instruments for 2003.Overall equity portfolio VaR is around 40%~50% of our aggregate portfolio VaR, and due to the negatively correlated trend between equity and bond prices, the diversification effect of our total business activity portfolio is continuously significant.

The number of financial derivatives in the market has grown rapidly over the past two years. The Risk Management Department recognizes the increasing importance of sound model risk management and has set up a policy to verify the derivatives pricing models and related model parameters. This policy also incorporates tools to set limits, and monitor risk and exposure.

Credit risk management has faced many difficulties due to the lack of a widely accepted domestic credit rating system. The Risk Management Department has established its own internal ratings system and issuer/counterparty rating policies to ensure credit risk exposures are accurately assessed and credit limits are properly approved. In addition, credit risk models are developed to quantify the different costs of credit.

Liquidity risk arises from the funding needs of business activities and in the management of portfolio assets. The Risk Management Department has developed a liquidity framework to minimize loss and turnover difficulty in cases of low market liquidity. Meanwhile, funding measurements and projections are maintained daily and policies are in place to ensure appropriate liquidity profiles under various stress tests.

RAPM measures are calculated to evaluate risk-adjusted performance of the business units and to optimize Yuanta's capital allocation. The Risk Management Department continues to support the decision-making of our senior management, thus linking risk management to Yuanta's shareholder value strategy.