 10.16% YoY came above consensus. Interestingly, March numbers have been revised from 9.9% to 11.04%. Global markets rallied on the back of positive numbers from China and easing out of the European crisis. A statement by China on possibility of revaluing Chinese Yuan improved sentiments. The market also reacted positively to the stability in the European markets as seen from the successfully auction of 10-years bonds. However, the euphoria in global equity markets over a possible revaluation of Chinese currency evaporated quickly. As the euphoria fizzled out, the euro-zone crisis was back in focus. Market sentiments were dampened after the Federal Reserve indicated that high levels of debt in Europe might have an impact on the US economic growth. The growth outlook for the Indian economy has improved significantly, as three key risk factors have turned benign: 1) commodity prices have cooled off; 2) initial estimates suggest a normal monsoon this year; and 3) the 3G bonanza and deregulation of auto fuel has reduced worries on the fiscal front. Growth is back and is fairly broad-based. Bottom up continues to look good with a strong earning outlook. Strong resilience and robust outlook for the country would continue to attract foreign inflows. Debt Market Update The bond markets were bearish in the month of June due to high inflation, strong IIP growth and tight liquidity condition. The 10-year benchmark bond yield moved up by 14 bps to 7.66% before closing at 7.54%. The short-term interest rate was further reversed due to tight liquidity conditions. IIP grew by 17.6% in April, which is far above the market expectation of 13.5%. Capital goods surprisingly grew by 72.8% and consumer durables continued to do well with a growth of 37%. This reading indicates that the economy is picking up and makes for a case for RBI to tighten it policies. WPI inflation in May accelerated to 10.16%. Food and manufacturing group mainly drove this acceleration in inflation. Inflation in primary article group is again firming up due to higher tea and cane sugar prices. Hike in petroleum products and LPG prices would further increase inflationary expectation. Inflation should start to moderate in H2 of FY 2011, assuming normal monsoon and steady global oil prices. Short-term interest rate is expected to ease in July due to improving liquidity condition as government spending kicks in along with lower supply of short-term papers. Large government borrowings in H1 FY 11 would put pressure on long-term interest rates and may be challenging due to high inflation, strong recovery in growth, lower liquidity and private credit demand. However, benign global interest rate scenario and strong revenue collection from 3G auction are helping the market to remain bullish in short term. We expect the 10-year yield to remain volatile and trade in the range of 7.4% to 7.7%.

2 April 06 - Rs. 10.1, July 09 - Rs. 3

3 Feb 07 - Rs. 6, Dec 05 - Rs. 11, Mar 05 - Rs. 2

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6 Rs. 5,000 in multiples of Re. 1/- thereafter Rs. Rs.

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10 Need stable returns month-on-month? Invest in Baroda Pioneer Monthly Income Plan (MIP) Fund (An Open Ended Income Scheme) What is Monthly Income Plan? The uncertainty in the equity market and scenario of changing fixed income returns, sip your investments need a better option. The Baroda Pioneer MIP Fund is a mixture of Debt and Equity instruments. Monthly Income Plan or MIP is a hybrid fund that invests a small portion of its investment in equities (0-20%) while the rest is invested in Debt (0-100%). Monthly Income Plan relies on a small dosage of equities in a predominantly debt portfolio, to provide a boost to returns. What is the Scheme all about? To generate regular income through investment in debt and money market instruments and also to generate long-term capital appreciation by investing a portion in equity and equity related instruments. Why Monthly Income Plan The Scheme will largely invest in debt and marginally in equity stocks. Investment in equity brings scope for capital appreciation. Investments in debt & money market instruments provide guaranteed returns at a steady rate over a period. Potential of higher returns from equity is balanced with lower volatility from debt investments. Potential Regular declaration of Dividend. Performance (%) Since Month Month Months Years Years Years Inception Baroda Pioneer MIP Fund Crisil MIP Blended Index NAV Rs and returns as on 30 June Inception date 10th September Returns are CAGR for more than one year and all returns are calculated for growth option. Past performance may or

11 Why should one consider investing in Baroda Pioneer Mutual Fund? Baroda Pioneer Asset Management Company Limited is a joint venture between two large and well-established financial services companies - Bank of Baroda and Pioneer Investments SpA. (Visit for more details) Baroda Pioneer Mutual Fund products cater to the unique asset management needs of the Indian investor Baroda Pioneer Mutual Fund manages assets of about Rs crs. (as on 30th June 2010) Our Fixed Income investment philosophy involves active management of key drivers like credit outlook, duration, curve positioning and security selection Effective control of risk is an essential element in the management of all Baroda Pioneer products What is the asset allocation strategy of the scheme? Equity & Equity Related Instruments 0-20 Money Market, Instruments, Debt Securities, Securitised Debt & Cash and Call Instruments Securities Debt 0-20 What are the other scheme details? Benchmark Investment Options Load Structure About Us CRISIL MIP Blended Index There are two options available under this scheme for the investors Growth Option Dividend Option (Monthly/Quarterly) Entry Load: Nil Exit Load: 1.0% if redeemed on or before 12 months Minimum subscription Rs. 5,000/- and in multiples of Re. 1,000/- under each Plan thereafter Minimum Additional Rs. 1,000/- and in multiples of Re. 1/- application amount thereafter Baroda Pioneer Asset Management Company Limited: Baroda Pioneer Asset Management Company Limited is a joint venture between two large and well established financial services companies - Bank of Baroda and Pioneer Investments. Baroda Pioneer Mutual Fund is positioned to serve the varied asset management needs of investors in India through a range of equity, debt and money market offerings. Since the formation of the joint venture in 2008, Baroda Pioneer has have been working relentlessly to create an operational and servicing platform well suited to the exacting requirements of our existing and potential investors. The company currently operates out of 15 locations in India. About Bank of Baroda: In the Indian banking universe, Bank of Baroda occupies a distinct position. Bank of Baroda is a state-owned bank with more than 100 years of successful existence. The biggest strength is its uninterrupted profit performance and consistent record in dividend payments. The name inspires confidence among its customers. A consistent track-record, sound financials and its contribution to social sectors and policy-making has given Bank of Baroda a unique place in Indian banking universe. Bank of Baroda s vast distribution channel of domestic branches (at 3,100 on 31st March, 2010), extension counters and ATMs (at 1,261), and a strong international presence in 25 countries (excluding India) covering regions like U.S.A., U.K., Africa, Middle East and Asia Pacific zones has ensured a wide global client base of 36.5 million. About Pioneer Global Asset Management SpA: With 80 years experience in fund management, Pioneer Investments (the Group ) has a history few asset management companies can match. Pioneer Investments flagship fund, Pioneer Fund, is the third oldest mutual fund in the United States. It has not only weathered volatile market conditions, but has outperformed common stocks, long term bonds, US Treasury Bills and inflation since its foundation in Innovation is part of Pioneer heritage. At the forefront of the establishment of the modern US mutual fund industry, Pioneer Investments is an industry leader in the development of this market in Europe. The Group was the first asset management company to launch investment funds in Italy, first in Germany to register US mutual funds under the Foreign Investments Act, and first to distribute open-ended investment funds in Poland. The main activity of Pioneer Investments is the management and distribution of over 180 investment funds and alternative investments. With investment centres in Boston, Dublin, Milan and Singapore, it manages assets worth billion as on 31st May, Headquartered in Milan, Pioneer Investments has a presence in over 31 countries around the world. The investment process is active, bottom-up and research-driven, based upon the principles of fundamental investing that Pioneer Investments as used since The approach enables Pioneer Investments to make informed judgements about how industries and companies have operated in the past, about their future behaviour and about the effects of these variables on stock prices. We add a strong quantitative discipline to this process, which supports the work of fundamental analysts and keeps a close check on the investment risks for its funds *Pioneer Investments is a trading name of the Pioneer Global Asset Management S.p.A. group of companies ( PGAM ).PGAM is a wholly owned subsidiary of UniCredit S.p.A. Investment Objective: To generate regular income through investment in debt and money market instruments and also to generate long-term capital appreciation by investing a portion in equity and equity related instruments. Statutory Details: Baroda Pioneer Mutual Fund has been set up as a Trust under the Indian Trust Act, Sponsors: Pioneer Global Asset Management S.p.A and Bank of Baroda. Trustees: Board of Trustees of Baroda Pioneer Mutual Fund. Investment Manager: Baroda Pioneer Asset Management Co. Ltd. Risk Factors: All Investments in Mutual Fund and securities are subject to market risk and there is no assurance or guarantee that the objective of the Scheme will be achieved. The name of the scheme does not in any manner indicate the quality or future prospect of the scheme. The NAV of the scheme can go up or down depending upon the factors and forces affecting the capital market. Past performance of the scheme, the sponsors or its group affiliates are not indicative of and do not guarantee future performance of the scheme. The sponsor is not responsible or liable for any loss resulting from the operation of the scheme beyond their initial contribution of Rs. 10 lacs towards setting up of the Mutual Fund and such other accretions and additions to the corpus. Please read the Statement of Additional Information (SAI) and Scheme Information Document (SID) carefully before investing. Investor are advised to refer to the details in the Statement of Additional Information and independently refer to his tax advisor.

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