CVM INSTRUCTION NO. 304, OF MAY 5, 1999, WITH THE CHANGES INTRODUCED BY CVM INSTRUCTION NO. 326/00.

CVM INSTRUCTION NO. 304, OF MAY 5, 1999.

Provides for investment funds in shares of investment funds in securities.

THE PRESIDENT OF THE SECURITIES AND EXCHANGE COMMISSION - CVM makes public that the Collegiate Board, in a meeting held on this date, in view of the provisions of CMN Resolution No. 1787, of February 1, 1991, and Art. 19 of Law No. 6.385, of December 7, 1976, HAS DECIDED to issue the following Instruction:

Art. 1 The investment fund in shares of investment funds in securities is governed by this Instruction and by the general norms issued by the Securities and Exchange Commission.

Art. 1 The investment fund in shares of investment funds in securities is governed by this Instruction and by general norms issued by the Securities and Exchange Commission on investment funds in securities. (NR)

• Article with wording given by CVM Instruction No. 326, of February 11, 2000.

Art. 2 The fund must maintain, at minimum, ninety-five percent of its assets invested in shares of investment funds in securities.

§1 Only share funds intended exclusively for qualified investors may acquire shares of mutual investment funds in emerging companies. (NR)

• §1 added by CVM Instruction No. 326, of February 11, 2000.

§2 The fund that acquires shares of funds that cover an administration fee based on its result (performance fee) must meet one of the following conditions:

I - require a minimum individual value of the initial investment and of staying in the fund of R$ 50,000.00 (fifty thousand reais) and of other movements of R$ 5,000.00 (five thousand reais);

II - be intended exclusively for qualified investors. (NR)

• §2 and items added by CVM Instruction No. 326, of February 11, 2000.

CVM INSTRUCTION NO. 304, OF MAY 5, 1999

Art. 3 The remaining five percent of its assets may be kept in:

Art. 3 The remaining five percent of its assets may be kept in demand deposits or invested in: (NR)

• "Caput" with wording given by CVM Instruction No. 326, of February 11, 2000.

I - shares of financial investment funds (FIF), shares of funds applying in shares of FIF, and shares of investment funds abroad;

II - bonds issued by the National Treasury or the Central Bank of Brazil;

III - fixed-income bonds issued by financial institutions; and

IV - committed operations, according to the specific regulation of the National Monetary Council - CMN.

Art. 4 The prospectus and the fund regulations must specify the maximum percentage of assets that can be invested in a single fund.

Art. 5 The fund that invests in shares of funds that carry out operations with derivatives, which may result in significant asset losses or negative net equity, must explicitly state, respectively, on the cover of its prospectus, and in all disclosure material, one of the following warnings, as the case may be:

Art. 5 The fund that invests in shares of funds that carry out operations with derivatives, which may result in significant asset losses or negative net equity, must explicitly state, respectively, on the cover of its prospectus, and in all disclosure material, one of the following warnings, as the case may be: (NR)

• "Caput" with wording given by CVM Instruction No. 326, of February 11, 2000.

I - "THIS FUND INVESTS IN FUNDS THAT USE DERIVATIVE STRATEGIES AS AN INTEGRAL PART OF THEIR INVESTMENT POLICY. SUCH STRATEGIES, AS ADOPTED, MAY RESULT IN SIGNIFICANT ASSET LOSSES FOR ITS SHAREHOLDERS."; or

II - "THIS FUND INVESTS IN FUNDS THAT USE DERIVATIVE STRATEGIES AS AN INTEGRAL PART OF THEIR INVESTMENT POLICY. SUCH STRATEGIES, AS ADOPTED, MAY RESULT IN SIGNIFICANT ASSET LOSSES FOR ITS SHAREHOLDERS, AND MAY EVEN CAUSE LOSSES HIGHER THAN THE CAPITAL APPLIED AND THE CONSEQUENT OBLIGATION OF THE SHAREHOLDER TO PROVIDE ADDITIONAL RESOURCES."

CVM INSTRUCTION NO. 304, OF MAY 5, 1999

Art. 6 The fund administrator is obliged to include in the semi-annual report information on the average monthly volumes of the rates paid by the fund, as well as information on the portfolios of these funds that represent more than thirty percent of the share fund's portfolio.

Art. 6 The fund administrator is obliged to include in the semi-annual report information on the administration fees and portfolios of the funds that represent more than thirty percent of the applications. (NR)

• Article with wording given by CVM Instruction No. 326, of February 11, 2000.

Art. 7 The fund prospectus must also provide for the investment policy of the funds in which it intends to invest.

Art. 8 Violations of the norms of this Instruction are subject to the summary procedure of the administrative process, in accordance with the CMN regulation.

Art. 9 This Instruction enters into force ninety days after its publication in the Official Gazette of the Union.

Original signed by

FRANCISCO DA COSTA E SILVA
President