Provida Pension Fund Administrator – ‘20-F’ for 12/31/02

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Annual Report of a Foreign Private Issuer   —   Form 20-F
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 20-F        Annual Report of a Foreign Private Issuer            176    795K 
 2: EX-1.1      Underwriting Agreement                                 4     19K 
 3: EX-8.1      Opinion re: Tax Matters                                1      4K 
 4: EX-10.1     Material Contract                                      1      7K 

20-F   —   Annual Report of a Foreign Private Issuer
Document Table of Contents

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
Form 20-F 

 |_| Registration Statement pursuant to Section 12(b) or (g)
of the Securities Exchange Act of 1934

OR

|X|  Annual Report pursuant to Section 13 or 15(d) of the 
 Securities Exchange Act of 1934
 For the fiscal year ended December 31, 2002

OR

|_|  Transition Report pursuant to Section 13 or 15(d) of 
 The Securities Exchange Act of 1934

 Commission File Number: 1-13406
Administradora de Fondos de Pensiones Provida S.A.
(Exact name of Registrant as specified in its charter)

Provida Pension Fund Administrator                Republic of Chile     
 (Translation of Registrant's name into      (Jurisdiction of incorporation or
   English)                                organization)
------------------
 Avenida Pedro de Valdivia 100
 Santiago, Chile
(Address of principal executive offices)

 Securities registered or to be registered pursuant to Section 12(b) of the Act:

                                                        [Enlarge/Download Table]
                                                                                          
           Title of each class:                 Name of each exchange on which registered:
Common Stock, without nominal (par) value               New York Stock Exchange*          
        American Depositary Shares                      New York Stock Exchange           
           each representing                                                              
     fifteen shares of Common Stock,                                                      
       without nominal (par) value                                                        
----------                                                                                
* Not for trading, but only in connection with the registration of American               
Depositary Shares, pursuant to the requirements of the Securities and Exchange            
Commission.                                                                               

    Securities registered or to be registered pursuant to Section 12(g) of the
Act.                            None                                            
----            
  Securities for which there is a reporting obligation pursuant to Section
15(d) of the Act.               N/A                                             
---             

     Indicate the number of outstanding  shares of each of the issuer's  classes
of capital or common  stock as of the close of the period  covered by the annual
report.                                                                         

Common Stock, without nominal (par) value -- 331,316,623              

     Indicate  by check mark  whether the  Registrant  (1) has filed all reports
    required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of                                                                              
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
Registrant  was required to file such  reports) and (2) has been subject to such
filing requirements for the past 90 days.                                       

Yes      |X|      No       |_|                                

  Indicate by check mark which financial statement item the Registrant has
elected to follow:                                                              

Item 17  |_|      Item 18  |X|                                

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                                                                            Page
PRESENTATION OF INFORMATION                                                    3
Item 1. Identity of Directors, Senior Management and Advisers                  3
Item 2. Offer Statistics and Expected Timetable                                3
Item 3. Key Information                                                        4
Item 4. Information on Provida                                                11
Item 5. Operating and Financial Review and Prospects                          61
Item 6. Directors, Senior Management and Employees                            83
Item 7. Major Shareholders and Related Party Transactions                     90
Item 8. Financial Information                                                 93
Item 9. The Offer and Listing                                                 94
Item 10. Additional Information                                               98
Item 11. Quantitative and Qualitative Disclosures About Market Risk          104
Item 12. Description of Securities Other Than Equity Securities              106
Item 13. Defaults, Dividend Arrearages and Delinquencies                     106
Item 14. Material Modifications to the Rights of Security Holders and Use of    
         Proceeds                                                            106
Item 15. Control and Procedures                                              106
Item 16. [Reserved]                                                          106
Item 17. Financial Statements                                                107
Item 18. Financial Statements                                                107
Item 19. Exhibits                                                            107

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 PRESENTATION OF INFORMATION

In this annual report, references to "$", "US$", "US dollars" and     
"dollars" are to United States dollars and ThUS$ to thousands of US dollars,    
references to "pesos" or "Ch$" are to Chilean pesos, references to "Ch$         
million" or "MMCh$" are to millions of Chilean pesos, and references to "UF"    
are to "Unidades de Fomento." The Unidad de Fomento ("UF") is a unit of account 
that is linked to, and is adjusted daily to reflect changes in, the Chilean     
consumer price index. At December 31, 2002, a UF was equivalent to              
Ch$16,744.12. Percentages and certain dollar and peso amounts contained herein  
have been rounded for ease of presentation. Unless otherwise indicated, the     
exchange rate used to translate peso amounts into dollars appearing throughout  
this annual report is the Dolar Observado (the Observed Exchange Rate) reported 
by the Banco Central de Chile (the "Central Bank") on December 31, 2002, which  
was Ch$718.61 = US$1.00. These translations should not be construed as          
representations that the peso amounts actually represent such dollar amounts or 
could be converted into dollars at the rates indicated or at any other rate.    
Peso amounts presented herein in terms of "constant" Chilean pesos are          
expressed in pesos as of December 31, 2002, by adjusting year on year           
inflation.                                                                      

As used herein, the terms "AFP Provida", "Provida", and "the Company",
unless the context otherwise requires, refers to Administradora de Fondos de    
Pensiones Provida S.A. References to "AFP" or "AFPs" refer to private pension   
fund administrators in general.                                                 

As used in this annual report, the term "billion" means one thousand  
million (1,000,000,000).                                                        

As used in this annual report, the term "trillion" means one thousand 
billion.                                                                        

   As used in this annual report and related to Provida's business, the term
"affiliate" means a client that has made at least one time contributions in his 
individual capitalization account and "cotizante" or "contributor" means        
affiliate currently making pension contributions.                               

PART I

 Item 1. Identity of Directors, Senior Management and Advisers

Not Applicable.                                                       

Item 2. Offer Statistics and Expected Timetable 

Not Applicable.                                                       

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 Item 3. Key Information

Selected Financial Data                                                         

   The following table presents selected financial and operating information
for Provida as of the dates and for each of the periods indicated. This         
information should be read in conjunction with, and is qualified in its         
entirety by reference to, the Audited Consolidated Financial Statements and the 
Operating and Financial Review and Prospects included in Item 5 and appearing   
elsewhere in this annual report. The selected financial information as of and   
for each of the years ended December 31, 1998, 1999, 2000, 2001 and 2002 has    
been derived from the Audited Consolidated Financial Statements, which have     
been audited by Deloitte & Touche for Fiscal Years 1998, 1999 and 2002 and by   
Arthur Andersen - Langton Clarke for Fiscal Years 2000 and 2001, independent    
public accountants. The reports of Deloitte & Touche on the Audited             
Consolidated Financial Statements for Fiscal Year 2002 and Arthur Andersen -    
Langton Clarke for Fiscal Years 2000 and 2001which appear in the Audited        
Consolidated Financial Statements is included elsewhere in this annual report.  

The Audited Consolidated Financial Statements have been prepared in   
accordance with Chilean GAAP, which differs in certain significant aspects to   
U.S. GAAP. Note 42 to the Audited Consolidated Financial Statements provides a  
description of the principal differences between Chilean GAAP and U.S. GAAP and 
a reconciliation of net income and shareholders' equity as of and for the years 
ended December 31, 2000, 2001 and 2002, respectively, between Chilean GAAP and  
U.S. GAAP.                                                                      

 Pursuant to Chilean GAAP, the financial data in the following table for
all periods are restated in constant Chilean pesos of December 31, 2002. See    
Note 1 to the Audited Consolidated Financial Statements.                        

                                                        [Enlarge/Download Table]
                                              ------------------------------------------------------------ 
                                                  As of and for the Twelve Months ended, December 31,      
                                              ------------------------------------------------------------ 
                                                 1998      1999       2000      2001      2002     2002    
                                              ------------------------------------------------------------ 
                                                    (In millions of Ch$ and thousands of US$)(1)(2)        
INCOME STATEMENT DATA                            Ch$        Ch$       Ch$        Ch$      Ch$       US$    
                                                                                                           
Chilean GAAP:                                                                                              
Operating revenues                                78,496   106,861     98,919   102,163  105,321   146,562 
Operating cost and expenses                      (59,012)  (74,917)   (66,083)  (69,757) (69,591)  (96,841)
Income from operations                            19,485    31,944     32,836    32,406   35,731    49,721 
Non-operating expenses - net                        (557)   (9,564)    (1,326)   10,928    1,742     2,424 
Income taxes                                      (2,168)      366        743   (12,276)  (3,466)   (4,823)
Extraordinary items                                                               2,272                    
Net income                                        16,760    22,746     32,253    33,330   34,007    47,322 
Earning per share and per ADS (3) (4) (6)                                                                  
Income from operations per share (6)                  78       118         99        98      108      0.15 
Net income per share(6)                               67        84         97       101      103      0.14 
Dividends per share and per ADS(4)(5)(6)             616        44         30        57       74      0.10 
Dividends per share and per ADS (in US$)(4)(5)(6)   1.24      0.08       0.06      0.08     0.10           
US GAAP:                                                                                                   
Operating revenues                                78,496   106,861     98,919   102,163  105,321   146,562 
Operating cost and expenses                      (59,012)  (74,917)   (66,083)  (69,757) (69,591)  (96,841)
Income from operations                            19,485    31,944     32,836    32,406   35,731    49,721 
Non-operating expenses - net                      (2,811)  (11,154)    (8,436)   28,181   (1,185)   (1,649)
Income taxes                                      (3,646)   (3,012)    (3,314)  (13,393)  (4,041)   (5,623)
Net income                                        13,028    17,778     21,086    47,774   30,505    42,450 
Earning per share and per ADS(3)(4)                   52        66         64       142       92      0.13 

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                                                        [Enlarge/Download Table]
                                              ------------------------------------------------------------
                                                  As of and for the Twelve Months ended, December 31,     
                                              ------------------------------------------------------------
                                              ------------------------------------------------------------
                                                 1998      1999       2000      2001      2002     2002   
                                              ------------------------------------------------------------
                                                    (In millions of Ch$ and thousands of US$)(1)(2)       
INCOME STATEMENT DATA                            Ch$        Ch$       Ch$        Ch$      Ch$       US$   
                                                                                                          
Weighted average number of shares                249,780   270,987    331,317   331,317  331,317   331,317
outstanding (thousands)                                                                                   

BALANCE SHEET DATA                                                                                        
Chilean GAAP:                                                                                             
Current assets                                     6,018    11,666      5,357     7,099    8,593    11,957
Mandatory Investments                             39,282    64,188     68,358    74,953   79,395   110,484
Property, plant and equipment                     23,816    25,175     25,310    24,607   23,644    32,903
Total assets                                      96,433   196,451    233,577   212,208  216,168   300,814
Total shareholders' equity                        68,714   132,527    149,884   165,794  176,953   246,243

US GAAP:                                                                                                  
Current assets                                     6,018    11,666      5,254     9,153    8,593    11,957
Mandatory Investment                              39,282    64,188     68,358    74,953   79,395   110,484
Property, plant and equipment                     23,816    25,175     25,310    24,607   23,644    32,903
Total assets                                     100,344   200,572    223,584   195,214  195,877   272,578
Total shareholders' equity                        68,937   123,833    135,845   168,572  175,396   244,077
------------------------------------------------------------                                              
(1)  Except per share and per ADS data.                                                                   
(2)  Amounts stated in US dollars as of December 31, 2002 or for the twelve                               
     months ended December 31, 2001 have been translated at the observed                                  
     Exchange Rate of Ch$718.61 per US$1.00.                                                              
(3)  Net income per share and per ADS data under Chilean GAAP have been                                   
     calculated on the basis of the weighted average number of shares                                     
     outstanding during the year. Earning per share and per ADS data under US                             
     GAAP have been calculated on the basis of the weighted average number of                             
     shares outstanding during the year.                                                                  
(4)  Calculated on the basis of one share per ADS.                                                        
(5)  Dividends per share and per ADS in Chilean pesos represent actual                                    
     dividends paid restated to December 31, 2002. Dividends per share and per                            
     ADS in U.S. dollars have been calculated based on the pesos paid and the                             
     Observed Exchange Rate as of each date of payment.                                                   
(6)  In 1999, the number of shares was modified by exchanging 15 new shares of                            
     Provida's Capital Stock for each old share. The total number of                                      
     outstanding shares is 331,316,623.                                                                   


Exchange Rate Information                                                       

The following table sets forth, for the periods and dates indicated,  
certain information concerning the exchange rate between the Chilean peso and   
the US dollar. Such rates are provided solely for the convenience of the reader 
and are not necessarily the rates used by the Company in the preparation of the 
Audited Consolidated Financial Statements included elsewhere in this annual     
report. No representation is made that the Chilean peso could have been, or     
could be, converted into US dollars at the rates indicated below or at any      
other rate.                                                                     

                                                   Chilean pesos per US$1.00
                                                   -------------------------
Yearly amounts                                              Average rate        
--------------                                              ------------        
1998............................................              460.29            
1999............................................              508.78            
2000............................................              539.49            
2001............................................              634.94            
2002............................................              688.94            

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                NOMINAL RATE OF EXCHANGE
                (Chilean pesos per Dollar)
  Months              Monthly Average             High                   Low
October 2002                 742.32                756.56                731.95 
November 2002                709.48                728.46                697.22 
December 2002                701.48                712.38                692.94 
January 2003                 722.48                738.87                709.22 
February 2003                745.21                755.26                733.10 
March 2003                   743.28                758.21                725.79 

Risk Factors                                                                    

In addition to the other information contained in this annual report, 
prospective investors should carefully consider the risks described below and   
the other information contained in this annual report. Provida's business,      
financial condition or results of operations could be materially adversely      
affected by any of these risks. This annual report also contains                
forward-looking statements that involve risks and uncertainties. Provida's      
future results could differ materially from those anticipated in these          
forward-looking statements as a result of certain factors, including the risks  
it faces as described below and elsewhere in this annual report.                

Risk Factors Relating to Provida's Business                                     

Provida has limitations on significantly increasing its market position.        

Since its inception, Provida has maintained a leading market position,
which has been reinforced during the last seven years through successful        
mergers and acquisitions of smaller and less efficient AFPs. In figures, the    
latter meant a market share increase from 29% to 40% in terms of affiliates and 
from 20% to 32% in terms of assets under management. As a consequence, Provida  
is a target of its competitors, in the sense that it is highly probable for     
competitors' sales forces to find affiliates of the largest AFP and persuade    
them to transfer their funds and participate in another AFP. This makes it more 
difficult for Provida to increase significantly its market share.               

  In the competitive environment of the year 2002, the Company was able to
outpace the industry in terms of the growth of its affiliate' base. Provida     
cannot ensure that it will be able to maintain the upward trend of its market   
position, even when. Any overall decrease in Provida's affiliate base could     
have a negative impact on its operating revenues.                               

Provida is limited in its ability to improve the performance of its Pension     
Funds.                                                                          

Also associated to Provida's leading position, is the fact that assets
under management are very large with respect to the local capital market, which 
reduces Provida's flexibility to significantly modify the structures of its     
portfolios. This is more relevant in situations of instability or uncertainty   
in the investment markets and could limit Provida's ability to improve the      
return on its Pensions Funds in critical market circumstances.                  

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The pension fund regulations regarding investments have been broadened
significantly since the creation of the private pension system. AFPs have been  
authorized to invest a percentage of pension funds outside of Chile and the     
Multiple Funds start up allowed lessening this risk factor by extending the     
number of Pension Funds from two to five, increasing flexibility to modify its  
portfolios. However, a general flexibility has not been observed yet because    
Fund Type C still concentrates a very important percentage (72.1%) of the total 
funds.                                                                          

  Provida cannot ensure that it will be able to maintain a sufficient rate
of return on its Pension Funds to attract new affiliates or decrease the number 
of affiliate transfers. Any overall decrease in Provida's affiliate base could  
have a negative impact on its operating revenues. Additionally, if Provida's    
pension funds returns do not fulfill the legal minimum requirements it could    
loose part of the Mandatory Reserve ("Encaje").                                 

Provida has always confronted a highly competitive environment.                 

    Before the merger and acquisition process that reduced the number of AFPs,
the industry was characterized by a high level of competitivity which took the  
form of large sales forces and a high number of transfers between AFPs with the 
obvious impact on sales expenses. At the end of 1997, the authority implemented 
regulatory changes aimed to formalize the transfers process (main source of     
AFPs costs), therefore the industry adopted a strategy more focused on fee      
competition, which has resulted in a gradual reduction in the level of fees     
charged to their affiliates.                                                    

   Provida is less affected by lower fee levels than most of its competitors
because of its size and its efficiency levels reflected in its lower            
administrative costs per affiliate. The Company cannot assure that this         
advantage will be maintained in the future considering the competitive and      
dynamic environment.                                                            

 Provida's returns in foreign companies investments could be affected by
changes in the regulatory environments, the exchange rates and the economic     
situation of the countries where they are located.                              

    Provida's subsidiary, Provida Internacional S.A. ("Provida Internacional")
maintains equity interests in private pension fund administrators operating in  
Peru, Colombia, Ecuador, Mexico and El Salvador. Like in Chile, such            
Administrators are highly regulated which generate certain stability.           
Nevertheless, Provida can not ensure that a change in the legal framework or in 
economic situation of those countries where these subsidiaries are located in,  
will not affect investment returns.                                             

Likewise, another risk factor is depreciation of domestic currencies  
respect to U.S. dollar and the evolution of the latter with respect to the      
Chilean currency, and its effect in foreign affiliates income and their         
respective return. Notwithstanding, this risk could be covered by taking        
forward contracts, if Provida considers it necessary.                           

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 Risk Factors Relating to the Chilean Pension Fund Administration Industry

  The economic situation in the country significantly affects Provida's results.

The main source of Provida's operating revenues stems from the monthly
fees charged to its affiliated members, which is determined by the number of    
its cotizantes as well as their average salaries. As a consequence, the         
economic situation in the country, especially economic activity evolution and   
conditions of employment affect significantly the Company's results, also       
determining financial capacity of employers. The latter might produce a drop in 
the number of contributors or the incapacity of creating new jobs as well as    
taxable income levels perceived by workers.                                     

 While the Chilean economy has experienced a moderate growth during year
2002 as evidenced by the figures given by the Central Bank, the Gross Domestic  
Product (GDP) increased 2.1%, during the first quarter of current year and      
continuing the trend of the last quarter of 2002, the economy has shown signs   
of reactivation. In fact, the first quarter 2003 IMACEC (Monthly Economic       
Activity Index), principal indicator of economic activity showed an increase of 
3.6% with respect to the same period the previous year, sustained by a rise in  
imports and industrial production motivated by private consumer dynamics and    
the recovery of employment levels. Even though, GDP growth expectations for     
2003 suppose economy reactivation with an estimated increase of 3%, sustained   
by the private consumption and labor maker normalization, there can be no       
assurance that this behavior will continue in the future. Although, even it     
should be highlighted that during the recent years the GDP has maintained an    
increasing trend (4,2%, 3,1% and 2,1% for years 2000, 2001 y 2002,              
respectively) in stead of the local and international context.                  

Future developments in the Chilean economy could impair our ability to
proceed with our business strategies. Provida's financial condition and its     
results of operations could also be adversely affected by changes in economic   
policies or others from the Chilean government (which has exercised and         
continues to exercise a substantial influence over many aspects of the private  
sector) or other political or economic developments in or affecting Chile.      
Notwithstanding, it should be mentioned that in stead of the moderate increase  
evidenced by the Chilean economy and the unemployment situation, adding         
politic, economic and regulatory changes, Provida has been capable to maintain  
the increasing trend of its results.                                            

The Life and Disability Insurance is the main component of operating  
expenses, so an increase in the casualty rate of clients has an important       
effect in the Company's results.                                                

    Provida by law is obligated to provide life and disability benefits to its
affiliates and has to take an insurance, which is financed by the fees received 
from its cotizantes. While Provida is entitled to receive rebates on its        
insurance premiums if its casualty rates fall below a certain level, it is also 
obligated to make additional premium payments if such rates increase beyond a   
certain level. During previous years, casualty rate has increased throughout    
Industry as a result of (i) local unemployment rate and awareness by affiliates 
about benefits, both affecting the number of casualties and (ii) downward trend 
evidenced by interest rates and the pension funds returns that have implied a   
rise in the economic                                                            

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value of the casualties. Although, Provida has developed a strategy aimed to    
control the effects of a higher casualty rate which involves measures within    
the Company and with third parties (Insurance Companies and Medical             
Commissions), it is not possible to ensure that the effect of increasing its    
casualty rates do not have a negative impact on Provida's operating income.     
However, it is important to highlight the management focus on core business     
profitability sustained by higher commercial and operational efficiency         
achievements.                                                                   

 Pension Funds are global investors, which are affected by both neighbor
economies of countries as well as worldwide economic development.               

Economic and market conditions in other countries, especially those in
Latin America, influence the market for securities issued by Chilean companies  
and investors' perception of the economic conditions in Chile. In 2002, the     
maintenance of the Argentinean crisis which has affected other countries such   
as Uruguay, the uncertainty originated by electoral system of Brazil that       
increased risk-country index and strong downward trend of real currency and the 
political and social crisis in Venezuela, influenced to increase uncertainty    
and an aversion level to risk by investors. In fact, direct foreign investment  
flows diminished, causing an economic sluggishness which originated important   
effects like the depreciation recorded in the year by most Latin-American       
currencies respect to U.S dollar. Besides, it is the minor economic activity in 
U.S.A. in recent years, deteriorated by the events of September 11, 2001 and at 
the end of 2002 by a possible war in the Middle East that finally took place    
during the first months of the current year. All the above has led to a great   
volatility in international and domestic financial markets that has affected    
returns obtained by Pension Funds.                                              

  Even though the markets have tended to recover, considering that Provida
is inserted in a global economy like the Chilean one, it can not assure that    
adverse factors like those previously mentioned are not going to affect its     
results in the future.                                                          

Despite a recent trend towards moderate deregulation of its industry, 
Provida continues to operate in a highly regulated market in which its          
flexibility to manage its business is limited.                                  

   Provida's operations are regulated by the Pensions Law and, to the extent
applicable, the Chilean Companies Law. Under the Pensions Law, Provida is only  
permitted to engage in the administration of its Pension Funds and the          
provision of related benefits. Provida must invest the assets of its Pension    
Funds in accordance with the types of investments and within the ranges of      
maximum percentages of assets allocated per type of investment authorized by    
the Pensions Law.                                                               

In addition, the Pensions Law requires each AFP to maintain a minimum 
reserve fund equal to 1% of the value of the pension fund as well as provide a  
real return on investment for each of its pension funds based on an adjusted    
weighted average of the real return of all pension funds in the AFP system. If  
an AFP fails to observe either the minimum reserve fund requirement or the real 
return requirement, it will eventually be dissolved in accordance with the      
Pensions Law. Notwithstanding, according to the multiple funds implementation,  
the requirement of minimum return has been differentiated by the                

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portfolios composition, which those with a higher component of variable income  
and tough with a higher volatility (Funds Type A and B) having a larger margin  
to fulfill this requirement.                                                    

Although Provida has not failed to observe the above requirements, the
principal regulator of Chilean AFPs, the Superintendencia de Administradoras de 
Fondos de Pensiones (the "SAFP") according to the law could determine that      
Provida has failed to fulfill these requirements and the Company could have an  
adverse effect on its market value.                                             

    Provida's business and results of operations may be affected by changes in
Chilean laws, regulation or government initiatives.                             

This year the most important reforms have been in force in the Chilean
Pension Industry since its inception. One of them establishes that AFPs must    
offer their participants four funds and a fifth as an alternative. The          
rationale behind this is to offer more alternatives to participants given their 
different age profiles. This initiative that has been labeled "multiple funds", 
was partially in force in March 2002 and in full force in August 2002. The      
second reform is related to the flexibilization of mechanisms for voluntary     
pension savings held in AFPs, delivering new saving tax incentives and allowing 
its administration by other institutions different from AFPs.                   

    Even when the creation of multiple funds is a positive innovation in order
to amplify the alternatives improving clients' services in accordance to their  
preferences and risk profile, in the context of competitiveness means a         
relative weakness to confront other players different from AFPs. The latter     
stemmed from the investments limits established in multiple funds that are      
additionally applicable to voluntary savings, while the other competitors are   
free to offer a wider variety of products. However the latter has not been very 
relevant when analyzing the results of voluntary pension funds industry, which  
positions AFP Industry in first place with 95.9% in terms of market share at    
March 2003, with insurance companies lagging far behind with a 2.1% of market   
share.                                                                          

  Additionally, it has to be mentioned that this service has been provided
until the reform for free by AFPs and the new legislation established charging  
fees for managing these voluntary savings, which has meant another source of    
revenues. It should be pointed out that according to fees informed by the       
different participants, AFPs stand out in terms of competitive tariffs.         

   Provida cannot ensure that it is going to be able to maintain its current
client base in this kind of service, but it is making efforts to capture and    
encourage its market share with the support of both its competitive fees and    
its distribution channels focused on customer service quality.                  

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Item 4. Information on Provida

History and Development                                                         

  Administradora de Fondos de Pensiones Provida S.A. is a sociedad anonima
incorporated under the laws of Chile. Its deed of incorporation was executed on 
March 3, 1981 and was registered in the Registry of Commerce in Santiago of     
Chile, on April 6, 1981, under the number 6,060 subsection 3,268. Provida's     
by-laws specify that the Company shall have a duration of one hundred years,    
beginning on the date on which its existence was authorized. Provida's          
registered office is located at Av. Pedro de Valdivia 100, Providencia,         
Santiago, Chile. Provida's telephone number at that location is (011-562)       
351-1200. Provida's internet address is www.afpprovida.cl.                      

Provida is the largest and one of the oldest private pension fund     
administrators operating in the Republic of Chile and has occupied a leading    
position in the Chilean private pension industry since its inception. As of     
December 31, 2002, Provida was the largest of the seven AFPs operating in Chile 
in terms of the number of affiliates, cotizantes, assets under management,      
salaries of affiliates subject to contributions and number of branch offices.   
See "Item 4. Information on Provida - Principal Markets." The Chilean private   
pension system was created in May 1981, when Decree Law 3,500 of November 13,   
1980 (the "Pensions Law") was implemented to replace the prior social security  
system. See "Item 4. Information on Provida - The Chilean Private Pension       
System."                                                                        

Provida was founded by the Cruzat Larrain Group, which at the time of 
Provida's founding was one of the largest conglomerates in Chile. In 1983, a    
commission controlled by the government (Comision Progresa) supervised the      
liquidation of the Cruzat Larrain Group as a result of the government's         
intervention due to that group's significant financial obligations. The         
Comision Progresa took control of Provida until December 1985, when it sold all 
of Provida's common stock through a combined private equity sale and special    
public offering. Subsequent to the sale and public offering, INACSA S.A.        
("INACSA"), a Chilean company, finally acquired a significant equity interest   
in Provida through a series of transactions. On August 29, 1997, INACSA changed 
its name to Corp Group Pensiones Chile S.A. ("Corp Group Pensiones"). On July   
1, 1999, Banco Bilbao Vizcaya S.A. ("BBV"), a Spanish bank, acquired a 100%     
equity interest in Corp Group Pensiones, thus acquiring an indirect 40.7%       
equity interest in Provida. Upon the completion of the acquisition by BBV, Corp 
Group Pensiones changed its name to BBV Pensiones Chile S.A. ("BBV Pensiones"). 
Adjustments in the authorized capital of Provida, which occurred in July and    
August of 1999, and again in March of 2000, increased BBV Pensiones's direct    
equity interest in Provida by an additional approximate 9.3% (see "Item 7.      
Major Shareholders and Related Party Transactions"). On May 11, 2000, BBV       
Pensiones changed its name to BBVA Pensiones Chile S.A. ("BBVA Pensiones") to   
reflect the merger of BBV and Argentaria S.A., another Spanish bank, into BBV   
Argentaria S.A. (the "BBVA Group"). BBVA Pensiones currently owns 171,023,573   
shares of Provida, representing a 51.6% interest.                               

In 2001 the BBVA Group completed the consolidation of its Pension Fund
Administrators in Latin America by unifying their corporate image, resulting in 
a leading franchise in the region.                                              

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   In order to reinforce its competitive position, Provida, like other major
AFPs, engaged in a merger process with smaller and less efficient AFPs in an    
attempt to increase market share and achieve economies of scale. On May 28,     
1998, Provida purchased from Inversiones Interamericana S.A., 99.99% of the     
shares of AFP Union S.A. ("AFP Union"), for a purchase price of UF781,613.59    
(approximately US$24 million). Resolution No. E-146-98 authorized the mergers   
of these two AFPs and their respective pension funds as of June 1, 1998. As of  
May 31, 1998, AFP Union had approximately 83,000 cotizantes and managed a       
pension fund with assets totaling approximately US$1.2 billion. After the       
merger, Provida absorbed approximately 60% of the sales personnel and 4% of the 
administrative personnel of AFP Union as part of the acquisition.               

   On March 18, 1998, Corp Group Pensiones acquired an stake of 89.1% in AFP
Proteccion S.A. ("AFP Proteccion"); subsequently, on January 1, 1999, Provida   
acquired a 100% equity interest that Corp Group Pensiones and minority          
shareholders had in AFP Proteccion for a purchase price of US$165 million. When 
it merged with AFP Proteccion, aproximately 170,000 cotizantes and a pension    
fund with assets totaling approximately US$2.8 billion to Provida's client      
-base were incorporated.                                                        

   Management considers the above mergers as successful, where Provida could
sustain the increase in its market shares reached through these acquisitions.   
In figures, the latter is reflected by the increase in market share from 29%    
before the mergers to 40% in terms of affiliates and from 20% to 32% in terms   
of assets under management. At December 31, 2002, Provida continued leading the 
pension fund industry, with total assets under management of US$11,156 million  
and a client portfolio of 2.70 million affiliates, equivalent to a market share 
of 31.45% and 40.26%, respectively.                                             

With respect to Foreign Affiliated Companies investments, in March of 
2001, Provida sold its 14.45% interest in the Mexican company AFORE Profuturo   
S.A. de C.V. ("AFORE Profuturo") for a total of US$61.7 million. The proceeds   
from this sale allowed Provida to complete the consolidation of its strategic   
position in Mexico, along with the BBVA Group after the purchase of a 7.5%      
stake in AFORE Bancomer S.A. de C.V. ("AFORE Bancomer") in November of 2000 for 
a total of US$66.3 million. The net proceeds of the US$61.7 million sale were   
used to pay the debts incurred from the acquisition of the AFORE Bancomer       
stake. Under Chilean GAAP, the successive acquisition and sale of both          
companies constituted a single financial operation, in this context, the net    
gain on sale of Profuturo of ThUS$29,155 (discounted income taxes) was offset   
against the goodwill recognized from the acquisition of Bancomer.               

  Additionally, during September 2001, Provida became the owner of 100% of
AFP Genesis S.A. ("AFP Genesis"), leader in the Ecuadorian fund management      
industry, through the purchase of 75% of the company that was owned by          
Filanbanco. Since then, AFP Genesis' financial statements are consolidated with 
Provida's.                                                                      

 During 2002 several developments took place from which are highlighted:

  -    In March 2002, the law related to flexibilization of the mechanisms
  for voluntary pension savings was passed, providing new saving
         incentives and permitting other financial institutions different from
AFPs to administrate voluntary pension savings.             

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       Since its implementation, strong competition has developed due to a
        wide range of pension savings plans offered by various institutions,
 and management fees for this service vary significantly among
       participating companies. In this respect, Provida has a competitive
        advantage due to its relatively low administrative costs as compared
         to other AFPs (an annual rate of 0.49% over assets under management).

   -    The Multiple Funds Law, partially in force since March 2002 and from
        August 1, 2002 in full force, offers affiliates to choose among five
         investment alternatives to manage their pension savings, according to
    their risk preferences and age. Additionally, it has allowed the
       increase in the number of funds offered by AFPs regarding voluntary
      pension fund savings, giving affiliates higher diversification and
    therefore, higher competitiveness among participants in this new
business.                                                   

-    The Unemployment Insurance Administration Law was passed in year 
       2001, all AFPs participated jointly by establishing a consortium in
      January 2002 that awarded the administration of this insurance for
         the next 10 years after presenting the best bid, both technically and
     economically. A new company was created called "Administradora de
     Fondos de Cesantia de Chile S.A." (AFC) starting up operations on
      October 1, 2002. AFP Provida participates with 37.8% of the shares
 and was awarded the operational and technical support of said
company.                                                    

  -    It is important to highlight that during 2002 Provida continued its
     leadership consolidation process in the Chilean Pension Industry.

Strategy                                                                        

   Provida has centered its competitive strategy on a combination of factors
unique to its business: service, price and profitability. Provida's objective   
is to consolidate as one of the most efficient and profitable AFPs in Latin     
America, with international and local market strategies.                        

In the international context, Provida's goal is to reinforce its      
leadership reached in conjunction with BBVA Group and to enlarge a              
Latin-American franchise in pension funds management, considering its current   
investments profitability, the developments in new countries, the joint venture 
with BBVA and a balance between financing and investments.                      

Locally, Provida is aimed at continuing its leadership consolidation, 
together with higher efficiency levels and maximizing new business              
opportunities. Reflecting the latter is the successful implementation of        
reforms related to voluntary pension savings and multiple funds, as well as its 
participation in local subsidiaries (AFC and PreviRed.com) as an extension of   
the recurrent business.                                                         

Capital Expenditures and Divestitures                                           

As part of its growth and foreign investment strategies ("See Item 4. 
Information on Provida--Business Overview--Principal Markets--International"),  
Provida incurred significant capital expenditures in Fiscal Years 1999 and      
2000, while in 2001 this trend was diminished. Capital expenditures for these   
three-years period totaled Ch$133 billion                                       

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(approximately US$215 million) and were related principally to the purchase of  
AFP Proteccion, the acquisition of a 7.5% interest in AFORE Bancomer in Mexico, 
the purchase of the additional 75% stake in AFP Genesis in Ecuador and          
investments in properties and equipment.                                        

In the past years, Provida has made investments in connection with its
affiliates companies in Peru, Colombia, Ecuador, Mexico and El Salvador. The    
amounts that Provida invested in foreign affiliates in Fiscal Years 1999, 2000  
and 2001 were Ch$1,103million, Ch$40,366 million and Ch$1,096 million,          
respectively.                                                                   

  In the last quarter of 1999, Provida made an additional investment in El
Salvador aimed to increase its stake to 50% in AFP Porvenir S.A. ("Porvenir (El 
Salvador)") by the acquisition of a 15% interest previously in the hands of a   
Deutsche Group company. At December 31, 1999, Provida owned 45% of Porvenir (El 
Salvador), and 50% ownership was reached in the first quarter of 2000. A year   
later, in September 2000, the merger of Porvenir (El Salvador), AFP Prevision   
S.A. and AFP Maxima S.A. was completed, forming a new entity without additional 
capital requirements, AFP Crecer S.A. ("AFP Crecer"). Provida owns a 19% equity 
interest in this new company.                                                   

On November 30, 2000 in a coordinated operation with the BBVA Group,  
Provida Internacional S.A. ("Provida Internacional"), Provida's subsidiary,     
acquired a 7.5% equity interest in AFORE Bancomer in Mexico. This transaction   
was financed with US$66.3 million in short-term debt, mainly through lines of   
credit with local banks in Chile. In March 2001, in the second part of the      
process that began in November 2000, Provida Internacional sold its 14.45%      
equity interest in AFORE Profuturo, GNP S.A. de C.V. ("AFORE Profuturo"), for a 
total sale price of US$61.7 million. According to the above mentioned, the net  
proceeds from this sale were used to pay the short-term debt incurred to        
acquire Provida Internacional's equity interest in AFORE Bancomer.              

In September 2001, Provida became the sole shareholder of AFP Genesis,
leader in the Ecuatorian fund management industry, through the purchase of 75%  
of the property previously owned by Filanbanco that involved an additional      
investment, financed with internal funds of US$ 1.6 million.                    

Additionally, in the local context, at the beginning of 1999, Provida 
acquired a 100% equity interest that Corp Group Pensiones and minority          
shareholders had in AFP Proteccion corresponding to 89.1%. Provida paid a       
purchase price of US$165 million to Corp Group Pensiones for its interest in    
AFP Proteccion, part of which was paid through Provida's assumption of US$146   
million of pre-existing debt of Corp Group Pensiones. The remaining amount was  
financed through a capital increase through which the minority shareholders of  
AFP Proteccion received the newly issued shares of common stock at a conversion 
rate of 1.1148437 Provida's shares to one share of AFP Proteccion, based on the 
fairness opinion of the economic valuation of the two companies. The            
pre-existing Corp Group Pensiones debt assumed by Provida consisted of US$100   
million in dollar-denominated debt and US$46 million in UF-denominated debt.    

   At the end of 1999, Provida increased its capital base in order to reduce
its liabilities, and used the approximate US$89 million in net proceeds from    
this capital                                                                    

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increase to partially prepay the US$100 million of dollar-denominated debt it   
assumed from BBV Pensiones (previously Corp Group Pensiones) in the acquisition 
of AFP Proteccion. The costs related to the capital increase are discounted to  
the shares holders equity in the account additional paid in capital and do not  
have a material effect.                                                         

  In March 2000, Provida entered into a US$30 million syndicated loan with
local banks in Chile, which was later converted into UF-denominated debt.       
Provida used part of the net proceeds from this syndicated loan to prepay the   
remaining amount of the US$100 million debt it assumed from BBV Pensiones. The  
remaining net proceeds from this syndicated loan was used to partially prepay   
the US$25 million of the five-years syndicated loan obtained in 1998 in order   
to finance its acquisition of AFP Union.                                        

   In Year 2002, the investments made are referred basically to fixed assets
according to the normal requirements of the business operation, while the most  
important investments in affiliates companies and the technological             
modernization of branches were materialized in previous periods than the        
current one.                                                                    

The table below sets forth information concerning expenditures and    
divestitures for the twelve months periods ended December 31, 2000, 2001 and    
2002, and the first quarter ended March 31, 2003.                               

                                                        [Enlarge/Download Table]
                                                                                    For the First
                                                                                    Quarter ended
                                      For the Twelve Months ended December 31,        March 31,  
                                    2000               2001                2002         2003     
                                    ----               ----                ----         ----     
                              (In million of constant Ch$ as of December 31, 2002)               
                                                                                                 
Capital Expenditures.........     (42,627)            (3,947)             (467)         (350)    
Divestitures.................        --                 --                 437            52     

There has been no indication of any public takeover offer by any third
party in respect of Provida's shares, nor has there been any indication by      
Provida of any public takeover in respect of any other companies' shares, in    
either the last or current fiscal year.                                         

The Chilean Private Pension System                                              

Historical Development                                                

The Chilean private pension system was created in 1980 through the    
adoption of the Pensions Law, which was intended to eliminate many of the       
problems associated with the former social security system. The private pension 
system began with twelve AFPs, a number that increased to 21 in 1993. After a   
consolidation process characterized by mergers, dissolutions and bankruptcies,  
the number of AFPs now stands at seven, including five that are listed on the   
Santiago Stock Exchange, of which two, including Provida, are actively traded.  

     Under the social security system in place prior to the enactment of
the Pensions Law, contributions from current workers were used to fund current  
pension payments, and there was a limited correlation between the amount        
contributed and the amount received by each worker upon retirement. During the  
early years of operation of the former social                                   

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security system, the number of workers making contributions was sufficient to   
support the pensions of retirees. In later years, however, demographic changes, 
principally a decrease in birth rates and an increase in life expectancy, had   
increased the ratio of pensioners to contributing workers from 9 pensioners for 
every 100 workers in 1960 to 45 pensioners for every 100 workers by 1980. The   
higher ratio resulted in the need for increased contributions from the State,   
which were funded through taxes, to pay for required benefits.                  

In 1980, faced with an undercapitalized social security system, the   
Chilean government enacted the Pensions Law to reform the Chilean social        
security system. Instead of making changes in the old "pay-as-you-go" system,   
which was similar in function to the United States social security system, the  
Chilean government elected to create an alternative system consisting of        
private, competitive Chilean AFPs, among which individuals could choose to      
manage their individual pension fund contributions. Between 1991 and 2002, AFP  
assets under management grew at a compound annual rate of 11.6%, fueled         
basically by both, stock market returns and mandatory contributions, reaching   
approximately US$35.5 billion at December 31, 2002, which represented           
approximately 56% of Chilean GDP.                                               

In 1984, the last year in which workers could elect to move to the new
private pension system, approximately 19%, principally older workers near       
retirement, elected to stay within the old social security system. Since then,  
a higher number of workers has been incorporated into the AFP system and, as of 
December 31, 2002, the number of affiliates to the Chilean private pension      
system reaches 6.7 million.                                                     

    Workers who participated in the old social security system that decided to
transfer to the AFP system received an interest-earning recognition bond (Bono  
de Reconocimiento) reflecting an estimate of the value of their contributions   
into the old social security system. This bond, which is indexed to the CPI and 
has a 4% real annual interest rate, is held by the Instituto de Normalizacion   
Previsional (the state owned National Pension Administration, or the "INP",     
which does not participate in Chile's private pension system) until the         
affiliate retires, dies or is disabled. Upon early retirement, the recognition  
bond may be traded in the secondary market to finance the pension capital in    
accordance with the rights to which the affiliate is entitled.                  

Business Overview                                                               

Principal Activities                                                  

Collection of Individual Capitalization Accounts                      

   In accordance with the Pensions Law, each dependent worker and affiliated
to Provida must contribute 10% of the portion of his/her salary subject to      
contribution into his/her individual capitalization account. Such contributions 
are deducted from the affiliate's salary and are used to purchase shares of     
some of 5 types of Funds that Provida manages. These Funds are entities,        
legally separated from Provida as a pension fund manager company. The option to 
choose among 5 alternatives of Funds was the result of legal changes made to    
Law Decree 3,500 implemented in August 2002. Until that date, it                

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was only possible to choose between two funds with certain age restrictions for 
the affiliates.                                                                 

 Provida collects monthly mandatory contributions that are withheld from
the salaries of Provida's affiliates by their employers and from Provida's      
self-employed affiliates. Those monthly contributions are credited to each      
affiliate's individual capitalization account. In the case of dependent         
workers, each employer of an affiliate must provide Provida with a monthly      
payroll (a "planilla") listing all of its employees who are affiliates of       
Provida and identifying the payments being made on behalf of each employee for  
pension contributions, both mandatory and voluntary ones and fee. Self-employed 
workers prepare and submit their own planillas. Each planilla, together with    
checks or cash for the aggregate amount, must be delivered to either a Provida  
branch office or a designated agent bank. Checks and cash are deposited in      
banks and planillas are submitted to the Santiago operations center for         
processing. See "Item 4.Information on Provida--Business Overview--Government   
Regulation--Mechanics of the System--Required Contributions."                   

Voluntary Savings Accounts                                            

Provida offers its affiliates the option of establishing a voluntary  
savings account into which they may deposit additional funds to be invested in  
the elected pension fund. The affiliate may make deposits into a voluntary      
savings account as often as desired and is able to make withdrawals four times  
a year. Once a voluntary savings account is opened, Provida maintains the       
account in the Pension Fund's records, regardless of the balance. Although      
permitted by law, neither Provida nor any other AFP currently charges any fees  
related to withdrawals from voluntary savings accounts.                         

Voluntary Pension Savings                                             

Legislation approved by Congress in order to liberalize the Chilean   
capital market modified the Pensions Law by introducing flexibility to          
mechanisms for voluntary pension savings. The above implied making them more    
accessible and establishing new saving incentives, as well as allowing its      
administration by other authorized institutions different from AFPs. Provida    
started offering this new service in March 2002 and now it is in full           
operation.                                                                      

   Voluntary pension savings correspond to the amount in excess of mandatory
contributions that each worker may add in order to improve his/her future       
pension. The maximum monthly contribution with tax benefits associated is UF 50 
(approximately US$1,200). If these funds are withdrawn for other use different  
from pension, the retired amount is charged by a higher tax rate than the       
corresponding one to his/her individual level.                                  

AFPs are entitled to charge a fee over assets under management and for
transfers of such funds to other institutions. Currently, Provida charges       
monthly a fee 0.49% in annual basis over assets under management and has        
established a fee regarding funds transfers.                                    

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Service Fees                                                          

The most significant source of operating revenues for Provida is the  
monthly fee charged to affiliates in connection with deposits into individual   
capitalization accounts. Under the Pensions Law, an AFP is permitted to charge  
a fee for (i) mandatory contributions into a mandatory pension account to fund  
the affiliate's old age pension, (ii) voluntary savings withdrawals, (iii)      
transfer of account balances from another AFP, (iv) payments of programmed      
withdrawals and (v) management and transfers of voluntary pension savings. All  
AFPs currently charge fees in connection with (i), (iv) and (v) above. Provida  
began charging a fee in connection with (iv) and (v) above on July 1, 2000 and  
in March 2002, respectively.                                                    

  In accordance with the Pensions Law, each AFP is allowed to set the fees
it charges to its affiliates or pensioners. With regard to fees for mandatory   
contributions into the mandatory pension account, the Pensions Law requires     
each AFP to apply the same fee levels to each of its affiliates within the same 
fund, with the exception that certain affiliates who are not entitled to life   
and disability benefits are charged a lower fee, reflecting the lower cost to   
Provida. The fee for payments of programmed withdrawals also must be the same   
for each pensioner.                                                             

Although there is no legal limit on the fees which an AFP may charge, 
competitive pressures have resulted in a narrow range of fees charged by the    
different AFPs.                                                                 

  Mandatory Contributions. Fee structure is one of the competitive aspects
of the AFP industry. Under the Pensions Law, each AFP may determine whether to  
charge a fixed fee, a variable fee that is a percentage of the salary used to   
calculate the mandatory pension contribution or a combination of both types of  
fees. Variable fees are charged as a percentage of the portion of an            
affiliate's monthly gross wages that is subject to the 10% mandatory monthly    
contribution (the "renta imponible"). Six out of seven AFPs, including Provida, 
charge a fixed fee in combination with a variable fee, while the remaining AFP  
charges a variable fee.                                                         

  The uniform fee requirement has limited the flexibility to reward longer
term or higher income cotizantes with lower fees than those applied to newer    
and/or smaller accounts. Although changes to this rule have been proposed from  
time to time, Provida cannot ensure that a change will be adopted that would    
allow Provida to reward longer term or higher income cotizantes through lower   
fees.                                                                           

    SAFP Circulars 998 and 999, released in November 1997 aimed to rationalize
the commercial expenses stemmed from transfers, and implied that AFPs would     
have to reorient their strategies to fee competition, reducing the variable     
tariff levels (partially offset by higher fixed fees). This trend continued     
until 2001 as is shown in the following table:                                  

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Monthly Fees for Mandatory Contributions

                                                        [Enlarge/Download Table]
                          1998               1999              2000             2001               2002        
                          ----               ----              ----             ----               ----        
                   Variable   Fixed   Variable   Fixed   Variable  Fixed  Variable   Fixed  Variable   Fixed   
                       %       Ch$        %       Ch$        %      Ch$       %       Ch$       %       Ch$    
---------------------------------------------------------------------------------------------------------------

                                                                                                               
Provida              2.62      195      2.36      390      2.25     390     2.25      390     2.25      390    

Industry High        2.99     1.000     2.95     1.000     2.95    1.000    2.55     1.000    2.55     1.000   

Industry Low         2.49      195      2.36      385      2.16     390     2.09      390     2.09      390    

Industry Average     2.62      336      2.45      406      2.31     526     2.26      532     2.26      532    

As of March 31, 2003, no changes have been observed from December 2002
regarding information as it shown in the previous figure.                       

Because of Provida's size and its cost of managing each affiliate's   
account are significantly below the industry average, management believes that  
it can continue to compete effectively at a lower fee level than most of its    
competitors. The following chart presents certain comparative information       
regarding average monthly costs of administering cotizantes' accounts for the   
years 1995 through 2002:                                                        

 Monthly Administrative Cost per Cotizante

                                                        [Enlarge/Download Table]
                                               For the Twelve Months ended December 31,                      
                                                           (in constant Ch$)                                 
                               1995       1996      1997      1998      1999      2000      2001     2002    
                             --------------------------------------------------------------------------------
                                                                                                             
Provida                        1,980      1,876    1,833     1,914     1,953     1,757     1,811     1,624   
Second lowest cost AFP         2,761      2,399    2,299     2,315     2,408     2,407     2,376     2,036   
Average of the five largest                                                                                  
AFPs                           3,301      3,116    2,747     2,975     2,735     2,605     2,451     2,298   

Variable fees are paid in addition to the amount contributed to the   
pension account. Fixed fees are charged against the balance of each cotizante   
in any month for which contributions are made. For example, an affiliate with a 
monthly salary of Ch$100,000 must contribute Ch$10,000. With the current        
Provida variable fee rate of 2.25% of the renta imponible, the total monthly    
fee collected by Provida on such an account would be a variable fee of Ch$2,250 
plus a fixed fee of Ch$390 deducted from the cotizante's individual mandatory   
pension account. Fees are paid directly by the employer or self-employed worker 
at the same time as the pension contribution.                                   

Programmed Withdrawals. Regarding fees for payments of programmed     
withdrawals, six of the AFPs, including Provida, charge a variable fee that is  
a percentage of the amount of pensions paid to the affiliates, whereas just one 
AFP charges a fixed fee. Between 1999 and 2001, all AFPs in the industry        
announced the establishment of fees for payments of programmed withdrawals with 
such fees currently ranging from a low of 1.00% to a high of 1.25% of the renta 
imponible. Only one AFP charges a fixed monthly fee, which is set at Ch$1,495   
(approximately US$2).                                                           

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   Voluntary Pension Savings. AFPs, like other authorized institutions, also
offer affiliates the option to establish a voluntary pension savings account in 
which affiliates make previously-determined monthly deposits in order to        
improve their future pensions. According to the law, AFPs are allowed to charge 
a fee on assets under management, and annual fees currently range between 0.47% 
and 0.51%. Since March 2002, the annual fee charged by Provida is 0.49%.        
Additionally to the above, the regulation permitted to charge fees on fund      
transfers to other institutions; Provida established a fee of Ch$1,250 for each 
operation (approximately US$1.8).                                               

Fees may be changed at any time by an AFP upon three months' notice to
affiliates, the SAFP and the public. The following table sets forth the fee     
rates charged by Provida for each of the last three years and the current       
period:                                                                         

                                                        [Enlarge/Download Table]
                                                                     As of December 31,            As of March
                                                            -------------------------------------      31,    
                                                               2000        2001         2002          2003    
                                                            --------------------------------------------------
                                                                                                              
Fee charged on monthly contributions (for affiliates who are entitled to                                      
receive life and disability insurance)(a):                                                                    
  Fixed fee                                                     Ch$390      Ch$390        Ch$390       Ch$390 
  Variable fee                                                   2.25%       2.25%         2.25%        2.25% 
Fee charged on payments of programmed withdrawals:                                                            
  Fixed fee                                                       Ch$0        Ch$0          Ch$0         Ch$0 
  Variable fee                                                   1.00%       1.00%         1.00%        1.00% 
Fee charged for voluntary pension savings management:                                                         
  Fixed fee                                                       Ch$0        Ch$0          Ch$0         Ch$0 
  Variable fee (annual basis over AUM)                           0.00%       0.00%         0.49%        0.49% 
Fee charged for voluntary pension savings transfers:                                                          
  Fixed fee                                                       Ch$0        Ch$0      Ch$1,250     Ch$1,250 
  Variable fee                                                   0.00%       0.00%         0.00%        0.00% 
Ratios of fixed and variable fees to total fee revenues:                                                      
  Fixed fee on monthly contributions                              7.1%        6.8%          6.6%         6.6% 
  Variable fee on monthly contributions                          92.5%       92.4%         92.4%        92.4% 
  Variable fee on payments of programmed withdrawals              0.4%        0.8%          0.8%         0.8% 
  Variable fee on voluntary pension savings                   N.A. (b)    N.A. (b)          0.2%         0.2% 
  Fixed fee on voluntary pension savings transfers            N.A. (b)    N.A. (b)          0.0%         0.0% 
----------                                                                                                    
(a)  Affiliates who have reached retirement age or who are receiving a                                        
     disability benefit are not entitled to life and disability benefits and                                  
     are charged by lower fees. See "Item 4. Information on Provida--Business                                 
     Overview--Government Regulation--Fees and Commissions."                                                  
(b)  Not Applicable.                                                                                          

AFPs charge fees on active accounts into which contributions are made.
Accordingly, the number of cotizantes, as well as their average salaries, and   
not the number of affiliates, determine the monthly fee revenues of each AFP.   
At December 31, 2002, Provida had the largest market share of cotizantes among  
all AFPs (41.2%) and, according to Provida's estimates, also the largest market 
share of monthly renta imponible (33.6%). A number of factors result in each    
AFP having a larger number of affiliates than cotizantes. In the first quarter  
of 2003, according to labor force information, approximately 8.2% of Chile's    
labor force, and therefore a similar percentage of affiliates, was unemployed.  
In addition, self-employed affiliates are not obligated to contribute every     
month, regardless of                                                            

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whether they receive income in a given month. The number of cotizantes is also  
influenced by the seasonal nature of many significant industries in Chile, such 
as fishing, agriculture and tourism.                                            

Life and Disability Benefits                                          

   As required by the Pensions Law, Provida has purchased insurance to cover
its obligation to provide life and disability benefits to affiliates. The       
selection of the insurance company is determined through a competitive bidding  
process open to all licensed Chilean life insurance companies and is designed   
to provide the required coverage on the best terms available. Currently,        
Provida's insurance contract is with ING Seguros de Vida S.A. ("ING",           
previously known as "Aetna Chile") and provides coverage for two years, from    
August 1, 2001 through July 31, 2003.                                           

Provida has discretion to set the bid parameters for its competitive  
bidding process. In its competitive bid request, Provida specifies a maximum    
premium rate and a provisional premium rate. The maximum rate is the top        
percentage that Provida would have to pay to the insurer for coverage,          
regardless of casualty rates experienced among Provida's cotizantes were        
higher. The provisional rate is the monthly percentage of the salary of         
cotizantes that Provida pays monthly to the insurer according to the current    
contract. Under Provida's current contract, its maximum rate is 0.95% of the    
maximum salary eligible for contribution of each cotizante and its provisional  
premium rate is 0.70%. In addition, the competitive bid request provides for a  
formula pursuant to which the insurer and Provida may share in casualty rates   
incurred. This casualty sharing may constitute a significant source of revenue  
to Provida if the casualty rates suffered result in a premium cost below the    
provisional premium paid. Insurers also charge an additional fixed monthly      
premium to provide such coverage. This fixed monthly premium is currently UF    
2,200 (approximately US$53,400).                                                

Under Provida's current contract with ING, at the end of 18 months    
following the beginning of the contract year, and every twelve months           
thereafter for the 78 months following the beginning of the contract, the       
casualty rate among cotizantes is calculated as a percentage of the cotizantes' 
salary. The maximum rate is 0.95% and Provida has no obligation to make         
additional premium payments above this. The provisional premium rate of 0.70%   
is paid by Provida on a monthly basis. The difference between the maximum rate, 
the provisional rate and the cut rate set at 0.80%, allows the contract to      
define a rebate structure based on the effective casualty rate. If the          
effective loss is between 0.95% and 0.80%, Provida will have 100% of the        
excess. If the casualty rate is equal or lower than 0.80%, Provida will have    
90% of the excess of the amount below 0.80%. For example, if the loss rate is   
0.90% and Provida pays a provisional rate of 0.70%, Provida will pay the        
insurer an additional payment of 0.20% and the insurance company will not       
receive any premium. However, if the loss rate is 0.75%, Provida will pay to    
the insurance company an additional payment of 0.05%, in order to cover the     
difference in the casualty rate. Additionally, the insurance company will       
receive a premium equivalent to 10% of the difference between the effective     
casualty rate and the cut rate, meaning 0.005%. Finally, if the loss rate is    
0.65%, Provida will receive 0.05% as a rebate and the insurance company will    
receive a premium equivalent to 10% of the difference between the effective     
casualty rate and the cut rate, meaning 0.015%.                                 

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  In the past, rebates system implied a significant source of revenues for
Provida, while the casualty rate of the client portfolio was lower than the     
provisional premium paid monthly to the insurance company. Although, since the  
middle of year 1999, period when the country additionally evidenced             
unemployment rates over 10% (implying a significant gap to the average observed 
of 6.2% in 1998), the casualty rate started to increase to levels over the      
provisional premium paid monthly. This situation has been maintained at the     
industry level until now, as a result of: (i) local unemployment rate and       
awareness by affiliates about benefits, both affecting the number of casualties 
and (ii) downward trend evidenced by interest rates and pension funds returns   
that have implied a rise in the economic value of the casualties. In this       
context, Provida has developed a strategy aimed at controlling the effects of a 
higher casualty rate which involves measures within the Company and with third  
parties (Insurance Companies and Medical Commissions), adding its focus on core 
business profitability through higher commercial and operational efficiency     
achievements.                                                                   

    In order to measure the effect in results and considering that the rebates
are calculated on an annual basis for six years and each year can reflect the   
cumulative impact of several prior contracts as well as the current contract,   
the Company continues perceiving casualty rebates that have the most            
significant effect on operating income in the first quarter of the year, when   
the insurance company makes partial settlements. In the case of recent          
contracts, Provida makes monthly provisions accounted as operating expenses,    
based on casualty rate projections implicit in the yearly first quarter payment 
to the insurance company, according to the conservative criteria of recognizing 
losses when having a reasonable base for estimating.                            

   The following table sets forth, for each of the preceding five years, the
rebates and/or payments to the insurance company:                               

                                                        [Enlarge/Download Table]
                                                       For the Twelve Months Ended December 31,       
                                                    1998       1999      2000       2001      2002    
                                                  ----------------------------------------------------
                                                             (in million of constant Ch$)             
                                                                                                      
Amount of Insurance Premium Rebates (Surcharges)    5,469        894     1,132    (1,263)   (2,992)   

In addition to the rebate system, Provida's current insurance contract
stipulates that ING must pay Provida a monthly interest payment in the first    
and fourth quarters of each year. The monthly interest payment is calculated by 
applying a market interest rate previously defined in the contract, charged on  
the difference between (i) the sum of the premiums paid to ING plus all losses  
that stemmed from Provida's client portfolio and (ii) rebates received or paid  
by Provida during the contract period. The monthly interest payment compensates 
Provida for the float that ING enjoys on the premium amounts that are not used  
to cover casualties.                                                            

Investment Services                                                   

The general investment policy for the Pension Funds is determined by  
Provida's Board members and is administered by a Credit Committee composed of   
all Board members, the Chief Executive Officer and the Chief Investment         
Officer. The Credit Committee approves eligible companies in which the Pension  
Fund may invest and                                                             

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establishes limits for investments of different types of securities within      
legally prescribed limits. An Investment Committee composed of professionals of 
the Investment Area is responsible for the implementation of the investment     
policy.                                                                         

The Investment Area of Provida has two Management Divisions, one of   
Variable Income and another one of Fixed Income, and two Departments, one of    
International Investments and another of Research. Both managers and heads of   
departments, have full-time research analysts with experience in areas of       
investing, economics, and securities analysis. Provida also relies on external  
advisories from both domestic and international consultants who advises         
Investment Area about tendencies and developments that affect the value of the  
current and potential investments.                                              

In Chile, all secondary market trading by AFPs must be executed in the
formal trading markets, through a securities exchange or a competitive bidding  
process. Provida's Investment Control Department, part of the Accounting and    
Consolidation Division of the Company, validates each day's investments before  
carrying out those investments. This control department fulfills ISO 9002       
requirements established by UKAS Quality Management. Additionally, this         
department fulfills the obligation of submitting to the SAFP a daily report of  
all investment activities.                                                      

Recent Developments                                                   

   Introduction of Multiple Funds. In February 2002, a legal modification to
the Law Decree 2500 introduced multiple funds portfolios. Starting on August 1, 
2002, each AFP must hold four funds named Type B, Type C, Type D and Type E,    
and can optionally hold an additional fund named Type A. All the AFP's          
incorporated the five types of Funds and the first contributions to these new   
Funds were made on September 27, 2002. The main difference among them is the    
portion invested in variable income securities. The Type A fund is the most     
concentrated in variable income, while Type E fund does not have any variable   
income component. Mandatory contributions, deposits by agreement, voluntary     
contributions and voluntary pension savings may be maintained in different      
types of funds. The unemployment account established by Law 19,010 must stay in 
the same fund as the mandatory contributions.                                   

 Men younger than 55 years old and women younger than 50 may opt for any
fund. Women and men older than 56 and 61 years old, respectively, are not able  
to choose Type A fund for neither their mandatory contributions nor their       
unemployment account if it applies. Pensioners with programmed withdrawals and  
deferred life annuity are not able to opt for Type A and B funds. According to  
the law, if at the age of 56 and 61, women and men respectively, that have      
their mandatory contribution and/or their unemployment account do not make any  
choice regarding the destination of their mandatory pension funds, these are    
gradually transferred to the Type B fund.                                       

If the affiliate does not choose a fund at the moment of his          
incorporation, the mandatory contributions are assigned according to the        
following and are modified by law according to the affiliate's age:             

-    Men and women younger than 35 years old to Type B fund.          

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    -    Men between 36 and 55 years old and women between 36 and 50 years old
to Type C fund.                                             

    -    Men older than 56, women older than 51 and pensioners with programmed
withdrawals and deferred life annuity, to Type D fund.      

  Regarding transfers of affiliates that have no defined fund according to
the above description, the procedure is the following:                          

  -    Reaching the age condition, 20% of the funds are transferred to the
corresponding fund.                                         

 -    After a year of reaching the age condition, 40% is invested in the
corresponding fund.                                         

-    After two years, 60%.                                            

-    After three years, 80%.                                          

-    Finally, after four years, 100%.                                 

    In spite of the above, new mandatory contributions have to be set aside to
the corresponding fund regarding the age segment. This resource allocation is   
not applicable in the case of affiliates who have previously specified another  
type of permitted fund. The balance of mandatory contributions, unemployment    
accounts, deposits by agreement and voluntary savings can be invested in two    
types of funds at the same time.                                                

As of March 31, 2002 Distribution of Funds managed by Provida is as   
follows:                                                                        

[GRAPHIC OMITTED]                                                               
[Pie chart              RELATIVE SIZE OF MULTIPLE FUNDS                         
  (Figures in US$ Million)
Fund A US$137           1.2%                                                    
Fund B US$1,372        12.1%                                                    
Fund C US$8,150        72.2%                                                    
Fund D US$1,174        10.4%                                                    
Fund E US$464           4.1%]                                                   

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Limits of Investment for each Type of Fund                            

The Pensions Law expressly prescribes the assets classes and maximum  
assets limits in which funds can be invested. All securities (other than        
securities issued by the government, the Central Bank or certain government     
agencies, and certain qualified equity securities) must be specifically         
approved as eligible for investment by the Rating Commission. In Chile, fund    
investments can be made only in securities for which there is an established    
public trading market. The Central Bank sets the precise limits on permitted    
investments for AFPs within the range established by the law.                   

The rules that establish pension fund investment regulations have been
broadened significantly since the creation of the private pension system. This  
has occurred in response to the perceived need to prevent the growth in the     
total pension fund resources from outstripping the investment alternatives and  
because of the recognition that certain types of investments have become more   
stable. In 1991, a new series of regulations came into effect, allowing the     
AFPs to invest a percentage of their assets outside of Chile in debt securities 
of "investment grade" governments or banks, or those guaranteed by an           
"investment grade" government or bank.                                          

   On May 18, 1995, a new series of pension fund investment regulations came
into effect, which modified certain pension fund investment limits in equity    
securities and variable and fixed rate debt instruments of foreign issuers. The 
new investment regulations (i) allowed pension funds to enter into derivative   
securities transactions whose sole purpose is to hedge portfolio exposures;     
(ii) established the maximum investment limits on equity securities equal to    
37% of pension fund assets and (iii) broadened the foreign investments to       
bonds, stocks, mutual funds and other investment funds and setting a maximum    
investment limit of 12% on foreign issuers, that includes a sub-limit of 6% for 
equity securities. The Pension Funds are also permitted to invest a small       
portion of their assets in start-up projects depending on their risk            
classification.                                                                 

On January 18, 1999, the maximum global limit for investing in        
international assets was raised to 20%, with a sub-limit of 10% for equity      
securities and international mutual funds. The Central Bank, whose function is  
to establish precise limits within the boundaries defined by law, restricts the 
global limit to 16%.                                                            

 The regulation also limits the amount of investment that a pension fund
can make in a specific company based on the net asset value of the said pension 
fund, the outstanding number of shares of the company and certain other         
criteria. Limits related to the percentage of the property of a company can     
have the impact of restricting the ability of larger AFPs from owning the same  
proportion of the pension funds invested in equity as smaller AFPs. In past     
years, as the Chilean stock market has experienced strong growth, such          
regulations limited the ability of large funds to take full advantage of the    
return evidenced in certain smaller-capitalization equity investments.          

  In fact, prior to 1992, the Pensions Law provided that the maximum value
of equity securities of a "low ownership concentration" company (a company      
whose by-laws prohibit shareholders from owning above 20% of the company's      
equity) that could be owned by a pension fund was the lesser of (i) 7% of the   
net asset value of the pension fund or (ii) 7% of                               

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the outstanding shares of the company. In the case of a "high ownership         
concentration" company, the limit was the lesser of (i) 1% of the net asset     
value of the pension fund or (ii) 1% of the outstanding shares of the company.  
Because of the large size of the Pension Fund, such as the case of Provida,     
equity investments were usually limited by the number of the issuer's           
outstanding shares, while other smaller pension funds were able to invest a     
greater proportion of their total pension portfolio in an issuer. The impact of 
this rule on Provida was a lower level of return on the Pension Fund in         
relation to the industry average because the high return obtained by equity     
investments in that period.                                                     

In 1992, the Pensions Law was amended so that, in the case of high    
ownership concentration companies, the maximum value was the lesser of (i) 1%   
of the net asset value of the pension fund or (ii) 3% of the outstanding shares 
of the company. This allowed the larger pension funds to raise its investment   
level in the equity securities of such companies, while other smaller pension   
funds remained limited by the 1% of the net value of assets under management.   

Effective May 1995, the Pensions Law was amended to remove the low    
ownership concentration and high ownership concentration company distinction as 
the sole basis for limitations on pension funds' investments in equity          
securities of companies.                                                        

The changes to these limits made in 1992 and 1995, together with the  
option of investing in international markets, have made the restrictions        
imposed on domestic equity holdings less relevant and significantly improved    
this situation. Furthermore, this disadvantage has been largely removed,        
because AFPs willing to increase the share of equity stocks in their portfolios 
can easily acquire stocks in the international markets.                         

   An amendment to the Pensions Law, recently approved on February 28, 2002,
modified Investment Limits in order to introduce Multiple Funds and establish   
different parameters for each type of Fund. According to the above, new limits  
of Investments are as follows:                                                  

A. Limits of Investment by Instrument (in accordance with the Fund Value)       

                                                        [Enlarge/Download Table]
INSTRUMENT                                                                              MAXIMUM LIMITS BY TYPE OF FUND            
                                                                         TYPE A      TYPE B       TYPE C      TYPE D     TYPE E   
                                                                                                                                  
1. Securities issued by Central Bank; securities issued by                                                                        
Chilean Treasury; mortgage loans issued by Servicios                                                                              
Regionales y Metropolitano de Vivienda y Urbanizacion;                                                                            
recognition bonds issued by Government Pension System                                                                             
(Instituto de Normalizacion Previsional INP) or other                                                                             
Pension Institutions; other securities issued or guaranteed                                                                       
by the Chilean Government.                                                 40%          40%         50%         70%        80%    
2. Time deposits; bonds and other representative  securities                                                                      
of deposits issued by financial institutions.                              40%          40%         50%         70%        80%    
3. Securities guaranteed by financial institutions.                        40%          40%         50%         70%        80%    
4. Mortgage loans issued by financial institutions.                        40%          40%         50%         60%        70%    
5. Bonds of public and private Companies                                   30%          30%         40%         50%        60%    
6. Bonds of public and private companies convertible in                                                                           
shares.                                                                    30%          30%         10%          5%        ---    
7. Shares of publicly-traded corporations.                                 60%          50%         30%         15%        ---    
8. Shares of publicly real state corporations                              60%          50%         30%         15%        ---    
9. Investment fund shares which are referred to the Law                                                                           
No. 18,815, plus the amount of compromised contributions                                                                          
through contracts of subscription promises and payment of                                                                         
investment fund shares and national mutual fund shares ruled                                                                      
by the Decree Law No. 1,328, 1976.                                         40%          30%         20%         10%        ---    
10. Commercial notes issued by public and private companies                                                                       
that are referred to promissory notes or other investment                                                                         
and credit securities, with an expiry time of no higher than                                                                      
a year, counting from                                                      10%          10%         10%         20%        30%    

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INSTRUMENT                                                                              MAXIMUM LIMITS BY TYPE OF FUND            
                                                                         TYPE A      TYPE B       TYPE C      TYPE D     TYPE E   
its inscription in the Registro de Valores, without rollover.                                                                     

11.  Credit  securities,  commercial  notes  or  securities,                                                                      
issued or guaranteed by Foreign  Governments,  central banks                                                                      
or  international or foreign bank  institutions;  Shares and  The sum of  investment  of  different  types of  Funds  same        
bonds  issued by  foreign  companies;  Participation  shares  Administrator  in  foreign  securities,  plus the  amount of        
issued by mutual funds and foreign investment funds; Foreign  investments  carried out abroad through fees of mutual funds        
securities   representative   of  share  index;   Short-term  and national investment funds have as a maximum limit of 20%        
Deposits; Operations that have as an unique aim the coverage  of the  value of the sum of types  of  Pension  Funds of the        
of financial risks pointed of a out in this number, referred  same Administrator.                                                 
to risks of fluctuations  among foreign  currencies or risks                                                                      
of interest  rates in a same  foreign  currency;  Investment                                                                      
abroad  through the  investment  shares issued by investment                                                                      
funds and mutual funds  which is referred to number 9, when                                                                       
these have more than 50% of its assets invested abroad.                                                                           
12.  Other  Instruments  of public  offer whose  issuers are  To each type of instrument indicated in this number, maximum        
supervised  by  the   Superintendency   of  Securities   and  limits of investment for the Types A, B, C, D y E, not being        
Insurance  or the  Superintendency  of Banks  and  Financial  minor to 1 percent nor exceeding 5 percent of the respective        
Institutions, authorized by the Central Bank of Chile.        Fund Value,  corresponding  to the Central Bank of Chile the        
                                                              determination of them                                               
                                                                           40%          25%         20%         15%        10%    
                                                                           37%          22%         18%         13%         9%    
13.  Total  of  Investments  in  foreign   currency  without                                                                      
exchangeable cover.                                                    interim     interim     interim     interim     interim    
                                                                        until       until       until       until       until     
                                                                     October 31,  October 31, October 31, October 31,  October 31,
                                                                         2003        2003        2003        2003        2003     
14.  Operations or Contracts  aimed to the borrowing or fund                                                                      
of financial  instruments  of local  issuers  calculated  in               15%          10%          5%          5%         5%    
accordance   with  the   financial   instruments   given  in                                                                      
borrowing.                                                                                                                        
15. Time deposits; bonds and other representative securities                                                                      
of deposits issued by financial  institutions and securities               40%          40%         50%         70%        80%    
guaranteed by financial institutions.                                                                                             
16.  Bonds of  public  and  private  companies  and bonds of                                                                      
public and private companies convertible in shares.                        30%          30%         40%         50%        ---    
17.  Shares of  publicly-traded  corporations  and Shares of                                                                      
publicly real state corporations                                           60%          50%         30%         15%        ---    
18.  National  mutual fund shares ruled by Decree Law 1.328,                                                                      
1976,which is referred to number 9.                                         5%           5%          5%          5%        ---    
19.  Contributions  of subscription  promises and payment of                                                                      
investment fund shares referred to number 9.                                2%           2%          2%          2%        ---    

B. Limits of Investment by Specific  Instruments and in Groups of Instruments or
Sectors (in accordance with the Fund Value)                                     
B.1.  Maximum  Limits of  Investment  by Specific  Instruments  and in Groups of
Instruments and Sectors (in accordance with the Fund Value)                     

                                                        [Enlarge/Download Table]
INSTRUMENT                                                             MAXIMUM LIMITS BY TYPE OF FUND          
                                                               TYPE A  TYPE B       TYPE C      TYPE D   TYPE E
                                                                                                               
I. OF CAPITAL                                                                                                  
1. ACC with lower liquidity factor                            10%      8%           5%          2%      ---    
2. ACC + CFI + CFM with no approval by the Rating Commission                                                   
(CCR).                                                         3%      3%           1%          1%      ---    
3. EXT + other  securities  of  public  offer  inspected  by                                                   
S.V.S. or S.B.I.F. that no require approval of CCR.            1%      1%           1%          1%      ---    
4. ACC + ACI + CFI + CFM  referred  to number  9,  letter A,                                                   
plus  the  amount  of  compromised   contributions   through                                                   
contracts of subscription promises and payment of investment                                                   
fund  shares  +   representative   instruments   of  capital                                                   
indicated in numbers 11 and 12, letter A.                     80%      60%         40%         20%      ---    
II. OF DEBT                                                                                                    
1.  FIN + LHF + DEB + BCA + ECO + [ EXT + OAC ] if they  are                                                   
debts, classified in N-3 and BBB category of risk.            10%      10%         10%          5%       5%    
III. OF DEBT AND CAPITAL                                                                                       
1.  DEB + BCA  +  Capital  Instruments  +  Debt  Instruments                                                   
classified in BBB category and N-3 of risk.                   ---      ---         45%         22%      ---    
2. DEB + BCA + ACC + ECO + OAC whose  issuer has less than 3                                                   
years of operation.                                           10%      10%         10%          8%       5%    

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INSTRUMENT                                                             MAXIMUM LIMITS BY TYPE OF FUND          
                                                               TYPE A  TYPE B       TYPE C      TYPE D   TYPE E
3. Restricted securities: OAC + [ ACC ] with lower liquidity                                                   
factor  + [ ACC +  CFI  +  CFM + CME + CIE + OAC ]  that  no                                                   
require the  approval of the CCR + [ DEB + BCA + ACC + ECO +                                                   
OAC ] whose  issuer has less than 3 years of  operation  + [                                                   
FIN + LHF + DEB + BCA + ECO + EXT + OAC ] classified  in BBB                                                   
category  and N-3 of risk.  The Central Bank will be able to                                                   
exclude  from  this  limit to each type of  instrument  from                                                   
number 12, letter A. (OAC).                                   20%      20%         20%         15%      ---    

B.2.  Maximum  Limits  of  Investment  by  Specific  Instruments  in  Groups  of
Instruments and Sectors (in accordance with the Fund Value)                     

                                                        [Enlarge/Download Table]
INSTRUMENT                                                                            MAXIMUM LIMITS BY TYPE OF FUND            
                                                                              TYPE A    TYPE B       TYPE C      TYPE D   TYPE E
                                                                                                                                

1. ACC + ACI + CFI + CFM referred to number 9, letter A.                                                                        
plus the amount of compromised contributions through                                                                            
contracts of subscription promises and payment of investment                                                                    
fund shares + representative instruments of capital                                                                             
indicated in number 11 and 12, letter A.                                     40%        25%         15%         5%       ---    
Capital Instruments:                                                                                                            
o ACC: Shares of publicly-traded corporations.                                                                                  
o ACI: Shares of publicly real state corporations                                                                               
o CFI: National Investment Funds Shares.                                                                                        
o CFM: National Mutual Funds Shares.                                                                                            
o CIE: Foreign Investment Fund Shares.                                                                                          
o CME: Foreign Mutual Fund Shares.                                                                                              
  Debt Instruments:                                                                                                             
o LHF: Mortgage loans issued by financial                                                                                       
  institutions.                                                                                                                 
o ECO: Commercial Notes.                                                                                                        
o DEB: Bonds of public and private companies.                                                                                   
o FIN: Time deposit, and other representative securities of                                                                     
  deposits of financial institutions, and securities                                                                            
  guaranteed by financial institutions.                                                                                         
Others:                                                                                                                         
o BCA: Convertible Bonds.                                                                                                       
o OAC: Instruments of other types whose issuers are supervised by the                                                           
  Superintendency of Securities and Insurance and the Superintendecy                                                            
  of Banks and Financial Institutions, that authorize the Central Bank.                                                         
o EXT: Credit securities, commercial notes or securities issued or guaranteed                                                   
  by foreign Governments, Central Banks or foreign or international Banks;                                                      
  shares; stocks and bonds issued foreign companies; approved by the Rating                                                     
  Commission.                                                                                                                   

C. Limits of Investment by Issuer                                               

                                                        [Enlarge/Download Table]
INSTRUMENTS                                                                       INDIVIDUAL FUNDS                FUNDS           
                                                                                                             A + B + C + D + E    
SECTORS                                                                   %          %             %           %            %     
                                                                        FUND      COMPANY        SERIE      COMPANY       SERIE   
                                                                                                                                  
I. FINANCIAL SECTOR                                                                                                               
Deposit in current accounts and time deposits, and Debt                                                                           
Securities issued by banks, financial institutions and its                                                                        
subsidiaries or guaranteed by them.                                  10%VFxfij   MU1 x Pat.       ---      MU1 x Pat.      ---    
Shares (when it corresponds)+ deposit in current accounts                                                                         
and time deposits + Debt Securities issued by banks,                                                                              
financial institutions and its subsidiaries, or guaranteed                                                                        
by them.                                                               7% VF         ---          ---         ---          ---    
II. FOREIGN SECTOR                                                                                                                
Shares                                                               0,5 % VF                                                     
Debt securities                                                      5%xVFxfij                                                    
Mutual and Investment Funds                                            1%VF                                                       
Shares of free availability which are traded in national                                                                          
markets                                                               0,15%xVF    7% x AEE                 7% x AEE               
Investment Fund Shares, of number 11, letter A. Of a same                                                                         
issuer not requiring approval of CCR                                  0,15%xVF    35%xCF                    35%xCF                

Mutual Fund Shares,  of number 11, letter A of a same issuer          0,15%xVF   35%xCF in                 35%xCF in              
not requiring approval of CCR                                                    circulation              circulation             
III. COMPANY SECTOR                                                                                                               
A) Bonds and Commercial Notes Debts securities leasing                                                                            
Companies bonds + commercial notes                                    7%VFxfij   MU2xPat.                   MU2xPat.     35% serie

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INSTRUMENTS                                                                       INDIVIDUAL FUNDS                FUNDS           
                                                                                                             A + B + C + D + E    
SECTORS                                                                   %          %             %           %            %     
                                                                        FUND      COMPANY        SERIE      COMPANY       SERIE   
Individual Companies                                                                                                              
Bonds + commercial notes issued or guaranteed by individual           7%VFxfij   MU3xAsset                 MU3xAsset     35% serie
companies                                                                       value issuer             value issuer             

Headquarters and Subsidiaries bonds + commercial notes                7%VFxfij       MU3x                   >MU3x                 
issued or guaranteed by individual companies                                     Consolidated            Consolidated             
                                                                                  net asset               net asset               
                                                                                 value issuer            value issuer             

Securitizer Company bonds + commercial notes issued or                7%VFxfij                  35% serie                35% serie
guaranteed                                                                                                                        

Companies having less than 3 years of operation bonds +               3%VFxfij                  35% serie                35% serie
commercial notes issued or guaranteed                                                                                             

B) Company Group Shares, bonds and commercial notes issued                                                                        
or guaranteed                                                         15%xVF                                                      
C) Shares                                                                                                                         
Shares of publicly-traded corporations                                5%xVFxFC    7%xACC        20% new      7%xACC       20% new 
                                                                        xFL                     issuance                 issuance 
Shares of real state corporations                                     5%xVFxFC    20%xACC       20%n new    20%xACC      20% new  
                                                                                                issuance                 issuance 
Shares not requiring approval of the CCR                              0,15%xVF    7%xACC        20% new      7%xACC       20% new 
                                                                                                issuance                 issuance 
Shares of Financial and Bank Societies                                2,5%xVFxFC  2,5% x ACC    20% new    2.5%xACC       20% new 
                                                                       FC x FL                  issuance                 issuance 
D) Investment Fund Shares and Mutual Funds                                                                                        
Investment Fund Shares + subscription promises                        5%xVFxFD    35%xCFI       35% new     35%xCFI      35% new  
                                                                                                issuance                 issuance 
Mutual Fund Shares                                                     1%xVF      35%xCFM in                35%xCFM in            
                                                                                  circulation               circulation           
Investment Fund Shares, number 9, letter A. not  requiring            0,15%xVF    35%xCFI       35% new     35%xCFI      35% new  
approval of CCR                                                                   issued        issuance    issued       issuance 
Mutual Fund Shares, number 9, letter A. not  requiring                0,15%xVF    35%xCFM in                35%xCFM in            
approval of CCR                                                                   circulation               circulation           
Contributions compromised through subscription and payment                                                                        
promises                                                              0,5%xVF                                                     
E) Shares + Bonds + ECO                                                                                                           
Individual Companies (Funds A, B, C y D)                                7%VF                                                      
o  ACC: The overall subscripted shares of a society                                                                               
multiplied by its price.                                                                                                          
o  AEE: The overall subscripted shares of a foreign society                                                                       
   multiplied by its price.                                                                                                       
o  CFI: Subscripted fees from respective Investment Funds.                                                                        
o  CFM: national mutual fund Shares in circulation                                                                                
o  fij: Weighted average risk factor, whose value depends on risk                                                                 
   classification of instruments and investments into them.                                                                       
o  FC: Concentration factor, may vary between 0.3 and 1.                                                                          
o  FD: Diversification factor, may vary between 0 and 1.                                                                          
o  FL: Liquidity factor,  may vary 0.2 y 1, determined by the                                                                     
   Central Bank of Chile.                                                                                                         
o  MU1: Unique multiple for all the financial institutions whose range                                                            
   may vary between 0.5 and 1.5. At present it is fixed at 1.0                                                                    
o  MU2: Unique  multiple for companies intended to carry out                                                                      
   leasing operations, changes between 0.4 and 1. At present it                                                                   
   is fixed at 0.7                                                                                                                
o  MU3: Unique multiple for Bonds and Commercial Notes change                                                                     
   between 0.08 and 0.12. At present it is fixed at 0.12                                                                          
o  Pat: Issuer's Shareholder's equity.                                                                                            
o  VF: Value of Pension  Funds, meaning the closing value of                                                                      
   the instrument's portfolio plus the balance in current                                                                         
   accounts, national investment Bank and foreign investment Bank.                                                                

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D. Limits of Investments in Issuers being Persons related to the Administrator  

                                                        [Enlarge/Download Table]
INSTRUMENTS                                                       INDIVIDUAL FUNDS                   FUNDS       
                                                         NORMAL LIMIT        RELATED LIMIT     A + B + C + D + E 
                                                                                                                 
Shares of Publicly- traded corporations                  5%xVFxFCxFL         5%xVFxFCxFL and     5%xVFxFCxFLy    
                                                                             high liquidity      high liquidity  
                                                          7%xACC                2%xACC               2%xACC      
Shares of publicly real state corporations              5%xVFxFC             5%xVFxFC and         5%xVFxFC and   
                                                                             high liquidity      high liquidity  
                                                         20%xACC                5%xACC              5%xACC       

Financial and Bank Shares                              2,5%xVFxFCXFL       2,5%xVFxFCxFL and     2,5%xVFxFCxFL   
                                                                            high liquidity     and high liquidity

                                                         2,5%xACC                0,5%xACC            0,5%xACC    
Free Availability Shares                                 0,15%xVF                0%                  0%          
                                                          7%xACC                 0%                  0%          
                                                                         Only AAA o AA or with                   
                                                                         level n-1 of risk and                   
                                                                           limits previously                     
                                                                               described                         

Debt Securities                                      Previously described   3% x Asset value   5% of the issuance
                                                                                 issuer          and 20% of daily
                                                                                  3% x                 loans     
                                                                         Consolidated/countable                  
                                                                         net asset value issuer                  

Investment Fund Shares: AFP related to Investment        5%xVFxFD                                                
Fund Administrator                                        35%xCF                    -                 5%xCF      
Mutual Fund Shares: AFP related to Mutual Fund             1%xVF                    -                            
Administrator                                             35%xCF                    -                 5%xCF      
Investment Fund Shares having securities from an                                                                 
issuer that can be a person related to                                                                           
Administrator                                                                       -             10% of shares  
Mutual Fund Shares having securities form an issuer                                 -             10% of shares  
that can be a person related to Administrator                                                                    
Limit for the Investment in instruments issued or                                 1%xVF                 -        
guaranteed by each issuer related to AFP                                                                         
Limit for the investment in direct or indirect way                                                               
in instruments issued or guaranteed by all                                        5%xVF                 -        
societies related to AFP                                                                                         
o ACC: Number of subscripted shares multiplied by                                                                
its price                                                                                                        
o VF: Value of Pension Funds                                                                                     
o FL: Liquidity Factor                                                                                           
o FC: Concentration Factor                                                                                       
o FD: Diversification Factor                                                                                     

E. Factors considered in Limits by Issuer in Shares and Investment Funds Shares 
o Concentration Factor (FC)                                                     
It is calculated on the bases of the maximum concentration of the property      
allowed in the by-laws of the Corporation and to the subjection of this         
Corporation to the XII Title Law Decree 3500.                                   
PARTICIPATION OF MAJORITY SHAREHOLDER                      CONCENTRATION FACTOR 
Subject to XII title                   <=32%                        1           
                             >32% a <50%                 0,8
                             >=50% a<=65%                0,6
                             <=32%                       0,6
Not subject to XII title               >32% a <50%                 0,5          
                             >=50% a <=65%               0,4
                             >65%                        0,3
o Liquidity Factor (FL)                                                         

It is calculated on the bases of presence and amount of share transactions in   
Stock Exchange (Liquidity Index). The following fixed scale by The Central Bank 
is:                                                                             
LIQUIDITY INDEX                                              LIQUIDITY FACTOR   
IL<=20%                                                            0,3          
20%< IL <=50%                                                      0,5          
50%< IL <=70%                                                      0,7          
70%< IL                                                              1          
o Diversification Factor (FD)                                                   
It is calculated in accordance with total assets of Investment Funds, invested  
directly and indirectly in instruments issued or guaranteed by a same issuer;   
where:                                                                          
DIRECT AND INDIRECT INVESTMENT OF A SAME ISSUER           DIVERSIFICATION FACTOR
Inv.<=20% Of the total asset of the Fund                           1,0          
20%< Inv.<=25% of total asset of the Fund                          0,8          
25%< Inv. <=1/3 of total asset of the Fund                         0,6          
1/3< Inv.<=40% of total asset of the Fund                          0,2          
Inv.>40% of total assets of the Fund                                0           

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Accounts Administration. A significant part of Provida's operational  
activities are related to the processing of "planillas" payment given by the    
employer, deposits and the preparation of affiliate account statements for      
individual capitalization accounts and voluntary savings accounts. The          
processing of planillas is labor-intensive because all forms are still prepared 
and submitted on paper and must be manually entered into Provida's computer     
records. Various computer programs, audit procedures and backing archives are   
maintained by Provida to assure that the data is entered accurately and the     
amounts are properly credited to accounts.                                      

    In October 2000, the PreviRed.com project, sponsored by the Association of
Pension Fund Administrators, was begun with the goal of developing and managing 
a system to collect contributions electronically through the Internet. All AFPs 
are shareholders of PreviRed.com, and Provida holds a 37.8% stake in this       
company. As of March 31, 2003, Provida's investment in PreviRed.com amounted to 
Ch$306 million. PreviRed.com started operations in October 2001. The volume of  
collection by this service ascends approximately to 5% of the total collected   
by this Administrator.                                                          

Principal Markets                                                     

Chile                                                                 

  Provida is the largest and one of the oldest AFPs operating in Chile and
has occupied a leading position in the private pension industry since its       
inception. As of December 31, 2002, Provida was the largest of the seven AFPs   
operating in Chile in terms of the number of affiliates, cotizantes, assets     
under management, renta imponible and number of branch offices. For the twelve  
months ended December 31, 2002 ("Fiscal Year 2002") and the twelve months ended 
December 31, 2001 ("Fiscal Year 2001"), Provida held 32.8% and 32.0%,           
respectively, of the operating revenues, 35.5% and 32.4%, respectively, of the  
operating income and 37.8% and 32.9% respectively, of the net income of the     
entire Chilean AFP system, according to data made publicly available by all     
AFPs (equity in gain of related companies is considered as non-operating        
income, with the exception of those consolidated). As of December 31, 2002, the 
value of the Pension Funds managed by Provida (including the Funds Type A, B,   
C, D and E) was Ch$8.0 trillion (or approximately US$11.2 billion), which       
constituted 31.5% of the total value of all funds in the Chilean AFP system     
according to data published by the principal regulator of Chilean AFPs, the     
SAFP.                                                                           

Provida's leading position is shown in the following table regarding  
market shares in the most relevant variables:                                   

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                                                        [Enlarge/Download Table]
--------------------------------------------------------------------------------------------------------------
                               Pension                                    Operating     Operating        Net  
Market Share 2002               Funds       Affiliates     Contributors    Revenues       Income        Income
--------------------------------------------------------------------------------------------------------------
                                                                                                              
Provida                           31,5%        40,3%             41,2%        32,8%         35,5%       37,8% 
Habitat                           23,6%        24,3%             25,0%        22,6%         25,2%       25,0% 
Cuprum                            15,6%         6,6%              9,0%        15,4%         18,7%       16,3% 
Santa Maria                       12,8%        14,8%             12,0%        12,5%          7,0%        8,9% 
Summa Bansander                   11,1%         7,6%              8,2%        10,6%         10,8%        9,6% 
Magiste                            2,7%         1,7%              1,9%         3,0%          0,5%        0,3% 
Planvital                          2,7%         4,7%              2,7%         3,0%          2,4%        2,1% 
System                           100,0%       100,0%            100,0%       100,0%        100,0%      100,0% 

The private pension system in Chile has matured and continues to be   
extremely competitive. Currently, there are seven AFPs operating in a highly    
regulated environment. By law, no company in Chile other than an AFP may        
provide pension benefits of a similar nature, with only one exception related   
to voluntary pension savings that has been opened to other authorized           
institutions since March 2002. Provida is significantly larger in terms of      
branches, affiliates and cotizantes than its closest competitors. All           
competitors have certain relationships with trade associations, insurance       
companies, banks or financial corporations that may provide unique competitive  
advantages. Competition is especially focused on fees charged, sales efforts    
and, to a lesser extent, services provided and returns earned by the pension    
funds. Until the end of 1997, the intensity of sales efforts was evidenced by   
the fact that the number of salespeople in the industry increased from 5,200 to 
18,700, which represents a 260% increase between the years 1992-1997. New       
regulations issued in November 1997 by the SAFP formalized the process of       
affiliate transfers between AFPs; however, they also effectively reduced the    
number of salespeople in the industry as evidenced by a 48% decrease from 1997  
to 1998, culminating with an average number of salespeople of approximately     
9,800 for 1998. During 1999, an additional decline of 56% occurred in           
comparison to the previous year, with the average number of salespeople falling 
to approximately 4,300. This trend continued during the years 2000 and 2001,    
with the average number of salespeople decreasing to 3,222 and 2,649,           
respectively, which represent decreases of 25% and 18% respectively, regarding  
the previous year. This strategy related to commercial expense rationalization  
was accompanied by fee reductions, converting the latter into the main          
competitiveness variable. In 2002, the average number of sales agents           
throughout the Industry was 2,679 implying an increase of 1% compared to last   
period.                                                                         

   Competition also encouraged a process in which smaller and less efficient
AFPs were acquired by and merged into larger ones, as well as the association   
of strategic partners with existing AFPs. Consequently, during 1995 and 1996,   
Provida absorbed AFP El Libertador S.A.; AFP Santa Maria S.A. ("AFP Santa       
Maria") absorbed AFP Banguardia S.A.; AFP Qualitas S.A.("AFP Qualitas")         
absorbed AFP Valora S.A. and AFP Previpan S.A.; AFP Planvital S.A. ("AFP        
Planvital") absorbed AFP Corcordia S.A.; and AFP Magister S.A. ("AFP Magister") 
absorbed AFP Futuro S.A. Additionally, Citicorp Inc. became an important        
shareholder of AFP Habitat S.A. ("AFP Habitat"), and Luksic group became the    
controller of AFP Qualitas.                                                     

   During 1998 and 1999, the consolidation trend continued. Provida absorbed
AFP Union; Sun Life Inc. acquired 31.7% of AFP Cuprum S.A. ("AFP Cuprum"); Corp 
Group Pensiones acquired AFP Proteccion; and Inverlink Holdings acquired 84.6%  
of AFP                                                                          

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Qualitas. Inverlink Holdings, which already controlled AFP Magister, merged     
both pension fund managers and retained the name AFP Magister. In addition,     
Santander Chile Holding S.A. acquired 100% of AFP Summa S.A. which was merged   
with Santander AFP to form AFP Summa Bansander S.A. ("AFP Summa Bansander"),    
and AFP Aporta S.A. and AFP Fomenta S.A. were merged to form AFP Aporta Fomenta 
S.A. ("AFP Aporta Fomenta"). On January 1, 1999, Provida acquired and merged    
with AFP Poteccion. Subsequently, BBV acquired 40.7% of Provida and Aetna Chile 
increased its participation in AFP Santa Maria from 76.0% to 96.6%.             

    In January, 2001, AFP Aporta Fomenta S.A. was acquired and absorbed by AFP
Magister, while at the end of the same year, the Banca della Suizzera Italiana, 
a Swiss group, took control of AFP Planvital (99.98%). In June 20, 2001, the    
merger of ING Life Insurance Company with Aetna Life Insurance Company was      
allowed, implying the integration of AFP Santa Maria to ING Group, company that 
was formerly controlled by Aetna Chile. Currently, ING S.A. owns 97,61% of AFP  
Santa Maria's stake.                                                            

 Although Provida competes with all AFPs in Chile, it believes that only
four of the six competitors can compete with it significantly in terms of size, 
scope of service and sales coverage. These are AFP Habitat, AFP Santa Maria,    
AFP Summa Bansander and AFP Cuprum, which are currently the only AFPs with      
pension fund assets under management in excess of US$3 billion. As of December  
31, 2002, Provida and these four competitors collectively accounted for         
approximately 94% of all assets under management in the Chilean AFP system.     

  Provida believes that the rate of return on Pension Funds has not had as
much relevance as the issues previously described in retaining affiliates, due  
to the fact that over time, the return of the different Pension Funds has been  
very similar, as a consequence of the law in force until beginning of 2002,     
related to minimum returns requirement, which made AFPs to constitute similar   
portfolios. Since the Multiple Funds law came into force that considers a wide  
rage for minimum returns for some investment portfolios (those with a higher    
percentage of variable income, Funds Type A and B), it is possible to notice    
differences in returns obtained by different types of funds. However, it is not 
possible to foresee the influence that this will have in affiliate transfers.   
The following chart contains the ten-year evolution of returns of Fund Type C.  

Real Return of Chilean Pension Funds

                                                        [Enlarge/Download Table]
                                             For the Twelve Months Ended December 31,                        
                        1993     1994    1995     1996    1997     1998     1999    2000     2001     2002   
                      ---------------------------------------------------------------------------------------
                                                                                                             
Provida..............    15.9%    17.9%   -2.5%     3.4%    4.6%    -0.1%    16.2%    4.5%     6.4%     3.0% 
Industry (1).........    16.2%    18.2%   -2.5%     3.5%    4.7%    -1.1%    16.3%    4.4%     6.7%     2.9% 
----------                                                                                                   
Source: SAFP                                                                                                 
(1)  Weighted average by pension fund value for corresponding period.                                        

 As of April 30, 2003 Provida obtained the following table shows returns
and rankings in real terms, figures to figures in year on year for each of the  
following types of funds.                                                       

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     Return            Ranking
----------------------------------------------------------              
Type A(*)                 6.58%                1                        
Type B(*)                 3.22%                4                        
Type C                    3.20%                6                        
Type D(*)                 1.40%                6                        
Type E                    6.37%                4                        
----------                                                              
     (*)  Starting  up  of A,  B and D  Types  Funds  as of 27  September  2002,
therefore previous returns are accumulated in 7 months.     

 As of the same date, Provida obtained the sixth and third place in real
returns in type C and E funds respectively, figures to figures within 24        
months. Also it has obtained the sixth and fifth place in real return in type C 
and E Funds respectively, figures to figures within 36 months.                  

In addition to the above, and in order to strengthen Provida's leading
position and to reinforce its quality of customer service, efforts have been    
implemented in order to improve both technology and processes involved in each  
service channel. The above has implied important challenges considering the     
issues that the industry implemented during 2002: voluntary pension savings,    
multiple funds and unemployment insurance. Besides, a new web site was released 
in Internet with characteristics of a "Virtual Agency"; line 800 Provifono was  
equipped with high technology and in the main branches of the country a         
clearance process was initiated through externalization of collection process   
and pension payments, as well a the implementation of self consultant           
equipments (Provimaticos).                                                      

 Provida also faces competition for voluntary savings contributions from
various financial institutions and intermediaries such as banks, insurance      
companies and investment companies. Because Provida does not currently charge a 
fee on voluntary savings account deposits, such competition has not been a      
source of significant concern. As of December 31, 2002, the aggregate number of 
voluntary savings accounts in the AFP industry was 870,920 which represents a   
total amount of US$204 million, of which Provida had 414,692 accounts           
representing a market share of 47.6% and occupying first place in the industry. 

    In 2001, the Chilean government recently passed a set of measures aimed at
liberalizing the capital market, one of them related to voluntary pensions fund 
savings that came into force in March 2002, giving new saving incentives and    
allowing its administration by other institutions different from AFPs. In this  
context, while competitors have the advantage of offering a larger variety of   
products because AFP investments are limited by law (even though multiple funds 
extended the limits), according to fees reported by the different participants, 
AFPs stand out in terms of low costs. Additionally, by law AFPs had to          
establish commissions, that has implied a new source of revenues.               

International                                                         

    Because of the success of the private pension system in Chile, a number of
other Latin American and European countries have adopted substantially similar  
private pension systems. Currently, private pension systems are also in place   
in Peru, Colombia, Argentina, Uruguay, Bolivia, Mexico, El Salvador, Costa      
Rica, Panama, the Dominican Republic, Croatia and Poland. In addition, Ecuador, 
Paraguay, Venezuela, Brazil and Guatemala are also considering the adoption of  
a private and mandatory pension system.                                         

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  The Pensions Law states that the "sole objective" of each AFP is limited
to the administration of pension funds and the provision of related benefits.   
The Pensions Law allows an AFP to invest, through a subsidiary created by the   
AFP for such purposes, in foreign companies whose purpose is the provision of   
social security benefits in other countries. While Chilean law would permit a   
Chilean AFP to exercise control over a foreign AFP through such that Chilean    
AFP's subsidiary, not all foreign laws permit such an exercise of control.      

 In May 1995, Provida amended its by-laws to allow for the creation of a
subsidiary, Provida Internacional, the objective of which is to invest in       
companies in countries other than Chile whose purpose is the provision of       
social security benefits in those countries. Provida Internacional was          
constituted with Provida as holder of 99.99% of the shares of the common stock  
and Corp Group Pensiones Chile S.A. as holder of the remaining shares.          
Subsequently, Corp Group Pensiones Chile S.A. changed its name to BBVA          
Pensiones Chile S.A., maintaining the same shareholding structure. Provida      
Internacional holds investments in AFPs operating in Peru, Colombia, Ecuador,   
Mexico and El Salvador.                                                         

  International Strategy. As of December 31, 2002 the BBVA Group, with the
participation of Provida, is the largest pensions group in Latin America, with  
almost 12 million affiliates and more than US$25 billion in assets under        
management. Provida's international strategy is to continue playing an active   
role in Latin American pensions projects together with the BBVA Group.          
Notwithstanding the above, neither Provida nor the BBVA Group intends to        
significantly increase Provida's level of debt in detriment of its future       
development. According to the latter, Provida will act as a consultant to local 
AFPs in those countries with large pension markets, where it will expect to     
generate consulting fees. In countries with smaller pension markets, Provida    
will actively seek new investments in local AFPs.                               

   Peru-AFP Horizonte. In June, 1993, Peru started a private pension system.
In November, 1993, Provida made an initial US$2 million investment in exchange  
for a 20% equity share in AFP Horizonte ("AFP Horizonte"), a company targeting  
high and middle-income workers located mainly in the Lima region of Peru. In    
April 1994, Provida invested an additional US$1 million in connection with an   
equity issue to maintain its 20% stake. Due to the slow development of the      
private pension market, in August, 1994 AFP Horizonte decided to merge with AFP 
Megafondo S.A. in order to take advantage of scale economies and consolidate    
its position as one of the leading AFPs in Peru. Under the terms of the merger, 
Provida's equity stake in AFP Horizonte was reduced to 13.2%. In 1996, Provida, 
through Provida Internacional made an additional investment of approximately    
US$1.1 million in AFP Horizonte in order to increase its participation to       
15.87%. Provida's total investment in AFP Horizonte at December 31, 2002        
amounted to US$4.1 million, being more than surpassed by dividends paid by the  
Peruvian company to Provida. In the first half of 1998, AFP Horizonte           
distributed a dividend to its shareholders for the first time since it started  
operations and in order to be able to pay these dividends, AFP Horizonte had to 
absorb losses corresponding to previous periods. The absorption of past period  
losses was accomplished through a reduction in the amount of the paid-in        
capital of AFP Horizonte.                                                       

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 The Peruvian pension system originally was comprised of eight AFPs, but
only four are currently operating. Workers may still choose to participate in   
the public system. As a result of the merger mentioned above, AFP Horizonte's   
market share in terms of the number of affiliates in the system increased from  
13% to 23%, and from 17% to 25% in terms of assets under management. As of      
December 31, 2002, 2,993,782 eligible workers had been incorporated into the    
Peruvian private pension system, of which AFP Horizonte had 787,248 affiliates  
with a market share of 26%, occupying the first place in the industry. At that  
date, assets under management in the Peruvian system were approximately US$4.5  
billion, of which US$1,142 million were managed by AFP Horizonte, representing  
a 25% of participation and the third place in the market.                       

AFP Horizonte achieved strong financial returns in Fiscal Year 2002,  
contributing Ch$2,035 million (US$2.83 million) to the net income of Provida.   
This result basically stems from higher fee income given the increase in the    
average number of contributors (10.5%).                                         

 During 1998, Holding Continental S.A., a company related to the Brescia
family and BBV, increased its interest in AFP Horizonte to 54%, thereby         
becoming its controlling shareholder. Beginning in 2000 the BBVA Group, through 
the acquisition of outstanding minority shareholdings, held a 100% equity       
interest in AFP Horizonte, directly and through subsidiaries.                   

Provida does not currently anticipate making any additional equity    
investment in or capital contributions to AFP Horizonte and is not currently    
aware of any intention by any other investor, including other shareholders of   
AFP Horizonte, to make any capital investments. No assurance can be given that  
unforeseen circumstances may not arise which would make an additional capital   
expenditure by Provida or other investors desirable or necessary or which may   
result in the need for additional borrowings by AFP Horizonte.                  

   Colombia-AFPC Porvenir. In April 1994, Colombia started a private pension
system. Provida purchased a 20% equity stake in AFPC Porvenir S.A. ("Porvenir   
(Colombia)") in 1994 for approximately US$4.7 million. Between 1995 and 1997,   
Provida made additional investments of approximately US$2.3 million in order to 
maintain its stake and according to the company's capital requirements.         
Provida's total investment in Porvenir (Colombia) at December 31, 2002 amounted 
to US$7.0 million.                                                              

   In the Colombian system, workers may elect to affiliate themselves with a
private pension and unemployment funds administrator ("AFPC") or remain in the  
public system. Each affiliate may make this choice every three years. The       
operating partners of Porvenir (Colombia), who are related to Banco de Bogota   
and Banco de Occidente, have national recognition through their operations as   
managers of unemployment benefits funds. Accordingly, when Porvenir (Colombia)  
started operating as a pension fund manager, it took advantage of the existing  
position and broad national coverage of Banco de Bogota and Banco de Occidente. 
At December 31, 2002, Porvenir (Colombia) was the leading administrator in the  
Colombian market with 1,205,442 affiliates, representing a market share of 26%, 
while it had US$1,485 million in assets under management, representing a market 
share of approximately 27%. The Colombian company also managed an unemployment  
benefits fund of US$218 million.                                                

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The results obtained by Porvenir (Colombia) in Fiscal Year 2002       
contributed Ch$1,533 million (US$2.1 million) to the net income of Provida.     

 There can be no assurance that unforeseen circumstances may not make it
desirable or necessary for Provida or other investors to make additional equity 
investments in Porvenir (Colombia) or that Porvenir (Colombia) will not be      
required to borrow additional funds in connection with future operations.       

  At year-end 2002, the BBVA Group held an interest in AFPC Horizonte S.A.
("Horizonte (Colombia)") which was created by the merger in September 2000 of   
the companies Horizonte (Colombia) and AFPC Colpatria S.A. Previously, the      
Group had investments in AFPC Colfondos S.A., another Colombian AFPC.           

Ecuador. Although a mandatory private pension system has not been     
implemented yet in Ecuador, the Ecuadorian government has provided for the      
creation of AFPs, which receive regular voluntary contributions from their      
affiliates. Until 1995, Filanbanco S.A. ("Filanbanco"), one of the largest      
banks in Ecuador, operated and owned all of the outstanding common stock of AFP 
Genesis. In August 1994, Provida entered into a software and technology supply  
contract with AFP Genesis and also signed a letter of intent by which Provida   
agreed to purchase approximately 25% of the outstanding shares of common stock  
of AFP Genesis from Filanbanco. In December 1995, Provida Internacional, as     
Provida's successor in interest under the above-mentioned contract and letter   
of intent, purchased 25% of the outstanding shares of common stock of AFP       
Genesis from Filanbanco, paying approximately US$0.7 million.                   

In 1996, Provida Internacional made an additional investment of       
approximately US$0.5 million, in order to maintain its 25% interest in AFP      
Genesis. Around this time, Filanbanco, like other local banking institutions,   
was suffering from financial difficulties that ultimately required the          
intervention and assistance of the government at the end of 1998. ING Barings   
was engaged by the Ecuadorian government to find a strategic partner for        
Filanbanco. Finally, in September 2001, Provida Internacional acquired 75% de   
AFP Genesis, completing 100% of the shareholding in the Ecuadorian company.     
Since then, Provida's financial statements are consolidated with those of AFP   
Genesis, implying a net result of Ch$323 million as of December, 2002 (US$ 0.45 
million).                                                                       

As of December 31, 2002, Genesis had 214,228 affiliates, 103,885      
contributors and assets under management over US$11 million representing a      
market share of approximately 82% in terms of contributors and 69% in terms of  
assets under management.                                                        

Mexico. In March 1996, Mexico promulgated a pension reform law that   
allowed the implementation of privately managed pension funds. The affiliation  
process began in February 1997 and private Mexican pension funds administrators 
("AFOREs") started receiving collections in September 1997. In 1996, Provida    
entered into an agreement with Grupo Nacional Provincial S.A. de C.V. ("GNP")   
of Mexico, one of the largest insurance groups in Mexico offering life, health, 
casualty and property insurance products, and BBV to create AFORE Profuturo.    
The initial shareholders of AFORE Profuturo were GNP (51%), BBV (25%) and       
Provida Internacional (24%) that also provided instruction and                  

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technology for pension fund administration. On May 29, 1998, the shareholders   
of Profuturo approved the acquisition of AFORE Previnter S.A. de C.V., which    
was financed by the issuance of new capital. Through this acquisition, AFORE    
Profuturo became the third largest pension fund administrator in Mexico.        
Provida Internacional decided not to increase its exposure in the Mexican       
market, and consequently its participation was diluted from 24% to 14.45%.      

Afterward, a merger between Grupo Financiero Bancomer S.A. de C.V. and
Grupo Financiero BBV Probursa S.A. de C.V. was authorized in the first half of  
2000, creating one of the largest banks in Latin America and, upon the          
incorporation of AFORE Bancomer into the BBVA Group, the largest pension fund   
administrator in Mexico. Provida, as a member of the BBVA Group, was invited to 
participate in this new project. On November 30, 2000 Provida Internacional     
acquired a 7.5% equity interest in AFORE Bancomer in a substantial transaction  
involving the payment of US$66.3 million. In March 2001, in the second part of  
the process, Provida Internacional sold its 14.45% holding in AFORE Profuturo,  
receiving US$61.7 million before taxes from the sale. The net proceeds were     
used to prepay the transitory debt originating from the acquisition of Provida  
Internacional's stake in AFORE Bancomer, whereas earnings of Ch$18,862 million  
(net of taxes) were destined to accelerate the amortization of part of the      
goodwill resulting from the purchase of AFORE Bancomer. The successive          
acquisition and sale of both companies constituted a single financial           
operation.                                                                      

   For Provida, Mexico is a great challenge because it is the most important
market where a private pension system similar to the Chilean system has been    
adopted, reaching more than 29 million affiliates as of December, 2002. As      
Provida sold its participation in AFORE Profuturo, this company's results were  
not recognized on Provida's books from March 2001 onwards . AFORE Bancomer, as  
the leading administrator in the Mexican market, had 4,353,848 affiliates       
equivalent to a market share of 15%, and had assets under management of US$6.6  
billion, representing a market share of 22%.                                    

The results obtained by AFORE Bancomer in Fiscal Year 2002 contributed
Ch$5,947 million (US$8.3 million) to the net income of Provida. AFORE Bancomer  
is Provida's main investment and generates the highest earnings equivalent to   
57.7% of the total earnings of foreign affiliates during this period.           

    El Salvador. In early 1998, Provida Internacional signed an agreement with
Dresdner Bank A.G. and local sponsors Corporacion Universal S.A. and Credomatic 
S.A. to create AFP Porvenir S.A. ("Porvenir (El Salvador)"). Porvenir (El       
Salvador) began its operations in April 1998 with a capitalization of           
approximately US$6.3 million, of which 35% was contributed by Provida           
Internacional. In the last quarter of 1999, Provida made an additional          
investment of US$2.6 million aimed to increase its stake to 50% in Porvenir (El 
Salvador) by the acquisition of 15% interest previously in hands of Deutsche    
group company.                                                                  

On March 28, 2000, the merger of Porvenir (El Salvador), AFP Prevision
S.A. and AFP Maxima S.A. was approved. The merger process was completed in      
September 2000, forming a new entity, AFP Crecer S.A. ("AFP Crecer"), in which  
Provida participates with a 19% stake. Porvenir (El Salvador) added about       
181,000 affiliates and US$80 million in                                         

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assets under management to AFP Crecer. As of December 31, 2002, AFP Crecer had  
546,197 affiliates, representing a market share of 55%, and assets under        
management of US$516 million, with a market share of 48%. The results obtained  
by AFP Crecer in Fiscal Year 2002 contributed Ch$792 million (US$1.1 million)   
to Provida's net income.                                                        

 The table below describes the total equity in gain of Provida's related
companies, both foreign and local, for the last three financial years.          

                                                        [Enlarge/Download Table]
                                                    For the Twelve Months Ended December 31,       
                                                          (in millions of constant Ch$)            
                                                     2000          2001         2002         2002  
                                                     MMCh$         MMCh$        MMCh$        MMUS$ 
                                                                                                   
Net Income Provida                                  32,252        33,330      34,007            47 
- Net Income excluded gain of affiliated companies  23,995        22,827      24,295            34 
- Equity in gain of foreign affiliated companies     8,206        10,665      10,307            14 
- Equity in gain of local affiliated companies          52          (162)       (595)           (1)

Equity in Gain of Affiliated Companies/Net Income     25.6%         31.5%       28.6%         28.6%

Marketing and Sales                                                   

General                                                               

    As is the case with all AFPs, Provida's activities are limited to offering
only those products and services permitted under the Pensions Law. See "Item 4. 
Information on Provida--Business Overview--Government Regulation--Mandatory     
Benefits." As a result, Provida seeks to maximize its income by attracting and  
retaining affiliates and charging the fees permissible under the Pensions Law.  
Provida obtains its clients principally through its sales force, which targets  
potential affiliates who may be interested in transferring from another AFP as  
well as new workers who enter in the labor market for first time and need to be 
affiliated the AFP System. Provida also captures affiliates through its Pension 
Service Centers without sales agents intervention. Provida believes that its    
general marketing efforts, including direct marketing and other promotional     
activities, are instrumental in attracting affiliates through our sales force   
and Pension Service Centers.                                                    

As the largest private pension fund manager in the Chilean AFP system,
Provida seeks to capitalize on its broad name recognition in attracting new     
affiliates and retaining existing affiliates. Management believes that an       
important part of Provida's public image, has been the perception of moving to  
a "three blocks" corporate value concept: Experience, Capability and Trust,     
maintaining closeness with and disposition to service its clients.              
Additionally, reinforcing the above, Provida's prestige stems from its          
consolidated leadership over time, as well as the culmination of the            
integration process in the BBVA Group, a conglomerate leader in the Latin       
American private pension fund system, through the new corporate image carried   
out in March 2001. Provida also uses periodic informational mailings to         
supplement its marketing efforts and provides additional services by making its 
facilities available for community use. Additionally, recent promotional        
activities have reinforced Provida's technological capabilities and             

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quality services. In 2002, and after 21 years from the creation of the Private  
Pension System, the most significant reforms in the Chilean Pension Industry    
began in connection to the management of voluntary pension savings and the      
multiple funds creation.                                                        

In March 2002, the law that made flexible the mechanisms for voluntary
pension savings came into force, giving new incentives of saving and permitting 
other financial institutions different from AFPs to administrate this service.  
Strong competition has been present through a wide range of pension saving      
plans offered by participating institutions, presenting significant differences 
for administration costs among them. In the specific case of Provida, it has    
highlighted for its low administration costs among AFPs, with an annual fee of  
0.49% over assets under management. Additionally, and in the area of commercial 
strategy facing greater competitiveness in this business, Provida focused its   
efforts in capturing new clients, which implied opening accounts for new        
pension saving plans. The above was made with advertising support in written    
media and support elements for different channels of distribution.              

 The Multiple Funds Law, partially in force in March of 2002 and in full
force from August 1, 2002, has allowed affiliates to have five alternatives of  
investment to manage their pension savings, according to their risk preferences 
and age. Additionally, it has implied higher competitiveness among participants 
regarding voluntary pension savings by increasing the number of funds offered   
by AFPs, giving affiliates more attractive in terms of diversification.         
Additionally, Management considers that this represents an opportunity to       
obtain a greater approach and "loyalty" of its clients, through delivering a    
complete advisory assistance of this new process that allows to optimize        
his/her decision of saving. As regards change of funds and as it is appraised   
in the table bellow, Provida has led the change of Funds process and it         
continues developing advising assistance activities to satisfy necessities and  
preferences of its clients in the best way.                                     

Total Changes of Funds of AFPs

                      Cotizantes as of   Number of Changes   % Changes regarding
               September, 2002      October, 2002            Total
AFP Provida              1,432,269            296,896               37.7%       
AFP Habitat               875,984             238,836               30.3%       
AFP Cuprum                290,297              74,693                9.5%       
AFP Summa Bansander       275,973              73,352                9.3%       
AFP Santa Maria           394,437              71,328                9.1%       
AFP Magister               65,738              19,206                2.4%       
AFP Planvital              89,582              12,976                1.6%       

Total                    3,424,280            787,287               100.0%      

Management considers that Provida transformed into great opportunities
these changes that took place in the Private Pension Chilean Industry,          
supported in its experience, dimension, capacity, flexibility, innovation as    
well as support on its partners.                                                

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   Provida has demonstrated that it is prepared to develop these changes and
to transform them into a real opportunity of future growth, through its         
leadership maintained from its creation.                                        

As regards distribution channels, it is important to point out that   
Provida's sales personnel and service offices are organized into eigth          
geographical districts throughout Chile: the North, North Center, Central, East 
Metropolitan, West Metropolitan, South Metropolitan, Mid-South and South        
regions.                                                                        

 Branches and Telephone Service. Provida services its existing affiliate
base through its branch system, telephone support centers and field visits by   
its sales personnel. Provida has maintained its leadership position in a        
heightened technological environment by offering the most extensive nationwide  
branch network in Chile with 77 inter-linked offices. Approximately 16.9% of    
the branches are located in the north region, 19.4% in the central-north        
region, 14.3 % central zone, 6.5% in east metropolitan of Santiago, 7.8% in     
west metropolitan, 6.5% in the south metropolitan, 11.7% in south center and    
16,9% in the south region. The branches have a uniform style nationwide and     
vary in size according to the needs of the zone where they are located. The     
branches serve as deposit centers for monthly contributions, process deposits   
and withdrawals for voluntary savings accounts, initiate the process of         
retirement and pay the pensions. The branches provide information on individual 
accounts, the overall performance of the Pension Fund and various aspects of    
the pension fund system through specialized personnel and the provision of      
brochures as required by the SAFP. Adding to the above, and in order to         
increase its leading position and reinforce its quality service, Provida made   
an important technological investment during the period, destined to modernize  
its branch network and thereby improve customer relations and services, and has 
broadened the services offered by its web page (www.afpprovida.cl).             

During year 2002 a process intended to modernize branches was begun   
through externalization of collection and pension payments processes. This      
externalization was made in the most critical centers, allowing Provida focuses 
its efforts of assisting clients with specialized personnel, in order to        
increase the knowledge of their pension needs and satisfying them in the best   
way. Additionally and supporting the clearing of the Service Centers, is the    
implementation of self- consultant equipments "Provimaticos" in Provida         
branches of the main cities of the country, allowing affiliates to obtain       
rapidly their certificates and balance accounts.                                

    Provida provides its affiliates with telephone support through centralized
telephone service with personnel specially trained for this purpose. Generally, 
Provida contacts its affiliates periodically to determine if they are satisfied 
with its services. Affiliates may obtain account and benefits information       
through this telephone network and can seek to resolve questions and problems   
concerning their accounts through customer service telephone representatives.   
Provida also has an "Interactive Voice Response System" (IVR) which allows      
affiliates and employers to access information in Provida's databases and to    
receive such information verbally using an ordinary touch-tone phone, without   
the assistance of customer service personnel.                                   

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Services. Great strides have been made to improve even further the    
services that Provida furnishes to its affiliates. Five years ago, Provida      
began a process to supply its off-site customers with products offering better  
technology. The aim was to both improve client satisfaction with Provida's      
service and also optimize the position of the Provida brand. As part of this    
process, Provida has developed the following initiatives:                       

    -    Gold Service. This is a service aimed at delivering special attention
  to an exclusive client portfolio assigning specialized account
    executives in pension area, through a personalized attention and
using communication tools such as e-mail and telephone.     

  -    Interactive Internet Service. This service provides several options
       that enhance Provida's client support. The service involves the use
     of passwords and personal identification numbers (PINs), delivers
   online information about individual capitalization accounts and
 updates personal information. It also provides information to
         employers about their workers, the interest and inflation adjustments
       made on contributions and access to different areas within Provida.
Additionally, Provida will incorporate in the short term the
        possibility of initiating the process of retirement in its web page,
         as well as, give affiliates access to information regarding the their
      pension application. In Internet, in December, 2002 a new web site
        was released with characteristics of a "Virtual Agency", which has a
    greater number of on line services. This has allowed even making
      financial transactions with a faster and more effective navigation
for our users according to instructions issued by AFP's     
Superintendence in 1211 Act.                                

-    CD Gold. This CD includes retirement calculation software and    
    software for employers. The retirement calculation software is a
      program that facilitates calculations of pension plan estimates at
         different stages for the legal retirement age (age 65 for men and age
        60 for women) or early retirement, under different profitability and
    cost assumptions. The second program facilitates calculations of
       pension plan estimates and provides the planilla for contributions.
      On the other hand and due to the legal amendments, during 2002 the
      Pension estimate software was updated to simulate the date and the
        amount of the future pension. Also, it calculates a pension that has
     included voluntary pension savings and tax benefits associated to
this alternative.                                           

-    Provifono. This is an automated and personal pension consulting  
    service for affiliates and employers by telephone, permitting to
      solve doubts about the pension's law and the old system. In second
semester of 2002, line 800 Provifono was equipped with high 
        technology, counting with tools like Lucent Centre Vu and a complete
development of a new IVR (Interactive Voice Response).      

New services in the industry. Provida participates in PreviRed.com, a 
company created with the aim of providing electronic collections services for   
employers through the Internet, involving among others pension and health       
contributions. PreviRed.com began operations in August 2001, and is aimed at    
improving efficiency by simplifying the processing of payments and              
registration. In its first period of operations, PreviRed.com has incorporated  
important clients such as the health insurance companies (Isapres) and the      
government pension system (Instituto de Normalizacion Previsional, "INP").      

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  Additionally, in May 2001, the Unemployment Insurance Administration Law
was passed. After a competitive bid in January 2002, this administration was    
finally granted to a consortium of all of the AFPs for 10 years, starting       
operations in August 2002. All AFPs' branches will provide services related to  
this new benefit through their nationwide network. Provida has a 37.8%          
participation in the new company and was granted the operational and technical  
support as well.                                                                

   In November 2001, Provida implemented a "Specialized Center for Voluntary
Pension Savings", aimed to promote by phone (600-PROVIDA) the voluntary pension 
saving alternative to its "Gold" clients' portfolio (defined as affiliates with 
permanent salaries higher than 60 UF, approximately US$1,500 ), as well as      
answering requirements of clients; potential clients and the company's branches 
and maintenance staff. This center made up of highly trained customer service   
executives operated until November 2002. Later on, all pension saving           
requirements are assisted by stable channels which are also offered on          
Provida's web page , allowing each person interested in this issue to calculate 
his future pension including this alternative and the tax benefit associated.   
Finally, it is important to point out that line 600 allows the AFP to count on  
a channel of exclusive attention that focuses on relevant pension matters and   
contingency for a certain period of time. This service has been also used for   
extraordinary rescheduling of pension debts, voluntary pension saving and       
Multiple Fund start up among others.                                            

   Additionally, in March 2002, the BBVA Group created a shared web-site for
both Provida and its related Chilean company BBVA Banco BHIF, www.bbvaapv.cl,   
associated with voluntary pension savings, containing the description of the    
products, a calculation simulator and links connecting both companies'          
web-sites. Adding to that support there was a joint call center aimed at        
providing information about this new pension saving alternative.                

 Provida's strategy continues to center on intensifying the optimization
and development of new in-house services to each segment by establishing        
communication plans and programs within the context of on-site client           
assistance.                                                                     

New corporate image. On March 19, 2001, Provida modified its corporate
image by replacing its traditional logo with the BBVA Group logo as the         
successful culmination of Provida's integration into the BBVA Financial Group,  
which is currently the leader in the private pension fund administration        
industry in Latin America. Provida performed this change after conducting       
several studies that concluded that the association of BBVA Group with Provida  
implied a higher international profile and stronger image, among other          
benefits, which generated positive expectations for future investments.         

Sales Force                                                           

    Provida has generally intended to maintain a sales force that enable it to
maintain its dominant market share. In a competitive context, after the mergers 
and acquisitions of small AFPs into larger ones, in 1997 Provida reached a      
maximum of 3,142 sales agents. Therefore and considering the high level of the  
industry sales force with its subsequent impact on commercial expenses stemming 
from a large number of transfers, not all them fulfilling the requirements,     
Circulars 998 and 999 from the SAFP were implemented. This                      

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implied establishing strict procedures regarding the transfers of affiliates    
between AFPs as well as concerning sales force hiring. As a consequence of the  
reduction in transfers due to the above, Provida's sales force diminished 51.1% 
in comparison to its 1997 level, falling to 1,536 sales agents at the end of    
1998, while in 1999 a further 31.6% reduction resulted in a year-end sales      
force of 1,050 sales agents. Additionally, following this trend and according   
to a strategy focused on fee competition instead of commercial efforts, in the  
year 2000 the sales force decreased 14.5% to 898 sales agents regarding 1999    
and diminished 25.9% to 665 in the year 2001 compared to the year 2000.         
Finally, in 2002 sales agents were reduced to 652 (2%) compared to 2001. At     
December 31, 1997, Provida's sales force constituted 18.4% of the total sales   
force in the AFP industry, whereas at December 31, 1998, 1999, 2000, 2001 and   
2002 Provida's sales force constituted 24.2%, 29.6%, 30.0%, 25.7% and 23.5% of  
the sales force in the AFP industry, respectively. See "Item 6. Directors,      
Senior Management and Employees--Employees".                                    

The following chart compares the relative sizes of the sales force of 
Provida against its four largest competitors and the remaining AFPs as of       
December 31, 2001, 2002 and March 31, 2003:                                     

                                                        [Enlarge/Download Table]
                                      Total AFP Sales Force                                             
                                          (percentage)                                                  
                                                             As of December  As of December  As of March
                                                                31, 2001        31, 2002      31, 2003  
                                                                                                        
Provida                                                          25.67%          23.50%        24.71%   
AFP Summa Bansander                                              17.72%          16.65%        17.44%   
AFP Habitat                                                      12.77%          11.64%        11.79%   
AFP Santa Maria                                                  11.15%          17.55%        13.57%   
AFP Cuprum                                                       13.93%          13.27%        13.88%   
Other AFPs                                                       18.76%          17.26%         18.6%   

Total AFP Sales force (number of salespersons)                   2,591           2,775          2,586   

Unlike some of its competitors, Provida has not focused its marketing 
efforts on any specific industry or region. Each salesperson is assigned to     
cover certain businesses within a specific geographic coverage area. Sales      
personnel have a visiting program aimed at covering different businesses,       
companies and institutions in order to present Provida to new workers to        
achieve their incorporation, as well as to encourage affiliates to transfer     
from other AFPs. During regularly scheduled visiting programs, salespersons     
emphasize Provida's size, longevity, industry prominence and reputation for     
quality of customer service in attracting affiliates, reinforcing the concepts  
of experience, capability and trust.                                            

In the second half of 1997, a specialized sales force named the "Gold 
Sales Force", whose main goal was to target the high-income segment of the      
market, began operations. The Gold Sales Force began to show results in 1998,   
evidenced by an increase in the average salary of cotizantes and the retention  
of most of the clients that Provida acquired from its acquisitions of AFP Union 
and AFP Proteccion (for a description of these acquisitions, see "Item 4.       
Information on Provida"). After 1998, regulatory changes and a                  

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trend towards smaller sales forces in the AFP industry resulted in a change in  
strategy focused on higher income segments. Provida, therefore, abandoned the   
concept of the Gold Sales Force, which was no longer necessary and replaced it  
with a Gold Service comprised of specialized personnel trained to attend to the 
needs of Provida's high-income affiliates.                                      

 Salespeople are paid a base salary and commissions. Generally, the base
salary is approximately equal to the legal minimum wage. Salespeople earn       
commissions at a rate based on the age, gender, salary and permanency of the    
affiliates they attract to Provida. To include the last commission concept, in  
September 1999, Provida changed its labor contract with its sales force to      
reduce the commission rate it pays, as well as to link such commissions to the  
retention of affiliates. In Chile, a salesperson is an exclusive employee of    
the AFP and is registered with the SAFP. The conduct of salespeople is also     
monitored by the SAFP and are subject to censure for violating standards of     
conduct established by the SAFP. The Pensions Law does not allow for            
independent sales agents who may market the products of various AFPs.           

  Provida's sales personnel meet regularly with supervisors to analyze the
strategy and coverage of potential customer opportunities. Since the            
implementation of SAFP Circulars 998 and 999, the turnover rate of Provida's    
sales force has decreased and Provida has modified its commercial strategy to   
address the turnover rate of its sales force by bolstering its human resources  
and other operating and administrative areas. Provida developed intensive       
training and preparation programs with the main objective of improving          
knowledge of the Pensions Law, as well as new sales techniques and arguments    
centered on delivering excellent service to its clients. Advertising in various 
domestic and national media is used to supplement the efforts of the sales      
force. Advertising must conform to SAFP standards, and copies of advertisements 
must be sent to the SAFP.                                                       

 A substantial and increasing number of affiliates had been changing AFP
affiliations until 1997 as a consequence of a regulation that became effective  
in April 1995 (the "1995 Regulation"), which facilitated transfers by reducing  
the number of transfer rejections. To transfer to another AFP, an affiliate     
only needed to complete a form that was sent to the former AFP. Regulations     
introduced at the end of 1997, through SAFP Circulars 998 and 999, stated that  
an affiliate who intends to change his or her AFP must present a photocopy of   
his or her identification card and the latest investment statement issued by    
the AFP containing the balance of his or her individual capitalization account  
(which is distributed every four months). If the affiliate does not have a copy 
of the investment statement, he or she must acquire a copy, which requires      
visiting a branch of the affiliate's AFP office in person. A transfer may be    
accepted or rejected for technical reasons defined by the SAFP and based on the 
fulfillment of (or non-compliance with, in the case of rejections) certain      
requirements. The main reasons for the rejection of transfers throughout the    
industry are technical such as the failure to fulfill the minimum permanence    
period in an AFP from which an affiliate wishes to transfer, the lack of an     
identification card photocopy or the failure to provide the latest investment   
statement.                                                                      

During Fiscal Years 1998,1999, 2000 and 2001 approximately 696,000,   
489,000, 254,500, and 225,000 respectively, of total contributors in the        
industry as a whole changed AFPs. These changes resulted in reductions of 30%,  
48% and 12% for Fiscal Year 1999, 2000 and 2001, respectively regarding to the  
previous period. These reductions in transfers                                  

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of affiliates between AFPs have resulted in a significant decrease in the       
number of sales agents in the industry and a corresponding reduction in sales   
expenses, which halted the trend experienced in recent years, in which sales    
and marketing efforts had accounted for an increasing percentage of operating   
costs.                                                                          

During Fiscal Year 2002, opposite to the tendency followed in previous
years, the number of transfers increased 7% in comparison to 2001, reaching     
approximately 240,000 affiliates, or 7% of total average of contributors. This  
evolution was due to the law that came into force regarding new products        
authorized to the Pension Fund industry, the Voluntary Pension Savings (APV)    
and the Multiple Funds. The advertising made by all AFPs as well as the         
government support to these new products, implied an strong encouragement to    
the workers regarding to increase the knowledge about their capitalization      
accounts and the destine of their funds. The above meant that sales force       
focused their efforts on disseminating these new products and promoting their   
AFPs in order to induce affiliates transfers. Likewise, even tough the number   
transfers increased, Provida's sales force decreased, evidencing a higher       
productivity.                                                                   

 Provida's total sales and marketing expenditures, expressed in constant
Chilean pesos as of December 31, 2002, increased from Ch$5.5 billion for the    
twelve months ended December 31, 1990, which was immediately prior to the       
beginning of a period of greater competition in the AFP industry, to Ch$19.6    
billion in Fiscal Year 1997, which was the peak of commercial expenditure and   
competition in the AFP Industry. In Fiscal Year 1998, the year in which         
regulatory changes were implemented to reduce client transfers, Provida's sales 
and marketing expenditures decreased to Ch$17.5 billion. Following this latest  
trend, Provida's sales and marketing expenditures in Fiscal Year 2000 were      
Ch$10.0 billion for the fiscal year 2001 was Ch$9.9 billions (figure that       
includes the cost of image change) and in Fiscal Year 2002 they reached Ch$8.0  
billion . Provida has continued to pursue a policy aimed at rationalizing the   
number of transfers and sales expenditures. In figures, sales and marketing     
expenditures as a percentage of fee income decreased from 19.5% in Fiscal Year  
1999 to 11.4%, 10.8% and 8.6% in Fiscal Year 2000, 2001 and 2002 respectively.  
This move was also complemented by an aggressive policy of optimizing new       
affiliations.                                                                   

Provida during 2002 continued its consolidation of leadership in the  
Chilean pension industry, transforming into opportunities several changes       
occurred in the pension system, reflected by an increase in its market share in 
terms of contributors from an average of 40.93% in 2001 to 41.69% in 2002.      
Also, the Company increased the number of subscribed transfers of 6% in         
comparison to 2001 due to a higher productivity of its sales force.             
Complementing Provida's strategy refereed to profit and rationalize transfers,  
is the focus on emphasizing capture of new affiliations; strategy that allows   
to continue optimizing the possibilities of future growth of recurrent business 
of the Administrator, catching 88,696 new affiliations, figure that represents  
a 50% of market share. Finally, it should be pointed out regarding to transfers 
and affiliations evidence the higher productivity reached by the Company's      
sales force, considering that Provida reduced its sales staff in 8.9% regarding 
2001.                                                                           

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Government Regulation                                                 

 All AFPs are subject to extensive and continuous regulatory review. The
principal authorities that regulate AFPs in Chile are the SAFP, the Central     
Bank, the Superintendencia de Valores y Seguros (the "SVS") and the Rating      
Commission. AFPs are primarily subject to the Pensions Law and, to the extent   
not inconsistent therewith, to the Chilean Companies Law. The principal         
regulator is the SAFP; however, AFPs are also regulated by the Central Bank,    
which by law is required to set the limit on permitted investment for AFPs      
within the range established by the Pensions Law. In addition, AFPs that are    
listed on a stock exchange are regulated by the SVS, which regulates the        
securities and insurance industries. Finally, the Rating Commission determines  
whether securities qualify as acceptable for pension funds investment.          

The SAFP                                                              

General. The SAFP, an independent governmental agency under the       
supervision of the Ministry of Labor and Social Security, is in charge of       
supervising and controlling AFPs. The SAFP authorizes the creation of new AFPs, 
mergers of the existing ones and has broad powers to interpret and enforce      
legal and regulatory requirements. Furthermore, in cases of non-compliance, the 
SAFP has the ability to impose sanctions, such as censures and fines and in     
extreme cases, it may order the liquidation of an AFP. In addition, any         
amendment of the by-laws of an AFP such as capital increases, is subject to the 
SAFP's approval.                                                                

  Frequently during the year, SAFP officers inspect the facilities of AFPs
and examine their records. AFPs are required to submit their quarterly          
financial statements to the SAFP to provide periodically extensive information  
regarding their operations to the SAFP. The annual report of an AFP, including  
financial statements for the fiscal year and the opinion of its independent     
auditors, must be submitted to the SAFP for review before March 1 of the        
following year.                                                                 

Limitations on Types of Activities. According to the Pensions Law, the
corporate purpose of an AFP is unique and exclusive: the administration of its  
pension funds and the provision of related benefits. The above includes the     
collection of mandatory and voluntary contributions made by affiliates to       
pension funds, crediting those contributions to each individual capitalization  
account and the investment of those contributions in securities according to    
the rules established under the Pensions Law.                                   

  Legal amendments introduced to the Pensions Law in March 1994 allowed an
AFP, upon prior written authorization from the SAFP, to set up affiliated       
companies in Chile that may: (i) provide services related to the business of    
the AFP to companies operating abroad and (ii) invest in foreign pension fund   
management companies or in foreign companies engaged in business related to     
pension issues abroad. Additionally, AFPs were authorized to constitute a       
subsidiary aimed to invest in companies that act as depositaries of securities. 
Following this authorization, all AFPs participated in the constitution of      
Inversiones DCV S.A., where Provida has a 23.14% interest.                      

    The Law on Unemployment Insurance, enacted on May 2001, authorized AFPs to
participate in the tender on the Unemployment Insurance Administration and, if  
applicable,                                                                     

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to set up an affiliated company that administrates the Unemployment Funds. This 
society is also subjected to supervision by the SAFP. The Unemployment          
Insurance Management tender bases were published in November 2001, and all AFPs 
participated as a consortium that was finally awarded the insurance management  
for 10 years, presenting the best offer in terms of technical and economic      
issues. Provida participates in the new company, "Administradora de Fondos de   
Cesantia de Chile S.A." constituted in March 2002, with a stake of 37.8% and    
was awarded the operational and technical support of this company.              

 Insurance. Each AFP is required by the Pensions Law to provide life and
disability benefits to each affiliate. The SAFP establishes regulations with    
respect to the AFPs' insurance contracts. See "Item 4. Information on           
Provida--Business Overview--Government Regulation--Mandatory Benefits--Life and 
Disability Benefits."                                                           

   Reserves. The Pensions Law requires that each AFP must maintain a reserve
fund ("encaje") equal to 1% of the value of the pension funds under management. 
Accordingly to the Pensions Law, more than two violations of this rule within a 
six-month period will result in the liquidation of the offending AFP. The       
encaje is calculated in accordance with instructions issued by the SAFP on the  
value of the pension fund two days before the calculation. Since March, 1995,   
the Pensions Law required the AFPs to invest this encaje in shares of the       
pension funds managed by the AFP. See "Item 4. Information on Provida--Business 
Overview--Government Regulations--Reserves."                                    

Dissolution and Liquidation of AFPs. Any AFP that fails to cover the  
difference between the legal minimum pension fund real return and the pension   
fund's real return obtained by investments, or that does not replenish the      
encaje within the established time limits, will be dissolved under the Pensions 
Law.                                                                            

   Once the AFP is dissolved or declared bankrupt, the AFP's affiliates have
ninety days to join another AFP. If an affiliate does not do so, a receiver     
appointed by the SAFP must transfer that affiliate's individual account         
balances to another AFP in accordance with certain rules.                       

 If an AFP must be dissolved for any reason, the liquidation of that AFP
will be carried out by the SAFP. For such matters, the SAFP is vested with all  
necessary legal powers to liquidate the assets of such AFP.                     

    Under the Pensions Law, contributions made to an AFP are guaranteed by the
Chilean government. If an AFP is liquidated and enough funds do not exist upon  
liquidation to cover the required minimum return of pension funds, the          
government of Chile will step in and pay the difference.                        

  Fund Investment Controls. The Pensions Law limits the investment options
of a pension fund. The sole objective of investments made with resources of a   
pension fund is to obtain an adequate return and maintain the security of such  
resources. Other than securities issued by the Chilean government, the Central  
Bank and Chilean government agencies, and to a limited extent, qualified equity 
securities, instruments purchased for a pension fund must be previously         
approved by the Rating Commission.                                              

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    The Central Bank is in charge of establishing maximum investment limits by
type of securities and by issuer for the pension funds, within certain defined  
ranges. The Central Bank cannot establish minimum investment limits. See "Item  
4. Information on Provida--Business Overview--Government Regulations--Pension   
Fund Investments."                                                              

  Conflicts of Interest. Directors, officers and all employees involved in
the investment process must file reports to the SAFP disclosing their           
investments in eligible securities and cannot use information related to the    
investments of the pension fund for their own or a third party's benefit. By    
law, the AFP or the people mentioned above must indemnify the pension fund for  
any damages caused to it by the misuse of confidential information.             

 Funds Return Requirements. The Pensions Law requires that each AFP must
ensure each month that the real return on investment of each of its pension     
funds C, D and E for the immediately preceding thirty-six months was not lower  
than the lesser of (a) the annual real average weighted return of all pension   
funds, less 2% and (b) 50% of the annual real average weighted return of all    
the corresponding pension funds. For Pension Funds A and B, the law requires    
that each AFP must ensure each month that the real return on investment of each 
pension fund for the immediately preceding thirty-six months was not lower than 
the lesser of (a) the annual real average weighted return of all pension funds, 
less 4% and (b) 50% of the annual real average weighted return of all the       
corresponding pension funds. Returns on investments are calculated based on the 
performance of the system's pension funds in the preceding thirty-six months    
according to a weighted formula established by law. This requirement has been   
in force since November 1, 1999 and was amended in February 2002 by Law 19,795  
on Multiple Funds. Prior to that date the performance period was twelve months  
long; however, beginning on November 1, 1999, the performance period was to     
increase by one month every month so as to reach thirty-six months by October   
2002.                                                                           

The Central Bank                                                      

The Central Bank is an autonomous legal entity created by the Chilean 
Constitution. It is subject to the Central Bank Act and, to the extent          
applicable and not inconsistent, also to the laws and regulations applicable to 
the private sector. It is governed and administered by a Board of Directors     
composed of five members appointed by the President of the Republic and         
requiring a "special majority" vote of the Chilean Senate to be elected. For a  
further description of the Central Bank's regulation of Provida. See "Item 4.   
Information on Provida--Business Overview--Pension Fund Investments" and "Item  
10. Additional Information--Exchange Controls."                                 

The SVS                                                               

The SVS is an independent governmental organization that supervises,  
regulates and controls the Chilean capital markets. As an open corporation      
listed on the Chilean stock exchanges, Provida is subject to the supervision,   
regulation and control of the SVS.                                              

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The Rating Commission                                                 

  The Rating Commission is composed of the pension, securities and banking
superintendents and representatives of the AFP industry. Its main objective is  
to determine whether securities qualify as acceptable for pension funds         
investment.                                                                     

Mechanics of the System                                               

General. AFPs are required by law to be single purpose companies. The 
services they provide include the collection of affiliate contributions, the    
management of individual capitalization accounts, the investment of the         
affiliate contributions into one of the Pension Funds managed by the AFP, the   
provision of life and disability benefits for affiliates and the provision of   
specified defined pension and retirement benefits. AFPs are required to enter   
into insurance contracts with licensed Chilean insurance companies whereby      
these companies insure the obligation of the AFP to provide life and disability 
benefits.                                                                       

   In order to commence operations, an AFP must have a minimum capital equal
to UF5,000 (approximately US$120,000), which increases based on the number of   
affiliates up to UF20,000 (approximately US$480,000) for AFPs with over 10,000  
affiliates.                                                                     

   Required Affiliation. Membership in the pension fund system is obligatory
for all dependent workers and voluntary for self-employed individuals. Members  
of the armed forces, foreign workers who can demonstrate that they are part of  
another social security system and approximately 429,000 workers who elected to 
remain in the old system are not required to participate in the private system. 
Each AFP also administers a separate private unemployment account in the fund   
for household workers, such as maids or housekeepers. Additionally, according   
to the Unemployment Insurance Management law passed in May 2001 and its tender  
bases published in November 2001, all AFPs participated as a consortium that    
finally was awarded the insurance management for 10 years, presenting the best  
offer in terms of technical and economic issues. Provida participates in the    
new company "Administradora de Fondos de Cesantia de Chile S.A." constituted in 
March 2002, with a stake of 37.8% and was awarded the operational and technical 
support of said company.                                                        

AFPs compete actively for the membership of workers in Chile, who may 
choose to be affiliated with only one AFP to administrate its pension funds at  
a time. Although membership in the system is obligatory for employees,          
affiliation is individual (as opposed to collective or through an employer),    
giving the individual full discretion both in selecting an AFP initially, as    
well as in transferring from one AFP to another. At present, transfers between  
different AFPs are free of cost to affiliates, and the only restriction is a    
limit of one transfer every six months. No AFP may reject a properly-documented 
request by a worker to transfer to another AFP.                                 

   Required Contributions. Employers are required to retain and transfer 10%
of each employee's gross pre-tax monthly salary to the AFP selected by the      
employee. The maximum amount of salary subject to the 10% mandatory             
contribution is UF60 per month (approximately US$1,500). The AFP uses these     
sources to buy shares in one of the five pension funds managed and has been     
chosen by the affiliate. Those funds are credited to a                          

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special individual account opened and maintained by the AFP (the "individual    
capitalization account"). These contributions are tax deductible, although      
affiliates pay income tax on their pensions at the time of withdrawal.          

Affiliates can also make voluntary additional contributions into their
individual capitalization accounts, which are invested in shares of the same    
fund that the affiliate has elected for mandatory contributions. The overall    
monthly tax-deductible limit on mandatory and additional voluntary              
contributions is the lower than UF60 or the actual salary of the affiliate if   
it is lower. In this aspect it has to be mentioned that the measures approved   
in order to liberalize the Chilean capital market, among others, allowed for    
the flexibilization of mechanisms for voluntary pension savings. The above      
implied tax benefits for this kind of savings, the alternative to be able to    
use the funds before the retirement and opening up the participation in this    
business to other entities besides AFPs.                                        

   Monthly contributions deducted from wages are made directly by a worker's
employer, who is required to file a planilla with each AFP that has accounts    
for employees of such employer within 10 days of the beginning of the following 
month. The planilla identifies each worker for whom a contribution is being     
made and the amount of the contribution. The employer provides a check or cash  
to the AFP in the aggregate amount of contributions made for the affiliated     
employees. Self-employed workers who elect to contribute an AFP file their own  
planillas with their AFP together with a check or cash for the contribution     
amount and related fees.                                                        

Mandatory contributions are only required for a month in which an     
affiliate has actually earned wages. Affiliates who have made a contribution in 
a current month are called cotizantes. Self-employed individuals who            
voluntarily become affiliates are not obligated to make monthly pension         
contributions regardless of whether they have perceived income for that month.  
The decision regarding the timing and amount of a self-employed affiliate's     
contributions is at the discretion of the affiliate, but such contributions are 
subject to the same UF60 maximum monthly limit described above.                 

 The value of the shares in each fund is determined and published daily,
based on the current prices for the fund's investments calculated in accordance 
with regulations established by the SAFP. The objective of these regulations is 
to generally revalue the investments daily to reflect their current market      
value.                                                                          

Since August 2002, the alternatives increased from two to five funds, 
allowing affiliates to choose among them according to their preferences and     
degree of risk aversion. The new five funds labeled Funds A, B, C, D and E,     
differ mainly in the proportion of variable income equity that they are allowed 
to hold. The main characteristics of each fund are as following:                

                Variable Income Investment Limit
------------------------------------------------------------  
Type of Fund        Maximum %            Minimum %      
------------------------------------------------------------  
A                 60%                  45%    
B                 50%                  35%    
C                 30%                  15%    
D                 15%                   5%    
E             Not allowed          Not allowed

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    In the event of the death or permanent disability of an affiliate prior to
retirement, an AFP must pay into the affiliate's individual capitalization      
account an amount (known as an aporte) that, together with amounts accumulated  
in the affiliate's account and the amount paid pursuant to any recognition bond 
that the AFP holds for such affiliate, will be sufficient to provide for the    
present value of all pensions to which the affiliate or his legal beneficiaries 
are entitled. In order to guarantee that sufficient funds are available for an  
AFP to make the payment of an aporte, as required by the Pensions Law, each AFP 
is obligated to purchase insurance to cover this obligation and pays insurance  
premiums to a licensed life insurance company in Chile that effectively insures 
100% of the responsibility. Under the Pensions Law, the AFP remains liable if   
the insurance company becomes insolvent and cannot pay the aporte. The          
selection of the insurance company is determined by a competitive bidding       
process open to all licensed Chilean life insurance companies and is designed   
to provide the required coverage on the best terms.                             

Mandatory Benefits                                                    

Under current law, all AFPs must provide each of their affiliates with
specified benefits computed pursuant to formulae set forth in the Pensions Law  
and regulations thereunder. Chilean law specifies certain minimum benefits for  
all workers; however, the greater the amount of funds contributed to an         
individual capitalization account, the greater the amount of the monthly        
benefit for the affiliate or beneficiaries will be upon retirement, death or    
disability.                                                                     

     Under current law, each AFP must provide to each of its affiliates with the
following:                                                                      

-    An old age pension;                                              

-    Life and disability benefits that provide the affiliate or the   
         affiliate's beneficiaries with specified benefits in the event of the
affiliate's death or disability prior to retirement;        

    -    A voluntary savings account that allows affiliates to make additional
        cash contributions to one of the Pension Funds managed by their AFP;
and                                                         

  -    The voluntary pension savings alternative that allows affiliates to
        make additional contributions to one of the Pension Funds managed by
their AFP in order to improve their future pensions.        

AFPs are not required to provide workers' compensation benefits in the
event of injuries related to employment. Under the workers' compensation law,   
these workers' compensation benefits are paid by certain legally created mutual 
corporations, which are funded principally through employer contributions.      

 Old-Age Pension Benefits. Under the Pensions Law, each AFP must provide
specified types of old age pension benefits to its affiliates who meet the      
legal requirement for retirement. Affiliates may retire and receive an old age  
pension when they have reached                                                  

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the age stipulated by law (60 years old for women and 65 years old for men), or 
before such ages if the affiliate has fully funded a pension equal to or        
greater than 50% of the affiliate's average real salaries subject to            
contributions over the last ten years and which would pay a monthly amount at   
least equal to 110% of the legal minimum pension. The Chilean government        
guarantees a minimum level of old-age pensions for all AFP affiliates who have  
paid contributions over at least 20 years (including any years under the old    
system) and have reached the age designated by law. In the event that           
contributions of an affiliate into his/her individual capitalization account    
together with the payment under any recognition bond do not meet these minimum  
levels, the AFP pays the pension from the affiliate's individual capitalization 
account until the account is exhausted.                                         

At retirement, the affiliate chooses among three options for receiving
his/her pension benefits: an immediate life annuity, a deferred life annuity,   
and a "programmed withdrawal" plan. In the first case, the affiliate selects an 
insurance company, which will pay the affiliate a monthly fixed income (i.e.,   
an annuity) for the remainder of the affiliate's life in exchange for a lump    
sum payment from the affiliate's individual capitalization account. For the     
affiliate to select this alternative, the insurance company must offer a        
pension equal to or superior to the minimum pension in effect at the time of    
retirement. In the second case, the affiliate purchases a life annuity plan     
from an insurance company, to begin at a date specified in the future, leaving  
the remainder of funds in the individual capitalization account for an interim  
pension which covers the period from the time the individual selects this       
option until the annuity payments begin. In the third case, the affiliate keeps 
his/her funds deposited in his/her individual capitalization account in the     
AFP, and withdraws a monthly pension in accordance with a pre-established       
formula that considers the historical pension fund return and the rates offered 
by the insurance companies, as well as life expectancies. The amount of the     
affiliate's monthly pension under the programmed withdrawal plan is             
recalculated every twelve months based on shares remaining in the affiliate's   
individual capitalization account and the variables described above. In the     
event that such amounts fall below the minimum pension level, the government    
guaranty applies if it corresponds. If the affiliate selects the programmed     
withdrawal plan, he/she always maintains the possibility to switch to a life    
annuity plan; however, once the affiliate chooses to transfer the savings in    
his/her individual capitalization account to an insurance company in exchange   
for a life annuity, the affiliate may no longer return to the programmed        
withdrawal plan.                                                                

  All pension obligations that are to be paid by an AFP through programmed
withdrawals from the individual capitalization account, are expressed in shares 
of the AFP's managed pension funds. Insurance annuity amounts are expressed in  
UF and are thus indexed to reflect the impact of inflation. The AFP has no      
ongoing financial obligations regarding the insurance company's annuity. In the 
case of bankruptcy of companies that are providing insurance annuities, the     
Chilean government guarantees 100% of this obligation up to the amount of the   
legal minimum pension and 75% of the maximum contribution (corresponding to UF  
60 or approximately US$1,500, meaning a maximum of UF 45 or approximately       
US$1,100). See "Item 4. Information on Provida--Business Overview--Government   
Regulation --Government Guarantees".                                            

In addition to the old-age pension, affiliates who have funded their  
individual capitalization accounts in an amount sufficient to generate a        
pension that is in excess of                                                    

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70% of their average real base salaries subject to contributions over the last  
ten years and would be in excess of 120% of the legal minimum pension are       
entitled to withdraw and freely use all excess amounts after applying the       
corresponding tax rate.                                                         

 Life and Disability Benefits. Each AFP is required to provide specified
life and disability coverage to each affiliate who has made contributions to an 
individual capitalization account in the current month or for six of the twelve 
previous months. Under law, the AFP must enter into a contract with a licensed  
Chilean insurance company that insures the obligation of the AFP to provide     
such benefits to the extent that these can not be covered with the funds of the 
affiliate's individual capitalization account. Under the life benefits provided 
to an affiliate, the legal beneficiaries of an affiliate who dies prior to      
reaching retirement age are entitled to elect to receive either programmed      
withdrawals from the affiliate's individual capitalization account, a lump sum  
designed to purchase an annuity, or a combination of both. The amount of the    
monthly payment to which a beneficiary is entitled to is calculated baseon the  
affiliate's average salary over the prior ten years. Designated legal           
beneficiaries include the affiliate's wife or disabled husband, unmarried       
mother of a child of the affiliate, children of the affiliate and dependent     
parents of the affiliate.                                                       

    Disability benefits are provided to those workers who have not reached the
legal retirement age and have been certified by a government medical commission 
(a "Medical Commission") designated by the SAFP to have had their working       
capacity diminished by at least 50%. The aimed of the disability benefits is to 
provide to the disabled affiliate and, after the affiliate's death, to the      
affiliate's legally-appointed beneficiaries with an amount necessary to receive 
programmed withdrawals from the affiliate's account or to purchase a life       
annuity or a combination of both that will provide said workers with specified  
monthly disability benefits.                                                    

    Under the Pensions Law, an affiliate is entitled to disability pensions as
a result of a partial disability prior to retirement (loss of between half and  
two-thirds of working capacity) or a total disability (loss of in excess of     
two-thirds of working capacity). In the case of partial disability, the pension 
is equal to 50% of the average monthly salary subject to contributions of the   
disabled affiliate for the prior ten years or such shorter time as the          
affiliate was in the labor force, adjusted for inflation. For affiliates who    
become totally disabled prior to retirement, the disability pension is equal to 
70% of said average.                                                            

   By law, a Medical Commission makes a preliminary determination of partial
or total disability (invalidez transitoria). Three years later, a determination 
is made by the Medical Commission as to whether to classify the disability as a 
partial or total permanent disability (invalidez definitiva). Pending such      
final determination, an interim pension benefit is paid to the affiliate by the 
insurer selected by the AFP.                                                    

   In the case of lump sum payments used to purchase an annuity for the life
and disability benefits, either the affiliate or his/her beneficiaries, select  
a licensed Chilean insurance company to provide the annuity benefit. The AFP    
makes payment of the lump sum directly to such designated insurer for the       
benefit of the recipients and such insurer is thereafter obligated to make all  
future annuity payments, while the AFP has no further                           

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obligation to the affiliate or his/her beneficiaries once the lump sum payment  
has been transferred.                                                           

 Voluntary Savings Accounts. AFPs also offer to affiliates the option to
establish a voluntary savings account in which an affiliate may make deposits   
as often as desired. Withdrawals from the account may be made by an affiliate   
as needed, up to four times a year, with no prior notice required to effect a   
withdrawal. The amounts deposited in a voluntary savings account are invested   
in shares of the same elected fund for mandatory monthly contributions          
administered by the AFP and accumulate value based on the overall performance   
of the fund. Unlike the mandatory monthly contributions into the individual     
capitalization account, contributions into voluntary savings accounts are not   
tax-deductible. Accumulations in value are not taxed until withdrawn.           

Voluntary Pension Savings. AFPs also offer affiliates the option to   
establish a voluntary pension savings account in which affiliates make monthly  
deposits previously determined in order to improve their future pensions. Like  
the monthly mandatory contributions into the individual capitalization account, 
contributions into voluntary pension savings accounts are tax-deductible.       
Withdrawals from the account may be made by affiliates, assuming a higher tax   
cost compared to their effective annual tax rate as defined by a formula. The   
amounts deposited in a voluntary pension savings account are invested in shares 
of any fund managed by the AFP, independent of the ones where the affiliates    
make their mandatory contributions and accumulate value based on the overall    
performance of the elected funds. Additionally, this service is open to other   
authorized institutions different from AFP and the AFP has the obligation of    
transferring funds to them if an affiliate so requests, being able to charge a  
fixed fee for the procedure. Provida started offering this new service in March 
2002.                                                                           

Fees and Commissions                                                  

Under the Pensions Law, an AFP is permitted to charge a fee for (i)   
mandatory contributions into the affiliate's individual capitalization account  
to fund his/her old age pension; (ii) voluntary savings withdrawals; (iii)      
transfer of account balances from another AFP; (iv) payments of programmed      
withdrawals and (v) management and transfers of voluntary pension savings. All  
AFPs currently charge fees in connection with (i), (iv) and (v) described       
above. Provida began charging a fee in connection with (iv) and (v) above on    
July 1, 2000 and in March 2002, respectively. See "Item 4. Information on       
Provida--Business Overview--Principal Activities--Service Fees."                

Pension Fund Investments                                              

   Under the Pensions Law, each pension fund is a separate legal entity from
the AFP, immune to the financial well-being of the AFP. In the event of a       
bankruptcy of an AFP, the SAFP assumes control of the fund and affiliates have  
90 days to transfer the funds of their individual capitalization accounts to a  
different AFP. At the end of 90 days, the custodian of the fund appointed by    
the SAFP transfers all remaining accounts to another fund that the custodian    
designates.                                                                     

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   The following table sets forth the permitted investments for Type A,B, C,
D and E Pension Funds, the limits for such investments and the breakdown of     
current valuation of investments of all pension funds in the industry and of    
Provida's Pension Funds as of December 31, 2002:                                

                                                        [Enlarge/Download Table]
                                                                               Provida's Pension  
                                                              Industry as of      Fund A as of    
Instrument                                                   December 31, 2002 December 31, 2002  
--------------------------------------------------------------------------------------------------
                                                                                                  
Government bonds............................................        7.5%               5.6%       
Mortgage bonds..............................................        2.4                0.0        
Time deposits (CDs) and other financial institution                                               
obligations.................................................       13.9               18.9        
Private & corporate bonds...................................        1.1                1.3        
Company stocks..............................................       30.7               34.2        
Low ownership concentration companies.......................       13.0               12.2        
Real estate companies.......................................        0.0                0.0        
High ownership concentration companies......................       17.7               22.1        
Investment fund shares......................................        3.4                2.3        
Real estate.................................................        1.3                1.4        
Venture capital.............................................        0.5                0.3        
Publicly traded securities..................................        1.7                0.5        
Commercial paper............................................        0.0                0.0        
Foreign investments.........................................       40.8               37.8        

                                                        [Enlarge/Download Table]
                                                                               Provida's Pension  
                                                              Industry as of      Fund A as of    
Instrument                                                   December 31, 2002 December 31, 2002  
--------------------------------------------------------------------------------------------------
                                                                                                  
Government bonds............................................       22.7%              23.2%       
Mortgage bonds..............................................        9.4                7.6        
Time deposits (CDs) and other financial institution                                               
obligations.................................................       18.2               18.9        
Private & corporate bonds...................................        4.1                2.7        
Company stocks..............................................       17.2               20.6        
Low ownership concentration companies.......................        7.3                7.6        
Real estate companies.......................................        0.0                0.0        
High ownership concentration companies......................        9.9               13.0        
Investment fund shares......................................        2.8                2.4        
Real estate.................................................        1.2                1.5        
Venture capital.............................................        0.4                0.3        
Publicly traded securities..................................        1.3                0.6        
Commercial paper............................................        0.0                0.0        
Foreign investments.........................................       25.7               24.7        

                                                        [Enlarge/Download Table]
                                                                               Provida's Pension  
                                                              Industry as of      Fund A as of    
Instrument                                                   December 31, 2002 December 31, 2002  
--------------------------------------------------------------------------------------------------
                                                                                                  
Government bonds............................................       29.1%              25.1%       
Mortgage bonds..............................................       10.7                8.3        
Time deposits (CDs) and other financial institution                                               
obligations.................................................       24.4               31.6        
Private & corporate bonds...................................        7.6                7.8        
Company stocks..............................................        9.7                9.4        
Low ownership concentration companies.......................        4.0                3.4        
Real estate companies.......................................        0.0                0.0        
High ownership concentration companies......................        5.7                6.0        
Investment fund shares......................................        2.4                2.6        
Real estate.................................................        1.4                1.6        
Venture capital.............................................        0.4                0.4        

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Publicly traded securities..................................        0.6                0.6        
Commercial paper............................................        0.0                0.0        
Foreign investments.........................................       16.0               15.2        

                                                        [Enlarge/Download Table]
                                                                               Provida's Pension  
                                                              Industry as of      Fund A as of    
Instrument                                                   December 31, 2002 December 31, 2002  
--------------------------------------------------------------------------------------------------
                                                                                                  
Government bonds............................................       38.7%              44.7%       
Mortgage bonds..............................................       14.9               16.0        
Time deposits (CDs) and other financial institution                                               
obligations.................................................       18.7               16.1        
Private & corporate bonds...................................        7.5                4.3        
Company stocks..............................................        6.3                5.5        
Low ownership concentration companies.......................        2.7                2.0        
Real estate companies.......................................        0.0                0.0        
High ownership concentration companies......................        3.5                3.5        
Investment fund shares......................................        1.5                2.6        
Real estate.................................................        0.8                1.6        
Venture capital.............................................        0.2                0.4        
Publicly traded securities..................................        0.4                0.6        
Commercial paper............................................        0.0                0.0        
Foreign investments.........................................       12.6               10.8        

                                                        [Enlarge/Download Table]
                                                                               Provida's Pension  
                                                              Industry as of      Fund A as of    
Instrument                                                   December 31, 2002 December 31, 2002  
--------------------------------------------------------------------------------------------------
                                                                                                  
Government bonds............................................       44.6%              52.1%       
Mortgage bonds..............................................       14.9               16.5        
Time deposits (CDs) and other financial institution                                               
obligations.................................................       26.9               24.3        
Private & corporate bonds...................................        1.1                1.3        
Company stocks..............................................        7.9                5.3        
Low ownership concentration companies.......................        0.0                0.0        
Real estate companies.......................................        0.0                0.0        
High ownership concentration companies......................        0.0                0.0        
Investment fund shares......................................        0.0                0.0        
Real estate.................................................        0.0                0.0        
Venture capital.............................................        0.0                0.0        
Publicly traded securities..................................        0.0                0.0        
Commercial paper............................................        0.0                0.0        
Foreign investments.........................................        5.7                1.8        

Reserves                                                              

    The Pensions Law stipulates that each AFP must maintain an encaje equal to
one percent of the value of each of its pension funds under management. The     
encaje is calculated in accordance with instructions issued by the SAFP, and    
corresponds to the value of each pension fund two days prior to the             
calculation. Since June 1995, the Pensions Law has required AFPs to invest this 
encaje in shares of the respective Pension Fund managed by the AFP. This        
legislation is aimed at eliminating potential conflicts of interest that could  
exist between investment decisions relating to an AFP's portfolio of securities 
held as reserves and those relating to the portfolio in which the Pension Funds 
are invested.                                                                   

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 The purpose of the encaje is to provide a cushion in the event that the
performance of a specific Pension Fund drops below the required minimum level   
of return. Currently, for C, D, E Pension Funds, this level is the lesser of    
(a) the annual real weighted average return for the last 36 months of the same  
type of Pension Funds in the system less 2% and (b) 50% of the average annual   
real return for the last 36 months of the same type of Pension Funds in the     
system. The minimum level for A and B Pension Funds is the lesser between (a)   
the annual real weighted average return for the last 36 months of the same type 
of Pension Funds in the system less 4% and (b) 50% of the average annual real   
return for the last 36 months of the same type of Pension Funds in the system.  

   The annual real average returns are calculated by the SAFP according to a
weighted formula established by law. If, for a certain month, the Pension       
Fund's annual real return on investment falls below the minimum return, the     
difference is transferred first from the Pension Fund's own reserve for         
fluctuation on investment returns. If this procedure is not sufficient, then    
the remaining difference is transferred from the AFP's encaje.                  

A Pension Fund's reserve for fluctuation on investment returns is a   
reserve that is created if there are excess returns on fund investments above   
specific levels. Excess returns on investment arise when, for C, D, E Pension   
Funds, this level is the higher of (a) the annual real weighted average return  
for the last 36 months of the same type of Pension Funds in the system plus 2%  
and (b) 50% over the average annual real return for the last 36 months of the   
same type of Pension Funds in the system. The level for A and B Pension Funds   
is the lesser between (a) the annual real weighted average return for the last  
36 months of the same type of Pension Funds in the system plus 4% and (b) 50%   
over the average annual real return for the last 36 months of the same type of  
Pension Funds in the system. for each Pension Fund. Since the beginning of the  
operation of the pension system, only one AFP has generated sufficient excess   
returns to constitute a fluctuation reserve.                                    

The above mentioned is applicable since 12 months of funds operation. 

   In the event that the Pension Funds managed by an AFP fail to achieve the
required minimum level of investment return, the AFP is required to cover the   
difference within five days of such determination by the SAFP. If reserves are  
used to fund any deficit in the required return, the AFP must replenish the     
reserves within fifteen days thereafter. If a deficit is not covered or if      
reserves are not replenished, the AFP will be liquidated by the SAFP.           

Collections                                                           

    In the case that an employer fails to make the correct payment or fails to
pay contributions, Provida is obligated to take diligent legal steps to collect 
such amounts. In such cases, Provida must file a lawsuit within six months of   
non-payment and actively pursue the lawsuit until payment is received or a      
court makes a final determination with respect to such payments. Provida has    
approximately 35 employees who manage the legal process and initiate collection 
efforts. Additionally, Provida hires lawyers throughout the country to provide  
legal services when a lawsuit must be initiated. As long as it acts diligently, 
Provida is not under any obligation to make a refund of the contributions that  
an                                                                              

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employer has failed to provide. It should be pointed out that Provida has never 
been held liable for failing to diligently pursue delinquent employers.         

Record-keeping                                                        

Provida must maintain complete records of the accounts of each of its 
affiliates. Provida is required to provide an account statement to each         
cotizante every four months and once a year to every non-contributing           
affiliate. These statements comprise information regarding to mandatory         
contributions, voluntary savings contributions and voluntary pension savings    
managed by the AFP, the amount and current value of shares in the elected       
Pension Fund and, if applicable, the amount of the recognition bond properly    
updated. In addition, the affiliate must receive information about the          
insurance cost and the whole pension service cost, separated by income          
brackets, as a way to evaluate his situation. Also, each affiliate can obtain   
daily information on his/her account balances at Provida branch offices,        
through Provida's Internet service or through the telephone service center.     

Government Guarantees                                                 

The Chilean government guarantees minimum old-age, life and disability
pensions for affiliates who have made contributions for a certain minimum       
number of years, regardless of the level of contributions actually made into    
the affiliate's individual capitalization account. Since 1988, when an          
affiliate elects to receive a lump sum payment to purchase an annuity, the AFP  
is not liable in the event the chosen insurer fails to make the required        
payments. The Chilean government, however, is liable for 100% of this           
obligation up to the amount of the legal minimum pension and for 75% of the     
pensions above the minimum pension up to UF45 (approximately US$1,100).         

New Legal Developments                                                

Flexibilization of Mechanisms for Voluntary Savings. According to Law 
19,786 published on November 7, 2001, in force since March 2002, the Pensions   
Law was modified regarding the voluntary pension savings. The main changes      
involved are the flexibilization of voluntary pension funds by allowing other   
participants besides AFPs, such as banks, insurance companies and mutual funds, 
to offer this savings alternative. Furthermore, the modification included tax   
benefits for this kind of savings alternative up to an established maximum if   
the funds are destined to increase the future pensions. If the affiliate makes  
withdrawals, that drawing will be charged with a higher tax rate than the       
current one. Finally, the law permits all the institutions that offer this      
service to charge a fee over funds under management, which was not allowed      
previously to its implementation.                                               

Multiple Pension Funds. Regarding Law 19,795 published on February 28,
2002, partially in force since March 2002 and completely in force beginning in  
August 2002, the Pensions Law was modified concerning fund alternatives by      
increasing the number from two to five. The differences among funds are         
basically related to the portion of variable income in their portfolios and     
each affiliate can choose among them with the only legal restriction of age. If 
the affiliates do not make any fund specification, the law stipulates their     
fund assignment according to their age profile. Finally, the law specifies in   
detail                                                                          

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each limit depending on the kind of instruments for the five funds, including   
the foreign investments.                                                        

Organizational Structure                                                        

 Provida was integrated into the BBVA Group in July 1999. As of December
31, 2002 the BBVA Group has 1.2 million shareholders and a presence in 37       
countries, with more than 100,000 employees worldwide that serve over 35        
million of clients trough a network of 9,000 branches. Within the pension fund  
area, the BBVA Group is a leader in Latin America, managing assets in an amount 
of US$25 billion and providing services to approximately 12 million people. In  
Chile, the BBVA Group, through Provida, manages assets in an amount of US$11.2  
billion in a highly competitive market in which Provida is the leader.          

The following chart sets forth the significant related companies      
comprising the corporate structure of Provida.                                  

[GRAPHIC OMITTED]                                                               

Property, Plant and Equipment                                                   

Since 1981, Provida's strategy has included the development of a      
nationwide branch network, which currently includes 77 branch offices located   
throughout the country. Since 1989, Provida has moved to company-owned real     
estate rather than leased space for its                                         

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branches by increasing the number of owned branches from 5 to 41. In order to   
market its corporate image to the public, each newly built or remodeled branch  
is uniformly decorated. In March 2001, Provida completed its integration into   
the BBVA Financial Group with a complete change of Company image, thus making   
the Provida brand consistent with most of BBVA's other Latin American           
interests. This process involved the design of a new branch employee uniform    
and color scheme, which was applied throughout the entire branch network.       

The principal property that Provida owns is its 18-story headquarters 
building, known as the Provida Tower, located in the heart of the developing    
midtown of Santiago. Completed in 1994, the Provida Tower houses the entire     
central administrative operations and executive offices of Provida.             

Item 5. Operating and Financial Review and Prospects

Critical Accounting Policies                                                    

Financial Reporting Release No. 60, released by the Securities and
Exchange Commission, encourages all companies to include a discussion of        
critical accounting policies or methods used in the preparation of the          
financial statements. Critical accounting policies are defined as those that    
are reflective of significant judgments and uncertainties, which would          
potentially result in materially different results under different assumptions  
and conditions. We believe that our critical accounting policies in the         
preparation of our Chilean GAAP financial statements are limited to those       
described below. It should be noted that in many cases, Chilean GAAP            
specifically dictates the accounting treatment of a particular transaction,     
with no need for management's judgement in their application. Additionally,     
significant differences can exist between Chilean GAAP and U.S. GAAP, as        
explained in the section U.S. GAAP Reconciliation above. There are also areas   
in which management's judgement in selecting available alternatives would not   
produce materially different results. For a summary of significant accounting   
policies and methods used in the preparation of the financial statements, see   
Note 1 to our consolidated financial statements.                                

Revenue Recognition                                                             

 The Company recognizes revenues when all the activities relating to
the administration of the Pension Fund have been completed. See "Item 4.        
Information on Provida--Business Overview--Principal Activities--Service Fees". 

Valuation of Mandatory Investments                                              

 In accordance to the Pensions Law each AFP must maintain a reserve fund
("encaje") equal to 1% of the value of the pension fund. These investments are  
stated at fair values, with unrealized gains and losses included in earnings.   

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Accounting of Life and Disability Insurance Cost:                               

D.L. 3,500 dated 1980, establishes that the Disability and Survival   
Pension will be funded with the balance in the member's individual              
capitalization account and Guarantee by the State, when applicable.             

 Otherwise, partial and total disability pensions corresponding to those
determined by the Medical Commission in their preliminary review, granted in    
accordance with the first ruling of D.L. 3,500 ("the First Ruling"), shall be   
funded by the Administrator that manages affiliates 's pension fund and the     
State Guarantee, when applicable.                                               

The balance in the individual capitalization account includes the     
accumulated capital by the affiliates, including the contributions as outlined  
in article 53, and when applicable bonus recognition stipulated by the law. The 
Administrator must make by law an additional contribution and may transfer the  
funds from the voluntary savings accounts subordinated to the affiliate's       
decision.                                                                       

 The additional contributions made by the Administrator should equal the
shortfall between the capital needed to the Disability and Survival Pension     
fund and the accumulated capital of the affiliates including their bonus        
recognition on the date of loss. The Administrator shall be solely responsible  
for paying partial and total pensions originating from the first ruling and to  
pay additional contributions for those affiliates that can qualify for a        
Disability or Survival Pension as required by the Law.                          

   As required by the Pensions Law, Provida has purchased insurance to cover
its obligation to provide life and disability benefits to affiliates. The       
selection of the insurance company is determined through a competitive bidding  
process open to all licensed Chilean life insurance companies and is designed   
to provide the required coverage on the best terms available. Currently,        
Provida's insurance contract is with ING Seguros de Vida S.A. ("ING",           
previously known as "Aetna Chile") and provides coverage for two years, from    
August 1, 2001 through July 31, 2003.                                           

Provida has discretion to set the bid parameters for its competitive  
bidding process. In its competitive bid request, Provida specifies a maximum    
premium rate and a provisional premium rate. The maximum rate is the top        
percentage that Provida would have to pay to the insurer for coverage,          
regardless of casualty rates experienced among Provida's cotizantes were        
higher. The provisional rate is the monthly percentage of the salary of         
cotizantes that Provida pays monthly to the insurer according to the current    
contract. Under Provida's current contract, its maximum rate is 0.95% of the    
maximum salary eligible for contribution of each cotizante and its provisional  
premium rate is 0.70%. In addition, the competitive bid request provides for a  
formula pursuant to which the insurer and Provida may share in casualty rates   
incurred. This casualty sharing may constitute a significant source of revenue  
to Provida if the casualty rates suffered result in a premium cost below the    
provisional premium paid. Insurers also charge an additional fixed monthly      
premium to provide such coverage. This fixed monthly premium is currently UF    
2,200 (approximately US$53,400).                                                

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  In the past, rebates system implied a significant source of revenues for
Provida, while the casualty rate of the client portfolio was lower than the     
provisional premium paid monthly to the insurance company. Although, since the  
middle of year 1999, period when the country additionally evidenced             
unemployment rates over 10% (implying a significant gap to the average observed 
of 6.2% in 1998), the casualty rate started to increase to levels over the      
provisional premium paid monthly. This situation has been maintained at the     
industry level until now, as a result of: (i) local unemployment rate and       
awareness by affiliates about benefits, both affecting the number of casualties 
and (ii) downward trend evidenced by interest rates and pension funds returns   
that have implied a rise in the economic value of the casualties.               

    In order to measure the effect in results and considering that the rebates
are calculated on an annual basis for six years and each year can reflect the   
cumulative impact of several prior contracts as well as the current contract,   
the Company continues perceiving casualty rebates that have the most            
significant effect on operating income in the first quarter of the year, when   
the insurance company makes partial settlements. In the case of recent          
contracts, Provida makes monthly provisions accounted as operating expenses,    
based on casualty rate projections implicit in the yearly first quarter payment 
to the insurance company, according to the conservative criteria of recognizing 
losses when having a reasonable base for estimating.                            

Fair value of Financial Derivative Instruments                                  

The Company's financial derivative instruments are primarily short    
duration foreign currency forward exchange contracts to purchase U.S. dollars   
or UF and sell UF or U.S. dollar. The Company records these financial           
derivative contracts at fair value. Generally, fair values under Chilean GAAP   
are estimated using the closing spot exchange rate at the period end, because   
listed forward market prices between these currencies are not widely-available  
in the Chilean market, and spot rates are the accepted local standard to        
estimate fair value.                                                            

Impairment of Investments in Related Companies, Long-lived assets, Identifiable 
Intangible Assets and Goodwill                                                  

We assess the impairment of our investments in related companies,     
long-lived assets, identifiable intangible assets and goodwill whenever events  
or changes in circumstances indicate that the carrying value may not be         
recoverable. Important factors which could trigger an impairment review include 
the following:                                                                  

-    Significant under performance relative to expected historical or 
projected future operating results;                         

 -    Significant changes in the manner of use of the acquired assets or
the strategy for our overall business;                      

-    Significant negative industry or economic trends.                

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When we determine that the carrying value of investments in related   
companies, long- lived assets, identifiable intangibles and goodwill may not be 
recoverable based upon the existence of one or more of the above indicators of  
impairment, we evaluate the future cash flows to determine if we need to take   
an impairment charge. If the sum of the expected future cash flows              
(undiscounted and without interest charges) is less than the carrying amount of 
the assets, we recognize an impairment loss. The measurement of the impairment  
loss is based on the fair value of the investment which we generally determine  
using a discounted cash flow approach and recent comparable transactions in the 
market.                                                                         

Initial Adoption of Accounting Policies                                         

    For periods beginning after January 1, 2000, Provida has adopted Technical
Bulletin No. 60 and subsequent complementary technical bulletins issued by the  
Chilean Association of Accountants established the accounting for deferred      
taxes originating from temporary differences, tax loss carry forwards and other 
events creating differences between financial reporting and income tax assets   
and liabilities.                                                                

In addition, on December 28, 2001 the Superintendency of Pension Fund 
Administrators issued Ordinary Letter No. 17,817, with retroactive effect to    
January 1, 2001, requiring Provida to recognize deferred taxes originating from 
income on mandatory investments ("encaje") on a discounted basis. As of         
November 30, 2001, deferred taxes associated with the income on such mandatory  
investment are recognized at the present value of the obligation. The           
application of this change in accounting principle resulted in an increase to   
income of MMCh$ 2,272 in 2001 that was included under the caption               
"Extraordinary Items" in the Company's consolidated statement of income. In     
2002, there was no effect due to this issue.                                    

Users unfamiliar with Chilean GAAP may not be accustomed to certain   
accounting policies applied in our financial statements.                        

Price-level restatement                                                         

    Chilean GAAP requires that the financial statements be restated to reflect
the full effects of loss in the purchasing power of the Chilean peso on the     
financial position and results of operations of reporting entities. The method  
prescribes that the historical cost of all non-monetary accounts be restated    
for general price-level changes between the date of origin of each item and the 
year-end. The consolidated financial statements have been price-level restated  
in order to reflect the effects of the changes in the purchasing power of the   
Chilean currency during each year. All non-monetary assets and liabilities and  
all equity accounts have been restated to reflect the changes in the CPI from   
the date they were acquired or incurred to year-end. The purchasing power gain  
or loss included in net income reflects the effects of Chilean inflation on the 
monetary assets and liabilities held by the Company. For comparative purposes,  
the historical December 31, 2000 and 2001 consolidated financial statements and 
their accompanying notes have been presented in constant Chilean pesos as of    
December 31, 2002. This updating does not change the prior years' statements or 
information in any way except to update the amounts to constant pesos of        
similar purchasing power.                                                       

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   The price-level adjusted consolidated financial statements do not purport
to represent appraised values, replacement cost, or any other current value of  
assets at which transactions would take place currently and are only intended   
to restate all non-monetary consolidated financial statement components in      
terms of local currency of a single purchasing power and to include in the net  
result for each year the gain or loss in purchasing power arising from the      
holding of monetary assets and liabilities exposed to the effects of inflation. 

Currency translation of foreign investments                                     

In October 1998, the Chilean Institute of Accountants (Colegio de     
Contadores de Chile) issued Technical Bulletin No. 64, Accounting for Permanent 
Foreign Investments replacing Technical Bulletin No. 51, which was effective as 
from January 1, 1996. As required by Chilean GAAP, Technical Bulletin No.64 has 
been applied prospectively from January 1, 1998. Such Bulletin differs from the 
foreign currency translation procedures to which an investor is accustomed      
under Statement of Financial Accounting Standards No. 52, "Foreign Currency     
Translation" issued by the Financial Accounting Standards Board. Technical      
Bulletin No.64 changes the method used to restate the foreign investments, by   
first translating foreign currency amounts in respect of foreign subsidiaries   
and investees to US$ at historical rates of exchange and then translating the   
U.S. dollar amounts to Chilean pesos at the period-end rate of exchange. In     
effect, the foreign investments are adopting the U.S. dollar as their           
functional currency, because the local currency is not considered to be a       
stable currency.                                                                

   The application of Technical Bulletin No. 64 results in the comprehensive
separation of the effects of inflation in Chile (for financial accounting       
purposes) from the changes in foreign currency translation, with respect to our 
non-Chilean investments. Under Chilean GAAP, the amount of the net foreign      
investment as of the opening balance sheet date is price-level restated for the 
effects of inflation in Chile, increasing net income due to price-level         
restatement. Changes in the opening balance sheet balance of the net foreign    
investment due to movements in the Chilean peso to U.S. dollar exchange rates   
are recorded net of the effects of price-level restatement mentioned above in   
shareholders' equity under the caption "cumulative translation adjustments." As 
a result, during periods when the Chilean peso depreciates in excess of         
inflation in Chile, compared to the U.S. dollar, shareholders' equity would     
increase. Conversely, during periods in which the Chilean peso appreciates in   
excess of inflation in Chile, as compared to the U.S. dollar, shareholders'     
equity would decrease.                                                          

    The application of Chilean foreign currency translation standard Technical
Bulletin No.64 with respect to the translation of our non-Chilean operations is 
part of the comprehensive basis of preparing of price-level adjusted financial  
statements required by Chilean GAAP. The inclusion of inflation and translation 
effects in the financial statements is considered appropriate under the         
inflationary conditions that have historically affected the Chilean economy     
and, accordingly, have not been eliminated. The U.S. Securities Exchange        
Commission has confirmed that they do not object to the view that the           
adjustment made in respect of investments in unstable countries are part of a   
comprehensive basis of adjusting for inflation. Accordingly, differences        
between Technical                                                               

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Bulletin No. 64 and SFAS No.52 do not need to be eliminated in the              
reconciliation to US GAAP.                                                      

Net Investment Hedge under Technical Bulletin No. 64                            

 Technical Bulletin No.64 allows us to designate certain US$-denominated
debt as a hedge against our net foreign investments being measured in US$. The  
unrealized exchange differences resulting from the translation to Chilean pesos 
of the foreign investee's financial statements and the related hedges are not   
included in determining net income for the period; rather, such differences are 
recorded in cumulative translation adjustment, a reserve account as part of     
shareholders' equity. For the year ending December 31, 2002, the effect of      
unrealized exchange differences for net investments resulted in an unrecorded   
gain of Ch$4,918 million and the effect of unrealized exchange differences for  
US$-denominated debt resulted in an unrecorded loss of Ch$0 million or a net    
unrecorded gain of Ch$4,918 million.                                            

Introduction                                                          

 The following discussion should be read in conjunction with the Audited
Consolidated Financial Statements of Provida and its subsidiary, and the Notes  
thereto included elsewhere in this annual report. See Item 19.                  

The Audited Consolidated Financial Statements have been prepared in   
accordance with Chilean GAAP, which differs in certain significant respects     
from U.S. GAAP. Note 42 to the Audited Consolidated Financial Statements        
provides a description of the principal differences between Chilean and U.S.    
GAAP as they relate to Provida and a reconciliation of net income for Fiscal    
Years, 2000, 2001 and 2002 assets and liabilities as of December 31, 2000, 2001 
and 2002 to U.S. GAAP. In addition, in accordance with Chilean GAAP, all        
financial information regarding Provida contained in this report, unless        
otherwise indicated, has been restated in constant Chilean pesos as of December 
31, 2002 to recognize the effects of changes in the general purchasing power of 
the Chilean currency. See Note 1 to the Audited Consolidated Financial          
Statements.                                                                     

 Provida is the largest AFP in Chile, providing pension fund and various
related services. These services are limited to those permitted for AFPs under  
the Pensions Law and its revenues is largely dependent on the amount and level  
of fees charged to its affiliates. See Item 4. As a consequence, Provida's      
operating results are dependent on the general level of economic activity in    
Chile and, in particular, on the number of workers who affiliate with Provida   
and make monthly contributions as well as the amount of their salaries subject  
to contributions. Even though the Chilean economy has evidenced a moderate      
increase during recent years basically due to the international environment,    
Provida has been able to maintain the upward trend of its results.              
Additionally, Provida believes that growth in the number of workers in Chile    
and their aggregate salaries will continue to increase in the future, although  
not necessarily at the same rate as in the past. Because of its large market    
share, the broad geographic coverage of its branch network and its sales        
activities, and the diversity of its affiliates, Provida believes that its      
revenues are not dependent on any one sector of the economic activity.          

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  The principal sources of operating revenues for Provida are the variable
and fixed fees it charges to its cotizantes for monthly mandatory               
contributions. Therefore, the operating revenues of Provida can be materially   
impacted by any combination of significant changes in fee rates, in the number  
of cotizantes or in their gross wages. From April, 1993 until March, 1998,      
Provida charged a variable fee of 2.85% over each contributor's salary and a    
fixed fee of nominal Ch$195 per month discounted from the contributor's         
accounts. From April 1998 until March 1999, Provida charged a variable fee of   
2.62%, maintaining its fixed fee of Ch$195 per month. Continuing with the       
downward trend in variable fee rates, from April, 1999 until November, 1999,    
Provida charged a variable fee of 2.36% and a fixed fee of Ch$390 per month     
and, since December, 1999, Provida has charged a variable fee of 2.25%, holding 
its fixed fee of Ch$390 per month.                                              

  With more pensioners now benefiting from programmed withdrawals, on July
1, 2000, Provida started charging a 1.0% fee over pensions paid out to absorb   
the costs of this service. Whereas all companies in the industry had been       
charging fees for this service, Provida was the last in applying this type of   
fee.                                                                            

 According to the modifications of the Pensions Law related to voluntary
pension savings, Provida started charging a monthly fee for this new service    
equivalent to 0.49% on an annual basis on the funds under management.           
Additionally, the law permitted fees to be charged on fund transfers to other   
institutions, and Provida established a fee of Ch$1,250 for each operation of   
this type.                                                                      

Although sales efforts are relevant factors in competition, Provida   
believes that fees have became the most important factor.                       

Another significant source of revenues is the gain on mandatory       
investments held in the encaje. "See Item 4. Information on Provida--Business   
Overview--Government Regulation--Reserves". These earnings reflect general      
market performance (i.e., the stock and bond markets and interest rates, both   
domestic and international). The income generated from the encaje belongs to    
the AFP but does not necessarily result in increased cash flow because as the   
pension fund grows so do the reserve requirements imposed on the encaje. After  
June 30, 1995, AFPs must invest their reserves in shares of the pension funds   
they manage. Until 1994 these investments were maintained in debt and equity    
securities that had been classified as investment grade for pension funds.      

 An additional source of revenues for AFPs including Provida, is rebates
received from life and disability insurance contracts. "See Item 4 Information  
on Provida--Business Overview--Life and Disability." Rebates have the most      
significant effect on operating income in the first quarter of the year, which  
is when the insurance companies make partial settlements on the most recent     
contracts, in the event that the casualty rate is lower than the provisional    
rate paid by the AFP. Given that the rebates are calculated on an annual basis  
for six years, each year can reflect the cumulative impact of several prior     
contracts as well as the current contract. In addition to the rebate system,    
Provida's insurance contracts stipulate that the insurance companies must pay   
Provida a monthly interest payment in the first and fourth quarters of each     
year. These payments are recognized on monthly basis according to accrual       
criteria. These revenues are accounted as other operating income in the case of 
older contracts than the current one, and are deducted from the insurance cost  
in the                                                                          

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case of the current contract. The monthly interest payments are calculated by   
applying an interest rate, previously specified in each contract, multiplied by 
the difference between (i) the sum of the premiums paid to insurance companies  
plus all losses stemmed from Provida's client portfolio and (ii) rebates        
received or paid by Provida during the contract period. The monthly interest    
payment compensates Provida for the float that insurance companies enjoy on the 
premium amounts that are not used to cover casualties.                          

The most significant components of Provida's operating expenses are   
personnel remuneration, of both administrative and sales staff, administrative  
expenses and the cost of the premiums paid for life and disability insurance.   
Provida believes that it is the most cost efficient provider of services in the 
AFP industry, presenting the lowest administrative cost per contributor since   
its creation. However, Provida, like the other AFPs in the industry, was        
subject in the past to increasing sales cost pressures as a result of the high  
level of competition reflected in aggressive commercial campaigns to reach      
leading market share. This increasing trend stopped at the end of 1997, after a 
new regulation environment reinforced by the change in AFPs competitive         
strategies. In fact, regulations introduced by SAFP (Circulars 998 and 999) in  
November 1997 effectively reduced the number of salespeople and the number of   
transfers in the industry, which is reflected by the sales expense comparisons  
between the last four fiscal years and the preceding period. In the current     
context, the AFP competitive strategy is more focused on fee competition that   
on commercial efforts. Even though new products are being allowed, mainly       
multiple funds and voluntary pension savings, management believes that          
commercial efforts are going to be only one of the competitive issues in future 
periods, and not the only one.                                                  

  The cost of insurance premiums paid for life and disability benefits has
become a very important component of Provida's operating expenses during the    
recent years due to increase in the client portfolio casualty rate, as          
demonstrated in 2000, 2001 and 2002 figures, due to (i) local unemployment rate 
and awareness by affiliates about benefits, both affecting the number of        
casualties and (ii) downward trend evidenced by interest rates and pension      
funds returns that have implied a rise in the economic value of the casualties. 
In this aspect, it has to be stressed that Provida established a strategy to    
reduce the impact of casualty rate on its results. This strategy consists of    
maintaining higher control of the number of cases included in the insurance     
company's technical reserve and the careful analysis of cases presented to the  
Medical Commission. Provida has also developed a suitable training campaign at  
its service centers to avoid the inclusion of non-eligible cases.               

The main sources of Provida's non-operating income (expenses) are: the
results on financial investments, its equity in the earnings or losses of its   
investments in foreign pension fund managers, goodwill amortization due to      
investments in foreign pension fund managers and local acquisitions, interest   
expenses and the effect of inflation and foreign exchange exposure as measured  
by the price-level restatement.                                                 

The gain or loss on financial investments, excluding those held as    
mandatory reserves, reflects the impact of actual trading gains or losses, the  
daily revaluation of the carrying values of such securities to reflect market   
prices, dividends and interest received and the effect of forward contracts     
entered into in order to hedge foreign exchange exposure. This kind of          
investments does not represent a commensurate impact on Provida's cash flow.    

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Even when forward contracts entered into in order to hedge foreign    
exchange exposure were relevant in Fiscal Year 1999, the Company decided not to 
enter into them related to US denominated loans, since its foreign debt was     
transferred to UF denominated local debt in March 2000 (See "Note 35 of the     
Consolidated Financial Statements"). However, Provida has entered into forward  
contracts mainly to cover the impact of investments in related companies.       

In 1997, an accounting standard was adopted in Chile that require a   
company making an investment in a foreign affiliate to reduce its net worth by  
the amount of such investment related to start up costs, and then to record the 
amount on the company's balance sheet under "investments in related companies". 
This amount is thereafter reduced (increased) by the net income (loss)          
generated by that foreign affiliate until the account is reduced to zero. The   
income statement, thus, only registers current net income obtained from foreign 
affiliates without the impact of the amortization of their start-up costs.      

As a consequence of the process of mergers and acquisitions of smaller
Chilean AFPs, the participation in the capital increase of Provida's current    
investments and the acquisition of stakes in companies that have begun          
operations, Provida's financial statements include goodwill. This originates in 
the excess of cost over the book value of assets acquired that may be amortized 
over the estimated period of return on the corresponding investments with a     
maximum of twenty years.                                                        

Inflation produces losses, due to the net liability exposure of the   
Company. See "Impact of Inflation and Price Level Restatement."                 

The following table sets forth the composition of Provida's operating 
revenues and expenses for the periods indicated:                                

                                        For the Twelve Months Ended December 31,
                                        ----------------------------------------
                                       2000        2001         2002
                                        ----------------------------------------
REVENUES:                                                                       
Fee income................................   90.1%       90.2%        90.1%     
Gain on mandatory investments.............    5.8%        6.2%         4.6%     
Other operating revenues..................    0.6%        1.1%         2.5%     
Rebates on life and disability insurance..    3.5%        2.5%         2.8%     
                                          --------------------------------------
TOTAL OPERATING REVENUES                    100.0%      100.0%       100.0%     

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                                        For the Twelve Months Ended December 31,
                                        ----------------------------------------
                                       2000        2001         2002
                                        ----------------------------------------
EXPENSES:                                                                       
Administrative personnel remuneration....    25.6%       26.5%        23.4%     
Sales personnel remuneration.............    14.6%       12.9%        11.1%     
Directors' remuneration..................     0.3%        0.3%         0.2%     
Marketing expense........................     0.7%        1.5%         1.0%     
Data processing expense..................     0.8%        1.0%         1.1%     
Administrative expense...................    11.3%       10.3%        11.2%     
Depreciation.............................     1.9%        2.2%         2.4%     
Other operating expenses.................     1.8%        1.8%         2.2%     
Life and disability insurance............    43.0%       43.5%        47.5%     
                                        ----------------------------------------
TOTAL OPERATING EXPENSES                    100.0%      100.0%       100.0%     

     The  following  table  sets  forth  certain   additional   monthly  average
information relating to the operations of Provida for the periods indicated:    

                                        ----------------------------------------
                                        Monthly Averages
                                        ----------------------------------------
                                        ----------------------------------------
                                       2000        2001         2002
                                        ----------------------------------------
Number of cotizantes (1)................1,305,422   1,353,242    1,441,684      
Administrative employees.................   1,243       1,219        1,130      
Sales personnel..........................     944         739          673      
----------                                                                      
(1)  Source: SAFP                                                               

OPERATING RESULTS FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001

Operating revenues                                                        

   Operating revenues increased 3.1% from Ch$102,162 million for Fiscal Year
2001 to Ch$105,321 million for Fiscal Year 2002, due to increases of 3.0%       
(Ch$2,744 million) in fee income and 53.4% (Ch$1,936 million) in other          
operating revenues.                                                             

 The 3.0% increase in fee income, from Ch$92,159 million for Fiscal Year
2001 to Ch$94,903 million for Fiscal Year 2002, is explained by higher          
collections recorded during the period due to an increase in the average number 
of contributors, from 1,353,242 for Fiscal Year 2001 to 1,441,684 for Fiscal    
Year 2002. The above is the result of the successful commercial strategy of     
Provida on attracting new affiliations, and as it has been occurring throughout 
the industry during the year, an improvement in contribution density. In        
figures the ratio contributors to affiliates for Provida increased from 52.3%   
in 2001 to 54.1% in 2002. Additionally, regarding to unemployment level, the    
average rate in 2002 was 9.0%, compared favorably to the figure registered last 
year that reached 9.2%.                                                         

 The increment of 53,4% in other operating revenues from Ch$3,624 in the
fiscal year 2001 to Ch$5,560 in the fiscal year 2002, is mainly explained by    
(i) higher rebates and financial revenues stemming from previous L&D Insurance  
Contracts for Ch$444 million, (ii) revenues stemmed from AFC annual fee         
(Administradora de Fondos de Cesantia) in connection of rendering of            
technological support given by Provida for Ch$216 million and                   

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(iii) higher revenues for Ch$1,358 million generated by 100% of AFP Genesis,    
Ecuador consolidation.                                                          

Gains on Mandatory Investments in fiscal year 2002 decrease 23.9% or  
$1,522 million regarding fiscal year 2001 as a consequence of a drop in         
domestic equities as well as international markets which partially overshadowed 
the positive contribution of the local fixed income stemming from Central       
Bank's easing up on monetary policy reflected in successive interest rate       
reductions during the period. As a result, the pension funds return amounted to 
6.51% in nominal terms in 2002 which compares unfavorably respect to the 9.46%  
obtained in 2001.                                                               

Operating expenses                                                    

Total operating expenses decreased 0.20%, from Ch$69,757 million for  
Fiscal Year 2001 to Ch$69,590 million for Fiscal Year 2002. This result is      
mainly due to important savings achieved in both administrative and sales force 
remunerations and additionally lower marketing expenses sustained by no         
recurrence of the extraordinary effects during 2001 (advertising campaign and   
change of corporate image), partially offset by the increase in the life and    
disability insurance cost and higher administrative expenses.                   

  The administrative personnel remuneration, for Fiscal Year 2002 amounted
to Ch$16,272 million, representing a decrease of 12.0% or Ch$2,216 with respect 
to Fiscal Year 2001. This favorable result is mainly due to the implementation  
at the end of 2001, of special retirement and pre-retirement plans, resulting   
in a lower average staff number compared 2001 and implying lower expenses       
related to wages and other benefits for administrative personnel as well as     
minor severance payments caused by structural staff adjustments. In figures,    
the average number of administrative staff dropped from 1,219 employees in 2001 
to 1,130 in 2002 representing a drop of 7.3%. Comparing the year-end figures of 
years 2001 and 2002, the reduction in employees was 6.8% from 1,201 to 1,119.   

   Remuneration of sales personnel decreased by 14.1%, from Ch$8,979 million
for Fiscal Year 2001 to Ch$7,715 million for Fiscal Year 2002. This result      
mainly originated by adjustments in the sales force during 2001, based on less  
commercial activity expectations, situation that was evidenced in 2002.         
Therefore, and considering that during the year there was not significant       
adjustments in sales staff, savings in severance payments were recorded as well 
as capitalization of savings stemmed from lower sales personnel (wages and      
personnel benefits) and less commercial activity which generated minor          
commercial incentives. The average number of sales agents decreased 8.9% from   
739 in Fiscal Year 2001 to 673 in Fiscal Year 2002,. Comparing the year-end     
figures of 2001 and 2002, the sales force decreased a 2.0% from 665 to 652      
employees.                                                                      

 Life and disability insurance cost increased from Ch$30,354 million for
Fiscal Year 2001 to Ch$33,090 million for Fiscal Year 2002, representing a rise 
of Ch$2,735 million or 9.0% over the previous year. . This result stemmed from  
the growth registered in the client salary base and its subsequent higher       
provisional premium payments, as well as, higher provisions originated by the   
increment in casualty rate in client's portfolio throughout the industry. The   
latter has been affected by the local unemployment rate and awareness by        
affiliates about benefits that affects the number of benefit appliances, as     
well as the lower                                                               

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trend evidenced by interest rates and the return of pension funds that          
increased the economic value of casualties. Considering the above, Provida      
continues its strategy intended to control the effects of a higher casualty     
rate; which involves measures within the Company and with third parties         
(Insurance Company and Medical Commission).                                     

The remaining operating expenses increased by 4.8%, or Ch$577 million,
from Ch$11,936 million for Fiscal Year 2001 to Ch$12,513 million for Fiscal     
Year 2002. The principal component of Ch$594 million arose from higher          
administration expenses negatively affected by new business start up in 2002    
basically related to the campaign made trhorugh Association of AFP in order to  
promote voluntary pension savings start up, as well as outsourcing for the      
rendering of technical and operational support to AFC and higher payments on    
account of a license referred to Provida International due to the increase in   
its taxable capital. Another factor affecting this item is disability           
qualification expenses for Ch$224 millions aimed to control the impact of       
casualties in the insurance cost and administrative expenses partially offset   
by lower commercialization expenses of Ch$322 million during this period, due   
to the corporate change image that took place in 2001.                          

Operating income                                                      

 Consequently, due to favorable evolution of both operating revenues and
operating expenses, the operating income increased by Ch$3,325 million, or      
10.3%, from Ch$32,406 million for Fiscal Year 2001 to C1$35,730 million for     
Fiscal Year 2002.                                                               

Non-operating income (expenses) net                                   

Non-operating income (expenses) net decreased from a gain of Ch$10,928
million for Fiscal Year 2001 to again of Ch$1,742 million for Fiscal Year 2002, 
representing an unfavorable variation of Ch$9,186 million. However, the         
non-operating income as of December 2001 includes the sale of AFORE Profuturo,  
which had zero effect on the results including the respective income tax,       
therefore, once the financial impacts of the transactions are isolated, the     
adjusted deviation non-operating income is reduced to Ch$864 million. This      
result is explained by lower earnings obtained in affiliated companies          
basically originated by exchange effects and losses for start up process of     
local companies and higher losses in price level restatement due to in 2001 it  
was recorded a positive and extraordinary effect of Provida Internacional       
dollarization in 2001.                                                          

 Regarding to the transactions in Mexico, it should be reminded that the
sale of AFORE Profuturo generated the following effects: a gain of Ch$26,181    
million recorded as other non-operating income, a release of shareholders       
equity reserves due to foreign exchange effect related to this investment       
amounted to Ch$1,804 million recorded as a gain in price level restatement and  
the corresponding transaction taxes of Ch$8,322. Therefore, the net proceed of  
the transaction was Ch$19,663 million fully destined to amortize a significant  
portion of goodwill generated by AFORE Bancomer acquisition.                    

The Result in Affiliated Companies decreased from Ch$10,503 million in
Fiscal Year 2001 to Ch$9,712 million in Fiscal Year 2002. This Ch$791 million   
(7.5%) decrease is originated partially by local affiliated companies           
(PreviRed.com and AFC) still record losses, registering a negative variation of 
Ch$433 million. Regarding affiliated companies                                  

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abroad, they recorded lower results for Ch$358 mainly originated by lower       
earnings recorded by AFPC Porvenir, Colombia of Ch$1,015 million stemming from  
depreciation of the local currency respect to US dollar in the year. On the     
other hand, the sale of the stake in AFORE Profuturo, Mexico in March 2001      
since its benefits are not being accounted for from that date on, implied lower 
income for Provida of Ch$545 million. Although, it has to be stressed that the  
higher benefits stemmed from AFORE Bancomer, Mexico of Ch$1,137 million, more   
than compensate that lower income, generating a net earning of Ch$592 million   
from the investment in this country. Additionally, in September 2001, Provida   
Internacional completed its 100% stake of AFP Genesis consolidating its         
results, and its net income is not considered in this item.                     

 The price-level restatement results evolved unfavorably, from a gain of
Ch$2,301 million in Fiscal Year 2001 to a loss of Ch$ 1,925 in Fiscal Year      
2002, representing a negative deviation of Ch$ 4,225 million. The latter due to 
year 2001 considers the extraordinary effect of Provida Internacional           
dollarization and the sale AFORE Profuturo, therefore isolating that effect the 
deviation is reduced to Ch$115 million originated by the increase in Provida's  
net passive exposure.                                                           

   Regarding to the exchange difference registered during the year, the loss
decreased from Ch$908 million in 2001 to Ch$140 million en 2002, basically as a 
cause that in 2001 an extraordinary loss was registered stemming from the hedge 
passive conversion regarding to AFORE Profuturo investment, while in 2002 the   
loss is related to forward contracts valorization.                              

Income taxes                                                          

Income taxes decreased from Ch$12,276 million in the fiscal year 2001 
(which includes Ch$8,322 million associated with 20% tax retention in December  
2001 in connection to AFORE Profuturo sale) to Ch$3,466 million in fiscal year  
2002, showing a lower expense of Ch$8,810 million (71.8%). Adjusting 2001 due   
to tax generated by Profuturo sale, lower expenses for Ch$488 million is        
registered in 2002, which is backed up in tax credits stemming from dividends   
in affiliated companies abroad and the favorable effect of the tax base review  
made in the period.                                                             

Extraordinary items                                                   

By request of the AFPs, the Superintendency of AFPs modified the      
regulation of deferred tax accounting of gains on mandatory investments in      
December 2001. The modifications allows the gains to be recognized at their     
present value, considering that it is doubtful that an AFP would sell its       
shares and consequently recognize the earnings. Therefore, this modification    
meant a retroactive recognition of Ch$2,272 million accumulated since January   
2001 that was accounted for as an extraordinary item, generating a lower gain   
in respect to that amount in 2002 compared to 2001.                             

Effect of accounting change                                           

   During the period, there were no changes in accounting policies regarding
the previous year that might affect the interpretation of these consolidated    
financial statements.                                                           

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Net income                                                            

Net income increased from Ch$33,330 million for Fiscal Year 2001 to   
Ch$34,007 million for Fiscal Year 2002. The real growth of 2.0%, or Ch$677      
million, mainly backed up in good results obtained in fee income and other      
operating revenues, as well as lower administrative and sale personnel          
remunerations and marketing and financial expenses; more than offsetting the    
market evolution negative impact on gains in mandatory investments, as well as  
the client portfolio casualty rate that generated a higher cost in life and     
disability insurance.                                                           

OPERATING RESULTS FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000

Operating revenues                                                    

  Operating revenues increased 3.4% from Ch$98,919 million for Fiscal Year
2000 to Ch$102,163 million for Fiscal Year 2001, due to increases of 3.4%       
(Ch$3,067 million) in fee income and 11.3% (Ch$647 million) in gains on         
mandatory investments.                                                          

 The 3.4% increase in fee income, from Ch$89,092 million for Fiscal Year
2000 to Ch$92,159 million for Fiscal Year 2001, is explained by higher          
collections recorded during the period due to an increase of 3.7% in the        
average number of contributors, from 1,305,422 for Fiscal Year 2000 to          
1,353,242 for Fiscal Year 2001. Reflecting Provida's consolidation strategy,    
the increase in clients stemmed from its outpacing the industry in contributor  
transfers and its attracting many more new affiliates. This evolution was even  
more significant considering the high unemployment rate maintained during the   
period. In addition, Ch$418 million in fees were charged on programmed pension  
withdrawals, which were first applied in July 2000.                             

    The 11.3% increase in gains on mandatory investments from Ch$5,728 million
in Fiscal Year 2000 to Ch$6,380 million in Fiscal Year 2001 is mainly explained 
by the Central Bank's easing off monetary policy that transformed fixed income  
into the main source of earnings for the pension funds in 2001. Consequently,   
in nominal term the pension fund returns rose from 9.3% for Fiscal Year 2000 to 
9.5% for Fiscal Year 2001. This performance is remarkable if we compare it to   
the international financial markets that experienced lower earnings and         
negative stock exchange results due to the complex international situation in   
the aftermath of the events of September 2001 and the Latin America economic    
environment.                                                                    

Other operating revenues in Fiscal Year 2001 fell by Ch$470 million   
compared to Fiscal Year 2000 basically as a consequence of lower rebates from   
life and disability insurance contracts due to the impact of higher             
unemployment on the casualty rate of Provida's client portfolio. Partially      
offsetting this effect is the consolidation of AFP Genesis into Provida's       
results, which caused the recognition of Ch$421 million in revenues.            

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Operating expenses                                                    

    Total operating expenses rose 5.6%, from Ch$66,083 million for Fiscal Year
2000 to Ch$69,757 million for Fiscal Year 2001. This result is mainly due to a  
series of extraordinary events that characterized the Fiscal Year 2001, even    
though, important savings were achieved in sales force remuneration and         
administrative expenses.                                                        

  The administrative personnel remuneration, for Fiscal Year 2001 amounted
to Ch$18,488 million, representing an increase of 9.2% or Ch$1,564 million with 
respect to Fiscal Year 2000. This increase is specifically due to the           
implementation at the end of December 2001, of extraordinary retirement and     
pre-retirement plans, which implied greater severance payment expense of        
Ch$1,805 million. This higher expense was partially offset by savings from the  
lay-off of administrative staff during the period; the yearly average dropped   
by 2.0%, from 1,243 employees in 2000 to 1,219 in 2001. Comparing the year-end  
figures of 2000 and 2001, the reduction in employees was 3.5% from 1,244 to     
1,201. The above does not include the decrease related to the retirement plans, 
which occurred on January 1, 2002.                                              

  Remuneration of sales personnel decreased by 7.1%, from Ch$9,662 million
for Fiscal Year 2000 to Ch$8,979 million for Fiscal Year 2001. This result      
mainly stemmed from savings made in salaries and other benefits granted to      
personnel due to the important reduction in the sales force, which did not      
affect fee income's growing trend. The average number of sales agents fell from 
944 in Fiscal Year 2000 to 739 in Fiscal Year 2001, a decrease of 21.7%.        
Comparing the year-end figures of 2000 and 2001, the sales force dropped from   
898 to 665, implying a reduction of 25.9%.                                      

 Life and disability insurance cost increased from Ch$28,425 million for
Fiscal Year 2000 to Ch$30,354 million for Fiscal Year 2001, representing an     
increase of Ch$1,929 million or 6.8% over the previous year. This variation     
included Ch$645 million from the growth of the clients' salary base, while the  
rest is linked to the higher provision required for the clients portfolio's     
casualty rate affected by the lack of economic recovery and its subsequent      
effect on the unemployment rate. Even though unemployment rates maintained      
their level during the comparison periods (an average of 9.2%), this is mainly  
due to the emergency job programs implemented by the government and the high    
season for agricultural economic activity without having substantially modified 
the employment expectations of the labor force relevant to the pension fund     
industry. In light of that, life and disability insurance expenses continue to  
reflect a higher client casualty rate, creating the need to constitute higher   
provisions for this concept. However, Provida's strategy continues to focus on  
the maintenance of suitable control over the amount of cases included in the    
technical reserve that must be constituted by the insurance company and careful 
analysis of the cases submitted to the Medical Commission.                      

Other operating expenses increased by 7.9%, or Ch$879 million, from   
Ch$11,057 million for Fiscal Year 2000 to Ch$11,936 million for Fiscal Year     
2001. The principal component of Ch$547 million arose from higher marketing     
expenses in connection with the institution's publicity campaign and change of  
corporate image that took place in March 2001. Two other related factors were   
depreciation and data processing expenses, which respectively increased Ch$308  
million and Ch$178 million in Fiscal Year 2001 compared                         

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to Fiscal Year 2000. Both cases include investments in new technology for       
branches and expenses related to Plan Conect@ aimed to improve the training and 
development of Provida's personnel through enabling most company's employees to 
access to high technology and internet services at home in favorable            
conditions. The higher expenses were partially offset by lower administration   
expenses (Ch$227 million) due to the application of the BBVA Group's strategic  
cost efficiency program ("EFYCO").                                              

Operating income                                                      

Consequently, and in spite of the recurrent successful performance of 
operating revenues, the operating income decrease by Ch$430 million or 1.3%,    
from Ch$32,836 million for Fiscal Year 2000 to Ch$32,406 million for Fiscal     
Year 2001.                                                                      

Non-operating income (expenses) net                                   

Non-operating income (expenses) net improved from a loss of Ch$1,326  
million for Fiscal Year 2000 to a gain of Ch$10,928 million for Fiscal Year     
2001, representing a favorable variation of Ch$12,254 million. This was         
partially offset by the increase in income tax expense associated with the sale 
of Provida's participation in AFORE Profuturo (Ch$8,322 million in income       
taxes); therefore, the net result was a Ch$3,932 million increase in Fiscal     
Year 2001 as compared to Fiscal Year 2000. The main components behind this      
were: favorable results obtained from foreign affiliates; an improved financial 
performance and the positive impact of exchange rates on the price-level        
restatement, given Provida International's change in functional currency.       

   The results of related companies improved from Ch$8,250 million in Fiscal
Year 2000 to Ch$10,503 million in Fiscal Year 2001. This Ch$2,252 million       
(27.2%) increase was due to higher earnings of all foreign affiliates,          
partially offset by the start-up losses of the electronic collection company,   
PreviRed.com, which amounted to Ch$236 million. Additionally, it must be        
mentioned that the parameters of comparison between both periods are somewhat   
different in individual terms, although offset in a global sense, considering   
that AFORE Bancomer was acquired in November 2000, AFORE Profuturo was sold in  
March 2001, and the purchase of 100% of AFP Genesis in September 2001 implied   
the consolidation of this affiliated company's financial statements.            

   Regarding the AFORE Profuturo sale, it is important to point out that the
earnings after taxes which stemmed from this operation were destined to         
amortize part of the goodwill generated by the purchase of AFORE Bancomer. The  
sale and purchase of both companies were considered as one sole financial       
operation with a neutral effect on the company's results.                       

   The improved financial performance is reflected on interest expenses that
diminished from Ch$4,013 million in Fiscal Year 2000 to Ch$2,978 in Fiscal Year 
2001, representing savings of Ch$1,036 million or 25.9%, given the debt         
amortization programmed for year 2001, as well as adjustments of market         
interest rates. Additionally, the renegotiations of long-term contracts that    
took place in the middle of the year allowed for a reduction in interest rate   
spread from 1.0% to 0.75%.                                                      

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 Regarding the price-level restatement results, they evolved positively,
from a loss of Ch$2,422 million in Fiscal Year 2000 to a gain of Ch$2,301 in    
Fiscal Year 2001, representing an improvement of Ch$4,723 million, mainly due   
to Provida International's change in functional currency. In December 2001,     
previously authorized by the Chilean Tax Authority (Servicio de Impuestos       
Internos, SII), Provida Internacional changed its functional currency from the  
Chilean peso to US dollar starting on January 1st, considering that most of its 
operations are controlled in that currency.                                     

   Finally, the exchange difference evolved from a gain of Ch$593 million in
2000 to a loss of Ch$908 million in 2001, basically as a cause that in 2001 an  
extraordinary loss was registered regarding the hedge passive conversion        
related to AFORE Profuturo investment, while in 2001 the gain is related to     
forward contracts valorization.                                                 

Income taxes                                                          

    During Fiscal Year 2001, Income tax expenses were Ch$13,019 million higher
than the recorded in Fiscal Year 2000 and included the taxes associated with    
the sale of AFORE Profuturo for Ch$8,322 million. This issue aside, higher      
income tax expenses of Ch$4,697 million on the company's normal business stem   
from higher provisions needed to calculate and apply the treatment of deferred  
taxes, complementary accounts and the increase in the tax rates approved by     
authorities, which continue over the next few years. In addition, tax           
exemptions stemming from previous mergers that had benefited Provida during the 
last three years were extinguished during Fiscal Year 2001.                     

Extraordinary items                                                   

    By request of the AFPs, the Superintendency of AFP modified the regulation
of deferred tax accounting of gains on mandatory investments in December 2001.  
The modifications allows the gains to be recognized at their present value,     
considering that it is doubtful that an AFP would sell its shares and           
consequently recognize the earnings. Therefore, this modification meant a       
retroactive recognition of Ch$2,272 million accumulated since January 2001 that 
was accounted for as an extraordinary item.                                     

Effect of accounting change                                           

It is important to point out that during the period, two accounting   
changes previously described were implemented, one related to Provida           
Internacional's functional currency and the other regarding the deferred tax    
treatment of mandatory investments.                                             

Net income                                                            

Net income increased from Ch$32,225 million for Fiscal Year 2000 to   
Ch$33,330 million for Fiscal Year 2001. The real growth of 3.3%, or Ch$1,105    
million, is outstanding considering the economic environment of the year 2001   
and the extraordinary events that affected the Provida's operating and tax      
expenses. The latter includes the extraordinary retirement and pre-retirement   
plans, the technological investments, the campaign for the corporate image      
change, the Plan Conect@ and the end of tax benefits derived from the mergers   
in previous years, as well as the modification of the deferred tax treatment.   

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Impact of Inflation and Price-Level Restatement                       

   Provida is required under Chilean GAAP to restate non-monetary assets and
liabilities, equity and income and expense accounts to reflect the effect of    
changes in the purchasing power of the Chilean peso. During inflationary        
periods, monetary assets and liabilities generate losses or gains,              
respectively, in purchasing power. Non-monetary assets and liabilities are      
restated so as to correct the effect of inflation and remain constant in real   
terms for both periods. See Item 19, Notes 1 and 31 to the Audited Consolidated 
Financial Statements.                                                           

   Non-monetary assets and liabilities are generally restated using the CPI.
Monetary assets and liabilities are typically not adjusted because their value  
is eroded by inflation.                                                         

  For practical reasons, the price-level restatement of trading securities
is not computed separately from the gain or loss on such securities because it  
has just been included. Accordingly, the net loss from changes in purchasing    
power of the currency does not include the gain that would have been separately 
recognized if price-level restatement on trading securities had been computed   
separately prior to restating trading securities to fair values.                

    In terms of inflation impact in Provida's results, it produces losses as a
consequence of the net liability exposure of the Company.                       

   Otherwise, after Provida incurred US dollar-denominated long-term debt to
finance the acquisition of AFP Union and Proteccion, other variables, such as   
movements in the foreign exchange rate, become relevant in terms of the         
definition of the price-level restatement account. In terms of existing assets, 
a natural hedge evolved from the foreign affiliate investments that for         
accounting purposes are denominated in dollars. Nevertheless, subsequent to the 
capital increase at the end of Fiscal Year 1999, Provida's borrowings were      
re-negotiated and the new obligations were re-denominated in UF.                

   Additionally, in Fiscal Year 2001 an extraordinary gain was perceived due
to Provida International's change in its functional currency from the Chilean   
peso to US dollar starting on January 1st, considering that most of its         
operations are controlled in that currency.                                     

  The following table sets forth the calculation of the net loss resulting
from the changes in the purchasing power of the Chilean peso:                   

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                                                        [Enlarge/Download Table]
                                                                   -------------------------------------- 
                                                                   As of, and for the Twelve Months ended,
                                                                                December 31,              
                                                                   -------------------------------------- 
                                                                       (in million of constant Ch$)       
                                                                      2000         2001         2002      
                                                                   -------------------------------------- 
                                                                                                          
Shareholders' equity..............................................   5,687         4,184        4,266     
Current assets....................................................    (191)         (246)          (1)    
Other assets......................................................  (3,798)       (4,919)      (2,898)    
Premises and equipment............................................  (1,350)         (927)        (894)    
Liabilities.......................................................   1,282          (962)         595     
Accumulated depreciation..........................................     236           169          174     
Income statement amounts..........................................     557           400          682     
Net loss from changes in the purchasing power of the currency.....   2,422        (2,301)       1,925     
                                                                                  =======       =====     

Liquidity and Capital Resources                                       

   Provida's working capital requirements have historically been funded with
internally-generated cash flows and short-term sources such as available lines  
of credit, considering that Provida's cash flow from operations, mainly from    
fees paid by its affiliates, is significant and sufficient to cover the core    
business needs. As a consequence, Provida has historically paid a significant   
portion of its income as dividends, even though they are limited according to   
the long-term investment decisions. See Item 8. "Financial Information --       
Dividends Policy". Management believes that the Company's cash flow generated   
by operations, cash balances, and available lines of credit will enable it to   
meet its working capital.                                                       

 Regarding short term financing sources, the available bank credit lines
for short term financing are as follows:                                        

---------------------------------------------------------------                 
                   As of April 30,
                  Used         Total
                                April-03     April-03     Due Date
-----------------------------------------------------------------------------   
                  MMCh$        MMCh$
-----------------------------------------------------------------------------   
Bank overdrafts, maturity 0 to 30 days:                                         
Banco Santander                               130       20,000     30-May-04    
Banco de Chile                              1,718       20,000     24-Jan-04    
Banco Credito e Inversiones                     1        3,500     22-Oct-03    
Banco Bice                                      -        3,000     16-Feb-04    
-----------------------------------------------------------------------------   
Total                                       1,869       46,500                  
-----------------------------------------------------------------------------   

  Provida's long-term investments have been financed by long-term sources,
basically bank debt, capital increases and retained earnings.                   

  During Fiscal Years 1999, 2000 and 2001, Provida had significant capital
expenditures related principally to the purchase of AFP Proteccion, the         
purchase of a new stake in AFORE Bancomer in Mexico, the increase to 100%       
ownership in AFP Genesis in Ecuador and the purchase of property and equipment. 
Regarding Year 2002, the investments made are related basically to fixed assets 
according to the normal requirements of the business operation, while the most  
important investments in affiliates companies                                   

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and the technological modernization of branches were materialized in previous   
periods than the current one. "See Item 4. Information on Provida -- Capital    
Expenditures and Divestitures".                                                 

Provida also has had to build additional reserves as its assets under 
management have increased, translating into higher mandatory investments. "See  
Item 4. Information on Provida." As of December 31, 2002, the amount of such    
reserves had increased 102,3% in the last four years due to mandatory           
contributions of affiliates, the pension funds' returns and Provida's           
acquisition of other AFPs. Provida expects these reserves to increase in the    
future as a result of further increases in funds invested by affiliates in the  
Pension Funds and their respective returns.                                     

 Specifically, in the local context, for the acquisitions and mergers of
AFP Union and Proteccion, both long-term debt as well as a capital increase (to 
reduce the debt), financed these transactions. Management believes that the     
long-term obligations assumed in order to finance the above acquisitions will   
be paid for by the cash flows generated by both transactions. Additionally,     
during 2002 Provida made a paid-in capital in two of its local subsidiaries,    
financed by own resources. One of them is related to the paid-in capital for    
the incorporation of the unemployment insurance management company related to a 
Provida's steak of 37.8%, while the other is refereed to an additional paid-in  
capital to PreviRed.com according to the company needs and in order to maintain 
the 37.8% interest. Considering that those local related companies are in their 
star up process, management does not discard additional investment requirements 
in the short term, which are expected to be financed by internal resources in   
view of their magnitudes.                                                       

In the case of foreign affiliates, the main source of financing was   
shareholders' equity. Provida will continue playing an active role in Latin     
American pensions projects together with the BBVA Group. However, neither       
Provida nor the BBVA Group intends to significantly increase Provida's level of 
debt in the pursuit of its future development. Accordingly, Provida will act as 
a consultant to local AFPs in those countries with large pension markets, where 
it will expect to generate consulting fees. In countries with smaller pension   
markets, Provida will actively seek new investments in local AFPs.              

   As of December 31, 2002, bank debt outstanding was Ch$13,751 million, the
liquidity index (current assets over current liabilities) was 0.31 and the      
ratio of total liabilities over shareholders' equity was 0.22. A summary of     
Provida's main long-term debt obligations is as follows:                        

                                                        [Enlarge/Download Table]
-----------------------------------------------------------------------------------------------------------------
Contractual Obligations                                                                                          
Long-Term Debt (amount in UF)           Total       Less than 1      1-3 years      4-5 years     After 5 years  
                                                       year                                                      
-----------------------------------------------------------------------------------------------------------------
                                                                                                                 

Syndicated loan - Local banks        500,000.00      200,000.00     300,000.00          -               -        

BBVA Pensiones Chile S.A.            530,477.46      350,535.07     179,942.39          -               -        
-----------------------------------------------------------------------------------------------------------------

Total                               1,030,477.46     550,535.07     379,942.39      100,000.00          -        
-----------------------------------------------------------------------------------------------------------------

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                                                        [Enlarge/Download Table]
-----------------------------------------------------------------------------------------------------------------------
   Property     Acquired by      Losser          Date of          Date        Terms of            Call Option          
                                               Commencement    Termination     Payment                                 
-----------------------------------------------------------------------------------------------------------------------
                                                                                                                       
   Branch:        A.F.P.         Cia. de      June 01, 1994   May 31, 2014  Monthly rent  By paying 39.79 UF at        
   Rancagua    El Libertador Seguros de Vida                                  39.79 UF    termination of the           
# 626 O'Carrol                 Euroamerica                                                contract. If this option is  
                                  S.A.                                                    not taken, the contract      
                                                                                          must be terminated.          
-----------------------------------------------------------------------------------------------------------------------
   Branch:        A.F.P.         Cia. de      June 06, 1994   May 30, 2019    Six-month   By paying the amount of      
  Huerfanos    El Libertador   Seguros UAP                                      rent      last rent and liquidating    
  # 669 5th                   (Chile Ltda.)                                   1,171 UF    possible debts. If this      
    floor                                                                                 option is not taken, the     
                                                                                          contract must be terminated. 
-----------------------------------------------------------------------------------------------------------------------
   Storage:       A.F.P.        Santiago       November 26,   November 26,  Monthly rent  Along with a monthly rent,   
  Quilicura     Proteccion    Leasing S.A.         1996           2008        97.92 UF    a contribution called "call  
                                                                                          option" of 41.964 UF must be 
                                                                                          paid which will accumulate   
                                                                                          the sale value of the        
                                                                                          property.  If this option is 
                                                                                          not taken, lessor will return
                                                                                          contributions.               
-----------------------------------------------------------------------------------------------------------------------

Although the long-term debt has covenants that could accelerate the   
integral payment of the obligations, management believes that the transactions, 
which originated them, are going to permit the full payment of the debt and the 
fulfillment of the related requirements. The covenants related to the long-term 
obligations according to the figures at December 31,2002 are as follows:        

--------------------------------------------------------------------------------
DATA INFORMATION FOR COVENANTS                                                  
1.- Consolidated Financial Debt                          Ch$ Million US$ Million
--------------------------------------------------------------------------------
Current Liabilities                                                     
  Bank and financial institutions borrowings               8,727       12.14
(+) Public borrowings                                            -           -  
(+) Due to related companies                                 5,885        8.19  
(+) Accounts payable and sundry creditors                        -           -  
  Long-term Liabilities                                    5,023        6.99
  Bank and financial institutions borrowings                   -           -
(+) Public borrowings                                        3,013        4.19  
(+) Due to related companies                                     -           -  
(+) Accounts payable and sundry creditors                        -           -  

  Total Consolidated Financial Debt                       22,648       31.52

--------------------------------------------------------------------------------
2.- Net Shareholder's Equity                             Ch$ Million US$ Million
--------------------------------------------------------------------------------
  Total Shareholder's Equity                             176,953      246.24
(-) Net Income                                             (34,007)     (47.32) 
(+) Provisional Dividends                                    9,425       13.12  

  Net Shareholder's Equity                               152,371      212.04

--------------------------------------------------------------------------------
3.- EBITDA                                               Ch$ Million US$ Million
--------------------------------------------------------------------------------
  Income before taxes                                     37,473       52.15
(-) Depreciation                                             1,667        2.32  
(-) Amortization of goodwill                                 4,930        6.86  
(-) Interest expenses                                        1,497        2.08  

  EBITDA                                                  45,566       63.41

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--------------------------------------------------------------------------------
Covenants                                                    Ratio       Limit  
--------------------------------------------------------------------------------
1.- Consolidated Financial Debt / Net Shareholder's Equity    0.15       <1.75  
2.- Consolidated Financial Debt / EBITDA                      0.50       <3.75  
3.- EBITDA / Interest expenses                               30.44       >2.75  
4.- Net Shareholder's Equity (US$ Million)                     212        >150  

    Finally, it should be mentioned that there are not contractual obligations
out of balance that could have a material in Provida's results (See "Note 35:   
Commitments and Contingencies" of Consolidated Financial Statements".           

U.S. GAAP Reconciliation                                              

The adjustments made under U.S. GAAP for deferred taxes in order to   
conform to the Statement of Financial Accounting Standards Number 109           
"Accounting for Income Taxes" lowered net income for Fiscal Years 2000, 2001    
and 2002 by Ch$4,057 million (12.6%), Ch$3,388 million (10.2%) and Ch$575       
million (1.7%), respectively.                                                   

   In addition, the adjustments made under U.S. GAAP for the amortization of
acquisition costs of initial affiliates of investees decreased Provida's net    
income in Fiscal Years 2000 by Ch$7,110 million (22.0%) and increased in Fiscal 
Year 2001 by Ch$25 million (0.1%), while in Fiscal Year 2002 it did not have    
any effect.                                                                     

    In Fiscal Years 2000, 2001 and 2002, the conversion adjustments of foreign
affiliates signified an increase in net income of Ch$539 million (1.7%), a rise 
of Ch$1,299 million (3.9%) and an increase of Ch$1,944 million (5.7%),          
respectively.                                                                   

Consequently, Provida's net income under Chilean GAAP was Ch$32,253   
million for Fiscal Year 2000, Ch$33,330 million for Fiscal Year 2001 and        
Ch$34,007 million for Fiscal Year 2002 as compared to net income under U.S.     
GAAP of Ch$21,086 million for Fiscal Year 2000, Ch$47,774 million for Fiscal    
Year 2001 and Ch$30,505 million for Fiscal Year 2002. Net income under U.S.     
GAAP was 34,6% lower than under Chilean GAAP in 2000, 43,3% and 10,3% higher    
than under Chilean GAAP in 2001 and 2002, respectively.                         

The principal differences between Chilean GAAP and U.S. GAAP as they  
relate to the Company are the reversal of income in Investment in related       
Companies, elimination of result of subsidiaries during the development stage,  
the reversal of amortization of goodwill for the sale of Afore Bancomer, the    
recognition of gains in sale of Afore Profuturo, the inclusion of derivatives   
effects, the recording of a liability to reflect minimum dividend payments      
required by law and the recording of deferred taxes. For a more detailed        
explanation of these differences between Chilean GAAP and U.S. GAAP, see Note   
42 for the Consolidated Financial Statements. The difference between Chilean    
GAAP and U.S. GAAP arising from deferred taxes and amortization of acquisition  
costs of initial affiliates of investees, also affected Provida's net equity at 
of the end of each fiscal year. Other differences that affected equity were a   
decrease in equity under U.S. GAAP, in order to recognize a liability for the   
minimum dividend Provida must distribute every year, and an increase in equity  
under U.S. GAAP due to the reversal of a deficit for the inception period.      

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  Net equity under Chilean GAAP as of December 31, 2000, 2001 and 2002 was
Ch$149,884 million, Ch$165,794 million and Ch$176,953 million, respectively, as 
compared to net equity under U.S. GAAP as of December 31, 2000, 2001 and 2002   
of Ch$135,845 million, Ch$168,572 million and Ch$175,396 million, respectively  
(or 9.4% lower, 1.7% higher and 0.1% lower, under U.S. GAAP than under Chilean  
GAAP).                                                                          

 In determining U.S. GAAP amounts, Provida has implemented Statements of
Financial Accounting Standards applicable to its operation and described in     
Note 42 for the Consolidated Financial Statements. The inclusion of price-level 
adjustments in the accompanying financial statements is considered appropriate  
under the prolonged inflationary conditions affecting the Chilean economy even  
though the cumulative inflation rate for the last three years does not exceed   
100%. Accordingly, the effect of price-level changes is not eliminated in the   
reconciliation to U.S. GAAP.                                                    

    Pursuant to Chilean GAAP, the Company's financial statements recognize the
effects of the application of Chilean foreign currency translation standard     
Technical Bulletin No. 64 with respect to the translation of our non-Chilean    
operations is part of the comprehensive basis of preparing of price-level       
adjusted financial statements required by Chilean GAAP. The inclusion of        
inflation and translation effects in the financial statements is considered     
appropriate under the inflationary conditions that have historically affected   
the Chilean economy and, accordingly, have not been eliminated. An              
accommodation has been made by U.S. Securities Exchange Commission permitting   
Chilean registrants to not include or the effect of any differences between     
Technical Bulletin No. 64 and SFAS No. 52 in respect of investments in unstable 
countries in the reconciliation to US GAAP                                      

Item 6. Directors, Senior Management and Employees

Provida's current directors and executive officers are as follows:    

                                                        [Enlarge/Download Table]
                                                                              Current                    
                                                                           Position Held      Term of    
Directors *                                      Position                      Since        Expiration   
---------------------------------------------------------------------------------------------------------
                                                                                                         
Antonio Martinez-Jorquera        Chairman of the Board of Directors             2002           2004      
Miguel Angel Poduje              Vice-Chairman                                  1999           2004      
Julio Gilsanz                    Director                                       2002           2004      
Jesus Maria de las Fuentes       Director                                       1999           2004      
Fernando Leniz Cerda             Director                                       1997           2004      
Jose Madariaga Lomelin           Director                                       1999           2004      
Maximo Pacheco Matte             Director                                       1991           2004      
Alberto Pulido Cruz              Director                                       1999           2004      

                                                        [Enlarge/Download Table]
                                                                              Current                    
                                                                           Position Held      Term of    
Executive Officers (*)                       Position                          Since        Expiration   
---------------------------------------------------------------------------------------------------------
                                                                                                         
Gustavo Alcalde (**)      Chief Executive Officer                               1996            N/A      
Juan Carlos Reyes (**)    Chief Operation Officer                               1998            N/A      
Joaquin Cortez (**)       Chief Investment Officer                              1996            N/A      
Carlo Ljubetic (**)       Chief Commercial Officer                              2000            N/A      

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                                                                              Current                    
                                                                           Position Held      Term of    
Executive Officers (*)                       Position                          Since        Expiration   
---------------------------------------------------------------------------------------------------------
Magdalena Aninat (**)     Human Resources Manager                               1993            N/A      
Arnaldo Eyzaguirre        Controller Division Manager                           2003            N/A      
Maria Paz Yanez           Planning & Control Division Manager                   2002            N/A      
Gabriel Galaz             Accounting & Consolidation Division Manager           2002            N/A      
Andres Veszpremy (**)     General Counsel                                       2002            N/A      
----------                                                                                               
(*)  None of the above mentioned Directors and Executive Officers individually                           
     owns one percent or more shares of the Company.                                                     
(**) Members of Management Committee of the Company.                                                     

Directors                                                             

Antonio Martinez Jorquera is the Chairman of the Board and has been a 
Director of Provida since 2002. He received a degree in law and economics from  
the University of Deusto in San Sebastian, Spain.                               

Miguel Angel Poduje is the Vice-Chairman of the Board and has been a  
Director of Provida since 1999. He received his law degree from the Catholic    
University of Chile. Mr. Poduje is also a Director of Provida International     
S.A. and of Consorcio Periodistico de Chile S.A. ("COPESA"). Additionally, he   
is a member of the Directorship of Andres Bello University and law professor of 
such university.                                                                

    Julio Gilsanz has been a Director of Provida since 2002. He received a law
and economics degree from the Deusto University, San Sebastian in Spain.        

  Jesus Maria de las Fuentes has been a Director of Provida since 1999. He
received an industrial engineering degree from the High Engineer Academy of     
Bilbao in Spain. He has served BBV in Mexico and as Director of Instituciones   
Bancarias Internacionales del Area America Centro-Sur ("International Banking   
Insitutitons, Central and South America Area").                                 

 Fernando Leniz has been a Director of Provida since 1997. He obtained a
civil engineering degree from the University of Chile. He is a Director of      
several companies such as Banmedica, Compania Sudamericana de Vapores, Sintex   
and Cintra. He is a former Minister of the Economy.                             

    Jose Madariaga has been a Director of Provida since 1999. Mr. Madariaga is
a business administration graduate of Iberoamerican University of Mexico.       

Maximo Pacheco has been a Director of Provida since 1991. Mr. Pacheco 
received a commercial engineering degree from the University of Chile and is    
also a Director of various companies, including Luchetti S.A., Falabella S.A    
and Banco de Chile. He is president of the of International Paper Latin         
American Ltd.                                                                   

 Alberto Pulido has been a Director of Provida since 1999. He received a
law degree from the Catholic University of Chile. He is a partner at Philippi,  
Yrarrazabal, Pulido & Brunner law firm. Mr. Pulido is director of Scotia Bank   
and Axa Seguros.                                                                

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    The Extraordinary Shareholders Meeting held on April, 30, 2002 approved an
amendment of article 7th of Provida's Bylaws, in order to decrease the number   
of Board of Directors members from 10 to 8. The current Board members, who were 
elected on the Ordinary Shareholders Meeting, held right after the              
Extraordinary Shareholders Meeting, are: Miguel Angel Poduje Sapiain, Antonio   
Martinez-Jorquera Lloveras, Julio Gilsanz Arrola, Jesus Maria de las Fuentes    
Arambarri, Fernando Leniz Cerda, Jose Madariaga Lomelin, Maximo Pacheco Matte   
and Alberto Pulido Cruz.                                                        

Executive Officers                                                    

Gustavo Alcalde has been Chief Executive Officer since May 2, 1996. He
received his commercial engineering degree from the University of Chile.        

  Juan Carlos Reyes has been Chief Operation Officer since 1998. From 1994
to 1998 he served as Production Manager in AFP Provida. He received a           
mathematics civil engineering degree from the University of Chile.              

    Joaquin Cortez has been Chief Investment Officer since 1996. He received a
commercial engineering degree from the Catholic University of Chile and a       
Master of Arts in economics from the University of Chicago.                     

Carlo Ljubetic has been Chief Commercial Officer since year 2000. He  
received an industrial engineering degree from University Santiago of Chile.    

    Magdalena Aninat has been Human Resources Manager since 1993. She received
a psychology degree from the Catholic University of Chile.                      

Arnaldo Eyzaguirre has been Auditor Division Manager since 2003. He   
received commercial engineering degree from the Metropolitan Technological      
University of Chile and his Public Accountant-Auditor degree from the Central   
University of Chile.                                                            

  Maria Paz Yanez has been Planning & Control Division Manager since 2002.
She received a commercial engineering degree from the Catholic University of    
Chile.                                                                          

  Gabriel Galaz has been Accounting & Consolidation Division Manager since
2002. He is a university graduate in mathematics and physical from the          
University of Santiago of Chile.                                                

   Andres Vezspremy has been General Counsel since January 2002. He received
a law degree from University of Chile and a Master of Laws in International     
Legal Studies from the Washington College of Law in the United States of        
America.                                                                        

Compensation of Directors and Officers                                

 In 2002, the total compensation paid to each director of Provida was as
follows:                                                                        

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                          (in Thousands of Constant $Ch as of December 31, 2002)
                           -----------------------------------------------------
Directors                   Per Diem              Fees *               Total    
                           -----------------------------------------------------
Eduardo de Aguirre            10,162                   0                 10,162 
Miguel Angel Poduje           30,543                   0                 30,543 
Alberto Pulido                15,330               2,905                 18,235 
Fernando Leniz                15,330               2,905                 18,235 
Javier Palacios                5,139                 693                  5,832 
Alvaro Donoso                  5,139                   0                  5,139 
Jesus Maria de las Fuentes    12,991                 696                 13,687 
Maximo Pacheco                15,330                   0                 15,330 
Total                        109,963               7,199                117,162 
----------                                                                      
(*)  Fees received by participation in the Directors Committee.                 

  The aggregate amount of compensation paid by Provida to all Directors in
Fiscal Year 2002 was Ch$117 million, including the fees of Ch$74 million        
received by the directors members of the Directors Committee. The aggregate     
compensation of Provida's executive staff during Fiscal Year 2002, including 25 
managers (area and division) and 36 department chiefs, was Ch$2,523 million.    

  The plan of variable incentives known as "Direction Oriented to Results"
(DOR) has been in force which was implemented, first for managers during the    
year 2000 and extended to department chiefs in 2001. This evaluation system, is 
focused on the employees' reaching previously defined objectives during the     
period. DOR is composed mainly of three aspects: achievements of goals          
established in numerical terms (figures); achievements of goals not established 
in numerical terms, but related to tasks and responsibilities and finally,      
discretionary evaluation aimed to reinforce aspects in terms of efforts and     
external environmental factors which can affect worker's performance.           

Board Practices                                                       

The administration of Provida is conducted by its Board of Directors  
which, in accordance with Provida's current by-laws, consists of eight members  
who are elected at the annual ordinary shareholders' meeting for a term of      
two-years. Cumulative voting is permitted for the election of Directors.        

  Until August 30, 2002, the Board of Directors was made up of 10 members.
On April 30, 2002, the extraordinary shareholder's meeting reduced this number  
to 8. The current Directors will hold their positions until the Ordinary        
shareholders' meeting that will take place during the first quarter of 2004.    
Scheduled meetings of the Board of Directors are held once a month.There are no 
directors' service contracts with the Company or any of its subsidiaries        
providing for benefits upon termination of employment.                          

Directors Committee                                                   

Regarding the Law No. 19,705 enacted in December 2001 which regulates 
tender offers and establishes norms about corporate governance, and Circular    
1,526 of February                                                               

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2001, issued by the SVS, the Directors Committee concept was created. At the    
Board of Directors' meeting held on May 29, 2001 Provida elected the members of 
its first committee to begin on that date. This committee replaced the          
functions developed by the old audit committee. Later on, during the Board of   
Directors' meeting held on May 28, 2002, and given the renewal of the Board in  
the Ordinary Shareholder's meeting that took place on April 30, 2002 the Board  
of Directors was renewed, being its current members Director Mr. Fernando Leniz 
as a President, Mr.Alberto Pulido and Mr. Jesus Maria de las Fuentes. The       
current members will hold their position until renewal of the Board of          
Directors.                                                                      

The Directors Committee examines the reports of internal and external 
auditors, as the case may be, the balance sheet and other financial statements  
presented by the administrators or liquidators of the company to the            
shareholders; and renders an opinion on them prior to their presentation to the 
shareholders for approval. The Directory Committee also proposes the external   
auditors and private risk rating agencies, if is pertinent to the Board of      
Directors, in order to present such proposition, at the respective              
shareholders' meeting. In the event of a disagreement with the Directors        
Committee, the Board of Directors may make its own suggestion and both may be   
submitted for consideration at the shareholders' meeting. Finally, the          
Directory Committee examines the information relative to transactions with      
related parties and prepares a report on those transactions, which is submitted 
to the Board of Directors for consideration when the Board makes a decision on  
such transaction.                                                               

Employees                                                             

The following chart sets forth Provida's organizational structure and 
related numbers of employees for major operating areas as of March 31, 2003:    

[GRAPHIC OMITTED]                                                               

 Total number of employees as of March 31, 2003: 1,739

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    The daily operations of Provida are supervised by the general manager, who
is the Chief Executive Officer of Provida. The General Counsel, Controller,     
Human Resources, Planning & Control and Accounting & Consolidation Managers and 
four Area Managers of Provida report directly to the General Manager. The Area  
Managers or Officers are: (i) the Chief Commercial Officer, (ii) the Chief      
Investment Officer, and (iii) the Chief Operation Officer. The Chief Executive  
Officer, the three Area Officers, the Human Resources Manager and the General   
Counsel are members of the Management Committee. Although each of these persons 
manages a distinct area or division of Provida, they coordinate many of their   
day-to-day activities. Provida's executive officers are appointed by the Board  
of Directors and hold office at its discretion. Provida believes it has one of  
the most experienced senior management teams in the AFP industry.               

   As of December 31, 2002, Provida had 1,771 employees: 652 employees, were
members of the sales force representing 37% of Provida's total staff. As of     
December 31, 2001, Provida had 1,866 employees, of which 665 were members of    
the sales force, representing 36% of Provida's total staff. As of December 31,  
2000, Provida had 2,142 employees, of which 898 employees were members of the   
sales force, representing 42% of Provida's total staff.                         

Continuity of BBVA Model. One of the most important facts in 2002 was 
functional and/or geographical mobility, main way of development and promotion  
of workers.                                                                     

A total of 162 cases of functional mobility and 32 of geographical    
mobility were registered during the year, which represent a 17.3% of the        
administrative staff. Of these, 92 cases correspond to promotions.              

 In the field of Schemes of Performance Evaluation, Valuation of Ability
Program VBA (Annual Basic Valuation) was applied to all workers of the company  
with exception of sales agents. In year 2002, chiefs were trained to evaluate   
and to "feedback" their collaborators.                                          

The feedback process allowed each worker to know the development of   
abilities included in the VBA. Likewise, workers and chiefs could define        
improvement standards for year 2003.                                            

Human Resources Staff. At the beginning of 2002, Provida had 1,866    
employees, whereas at the close of that period the number of workers ascended   
to 1,771 of which 652 were salespeople and 1,119 administrative employees.      

Programs of Training. During the year 2002, training had special      
importance. 318 training activities were carried out, corresponding 308 to      
presencial courses and 10 to on line courses. As far as the number of           
participants is concerned, there were 7,710, of which 3,525 corresponded to     
presencial activities and 4,185 to on line activities. The total of man/hour    
during the year ascended to 90,793, equivalent to 51 hours of training per      
worker per year (6.4 days).                                                     

The on line training had special relevance owing to the @-learning    
technological platform incorporated during the months of February, March and    
April. The voluntary                                                            

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pension savings course was presented through this platform for 800 sales        
agents. The platform allowed creating a learning community, where each student  
could make questions, satisfy his/her doubts and deepen concepts, through tools 
like discussion forums, chats and other alternatives within this virtual        
campus. Participation of workers reached 90% with an average evaluation of 78%. 
Likewise, the Program "Prevision 2000" continued with on line courses, offering 
5 courses in the year.                                                          

   The development of a "Culture of Service" is a key factor in the Company,
for that reason, the Company decided to continue with the Quality of Service    
Program that had 9 presencial workshops and distance tutoring for those Service 
Centers with major employees.                                                   

   Training for chiefs constitutes a strategic concept in BBVA Group. During
the year the program Commercial Management of AFP's for chiefs of the           
Commercial Area of Provida was developed. They continued with the program       
Managerial Development in Universidad Catolica, in which 13 managers            
participated. In order to apply Annual Basic Valuation program successfully     
(VBA) chiefs were trained through 10 workshops. In the middle of the year the   
workshop called "Training to trainers for an effective management" took place   
with the participation of 4 workers of Provida, 3 of BBVA Banco Bhif and        
workers of AFPs of BBVA Pensiones America, who will be able to train chiefs in  
their respective organizations.                                                 

  The support given by the network of experts and pension trainers both in
Santiago and regions was fundamental to develop the knowledge of Commercial     
Area workers.                                                                   

    According to the collective labor contracts in force, for the second time,
the Company offered Courses of Free Election that benefited 204 workers who     
chose to take courses such as computing, English, human resources and financing 
among others.                                                                   

 Labor Unions. Provida believes it has good relations with its employees
and its labor unions, and has never experienced a strike or walk out. Provida's 
workers are represented by two labor unions. The Sindicato No. 1 de             
Trabajadores de AFP Provida S.A. ("Sindicato No.1"), was established in 1986    
and is the oldest one. As of December 31, 2002 its membership consisted of      
41.26% of the work force, of which 583 workers are sales agents and the rest    
are comprised of administrative staff. The second union, Sindicato No. 2 de     
Trabajadores de AFP Provida S.A. ("Sindicato No. 2") was established in 1997    
and represents only administrative employees. As of December 31, 2002 its       
membership consisted of 32.87% of the Company's employees.                      

Both Labor Unions, Sindicato No.1 and Sindicato No.2, presented its   
collective bargaining agreement on October 1, 2002, which is effective from     
that date on and expires on January 31, 2005 and on December 31, 2004           
respectively. It should be pointed out that Provida has applied the terms of    
the collective bargaining agreements equally to both its unionized and          
non-unionized employees.                                                        

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Item 7. Major Shareholders and Transactions with Related Parties

The Administradora de Fondos de Pensiones PROVIDA S.A. is a publicly  
traded Corporation with an equity divided into 331,316,623 Common Stocks of     
only series, nominative cases and without nominal value; instrument that grants 
such right of vote to each one of the shareholders. Since July 1, 1999, Provida 
is controlled by its major shareholder BBVA Pensiones Chile S.A., with a        
participation of 51.619% in the share capital. The balance of the subscribed    
and paid shares is distributed among small investors whose total includes       
Directors and Executive Officers of Provida with participation less than 1%.    

At December 31, 2002, Shares were distributed as it follows:          

                                                        [Enlarge/Download Table]
                                                            Number of Shares of Common       Percentage      
Name of Shareholder                                                Stock Owned               Ownership       
-------------------------------------------------------------------------------------------------------------
                                                                                                             
BBVA Pensiones Chile S.A.                                         171,023,573                  51.62%        
The Bank of New York (1)..................................         75,639,690                  22.30%        
Deposito Central de Valores S.A. (2)......................         34,727,913                  10.48%        
Directors y Executive Officers as a group ................            148,213                   0.04%        
----------                                                                                                   
(1)  Depositary Bank of A.D.S acting Banco de Chile as a custodian.                                          
(2)  Local Share Depositary corresponding to Stock Exchange, Stockbrokers,                                   
     Mutual Fund Administrators, Foreign Investment Mangers, Insurance Company,                              
     etc.                                                                                                    

The shares registered on behalf of Directors and Executives are the   
following:                                                                      

                                                Number of Shares of Common
Name of Shareholder                Position                Stock Owned          
--------------------------------------------------------------------------------

Miguel Angel Poduje Sapiain........Director                   5,250             
Juan Carlos Reyes M. and spouse ... Officer                  87,499             
Carlo Ljubetic R................... Officer                  28,589             
Mario Picero C..................... Manager                    1,905            
Gabriel Galaz G.................... Manager                    9,000            
Roberto Vaccaro Y.................. Manager                    5,000            
Julio Cesar Gonzalez O............. Manager                    9,000            
Pablo Aichele G.................... Manager                    1,970            

Related Party Transactions                                            

   Article 89 of the Chilean Companies Law requires that a Chilean company's
transactions with related parties be on a market basis or on terms similar to   
those customarily prevailing in the market. Directors and executive officers of 
companies that violate Article 89 are liable for losses resulting from such     
violation. In addition, Article 44 of the Chilean Companies Law stipulates that 
any transaction in which a director has a personal interest or is acting on     
behalf of a third party may be approved only when the board of directors has    
been informed of such director's interest and the terms of the transaction are  
similar to those prevailing in the corresponding market. Interested directors   
shall be excluded from all decisions of the Board related to the transaction.   
Resolutions approving such transactions must be reported to the company's       
shareholders at the next shareholders' meeting. Violation of Article 44 may     
result in administrative or criminal                                            

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sanctions and civil responsibility to the company, shareholders or    
interested third parties that suffer losses as a result of such violation.      
Provida has from time to time entered into transactions with various companies  
that have affiliations with some of its directors who also exercise control     
over the principal shareholders. Provida believes that all those transactions   
have been carried out in compliance with the provisions of Articles 44 and 89   
of the Chilean Companies Law.                                                   

   The last three years, Provida has transacted business with companies that
are under common ownership with Provida, including BBVA Pensiones Chile S.A.,   
BBVA Banco Bhif S.A. and Bhif Corredores de Bolsa S.A. Additionally, Provida    
had related transactions with companies that were under common ownership with   
Provida until June 30, 1999, including CorpBanca S.A., Corp Corredores de Bolsa 
S.A., COPESA, Corp Group S.A and its subsidiaries, and Saionara S.A. During the 
period, Provida also has had related transactions with affiliate companies      
including AFP Porvenir (El Salvador), AFC and PreviRed.com.                     

   Provida entered into short-term repurchase agreements, financial services
and forward contracts with CorpBanca S.A. and its subsidiary, Corp Corredores   
de Bolsa S.A. Alvaro Saieh, Nicolas Abumohor, Odde Rishmague and Juan Pablo     
Diaz have been directors or principal shareholders of both Provida and          
CorpBanca S.A. The total amount of these transactions in Fiscal Year 1999 was   
Ch$38,048 million representing a gain for Provida of Ch$1,114 million in Fiscal 
Year 1999.                                                                      

 Provida entered into certain advertising contracts with COPESA in which
Alvaro Saieh and a brother of Nicolas Abumohor play important roles. Such       
contracts resulted in a loss of Ch$45 million for Provida in Fiscal Year 1999.  

In Fiscal Year 1999, Provida purchased office furnishings amounting to
Ch$8 million from Saionara S.A., an enterprise owned by a brother of Nicolas    
Abumohor.                                                                       

   In Fiscal Year 1999, Provida received Ch$182 million from rentals to Corp
Group and its subsidiaries, in which the following directors of Provida,        
Nicolas Abumohor, Maria Soledad Saieh, Odde Rishmague and Jorge Andres Saieh    
had a significant interest.                                                     

    During Fiscal Year 1999, Provida received Ch$174 million from Porvenir (El
Salvador) for a sale of software. Provida was a shareholder of Porvenir (El     
Salvador) until August 2000.                                                    

 The acquisition of AFP Proteccion, paid through Provida's assumption of
BBVA Pensiones Chile S.A. pre-existing debt (previously Corp Group Pensiones),  
resulted in financial costs for Provida of Ch$6,442 million in Fiscal Year      
1999, Ch$1,633 million in Fiscal Year 2000, Ch$1,061 million in Fiscal Year     
2001, Ch$496 million in Fiscal Year 2002 and Ch$41 million in the first quarter 
of 2003. In addition, Provida received Ch$8 million during Fiscal Year 1999,    
Ch$34 million during Fiscal Year 2000, Ch$35 million during Fiscal Year 2001,   
Ch$57 million during Fiscal Year 2002 and Ch$10 million in the first quarter    
2003 for rentals from BBVA Pensiones Chile S.A., which is the principal         
shareholder of Provida.                                                         

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Provida entered into short-term repurchase agreements and financial   
services with Banco Bhif S.A. and its subsidiary, Bhif Corredores de Bolsa S.A. 
The total amount of these transactions in Fiscal Year 1999 was Ch$19,433        
million, which resulted in a gain of Ch$9 million for Provida. In Fiscal Years  
2000, 2001and 2002, Bhif Corredores de Bolsa S.A. provided additional financial 
services to Provida at a cost of Ch$83 million, Ch$60 million and Ch$55         
million, respectively. In the first quarter of Fiscal Year 2003, this cost was  
Ch$10 million. The BBVA Group is the principal shareholder of both Provida and  
Banco Bhif S.A.                                                                 

    In Fiscal Years 2001 and 2002, PreviRed.com provided electronic collection
services to Provida at a cost of Ch$0.3 million and Ch$4 million, respectively, 
while in the first quarter of 2003, this cost reached Ch$4 million. In March    
2002, Provida entered into a merchant account agreement with PreviRed.com, a    
Company in which Provida has a 37.8% equity interest. Pursuant to this          
Agreement Provida loaned PreviRed.com UF 12,852 (approximately US$310,000), to  
be repaid on December 31st, 2003, with a monthly floating interest to be        
established based on the average of the last 5 days of the corresponding month  
of the TIP (Average Interest Rate), as informed by the Central Bank for non     
index loans with maturity between 30 and 89 days.                               

In April 2002, Provida issued a guaranty in the amount of UF226,800   
(approximately US$5.5 million), in favor of Sociedad Administradora de Fondos   
de Cesantia de Chile S.A. ("AFC"), a company in which Provida has a 37.8%       
equity interest, to secure bank bonds that guarantee AFC's obligations under    
the Mandatory Unemployment Insurance Management Agreement. Additionally,        
Provida entered into a Technological Services Agreement with AFC for an amount  
of US$3,850,000, for a term of 10 years, by which Provida will provide certain  
technological services to the AFC. In October of the same year, and having      
returned the bank bonds previously mentioned and rescinding such guaranty,      
Provida gave a joint and indivisible guaranty of UF151, 200 (approximately      
US$3.7 million) in favor of AFC intended to obtain bank bonds guaranties to     
ensure faithful fulfillment of the contract. AFP Provida perceived revenues for 
Ch $216 million due to the rendering of services mentioned above.               

   In January 2003, the Board of Directors approved the following operations
with related people. All operations are adjusted to conditions similar to the   
ones prevailing in the market.                                                  

 -    Several Property Rental Contracts with BBVA Banco BHIF for a total
amount of UF 81,289 (approximately US$2 million).           

    -    Collection Contract of pension contributions with BBVA Banco BHIF for
a total amount of UF 0.022 per contribution payroll.        

-    Pension Payment Contract with BBVA Banco BHIF for an amount of UF
0.0264 for cash or check pension payments                   

  -    Property Rental Contract to BBVA Pensiones Chile S.A. for an annual
amount of UF 8,000 approximately (US$200,000).              

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 Item 8. Financial Information

Audited Consolidated Financial Statements                             

See "Item 18. Financial Statements" for a list of audited consolidated
financial statements and other financial information filed with this annual     
report. Provida's financial year ends on December 31.                           

Legal Proceedings                                                     

Provida is subject to certain claims and is party to certain legal    
proceedings inherent to the normal course of its business. Provida does not     
believe that any liabilities related to such claims and proceedings, in the     
aggregate, are likely to have a materially adverse effect on its consolidated   
financial statements or its results of operations.                              

    In April 1993, the Company's Labor Union filed a suit before the Courts to
collect alleged differences in legal bonuses, sustaining that the stipulations  
and payments for conventional bonuses in substitution of legal bonuses were     
less than what they were owed and the difference should be paid until reaching  
30% of profits. They also claimed collection of alleged differences in the      
payment called "Performance Bonus" for 1990 and 1991. Subsequently, in April    
1995, they filed a new claim for the same reasons for 1992 and 1993, which were 
repeated for 1994 and 1995 in claims filed in March and April of 1997. They     
again filed a suit in April 2000 for differences in bonuses corresponding to    
1998. In the opinion of labor advisors, the outcome of these lawsuits will have 
no effect on the equity of Provida since the Company's defense was sustained by 
a first-instance decision rendered August 19, 2000, which rejected the first    
claim. That ruling is currently being appealed before the Court of Appeals of   
Santiago.                                                                       

In 2002, Provida was sued to compensate supposed damages for an       
approximate amount of US$250,000, due to plaintiff was affiliated to Provida    
without having fulfilled an application form for that purpose. With respect to  
the above, Provida received a pension contribution from a social security       
entity "Caja de Compensacion de Asignacion familiar" on behalf of the plaintiff 
and according to the law currently in force, Provida is not entitled to refuse  
a contribution payment. The SAFP has regulated these kind of situations,        
creating a procedure to regulate such payments, which consists of affiliating   
the person and creating an individual pension account. As far as this person    
claimed on her situation and it was possible to find out that she contributed   
to INP, SAFP was requested to rescind her affiliation to Provida, which was     
authorized in conformity to procedures established by SAFP.                     

Dividend Policy                                                       

Historically, Provida has paid a significant portion of its income as 
dividends. The dividend ratio for the twelve months ended December 31 of Fiscal 
Years 1997 and 1998 were equal to 80.0% and 77.0% of the net income of each     
period respectively. These dividend ratios were in accordance with the dividend 
policy Provida adopted in the third quarter of 1994, which called for the       
payment of annual dividends of between 70% and 80% of Provida's annual net      
income. At the ordinary shareholders' meeting in April 1999,                    

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a dividend policy was adopted that called for the payment of annual dividends   
equal to the legal minimum (30%) and not exceeding 80% of Provida's annual net  
income, in light of the acquisitions of AFP Union and Proteccion.               

    One year later, at the ordinary shareholders' meeting in April 2000, a new
dividend policy was adopted, calling for the payment of annual dividends        
equivalent to 50% of Provida's annual net income, in light of the partial       
prepayment of the debt it assumed to acquire the AFP Union and Proteccion with  
the proceeds of the capital increase made at the end of Fiscal Year 1999. At    
the ordinary shareholders' meeting in April 2001, the Board informed its        
intention of paying annual dividends for the twelve months ended December 31,   
2001 ("Fiscal Year 2001") of not more than 70% of Provida's annual net income   
that was ratified in the shareholders' meeting in April 2001. In such meeting,  
the Board informed its intention of paying annual dividends for the twelve      
months ended December 31, 2002 ("Fiscal Year 2002") of not more than 80% of     
Provida's annual net income that was ratified in the shareholders' meeting in   
April 2003. Finally, in the latter meeting the Board informed its intention of  
maintaining a level of annual dividends in not more than 80% of Provida's       
annual net income for the twelve months ended December 31, 2003 ("Fiscal Year   
2003").                                                                         

 Dividends per share of each respective period
(in Ch$ as of December 31, 2002)
                        1997        1998        1999        2000        2001
                          ------------------------------------------------------
Total dividend (1)......  41.94       51.58       22.40       48.45       70.19 
Dividend ratio (2)......   80%         77%         33%         50%         70%  
----------                                                                      

(1). The historical dividends per share were adjusted by the effective increase 
   in the number of issued shares of Common Stock through the exchange of 15
new shares of Common Stock for each old one on August 25, 1999.       
(2). Annual dividends for the corresponding annual net income.                  

 Item 9. The Offer and Listing

General                                                               

   The Chilean stock markets are sophisticated and developed, reflecting the
particular economic history and development of Chile. The Chilean government's  
policy of privatizing state-owned companies, which was implemented during the   
1980s, led to an expansion of private share ownership, resulting in an increase 
in the importance of stock markets in Chile, which are regulated by the SVS.    
Certain elements of Chile's stock markets, including pension fund investors,    
are highly regulated with respect to investment and remuneration criteria, even 
though Chile's stock markets are generally less regulated than U.S. stock       
markets with respect to disclosure requirements and information usage.          

History and Description                                               

The Santiago Stock Exchange was established in 1893 and is a private  
company whose equity consists of 48 shares held by 48 shareholders. As of       
December 31, 2002, 268 companies had shares listed on the Santiago Stock        
Exchange. The Santiago Stock Exchange is Chile's principal exchange and         
accounts for approximately 72.4% of all equity                                  

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traded in Chile. Approximately 26.1% of equity trading is conducted on the      
Chilean Electronic Stock Exchange, an electronic trading market that was        
created by banks and brokerage houses non-member of the Stock Exchange. The     
remaining 1.5 % of equity is traded on the Valparaiso Stock Exchange.           

   Equities, closed-end funds, fixed-income securities, short-term and money
market securities, gold and US dollars are traded on the Santiago Stock         
Exchange. In 1991, the Santiago Stock Exchange initiated a futures market with  
two instruments: US dollar futures and Selective Shares Price Index (the        
"IPSA") futures and, in 1994, a stock options market. Equities are traded both  
through an open voice auction system (a firm offers system or daily auction)    
and an Electronic System called Telepregon. Trading through the open voice      
system occurs on each business day in two sessions, from 11:00 a.m. to 11:30    
a.m. and from 4:00 p.m. to 4:30 p.m. only for high volume stocks. Telepregon    
operates continuously from 9:30 a.m. to 4:30 p.m. The Electronic Stock Exchange 
of Chile operates continuously from 9:30 a.m. to 4:30 p.m. on each business     
day.                                                                            

There are two share price indexes for the Santiago Stock Exchange: the
General Share Price Index (the "IGPA") and the Selective Share Price Index      
("IPSA"). The IGPA is calculated using the prices of over 180 issues and is     
broken into five main sectors: banks and finance, farming and forest products,  
mining, industrial, and miscellaneous. The IPSA is a major company index,       
currently including the Exchange's 40 most traded stocks. Shares included in    
the IPSA are weighted according to the value of shares traded and represent     
more than 56% of the entire market capitalization. Currently Provida's Common   
Stock is included in the IGPA and the IPSA.                                     

    The table below summarizes recent value and performance indicators for the
Santiago Stock Exchange:                                                        

                                                        [Enlarge/Download Table]
                                       Market            Annual Trading            IGPA         IPSA Index  
As of:                           Capitalization (1)       Volume (1)(2)         Index (3)          (3)      
------------------------------------------------------------------------------------------------------------
                                    (US$ billion)         (US$ million)                                     
                                                                                                            
December 31, 1998..............         51.8                 4,419.4               73.32           87.34    
December 31, 1999..............         68.2                 6,601.2              105.41          124.94    
December 31, 2000..............         60.4                 5,777.9               99.30          120.44    
December 31, 2001..............         56.0                 4,110.7              110.08          131.40    
December 31, 2002..............         48.1                 3,399.1              102.37          111.06    
------------------------------------------------------------------------------------------------------------
----------                                                                                                  
Source: Santiago Stock Exchange.                                                                            

(1)  US dollar equivalents for the year-end stock market capitalization and                                 
     trading volume figures are translated at the Observed Exchange Rate for                                
     the last day of such period.                                                                           
(2)  Reflects annual trading volume.                                                                        
(3)  Index base = 100 on December 31, 1996.                                                                 

Volatility                                                            

The IPSA has decreased at an annualized real rate of -4.3% (with a    
standard deviation of 22.3%) for the period from December 31, 1996 to December  
31, 2002. During 2002, the IPSA decreased by -17.8% in real terms. As the table 
below shows, swings in                                                          

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market performance are often dramatic and reflect the high level of volatility  
characteristic of the Santiago Stock Exchange:                                  

           Real Annual % Change in
Year                           IGPA Index        IPSA Index                     
----------------------------------------------------------------                

1998.....................        (28.4)            (26.1)                       
1999.....................         40.5              39.8                        
2000.....................         (9.9)             (7.8)                       
2001.....................          8.1               6.3                        
2002.....................         (9.6)            (17.8)                       
----------------------------------------------------------------                
----------                                                                      
Source: Santiago Stock Exchange.                                                

Liquidity                                                             

As of December 31, 2001 and 2002, the aggregate market value of equity
securities listed on the Santiago Stock Exchange reached to US$56.0 billion and 
US$48.1 billion, respectively. The ten largest companies on the Santiago Stock  
Exchange represented approximately 67% and 70% of the IPSA index market         
capitalization, in 2001 and 2002 respectively. The average monthly trading      
volumes for the years ended December 31, 2001 and 2002 were US$343 million and  
US$283 million, respectively.                                                   

Foreign Ownership                                                     

  Foreign investment in Chile is governed by Decree Law No. 600 and by the
Central Bank Act. See "Item 10. Additional Information--Exchange Controls."     
Until May 2000, capital could not be remitted outside Chile less than one year  
from the date of an investment if governed either by Decree Law No. 600 or the  
Central Bank Act, although earnings could be remitted at any time. The Central  
Bank, in its meeting of May 11, 2000, decided to end the restriction on capital 
outflows. Capital and earnings, however, must be remitted through the Formal    
Exchange Market.                                                                

Notwithstanding the foregoing, an investment in Chilean shares by     
foreigners through an ADS program is governed by the Central Bank Act and by    
Chapter XXVI, which does not require a holding period before remitting capital  
or earnings abroad. Even though Chapter XXVI was repealed on April 2001, it is  
still applicable for foreign investment contracts executed before that date.    
See Item 10.                                                                    

   Foreign capital investment funds ("FCIFs") are governed by Law No. 18,657
and are permitted to receive preferential tax treatment. FCIFs are required to  
obtain a favorable report issued by the SVS, in which case capital may not be   
remitted earlier than five years after the investment is made, although         
earnings may be remitted at any time. An FCIF may hold a maximum of 5% of a     
given company's shares, although this can be increased if the company issues    
new shares. Furthermore, no more than 10% of an FCIF's assets may be invested   
in a given company's stock, and no more than 25% of the outstanding shares of   
any listed company may be owned by FCIFs, taken together.                       

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Market Information                                                    

    Since November 16, 1994, Provida's American Depositary Shares (the "ADSs")
have been listed on the New York Stock Exchange under the symbol "PVD". Until   
August 25, 1999, each ADR represented one Common Stock, while after the         
increase in Provida's paid-in capital it became to represent fifteen shares of  
Common Stock. Until February 7, 1996, the ADSs were issued by The Chase         
Manhattan Bank N.A. as depositary (the "Depositary"). Since that date,          
Provida's ADSs have been issued by the Bank of New York as the successor        
depositary (the "Successor Depositary"). In addition to approximately 22.83% of 
the Common Stock held by the Depositary, as of December 31, 2002 approximately  
48.38% of the outstanding capital stock of Provida was held by shareholders     
other than the Principal Shareholder.                                           

The Common Stocks are currently traded on the Santiago Stock Exchange,
Valparaiso Stock Exchange and the Chilean Electronic Stock Exchange. In Fiscal  
Year 2002, the Santiago Stock Exchange accounted for approximately 72.4% of the 
trading volume of the shares of Common Stock in Chile, while the Valparaiso     
Stock Exchange accounted for 1.5% and the Chilean Electronic Stock Exchange     
accounted for 26.1%. Provida estimates that during 2002, its shares of Common   
Stock were traded on approximately 85% of the trading days on the Santiago      
Stock Exchange, while in the Chilean Electronic Stock Exchange they were traded 
on approximately 89% of the trading days.                                       

  The table below shows, for the periods indicated, the quarterly high and
low closing prices in pesos of the Common Stock listed on the Santiago Stock    
Exchange, the quarterly high and low trading prices expressed in dollars per    
ADS on the New York Stock Exchange (each ADS represents fifteen shares), as     
well as, the monthly values for the first quarter of year 2003. See             
"Presentation of Information" for the exchange rates applicable during the      
periods set forth below.                                                        

               Santiago Stock Exchange              NYSE
                       Ch$ per share (1)            US$ per ADS(2)
                       -----------------            --------------

--------------------------------------------------------------------------------
   Period               High          Low          High          Low
--------------------------------------------------------------------------------
1997                                                                            
1st Quarter.............     646.67        524.00       24.13         18.88     
2nd Quarter.............     613.33        480.00       21.88         18.00     
3rd Quarter.............     620.00        493.33       21.69         18.56     
4th Quarter.............     533.33        466.67       17.13         16.75     
1998                                                                            
1st Quarter.............     577.00        466.67       19.00         15.88     
2nd Quarter.............     555.33        506.67       19.25         16.69     
3rd Quarter.............     583.33        416.67       19.25         12.75     
4th Quarter.............     480.07        386.67       15.63         12.00     
1999                                                                            
1st Quarter.............     613.33        400.00       18.75         12.38     
2nd Quarter.............     800.00        613.33       23.19         19.19     
3rd Quarter.............     833.33        690.00       24.44         20.06     
4th Quarter.............     770.00        620.00       21.50         16.94     
2000                                                                            
1st Quarter.............     771.00        670.00       21.56         19.50     
2nd Quarter ............     736.10        690.00       21.75         19.50     
3rd Quarter ............     815.00        735.00       21.50         19.88     

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               Santiago Stock Exchange              NYSE
                       Ch$ per share (1)            US$ per ADS(2)
                       -----------------            --------------

--------------------------------------------------------------------------------
   Period               High          Low          High          Low
--------------------------------------------------------------------------------
4th Quarter ............      810.00        770.00      21.25         20.02     
2001                                                                            
1st Quarter.............      965.00        780.00      24.45         20.40     
2nd Quarter ............    1,005.00        920.00      24.45         22.64     
3rd Quarter ............    1,220.00      1,000.00      27.16         22.70     
4th Quarter ............    1,170.00      1,050.00      27.50         23.34     
2002                                                                            
1st Quarter..............   1,175.00      1,005.00      26.61         22.76     
2nd Quarter ............    1,130.00      1,015.00      25.10         22.54     
3rd Quarter ............    1,110.00        980.00      22.84         20.16     
4th Quarter ............    1,115.00      1,035.00      23.80         22.09     
October.................    1,100.50      1,035.00      21.10         20.90     
November ...............    1,095.00      1,040.00      23.40         22.40     
December................    1,115.00      1,070,00      23.65         22.70     
2003                                                                            
1st Quarter.............    1,130.00      1,090.00      23.09         21.62     
January.................    1,120.00      1,090.00      23.09         22.36     
February ...............    1,125.00      1,100.00      22.65         22.13     
March ..................    1,130.00      1,110,00      22.60         21.62     
----------                                                                      
Source: Santiago Stock Exchange-Official Quotations Bulletin.                   

(1)  Pesos per share reflect the nominal closing price at the trade date. The   
  historical closing prices were adjusted by the effective increase in the
number of issued shares of Common Stock through the exchange of 15 new
shares of Common Stock for each old one on August 25, 1999.           

(2)  Each ADS represents 15 shares.                                             

On March 31, 2003, the closing sales price for the shares of Provida's
Common Stock on the Santiago Stock Exchange was Ch$1,115.00 per share of Common 
Stock or US$22.99 per ADS, assuming each ADS represented fifteen shares of the  
Common Stock, converted at the Observed Exchange Rate of Ch$727.37 = US$1.00 on 
the same date.                                                                  

On March 31, 2003 the closing sales price for the ADSs on the New York
Stock Exchange was $22.30 per ADS.                                              

It is not possible for Provida to determine the proportion of ADSs    
beneficially owned by U.S. persons.                                             

 Item 10. Additional Information

Memorandum and Articles of Association                                

Organization and Register                                             

Provida is a sociedad anonima organized under the laws of Chile. The  
Company's deed of incorporation was executed on March 3, 1981 and was inscribed 
in the Registry of Commerce of Santiago on April 6, 1981, on number 6,060,      
section 2,913. The by-laws of the Company were amended and restated at the      
shareholders' meeting held on April 23, 2000; furthermore, on April 27, 2001    
they were amended again. A translation of the amended and restated by-laws has  
been filed as an exhibit to this annual report.                                 

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Purpose                                                               

Article 4 of the Company's Amended and Restated by-laws ("Estatutos   
Sociales") stipulates that the Company's corporate purpose establishing that:   
"The Company general purpose is (i) administer the Pension Funds established by 
law (ii) provide and administer the benefits established in the Decree Law      
3,500 from 1980 and its amendments and those specifically authorized by other   
present or future legal dispositions; (iii) constitute and/or participate, as   
and addition to its business, affiliate corporations pursuant to Article 23 and 
23 bis of said Decree Law 3,500 (iv) to carry out activities authorized by law  
constituting and/or participating in subsidiary or united corporations          
authorized by law and/or by the Superintendence of Pension Fund Administrator   
as agreed to, and (v) constitute and/or participate in corporations constituted 
as securities custody companies referred to in Law 18,876".                     

Board of Directors                                                    

 Management of Provida is vested in its Board of Directors. According to
the Estatutos Sociales, the board of directors is to consist of 8 members, who  
may be reelected. Their terms last two years, at the end of which time new      
elections are held. Meetings of the Board shall be held at least once a month,  
they are validly held with the attendance of at least of five of its members,   
and the Board's resolutions should be passed by an absolute majority vote of    
the directors in attendance.                                                    

(a) There are no provisions in the Estatutos Sociales relating to the 
power of directors or officers to vote on a proposal in which a conflict of     
interest exists or may exist. However under Chilean law, the Board of Directors 
must decide previously whether the transaction adheres to arm's length          
conditions similar to those usually prevailing on the market and if it is       
deemed impossible to determine those conditions, the board may approve or       
reject the transaction or appoint two arbiters that will be requested to issue  
a report regarding the transaction. Interested directors shall be excluded from 
all decisions of the board related to the transaction.                          

    (b) The aggregate compensation of the board of directors is decided at the
ordinary shareholders meeting.                                                  

(c) There are no provisions in the Estatutos Sociales relating to     
borrowing powers of the directors.                                              

 (d) There are no provisions in the Estatutos Sociales setting forth age
limits or retirement requirements for directors and officers.                   

(e) According to the Estatutos Sociales, directors do not need to be  
shareholders of the Company to be appointed.                                    

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Shares                                                                

    The Company's share capital is divided into 331,316,623 ordinary shares of
the same series. Each ordinary share entitles the holder thereof to one vote    
and to share in any distributions in proportion to the number of shares that    
they own. Holders of the ordinary shares have the right to subscribe for new    
shares that maybe issued by the Company from time to time in proportion to the  
shares they hold at the time of the increase.                                   

    (a) There are no provisions in the Estatutos Sociales setting forth a time
limit for dividend entitlements to lapse. All shares are entitled to the same   
dividend payments. However, in accordance with the rule currently in force, if  
five years pass by since a dividend was available for a shareholder, and the    
latter has not charged it, the dividend will go to the Chilean Fire Department. 

    (b) There are no provisions in the Estatutos Sociales concerning staggered
intervals for the reelection of directors or permitting or requiring cumulative 
voting.                                                                         

(c) All shares have the right to share in the Company's net income.   
According the Estatutos Sociales, the Company is required distribute annually   
as a cash dividend to the shareholders, in proportion to their shares, at least 
thirty percent of the net profits of each fiscal year.                          

 (d) In case of liquidation, this will be carried out by the SAFP, which
will also liquidate the pension funds administered. According to law, all       
shares have the same right to share in any surplus in case of a liquidation of  
the Company after settlement of all outstanding debts.                          

(e) There are no redemption provisions in the Estatutos Sociales.     

(f) There are no sinking fund provisions in the Estatutos Sociales.   

  (g) All of the Company's shares are issued and fully paid. Consequently,
the shareholders are not subject to further capital requirements.               

(h) There are no provisions in the Estatutos Sociales discriminating  
against any existing or prospective holder of such securities as a result of    
such shareholder owning a substantial number of shares.                         

    In order to modify the rights of shareholders, the Estatutos Sociales must
be amended to reflect such modification. The Estatutos Sociales can be amended  
only through a resolution passed at an extraordinary shareholders' meeting.     

According to the Estatutos Sociales, the shareholders meetings can be 
ordinary or extraordinary. The ordinary shareholders meeting must take place    
within four months following the closing of each fiscal year. Any other general 
shareholders' meeting is an extraordinary meeting. Generally, the Board of      
Directors calls the shareholders' meeting; however, it can be requested by the  
SAFP, other institutions authorized by the law or by shareholders representing  
at least 10% of the fully paid and issued shares. Notice of the                 

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meeting must be published in a newspaper of general circulation in the domicile 
of the Company three times on three different days.                             

    The Estatutos Sociales do not describe any limitation on the rights to own
the shares of the company.                                                      

   There are no provisions in the Estatutos Sociales governing the ownership
threshold above which shareholder ownership must be disclosed. Nevertheless, in 
accordance with the law if a controller shareholder had 66.66% of the capital   
stock of the society, he would be forced to make a public offering ("OPA") for  
the rest of shareholders, within a period established by law.                   

   There are no provisions in the Estatutos Sociales imposing more stringent
conditions than those required by law to change the capital of the Company.     

For a complete translation of the Company's Estatutos Sociales, see   
Exhibit 2.                                                                      

Material Contracts                                                    

 Provida does not have material contracts that differ from those entered
into the ordinary course of business.                                           

Exchange Controls                                                     

  The Central Bank is responsible for, among other issues, monetary policy
and exchange controls in Chile. Appropriate registration of a foreign           
investment in Chile grants the investor access to the Formal Exchange Market.   
Foreign investments can be registered with the Foreign Investment Committee     
under Decree Law No. 600 or can be registered with the Central Bank under the   
Central Bank Act. The latter is an organic constitutional law requiring a       
"special majority" vote of the Chilean Congress to be modified.                 

   A Foreign Investment Contract (the "Contract") was entered into among the
Central Bank, Provida and the Depositary pursuant to Article 47 of the Central  
Bank Act and Chapter XXVI of the Compendio de Normas de Cambios Internacionales 
("Compendium of Foreign Exchange Regulations") of the Central Bank ("Chapter    
XXVI"), which addressed the issuance of ADSs by a Chilean company. On April 16, 
2001, the Central Bank approved a series of amendments to the Compendium of     
Foreign Exchange Regulations, thereby establishing an entirely new regime. The  
new Compendium represents the culmination of a deregulation process, which has  
resulted in the elimination of many of the exchange restrictions established in 
the former Compendium. Chapter XXVI has been repealed. Notwithstanding the      
aforementioned, the applicable law that governs the Contract is that in force   
at the execution of the Contract. Therefore for the purpose of the Contract,    
Chapter XXVI is still applicable.                                               

   Absent the Foreign Investment Contract, under applicable Chilean exchange
controls regulation, investors might not be granted access to the Formal        
Exchange Market for the purpose of converting from pesos to dollars and         
repatriating from Chile the amounts received with respect to deposited shares   
or shares withdrawn from deposit on surrender of                                

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ADSs (including amounts received as cash dividends and proceeds from the sale   
in Chile of the underlying shares and any rights arising therefrom). The        
following is a summary of certain provisions contained in the Foreign           
Investment Contract. This summary does not purport to be complete and is        
qualified in its entirety by reference to Chapter XXVI, before the amendments   
established by the Central Bank on April 16, 2001, and the Foreign Investment   
Contract.                                                                       

  Under Chapter XXVI and the Foreign Investment Contract, the Central Bank
agreed to grant to the Depositary, on behalf of ADS holders, and to any         
investor not residing or domiciled in Chile who withdraws shares upon delivery  
of ADSs (such shares being referred to herein as "Withdrawn Shares"), access to 
the Formal Exchange Market to convert pesos to dollars (and remit such dollars  
outside of Chile) in respect of shares represented by ADSs or Withdrawn Shares. 
This includes amounts received as (a) cash dividends, (b) proceeds from the     
sale in Chile of Withdrawn Shares subject to receipt by the Central Bank of a   
certificate from the holder of the Withdrawn Shares (or from an institution     
authorized by the Central Bank) that such holder's residence and domicile are   
outside Chile and a certificate from a Chilean stock exchange (or from a        
brokerage or securities firm established in Chile) that such Withdrawn Shares   
were sold on a Chilean stock exchange, (c) proceeds from the sale in Chile of   
rights to subscribe for additional shares, (d) proceeds from the liquidation,   
merger or consolidation of a company and (e) other distributions, including     
without limitation those resulting from any re-capitalization, as a result of   
holding shares represented by ADSs or Withdrawn Shares. Transferees of          
Withdrawn Shares were not entitled to any of the foregoing rights under Chapter 
XXVI unless the Withdrawn Shares were re-deposited with the Depositary. Under   
certain circumstances, investors receiving Withdrawn Shares in exchange for     
ADSs had the right to re-deposit such shares.                                   

  Chapter XXVI provided access to the Formal Exchange Market in connection
with dividend payments conditioned upon certification by a company to the       
Central Bank that a dividend payment has been made and any applicable tax       
withheld. Chapter XXVI also provided access to the Formal Exchange Market in    
connection with the sale of Withdrawn Shares or distributions thereon. This is  
conditional upon receipt by the Central Bank of certification by the Depositary 
that such shares were withdrawn in exchange for ADSs and receipt of a waiver of 
the benefit of the Foreign Investment Contract with respect thereto until such  
Withdrawn Shares were redeposited.                                              

  Chapter XXVI and the Foreign Investments Contract provided that a person
who brought foreign currency into Chile to purchase shares with the benefit of  
the Foreign Investments Contract must convert it into pesos on the same date    
and had 5 days within which to invest in shares in order to receive the         
benefits of the Foreign Investments Contract. If such person decided during     
that period not to acquire shares, the person could access the Formal Exchange  
Market to reacquire dollars, provided that the applicable request was presented 
to the Central Bank within 7 days of the initial conversion into pesos. Shares  
acquired as described above could be deposited for ADSs and receive the         
benefits of the Foreign Investment Contract, subject to receipt by the Central  
Bank of a certificate from the Depositary that such deposit was effected and    
that the related ADSs were issued and receipt by the Custodian of a declaration 
from the person making such deposit waiving the benefits of the Foreign         
Investment Contract with respect to the deposited shares.                       

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Both previously mentioned periods were modified by the Central Bank on          
September 20, 1995. Formerly, the period was 60 days for converting into pesos  
and 90 days from the initial conversion for informing the Central Bank that the 
person did not acquire shares of Common Stock and reacquired Dollars.           

On July 3, 1995 the Central Bank changed the regulations applicable to
persons bringing foreign currency into Chile with the purpose of acquiring      
pesos to purchase securities. Under those regulations such persons were         
required to either (i) establish a non-interest bearing deposit with the        
Central Bank for a one-year term in an amount equal to 30% of the foreign       
currency brought into Chile or (ii) pay a charge to the Central Bank at the     
time the foreign currency was converted into pesos in an amount equal to        
interest on such deposit at the rate of 12-months LIBOR plus 4% for one year.   
The Central Bank regulations did not apply to persons bringing foreign currency 
into Chile for the purpose of purchasing securities from the issuer thereof as  
part of a capital increase (primary offering) by the issuer. Effective          
September 17, 1998, this 30% withholding requirement was reduced to 0%.         
Recently, the Central Bank decided to eliminate this regulation.                

Access to the Formal Exchange Market under any of the circumstances   
described above was not automatic. Pursuant to Chapter XXVI, such access        
required the approval of the Central Bank based on a request presented through  
a banking institution established in Chile. The Foreign Investment Contract     
provided that if the Central Bank had not acted on such request within seven    
banking days, the request could be deemed approved.                             

Under current Chilean law, the Foreign Investment Contract cannot be  
changed unilaterally by the Central Bank. No assurance can be given, however,   
that additional Chilean restrictions applicable to the holders of ADSs related  
to the disposition of underlying shares or the repatriation of the proceeds     
from such disposition could not be imposed in the future, nor can there be any  
assessment of the duration or impact of such restrictions if they were imposed. 

Taxation                                                              

Chilean Tax Consideration                                             

  In accordance with D.L. 824, 1974 on Tax Income, updated in April, 2002,
Foreign Investors domiciled and abroad resident are affected by an additional   
tax with a rate 35% calculated on the net dividend, which is withheld and paid  
by the disbursement officer on behalf of the investor. This tax is paid off in  
April of the following year to which the dividend payment has been recorded,    
considering that taxes paid by the society respect to gains obtained during the 
previous fiscal year (first category Tax), constitute a credit in favor of the  
investor. If the withheld tax for each dividend were higher than the tax in the 
definitive liquidation, disbursement officer should ask for the corresponding   
repayment of the surplus to the Internal Revenue Service to generate the        
payment for The Bank of New York and later distribution to the holders of ADS   
subscribed to the date of payment of each dividend.                             

  The first category tax effective from April 2002 has the progressive and
transitory character, according to the following:                               

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Fiscal Year 2002                   Rate 16.0%                 
Fiscal Year 2003                   Rate 16.5%                 
Fiscal Year 2004                   Rate 17.0%                 

    Capital Gains. Gains from the sale or exchange of ADSs (or ADRs evidencing
ADSs) outside of Chile are not subject to Chilean taxation. The deposit and     
withdrawal of shares in exchange for ADSs will not be subject to any Chilean    
taxes.                                                                          

Gain recognized on a sale or exchange of shares (as distinguished from
sales or exchanges of ADSs representing such shares) will be subject to both    
the First Category Tax and the Withholding Tax (the former being creditable     
against the latter) if: (i) the foreign holder has held the shares for less     
than one year since exchanging ADSs for the shares, (ii) the foreign holder     
acquired and disposed of the shares in the ordinary course of its business or   
as a regular trader of shares or (iii) the foreign holder transfers shares of   
Common Stock to a related person, as defined in the Chilean Tax Law. In all     
other cases, gain on the disposition of shares will be subject only to the      
First Category Tax.                                                             

  The tax basis of shares received in exchange for ADSs is the acquisition
value of the shares. The valuation procedure set forth in the Deposit           
Agreement, which values shares that are being exchanged at the highest price    
they were trade on the Santiago Stock Exchange on the date of the exchange.     
Consequently, the conversion of ADSs into shares and the immediate sale of such 
shares for the value established under the Deposit Agreement do not generate a  
gain subject to taxation in Chile.                                              

    The exercise of preemptive rights relating to the shares is not subject to
Chilean taxation. Any gain on the sale or assignment of preemptive rights       
relating to the shares are subject to both the First Category Tax and the       
Withholding Tax (the former being creditable against the latter).               

Other Chilean Taxes. No Chilean inheritance, gift or succession taxes 
apply to the transfer or disposition of ADSs by a foreign holder, but such      
taxes generally do apply to the transfer at death or by gift of shares by a     
foreign holder. No Chilean stamp, issue, registration or similar taxes or       
duties apply to foreign holders of ADSs or shares.                              

 Item 11. Quantitative and Qualitative Disclosures about Market Risk

Foreign Exchange Rate Risk                                                      

 Provida has been exposed to foreign exchange rate risks associated with
underlying assets, liabilities and anticipated transactions. In these cases,    
Provida manages these risks using derivative financial instruments. These       
contracts are entered into with major high credit quality financial             
institutions, in accordance with procedures and within limits approved by       
senior management. Provida's policy is to use derivatives only for hedging its  
foreign exchange rate exposures.                                                

In the past, Provida was exposed to foreign exchange rate risk mainly 
related to its foreign currency denominated borrowings. In order to take        
advantage of opportunities to                                                   

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reduce the cost of borrowings, Provida took out a US dollar-denominated         
long-term loan to finance the acquisitions of AFP Union and Proteccion in 1998  
and at the beginning of 1999, respectively. At the end of 1999, Provida         
increased its capital base in order to pre-pay part of the debt, converting the 
remaining debt into UF in order to reduce Provida's exposure to foreign         
exchange rate risk.                                                             

 At December 31, 2002, Provida did not have commitments to repay debt in
currencies other than UF or Chilean pesos.                                      

Otherwise, as a product of its investment in Provida Internacional,   
Provida is exposed to minor foreign exchange rate risk associated with the      
subsidiaries of that company. Consequently, a risk factor is depreciation of    
domestic currencies respect to U.S. dollar and the evolution of the latter with 
respect to the Chilean currency, and its effect in foreign affiliates income    
and their respective return. Notwithstanding, this risk could be covered by     
taking forward contracts, if Provida considers it necessary.                    

Interest Rate Risk                                                              

Provida is exposed to an interest rate risk due to the long-term debt 
taken to finance the acquisitions of two AFPs in previous years. These          
long-term obligations have an interest rate determined by the TAB rate (active  
banking rate) for 90-day indexed operations plus 0.75% per year. These debt     
obligations expose us to variability in interest payments due to changes in the 
TAB rate. If interest rates increase, interest expense increases. Conversely,   
if interest rates decrease, interest expense also decreases.                    

Management believes that the interest rate exposure is moderate       
considering that the long-term obligations assumed in order to finance the      
acquisitions are being paid for by the cash flows generated by both             
transactions and the maturity of the remaining debt is in the first quarter of  
2005. Adding the above, it should be highlighted that Provida maintains a       
moderate leverage of 0.22.                                                      

Liquidity Risk                                                                  

Provida's liquidity requirements have historically been funded with   
internally-generated cash flows considering that the Company's cash flow from   
operations, mainly from fees paid by its affiliates, is significant and         
sufficient to cover the core business needs. Reflecting the above, Provida has  
historically paid a significant portion of its income as dividends, even though 
they are limited according to the long-term investment decisions. Additionally, 
Provida counts on other short-term sources such as available lines of credit.   

Credit Risk                                                                     

    Provida's main investment is the Mandatory Investment (encaje) constituted
by law and is equivalent to one percent (1%) of the Pension Funds under         
management, which should be maintained invested in shares of each kind of them. 

     The Pensions Law expressly prescribes the assets classes and maximum assets
limits in which funds can be invested.  All  securities  (other than  securities
issued by the                                                                   

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government, the Central Bank or certain government agencies, and certain        
qualified equity securities) must be specifically approved as eligible for      
investment by the Rating Commission. In Chile, fund investments can be made     
only in securities for which there is an established public trading market. The 
Central Bank sets the precise limits on permitted investments for AFPs within   
the range established by the law.                                               

Additionally, Provida counts on an Investment Committee composed of   
specialized professionals of the Investment Area responsible for the            
implementation of the investment policy. The general investment policy for the  
Pension Funds is determined by Provida's Board members and is administered by a 
Credit Committee composed of all Board members, the Chief Executive Officer and 
the Chief Investment Officer. The Credit Committee approves eligible companies  
in which the Pension Fund may invest and establishes limits for investments of  
different types of securities within legally prescribed limits.                 

 Item 12. Description of Securities Other Than Equity Securities

Not applicable.                                                       

PART II 

Item 13. Defaults, Dividend Arrearages and Delinquencies

   To Provida's knowledge, there has been no material default in the payment
of principal or interest or any other material default not cured within 30 days 
relating to indebtedness of Provida or any of its subsidiaries.                 

Item 14. Material Modifications to the Rights of Security Holders and Use of  
Proceeds

None.                                                                 

 Item 15. Control and Procedures

Within the 90 day period prior to the filing of this report, we have  
carried out an evaluation of the effectiveness of the design and operation of   
the AFP Provida's disclosure controls and procedures, which are defined as      
those controls and procedures designed to ensure that information required to   
be disclosed in reports filed under the Exchange Act is correctly recorded,     
summarized and reported. As of the date of the evaluation, we have concluded    
that the design and operation of these disclosure controls and procedures were  
effective. No significant changes were made in our internal controls or in      
other factors that could significantly affect these controls subsequent to the  
evaluation.                                                                     

 Item 16. [Reserved]

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PART III

 Item 17. Financial Statements

   Provida's Audited Consolidated Financial Statements have been prepared in
accordance with Item 18 hereof.                                                 

 Item 18. Financial Statements

Reference is made to Item 19 (a) for a list of all Audit Financial    
Statements filed with this form 20-F.                                           

                                                                            Page
                                                                            ----

Report of Independent Auditors in connection with the Consolidated              
Financial Statements as of and for the year ended December 31, 2002          F-2

Reports of Independent Auditors in connection with the                          
Consolidated Financial Statements as of and for the years                       
ended December 31, 2000 and 2001                                             F-4

Consolidated Balance Sheets as of December 31, 2001 and 2002                 F-5

Consolidated Statements of Income for the years ended                           
December 31, 2000, 2001 and 2002                                             F-7

Consolidated Statements of Cash Flows for the years                             
ended December 31, 2000, 2001 and 2002                                       F-8

Notes to the Consolidated Financial Statements                              F-10

 Item 19. Exhibits

1.1    Amended Bylaws of A.F.P. Provida S.A. (English translation)              

8.1    List of significant subsidiaries                                         

10.1   Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002  

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Signature 

   Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the Registrants certify that they meet all of the requirements for     
filing on Form 20-F and have duly caused this annual report or amendment        
thereto to be signed on their behalf by the undersigned, thereunto duly         
authorized.                                                                     

                                     Administradora de Fondos de Pensiones
            Provida S.A.

                       By: /s/ Gustavo Alcalde
                                         ---------------------------------
                              Name:  Gustavo Alcalde
                                      Title: Chief Executive Officer

Dated: June 30, 2003                                                            

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 Form of 302 Certification

I, Gustavo Alcalde, Chief Executive Officer of Administradora de Fondos de      
Pensiones Provida S.A., certify that:                                           

1. I have reviewed this annual report on Form 20-F of Administradora de Fondos  
de Pensiones Provida S.A.;                                                      

2. Based on my knowledge, this annual report does not contain any untrue        
statement of a material fact or omit to state a material fact necessary to make 
the statements made, in light of the circumstances under which such statements  
were made, not misleading with respect to the period covered by this annual     
report;                                                                         

3. Based on my knowledge, the financial statements, and other financial         
information included in this annual report, fairly present in all material      
respects the financial condition, results of operations and cash flows of the   
registrant as of, and for, the periods presented in this annual report;         

4. The registrant's other certifying officer and I are responsible for          
establishing and maintaining disclosure controls and procedures (as defined in  
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:           

a) designed such disclosure controls and procedures to ensure that material     
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the    
period in which this annual report is being prepared;                           

b) evaluated the effectiveness of the registrant's disclosure controls and      
procedures as of a date within 90 days prior to the filing date of this annual  
report (the "Evaluation Date"); and                                             

c) presented in this annual report our conclusions about the effectiveness of   
the disclosure controls and procedures based on our evaluation as of the        
Evaluation Date;                                                                

5. The registrant's other certifying officer and I have disclosed, based on our 
most recent evaluation, to the registrant's auditors and audit committee of     
registrant's board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls 
which could adversely affect the registrant's ability to record, process,       
summarize and report financial data and have identified for the registrant's    
auditors any material weaknesses in internal controls; and                      

b) any fraud, whether or not material, that involves management or other        
employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officer and I have indicated in this annual
report whether or not there were significant changes in internal controls or in 
other factors that could significantly affect internal controls subsequent to   
the date of our most recent evaluation, including any corrective actions with   
regard to significant deficiencies and material weaknesses.                     

Date:  June 30, 2003                                                            

                 /s/ Gustavo Alcalde
                                       -----------------------------------------
             Gustavo Alcalde
                     Chief Executive Officer
                      Administradora de Fondos
                       de Pensiones Provida S.A.

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 Form of 302 Certification

I, Gabriel Galaz, Accounting Manager of Administradora de Fondos de Pensiones   
Provida S.A., certify that:                                                     

1. I have reviewed this annual report on Form 20-F of Administradora de Fondos  
de Pensiones Provida S.A.;                                                      

2. Based on my knowledge, this annual report does not contain any untrue        
statement of a material fact or omit to state a material fact necessary to make 
the statements made, in light of the circumstances under which such statements  
were made, not misleading with respect to the period covered by this annual     
report;                                                                         

3. Based on my knowledge, the financial statements, and other financial         
information included in this annual report, fairly present in all material      
respects the financial condition, results of operations and cash flows of the   
registrant as of, and for, the periods presented in this annual report;         

4. The registrant's other certifying officer and I are responsible for          
establishing and maintaining disclosure controls and procedures (as defined in  
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:           

a) designed such disclosure controls and procedures to ensure that material     
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the    
period in which this annual report is being prepared;                           

b) evaluated the effectiveness of the registrant's disclosure controls and      
procedures as of a date within 90 days prior to the filing date of this annual  
report (the "Evaluation Date"); and                                             

c) presented in this annual report our conclusions about the effectiveness of   
the disclosure controls and procedures based on our evaluation as of the        
Evaluation Date;                                                                

5. The registrant's other certifying officer and I have disclosed, based on our 
most recent evaluation, to the registrant's auditors and audit committee of     
registrant's board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls 
which could adversely affect the registrant's ability to record, process,       
summarize and report financial data and have identified for the registrant's    
auditors any material weaknesses in internal controls; and                      

b) any fraud, whether or not material, that involves management or other        
employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officer and I have indicated in this annual
report whether or not there were significant changes in internal controls or in 
other factors that could significantly affect internal controls subsequent to   
the date of our most recent evaluation, including any corrective actions with   
regard to significant deficiencies and material weaknesses.                     

Date:  June 30, 2003                                                            

               /s/ Gabriel Galaz
                                       -----------------------------------------
           Gabriel Galaz
                Accounting Manager
                      Administradora de Fondos
                       de Pensiones Provida S.A.

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 Form of 302 Certification

I, Maria Paz Yanez, Planning and Control Manager of Administradora de Fondos de 
Pensiones Provida S.A., certify that:                                           

1. I have reviewed this annual report on Form 20-F of Administradora de Fondos  
de Pensiones Provida S.A.;                                                      

2. Based on my knowledge, this annual report does not contain any untrue        
statement of a material fact or omit to state a material fact necessary to make 
the statements made, in light of the circumstances under which such statements  
were made, not misleading with respect to the period covered by this annual     
report;                                                                         

3. Based on my knowledge, the financial statements, and other financial         
information included in this annual report, fairly present in all material      
respects the financial condition, results of operations and cash flows of the   
registrant as of, and for, the periods presented in this annual report;         

4. The registrant's other certifying officer and I are responsible for          
establishing and maintaining disclosure controls and procedures (as defined in  
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:           

a) designed such disclosure controls and procedures to ensure that material     
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the    
period in which this annual report is being prepared;                           

b) evaluated the effectiveness of the registrant's disclosure controls and      
procedures as of a date within 90 days prior to the filing date of this annual  
report (the "Evaluation Date"); and                                             

c) presented in this annual report our conclusions about the effectiveness of   
the disclosure controls and procedures based on our evaluation as of the        
Evaluation Date;                                                                

5. The registrant's other certifying officer and I have disclosed, based on our 
most recent evaluation, to the registrant's auditors and audit committee of     
registrant's board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls 
which could adversely affect the registrant's ability to record, process,       
summarize and report financial data and have identified for the registrant's    
auditors any material weaknesses in internal controls; and                      

b) any fraud, whether or not material, that involves management or other        
employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officer and I have indicated in this annual
report whether or not there were significant changes in internal controls or in 
other factors that could significantly affect internal controls subsequent to   
the date of our most recent evaluation, including any corrective actions with   
regard to significant deficiencies and material weaknesses.                     

Date:  June 30, 2003                                                            

                 /s/ Maria Paz Yanez
                                       -----------------------------------------
             Maria Paz Yanez
                          Planning and Control Manager
                      Administradora de Fondos
                       de Pensiones Provida S.A.

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Index to Financials 

                                                                          Page
                                                                          ----

Report of Independent Auditors in connection with the Consolidated              
Financial Statements as of and for the year ended                               
December 31, 2002                                                           F-2 

Reports of Independent Auditors in connection with the Consolidated             
Financial Statements as of and for the years ended                              
December 31, 2000 and 2001                                                  F-4 

Consolidated Balance Sheets as of December 31, 2001 and 2002                F-5 

Consolidated Statements of Income for the years ended                           
December 31, 2000, 2001 and 2002                                            F-7 

Consolidated Statements of Cash Flows for the years ended                       
December 31, 2000, 2001 and 2002                                            F-8 

Notes to the Consolidated Financial Statements                             F-10 

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INDEPENDENT AUDITORS' REPORT                                                    

To the Shareholders of                                                          
Administradora de Fondos de Pensiones Provida S.A.                        

We have audited the consolidated balance sheets of Administradora de Fondos de  
Pensiones Provida S.A. and subsidiaries (the "company") as of December 31,      
2002, and the related consolidated statements of income and of cash flows for   
the year ended December 31, 2002 all expressed in millions of constant Chilean  
pesos. These consolidated financial statements are the responsibility of the    
Company's management. Our responsibility is to express an opinion on these      
financial statements based on our audit. The financial statements for the years 
ended December 31, 2001 and 2000, were audited by other auditors who have       
ceased operations. Those auditors expressed an unqualified opinion on those     
financial statements in their report dated January 25, 2002.                    

We conducted our audit in accordance with auditing standards generally accepted 
in Chile and in the United States of America. Those standards require that we   
plan and perform the audit to obtain reasonable assurance about whether the     
financial statements are free of material misstatement. An audit includes       
examining, on a test basis, evidence supporting the amounts and disclosures in  
the financial statements. An audit also includes assessing the accounting       
principles used and significant estimates made by the Company's management, as  
well as evaluating the overall financial statement presentation. We believe     
that our audit provides a reasonable basis for our opinion.                     

In our opinion, such consolidated financial statements present fairly, in all   
material respects, the financial position of Administradora de Fondos de        
Pensiones Provida S.A. and its subsidiaries as of December 31, 2002, and the    
results of their operations and their cash flows for the year then ended, in    
conformity with accounting principles generally accepted in Chile.              

Accounting principles generally accepted in Chile vary in certain significant   
respects from accounting principles generally accepted in the United States of  
America. The application of the latter would have affected the determination of 
net income for the year ended December 31, 2002, and the determination of       
shareholder's equity at December 31, 2002, to the extent summarized in Note 42  
to the consolidated financial statements.                                       

Our audit also comprehended the translation of constant Chilean Peso amounts    
into U.S. dollar amounts and, in our opinion, such translation has been made in 
conformity with the basis stated in Note 2. o. Such U.S. dollar amounts are     
presented solely for the convenience of readers in the United States of         
America.                                                                        

As discussed above, the consolidated balance sheet as of December 31, 2001, and 
the consolidated statements of income and of cash flows for the years ended     
December 31, 2001 and December 31, 2000 of Administradora de Fondos de          
Pensiones Provida S.A. were audited by other auditors who have ceased           
operations. As described in Note 42 (I) (g), these financial statements have    
been revised to include the transitional disclosures required by Statement of   
Financial Accounting Standards (SFAS) No. 142, "Goodwill and Other Intangible   
Assets", which was adopted by the Company as of                                 

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January 1, 2002. Our audit procedures with respect to the disclosures in Note   
42 (I) (g) with respect to 2000 and 2001 included (i) agreeing the previously   
reported net income to the previously issued financial statements and the       
adjustments to reported net income represented by amortization expense          
(including any related tax effects) recognized in those periods related to      
goodwill, and (ii) testing the mathematical accuracy of the reconciliation of   
adjusted net income to reported net income, and the related earnings-per-share  
amounts. In our opinion, the disclosures for 2000 and 2001 in Note 42 (I) (g)   
are appropriate. However, we were not engaged to audit, review, or apply any    
procedures to the 2000 or 2001 financial statements of the Company other than   
with respect to such disclosures and, accordingly, we do not express an opinion 
or any other form of assurance on the 2000 or 2001 consolidated financial       
statements taken as a whole.                                                    

/s/ Deloitte & Touche                                                           

Santiago, Chile                                                                 
January 16, 2003, except for Notes 42 and 43                                    
as to which the date is June 24, 2003                                     

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The report of Langton Clarke - A Member Firm of Andersen Worldwide SC, below is 
a copy of their previously issued report contained in Administradora de Fondos  
de Pensiones Provida S.A. Annual report on Form 20-F for the year ended         
December 31, 2001. Langton Clarke - A Member Firm of Andersen Worldwide SC has  
ceased operations and has not reissued its report in connection with this Form  
20-F.                                                                           

Langton              Hueranos 770 Piso 5         Telefono  (56 2) 676 1000      
Clarke              Santiago - Chile            Fax       (56 2) 676 1010     

Langton Clarks Auditores y Consultores                                          
Limitada                                                                        

Firma miembro de                                                                
Andersen Worldwide SC                                                           

REPORT OF INDEPENDENT ACCOUNTANTS                                               

To the Board of Directors and Shareholders of                                   
Administradora de Fondos de Pensiones Provida S.A. and Subsidiaries:            

We have audited the accompanying consolidated balance sheets of Administradora  
de Fondos de Pensiones Provida S.A. and subsidiaries (the "Company") as of      
December 31, 2000 and 2001, and the related consolidated statements of income   
and cash flows for each of the two years in the period ended December 31, 2001, 
all expressed in thousands of constant Chilean pesos. These financial           
statements are the responsibility of the Company's management. Our              
responsibility is to express an opinion on these financial statements based on  
our audits.                                                                     

We conducted our audits in accordance with generally accepted auditing          
standards in the United States of America. Those standards require that we plan 
and perform the audit to obtain reasonable assurance about whether the          
financial statements are free of material misstatement. An audit includes       
examining, on a test basis, evidence supporting the amounts and disclosures in  
the financial statements. An audit also includes assessing the accounting       
principles used and significant estimates made by the management, as well as    
evaluating the overall financial statement presentation. We believe that our    
audits provide a reasonable basis for our opinion.                              

Accounting practices used by the Company in preparing the accompanying          
consolidated financial statements conform with generally accepted accounting    
principles in Chile, but do not conform with generally accepted accounting      
principles in the United States of America. A description of these differences  
and a reconciliation of consolidated net income for each of the two years in    
the period ended December 31, 2001 and shareholders' equity as of December 31,  
2000 and 2001, under generally accepted accounting principles in Chile to the   
corresponding amounts that would be reported in accordance with United States   
generally accepted accounting principles, except for the omissions, as allowed  
pursuant to Item 17 of SEC Form 20-F, of adjustments necessary to eliminate the 
effect of price-level changes and the translation of non-Chilean operations     
described in Notes 1(e) and 41(b), is set forth in Note 41 to these             
consolidated financial statements.                                              

In our opinion, the consolidated financial statements referred to above present 
fairly, in all material respects, the financial position of Administradora de   
Fondos de Pensiones Provida S.A. and subsidiaries as of December 31, 2000 and   
2001, and the results of their operations and their cash flows for each of the  
two years in the period ended December 31, 2001, in conformity with generally   
accepted accounting principles generally accepted in Chile.                     

As explained in Note 2 to the consolidated financial statements, as of January  
1, 2000, the Company began accounting for deferred income taxes in accordance   
with Technical Bulletin No. 60. In addition, during 2001 at the instruction of  
the Superintendency of Pension Fund Administrators, the Company began to        
recognize deferred income taxes originating from income on mandatory            
investments on a discounted basis.                                              

/s/ Langton Clarke                                                              

LANGTON CLARKE                                                                  

Santiago, Chile January 25, 2002                                                
(except for Note No. 41 for which the date is May 17, 2002)                     

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                                                        [Enlarge/Download Table]
                         ADMINISTRADORA DE FONDOS DE PENSIONES PROVIDA S.A. AND SUBSIDIARIES                   

                              CONSOLIDATED BALANCE SHEETS AT DECEMBER 31, 2001 AND 2002                        

                   (Restated for general price-level changes and expressed in millions of constant             
                  Chilean pesos (MCh$) as of December 31, 2002 and thousands of US dollars (ThUS$))            
                                        (See Notes 2 c. and o., respectively)                                  
-------------------------------------------------------------------------------------------------------------- 
                                                                                  As of December 31,           
-------------------------------------------------------------------------------------------------------------- 
                                                                         2001           2002             2002  
                                                                         MCh$           MCh$            ThUS$  
-------------------------------------------------------------------------------------------------------------- 
                                                                                                               
Assets                                                                                                         
Current Assets                                                                                                 
Cash                                                                      689             788            1,097 
Time deposits (Note 4)                                                    170             679              945 
Marketable securities (Note 5)                                            313             117              163 
Receivables from Pension Fund                                             312             423              589 
Receivables from Insurance Companies (Note 8)                             729             621              864 
Receivables from the State (Note 8)                                        30              31               43 
Receivables and notes due from related companies (Note 9)                 450             940            1,308 
Fees receivable (Note 7)                                                1,798           3,004            4,180 
Miscellaneous Receivables, net (Note 10)                                1,287           1,370            1,906 
Accounts receivable                                                        75              56               78 
Inventories                                                                43              44               61 
Recoverable Taxes, net  (Note 23)                                         767               -                - 
Prepaid expenses (Note 11)                                                277             394              548 
Deferred Income Taxes (Note 23)                                            46             125              174 
Other Current Assets (Note 12)                                            113               1                1 
-------------------------------------------------------------------------------------------------------------- 
Total Current Assets                                                    7,099           8,593           11,957 
-------------------------------------------------------------------------------------------------------------- 
Mandatory Investment                                                                                           
Mandatory Investment - Fund type A                                          -             839            1,168 
Mandatory Investment - Fund type B                                          -           8,997           12,520 
Mandatory Investment - Fund type C                                     74,885          58,489           81,392 
Mandatory Investment - Fund type D                                          -           7,996           11,126 
Mandatory Investment - Fund type E                                         68           3,074            4,278 
-------------------------------------------------------------------------------------------------------------- 
Total Mandatory Investment (Note 6)                                    74,953          79,395          110,484 
-------------------------------------------------------------------------------------------------------------- 
Property, Plant and Equipment, net                                                                             
Land                                                                    4,698           4,698            6,538 
Buildings and Infrastructure                                           17,034          17,034           23,704 
Equipment, furniture and fixtures                                       2,678           2,565            3,569 
Other Fixed Assets                                                      7,236           6,956            9,680 
(Less) Accumulated Depreciation                                        (7,039)         (7,609)         (10,588)
-------------------------------------------------------------------------------------------------------------- 
Total Property, Plant and Equipment, net (Note 13)                     24,607          23,644           32,903 
-------------------------------------------------------------------------------------------------------------- 
Other Assets                                                                                                   
Investment in related companies (Note 14)                              19,293          22,309           31,045 
Goodwill, net (Note 14)                                                85,163          81,209          113,008 
Other Assets (Note 15)                                                  1,093           1,018            1,417 
-------------------------------------------------------------------------------------------------------------- 
Total Other Assets                                                    105,549         104,536          145,470 
-------------------------------------------------------------------------------------------------------------- 
Total Assets                                                          212,208         216,168          300,814 
-------------------------------------------------------------------------------------------------------------- 
The accompanying notes are an integral part of these consolidated financial statements.                        
-------------------------------------------------------------------------------------------------------------- 

                                   F-5

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                                                        [Enlarge/Download Table]
-------------------------------------------------------------------------------------------------------------- 
                                                                                  As of December 31,           
-------------------------------------------------------------------------------------------------------------- 
                                                                         2001            2002            2002  
                                                                         MCh$            MCh$           ThUS$  
-------------------------------------------------------------------------------------------------------------- 
                                                                                                               
Liabilities and Shareholders' Equity                                                                           
Current Liabilities                                                                                            
Obligations with banks and financial institutions (Note 16)             7,108           8,727           12,144 
Dividends payable                                                         140             172              239 
Accounts payable                                                        1,240           1,772            2,466 
Notes and accounts due to related companies (Note 17)                   6,428           5,885            8,189 
Accounts payable to National Health Fund (Note 18)                         43             156              217 
Pensions payable                                                           45              64               90 
Collections to be cleared (Note 8)                                         77              72              100 
Accounts payable to insurance companies (Note 8)                        4,404           3,580            4,982 
Accrued expenses (Note 20)                                              4,186           3,239            4,507 
 Withholdings (Note 19)                                                 1,043           1,383            1,925 
Withholdings from pensioners (Note 18)                                    944           1,010            1,405 
Income tax (Note 23)                                                        -           1,662            2,313 
Other current liabilities (Note 21)                                        85              90              125 
---------------------------------------------------------------------------------------------------------------
Total Current Liabilities                                              25,743          27,812           38,702 
-------------------------------------------------------------------------------------------------------------- 
Long-Term Liabilities                                                                                          
Obligations with banks and financial institutions (Note 16)             8,375           5,023            6,990 
Notes and accounts due to related companies (Note 17)                   8,312           3,013            4,193 
Long-term deferred taxes (Note 23)                                      2,843           2,353            3,274 
Other long-term liabilities (Note 22)                                   1,141           1,014            1,411 
-------------------------------------------------------------------------------------------------------------- 
Total Long-Term Liabilities (Note 24)                                  20,671          11,403           15,868 
-------------------------------------------------------------------------------------------------------------- 
Commitments and Contingencies (Note 35)                                                                        
-------------------------------------------------------------------------------------------------------------- 
Shareholders' Equity                                                                                           
Paid-in Capital                                                        83,602          83,602          116,338 
Additional Paid-in Capital                                                120             120              167 
Other reserves                                                          2,979           4,918            6,844 
Accumulated deficit during development stage                          (4,496)               -                - 
Retained  earnings                                                     83,589          88,313          122,894 
-------------------------------------------------------------------------------------------------------------- 
Total Shareholders' Equity (Note 25)                                  165,794         176,953          246,243 
-------------------------------------------------------------------------------------------------------------- 
Total Liabilities and Shareholders' Equity                            212,208         216,168          300,814 
-------------------------------------------------------------------------------------------------------------- 
The accompanying notes are an integral part of these consolidated financial statements.                        
-------------------------------------------------------------------------------------------------------------- 

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                         ADMINISTRADORA DE FONDOS DE PENSIONES PROVIDA S.A. AND SUBSIDIARIES                       

                                          CONSOLIDATED STATEMENTS OF INCOME                                        

                   (Restated for general price-level changes and expressed in millions of constant                 
                  Chilean pesos (MCh$) as of December 31, 2002 and thousands of US dollars (ThUS$))                
                                        (See Notes 2 c. and o., respectively)                                      
------------------------------------------------------------------------------------------------------------------ 
                                                                            For the years ended December 31,       
                                                                       2000         2001        2002        2002   
                                                                       MCh$         MCh$        MCh$        ThUS$  
------------------------------------------------------------------------------------------------------------------ 
                                                                                                                   
Operating Revenues:                                                                                                
Fee income (Note 7)                                                    89,092       92,159      94,903     132,065 
Gain on mandatory investments (Note 6)                                  5,733        6,380       4,858       6,760 
Other operating revenues (Note 26)                                      4,094        3,624       5,560       7,737 
-------------------------------------------------------------------------------------------------------------------
Total Operating Revenues                                               98,919      102,163     105,321     146,562 
-------------------------------------------------------------------------------------------------------------------
Operating Expenses:                                                                                                
Administrative personnel payroll expenses                             (16,939)     (18,488)    (16,272)    (22,644)
Sales personnel payroll expenses                                       (9,662)      (8,979)     (7,715)    (10,736)
Directors' fees (Note 28)                                                (207)        (188)       (117)       (163)
Selling and marketing expenses                                           (473)      (1,020)       (697)       (970)
Data processing expenses                                                 (537)        (716)       (737)     (1,026)
 Administrative expenses                                               (7,430)      (7,197)     (7,791)    (10,842)
Depreciation                                                           (1,228)      (1,535)     (1,667)     (2,320)
Life and disability insurance premium expenses                        (28,425)     (30,354)    (33,090)    (46,047)
Other operating expenses (Note 30)                                     (1,182)      (1,280)     (1,504)     (2,093)
-------------------------------------------------------------------------------------------------------------------
Total Operating Expenses                                              (66,083)     (69,757)    (69,590)    (96,841)
-------------------------------------------------------------------------------------------------------------------
Net Operating Income                                                   32,836       32,406      35,731      49,721 
-------------------------------------------------------------------------------------------------------------------
Non-Operating Income (Expenses):                                                                                   
Gain (Loss) on financial investments                                      171          105         174         242 
Equity participation income of related companies (Note 14)              8,258       10,503       9,712      13,515 
Amortization of goodwill                                               (4,369)     (24,698)     (4,930)     (6,860)
Other non-operating income (Note 27)                                    1,325       26,834         644         896 
Interest expenses (Note 29)                                            (4,017)      (2,978)     (1,497)     (2,083)
Other non-operating expenses (Note 30)                                   (270)        (231)       (296)       (412)
Price-level restatement, net (Note 31)                                 (2,424)       2,301      (1,925)     (2,679)
Exchange loss                                                               -         (908)       (140)       (195)
------------------------------------------------------------------------------------------------------------------ 
Net Non-Operating Income (Expenses)                                   (1,326)       10,928       1,742       2,424 
------------------------------------------------------------------------------------------------------------------ 
Income before income taxes                                             31,510       43,334      37,473      52,145 
------------------------------------------------------------------------------------------------------------------ 
Extraordinary  items                                                        -        2,272           -           - 
------------------------------------------------------------------------------------------------------------------ 
Income Taxes (Note 23)                                                    743      (12,276)     (3,466)     (4,823)
------------------------------------------------------------------------------------------------------------------ 
Net Income                                                             32,253       33,330      34,007      47,322 
------------------------------------------------------------------------------------------------------------------ 
The accompanying notes are an integral part of these consolidated financial                                        
statements.                                                                                                        
------------------------------------------------------------------------------------------------------------------ 

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                         ADMINISTRADORA DE FONDOS DE PENSIONES PROVIDA S.A. AND SUBSIDIARIES                       

                                        CONSOLIDATED STATEMENTS OF CASH FLOWS                                      

                   (Restated for general price-level changes and expressed in millions of constant                 
                  Chilean pesos (MCh$) as of December 31, 2002 and thousands of US dollars (ThUS$))                
                                       (See Notes 2 c. and o., respectively)                                       
------------------------------------------------------------------------------------------------------------------ 
                                                                          For the years ended December 31,         
                                                                     2000          2001         2002        2002   
                                                                     MCh$          MCh$         MCh$        ThUS$  
------------------------------------------------------------------------------------------------------------------ 
                                                                                                                   
Cash Flow from Operating Activities:                                                                               
Fee income                                                             88,996       90,012      92,761     129,084 
Gain on investments                                                        81          109         643         895 
Revenue from dividends and others                                          33        5,792           -           - 
Other operating revenues                                                6,877        1,426       6,030       8,391 
-------------------------------------------------------------------------------------------------------------------
Total operating revenues                                               95,987       97,339      99,434     138,370 
-------------------------------------------------------------------------------------------------------------------
Payroll expenses                                                      (26,488)     (25,606)    (22,296)    (31,027)
Commercialization expenses                                               (363)        (495)       (339)       (472)
Data processing expenses                                                 (620)        (870)       (432)       (601)
 Administrative expenses                                               (8,112)      (7,779)    (17,150)    (23,866)
Life and disability insurance expenses                                (30,509)     (24,964)    (30,834)    (42,908)
Other operating expenses                                                 (308)      (1,523)       (498)       (693)
------------------------------------------------------------------------------------------------------------------ 
Total operating expenses                                              (66,400)     (61,237)    (71,549)    (99,567)
------------------------------------------------------------------------------------------------------------------ 
Net cash provided by operating activities                              29,589       36,102      27,885      38,803 
------------------------------------------------------------------------------------------------------------------ 
Cash Flow from Financing Activities:                                                                               
Dividends paid                                                         (9,890)     (18,581)    (24,624)    (34,266)
Bank borrowings                                                       223,192      144,047      74,304     103,400 
Repayment of bank borrowings                                         (183,309)    (179,816)    (76,045)   (105,822)
Repayment of accounts due to related companies                        (20,501)      (5,727)     (6,299)     (8,766)
Dividend Income                                                             -         (17)       8,438      11,742 
------------------------------------------------------------------------------------------------------------------ 
Net cash provided by (used in) financing activities                     9,492      (60,094)    (24,226)    (33,712)
------------------------------------------------------------------------------------------------------------------ 
Cash Flow from Investing Activities:                                                                               
Sale of marketable securities                                          18,296          173         189         263 
Sale of mandatory investments                                           2,624        2,031       1,567       2,181 
Sale of investments in related companies                                3,934       33,496          30          42 
Collection of accounts receivable from related companies                    -            -       1,082       1,506 
Other proceeds from investments                                         1,317        1,440         165         230 
Additions to premises and equipment                                    (1,104)      (2,616)       (467)       (650)
Purchase of marketable securities                                           -            -      (1,519)     (2,114)
Purchase of mandatory investments                                      (3,633)      (3,598)     (2,734)     (3,805)
Investments in related companies                                      (41,522)      (1,331)          -           - 
Loans to related companies                                                  -       (3,919)     (1,975)     (2,748)
Other                                                                 (19,250)      (2,097)        419         583 
------------------------------------------------------------------------------------------------------------------ 
Net cash used in investing activities                                 (39,338)       23,579     (3,243)     (4,512)
------------------------------------------------------------------------------------------------------------------ 
Total net positive (negative) cash flow for the period                   (258)        (413)        417         578 
------------------------------------------------------------------------------------------------------------------ 
Effect of inflation on cash and cash equivalents                           52         (11)          49          68 
------------------------------------------------------------------------------------------------------------------ 
Net variation in cash and cash equivalents                               (206)        (424)        466         646 
------------------------------------------------------------------------------------------------------------------ 
Cash and cash equivalents at beginning of period                        1,615        1,426       1,032       1,436 
------------------------------------------------------------------------------------------------------------------ 
Cash and Cash Equivalents at end of period                              1,409        1,002       1,498       2,082 
------------------------------------------------------------------------------------------------------------------ 
The accompanying notes are an integral part of these consolidated financial statements.                            
------------------------------------------------------------------------------------------------------------------ 

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                        ADMINISTRADORA DE FONDOS DE PENSIONES PROVIDA S.A. AND SUBSIDIARIES                            

                          RECONCILIATION BETWEEN THE NET CASH FLOWS PROVIDED BY OPERATING                              
                                       ACTIVITIES AND NET INCOME FOR THE EAR                                           

                  (Restated for general price-level changes and expressed in millions of constant                      
                 Chilean pesos (MCh$) as of December 31, 2002 and thousands of US dollars (ThUS$))                     
                                       (See Notes 2 c. and o., respectively)                                           
---------------------------------------------------------------------------------------------------------------------- 
                                                                                  For the years ended December 31,     
---------------------------------------------------------------------------------------------------------------------- 
                                                                                 2000       2001      2002      2002   
                                                                                 MCh$       MCh$      MCh$      ThUS$  
---------------------------------------------------------------------------------------------------------------------- 
                                                                                                                       
RECONCILIATION OF NET CASH PROVIDED BY (USED IN) OPERATING                                                             
ACTIVITIES TO NET INCOME FOR THE YEAR                                                                                  
Net Income for the year                                                          32,253     33,330    34,007    47,322 
---------------------------------------------------------------------------------------------------------------------- 
Add (deduct) charges (credits) to Income which do not                                                                  
  represent cash flows                                                                                                 
                                                                                 (6,483)    22,405    (5,667)   (7,886)
---------------------------------------------------------------------------------------------------------------------- 
Depreciation and amortization for the period                                      5,597     26,233     6,597     9,180 
Gain on mandatory investments                                                    (5,733)    (6,380)   (4,858)   (6,760)
Accrued fee income                                                                  (96)    (2,147)   (2,142)   (2,981)
Life and disability insurance expenses                                           (1,060)     2,591     2,255     3,138 
Allowance for doubtful accounts                                                       2          -         -         - 
Loss from disposal of property, plant and equipment                                  32         66        (5)       (7)
Income in sale of investments                                                         -          -      (105)     (146)
Equity participation income of related companies                                 (8,257)   (10,502)   (9,712)  (13,515)
Price-level restatement, net                                                      1,405       (972)    1,925     2,679 
Exchange difference                                                                   -          -       140       195 
Other Operating funds                                                             1,627     13,516       238       331 
---------------------------------------------------------------------------------------------------------------------- 
Decrease (increase) in Current Assets                                             2,826     (2,255)       26        36 
---------------------------------------------------------------------------------------------------------------------- 
Accounts receivable from Pension Funds, Insurance                                                                      
  companies and State                                                               (13)      (627)       (5)       (7)
Fees receivables                                                                      -     (1,805)     (202)     (281)
Inventories                                                                           -          -        (1)       (1)
Other Current assets                                                              2,839        177       234       326 
---------------------------------------------------------------------------------------------------------------------- 
Increase (decrease) in Current Liabilities                                          993    (17,379)     (481)     (668)
---------------------------------------------------------------------------------------------------------------------- 
Notes payable, accounts payable and miscellaneous creditors                       1,678    (21,645)     (472)     (657)
Collection to be cleared, accrued reimbursements collections to employers                                              
and affiliates for payments in excess                                              (128)        (5)       (6)       (8)
Accounts payable to National Health Fund, Pension Funds Insurance Companies                                            
and Other AFPs                                                                      337      3,071       114       158 
Pensions Payable                                                                    (34)        28        19        26 
Unearned Revenue                                                                    (21)         -         -         - 
Other accounts payable related to non operating result                             (828)     1,165      (136)     (189)
Other current liabilities                                                           (11)         -         -         - 
---------------------------------------------------------------------------------------------------------------------- 
Net Cash provided by Operating Activities                                        29,589     36,102    27,885    38,803 
---------------------------------------------------------------------------------------------------------------------- 
The accompanying notes are an integral part of these consolidated financial                                            
statements.                                                                                                            
---------------------------------------------------------------------------------------------------------------------- 
                                                                                                 (Concluded)           

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ADMINISTRADORA DE FONDOS DE PENSIONES PROVIDA S.A. AND SUBSIDIARIES 

 (Restated for general price-level changes and expressed in millions of constant
Chilean pesos (MCh$) as of December 31, 2002 and thousands of 
US dollars (ThUS$)) 
(See Notes 2 c. and o., respectively) 

Note 1.  THE COMPANY                                                            

Administradora de Fondos de Pensiones Provida S.A. is a publicly traded company 
incorporated on March 3, 1981. It is subject to the supervision of the          
Superintendency of Securities and Insurance (SVS) and the Superintendency of    
Pension Funds Administrators (SAFP).                                            

The sole object of Provida is to administer Fondos de Pensiones Provida the     
Pension Funds Types A, B, C, D and E, a defined contribution pension funds and  
the provision of related benefits, in accordance with D.L. 3,500 and            
modifications. Accordingly, Provida is regulated by the S.A.F.P. As of 1994, in 
accordance with Laws 19,301 and 18,876, Provida is allowed to create            
subsidiaries and to invest in companies that act as depositaries of securities. 

The main difference among the five types of funds is the portion invested in    
variable income securities. The Type A fund is the most concentrated in         
variable income, while Type E fund does not have any variable income component. 

Note 2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                             

a. Basis of Presentation - The accompanying financial statements have been      
prepared in accordance with regulations issued by the "Superintendencia de      
Administradoras de Fondos de Pensiones" (Superintendency of Pension Fund        
Administrators, herein referred to as the "SAFP") "Superintendencia de Valores  
y Seguros" (Superintendency of Securities and Insurance, herein referred to as  
the "SVS") and accounting principles generally accepted in Chile, ("Chilean     
GAAP"). The consolidated financial statements include certain reclassifications 
and additional disclosures in order to conform more closely to the form and     
content of the financial statements required by the United States Securities    
and Exchange Commission.                                                        

The preparation of financial statements in conformity with Chilean GAAP and US  
GAAP, requires management to make estimates and assumptions that affect the     
reported amounts of assets and liabilities, disclosures of contingent assets    
and liabilities as of the date of the financial statements, and the reported    
amounts of revenues and expenses during the reporting period. Actual results    
could differ from those estimates.                                              

b. Basis of Consolidation - The consolidated financial statements include the   
accounts of Administradora de Fondos de Pensiones Provida S.A. ("Provida" or    
the "Administrator") and the following subsidiaries:                            

  ------------------------------------------------------------------------------
               Subsidiary           2000              2001            2002
                                     %                 %               %
  ------------------------------------------------------------------------------
Provida Internacional S.A.         99.99986          99.99986      99.99986 
  ------------------------------------------------------------------------------
AFP Genesis S.A.                       -            99.999994     99.999994 
  ------------------------------------------------------------------------------
All significant transactions and balances between the companies have been       
eliminated in consolidation.                                                    

As of January 1, 2001, the subsidiary Provida Internacional S.A. maintains its  
accounting records in US dollars in accordance with Chilean GAAP. For           
consolidation purposes, these financial statements in dollars have been         
converted into Chilean pesos using the exchange rate as of the balance sheet    
date.                                                                           

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Notes to the Consolidated Financial Statements

c. Price-Level Restatement (Monetary Correction) - The consolidated financial   
statements are prepared on the basis of general price-level accounting in order 
to reflect the effect of changes in the purchasing power of the Chilean peso    
during each year. At the end of each reporting period, the consolidated         
financial statements are stated in terms of the general purchasing power of the 
Chilean peso using changes in the Chilean Indice de Precios al Consumidor       
(Consumer Price Index, or "IPC") as follows:                                    

o    Nonmonetary assets, liabilities, and shareholders' equity accounts are     
restated in terms of year-end purchasing power.                       

o    Monetary items are not restated as such items are, by their nature, stated 
in terms of current purchasing power in the financial statements.     

o    The price-level restatement credit or charge in the income statement       
represents the monetary gain or loss in purchasing power from holding 
assets and liabilities exposed to the effects of inflation.           

o    All the accompanying consolidated financial statements have been restated  
    in constant Chilean pesos of general purchasing power on December 31, 2002
("constant pesos") applied under the "prior month rule" as described  
    below, to reflect changes in the IPC from the financial statement dates to
December 31, 2002. This updating does not change the prior years'     
statements or information in any way except to update the amounts to  
constant pesos of similar purchasing power.                           

The general price-level restatements are calculated using the official consumer 
price index of the Chilean Instituto Nacional de Estadisticas (National         
Statistics Institute, or "INE") and are based on the prior month rule, in which 
the inflation adjustments are based on the consumer price index at the close of 
the month preceding the close of the respective period or transaction. The IPC  
index is considered by the business community, the accounting profession and    
the Chilean government to be the index which most closely complies with the     
technical requirement to reflect the variation in the general level of prices   
in the country and, consequently, is widely used for financial reporting        
purposes in Chile.                                                              

The values of the Chilean IPC used for price-level restatement purposes are as  
follows:                                                                        
                                            December 31,
Year                                             Index*         Change in index 

2000                                             106.82              4.7%       
2001                                             110.10              3.1%       
2002                                             113.36              3.0%       

---------------------                                                           
*  Index as of November 30 of each year, under prior month rule described above.

The price-level restated consolidated financial statements do not purport to    
represent appraised values, replacement cost, or any other current value of     
assets at which transactions would take place currently and are only intended   
to restate all nonmonetary financial statement components in terms of local     
currency of a single purchasing power and to include in the net result for each 
year the gain or loss in purchasing power arising from the holding of monetary  
assets and liabilities exposed to the effects of inflation.                     

d. Foreign Currency Translation - Balances in foreign currency have been        
translated at the year-end exchange rate. Indexed balances have been adjusted   
according to the readjustment index of the balance or as agreed to for this     
purpose.                                                                        

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Notes to the Consolidated Financial Statements

During 2001, after receiving authorization by the Chilean Tax Authority         
(Servicio de Impuestos Internos, SII), Provida Internacional changed its        
functional currency from the Chilean peso to US dollar starting on January 1st, 
considering that most of its operations are controlled in that currency.        

Assets and liabilities (in foreign currency) and UF (an inflation index-linked  
unit of account) and the investments in foreign related companies have been     
translated into Chilean pesos at the following year-end exchange rates:         

Currency                         31-Dec-00        31-Dec-01       31-Dec-02     
                            $                $               $

United States Dollar                  573.65          654.79           718.61   
UF                                 15,769.92       16,262.66        16,744.12   

e. Financial Investments - Time deposits are stated at cost plus accrued        
interest and UF or US dollar indexation adjustments, as applicable.             

Marketable securities: The company, as part of its trading activities maintains 
marketable securities, which mainly consist of recognition bonds, mutual fund   
units, and companies' bonds which are recorded at fair value unrealized gains   
and losses are recorded in income minimum rate of return.                       

Mandatory Investments: Provida must achieve a minimum return on the Pension     
Funds' assets, as required by D.L. 3,500, or compensate for any shortfall. To   
ensure the maintenance of the Funds' Value Provida is required to maintain a 1% 
investment in the amount of the corresponding pension fund which is a           
requirement of Chilean law. In addition to this amount, the company may         
maintain up to 0.02% further as an investment in the Pension Funds' assets,     
which is presented as other current assets. Should the minimum return by fund   
not be maintained, the Company may use the proceeds from its mandatory          
investments to reimburse the pension fund for the shortfall.                    

f. Property, plant and equipment - Have been valued at price-level restated     
cost. Depreciation has been determined using the straight-line method over the  
estimated useful lives of the assets.                                           

Capital lease assets are recorded at present value, which is calculated using   
the contracted monthly installments plus the purchase option at the interest    
rate implicit in the respective contract. The related obligations are included  
in "Other current liabilities and Other long-term liabilities" in the           
Consolidated Balance Sheets, net of deferred interest costs. Assets obtained    
under financial contracts are not the legal property of the Company until it    
decides to exercise the related purchase option. Therefore, the Company cannot  
freely dispose of them.                                                         

Capital lease assets are depreciated using the straight-line method over the    
estimated useful lives of the assets.                                           

g. Investments in Related Companies - Investments in related companies are      
included in other assets using the equity method, when there is significant     
influence over the affiliate. This valuation method recognizes in income the    
Company's equity participation in the net income or loss of each investee on an 
accrual basis, after eliminating intercompany transactions. Changes in          
shareholders' equity that do not affect the income of the related companies are 
recorded as direct charge to retained earnings, other reserves or accumulated   
deficit in development stage, where applicable. Under Chilean GAAP, significant 
influence is presumed to exist when the investment represents more than 10% and 
less than or equal to 50% of the investee's outstanding shares.                 

h. Goodwill - Goodwill results from differences between the carrying value of   
assets and liabilities acquired and the acquisition cost at the purchase date.  
Amortization is determined using the straight-line method over 20 years.        

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Notes to the Consolidated Financial Statements

i. Income tax and deferred taxes - Provida recognizes its income tax            
obligations in accordance with the tax laws of the respective countries in      
which it operates. Deferred taxes arising from those items which are treated    
differently for tax and book purposes have been recorded as established in      
Boletin Tecnico No. 60 (Technical Bulletin No. 60, or "BT60") of the Chilean    
Institute of Accountants, as amended.                                           

j. Employee Vacations -The cost of employee vacations is recorded on a monthly  
accrual basis.                                                                  

k. Staff severance indemnities - Indemnities agreed upon in the respective      
collective bargaining agreements are valued at the current value of the         
obligation calculated at today's salary rates.                                  

l. Revenue Recognition - Fee income from the Pension Fund is recognized when    
all the activities relating to the administration of the Pension Fund have been 
completed. In accordance with instructions issued by the S.A.F.P., fee income   
is not recognized for the Pension Funds' individual account administration      
until the contributions have been deposited.                                    

m. Software applications - Software acquired in the form of software packages   
which are recorded in Other property, plant and equipment have been valued at   
price-level restated cost. This software is being amortized using the           
straight-line method over the estimated useful lives of the software.           

n. Forward foreign exchange contracts - The Company maintains forward contracts 
to cover the risks of fluctuation in foreign exchange which are considered      
investment contracts or hedge contracts. These derivative instruments are       
stated at market value in accordance with Boletin Tecnico No. 57 (Technical     
Bulletin No. 57, or "BT57") of the Chilean Institute of Accountants.            

o. Convenience translation to US dollars - Provida maintains its accounting     
records and prepares its consolidated financial statements in Chilean pesos.    
The US dollar amounts disclosed in the accompanying financial statements are    
presented solely for the convenience of the reader using the observed exchange  
rate for December 31, 2002 of Ch$718.61 per US$1. This translation should not   
be taken to mean that the Chilean peso amounts actually represent, have been,   
or could be, converted into U.S. dollars at such a rate or at any other rate.   

p. Cash and cash equivalents - The Company and its subsidiaries have considered 
cash and cash equivalents to be all cash and investments defined under          
Technical Bulletin 50.                                                          

Cash flows from operating activities include all cash flows from operations,    
including fees from clients, payments to suppliers and personnel remuneration.  
In addition to the above, cash flows related to taxes, interest paid, financial 
income and in general all cash flows not otherwise defined as financing or      
investing activities are considered to be operating in nature. This concept is  
broader than the operating income used in the consolidated statement of income. 

q. Reclassification - Certain amounts in the prior years' financial statements  
have been reclassified to conform to the current year's method of presentation. 

Note 3.  CHANGES IN ACCOUNTING POLICIES                                         

During 2002 there were no changes in accounting policies from the prior year    
that might have a significant impact on the interpretation of these             
consolidated financial statements.                                              

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ADMINISTRADORA DE FONDOS DE PENSIONES PROVIDA S.A. AND SUBSIDIARIES 
Notes to the Consolidated Financial Statements

Note 4.  TIME DEPOSITS                                                          

Investments in time deposits have been made with Banco Security (interest rate  
0.25%) in the year 2002 and Banco de Santiago in the year 2001. The checking    
account in dollars is deposited with Brown Brothers Harriman Co. The amounts    
are detailed below:                                                             

                                                               2001         2002
                                                               MCh$         MCh$

Time deposits                                                   140          142
National Government bonds                                         -          537
Overnight deposits (US$ checking account)                        30            -
--------------------------------------------------------------------------------
Total                                                           170          679
--------------------------------------------------------------------------------

Note 5.  MARKETABLE SECURITIES                                                  

--------------------------------------------------------------------------------
                                                            As of December 31,
                                                           ---------------------
                                                            2001            2002
                                                            MCh$            MCh$
Marketable securities:                                                          
    Bonds issued by corporations                              89               2
    Bonds issued by Chilean Government agencies              205              94
    Notes issued by financial institutions                    19              21
--------------------------------------------------------------------------------
Total                                                        313             117
--------------------------------------------------------------------------------

Note 6.  MANDATORY INVESTMENT                                                   

In order to guarantee the capacity of the Administrator to cover the Pension    
Funds minimum return, as stipulated in Article 37 of D.L.3,500, and in          
conformity with Article 40 of the same legal regulation, the Administrator must 
maintain and asset known as Mandatory Investment equivalent to one percent (1%) 
of each Pension Fund. See Note 2 (e).                                           

--------------------------------------------------------------------------------
                                                            As of December 31,
                                                           ---------------------
                                                           2001         2002
                                                           MCh$         MCh$
   Pension Funds - Type A                                       -          839
   Pension Funds - Type B                                       -        8,997
   Pension Funds - Type C                                  74,885       58,489
   Pension Funds - Type D                                       -        7,996
   Pension Funds - Type E                                      68        3,074
--------------------------------------------------------------------------------
Total                                                       74,953       79,395 
--------------------------------------------------------------------------------

As of December 31, 2001, the Mandatory Reserve is MCh$74,953. This amount       
consists of Type C and Type E Pension Fund Mandatory Reserves of MCh$74,885 and 
MCh$68, respectively. These amounts are equivalent to Pension Fund Shares of    
6,938,961.46 and 5,465.42 respectively, according to the value of the Shares as 
of December 31, 2001.                                                           

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ADMINISTRADORA DE FONDOS DE PENSIONES PROVIDA S.A. AND SUBSIDIARIES 
Notes to the Consolidated Financial Statements

As of December 31, 2002, the Mandatory Reserve is MCh$79,395. This amount       
consists of Types A, B, C, D and E Pension Fund Mandatory Reserves of MCh$839,  
MCh$8,997, MCh$58,489, MCh$7,996 and MCh$3,074, respectively. These amounts are 
equivalent to Pension Fund Shares of 80,471.47, 881,371.81, 5,241,020.12,       
792,315.72 and 227,761.05 respectively, according to the value of the Shares as 
of December 31, 2002.                                                           

The Mandatory Reserve investment in Pension Funds generated net income of       
MCh$5,733, MCh$6,380 and MCh$4,858 during the years ended December 31, 2000,    
2001 and 2002, respectively, from recognizing the variation in the value of the 
Shares maintained as capital gains. These amounts are shown in the Consolidated 
Statements of Income as "Gain on mandatory investments."                        

Note 7.  FEE INCOME                                                             

In conformity with D.L.3,500 dated 1980, the Administrator has the right to     
establish its compensation based on commissions paid by affiliates.             

These commissions are designed to finance the Administration are include        
amounts designated for the administration of the Pension funds, the cost of the 
capitalization of individual accounts, of the old age pensions systems, of      
disability and survival pensions are benefits guaranteed by the State. These    
amounts also provide funds for the premium of insurance contracts to cover      
differences in the necessary capital to finance disability and survival         
pensions and the sum of the accumulated capital by the affiliates are the Fund  
Recognition Bonuses, if applicable, and administration cost of the other        
services that are established by law.                                           

In accordance with current regulations commissions on monthly contributions are 
recognized at the time that the contributions are received in the affiliates'   
personal accounts. Revenues are only recognized when this condition has been    
satisfied.                                                                      

From April 1999 to December 2002, the fixed fees that legally have to be        
deducted from the contributors' account, were Ch$ 390 per account per month,    
respectively. From December 2000 to 2002 the variable fee was 2.25%. Those      
affiliates who do not qualify for life and disability insurance are subject to  
a variable fee of 1.4% for the years ended December 31, 2000, 2001 and 2002.    
Types A, B, C, D and E have the same levels of fees described above.            

For the years ended December 31, 2000, 2001 and 2002, fee income related to     
Type A, B, C, D and E funds was as follows:                                     

--------------------------------------------------------------------------------
                                              Years ended December 31,
                                             2000           2001          2002
                                             MCh$           MCh$          MCh$
--------------------------------------------------------------------------------
Fixed fees                                   6,313          6,245         6,248 
Variable fees                               82,433         84,186        87,870 
Other Fees                                     346            752           785 
--------------------------------------------------------------------------------
Total                                       89,092         92,159        94,903 
--------------------------------------------------------------------------------

As of December 31, 2001 and 2002, the accrued fee from pension funds was        
MCh$1,798 and MCh$ 3,004 respectively, which is included in "Fees receivables". 

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ADMINISTRADORA DE FONDOS DE PENSIONES PROVIDA S.A. AND SUBSIDIARIES 
Notes to the Consolidated Financial Statements

Note 8.  DISABILITY AND SURVIVAL PENSION SYSTEM                                 

a. Financing of Disability and Survival Pensions:                               

D.L. 3,500 dated 1980, establishes that the Disability and Survival Pension     
will be funded with the balance in the member's individual capitalization       
account and is guaranteed by the state, when applicable.                        

In addition, in accordance with the law, partial and total disability pensions  
corresponding to those determined by the Medical Commission in their            
preliminary review, granted in accordance with the first ruling of D.L. 3,500   
("the First Ruling"), shall be funded by the Administrator that manages         
affiliates's pension funds and the State Guarantee, when applicable.            

The balance in the individual capitalization account therefore includes the     
accumulated capital to this individual capitalization account as explained      
below by the affiliates, including the contributions as outlined in article 53, 
and, when applicable, bonus recognition stipulated by the law. The              
Administrator must make by law an additional contribution and may transfer the  
funds from the voluntary savings of the affiliates.                             

The additional contributions made by the Administrator should equal the         
shortfall between the capital needed to fund the Disability and Survival        
Pension and the accumulated capital of the affiliates including their bonus     
recognition on the date of the shortfall. The Administrator shall be solely     
responsible for paying partial and total pensions originating from the first    
ruling and to pay additional contributions for those affiliates that can        
qualify for a Disability or Survival Pension as required by the Law.            

b. Insurance Contract:                                                          

In conformity with D.L. 3,500, Provida has purchased insurance from ING Seguros 
de Vida S.A. (formerly Aetna Chile Seguros de Vida S.A.) which covers the       
pensions of affiliates declared disabled through the first ruling and the       
initial and additional contributions specified in a) above. This agreement does 
not exempt Provida from the responsibility and obligation of paying pensions    
originated by the first ruling, making contributions to the member's individual 
account, or making additional contributions, when applicable.                   

The insurance policy runs from August 1, 2001 to July 31, 2003. Premiums are    
expressed as a percentage of the contributing affiliates' taxable remuneration; 
are variable, and are adjusted on the basis of the effective casualty rate.     
This adjustment is calculated when the effective casualty rate is less than the 
maximum contract rate, by comparing all monthly payments to a maximum of 0.95%  
of taxable remuneration, less corresponding bonuses for lower casualties. All   
values are expressed in UF. Provida's participation in the surplus will be      
100% if the casualty rate is equal to or lower than 0.95% and greater than      
0.80% (the cut rate) of the affiliates taxable remuneration; if the casualty    
rate's equal to or less than 0.80%, Provida will also have the right to an      
additional participation of 90% of the surplus for the amount that is below     
0.80%.                                                                          

In conformity with D.L. 3,500, Provida has purchased insurance from ING Seguros 
de Vida S.A. (formerly Aetna Chile Seguros de Vida S.A.) which covers the       
pensions of affiliates declared disabled through the first ruling, the initial  
contributions and additional contributions specified in paragraph a). This      
agreement does not exempt Provida from the responsibility and obligation of     
paying pensions originated by the first ruling, making contributions to the     
member's individual account, or making additional contributions, when           
applicable.                                                                     

The insurance policy spans from August 1, 2001 to July 31, 2003. Premiums are   
expressed as a percentage of the contributing affiliates' taxable remuneration; 
are variable, and are adjusted on the basis of the effective casualty rate.     
This adjustment is calculated when the effective casualty rate is less than the 

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ADMINISTRADORA DE FONDOS DE PENSIONES PROVIDA S.A. AND SUBSIDIARIES 
Notes to the Consolidated Financial Statements

maximum contract rate, by comparing all monthly payments to a maximum of 0.95%  
of taxable remuneration, less corresponding bonuses for lower casualties. All   
values are expressed in UF. Provida's participation in the surplus will be      
100% if the casualty rate is equal to or lower than 0.95% and greater than      
0.80% (the cut rate) of the affiliates taxable remuneration; if the casualty    
rate are equal to or less than 0.80%, Provida will also have the right to an    
additional participation of 90% of the surplus for the amount that is below     
0.80%.                                                                          

The final settlement of this contract will occur on January 31, 2008, but is    
extendable for up to 2 years by common agreement, with pre-settlements on March 
31 of each year beginning in 2003. In addition, in December of each year shall  
be an advance of monthly financial revenues on the basis of the value recorded  
as of November 30. Monthly financial revenues are a result of applying the      
interest rate previously defined in the contract, for each month to the amount  
of cash flow in the same month, plus the accumulated balance as of the previous 
month. In addition, the contract specifies monthly payments calculated with a   
provisional rate of 0.70%, applied over the total remuneration and monthly      
taxable income contributed in the preceding month and a fixed monthly premium   
of UF 2,200. Additionally, it establishes premium advances in the collection    
month equivalent to 70% of provisional settlements.                             

Payment of provisional premium balances and advances are due on the 20th of     
each month.                                                                     

In accordance with current legislation, the insurance company was chosen        
through public tender, and the results were published in the newspaper "La      
Tercera" on June 19, 20 and 21, 2001.                                           

The previous agreement was in effect from August 1, 1999 to July 31, 2001, with 
the same insurance company, and the same conditions as the current agreement,   
except the fixed premium was UF 3,920 monthly and the cut rate was 0.85%. In    
this agreement the bonus for a casualty rate lower than the premium rate was    
90% of surplus produced, if the range of casualty rate was equal to or less     
than 0.85%.                                                                     

The final settlements of the previous agreement will take place on March 31,    
2006, but is extendable for up to 2 years by common agreement. Preliminary      
settlements take place on March 31 of each year beginning in 2001. In addition, 
in December of each year an advance of the monthly financial revenues are given 
based on the value recorded as of November 30.                                  

Between August 1, 1997 and July 31, 1999, another contract was in place with    
the same insurance company, but with different conditions including a fixed     
premium that was UF 2,150 monthly, the maximum rate of 0.80% of taxable         
remuneration and the cut rate of 0.63%. The bonus for favorable casualty rates  
was 100% if casualty rate was in the range of 0.80% to 0.63% of taxable         
remuneration. If the casualty rate was equal to or less than 0.63% there was a  
participation in 90% of surpluses produced.                                     

The final settlements of this contract will take place on March 31, 2004, but   
is extendable for up to 2 years by common agreement. Preliminary settlements    
take place on March 31 of each year beginning in 1999. In addition, in December 
of each year an advance of the monthly financial revenues are given based on    
the value recorded as of November 30.                                           

Between August 1, 1995 and July 31, 1997, there was a contract with the same    
insurance company under the same conditions as the previous agreements, except  
that the fixed premium was UF 410 per month.                                    

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ADMINISTRADORA DE FONDOS DE PENSIONES PROVIDA S.A. AND SUBSIDIARIES 
Notes to the Consolidated Financial Statements

The final settlement of this contract will take place on March 31, 2003, but is 
extendable for up to one year by common agreement. Preliminary settlements take 
place on March 31 of each year beginning in 1997. In addition, in December of   
each year an advance of the monthly financial revenues are given based on the   
value recorded as of November 30.                                               

Between August 1, 1993 and July 31, 1995, there was a contract with the same    
insurance company. It had similar conditions to the previous ones, with a       
maximum rate of 0.90% and a temporary rate of 0.80% of taxable remuneration.    
The bonus for a decreased casualty rate was 100% of surpluses produced if the   
casualty rate was in the range of 0.90% to 0.75% of taxable remuneration. If    
the casualty rate was equal to or less than 0.75% there was a participation in  
90% of surpluses. Fixed premium was UF 50.                                      

Final settlement of this contract was extended for one year by agreement        
between the parties.                                                            

Provida sends to the insurance company a list of affiliates for whom payment    
has been recorded and those dependent affiliates whose delay in payment is      
known or is subject to confirmation due to incomplete information.              

c. Effect on results:                                                           

Insurance premium expenses for the years ended December 31, 2000, 2001 and      
2002, were MCh$28,425, MCh$30,354 and MCh$33,090, respectively, and are         
recorded as "Life and disability insurance premium expenses" in the             
Consolidated Statements of Income. For the years ended December 31, 2000, 2001  
and 2002, adjustments and provisions for a casualty rate higher than the        
premium rate were MCh$3,253, MCh$4,940 and MCh$6,342, respectively, while net   
financial income was MCh$914, MCh$1,171 and MCh$399, for the years ended        
December 31, 2000, 2001 and 2002, respectively.                                 

In "Other Operating Revenues", are included the settlements for a casualty rate 
lower than the premium rate and monthly financial revenues amounting to         
MCh$3,471, MCh$2,506 and MCh$2,950 in 2000, 2001 and 2002, respectively, for    
contract settlements from previous years.                                       

A description of the contracts with pending adjustments for casualties is       
discussed in paragraph b), and a detail of the contracts with pending           
adjustments for casualties are detailed in Note 35, c).                         

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ADMINISTRADORA DE FONDOS DE PENSIONES PROVIDA S.A. AND SUBSIDIARIES 
Notes to the Consolidated Financial Statements

d. Liabilities arising from additional contributions:                           

d.1) Collections to be cleared                                                  

Until 1997, the Company had collected additional contributions designated to    
finance the Disability and Survival Pension System fund, which were recorded as 
a liability of MCh$77 and MCh$72 as of December 31, 2001 and 2002 respectively. 
This liability increased in June 1998 and January 1999 as a result of the       
merger with AFP Union and AFP Proteccion, respectively. These liabilities are   
recorded under the caption "Collections to be cleared" in the Consolidated      
Balance Sheets and consist of the following:                                    

--------------------------------------------------------------------------------
                                                            As of December 31,
                                                           2001           2002
                                                           MCh$           MCh$
--------------------------------------------------------------------------------

1. Pending additional contributions                                             
Contributions of workers not identified in the                                  
affiliates master file or transferred to other                                  
Administrators, of deceased affiliates, or for which                            
only the summary sheet has been received identifying                            
the employer, or positive differences resulting from                            
subtracting the balance from the contribution summary.        72             69 

2. Additional contributions to be cleared                                       
Additional contributions and health Insurance contributions                     
of independent affiliates paid for which the support                            
sheet has not been received                                    5              3 
------------------------------------------------------------------------------- 
Totals                                                        77             72 
------------------------------------------------------------------------------- 

The balance of pending contributions will be reconciled internally or by        
transferring them to other pension fund administrators, as since January 1,     
1988, these contributions are paid directly into the Pension Fund.              

Comparative analysis of pending additional contributions:                       

--------------------------------------------------------------------------------
                                                            As of December 31,
                                                           2001           2002
                                                           MCh$           MCh$
--------------------------------------------------------------------------------
Pending additional contributions                                                
Beginning balance                                             74             69 
Pending for the year                                           -              - 
Cleared pending items:                                                          
  o  For Provida                                             (2)             -
  o  Sent to other Administrators                             -              -
------------------------------------------------------------------------------- 
Totals                                                        72             69 
------------------------------------------------------------------------------- 

d.2)  Accounts Payable to Insurance Companies                                   

This account represents obligations of the Administrator for disability and     
survival insurance premiums with ING Seguros de Vida S.A. and Compania de       
Seguros de Vida Consorcio Nacional de Seguros S.A. The liability, as explained  
in paragraph b), is for the difference between the final adjustment of the      
monthly premium and advances paid, which were MCh$727 and MCh$776 as of         
December 31, 2001 and 2002, respectively. These liabilities are due on the 20th 
of the following month. In addition, provisions for a casualty rate higher than 
the premium rate are estimated for the adjustment period with the insurance     
company that matures on March 31 in the next year, and were MCh$3,677 and       
MCh$2,804 for a total liability of MCh$4,404 and MCh$3,580 as of December 31    
2001 and 2002, respectively.                                                    

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ADMINISTRADORA DE FONDOS DE PENSIONES PROVIDA S.A. AND SUBSIDIARIES 
Notes to the Consolidated Financial Statements

e. Assets originated by payment of Disability and Survival Pensions:            

e. 1) Receivable from Insurance Companies                         

       -------------------------------------------------------------------------
                                                            As of December 31,
                                                           2001           2002
                                                           MCh$           MCh$
       -------------------------------------------------------------------------
Life Insurance Companies (*):                                     
          Balance at end of previous year                   109            708
Paid disability and survival pensions                     
          Covered by  insurance companies                14,323         41,041
          Additional contributions paid                     616              -
          Insurance companies reimbursements           (14,319)       (41,128)
       -------------------------------------------------------------------------
      Total                                                 729            621
       -------------------------------------------------------------------------

  (*) Includes contracts with Consorcio Nacional, Euroamerica, Inter
      Rentas, ISE Las Americas and ING by merger with AFP Union contracts with
Vida Corp, AXA and La Prevision, by merger with AFP Proteccion and
  contracts with Chilena Consolidada by merger with AFP El Libertador.

e. 2) Receivable from the State                                   

       -------------------------------------------------------------------------
                                                            As of December 31,
                                                           2001           2002
                                                           MCh$           MCh$
       -------------------------------------------------------------------------
      o   Balance as of previous year                        64             29
o   Pensions financed with state guarantee                        
          according to art. 73 of D.L. 3,500             11,132         12,821
o   Family assignations financed by                               
          the Administrator                               1,310          1,386
       o   Reimbursement of state guarantee              (11,168)       (12,830)
       o   Reimbursement of family assignations           (1,308)        (1,375)
       -------------------------------------------------------------------------
      Total                                                  30             31
       -------------------------------------------------------------------------

Note 9.  RECEIVABLES AND NOTES DUE FROM RELATED COMPANIES                       

Receivables and notes due from related companies were as follows:               

       -------------------------------------------------------------------------
                                                          Short-term
                                                           2001           2002
                                                           MCh$           MCh$
       -------------------------------------------------------------------------
      AFPC Porvenir de Colombia                             450            634
      Servicios de Adm. Previsional S.A.                      -            221
      BBVA Pensiones Chile S.A.                               -             85
      ------------------------------------------------------------------------
      Total                                                 450            940
      ------------------------------------------------------------------------

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ADMINISTRADORA DE FONDOS DE PENSIONES PROVIDA S.A. AND SUBSIDIARIES 
Notes to the Consolidated Financial Statements

Note 10.  MISCELLANEOUS RECEIVABLES, NET                                        

Miscellaneous receivables consists of the following:                            

--------------------------------------------------------------------------------
                                                            As of December 31,
                                                           2001           2002
                                                           MCh$           MCh$
--------------------------------------------------------------------------------
Employees current account, net                               714            749 
Forward exchange contracts (*)                               160                
Welfare fund current account                                 117              6 
Medical leave advances, net                                   30             35 
Advance to suppliers                                          42             76 
Short term  housing savings complementary loan                23             22 
Pending operations debtors, net                               38             40 
Recoverable expenses AFP Genesis                             110            320 
Others                                                        53            122 
--------------------------------------------------------------------------------
Total                                                      1,287          1,370 
--------------------------------------------------------------------------------
(*) In 2002 forward exchange contracts generate liabilities amounting to        
MCh$245 which is included in "Accounts payable".                                

Note 11. PREPAID EXPENSES                                                       

Prepaid expenses consists of the following:                                     

------------------------------------------------------------------------------- 
                                                            As of December 31,
                                                           2001           2002
                                                           MCh$           MCh$
------------------------------------------------------------------------------- 
Advertising                                                   47             23 
Quarterly AFP association installment:                                          
 medical commissions                                         82             83
AFP association social installment                            49             92 
Quarterly AFP association installment:                                          
 medical observer system                                     31             30
Insurance                                                     24            125 
Others                                                        44             41 
------------------------------------------------------------------------------- 
Total                                                        277            394 
------------------------------------------------------------------------------- 

Note 12. OTHER CURRENT ASSETS                                                   

Other current assets consists in mandatory investments provision:               
--------------------------------------------------------------------------------
                                                              As of December 31,
                                                           2001         2002
                                                           MCh$         MCh$
--------------------------------------------------------------------------------
   Amounts maintained for Type A Fund                         -              -
   Amounts maintained for Type B Fund                         -              -
   Amounts maintained for Type C Fund                       111              -
   Amounts maintained for Type D Fund                         -              -
   Amounts maintained for Type E Fund                         2              1
------------------------------------------------------------------------------- 
Total                                                        113              1 
------------------------------------------------------------------------------- 

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ADMINISTRADORA DE FONDOS DE PENSIONES PROVIDA S.A. AND SUBSIDIARIES 
Notes to the Consolidated Financial Statements

Note 13. PROPERTY, PLANT AND EQUIPMENT, NET                                     

Property, plant and equipment consists of the following:                        

--------------------------------------------------------------------------------
                                                              As of December 31,
                                                           2001           2002
                                                           MCh$           MCh$
--------------------------------------------------------------------------------
Land                                                       4,698          4,698 
Buildings and Infrastructure                              17,034         17,034 
Equipment, furniture and fixtures                          2,678          2,565 
Other fixed assets (1)                                     7,236          6,956 
Accumulated depreciation                                  (7,039)        (7,609)
--------------------------------------------------------------------------------
Property, plant and equipment, net                        24,607         23,644 
--------------------------------------------------------------------------------
(1) Capital lease asset are includes, and the detail consist of the following:  

                                                        [Enlarge/Download Table]
---------------------------------------------------------------------------------------------
                                                              Maturity ThCh$                 
                                         ----------------------------------------------------
                          Interest rate                                             2007 and 
                             annual        2003       2004      2005       2006    thereafter
---------------------------------------------------------------------------------------------
                                                                                             
Rancagua office               8.70%           3          3         4          4        44    
Huerfanos office              8.87%          10         11        12         13       304    
Quilicura office              8.01%          17         18        20         22        51    
---------------------------------------------------------------------------------------------
Total                                        30         32        36         39       399    
---------------------------------------------------------------------------------------------

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                              ADMINISTRADORA DE FONDOS DE PENSIONES PROVIDA S.A. AND SUBSIDIARIES                           
                                        Notes to the Consolidated Financial Statements                                      

Note 14.  INVESTMENTS IN RELATED COMPANIES                                                                                  

a. Investments in related companies consists of the following:                                                              
--------------------------------------------------------------------------------------------------------------------------- 
                                                                  As of and for the years ended December 31,                
                                                  ------------------------------------------------------------------------- 
                                                       Participation          Carrying value        Equity in gain (loss)   
                                                    2000   2001    2002      2001       2002      2000     2001      2002   
--------------------------------------------------------------------------------------------------------------------------- 
                                                     %       %      %         MCh$       MCh$      MCh$      MCh$      MCh$ 
                                                                                                                            
Afore Profuturo (Mexico)  (1) (2)                  14.45   14.45    -            -         -      4,006       545         - 
AFPC Porvenir (Colombia) (1)                       20.00   20.00  20.00      7,522      7,726     1,331     2,548     1,533 
Afore Bancomer (Mexico) (1) (3)                     7.50    7.50   7.50      6,312      7,357       875     4,810     5,947 
AFP Horizonte (Peru) (1)                           15.87   15.87  15.87      2,627      3,103     1,204     1,687     2,035 
AFP Crecer (El Salvador) (1) (4)                   19.00   19.00  19.00      2,360      3,306       753     1,075       792 
Servicios de Adm. Previsional S.A. (Chile)  (5)    37.80   37.80  37.80        233        162         -      (236)     (400 
AFP Genesis (Ecuador) (1) (6)                      25.00     -      -            -          -        37         -         - 
Inversiones DCV S.A. (Chile)                       23.14   23.14  23.14        239        275        52        74        58 
Soc. Adm. De Fondos de Cesantia de Chile S.A.          -       -  37.80          -        380         -         -      (253)
--------------------------------------------------------------------------------------------------------------------------- 
Total                                                                       19,293     22,309     8,258    10,503     9,712 
--------------------------------------------------------------------------------------------------------------------------- 

(1)  These investments are measured in US$.                                     
(2)  Provida International's investment in Afore Profuturo (Mexico) was sold to 
   Grupo Nacional Provincial Pensiones S.A. de C.V. (Mexico) effective March
2001, for ThUS$ 61,698. The effect in income of this transaction was  
applied to the amortization of part of the goodwill generated in the  
   purchase of Afore Bancomer and was part of the process of the purchase of
a 7.5% participation in Afore Bancomer, since Provida, according to   
Mexican legislation, cannot have share participation in two Afores.   
(3)  Provida purchased a 7.5% share in Afore Bancomer effective November 30,    
2000, for ThUS$66,264. This purchase was made as part of Banco Bilbao 
Vizcaya Argentaria's agreement to purchase a total of 49% of Afore    
Bancomer.                                                             
(4)  On March 30, 2000, AFP Porvenir, in which Provida Internacional had a 45%  
ownership, merged with AFP Maxima and AFP Prevision in El Salvador,   
 creating the AFP Crecer and diluting Provida Internacional's ownership.
(5)  In October 2000, Servicios de Adm. Previsional S.A. (PreviRed.com) was     
formed together with all the other Chilean AFPs. PreviRed.com began   
operations in October 2001.                                           
(6)  On September 6, 2001, Provida International exercised its purchase option  
for the 75% of the ownership of AFP Genesis S.A., Ecuador that was    
previously held by Filanbanco S.A. The agreed-upon purchase price was 
   US$1,625,000 and generated goodwill of ThUS$ 642,034. As a result of this
purchase, Provida Internacional reached a participation of 100% in the
said AFP, and therefore this investment is presented on a consolidated
basis as of December 31, 2001.                                        

b.   Goodwill, net consists of the following:                                   

--------------------------------------------------------------------------------
                                                            As of December 31,
                                                         2001         2002
                                                         MCh$         MCh$
--------------------------------------------------------------------------------
AFP  Proteccion (Chile) (1)                               58,756         55,284 
Afore Bancomer (Mexico)                                   14,269         14,396 
AFP  Union (Chile) (1)                                     8,578          8,050 
AFP  El  Liberator (Chile) (1)                             1,028            952 
AFPC Porvenir (Colombia)                                   1,071          1,060 
AFP Crecer (El Salvador)                                     600            604 
AFP Genesis (Ecuador)                                        448            453 
AFP  Horizonte ( Peru)                                       413            410 
--------------------------------------------------------------------------------
Total                                                     85,163         81,209 
--------------------------------------------------------------------------------
(1) Absorbed by Provida S.A.                                                    

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ADMINISTRADORA DE FONDOS DE PENSIONES PROVIDA S.A. AND SUBSIDIARIES 
Notes to the Consolidated Financial Statements

Goodwill amounts are amortized over a maximum of 20 years, based upon the       
estimated period of return on the investment. Amortization were MCh$4,370,      
MCh$24,697 and MCh$4,930 for the years 2000, 2001 and 2002, respectively, and   
includes an extraordinary write-off of MCh$19,663 during 2001 generated by the  
purchase of Afore Bancomer, in Mexico.                                          

Note 15. OTHER ASSETS                                                           

--------------------------------------------------------------------------------
                                                          As of December 31,
                                                           2001           2002
                                                           MCh$           MCh$
--------------------------------------------------------------------------------
Bond agreement issuance costs                                  -            387 
Mandatory investments of AFP Genesis                         471            169 
Loan origination costs for purchase of former                                   
AFP Proteccion and AFP Union (*)                             386            192 
Employee loans and advances                                   58             41 
Remodeling of leased customer service centers                101             78 
Guarantees for leased premises and others                     54             52 
Reimbursable financing contributions contracts                                  
 with service companies                                      15             94
Deferred expenses of AFP Genesis                               8              5 
--------------------------------------------------------------------------------
Total                                                      1,093          1,018 
--------------------------------------------------------------------------------
(*) These commissions are being amortized over the term of the bank loans       

Note 16. OBLIGATION WITH BANKS AND FINANCIAL INSTITUTIONS                       

a. Short-term obligations                                                       

Obligations with banks and financial institutions are as follows:               
--------------------------------------------------------------------------------
                                                            As of December 31,
                                                           2001           2002
                                                           MCh$           MCh$
--------------------------------------------------------------------------------
Syndicated loans with Banco Scotiabank                                          
Sudamericano and others, with maturity                                      
 less than one year                                       3,350          3,349
Bank overdrafts, maturity  0 to 30 days:                                        
Banco de Chile                                               145            523 
Banco Santiago                                                21             13 
Banco Santander                                            3,268          4,812 
Banco BBVA Bhif                                              270              4 
Banco del Estado de Chile                                      1             17 
Banco Credito e Inversiones                                    5              5 
Accrued interest expenses of syndicated loan                  48              4 
------------------------------------------------------------------------------- 
Total                                                      7,108          8,727 
------------------------------------------------------------------------------- 

The use of the above overdraft required to finance business operations          
generates interest expenses by applying a variable interest rate agreed upon    
between both parties, the average interest rate paid during 2002 was 3,29%      
(anual). As of December 31, 2002 the unused credit lines amount to MCh$41,126.  

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ADMINISTRADORA DE FONDOS DE PENSIONES PROVIDA S.A. AND SUBSIDIARIES 
Notes to the Consolidated Financial Statements

b.    Long-term obligations                                                     

Provida has syndicated loans with Banco Scotiabank Sud Americano, Banco         
Santiago and Bank Boston N.A.                                                   

These long-term obligations are for UF 300,000 payable in installments of UF    
100,000 each, maturing semi-annually finishing in March 2005. The interest rate 
is the TAB rate (active banking rate), for 90-day indexed operations plus 0.75% 
per year (1.00% until June 12, 2001), payable quarterly.                        

The outstanding balance of this loan was MCh$8,375 and MCh$5,023 as of December 
31, 2001 and 2002, respectively.                                                

Note 17. NOTES AND ACCOUNTS DUE TO RELATED COMPANIES                            

BBVA Pensiones Chile S.A.                                                       

Provida purchased 89.1% of the share ownership of AFP Proteccion S.A. for a     
price of UF 1,506,001.59 plus ThUS$ 100,000, payable in 9 semi-annually         
variable maturing installments starting on May 15, 1999. Interest was           
calculated using the six month LIBOR rate plus 2.25% per year for dollars, and  
the TAB rate for 180 days plus 2.00% for UF. The debt in dollars was fully paid 
and the obligation in UF was renegotiated at the TAB rate for 90 days plus      
0.75% (1.00% until June 12, 2001).                                              

As of December 31, 2002 the principal outstanding is UF 530,477.46 plus         
interest of UF 915.07 with a rate 1.35%.                                        

a. Short-term                                                                   

As of December 31, 2001, the principal is UF 376,500.40 plus interest of UF     
7,237.14, which is equivalent to MCh$ 6,428. Semi-annual maturities due on May  
15, 2003 and November 15, 2003 for a total of UF 350,535.07 plus accrued        
interest in the amount of UF 915.07, which is equivalent to the liability as of 
December 31, 2002 of MCh$ 5,885.                                                

b. Long-term                                                                    

Semi-annual payment is due from May 15, 2004. Total liabilities are UF          
179,942.39 and UF 496,202.73, which is equivalent to MCh$ 3,013 and MCh$ 8,312  
as of December 31, 2002 and 2001, respectively.                                 

Note 18. WITHHOLDINGS FROM PENSIONERS                                           

In conformity with the stipulations in D.L. 3,500, the Administrator must       
collect the independent affiliates' health contributions and discount health    
contributions from pensions financed by the Pension Fund and transfer these     
amounts to the Fondo Nacional de Salud (National Health Fund) or the            
corresponding health insurance institution.                                     

Accordingly, balances in these accounts represent contributions collected that  
must be transferred to the National Health Fund or the respective health        
insurance institutions in the following month, in accordance with current       
regulations.                                                                    

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The balances owed as of December 31, 2001 and 2002 are as follows:              

--------------------------------------------------------------------------------
                                                          As of December 31,
                                                           2001           2002
                                                           MCh$           MCh$
--------------------------------------------------------------------------------
a. Independent affiliates                                                       
o Balance at closing of previous year                        26             41
o Withholding of health contributions from affiliates                         
  during the year                                         5,642          3,278
 o Payments to National Health Fund during the year       (5,625)        (3,163)
--------------------------------------------------------------------------------
  Independent affiliates' health withholding                 43            156
--------------------------------------------------------------------------------
b. Pensioners                                                                   
o Balance at closing of previous year                       770            878
o Withholding of health contributions from                                    
  pensioners during the year                              8,466          8,313
 o Payments to National Health Fund during the year       (5,507)        (5,798)
Payments to Health Insurance institutions                                 
   during the year                                        (2,824)        (2,663)
------------------------------------------------------------------------------- 
  Pensioners health withholdings (*)                        905            730
------------------------------------------------------------------------------- 
(*) These number are included in "Withholdings from pensioners".                

Note 19. WITHHOLDINGS                                                           

Withholdings are is as follows:                                                 
--------------------------------------------------------------------------------
                                                            As of December 31,
                                                           2001           2002
                                                           MCh$           MCh$
--------------------------------------------------------------------------------
Retention of taxes from foreign shareholders                   -            683 
Social security payments                                     282            305 
Payroll taxes withholdings                                   414            114 
Other payroll withholdings                                   347            281 
--------------------------------------------------------------------------------
Total                                                      1,043          1,383 
--------------------------------------------------------------------------------

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ADMINISTRADORA DE FONDOS DE PENSIONES PROVIDA S.A. AND SUBSIDIARIES 
Notes to the Consolidated Financial Statements

Note 20.  ACCRUED EXPENSES                                                      

Accrued Expenses are as follows:                                                

--------------------------------------------------------------------------------
                                                          As of December 31,
                                                          2001          2002
                                                          MCh$          MCh$
--------------------------------------------------------------------------------
Employee benefits - net of advances                        1,440          1,427 
Accrued vacation                                           1,075            948 
Voluntary retirement plan severance                          567              - 
General expenses                                             368            643 
Sales commissions                                            209              - 
Other accruals                                               527            221 
--------------------------------------------------------------------------------
Total                                                      4,186          3,239 
--------------------------------------------------------------------------------

Note 21. OTHER CURRENT LIABILITIES                                              

--------------------------------------------------------------------------------
                                                            As of December 31,
                                                           2001           2002
                                                           MCh$           MCh$
------------------------------------------------------------------------------- 
Professional fees and other                                   85             90 
------------------------------------------------------------------------------- 
Total                                                         85             90 
------------------------------------------------------------------------------- 

Note 22. OTHER LONG-TERM LIABILITIES                                            

Other Long-Term Liabilities consists of the following:                          

--------------------------------------------------------------------------------
                                                  Interest    As of December 31,
                                                              ------------------
                                                    rate       2001         2002
                                                               MCh$         MCh$
--------------------------------------------------------------------------------
Capital leasing obligations:                                                    
 o U.A.P. Seguros de Vida (**)                     8.97%        350          340
 o Seguros de Vida Euroamerica (*)                 8.70%         58           55
 o Santiago Leasing (**)                           8.01%        128          111
Other:                                                                          
o  Provision for pensions Banco                                               
    Hipotecario Chile                                           536          443
 o  Guarantees                                                   69           65
--------------------------------------------------------------------------------
Total                                                         1,141        1,014
--------------------------------------------------------------------------------

(*)  Semester payments                                                          
(**) Monthly payments                                                           

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ADMINISTRADORA DE FONDOS DE PENSIONES PROVIDA S.A. AND SUBSIDIARIES 
Notes to the Consolidated Financial Statements

Note 23. INCOME TAXES                                                           

In accordance with Chilean law, the Company and each of its subsidiaries        
compute and pay tax on a separate return basis rather than on a consolidated    
basis. The Chilean statutory first category (corporate) income tax rate was     
16%. Enacted income tax rates in Chile are scheduled to be 16.5% and 17% for    
the taxation years ended December 31, 2003 and 2004, respectively.              

a. Income taxes:                                                                

--------------------------------------------------------------------------------
                                               As of December 31
                                             2000           2001          2002
                                             MCh$           MCh$          MCh$
--------------------------------------------------------------------------------
Taxable income                              (1,487)         37,348        35,938
Payable (recoverable) taxes                   (224)          5,645         5,881
Special taxes                                     1              2             1
Retained earnings for Tax purposes           14,241         35,399        48,750
Shareholders' credit for future dividends     1,169          5,310         7,991
--------------------------------------------------------------------------------

b. Deferred income taxes:                                                       

Deferred income taxes consist of the following as of December 31, 2001 and 2002:

                                                        [Enlarge/Download Table]
-------------------------------------------------------------------------------------------------------- 
                                                                 Short-term               Long-term      
                                                             2001          2002       2001        2002   
                                                             MCh$          MCh$       MCh$        MCh$   
-------------------------------------------------------------------------------------------------------- 
                                                                                                         
Deferred income tax assets:                                                                              
Accrued Life and disability insurance                         (182)          (82)        -             - 
Accrued vacations                                              172           160         -             - 
Leasing assets, net                                              -            (3)      (86)          (76)
Unearned commissions                                           103           108         -             - 
Leasing obligations, net                                         -            11        97            81 
Provision BHC                                                    -             -       104            90 
Other deferred income taxes                                     15             5         7           (95)
-------------------------------------------------------------------------------------------------------- 
    Total deferred income tax assets                           108           199       122             - 
-------------------------------------------------------------------------------------------------------- 
Deferred income tax liabilities:                                                                         
Contracts of change insurance                                    -             -       413           144 
Bond agreement collective contract                               -            58        55            65 
Gain on mandatory investment                                     -             -     1,446         2,110 
Other deferred income taxes, net complementary accounts         62            16     1,051            34 
-------------------------------------------------------------------------------------------------------- 
    Total deferred income tax liabilities                       62            74     2,965         2,353 
-------------------------------------------------------------------------------------------------------- 

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ADMINISTRADORA DE FONDOS DE PENSIONES PROVIDA S.A. AND SUBSIDIARIES 
Notes to the Consolidated Financial Statements

As of December 31, 2002, deferred income taxes are mainly composed of temporary 
differences in mandatory investment funds Types A,B,C,D and E that are shown at 
present values of MCh$2,110, and other temporary differences of MCh$118.        
Deferred income taxes and amortization of complementary accounts resulted in    
deferred tax benefit MCh$221, MCh$3,617 and MCh$489, respectively for the years 
ended December 31, 2000, 2001 and 2002.                                         

c. Income taxes for the years ended December 31, 2000, 2001 and 2002 are as     
follows:                                                                        

                                                        [Enlarge/Download Table]
--------------------------------------------------------------------------------------------------------- 
                                                                              Years ended December 31,    
                                                                            2000       2001        2002   
                                                                            MCh$       MCh$        MCh$   
--------------------------------------------------------------------------------------------------------- 
                                                                                                          
Provision for 1st category taxes                                                -      (5,645)     (5,827)
Recoverable 1st category income taxes                                         223           -           - 
Mandatory reserve deferred income taxes and deferred charges                (743)        (941)        (86)
Deferred income tax arising from application of Technical Bulletin 60      (3,542)     (6,014)          - 
Income tax arising from foreign investments                                   123      (8,608)          - 
Credits for provision for 1st category taxes                                    -       5,596       1,873 
Complementary accounts amortization                                         4,384       3,337         575 
Adjustment to prior year income tax                                           299           -           - 
Provision for additional tax                                                   (1)         (1)         (1)
----------------------------------------------------------------------------------------------------------
Income tax                                                                    743     (12,276)     (3,466)
----------------------------------------------------------------------------------------------------------

d. Recoverable and (payable) taxes are as follows:                              

--------------------------------------------------------------------------------
                                                              As of December 31,
                                                             -------------------
                                                            2001        2002
                                                            MCh$        MCh$
--------------------------------------------------------------------------------
1st category income taxes payable                            (5,645)     (5,751)
Special tax                                                      (2)         (1)
Provisional monthly payments                                    338       1,286 
Credits for training costs                                      233          65 
Credits for taxes paid on foreign investment                  5,596       1,874 
Credits from AFP Genesis (Ecuador)                               32          51 
Adjustment to prior year income tax                             215         814 
--------------------------------------------------------------------------------
Total                                                           767      (1,662)
--------------------------------------------------------------------------------

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ADMINISTRADORA DE FONDOS DE PENSIONES PROVIDA S.A. AND SUBSIDIARIES 
Notes to the Consolidated Financial Statements

Note 24.  LONG-TERM LIABILITIES:                                                

Maturities of long-term liabilities as shown in Notes 16, 17, and 23 are the    
following:                                                                      

--------------------------------------------------------------------------------
                                                            As of December 31,
                                                       -------------------------
                                                           2001           2002
                                                           MCh$           MCh$
--------------------------------------------------------------------------------
2003                                                        8,979               
2004                                                        6,209          6,458
2005                                                        1,764          1,770
2006                                                           70             96
2007 and thereafter                                           806            726
--------------------------------------------------------------------------------
Total                                                      17,828          9,050
--------------------------------------------------------------------------------

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ADMINISTRADORA DE FONDOS DE PENSIONES PROVIDA S.A. AND SUBSIDIARIES 
Notes to the Consolidated Financial Statements

Note 25.  SHAREHOLDERS' EQUITY                                                  

                                                        [Enlarge/Download Table]

Changes in shareholders' equity for the years ended December 31, 2000, 2001 and 2002 are as follows:                     
------------------------------------------------------------------------------------------------------------------------ 
                                                                Accumulated                                              
                                           Additional             deficit                                                
                                 Paid-in    Paid-in    Other      during      Retained     Net       Interim             
                                  capital   capital   reserves  development   Earnings   income     Dividends     Total  
                                   MCh$      MCh$       MCh$       MCh$         MCh$       MCh$       MCh$        MCh$   
------------------------------------------------------------------------------------------------------------------------ 
                                                                                                                         
Balances as of  January 1, 2000    75,581       108       10       (5,939)      30,956    20,458      (1,979)    119,195 
Dissenting shareholders, AFP                                                                                             
Proteccion                           (389)        -      389            -            -         -           -           - 
Transfer of 1999 net income             -         -        -            -       18,479   (20,458)      1,979           - 
Final dividends paid                    -         -        -            -       (4,175)        -           -      (4,175)
Deficit during development stage        -         -        -       (5,114)           -         -           -      (5,114)
Interim Dividend                        -         -        -            -            -         -      (5,003)     (5,003)
Absorption of deficit during                                                                                             
 development  stage                     -         -        -        3,462       (3,462)        -           -           - 
Cumulative translation                                                                                                   
adjustment of foreign affiliates        -         -      468           39            -         -           -         507 
Price-level restatement             3,534         5        -         (139)       2,040         -         (80)      5,360 
Net income  for the year                -         -        -            -            -    30,372           -      30,372 
------------------------------------------------------------------------------------------------------------------------ 
Balances as of December 31, 2000   78,726       113      867       (7,691)      43,838    30,372      (5,083)    141,142 
------------------------------------------------------------------------------------------------------------------------ 
Restated to constant Chilean                                                                                             
pesos of December 31,  2002        83,602       120      921       (8,168)      46,553    32,253      (5,398)    149,883 
------------------------------------------------------------------------------------------------------------------------ 
Balances as of January 1, 2001     78,726       113      867       (7,691)      43,838    30,372      (5,083)    141,142 
Transfer of 2000 net income             -         -        -            -       25,289   (30,372)      5,083           - 
Final dividends paid                    -         -        -            -      (10,184)        -           -     (10,185)
Deficit during development stage        -         -        -           24            -         -           -          24 
Interim dividend                        -         -        -            -            -         -      (7,700)     (7,700)
Absorption of deficit during                                                                                             
  development stage                     -         -        -        4,172       (4,172)        -           -           - 
Cumulative translation                                                                                                   
adjustment                                                                                                               
of foreign affiliates                   -         -    1,998         (737)           -         -           -       1,261 
Price-level restatement             2,441         4       27         (133)       1,794         -         (69)      4,064 
Net income for the year                 -         -        -            -            -    32,359           -      32,359 
------------------------------------------------------------------------------------------------------------------------ 
Balances as of December 31, 2001   81,167       117    2,892       (4,365)      56,565    32,359      (7,769)    160,965 
------------------------------------------------------------------------------------------------------------------------ 
Restated to constant Chilean                                                                                             
pesos of December 31,  2002        83,602       120    2,979       (4,496)      58,261    33,330      (8,002)    165,794 
------------------------------------------------------------------------------------------------------------------------ 
Balances as of January 1, 2002     81,167       117    2,892       (4,365)      56,565    32,359      (7,769)    160,965 
Transfer of 2001 net income             -         -        -            -       24,590   (32,359)      7,769           - 
Final dividends paid                    -         -        -            -      (14,952)        -           -     (14,952)
Interim dividend                        -         -        -            -            -         -      (9,277)     (9,277)
Absorption of deficit during                                                                                             
development stage                       -         -        -        4,365       (4,365)        -           -           - 
Cumulative translation                                                                                                   
adjustment                              -         -        -            -            -         -           -             
of foreign affiliates                   -         -    1,944            -            -         -           -       1,944 
Price-level restatement             2,435         3       82            -        1,894         -        (148)      4,266 
Net income for the year                 -         -        -            -            -    34,007           -      34,007 
------------------------------------------------------------------------------------------------------------------------ 
Balances as of December 31, 2002   83,602       120    4,918            -       63,732    34,007     (9,425)     176,953 
------------------------------------------------------------------------------------------------------------------------ 

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ADMINISTRADORA DE FONDOS DE PENSIONES PROVIDA S.A. AND SUBSIDIARIES 
Notes to the Consolidated Financial Statements

Common stock:                                                                   

331,316,623 common shares with no par value represent Provida's authorized,     
issued, and outstanding common stock at December 31, 2002.                      

Majority shareholders:                                                          

                                                        [Enlarge/Download Table]
--------------------------------------------------------------------------------------------------------------
                                                             Years ended December 31,                         
                                   ---------------------------------------------------------------------------
                                            2000                      2001                       2002         
--------------------------------------------------------------------------------------------------------------
                                    Purchases      Sales      Purchases      Sales      Purchases      Sales  
                                     Shares       Shares        Shares       Shares       Shares       Shares 
                                                                                                              
BBVA Pensiones Chile S.A.           4,851,365           -             -           -             -            -
The Bank of New York (C.951 SVS)   14,172,690   8,248,320       762,675   2,175,000    11,631,195   22,728,455
BBVA Securities Inc.                        -           -             -     525,000             -    1,050,000
--------------------------------------------------------------------------------------------------------------

The Bank of New York acts as custodian for Provida's American Depositary        
Shares.                                                                         

Profit Distributions:                                                           

As required by the Chilean Companies Law, unless otherwise decided by the       
unanimous vote of the issued and subscribed shares, Provida must distribute a   
cash dividend in an amount equal to at least 30% of Provida's net income for    
each year. In compliance with the law, it is the intention of the Board of      
Directors to pay an interim dividend during October and a final dividend after  
the General Shareholders' meeting in the following year. The total dividend     
will not be less than the legal minimum, however it will not exceed 80% of the  
net income for the year. The dividend will depend on fulfillment of budgeted    
income, cash requirements to finance the mandatory reserve, development of the  
company, and final income for the year.                                         

However, Provida cannot distribute as dividend the part of earnings generated   
by investee companies, which should be allotted to cover the balance of the     
account "Development Period Accumulated Deficit" of the respective companies.   
In the year 2002 the balance of this account was amortized. In the prior year   
11.1% , equivalent to ThCh$4,400, was allotted to reduce the balance of the     
account "Development Period Accumulated Deficit" in April 2001, after the       
approval of the Ordinary General Meeting of Shareholders.                       

Accumulated deficit during development stage:                                   

Accumulated deficit during development stage is the result of organizational    
and start-up expenses incurred by foreign related companies. Such expenses are  
recorded directly against equity as permitted by the SAFP. The deficit          
originated in each related company is relieved by the net income generated by   
the corresponding company after the commencement of the operating stage. At     
year-end 2002, this account is zero.                                            

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Notes to the Consolidated Financial Statements

The detail of this account is as follows:                                       
--------------------------------------------------------------------------------
                                                          As of December 31,
                                                           ---------------------
                                                           2001           2002
                                                           MCh$           MCh$
--------------------------------------------------------------------------------

Afore Bancomer (Mexico)                                    (4,496)            - 
------------------------------------------------------------------------------- 
Total                                                      (4,496)            - 
------------------------------------------------------------------------------- 

Other Reserves - Cumulative Translation Adjustment:                             

The Company through its subsidiary Provida International S.A. accounts for its  
investments outside of Chile in accordance with Technical Bulletin No. 64       
of the Chilean Association of Accountants. As of December 31, 2001 and 2002 the 
cumulative translation adjustments related to those foreign investments due to  
changes in the valuation of the Chilean peso total MCh$2,979 and MCh$4,918,     
respectively, and are included under the caption "Other reserves" within the    
shareholders' equity of the Consolidated Balance Sheets.                        

--------------------------------------------------------------------------------
                                                          As of December 31,
                                                           ---------------------
                                                          2001          2002
Cumulative translation adjustment                           MCh$          MCh$  
--------------------------------------------------------------------------------

Balance at beginning of the year                             893          2,892 
Foreign exchange adjustments (Provida Internacional)       1,299          1,918 
Price-level restatement of cumulative translation                               
 adjustment                                                  28             82
Accumulated deficit during development stage of                                 
 Provida Internacional                                      759             26
--------------------------------------------------------------------------------
Total                                                      2,979          4,918 
--------------------------------------------------------------------------------

Note 26. OTHER OPERATING REVENUES                                               

The detail of other operating Revenues is as follows:                           

                                                        [Enlarge/Download Table]
------------------------------------------------------------------------------------------------------------------
                                                                                        Years ended December 31,  
                                                                                     2000       2001         2002 
                                                                                     MCh$       MCh$         MCh$ 
------------------------------------------------------------------------------------------------------------------
                                                                                                                  
a. Insurance Contract Settlements:                                                                                
   o  Preliminary settlements contract, August 93 - July 95                           374        185             -
   o  Preliminary settlements contract, August 95 - July 97                         1,279      1,384            86
   o  Preliminary settlements contract, August 97 - July 99                         1,152        384           501
   o  Preliminary settlements contract, August 99 - July 01                           666        553         1,909
   o  Preliminary settlements contract, August 01 - July 03                             -          -           454
b. Additional revenue from contributions before January 1, 1988                       588        649           601
c. Surcharge and collection costs                                                      36         47            13
d.  Revenues from services renders to Administradora de Fondos de Cesantia Chile        -          -           216
S.A.                                                                                                              
e. Other operating revenues from AFP Genesis Ecuador                                    -        422         1,780
------------------------------------------------------------------------------------------------------------------
Totals                                                                              4,095      3,624         5,560
------------------------------------------------------------------------------------------------------------------

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ADMINISTRADORA DE FONDOS DE PENSIONES PROVIDA S.A. AND SUBSIDIARIES 
Notes to the Consolidated Financial Statements

Other operating Revenues is derived from favorable settlements from Insurance   
Contracts, recognition of net interest revenues, recovery of pending additional 
contributions (see Note 8 d) and collection of surcharge and collections costs  
for contributions not paid on time, benefiting the Administrator under D.L.     
3,500, Article 19.                                                              

Note 27. OTHER NON-OPERATING INCOME                                             

The detail of other non-operating income is as follows:                         

------------------------------------------------------------------------------- 
                                              Years ended December 31,
                                              2000         2001           2002
                                              MCh$         MCh$           MCh$
------------------------------------------------------------------------------- 
Gain on sale of Afore Profuturo (1)              -        26,181              - 
Rental of premises                             729           591            574 
Reversal of provisions in excess of                                             
 commission sales                             266             -              -
Expired checks (uncashed)                      209            20              1 
Gain on sales of assets (1)                     49             7             11 
Penalty interest                                12            20             18 
Other                                           60            15             40 
------------------------------------------------------------------------------- 
Total                                        1,325        26,834            644 
------------------------------------------------------------------------------- 
(1) See foot note 42, II letter b)                                              

Note 28. DIRECTORS' FEES                                                        

Directors received fees as follows:                                             

--------------------------------------------------------------------------------
                                              Years ended December 31,
                                              2000          2001            2002
                                              MCh$          MCh$            MCh$
--------------------------------------------------------------------------------
Attendance fees                                207           184             110
Other fees                                       -             4               7
------------------------------------------------------------------------------- 
Total                                          207           188             117
------------------------------------------------------------------------------- 

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Note 29.  INTEREST EXPENSES                                                     

Interest expenses were as follows:                                              

--------------------------------------------------------------------------------
                                              Years ended December 31,
                                               2000          2001           2002
                                               MCh$          MCh$           MCh$
--------------------------------------------------------------------------------
Interest on BBVA loan                         1,632         1,061            496
Interest on Bank loans                        1,076           770            470
Use of bank overdrafts                          843           646             85
Interest on forward exchange contracts            -           170            219
Amortization of debt issuance costs             133           132            132
Interest on leasing contracts                    54            51             49
Others                                          279           148             46
--------------------------------------------------------------------------------
Total                                         4,017         2,978          1,497
--------------------------------------------------------------------------------

Note 30. OTHER EXPENSES                                                         

a.    Other Operating Expenses                                                  

In the Consolidated Statements of Income, Other operating expenses were         
MCh$1,182, MCh$1,280 and MCh$1,504 for the years ended December 31, 2000, 2001  
and 2002, respectively. These expenses were incurred in the evaluation of the   
degree to which affiliates are disabled, medical commissions, doctor fees, and  
in the transporting and lodging of affiliates.                                  

b.  Other non-Operating Expenses                                                

The detail of other non-operating expenses is as follows:                       

------------------------------------------------------------------------------- 
                                              Years ended December 31,
                                               2000          2001           2002
                                               MCh$          MCh$           MCh$
------------------------------------------------------------------------------- 
Rental expense                                  169           122            220
Loss on sale of assets (1)                       33            66              8
Fines by SAFP                                    21             4              3
Disposal of Property, Plant and                                                 
  Equipment (2)                                  21             5              3
Reissued stale checks                            15             -              -
Write-off provision (1)                           4             2              -
Other                                             7            32             62
--------------------------------------------------------------------------------
Total                                           270           231            296
--------------------------------------------------------------------------------
(1) See foot note 42, II, letter b)                                             

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ADMINISTRADORA DE FONDOS DE PENSIONES PROVIDA S.A. AND SUBSIDIARIES 
Notes to the Consolidated Financial Statements

Note 31.  PRICE-LEVEL RESTATEMENT                                               

The detail of the price-level restatement is as follows:                        
--------------------------------------------------------------------------------
                                            Years ended December 31,
                                              ----------------------------------
                                               2000          2001           2002
                                               MCh$          MCh$           MCh$
--------------------------------------------------------------------------------
Shareholders' equity                          5,687         4,184         4,266 
Other assets                                 (3,988)       (5,165)       (2,897)
Property, plant and equipment, net           (1,350)         (927)         (894)
Liabilities                                   1,282          (962)          594 
Accumulated depreciation                        236           169           174 
Income statement amounts                        557           400           682 
--------------------------------------------------------------------------------
Net charge (credit) to income                 2,424        (2,301)        1,925 
--------------------------------------------------------------------------------

Note 32. SERVICE CONTRACTS                                                      

Provida has entered into service agreement with different companies to          
complement management, operation and sale operations in its line of business.   
The relevant aspects of these contracts are indicated below:                    

                                                        [Enlarge/Download Table]
------------------------------------------------------------------------------------------------------
                                                                             Years ended December 31, 
                                                                           2000        2001       2002
                                                                           MCh$        MCh$       MCh$
------------------------------------------------------------------------------------------------------
                                                                                                      
a.    Collection services contracts                                                                   
      Costs charged to the "Administrative expenses" account                                          
      In the Consolidated Statements of Income                                                        

a.1)  Banco del Estado de Chile Line of business: Banking activities                                  
      Value of service including VAT: UF 0.053 per payroll                                            
      Net costs recorded                                                    168         173       170 
      Amount owed                                                            29          14        70 
      Form of payment: cash                                                                           
a.2)  Banco Santiago                                                                                  
      Line of business: Banking activities                                                            
      Value of Service including VAT: UF 0.022 per payroll                                            
      Net costs recorded                                                     84          81        77 
      Amount owed                                                            14          13         6 
      Form of payment: cash                                                                           

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      ADMINISTRADORA DE FONDOS DE PENSIONES PROVIDA S.A. AND SUBSIDIARIES                             
                 Notes to the Consolidated Financial Statements                                       



                                                                                                      
a.3)  Banco de Chile                                                                                  
      Line of business: Banking activities                                                            
      Value of service including VAT(*): UF 0.041 by payroll                                          
      Net costs recorded                                                      5           4         3 
      Amount owed                                                             1           1           
      Payment:  cash                                                                                  
      (*) Puerto Williams branches only.                                                              

a.4)  Caja de Compensacion Los Andes                                                                  
      Line of business:  Compensation Administrator                                                   
      Value of service including VAT: Ch$ 110.90                                                      
        per payroll and Ch$19.90 per register, readjustable semi-annually                             
      Net costs recorded                                                      -           6        21 
      Amount owed                                                             -           2         2 
      Payment: cash                                                                                   
      Contract outstanding since June 2001                                                            

a.5)  Caja de Compensacion Los Heroes                                                                 
      Line of business:  Compensation Administrator                                                   
      Value of service including VAT: Ch$ 110.10 per payroll and Ch$ 19.80                            
      per register readjustable semi-annually                                                         
      Net costs recorded                                                      -           1         - 
      Amount owed                                                             -           -         - 
      Payment: cash                                                                                   
      Contract outstanding since October 2001                                                         

a.6)  Caja de Compensacion La Araucana                                                                
      Line of business:  Compensation Administrator                                                   
      Value of service including VAT: Ch$ 110.90 per payroll and Ch$ 19.90                            
      per register readjustable semi-annually                                                         
      Net costs recorded                                                      -           -         6 
      Amount owed                                                             -           -         1 
      Payment: cash                                                                                   
      Contract outstanding since October 2001                                                         

a.7)  Servicios de Administracion Previsional Line of business: Electronic                            
      collection services                                                                             
      Value of service including VAT: Ch$ 91.00 per payroll by a                                      
      factor between 1 and 0.1765, depending on the number of payroll                                 
      paid and Ch$16.33 per register readjustable semi-annually.                                      
      Net costs recorded                                                      -           -         4 
      Amount owed                                                             -           -         - 
      Payment: cash                                                                                   
      Contract outstanding since May 2001                                                             

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ADMINISTRADORA DE FONDOS DE PENSIONES PROVIDA S.A. AND SUBSIDIARIES 
Notes to the Consolidated Financial Statements

b.    Depository Services                                                       

Depository Services of securities and financial instruments of the Pension      
funds and mandatory reserve resulting in costs included in "Administrative      
Expenses", as follows:                                                          

--------------------------------------------------------------------------------
                                                  Years ended December 31,
                                                 2000          2001         2002
                                                 MCh$          MCh$         MCh$
--------------------------------------------------------------------------------

b.1.   Deposito Central de Valores S.A..                                        
Line of business: Depositary Services                             
       Net costs recorded                         410           421          455
       Amount owed                                  -             -            -
Payment: Cash                                                   

b.2 Brown Brothers Harriman & Co.                                               
Line of business: Banking activities                              
Type services rendered: Custodian                                 
       Net costs recorded                         247           208          197
       Amount owed                                  -            89          187
--------------------------------------------------------------------------------
Total                                             657           718          839
--------------------------------------------------------------------------------

c. Stock exchange transaction services                                          

Brokerage cost is included in "Administrative Expenses", as follows:            

--------------------------------------------------------------------------------
                                                  Years ended December 31,
                                                  2000         2001         2002
Bolsa de Comercio de Chile                        MCh$         MCh$         MCh$
--------------------------------------------------------------------------------
Broker commissions                                 156          123           58
Fixed costs                                          5           53           40
Others Brokerage costs                              36           25           25
--------------------------------------------------------------------------------
Total                                              197          201          123
--------------------------------------------------------------------------------

Bolsa de Comercio de Chile                                                      
Line of business: Brokerage                                               
Amounted owed: -                                                          
Payment: Cash                                                             

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ADMINISTRADORA DE FONDOS DE PENSIONES PROVIDA S.A. AND SUBSIDIARIES 
Notes to the Consolidated Financial Statements

d. Administration and maintenance equipment services                            

Provida has signed administration and maintenance equipment services contracts, 
the main services contracts are as follows:                                     

Unisys (Chile) Corporation:                                                     

The service agreement includes maintenance and repair of data processing        
equipment, technical professional services for programming licensed products    
and licenses for use of product programs. The costs of these services included  
in "Data Processing Expenses" are MCh$21, MCh$14 and MCh$11 in the years ended  
December 31, 2000, 2001 and 2002, respectively.                                 

Empresa Nacional de Telecomunicaciones S.A. Entel:                              

Entel provides telecommunications services for long distance and allows the     
transportation of wire line signals, lines and terminal equipment associated    
with the agreement, which were as follows:                                      

--------------------------------------------------------------------------------
                                                Years ended December 31,
                                                 2000         2001        2002
                                                 MCh$         MCh$        MCh$
--------------------------------------------------------------------------------

Processing data expenses                           174          31            - 
Administrative expenses                             32          32           27 
--------------------------------------------------------------------------------
Total                                              206          63           27 
--------------------------------------------------------------------------------
Amounts owed:                                       24          17            - 
--------------------------------------------------------------------------------

e.    Microfilm Services                                                        

Comicrom S.A.                                                                   

This company provides microfilming services. The costs incurred for these       
services are included in "Administrative Expenses, " and were MCh$ 400, MCh$ 44 
and MCh$ 45 for the years ended December 31, 2000, 2001 and 2002, respectively. 

f. Design and management of centralized database                                

Comicrom S.A.                                                                   

This company has a service agreement with Provida for the management,           
safekeeping and maintenance of the affiliates database, which contains the      
affiliates data transferred since 1981and their respective contributions.       
Provida accesses and manager this database through centralized consultation.    
The agreement was signed on March 1, 2000. The costs for these services was     
MCh$50, MCh$50 and MCh$109 for the years ended December 31, 2000, 2001 and      
2002, and is included in "Administrative Expenses".                             

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ADMINISTRADORA DE FONDOS DE PENSIONES PROVIDA S.A. AND SUBSIDIARIES 
Notes to the Consolidated Financial Statements

g. Agreement for supplying digital forms                                        

This contract is for the implementation of an information capture process for   
affiliate contribution forms and other documents related to the Administrator's 
operations, using digital imaging technology in general forms. This contract is 
currently in the preliminary stage of testing, reviewing, planning and          
modifying the documents in accordance with Provida requirements. The effect in  
income is included in "administrative expenses" of MCh$ 336 in 2000 and MCh$    
561 in 2001 and MCh$379 in 2002.                                                

Amounts owed to Comicron S.A.: MCh$ 44 in 2000, MCh$NIL in 2001 and MCh$37 in   
2002.                                                                           

h. Transmission and reception of electronic messages service                    

Transbank S.A.                                                                  

This company has an agreement with Provida to electronically transfer           
information through electronic mailboxes specialized in processing free form    
messages. The costs for these services was MCh$ 8, MCh$ 10 and MCh$ 14 for the  
years ended December 31, 2000, 2001 and 2002, and is included in "data          
processing expenses".                                                           

i. Rental and maintenance equipment contracts                                   

Xerox de Chile S.A.                                                             

The company has a contract with Provida for photocopy equipment rental,         
technical service, and maintenance of printers. The costs for these services    
were MCh$ 126, MCh$112 and MCh$ 103 for the years ended December 31, 2000, 2001 
and 2002, respectively, and are included in "administrative expenses".          

Amounts owed were MCh$7, MCh$ 3 and MCh$3 for the years ended December 31,      
2000, 2001 and 2002.                                                            

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Notes to the Consolidated Financial Statements

j. Other minor services                                                         

Other contracts with Wackenhut Ltda. and Slim Ltda. (cleaning services),        
Comunicaciones Capitulo S.A. (telephone line), resulted in costs of MCh$ 119,   
MCh$95 and MCh$114 for the years ended December 31, 2000, 2001 and 2002, and    
are included in "administrative expenses".                                      

Amounts owed were MCh$ 5, MCh$ 8 and MCh$NIL for the year ended December 31,    
2000, 2001 and 2002, respectively.                                              

Note 33. TRANSACTIONS WITH RELATED PARTIES                                      

a. Amounts                                                                      

Significant transactions with related companies for the years ended December    
31, 2000, 2001 and 2002 are summarized as follows:                              

                                                        [Enlarge/Download Table]
 ----------------------------------------------------------------------------------------------------------------------- 
              Company                    Transaction             Amount of transactions      Effect on income Gain (loss)
                                                                  2000     2001    2002            2000     2001    2002 
 ----------------------------------------------------------------------------------------------------------------------- 
                                                                                                                         
 BBVA Pensiones Chile S.A.(a)       Pending Balance        Th UF  1,150      873    530     MCh$  (1,632)  (1,061)  (496)
                                    Lease                  MCh$      34       35     36     MCh$      34       35     36 

 BBVA S.A. Oficina de                                                                                                    
 Representacion Chile (b)           Lease                  MCh$       -        -     22     MCh$       -        -     22 

 BBVA Corredores de Bolsa BHIF                                                                                           
 S.A.(b)                            Financial services     MCh$      83       59     55     MCh$     (83)     (59)   (55)

 Servicio de Adm. Previsional S.A.  Collections services   MCh$       -        -      4     MCh$       -        -     (4)
 (c)                                                                                                                     
                                    Pending balance        MCh$       -        -    221     MCh$       -        -     13 

 Administradora de Fondos de        Technological support                                                                
 Cesantia Chile S.A. (c)            services               MCh$       -        -    216     MCh$       -        -    216 

Nature of relationship:                                                                                                  

(a) Parent                                                                      
(b) There is a relationship through common shareholder BBVA Group.              
(c) Affiliated Company                                                          

b. Transactions                                                                 

BBVA Pensiones S.A.                                                             

Purchase agreement, through which Provida acquired 89.1% of the equity          
ownership of the company formerly known as AFP Proteccion S.A. equivalent to    
UF1,506,001.59 plus US$100,000,000, payable in 9 variable semiannual            
installments maturing from May 15, 1999. The calculation of interest considers  
six month-LIBOR rate plus 2.25 percent per year, in the case of dollars and 180 
day-TAB rate plus 2.00 percent in the case of UF. The US dollar denominated     
debt was fully canceled and the UF denominated debt was renegotiated to 90      
day-TAB rate plus 0.75 percent (1.00 point until June 12, 2001). At year-end    
2002, the balance of this debt is UF530,477.46 plus interest equivalent to      
UF915,07 with a 1.35% rate.                                                     

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Notes to the Consolidated Financial Statements

Short term                                                                      

Semiannual installments of the agreement with BBVA Pensiones Chile S.A.         
maturing on May 15, 2003 and November 15, 2003, equivalent to UF350,535.07 plus 
interest amounting to UF915.07 equivalent to MCh$5,885 at year-end. At prior    
year-end, the balance was UF376,500.40 plus interest amounting to UF7,237.14    
equivalent to MCh$6,428.                                                        

Long term                                                                       

Semiannual installment maturing on May 15, 2004 amounting to UF179,942.39       
equivalent to MCh$3,013 at year-end. At prior year-end, the balance was         
UF496,202.73 equivalent to MCh$8,312.                                           

Note 34. HEDGE CONTRACTS                                                        

At December 31, 2002 the detail of hedge contracts, recorded in conformity with 
Note 2, is as follows:                                                          

                                                        [Enlarge/Download Table]

                                                                                                  Effected book accounts         
                                                     Purchase/                                                                   
Type of Type of    Contract  Maturity or   Specific     sale                                                                     
hedge   contract   amount      expiry        item    position    Hedge amount or                                                 
                                                                   transaction            Asset/liability      Effect on income  
                                                                Name       Amount      Name       Amount  Realized    Unrealized 
                                                                Loan in                                                          
                                                                                                                                 
FR      CCPE     15,000,000 I quarter 2004   US$        P       US$      15,000,000  Creditors    51,547        -           -    
                                                                Closing                                                          
FR      CCPE     15,000,000 I quarter 2003   US$        S       position 15,000,000  Creditors  (297,000)       -       (249,459)

CCPE: Contract for hedge of existing items                                      

Note 35. COMMITMENTS AND CONTINGENCIES                                          

a.    Guarantees granted                                                        

AFP Provida, authorized by the Extraordinary Meeting of Shareholders held on    
January 7, 2002, guaranteed Administradora de Fondos de Cesantia de Chile S.A., 
debt amounting to UF 400,000, for compliance with its agreement concerning the  
Administration of Unemployment Insurance.                                       

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ADMINISTRADORA DE FONDOS DE PENSIONES PROVIDA S.A. AND SUBSIDIARIES 
Notes to the Consolidated Financial Statements

b.    Disability and Survival Pensions and Life Annuities                       

Article 82 of D.L. 3,500 established that when an insurance company does not    
fulfill obligations originated from signed contracts; the State Guarantee will  
cover the minimum fixed income defined in Articles 73, 77 and 78. For income or 
pensions exceeding those amounts, the State Guarantee will cover 75% of the     
excess, with a maximum of UF 45.                                                

The Administrator's contingency is approximately UF 1,215,965. The basic        
assumptions of this calculation made on pensions generated before January 1,    
1988 are based on a life expectancy of 28 years for pension beneficiaries, an   
annual discount rate of 5% and application of the previously mentioned State    
Guarantee. Pension fund affiliates claims against insurance companies would be  
subject to the privilege established in Article 2,472, No. 4 of the Civil       
Code. This amounts is provisioned as a contingency loss.                        

c.    Litigation                                                                

Provida has filed a lawsuit against Banco del Estado de Chile, claiming damages 
for the losses suffered by Provida and the Pension Funds when the bank made     
extraordinary write-offs of mortgage-backed bonds in violation of the           
applicable legal and contractual statutes in 1986. In a subsequent action,      
Provida filed a demand for payment based on Law No. 18,010.                     

In 1993, 1995 and 1997, the labor union, which represents certain Provida       
employees, filed actions against Provida on behalf of the union members for     
1990, 1991, 1992, 1993, 1994 and 1995. The action, which was filed in the labor 
Court of Santiago, alleges certain miscalculations of payment of contractually  
required profit sharing in those periods. According to Provida's legal advisors 
opinion none of these lawsuits would have a material impact on the              
Provida's financial position.                                                   

For the year ended December 31, 2002 there were 82 labor lawsuits presented by  
Administrator's former employees, which are filed in various courts throughout  
the country. These labor lawsuits seek damages of approximately MCh$ 370.       
However, management believes that none of these lawsuits would have a material  
impact on the Provida's financial position.                                     

d. Contracts with repurchase and resale commitments                             

As of December 31, 2001 and 2002 there are no resale agreements or securities   
sold with a repurchase commitment.                                              

e. Derivative financial instruments                                             

Provida has forward contracts and foreign exchange insurance as of December 31, 
2002 in order to hedge changes in the US dollar exchange rate, which would      
affect their liabilities denominated in US dollars, these contracts are         
explained Note 34.                                                              

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Notes to the Consolidated Financial Statements

Market value of gains or losses on futures contracts are recognized offsetting  
foreign exchange losses or gains on those liabilities. These contracts resulted 
in gains of MCh$ 1,003 and MCh$422 for the years ended December 31, 2000 and    
2001, respectively, and a loss of MCh$ 249 as of December 31, 2002.             

f.    Unpaid contributions                                                      

Pension contributions that have not been completely paid as of October 1, 1982, 
must be declared by employers to Provida, as stipulated in Law 18,646 dated     
August 19, 1987.                                                                

The amount of pension contributions that have not been declared nor paid by     
employers has been estimated based on affiliates with positive balances in      
their individual capitalization accounts that have unpaid periods in the last   
32 months, adjusted for the official unemployment rate and increase by          
indexation and interest.                                                        

The estimated amounts are as follows:                                           
                                                         Unaudited
--------------------------------------------------------------------------------
                                                            As of December 31,
                                                         2001           2002
--------------------------------------------------------------------------------
                                                         MCh$           MCh$
--------------------------------------------------------------------------------

Declare contributions                                     71,099          83,348
Originated by unreconciled accounts                          255             257
--------------------------------------------------------------------------------
Total                                                     71,354          83,605
--------------------------------------------------------------------------------

g.   Investment Abroad                                                          

o    As a consequence of the introduction of pension systems based on           
   individual capitalization in other Latin American countries, AFP Provida,
   as well as other administrators, is taking part in these projects through
capital contributions and software sale.                              

o    At year-end, the Administrator maintains investments, through its          
subsidiary Provida Internacional S.A., in AFP Horizonte (Peru) with   
    a15.87% ownership over the paid-in capital and an investment equivalent to
  US$4,096,919; in AFPC Porvenir (Colombia) with a 20.00% ownership and an
 investment equivalent to US$10,322,966; in Genesis AFP (Ecuador) with a
  99.999994% ownership and investment equivalent to US$2,855,282; in Afore
 Bancomer (Mexico) with a 7.5% ownership and an investment equivalent to
   US$66,263,572 and in AFP Crecer (formerly AFP Porvenir, El Salvador) with
a 19% ownership and an investment equivalent to US$4,338,885.         

h.  Statement of Cash Flow                                                      

o    Provida Internacional S.A. agreed to enter into a contract with Grupo      
  Nacional Provincial Pensiones S.A. de C.V. of Mexico, in virtue of which
Provida Internacional sold its total ownership in Afore Profuturo GNP,
S.A. de C.V. amounting to 14.45%. The agreed price is equivalent to   
   US$61,697,914.40 that was paid in cash when the contract was signed. Such
    transaction was performed in March 2001, once the corresponding government
authorization was obtained in Mexico.                                 

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Notes to the Consolidated Financial Statements

Note 36. OPERATING REVENUES AND EXPENSES, BY FUND                               

The operating Revenues and expenses by fund for the year ending December 31,    
2001 and 2002 are as follows:                                                   

Year 2000                                                                       

                                                        [Enlarge/Download Table]
----------------------------------------------------------------------------------------------------------------
A. OPERATING REVENUES                                                                                           
                                                  Fund        Fund       Fund       Fund        Fund            
                                                 Type A      Type B     Type C     Type D      Type E      Total
                                                  MCh$        MCh$       MCh$       MCh$        MCh$        MCh$
----------------------------------------------------------------------------------------------------------------
                                                                                                                
Fees for contribution deposits                                                                                  
    Fixed fee                                        -           -       6,313         -           -       6,313
    Variable fee                                     -           -      82,431         -           2      82,433

Fees from programmed withdrawals and                                                                            
temporary income                                                                                                
    Variable fee                                     -           -         291         -           1         292

Other Fees                                           -           -          54         -           -          54

Gains on mandatory investments                       -           -       5,732         -           1       5,733
----------------------------------------------------------------------------------------------------------------
Total                                                                   94,821                     4      94,825
----------------------------------------------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
B. OPERATING EXPENSES                                                                                           
                                                  Fund        Fund       Fund       Fund        Fund            
                                                 Type A      Type B     Type C     Type D      Type E      Total
                                                  MCh$        MCh$       MCh$       MCh$        MCh$        MCh$
----------------------------------------------------------------------------------------------------------------
                                                                                                                
Life and disability insurance premium expenses       -          -       28,425          -          -      28,425
Sales personnel payroll expenses                     -          -        9,662          -          -       9,662
Commissions paid for custody of securities                                                                      
    National                                         -          -          409          -          2         411
    Foreign                                          -          -          247          -          -         247
Commissions paid on investment principals abroad     -          -                       -          -            
Stock exchange transaction expenses                  -          -          197          -          -         197
Transporting of securities and insurance             -          -           30          -          1          31
----------------------------------------------------------------------------------------------------------------
Total                                                -          -       38,970          -          3      38,973
----------------------------------------------------------------------------------------------------------------

Other operating expenses not included in the previous table are directly or     
indirectly related to the Type 1 Pension Fund.                                  

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Notes to the Consolidated Financial Statements

Year 2001                                                                       

                                                        [Enlarge/Download Table]
---------------------------------------------------------------------------------------------------------------- 
A. OPERATING REVENUES                                                                                            
                                                  Fund        Fund        Fund       Fund       Fund             
                                                 Type A      Type B      Type C     Type D     Type E      Total 
                                                  MCh$        MCh$        MCh$       MCh$       MCh$        MCh$ 
---------------------------------------------------------------------------------------------------------------- 
                                                                                                                 
Fees for contribution deposits                                                                                   
    Fixed Fee                                        -          -        6,245                     -       6,245 
    Variable Fee                                     -          -       85,143                     7      85,150 

Fee s from programmed withdrawals and                                                                            
temporary income                                                                                                 
    Variable Fee                                     -          -          761                     3         764 

Gains on mandatory investments                       -          -        6,375                     5       6,380 
-----------------------------------------------------------------------------------------------------------------
Total                                                -          -       98,524                    15      98,539 
-----------------------------------------------------------------------------------------------------------------


-----------------------------------------------------------------------------------------------------------------
B. OPERATING EXPENSES                                                                                            
                                                  Fund        Fund       Fund      Fund         Fund             
                                                 Type A      Type B     Type C    Type D       Type E      Total 
                                                  MCh$        MCh$       MCh$      MCh$         MCh$        MCh$ 
-----------------------------------------------------------------------------------------------------------------
                                                                                                                 
Life and disability insurance premium expenses       -          -       30,353          -          1      30,354 
Sales personnel payroll expenses                     -          -        8,979          -          -       8,979 
Commissions paid for custody of securities                                                                       
    National                                         -          -          420          -          -         420 
    Foreign                                          -          -          208          -          -         208 
Stock exchange transaction expenses                  -          -           60          -          9          69 
Transporting of securities and insurance             -          -            5          -          -           5 
-----------------------------------------------------------------------------------------------------------------
Total                                                -          -       40,025          -         10      40,035 
-----------------------------------------------------------------------------------------------------------------

ther operating expenses not included in the previous table are directly or      
indirectly related to the Type C Pension Fund.                                  

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Notes to the Consolidated Financial Statements

Year 2002                                                                       

                                                        [Enlarge/Download Table]
----------------------------------------------------------------------------------------------------------------
A. OPERATING REVENUES                                                                                           
                                                  Fund       Fund       Fund       Fund         Fund            
                                                 Type A     Type B     Type C     Type D       Type E     Totals
                                                  MCh$       MCh$       MCh$       MCh$         MCh$       MCh$ 
----------------------------------------------------------------------------------------------------------------
                                                                                                                
Fees for contribution deposits                                                                                  
Fixed fee                                           20         457      5,642        103           24      6,247
Variable fee                                       344       5,750     79,947      1,364          466     87,871

Fees from programmed withdrawals and                                                                            
  temporary income                                                                                              
Variable fee                                         -           -        762          9           15        785

Gains on mandatory investments                      17          98      4,638         75           30      4,858
----------------------------------------------------------------------------------------------------------------
Total                                              381       6,305     90,989      1,551          535     99,761
----------------------------------------------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
B. OPERATING EXPENSES                                                                                           
                                                  Fund       Fund       Fund       Fund         Fund            
                                                 Type A     Type B     Type C     Type D       Type E      Total
                                                  MCh$       MCh$       MCh$       MCh$         MCh$        MCh$
----------------------------------------------------------------------------------------------------------------
                                                                                                                
Life and disability insurance premium expenses      64         929     31,834        187           76     33,090
Sales personnel payroll expenses                     -           -      7,715          -            -      7,715
Commissions paid for custody of securities                                                                      
National                                             1           8        435          7            3        455
Foreign                                              1          10        175          8            3        197
Stock exchange transaction expenses                  -           -         98          -            -         98
----------------------------------------------------------------------------------------------------------------
Total                                               66         947     40,257        202           82     41,555
----------------------------------------------------------------------------------------------------------------

Other operating expenses not included in the previous table are directly or     
indirectly related to the Type C Pension Fund.                                  

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Notes to the Consolidated Financial Statements

Note 37.  SEVERANCE PAYMENTS FOR YEARS OF SERVICE                               

Provida has recorded provisions of MCh$25 and MCh$ 54 in 2001 and 2002,         
respectively, to cover its obligation in accordance with the collective         
bargaining agreement with its workers.                                          

Note 38. SANCTIONS                                                              

a) Superintendency of Pension Fund Administrators (SAFP)                        

In accordance with Resolution No. 001 of January 5, 2001, SAFP assessed the     
Administrator a penalty of UF 150, for errors in Monthly Statistical            
Information sent to the Superintendency.                                        

In accordance with Resolution No. 00015 of October 10, 2001, SAFP assessed the  
Administrator, as legal successor of formerly AFP El Libertador, a censorship   
sanction for not notifying an employer.                                         

In accordance with Resolution No. 00016 of February 14, 2002, SAFP assessed the 
Administrator a censorship sanction, for administrative fault when omitting     
information concerning files of Related Persons and information (RI).           

In accordance with Resolution No. 00018 of February 14, 2002, SAFP assessed the 
Director of the Administrator, Mr. M. Pacheco Matte, a censorship sanction for  
administrative fault concerning the omission of information regarding file of   
Related Persons and information (RI).                                           

In accordance with Resolution No. 0024 of February 19, 2002, SAFP assessed the  
Administrator a penalty of UF 50, for breaking regulations concerning excessive 
investment.                                                                     

In accordance with Resolution No. 0026 of March 22, 2002, SAFP assessed the     
Administrator a penalty of UF 100 for breaking regulations concerning foreign   
currency purchasing net positions in forward contracts.                         

In accordance with written communication No. 5451 of April 11, 2002, SAFP       
reprimanded the Administrator for errors in the preparation of daily report.    

In accordance with Resolution No. 0033 of May 16, 2002, SAFP assessed the       
Administrator a penalty of UF 150 for being responsible for the treatment of    
information it compiles in order to comply with its function, concerning the    
collection of social security payments. This Resolution was claimed at the      
Court of Appeals in Santiago, which reduced the penalty to UF 50.               

In accordance with Resolution No. 0034 of May 24, 2002, SAFP assessed the       
Administrator a penalty of UF 100, for breaking regulations concerning          
excessive investment.                                                           

In accordance with Resolution No. 0057 of December 4, 2002, SAFP assessed the   
Administrator a penalty of UF 100, for breaking regulations concerning          
frequency required by the law for investments in foreign financial instruments. 

In accordance with Resolution No. 0058 of December 17, 2002, SAFP assessed the  
Administrator a penalty of UF 100, for deficiencies detected in the system of   
Control of Benefit Procedures.                                                  

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Notes to the Consolidated Financial Statements

Note 39.  SHARE TRANSACTIONS                                                    

                                                        [Enlarge/Download Table]
a. The Administrator's Chairman, Directors and Managers made the following share transactions:                          
------------------------------------------------------------------------------------------------------------------------
                                                                    Years ended December 31,                            
                                                      2000                      2001                    2002            
------------------------------------------------------------------------------------------------------------------------
                                            Purchases      Sales     Purchases      Sales      Purchases     Sales      
                                              Shares      Shares       Shares       Shares      Shares       Shares     

                                                                                                                        
Persons and Companies related with                                                                                      
Directors and Manager                                                                                                   
Monica Tejos Riveros                (1)        4,500           -            -            -           -           -      
------------------------------------------------------------------------------------------------------------------------
(1) This person is related to a member of management.                                                                   

Note 40. DISTRIBUTION OF SHAREHOLDERS                                                                                   

The percentage ownership of shareholders is as follows:                                                                 

--------------------------------------------------------------------------------------------------------------------    
                                                                                      Percentage         Number of      
                                                                                        holding         shareholders    
--------------------------------------------------------------------------------------------------------------------    
                                                                                                                        
a) As of December 31, 2001                                                                                              
10% holding or more                                                                       86.74                    2    
Less than 10% holding with                                                                                              
    Investment of UF 200 or more                                                          11.60                1,222    
Less than 10% holding with                                                                                              
    Investment of less than UF 200                                                         1.66                1,346    
--------------------------------------------------------------------------------------------------------------------    
Total                                                                                    100,00                2,570    
--------------------------------------------------------------------------------------------------------------------    
Controller of the Company (BBVA Pensiones Chile S.A.)                                     51.62                    1    
--------------------------------------------------------------------------------------------------------------------    

b) As of December 31, 2002                                                                                              
10% holding or more                                                                       74.45                    2    
Less than 10% holding with                                                                                              
    Investment of UF 200 or more                                                          23.88                1,215    
Less than 10% holding with                                                                                              
    Investment of less than UF 200                                                         1.67                1,339    
--------------------------------------------------------------------------------------------------------------------    
Total                                                                                    100.00                2,556    
--------------------------------------------------------------------------------------------------------------------    
Controller of the Company (BBVA Pensiones Chile S.A.)                                     51.62                    1    
--------------------------------------------------------------------------------------------------------------------    

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ADMINISTRADORA DE FONDOS DE PENSIONES PROVIDA S.A. AND SUBSIDIARIES 
Notes to the Consolidated Financial Statements

Note 41.  SIGNIFICANT EVENTS                                                    

Law No. 19,720 was published in the Official Gazette on April 7, 2001,          
authorizing the social security institutions to enter into agreements of        
payments of social security payments due by employers.                          

Law No. 19,768 was published in the Official Gazette on November 7, 2001,       
introducing tax changes in the capital market and making the voluntary savings  
method flexible.                                                                

On January 28, 2002 Providencia group, a trust made up by AFP's, was awarded a  
bid of unemployment insurance for 10 years, for presenting the lowest economic  
bid, that is 0.6% annual commission over the administered funds, and the best   
technical bid. AFP Provida S.A. will have an ownership in the future            
Administradora de Fondos de Cesantia de Chile S.A. equivalent to 37.8%.         

Law No. 19,795 was published in the Official Gazette on February 28, 2002,      
introducing changes in Act 3,500 of 1980, increasing the number of existing     
Pension Funds from two to five by each Administrator, each with a different     
percentage of investment in financial debt securities and equity securities.    
Also, it introduced changes concerning the investment of the Funds, increasing  
the limits and instruments authorized for investment abroad and improving the   
investment of Pension Funds in the country.                                     

On April 15, 2002 the Administrator entered into a contract with Sociedad       
Administradora de Fondos de Cesantia de Chile S.A . concerning the rendering of 
development and technological administration services related to its corporate  
purpose, equivalent to US$3,850,000 and in force for ten years.                 

The Extraordinary Meeting of Shareholders held on April 30, 2002 agreed to      
change article No. 7 of the statutes of the corporation, reducing the members   
of the Company's Board of Directors from 10 to 8.                               

The Ordinary Meeting of Shareholders held after the Extraordinary Meeting       
approved the following issues:                                                  

The following directors were assigned:                                          

Miguel Angel Poduje Sapiain                                                     
Antonio Martinez Jorquera Lloveras                                              
Julio Gilsans Arrola                                                            
Jesus Maria de las Fuentes Arambarri                                            
Fernando Leniz Cerda                                                            
Jose Madariaga Lomelin                                                          
Maximo Pacheco Matte                                                            
Alberto Pulido Cruz                                                             

La Tercera newspaper was assigned to publish the notification for Meeting of    
Shareholders.                                                                   

Providing a final dividend of Ch$45.13 for each share charging income for the   
year 2001, that will be paid on May 24, 2002. Also, interim dividend of         
Ch$23.24 for each share, that was paid in October 2001, was ratified.           

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Notes to the Consolidated Financial Statements

The Board of Directors meeting held on September 24, 2002 agreed to distribute  
an interim dividend of Ch$28 for each share charging income for the year, whose 
payment will be made from October 18, 2002.                                     

SAFP issued Circular No. 1235 on October 14, 2002, regulating Financial Report, 
Annual Report and calculation of net shareholders equity of AFP's . This        
Circular revokes Circulars No. 482, 957 and 958 and Chapters I, III and IV of   
the de Circular No. 180.                                                        

Note 42. DIFFERENCES BETWEEN CHILEAN AND UNITED STATES GENERALLY ACCEPTED       
ACCOUNTING PRINCIPLES:                                        

The Company's consolidated financial statements have been prepared in           
accordance with Chilean GAAP, which differ in certain aspects regarding         
generally accepted accounting principles in the United States of America (U.S.  
GAAP).                                                                          

I      Differences in Measurement Methods                                       

The principal methods applied in the preparation of the accompanying financial  
statements that have resulted in amounts which differ from those that would     
have otherwise been determined under U.S. GAAP are as follows:                  

a. Price-level restatement:                                                     

Under Chilean GAAP, financial statements are restated to reflect the full       
effects of the gain (loss) in the purchasing power of the Chilean peso on the   
financial position and results of operations of reporting entities. The method  
is based on a model that enables calculation of net inflation gains or losses   
caused by monetary assets and liabilities exposed to changes in the purchasing  
power of local currency, by restating all non-monetary accounts in the          
financial statements. The model prescribes that the historical cost of such     
accounts be restated for general price-level changes between the date of origin 
of each item and the year-end.                                                  

b. Translation of financial statements of investments outside of Chile:         

Provida's operations outside of Chile are not considered extensions of the      
parent company's operations and are therefore remeasured into U.S. dollars      
(Latin American Countries, mainly) under BT 64 as follows:                      

o   Monetary assets and liabilities are translated at year-end rates of         
exchange between the U.S. dollar and the local currency.                
o   All non-monetary assets and liabilities and shareholders' equity are        
  translated at historical rates of exchange between the U.S. dollar and the
local currency.                                                         
o   Income and expense accounts are translated at average rates of exchange     
between the U.S. dollar and the local currency.                         
o   The effects of any exchange rate fluctuations on monetary assets and        
liabilities, denominated in currencies other than the U.S. dollar, as   
  compared to the U.S. dollar, are included in the results of operations for
the period.                                                             

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Notes to the Consolidated Financial Statements

The foreign currency translation procedures prescribed by Chilean GAAP are part 
of the comprehensive basis of preparation of price-level adjusted financial     
statements. Inclusion of inflation and translation effects in the financial     
statements is considered appropriate under the inflationary conditions that     
have historically affected the Chilean economy and accordingly are not          
eliminated in the reconciliation to U.S. GAAP as allowed under item 17 of the   
Sec Rules.                                                                      

c. Minimum dividend:                                                            

As required by the Chilean Companies Law, unless otherwise decided by the       
unanimous vote of the holders of issued and subscribed shares, Provida must     
distribute a cash dividend in an amount equal to at least 30% of its income as  
determined in accordance with Chilean GAAP, unless and except to the extent     
that Provida has unabsorbed prior year losses. Since the payment of the 30%     
dividend out of each year's income is required by Chilean law, an accrued       
liability was included in the US GAAP reconciliation in paragraph m. below,     
whenever, and to the extent that, interim dividends paid do not reach the 30%   
minimum dividend.                                                               

d. Marketable securities:                                                       

Under Chilean GAAP, mutual funds, bonds issued by corporations, bonds issued by 
Chilean Government agencies and notes issued by financial institutions with     
readily determinable market values are recorded at fair market value.           
Unrealized gains and losses on such investments are reflected in the statements 
of income. Under U.S. GAAP, these investments are classified as available for   
sales and are recorded at fair market value. Unrealized gains and losses on     
such investments are reflected, net of tax, as other comprehensive income a     
separate component of shareholders' equity. As of December 31, 2000, 2001 and   
2002, this difference was not significant and no adjustment has been included   
in the reconciliation to U.S. GAAP.                                             

e. Investments in related companies                                             

Under both Chilean and US GAAP, investments in which the investor can exercise  
significant influence over the investee's operating and financial policies are  
recorded using the equity method of accounting. Under Chilean GAAP, an          
investment of 10% or more of the voting stock of the investee leads to a        
refutable presumption that the investor has the ability to exercise significant 
influence. Under US GAAP, the threshold is considered to be 20% or more. As of  
and for the year ended 2000 the effect of accounting for certain of Provida's   
investments under Chilean GAAP using the equity method as compared to           
accounting for the same investments under US GAAP using the cost method was not 
significant, however as of and for the year ended December 31, 2001 and 2002    
the corresponding adjustment is included in paragraph (m) below.                

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Notes to the Consolidated Financial Statements

f. Results of subsidiaries during the development stage:                        

Under Chilean GAAP, costs incurred during the development stage of a subsidiary 
company are not charged to the income statement during the year in which they   
were incurred, being charged instead directly to an equity account (subsidiary  
start-up deficit).                                                              

US GAAP requires that all such costs be charged to the income statement in the  
year incurred. The effects of these differences are shown in the paragraph (m)  
below.                                                                          

g. Goodwill                                                                     

Under Chilean GAAP, goodwill is amortized on a straight-line basis over a 20    
year period.                                                                    

Excluding goodwill and intangibles with indefinite lives acquired after June    
30, 2001 which have not been amortized, under US GAAP, goodwill and             
identifiable intangible assets were amortized on a straight-line basis over the 
useful economic life, not to exceed 40 years for years ending on or before      
December 31, 2001. Goodwill and identifiable intangible assets were evaluated   
for impairment when events or changes in circumstances indicated that, in       
management's judgment, the carrying value of such assets may not be             
recoverable.                                                                    

Impairment of long - lived assets were recognized if expected undiscounted cash 
flows were not sufficient to recover the carrying value of the asset. If a      
material impairment was identified, the asset was written down to its estimated 
fair value. Fair value was determined based on the present value of expected    
net cash flows to be generated, discounted using a rate commensurate with the   
risks involved.                                                                 

Under US GAAP, effective 31 December 2001, Provida adopted SFAS 142, "Goodwill  
and Other Intangible Assets". The statement directs that goodwill and           
intangible assets that have indefinite useful lives will not be amortized but   
rather will be tested at least annually for impairment. Intangible assets that  
have finite lives will continue to be amortized over their useful lives. Going  
forward, Provida will carry out an annual impairment review of goodwill. The    
transitional impairment test performed under SFAS No. 142 did not result        
in the recognition of an impairment loss.                                       

During 2000, Provida, through its subsidiary, Provida Internacional S.A.,       
acquired 7.5% of Afore Bancomer, for the amount of ThUS$66,264. In March of     
2001 and as a condition to this purchase, Provida Internacional S.A. sold its   
14.45% holding in Afore Profuturo, for the amount of ThUS$61,698 to an          
unrelated party.                                                                

Under Chilean GAAP, the successive acquisition and sale of both companies       
constituted a single financial operation . The proceeds from the sale were used 
to pay the transitory debts originating from the acquisition of the stake in    
Afore Bancomer, while the gain on sale of Profuturo of ThUS$29,155 (MCh$19,663) 
was set against the goodwill recognized from the acquisition of Bancomer.       

For US GAAP purposes, the purchase of Afore Bancomer and the sale of Afore      
Profuturo would be accounted for as two separate transactions, recognizing the  
gain on sale in results of operations and recording goodwill to the extent that 
the amount paid exceeded the fair value of the identifiable assets acquired and 
liabilities assumed for the purchase. The effects of these differences are      
shown in the paragraph (m) below.                                               

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Notes to the Consolidated Financial Statements

Had we adopted SFAS No. 142 effective January 1, 2000 and accordingly not       
amortized goodwill for the years ended December 31, 2001 and 2000 the Company's 
net income and basic and diluted earnings per share would have been as follows: 

                                               2000        2001       2002
                                               ------      ------     ------
                                               MCh$        MCh$       MCh$

Net income under US GAAP as reported             21,086      47,774     30,505  
Add back: Goodwill amortization under US GAAP     1,039         145             
                                               -----------------------------
Adjusted net income under US GAAP                22,125      47,919     30,505  
                                               =============================

                                               2000        2001       2002
                                               ------      ------     ------
                                               MCh$        MCh$       MCh$
Basic and diluted earnings per share:                                           
 Reported net income                             0.06        0.14       0.09
Add back: Goodwill amortization                 0.00        0.00          
                                               -----------------------------

Adjusted net income                                0.06        0.14       0.09  
                                               =============================

h. Derivatives:                                                                 

Under Chilean GAAP, the Company has forward contracts, which are recorded at    
their closing exchange rate in accordance with regulations issued by the SAFP.  

In June 1998, the Financial Accounting Standards Board ("FASB") issued          
Statement of Financial Accounting Standards N(0)133 ("SFAS N(0)133"),           
"Accounting for Derivative Instruments and Hedging Activities". In June 1999,   
the FASB issued Statement N(0)137, "Accounting for Derivative Instruments and   
Hedging Activities - Deferral of the Effective Date of FASB Statement N(0)133". 
In June 2000, the FASB issued Statement 138, "Accounting for Certain Derivative 
Instruments and Certain Hedging Activities, an amendment of FASB Statement      
N(0)133". SFAS N(0)133, as amended, establishes accounting and reporting        
standards requiring that every derivative instrument (including certain         
derivative instruments embedded in other contracts) be recorded in the balance  
sheet as either an asset or liability measured at its fair value. SFAS N(0)133  
requires that changes in the derivative instrument's fair value be recognized   
currently in earnings unless specific hedge accounting criteria are met.        
Special accounting for qualifying hedges allows a derivative instrument's gains 
and losses to offset related results on the hedged item in the income           
statement, to the extent effective, and requires that a company must formally   
document, designate, and assess the effectiveness of transactions that qualify  
for hedge accounting.                                                           

The Company adopted SFAS N(0)133, as amended, on January 1, 2001. SFAS N(0)133  
requires that as of the date of initial adoption, the difference between the    
market value of derivative instruments recorded on the balance sheet and the    
previous carrying amount to those derivatives be reported in net income or      
other comprehensive income, as appropriate, as the cumulative effect of a       
change in accounting principle in accordance with Accounting Principles Board   
Opinion No. 20, "Accounting Changes". Statement 133 cannot be applied           
retroactively. SFAS No. 133 must be applied to (a) derivative instruments       
and (b) certain embedded derivative instruments.                                

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ADMINISTRADORA DE FONDOS DE PENSIONES PROVIDA S.A. AND SUBSIDIARIES 
Notes to the Consolidated Financial Statements

SFAS No. 133, in part, allows special hedge accounting for "fair value"         
and "cash flow" hedges. SFAS No. 133 provides that the gain or loss on a        
derivative instrument designated and qualifying as a "fair value" hedging       
instrument as well as the offsetting loss or gain on the hedged item            
attributable to the hedged risk be recognized currently in earnings in the same 
accounting period. The accounting standard provides that the effective portion  
of the gain or loss on a derivative instrument designated and qualifying as a   
"cash flow" hedging instrument be reported as a component of other              
comprehensive income and be reclassified into earnings in the same period or    
periods during which the hedged forecasted transaction affects earnings.        

Current Chilean accounting rules do not consider the existence of derivative    
instruments embedded in other contracts and therefore they are not reflected in 
the financial statement. For US GAAP purposes, certain implicit or explicit     
terms included in host contracts that affect some or all of the cash flows or   
the value of other exchanges required by the contracts in a manner similar to a 
derivative instrument, must be separated from the host contract and accounted   
for at fair value. Under US GAAP, the Company separately measures embedded      
derivatives as freestanding derivative instruments at their estimated fair      
values recognizing changes in earnings when they occur. As of January 1,2001    
and December 31,2001 the only embedded derivative instrument requiring          
bifurcation related to the financial guarantee ("encaje") that becomes payable  
if the rate of return falls below market value.                                 

The Company estimates the fair value of this financial guarantee approximates   
zero, as there is very low probability that the guarantee will become           
effective. As a result, no adjustment has been included in paragraph m) below.  

The effects of adopting SFAS N(0)133 as of January 1, 2001, resulted in a       
cumulative effect on net income of ThCh$683, which is presented net of deferred 
taxes ThCh$102 under the caption "Cumulative effect of change in accounting     
principles". The effects of the adjustment with respect to financial            
derivatives and embedded derivatives for the year ended December 31, 2001 and   
2002, respectively, is included in the net income and shareholders' equity      
reconciliation to US GAAP under paragraph m) below.                             

i. Deferred income taxes                                                        

Under Chilean GAAP, until December 31, 1999, deferred income taxes were         
recorded based on non-recurring timing differences between the recognition of   
income and expense items for financial statement and tax purposes. Accordingly, 
there was an orientation toward the income statement focusing on differences in 
the timing of recognition of revenues and expenses in pre-tax accounting income 
and taxable income. Chilean GAAP also permitted not providing for deferred      
income taxes where a deferred tax asset or liability was not expected to be     
realized. Beginning on January 1, 2000, the Company recorded income taxes in    
accordance with Technical Bulletin No. 60 of the Chilean Association of         
Accountants, recognizing, using the liability method, the deferred tax effects  
of temporary differences between the financial and tax values of assets and     
liabilities.                                                                    

In order to mitigate the effects of recording deferred income taxes that under  
the prior income tax accounting standard were not expected to be realized,      
Technical Bulletin No. 60 provides for a period of transition, while at         
the same time recording the deferred taxes using the liability method. Under    
this transitional provision, a contra asset or liability has been recorded      
offsetting the effects of the deferred tax assets and liabilities not recorded  
prior to January 1, 2000. Such contra asset or liability must be amortized to   
income over the estimated average reversal periods corresponding to the         
underlying temporary differences to which the deferred tax asset or liability   
relates.                                                                        

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ADMINISTRADORA DE FONDOS DE PENSIONES PROVIDA S.A. AND SUBSIDIARIES 
Notes to the Consolidated Financial Statements

Under US GAAP, companies must account for deferred taxes in accordance with     
SFAS No. 109, which requires an asset and liability approach for financial      
accounting and reporting of income taxes, under the following basic principles: 

o   A deferred tax liability or asset is recognized for the estimated future    
tax effects attributable to temporary differences and tax loss          
carryforwards.                                                          
o   The measurement of deferred liabilities and assets is based on the          
provisions of the enacted tax law. The effects of future changes in tax 
laws or rates are not anticipated.                                      
o   The measurement of deferred tax assets are reduced by a valuation           
  allowance, if based on the weight of available evidence, it is more likely
than not that some of the deferred tax assets will not be realized.     

Temporary differences are defined as any difference between the financial       
reporting basis and the tax basis of an asset or liability that at some future  
date will reverse, thereby resulting in taxable income or expense. Temporary    
differences ordinarily become taxable or deductible when the related asset is   
recovered or the related liability is settled. A deferred tax liability or      
asset represents the amount of taxes payable or refundable in future years as a 
result of temporary differences at the end of the current year.                 

In 1999, the principal effect on the Company due to the difference in the       
accounting for deferred income taxes between Chilean and U.S. GAAP relates to   
the deferral of the amount calculated for temporary differences, where for US   
GAAP purposes the difference at transition to SFAS No. 109 was not              
deferred. In subsequent years, the principal difference relates to the reversal 
of the complementary assets and liabilities recorded as a transitional          
provision for unrecorded deferred taxes as of January 1, 2000 and their         
corresponding amortization into income. Additionally, during the year ended     
December 31, 2001, the Company began to recognize deferred taxes originating    
from income on mandatory investments on a discounted basis (See Note 2). The    
effect of these differences on the net income and shareholders' equity of the   
Company is included under paragraph (l) below.                                  

k. Customer list                                                                

In Chilean GAAP the Goodwill generated on the acquisition of AFP Proteccion     
in 1999 and other companies (Note 16) was determined as described in paragraph  
(j) above.                                                                      

Under U.S. GAAP, the goodwill is classified as an intangible assets, customer   
list. The weighted average life of the Customer list is slightly longer than    
the amortization period of 20 years for Chilean GAAP purposes. As of December   
31, 2002, 2001 and 2000, this difference was not significant and no adjustment  
is included in the reconciliation to U.S. GAAP. (See Note 42 (I) (m) for        
restatements effect).                                                           

l. Mandatory investments                                                        

The 1% mandatory investment is accounted for as described in Note for Chilean   
GAAP purposes. For US GAAP purposes, due to the highly liquid nature of the     
investment and the Company's intentions, the mandatory investment would be      
classified as "trading securities" under SFAS 115. Therefore, in compliance     
with this pronouncement, these marketable securities are recorded at their fair 
value and accounted for similarly to Chilean GAAP. There is therefore no        
difference recorded in the US GAAP reconciliation in Note 42 (m).               

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Notes to the Consolidated Financial Statements

m. Effect of Conforming to US GAAP:                                             

The adjustments to reported net income required to conform with accounting      
principles generally accepted in the United States of America are as follows:   

                                                        [Enlarge/Download Table]
------------------------------------------------------------------------------------------------------------------------ 
                                                                                     Year ended December 31,             
                                                             Ref.       2000            2001          2002         2002  
                                                                        MCh$            MCh$          MCh$        ThUS$  
------------------------------------------------------------------------------------------------------------------------ 
                                                                                                                         
Net income, as shown in the Chilean GAAP                                                                                 
   Financial statements                                                 32,253          33,330        34,007      47,323 
Investments in Related Companies                             (e)             -          (2,762)       (2,827)     (3,934)
Results of subsidiaries during the development               (f)                                                         
stage                                                                   (7,110)             25             -           - 
Gain on sale of Afore Profuturo, net                         (g)             -          18,618             -           - 
Derivatives                                                  (h)             -           1,370             -           - 
Deferred income taxes                                        (i)        (4,057)         (3,388)         (575)       (800)
Reversal of amortization of goodwill and intangible assets   (f)             -               -          (100)       (139)
------------------------------------------------------------------------------------------------------------------------ 
Net income in accordance with US GAAP before cumulative                                                                  
effect of change in accounting principles                               21,086          47,193        30,505      42,450 
Cumulative effect of change in accounting principles, net                                                                
of taxes MCh$ 102                                            (h)             -             581             -           - 
------------------------------------------------------------------------------------------------------------------------ 
Net income in accordance with US GAAP                                   21,086          47,774        30,505      42,450 
Other comprehensive (loss) income:                                                                                       
Cumulative translation adjustments determined under                                                                      
Chilean GAAP                                                               539           1,299         1,944       2,705 
Cumulative translation adjustments related to US GAAP                                                                    
adjustments                                                                  -             117             -           - 
------------------------------------------------------------------------------------------------------------------------ 
Comprehensive income in accordance with US GAAP                         21,625          49,190        32,449      45,155 
------------------------------------------------------------------------------------------------------------------------ 

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ADMINISTRADORA DE FONDOS DE PENSIONES PROVIDA S.A. AND SUBSIDIARIES 
Notes to the Consolidated Financial Statements

m. Effect of Conforming to US GAAP, continued:                                  

The adjustments required to conform shareholder's equity amounts with           
accounting principles generally accepted in the United States are as follows:   

                                                        [Enlarge/Download Table]
------------------------------------------------------------------------------------------------------------------------- 
                                                                                              As of December 31,          
                                                                             Ref.        2001         2002          2002  
                                                                                         MCh$         MCh$         ThUS$  
------------------------------------------------------------------------------------------------------------------------- 
                                                                                                                          
Net equity, as shown in the Chilean GAAP                                                                                  
  Financial statements                                                                 165,794       176,953      246,243 
Minimum dividend (30% of Net income less interim dividends paid)             (c)        (1,998)         (777)      (1,081)
Gain in sale of Afore Profuturo, net                                         (g)        18,734        18,734       26,070 
Investments in related companies                                             (e)        (2,762)       (5,589)      (7,778)
Derivatives                                                                  (h)         2,054             -            - 
Deferred income taxes                                                        (i)       (13,250)      (13,825)     (19,238)
Reversal of amortization of goodwill and intangible assets                                   -          (100)        (139)
------------------------------------------------------------------------------------------------------------------------- 
Net equity, in accordance with US GAAP                                                 168,572       175,396      244,077 
------------------------------------------------------------------------------------------------------------------------- 

The following summarizes the changes in shareholder's equity under US GAAP                                                
during the years ended December 31, 2001 and 2002:                                                                        

-----------------------------------------------------------------------------------------------------------------         
                                                                                  Year ended December 31,                 
                                                                    ---------------------------------------------         
                                                                       2001                2002            2002           
                                                                       MCh$                MCh$            ThUS$          
-----------------------------------------------------------------------------------------------------------------         
                                                                                                                          
Balance at January 1                                                 135,845             168,572          234,581         
Dividends paid                                                       (18,744)            (26,846)         (37,358)        
Accrual for mandatory dividends, previous year                         4,279               1,998            2,779         
Accrual for mandatory dividends, closing date                         (1,998)               (777)          (1,081)        
Net income  in accordance with US GAAP                                47,774              30,505           42,450         
Other comprehensive  income                                            1,416               1,944            2,705         
-----------------------------------------------------------------------------------------------------------------         
Balance at December 31,                                              168,572             175,396          244,077         
-----------------------------------------------------------------------------------------------------------------         

n. Reclassification for US GAAP purposes                                                                                  

As of December 31, 2002, 2001 and 2000 the Goodwill generated on the                                                      
acquisition of AFP Proteccion and other companies (Note 16) has been                                                      
reclassified as an intangible asset, customer list for U.S. GAAP. This                                                    
reclassification does not affect the net for Chilean GAAP income or                                                       
shareholders equity under US GAAP. The reclassification is as follows:                                                    

                                                                   -----------------------------------------------        
                                                                         2000               2001            2002          
                                                                         MCh$               MCh$            MCh$          
------------------------------------------------------------------------------------------------------------------        
                                                                                                                          
Goodwill:                                                                                                                 
AFP Proteccion                                                       (62,226)            (58,756)         (55,284)        
APF Union                                                             (9,103)             (8,578)          (8,050)        
AFP El Libertador                                                     (1,105)             (1,028)            (952)        
------------------------------------------------------------------------------------------------------------------        
Customer list                                                         72,434              68,362           64,286         
------------------------------------------------------------------------------------------------------------------        

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ADMINISTRADORA DE FONDOS DE PENSIONES PROVIDA S.A. AND SUBSIDIARIES 
Notes to the Consolidated Financial Statements

II     Additional disclosure requirements                                       

Earnings per Share and per ADS.                                                 

The following disclosure of earnings per share information is not required      
under Chilean GAAP, but is required by US GAAP:                                 

                                                        [Enlarge/Download Table]
--------------------------------------------------------------------------------------------------------------------------
                                                                                          Year ended December 31,         
                                                                            2000           2001        2002         2002  
--------------------------------------------------------------------------------------------------------------------------
                                                                                                                          
Basic and diluted earnings per share under US GAAP                           Ch$64        Ch$144       Ch$92       US$0.13

Basic and diluted earnings per share under Chilean GAAP                      Ch$97        Ch$101      Ch$103       US$0.14

Weighted average number of shares of common stock outstanding (in                                                         
thousands of shares)                                                       331,317       331,317     331,317       331,317
--------------------------------------------------------------------------------------------------------------------------

The basic and diluted earnings per share data shown above is determined by      
dividing net income for both Chilean GAAP and US GAAP purposes by the weighted  
average number of shares of Common stock outstanding during each year.          

Reclassifications to conform to US GAAP                                         

a. Balance Sheet                                                                

Certain reclassifications would be made to the line items of the Chilean GAAP   
balance sheet to show the same presentation as would be required under a US     
GAAP format. As of December 31, 2001 and December 31, 2002, these               
reclassifications were not significant.                                         

o     Under Chilean GAAP goodwill amortization is classified in the non         
     operating expenses. Under US GAAP, a portion of goodwill is classified as
 customer list as ar assets with a life of approximately 22 years. See
    Note 42.I.k. Both the amortization of customer list and the amortization
of goodwill would be classified as operating expenses under US GAAP.

o     Gain or losses from the sale of assets under Chilean GAAP are reported as 
    "Other non-operating income" or "Other non-operating expenses". Under US
GAAP, such gain or losses would be reported in operating income.    

o     In Chilean GAAP, extraordinary income of ThCh$2,272 was recorded at       
December 31, 2001 related to a deferred tax benefit resulting from a
 ruling from the SAFP allowing the Company to record deferred taxes on
  encaje from 2001 on. For US GAAP purposes, this amount is reclassed to
deferred tax expense for the year ended December 31, 2001.          

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ADMINISTRADORA DE FONDOS DE PENSIONES PROVIDA S.A. AND SUBSIDIARIES 
Notes to the Consolidated Financial Statements

c. Cash Flow Information                                                        

Certain reclassifications would be made to the line items of the Chilean GAAP   
Cash and Cash Equivalents at end of period, to show the same presentation as    
would be required under a US GAAP format. These reclassifications are as        
follows (the column labeled "US GAAP" presents amounts using US GAAP format     
although the amounts displayed have been determined in accordance with Chilean  
GAAP):                                                                          

                                                        [Enlarge/Download Table]
                                                        Chilean GAAP        Reclassification          US GAAP
                                                            MCh$                  MCh$                  MCh$ 
                                                    ---------------------------------------------------------
                                                                                                             
Cash and Cash equivalent at the end of period 2000         1,409                 (338)                 1,071 
                                                    ---------------------------------------------------------
Cash and Cash equivalent at the end of period 2001         1,002                 (143)                   859 
                                                    ---------------------------------------------------------
Cash and Cash equivalent at the end of period 2002         1,498                  (31)                 1,467 
                                                    ---------------------------------------------------------

Disclosures about fair value of financial instruments                           

The following methods and assumption were used to estimate the fair value of    
each class of financial instruments as of December 31, 2001 and 2002 for which  
it is practicable to estimate that value:                                       

o    Cash                                                                       

The fair value of the Company's cash is equal to its carrying value.  

o    Time deposits                                                              

The fair value of time deposits approximates carrying value due to the
relatively short-term nature.                                         

o    Marketable securities                                                      

  The fair value of marketable securities is based on quoted market prices
of the common stock held and approximates carrying value.             

o    Accounts receivable                                                        

 The fair value of long-term accounts receivable was estimated using the
    interest rates that are currently offered for loans with similar terms and
remaining maturities.                                                 

o    Long-term debt                                                             

    The fair value of long-term debt was based on rates currently available to
the Company for debt with similar terms and remaining maturities.     

o    Derivative instruments                                                     

Estimates of fair values of derivative instruments for which no quoted
prices or secondary market exists have been made using valuation      
techniques such as forward pricing models, present value of estimated 
   future cash flows, and other modeling techniques. These estimates of fair
value include assumptions                                             

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ADMINISTRADORA DE FONDOS DE PENSIONES PROVIDA S.A. AND SUBSIDIARIES 
Notes to the Consolidated Financial Statements

   made by the Company about market variables that may change in the future.
   Changes in assumptions could have a significant impact on the estimate of
    fair values disclosed. As a result, such fair value amounts are subject to
significant volatility and are highly dependent on the qualify of the 
assumptions used.                                                     

   The estimated fair values of the Company's financial instruments compared
to Chilean GAAP carrying amounts are as follows:                      

                                                          As of December 31,
                                                          2002
                                                         -----------------------
                                                        Carrying          Fair
                                                         Amount          value
                                                          MCh$            MCh$

     Cash                                                     788            788
     Time deposits                                            679            679
     Marketable securities                                    117            117
     Accounts receivable                                    5,505          5,505
     Receivables due from related companies                   940            940
     Mandatory investment                                  79,395         79,395
     Accounts payable and other                            20,265         20,265
     Notes and accounts due to related companies            5,885          5,885
Long-term liabilities:                                                
     Obligations with banks and financial institutions      5,023          5,023
     Notes and accounts due to related companies            3,013          3,013
     Derivatives instruments                                  245            245

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ADMINISTRADORA DE FONDOS DE PENSIONES PROVIDA S.A. AND SUBSIDIARIES 
Notes to the Consolidated Financial Statements

III.     Recent Accounting Pronouncements                                       

In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement    
Obligations", SFAS No. 143, which is effective for fiscal years beginning after 
June 15, 2002, addresses financial accounting and reporting for obligations     
associated with the retirement of tangible long-lived assets and the associated 
asset retirement costs. The Company does not believe that this pronouncement    
will have an impact on its financial statements.                                

In April 2002, the Financial Accounting Standards Board ("FASB") issued SFAS    
No. 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB    
Statement No. 13 and Technical Corrections." SFAS 145 rescinds SFAS 4,          
"Reporting Gains and Losses from Extinguishments of Debt," which required that  
all gains and losses from extinguishments of debt be aggregated and classified  
as an extraordinary item if material. SFAS 145 requires that gains and losses   
from extinguishments of debt be classified as extraordinary only if they meet   
criteria in Accounting Principles Board Opinion No. 30, thus distinguishing     
transactions that are part of recurring operations from those that are unusual  
or infrequent, or that meet the criteria for classification as an extraordinary 
item. SFAS 145 amends SFAS 13, "Accounting for Leases", to require that lease   
modifications that have economic effects similar to sale-leaseback transactions 
be accounted for in the same manner as sale-leaseback transactions. In          
addition, SFAS 145 rescinds SFAS 44, "Accounting for Intangible Assets of Motor 
Carriers," and SFAS 64, "Extinguishments of Debt Made to Satisfy Sinking-Fund   
Requirements," which are not currently applicable to the Company. The           
provisions of SFAS No. 145 as they relate to the rescission of SFAS 4 shall be  
applied in fiscal year 2003. Certain provisions related to SFAS 13 are          
effective for transactions occurring after May 15, 2002. Management does not    
expect SFAS 145 to have a material impact on the Company's results of           
operations or financial condition.                                              

In June 2002, the FASB issued SFAS No. 146, Accounting for Costs                
Associated with or Disposal Activities (SFAS No. 146). This statement           
requires that a liability for a cost associated with an exit or disposal        
activity be recognized when the liability is incurred. In addition, this        
statement supercedes Emerging Issues Task Force (EITF) Issue No. 94-3,          
"Liability Recognition for Certain Employee Termination Benefits And Other      
Costs to Exit an Activity (including Certain Costs Incurred in a                
Restructuring)" under which a liability is recognized at the date an entity     
commits to an exit plan. SFAS No. 146 also establishes that the liability       
should initially be measured and recorded at fair value. The provisions are     
applicable on a prospective basis and are effective for any exit and disposal   
activities initiated after December 31, 2002. No exit or disposal activities    
have been entered into by the Company subsequent to the effective date.         

In December 2002, the FASB issued SFAS No.148, Accounting for Stock-Based       
Compensation Transition and Disclosure (SFAS No.148), which provides            
a1ternative methods of transition for a voluntary change to the fair value      
based method of accounting for stock-based employee compensation. SFAS No.148   
also amends the disclosure requirements of SFAS No.123 to require prominent     
disclosures in both annual and interim financial statements about the method of 
accounting for stock-based employee compensation and the effect of the method   
used on the results of operations. The provisions of SFAS No.148 are effective  
for fiscal years ending after -I December 15, 2002. The Company does not        
believe that the adoption of SFAS No.148 will have an impact on this financial  
statements.                                                                     

In April 2003, the Financial Accounting Standards Board (FASB) issued Statement 
of Financial Accounting Standards SFAS No. 149 (SFAS No. 149), AMENDMENT OF     
STATEMENT 133 ON DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES SFAS No. 149     
amends and clarifies accounting for derivative instruments, including certain   
derivative instruments embedded in other contracts, and for hedging activities  
under SFAS No. 133. SFAS No. 149 is applied prospectively and is effective for  
contracts entered                                                               

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ADMINISTRADORA DE FONDOS DE PENSIONES PROVIDA S.A. AND SUBSIDIARIES 
Notes to the Consolidated Financial Statements

into or modified after June 30, 2003, except for SFAS No. 133 implementation    
issues that have been effective for fiscal quarters that began prior to June    
15, 2003, and certain provisions relating to forward purchases or sales of      
when-issued securities or other securities that not yet exist. The Company is   
assessing the impact the adoption of this standard with have on this financial  
statements.                                                                     

In May 2003 the Financial Accounting Standards Board (FASB) issued Statement of 
Financial Accounting Standards No. 150 ("SFAS 150"), Accounting for             
Certain Financial Instruments with Characteristics of both Liabilities and      
Equity. SFAS 150 modifies the accounting for certain financial instruments      
that, under previous guidance, issuers could account for as equity. The         
Statement requires that those instruments be classified as liabilities in       
statements of financial position.                                               

SFAS 150 affects an issuer's accounting for three types of freestanding         
financial instruments, namely:                                                  

o     Mandatorily redeemable shares, which the issuing company is obligated to  
buy back in exchange for cash or other assets.                      
o     Instruments, other than outstanding shares, that do or may require the    
issuer to buy back some of its shares in exchange for cash or other 
assets. These instruments include put options and forward purchase  
contracts.                                                          
o     Obligations that can be settled with shares, the monetary value of which  
is fixed, tie solely or predominantly to a variable such as a market
index, or varies inversely with the value of the issuers' shares.   

SFAS 150 does not apply to features embedded in financial instruments that are  
not derivatives in their entirety.                                              

In addition to its requirements for the classification and measurement of       
financial instruments within its scope, SFAS 150 also requires disclosures      
about alternative ways of settling those instruments and the capital structure  
of entities, all of whose shares are mandatorily redeemable.                    

SFAS 150 is effective for financial instruments entered into or modified after  
May 31, 2003, and otherwise is effective at the beginning of the first interim  
period beginning after June 15, 2003. It is to be implemented by reporting the  
cumulative effect of a change in an accounting principle for financial          
instruments created before the issuance date of the Statement and still         
existing at the beginning of the interim period of adoption. Restatement is not 
permitted.                                                                      

Provida is currently evaluating the impact of SFAS 150 on its results of        
operations and financial position.                                              

In November 2002, the FASB issued FASB Interpretation No. 45, Guarantor's       
Accounting and Disclosure Requirements for Guarantees, Including Indirect       
Guarantees of Indebtedness of Others (FIN 45). FIN 45 requires additional       
disclosures by guarantors about obligations under guarantees that it has        
issued. This statement also clarifies that a guarantor is required to           
recognize, at the inception of a guarantee, a liability for the fair value of   
obligations undertaken in issuing guarantees. The disclosure requirements for   
FIN 45 are effective for financial statements of interim and annual periods     
ending after December 15, 2002 and have been included in these financial        
statements. The initial recognition and initial measurement requirements are    
applicable on a prospective basis for guarantees issued or modified after       
December 31, 2002.                                                              

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ADMINISTRADORA DE FONDOS DE PENSIONES PROVIDA S.A. AND SUBSIDIARIES 
Notes to the Consolidated Financial Statements

In January 2003, the FASB issued FASB Interpretation No. 46, Consolidation      
of Variable Interest Entities (FIN 46), an interpretation of Accounting         
Research Bulletin No. 51, Consolidated Financial Statements (ARB 51). FIN       
46 addresses consolidation by business enterprises of variable interest         
entities, which are entities subject to consolidation according to the          
provisions of FIN 46. For interests acquired on or after February 1, 2003, FIN  
46 applies immediately. For existing interests as of January 31, 2003, FIN 46   
is effective on July 1, 2003. The Company does not believe that it has any      
variable interest entities and therefore does not believe that the adoption of  
this interpretation will have any effect on its financial statements.           

Note 43. SUBSEQUENT EVENTS                                                      

The Board of Directors' meeting held on January 21, 2003 approved rental        
contracts with BBVA Banco Bhif in the cities of Santiago, Rancagua and          
Concepcion. There rental agreements involve annual income between UF 51,480 and 
UF 62,667, and annual expenses between UF 16,610 and UF 18,622. These           
aforementioned rental revenues are adjusted conditions similar to those         
prevailing in the market.                                                       

In the same meeting, the Board of Directors approved contracts concerning the   
services of collection of social security payments and payment of pensions,     
with BBVA Banco Bhif, which are remunerated at price ranges that are usually    
charged by bank entities for these services.                                    

In accordance with Resolution No. 0007 of January 23, 2003, SAFP applied the    
Administrator a penalty of UF 50 for breaking regulations concerning excessive  
investment.                                                                     

In accordance with Resolution No. 0008 of January 23, 2003, SAFP applied the    
Administrator a penalty of UF 200 for breaking current regulations concerning   
remittance of information regarding the compliance with social security         
obligations of employers in the very north and south areas.                     

According to the Administration, there are no other subsequent events or        
circumstances at year-end and to the date of issuance of these financial        
statements, that could significantly affect the financial statements of the     
Administrator.                                                                  

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Exhibit Index 

1.1    Amended Bylaws of A.F.P. Provida S.A. (English translation)              

8.1    List of significant subsidiaries                                         

10.1   Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002  

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘20-F’ Filing		Date		First		Last			Other Filings
		5/30/19		81
		5/31/14		81
		1/31/08		128
		3/31/06		128
		1/31/05		89					6-K
		12/31/04		89		139			20-F,  NT 20-F
		5/15/04		136		153
		3/31/04		128
		12/31/03		94		139			20-F
		11/15/03		136		153
		7/31/03		21		127
		7/1/03		175					6-K
Filed on:		6/30/03		108		174			6-K
		6/24/03		114
		6/15/03		174
		5/31/03		174
		5/15/03		136		153
		4/30/03		33
		3/31/03		15		129
		2/1/03		175
		1/31/03		175
		1/23/03		175
		1/21/03		175
		1/16/03		114
For Period End:		12/31/02		1		174
		12/17/02		159
		12/15/02		173		174
		12/4/02		159
		10/18/02		162
		10/14/02		162
		10/1/02		13		89
		9/27/02		23
		9/24/02		162
		8/30/02		86
		8/1/02		13		40
		6/15/02		173
		5/28/02		87
		5/24/02		159		161
		5/17/02		115
		5/16/02		159
		5/15/02		173
		4/30/02		86		161
		4/15/02		161
		4/11/02		159
		3/31/02		24
		3/22/02		159
		2/28/02		26		161
		2/19/02		159
		2/14/02		159
		1/28/02		161
		1/25/02		113		115
		1/7/02		153
		1/1/02		75		114
		12/31/01		4		171
		12/28/01		64
		11/30/01		64
		11/7/01		59		161
		10/10/01		159
		9/11/01		9
		9/6/01		134
		8/1/01		21		127
		7/31/01		128
		6/30/01		164
		6/20/01		33
		6/12/01		136		152
		5/29/01		87
		4/27/01		98
		4/16/01		101		102
		4/7/01		161
		3/19/01		43
		1/5/01		159
		1/1/01		64		166
		12/31/00		4		169
		11/30/00		14		134
		8/19/00		93
		7/1/00		18		67
		5/11/00		11		96
		4/23/00		98
		3/30/00		134
		3/28/00		38
		3/1/00		150
		1/1/00		64		167
		12/31/99		4		166
		11/1/99		49
		8/25/99		94		98
		8/1/99		128
		7/31/99		128
		7/1/99		11		90
		6/30/99		91
		5/15/99		136		152
		1/18/99		25
		1/1/99		12		33
		12/31/98		4		95
		9/17/98		103
		6/1/98		12
		5/31/98		12
		5/29/98		38
		5/28/98		12
		3/18/98		12
		1/1/98		65
		12/31/97		44
		8/29/97		11
		8/1/97		128
		7/31/97		128
		12/31/96		95
		5/2/96		85
		2/7/96		97
		1/1/96		65
		9/20/95		103
		8/1/95		128
		7/31/95		129
		7/3/95		103
		6/30/95		67
		5/18/95		25
		11/16/94		97
		6/6/94		81
		6/1/94		81
		8/1/93		129
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