In December - 2002 the Brazilian funds industry had a total of R$ 344 billion in Assets Under Management - AUM, the same figure as at the end of 2001.
This was due to a net outflow of R$ 64.7 billion and an appreciation in value of the securities held by the funds of the same amount.
For the negative figure of the Net New Cash, the main reasons were:
-- A early than expected change in the MTM regulation, which made even money market funds to eventually show negative performance; that made investors to redeem and transfer money to savings accounts, perceived as a safe haven at that time; and
-- Abnormal market volatility caused by the Brazilian presidential election in October.
On the other hand, this volatility has pushed the Central Bank to keep a tight monetary policy, increasing the nominal base rate. As most of the Brazilian funds invest in floating rate debt securities, the return of funds' assets was not hurt. However, this scenario has kept investors away from equity funds, which represented only 8% of the industry.

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Table I
Investment Funds
                          AUM
Period     In current     Inconstant2     In US$     Number     Exchange
           R$ millions    R$ millions     millions3  of funds      rate1
------------------------------------------------------------------------
1994       46,021.74      121,303.69      54,399.22      802      0.8460
1995       61,886.65      142,116.34      63,636.66      939      0.9725
1996      115,907.96      243,440.63     111,514.30    1,364      1.0394
1997      128,825.31      251,738.44     115,393.51    1,777      1.1164
1998      146,962.96      282,371.29     121,587.62    1,800      1.2087
1999      220,936.81      353,812.94     123,497.38    1,973      1.7890
2000      297,104.31      433,297.61     151,940.43   2, 304      1.9554
2001      344,413.38      455,031.24     148,428.45    2,524      2.3204
2002      344,483.05      360,035.51      97,496.12    2,817      3.5333
June 2003 408,946.93      408,946.93     142,390.99    2,773      2.8720
========================================================================

1 In January 1999, Brazil has changed its exchange system and adopted floating rate regime
2 In constant currency of the last month, deflated by the IGP - General Price Index
3 Average of the month end open market rate

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Table 2
Funds of Funds
                          AUM
Period     In current     In constant4     In US$     % share     Number
           R$ millions    R$ millions      millions5  in the    of funds
                                                      Total6
                                                      AUM
------------------------------------------------------------------------
1994           22.88         60.30          27.04       0.05          28
1995       15,455.85     35,492.78      15,892.91      24.97         235
1996       32,739.71     68,762.96      31,498.66      28.25         666
1997       48,791.71     95,344.21      43,704.50      37.87         837
1998       70,593.15    135,636.08      58,404.20      48.03         893
1999      112,631.00   180,369.700      62,957.52      50.98       1,101
2000      160,613.39   234,238.949      82,138.38      54.06       1,336
2001      189,407.09    250,240.39      81,626.91      54.99       1,512
2002      166,053.15    173,549.99    46,996.6174      48.20       1,607
June 2003 211,082.72    211,982.72    73,496.7693      51.62       1,736
========================================================================

4 In constant currency of the last month, deflated by the IGP - General Price Index
5 Average of the month end open market rate.
The two segments that benefited from this environment were the Diversified Funds, which can more rapidly adapt their portfolio to market changes, and Pension Schemes Funds.
Pension Scheme Funds, which more than doubled their share in the total resources of funds in 2002, registered a net inflow of R$ 3.1 billion in the first semester of 2003.
Albeit the growth perspective for this segment remains high, it represents a mere 3.6% of the total industry.
For the whole industry, the figures for the first semester of 2003 show a much better scenario.
With the infusion of new cash, a net inflow of R$ 26.6 billion was recorded, which combined with a R$ 37.8 increase in the market value of the securities, raised the total AUM to the R$ 408.9 billion mark.

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Table 3
Data on Annual AUM -% Distribution per type
                    Fixed      Money                           Pension     Privati
Period     Equity   income   Market   Currency   Diversified   schemes     zation      Other
--------------------------------------------------------------------------------------------
1994        7.241    92.70      -        -         -              -           -         0.06
1995         2.77    83.45      -       0.37        13.24         -           -         0.17
1996         3.89    83.55      -       1.22        11.18         -           -         0.16
1997        11.22    79.90      -       0.79         7.82         -           -         0.27
1998         8.53    56.43    27.62     0.82         6.01        0.10         -         0.51
1999         9.22    50.21    33.56     1.10         5.45        0.36         -         0.09
2000         7.28    55.20    30.46     1.19         4.16        0.78        0.84       0.10
2001         6.41    37.42    29.34     2.12        22.46        1.44        0.72       0.08
2002         7.84    33.97    25.41     1.73        26.64        2.98        1.33       0.10
June 03      6.69    35.23    25.32     1.57        26.57        3.59        0.97       0.06
============================================================================================

Note: In April, 2001 reclassification of funds took place.
The portfolio composition of the Fixed-Income Funds shows a concentration of investments in Government Securities in spite of the reduction registered between 2001 and 2002: from 71% to 62%, respectively, this reduction, however, was offset by the increasing share of repurchase agreements ("repos"), which are actually collateralized by Federal Bonds.

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Table 4
Portfolio composition of the fixed-income funds as% of the AUM7
         Federal  State and                        Other
Period   Public   Municipal      CSDs  Debentures  Fixed   Stock   Repos   Other
         Bonds    Public Bonds                     Income         (Cash)
---------------------------------------------------------------------------------
1995     32.59    3.75           29.6    3.6        0.9     0.1     20.9      8.5
1996     38.01    3.18           13.1    2.8        1.0     0.2     33.7      8.3
1997     44.17    2.71           15.1    2.6        0.6     0.7     29.3     3 89
1998     70.42     2.4            8.8    1.8        1.1    0.80     11.2     4.55
1999     78.49     0.2            6.4    1.8        0.7     0.7     10.0      2.2
2000     73.89     0.7            5.2    2.7        0.3     0.0     13.1      3.2
2001     70.61     0.0            8.3    4.7        0.3     0.8     14.7      1.2
2002     61.99     0.1            6.6    4.9        0.3     0.8     23.4      2.1
June 03  66.62     0.1            8.4   4.36        0.6    0.90     17.8      1.3
=================================================================================

Source: Central Bank of Brazil
7 Not including the AUM of Equity Funds
The process of consolidating in the banking system has led to an increase in the industry concentration, as most of the fund were distributed through banks. During the year 2002, ten institutions were acquired or shut down their asset management unit, which lowered the number of managers to 110 in December. In 2001, the top 10 accounted for 72% of the AUM, but in 2002 their share grew only to 74%.
As for the 5 leading managers in 2002, they were responsible for over 53% of the AUM of the industry, versus 51% by the end of 2001.
This trend of consolidation is still continuing, whereas in the first semester of 2003 the number of administrators was reduced by 8 players, or 7%.

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Table 5
Number of Administrators and Concentration
                                        % Concentration of the
          Number of       Variation     AUM of the 10 leading     % Concentration of
          Administrators  (%)           administrators              the AUM of the 5
Period                                                        leading administrators
------------------------------------------------------------------------------------
1993         175               -               58.1                             39.8
1994         188              7.3              57.2                             38.9
1995         172             (8.1)             66.1                            46.12
1996         171             (0.8)             66.6                            47.87
1997         158             (7.0)             64.3                            45.35
1998         149             (5.0)             65.7                            48.81
1999         133            (10.4)             67.0                            47.24
2000         131             (1.0)             69.3                            49.42
2001         120             (8.0)             72.3                             51.4
2002         110            (8.33)             74.3                            53.32
June 03      102            (7.27)             76.5                            55.57
====================================================================================

Couresy: MUFAP