Circular Letter CVM/SMI 05/07

CIRCULAR LETTER CVM/SMI No. 005 / 2007
Rio de Janeiro, November 29, 2007.
Subject: New form for communication of portfolio non-compliance of investment funds regulated by CVM Instruction No. 409/04.

Dear Sir,

Article 88, paragraph 1, of CVM Instruction No. 409/04 provides that:

"Article 88. The administrator and the manager are liable for failure to observe the concentration limits by issuer and by financial asset category, portfolio composition and concentration, and concentration in risk factor, established in this Instruction and in the Bylaws.

Paragraph 1. Without prejudice to the manager's liability, the administrator must inform the manager and the CVM of the occurrence of non-compliance, by the end of the day following the date of the non-compliance. ..........................................................................................................................................."

2. In order to facilitate communications to the CVM referred to in the article of the Instruction reproduced above, starting from December 3, 2007, a new electronic form will be available in the CVMweb system, named "Portfolio Non-Compliance Communication", which must be used by administrators and managers of funds to comply with the obligation contained in the Instruction.

3. Starting from January 1, 2008, the use of the new form will become mandatory for all communications of portfolio non-compliance of funds, and the CVM's routine inspection checklist for investment funds will include a specific item, intended to verify internal controls, routines, and distribution of responsibilities in these communications.

4. Finally, access to the form can be made through the CVM website, using the following sequence of links:
   CVMweb > Document Submission > Submission of documents via Form > Portfolio Non-Compliance Communication.

Sincerely,

Signed original by
WALDIR DE JESUS NOBRE
Superintendent of Market Relations and Intermediaries