Circular Letter CVM/SIN 02/99

CIRCULAR LETTER/CVM/SIN/No. 002/99
Rio de Janeiro, 06/10/1999
Subject: CVM Instructions No. 302 and No. 305, of May 5, 1999.

Dear Sir,

We use this opportunity to clarify some doubts that have reached our knowledge regarding the recently issued CVM Instructions No. 302 and No. 305, both from May of the current year:

Regarding Instruction No. 302/99:

1. The main paragraph of Article 45 states that resolutions taken in a general meeting, which must be installed with the presence of at least one unitholder, are taken by the criterion of the majority of the shares held by the unitholders present, with one vote assigned to each share. The sole paragraph and its item I establish, for closed-end funds, which decisions can only be approved by the vote of unitholders who hold the absolute majority of the issued shares. In the case of open-end funds, item II of the sole paragraph only confirms the general rule established in the main paragraph of the article, that is, that resolutions are taken by the majority of the shares held by the unitholders present.

2. Taking into account the provisions of Article 49, we emphasize that the fund administrator and the portfolio manager, even when managing exclusive funds, cannot delegate to the unitholder the responsibility for investment decisions or for transmitting buy and sell orders for the fund's assets.

3. The correct understanding of the sole paragraph of Article 66 is that all documents to be forwarded to the CVM must be signed by the director or managing partner responsible for the administration of the fund.

4. Article 109 determines that funds that are already in operation must comply with the provisions of Instruction 302 until 11/06/99. With the aim of facilitating adaptation to the new deadlines for the preparation of accounting statements related to investment funds governed by CVM Instruction No. 215/94, and in transition to the new Instruction 302/99, the aforementioned statements must be sent to the CVM and published until November 30, 1999, covering the period from January 1 to September 30, 1999. Exceptionally, for comparability purposes, the accounting statements of September 1999 must be compared with those of December 1998, and the statements of March 2000 with those of September 1999.

Regarding CVM Instruction No. 305/99:

1. Article 6 deals with the criteria for pricing in the absence of an active market for a specific security. In the main paragraph of the article, when dealing with equity investments, an incorrect reference was made to item II of Article 3. The correct reference is to paragraph 1 of Article 3.

2. The obligation to adapt the accounting statements provided for in items "a", "b", and "c" of item I of Article 36 of CVM Instruction No. 215/94 to the models annexed to CVM Instruction No. 305/99, referring to months prior to September 1999, is postponed.

Sincerely,

CARLOS EDUARDO P. SUSSEKIND
Superintendent of Institutional Investor Relations