EXPLANATORY NOTES 1.Operational Context | 2. Benefit Plans | 3. Presentation of the Financial Statements | 4. Relevant Fact |
5. Main Accounting Practices | 6. Receivables - Pension Program | 7. Receivables - Investment Program | 8. Fixed Income | 9. Variable Income | 10. Real Estate Investments | 11. Operations with Participants |
12. Investments - PREVI Futuro Plan | 13. Investments - Annuity Portfolio - CAPEC | 14. Operating Liabilities | 15. Contingency Liabilities | 16. Actuarial Liabilities | 17. Mathematical Provisions - Benefit Plan 1 | 18. Mathematical Provisions - PREVI Futuro | 19. Technical Balance | 20. Found | 21. Income Statement


The Variable Income portfolio on December 31st, 2006 and 2005 may be demonstrated as follows:

The equity variation of the Variable Income portfolio totaled R$ 17,585,481 thousand, generated by the following events: investments of R$ 517,725 thousand, disinvestments of R$ 3,092,954 thousand, valuation of R$ 20,045,929 thousand, and receivable amounts totaling R$ 114,781 thousand.

a) Stock Market

The spot stock market includes shares from various companies. Based on their transacted financial volume, the most important are: Petrobras, Banco do Brasil, Ambev, Itaubanco, Embraer, Bradesco, Neoenergia, Usiminas, Vale do Rio Doce, Arcelor Brasil, Itausa, Paranapanema, Perdigão, Telemar and All América Latina.

The accounting values of the shares belonging to companies in receivership or in bankruptcy proceedings (Banco Econômico, Casa Anglo and Banco Nacional), acquired during the period of 1991 to 1998, totaling R$ 18,770 thousand, continue recorded in provision for losses.

b) Investment Funds

The exclusive BB Active Portfolio and PREVI's own portfolio include the recordings of the Litel Participações S.A. shares. This specific purpose company (SPE) has interest in the Valepar company that controls the Cia. Vale do Rio Doce. Since Litel shares are not negotiated in the market (although indirectly they represent Cia Vale do Rio Doce shares) this interest is evaluated at economic value since the year of 2002.

In 2006, the restatement of PREVI's interest in Litel elevated its value to R$ 18,001,496 thousand. Part of this amount, according to item 8 of these Notes, is allocated in the BB Fixed Income Fund IV (R$ 1,570,030 thousand).

The Free Portfolio 1 BB fund detains 84% of the 521 Participações S.A. company, another specific purpose company (SPE), which has interest in the electric sector such as CPFL Energia and the Neoenergia Group.

During 2006, the economic evaluation of the companies 521 Participações (R$ 5,903,250 thousand) and Neoenergia (R$ 2,437,712 thousand) was performed and are recorded in the Free Portfolio 1 BB fund and in PREVI's own portfolio. Part of this amount is allocated in the exclusive BB Fixed Income Fund IV (R$ 926,830 thousand).

See item 8 of these Notes (BB Fixed Income IV).

c) Shares not Quoted in the Stock Market

(i) Own Portfolio

PL: Net Equity

(ii) Exclusive Investment Funds

PL: Net Equity