Annual Report of the Management Board

WORLD TRADE WT/L/706 29 November 2007 ORGANIZATION (07-5246)

General Council 18-19 December 2007

WTO PENSION PLAN

ANNUAL REPORT OF THE MANAGEMENT BOARD

AND REPORT OF THE EXTERNAL AUDITOR

THEREON FOR THE YEAR ENDING

31 DECEMBER 20061

1 This Report is published in accordance with Article 5 of the Regulations of the Plan. WT/L/706 Page 2

Message from the Chairman of the Management Board

" The Management Board of the WTO Pension Plan has pleasure in presenting its Annual Report for 2006. A fourth consecutive year of positive equity returns has yielded another favourable investment result, with a nominal time-weighted rate of return of 9.7 per cent. The annualized rate of nominal time-weighted return over those four years has been 10.5 per cent. The effect of the bear market from 2000 through to 2003 continues to show in the annualized rate of nominal time-weighted return of 2.9% since inception in 1999. The Plan has continued to grow in size, numbering 684 active participants and 101 beneficiaries on 31 December 2006, as against 552 active participants and 4 beneficiaries on the same date in 1999.

In 2006 the Management Board focussed its attention on a number of important issues facing the Plan, including in particular the establishment of a working group to review the funding position of the Plan and the relevant assumptions used for the actuarial valuation.

Should you wish to share any thoughts or comments with the Management Board, please do not hesitate to contact Bob Luther or Jean-Pierre Helary in the Plan Secretariat." WT/L/706 Page 3

TABLE OF CONTENTS PAGE

I. INTRODUCTION 4 II. STRUCTURE OF THE PENSION PLAN ON 31 DECEMBER 2006 4 III. MEETINGS OF THE MANAGEMENT BOARD 5 IV. PARTICIPATION IN THE PENSION PLAN 8 V. ACCOUNTS 9 VI. ACTUARIAL POSITION OF THE PLAN 9 Report of the External Auditor on the Accounts of the WTO Pension 10 Plan for the Year Ending 31 December 2006 Opinion of the External Auditor on the Accounts of the WTO Pension 13 Plan for the Year Ending 31 December 2006

STATEMENT 1 14 Income and Expenditure Statement for the period 1 January – 31 December 2006

STATEMENT 2 15 Surplus account as of 31 December 2006

STATEMENT 3 16 Balance Sheet as of 31 December 2006

SCHEDULE A 17 Source and Application of Funds for the Period 1 January – 31 December 2006

SCHEDULE B 18 Investment Mandate Overview

SCHEDULE C 19 Performance and asset allocation

SCHEDULE D 20 Investment performance since inception

SCHEDULE E 21 Exchange rates used for the valuation of assets in 2006

SCHEDULE F 22 Structure of the WTO Pension Plan

SCHEDULE G 23 Glossary of terms

ANNEX 1 24 Statement of Investment Principles

ANNEX 2 25 Statement of Significant Accounting Policies WT/L/706 Page 4

I. INTRODUCTION

1. The WTO Pension Plan was established on 1 January 1999 following the decision by the General Council on 16 October 1998 (WT/L/282) to terminate the membership of ICITO in the United Nations Joint Staff Pension Fund on 31 December 1998 and to adopt the Regulations and Administrative Rules of the Plan.

2. The Management Board of the Plan was duly constituted by the General Council in accordance with Article 4 of the Regulations on 26 March 1999.

3. The General Council approved the Rules of Procedure of the Management Board on 8 May 2001 (WT/L/402).

4. The present report for the period from 1 January 2006 to 31 December 2006 has been prepared by the Management Board in accordance with Article 5 of the Regulations of the Plan for presentation to the General Council and to Plan participants. The annual reports for 1999, 2000, 2001, 2002, 2003, 2004 and 2005 were issued under cover of documents WT/GC/W/426, WT/GC/W/463, WT/L/497, WT/L/546, WT/L/583, WT/L/628, and WT/L/663, respectively.

II. STRUCTURE OF THE PENSION PLAN ON 31 DECEMBER 2006

(a) Management Board

The Management Board was composed as follows on 31 December 2006:

Mrs. Esra Demir, Chairman

Mr. Andrew Johnston Mr. Jean-Pierre Lapalme Mr. Nicholas Niggli Members elected Mr. Anthony Mistri Members Ms Rachel Shub by the General Ms Paulette Planchette appointed by the Mr. Pornvit Sila-On Council Mr. Paul Rolian Director-General Mr. Mathias Francke Mr. Rolf Adlung Ms Heather Grant Alternates Ms Monette David Alternates Mr. Jean-Marc Mignon elected by the Mr. Juan Marchetti appointed by the Ms Salina Yan General Council Mr. Shishir Priyadarshi Director-General Mr. Jan-Eirik Sørensen Observer on behalf of the beneficiaries Mr. Claude Mercier Alternate observer on behalf of the beneficiaries

(b) Investment Committee

Please see paragraph 21, below.

(c) Secretary

Robert Luther

- In-house support services

Jean-Pierre Helary Christine Figuigui WT/L/706 Page 5

- Outsourced support services

Trianon S.A., Lausanne

(d) Consulting Actuary

Cameron Hannah (Mercer HR Consulting S.A.)

(e) Medical Adviser

Dr. Catherine Mazeyrac

(f) Investment Analyst/Consultant

Edouard Stucki (Watson Wyatt)

(g) Global Custodian

The Northern Trust Company

(h) Fund Managers

Cohen and Steers2 (European real estate securities portfolio) Pictet (actively managed emerging market equity portfolio) Rogge Global Partners PLC (actively managed global bond portfolio) Warburg Henderson (European real estate portfolio) Wellington Management International (two actively managed global equity portfolios)

(i) External Auditor

Austrian Court of Audit.

5. An organizational chart is reproduced in Schedule F.

III. MEETINGS OF THE MANAGEMENT BOARD

6. The Management Board held six meetings in 2006. These took place on 17 February, 5 April, 21 July, 4 October, 20 November and 19 December 2006. The agendas included as standing items the review of investment performance and a report by the Secretary on matters arising since the previous meeting of the Management Board.

7. Regular progress reports were made available to the Plan participants and beneficiaries. The remainder of this section of the Annual Report is devoted to a summary of the main items of business dealt with by the Management Board in 2006.

(a) Review of investment performance

8. An overview of the current investment strategy is to be found in Schedule B.

9. For the fourth year in a row, positive equity market returns were recorded. The total Plan portfolio yielded a nominal return of 9.7 per cent (9.0 per cent after cost) in 2006, to be compared with 11.8 per cent for the custom benchmark. The main reason for the lag behind the custom benchmark was the underperformance of the Wellington global equity mandates and the Rogge bond mandate. The total annualized rate of nominal return over the past four years was 10.5 per cent, and

2 Previously known as Houlihan Rovers WT/L/706 Page 6 the annualized rate of nominal return since inception in 1999 was 2.9 per cent, due largely to the bear market situation that prevailed from the summer of 2000 to the spring of 2003.

10. The actuarial rate of return net of inflation was 8.41 per cent in 2006, and 1.88 per cent since inception, in other words 1.62 percentage points below the long-term target of 3.5 per cent.

11. A table summarizing investment performance and asset allocation is reproduced in Schedule C. A graph of investment performance since inception is reproduced in Schedule D.

(b) Working Group on the funding position of the Plan

12. The Working Group set up by the Management Board in 2005 met on four occasions during the year. The Working Group focussed its attention on the assumptions underpinning the actuarial valuation and the sensitivity of the Plan to changes in those assumptions, particularly with respect to improvements in mortality. The Working Group also examined the extent to which current assets would cover current liabilities on a discontinuance basis. The Working Group will submit its report to the Management Board in the course of 2007.

(c) Stop-loss insurance

13. The Management Board examined a proposal to insure the Plan against major death and disability risks. The Management Board noted that such risks, including, for instance, the concentration of significant numbers of staff on a single flight or in one location, were generally associated with official business and the cost of such insurance should, therefore, be covered by the WTO.

(d) Actuarial implications of agreed separation programmes

14. In the course of 2006, the Management Board considered the implications for the Plan of the possible implementation of a staff severance plan by the Organization. The Management Board expressed concern lest such a plan have an impact on the actuarial balance of the Pension Plan and decided that its concern should be conveyed to the senior management of the WTO and to the Committee on Budget, Finance and Administration, emphasizing that the WTO should cover all related costs.

(e) Recognition of same-sex spouses

15. The Management Board had begun its consideration of this matter in 2005 and continued to examine the related policy and legal implications in 2006. After extensive discussion in the course of three meetings and having considered an outside legal opinion on the matter, the Management Board agreed to strictly align the practice of the Pension Plan with that followed under the Staff Regulations and Staff Rules, and to treat same-sex marriages in the same way as heterosexual marriages insofar as Article 29 ("Surviving spouse's benefit") of the Plan Regulations was concerned.

(f) Transfer arrangement with the European Communities (EC) pension scheme

16. On the basis of consultations between the secretariats of the two pension schemes, an exchange of letters constituting a transfer arrangement between the WTO Pension Plan and the EC Pension Scheme was approved by the Management Board and endorsed by the General Council in May 2006. The arrangement entered into force on 1 July 2006. WT/L/706 Page 7

(g) Currency risk management

17. The Management Board considered the possibility of introducing a currency overlay mandate. It was noted that such a mandate would add to the demands on plan governance and to the management costs whilst at the same time offering the possibility of an additional return. The Management Board decided not to pursue currency risk management for the time being but reserved the possibility of returning to the subject at a later date.

(h) Rebalancing

18. The investment analyst / consultant presented to the Management Board a possible approach for rebalancing the investment portfolio, with the aim of ensuring that the proportional weights of the various mandates remained within predefined tactical bandwidths. New cash would similarly be invested in such a way as to maintain these proportional weights. The Management Board has not yet taken a decision on this matter but has continued to monitor the balance of the investment strategy on a regular basis.

(i) Warburg Henderson

19. The management agreement with the Warburg Henderson European real estate fund was signed in June 2006, and the first transfer of assets was made in December 2006 in respect of properties acquired in France, Germany and the United Kingdom. Further transfers up to the target amount of CHF 14.8 million will be drawn from accumulated contributions as and when properties are acquired by the fund.

(j) Staffing of the Plan Secretariat

20. During 2006, the Management Board noted the urgent need to strengthen the resources of the Plan Secretariat. Given the fact that the external auditor had once again drawn attention to the fact that the costs of administering the Plan should be charged fully to the Plan, in accordance with Article 5(f) of the Plan Regulations, the Management Board agreed to take up the question of human and financial resources for the Secretariat as a priority item in 2007.

(k) Investment Committee

21. The Management Board decided not to make appointments to the Investment Committee during the year. The Management Board was advised by its investment analyst / consultant and will be considering the future of the Investment Committee over the coming year. WT/L/706 Page 8

IV. PARTICIPATION IN THE PENSION PLAN

22. The following table shows the trends in the numbers of participants and beneficiaries in the Pension Plan in the course of 2006.

2006 2005 Active Members 684 695 Pensioners 101 85

Participants in the Pension Plan in 2006

Total number on 1 January 2006 695

Movements in 2006

- Entries 49 - Re-entries under the terms of Art. 15(b) of the 1 Regulations - Separations 61

Total number on 31 December 2006

Breakdown of separations in 2006

- retirement 9 - early retirement 4 - deferred retirement - - withdrawal settlement 30 - deferment of decision 17 - death 1 - disability -

Total separations 61

Benefits paid by the Pension Plan

Type of benefit At 31/12/2005 New benefits Benefits ended At 31/12/2006 in 2006 in 2006 Retirement 36 9 - 45 Early retirement 28 4 - 32 Deferred retirement 4 1 - 5 Surviving spouse's benefit 2 1 - 3 Partial /total disability benefit 6 - - 6 Child’s benefit 9 4 3 10 Total benefits 85 19 3 101 WT/L/706 Page 9

V. ACCOUNTS

23. A statement of significant accounting policies is reproduced in Annex 2.

24. The income and expenditure statement for the period 1 January – 31 December 2006 and surplus account as at 31 December 2006 are reproduced in Statements 1 and 2, respectively.

25. The balance sheet as at 31 December 2006 is reproduced in Statement 3.

26. The source and application of funds for the period 1 January – 31 December 2006 is reproduced in Schedule A.

27. A glossary of terms to facilitate an understanding of the tables is reproduced in Schedule G.

VI. ACTUARIAL POSITION OF THE PLAN

28. The Consulting Actuary to the WTO Pension Plan has completed an interim actuarial assessment of the WTO Pension Plan effective 31 December 2006. The interim assessment was carried out using the full membership data provided by the WTO Pension Plan as at 31 December 2006. Based on the results of this actuarial assessment, the consulting actuary confirms that the actuarial position of the plan has improved relative to the formal actuarial valuation as at 31 December 2005. This is mostly due to the fact that the market value of the investments of the plan has increased significantly.

______Esra Demir Robert Luther Chairman Secretary WTOPP Management Board WTO Pension Plan WT/L/706 Page 10

Report of the External Auditor on the Accounts of the WTO Pension Plan for the Year Ended 31 December 2006

Rates of return

29. After negative nominal rates of return in 2001 (–10.13%) and 2002 (–18.31%) the WTO Pension Plan (WTOPP) achieved positive nominal rates of return in 2003 (10.01%), 2004 (4.47%), 2005 (23.71%) and 2006 (9.01%). A comparison of the investment portfolios for the years 2005 and 2006 is given in the following table:

ACTUARIAL RATE OF RETURN 2005 2006 a. value of assets as of 01 Jan 223,344,222 296,529,427 b. value of assets as of 31 Dec 296,529,427 338,979,917 i. investment income 55,098,041 27,401,161 Average assets = (a+b-i)/2 232,387,804 304,054,092 Actuarial rate of return in nominal terms 23.71% 9.01% = i / average assets CPI for Switzerland 1.00% 0.60% Actuarial rate of return, net of inflation 22.71% 8.41%

30. The External Auditor noted that the actuarial rate of return in nominal terms decreased by more than 60% in 2006 compared to 2005. Investment and other administrative expenses increased from CHF 2.02 million to CHF 2.22 million or by 10% (Statement 1). In 2006 management and consultancy fees of CHF 2.02 million accounted for approximately 51% of the investment and other administrative expenses, compared to the periodic benefits of CHF 4.37 million.

Advisors to the Management Board

31. Pursuant to Article 7 of the Regulations of the WTOPP, the Director-General shall appoint advisors upon the recommendation of the Management Board. Accordingly, the Management Board decided at its 18th meeting in January 2001 to establish an Investment Committee on a cost-free basis. However, the committee ceased to function at the beginning of 2003. Since then the advisory function of the committee has been taken over by Watson Wyatt AG against fees.

Internal audit

32. The external audit together with the internal audit forms part of the audit function of an entity. As WTO will introduce an internal oversight function, the External Auditor recommends extending responsibilities of this unit to the WTOPP.

33. The External Auditor was informed that a vacancy notice for the internal auditor position in WTO is foreseen to be issued in July 2007. WT/L/706 Page 11

Operating costs

34. According to Article 5(f) of the Regulations of the WTO Pension Plan "All expenses incurred in administering the plan … shall be borne by the Plan." The Balance Sheet of the WTOPP includes since 2004 a reserve of CHF 250,000 relating to operating costs potentially invoiced by WTO. However, the External Auditor noted that since the establishment of the WTOPP no costs have been charged to WTOPP from WTO with respect to personnel resources and office space provided by WTO. The External Auditor recommended to comply with the above-mentioned regulation and to determine the cost elements which are to be charged to WTOPP.

35. In the course of the year-end audit of WTO (WT/BFA/W/157), the External Auditor was informed that the WTOPP Management Board had established a working group with the task of reviewing the actuarial assumptions underpinning the Plan and that the working group would be making recommendations with regard to the full charging of operational costs to the Plan.

Financial Rules and Regulations

36. The Regulations of the WTOPP do not refer to any financial rules and regulations governing the Plan. The External Auditor reiterates the recommendations raised in their previous reports, that the WTO Financial Rules and Regulations should apply mutatis mutandis in cases where no specific rules in the Regulations of WTOPP are defined.

37. The External Auditor recommends that the applied accounting procedures should be disclosed in the "Statement of Significant Accounting Policies" contained in an Annex of the Annual Report.

International Public Sector Accounting Standards (IPSAS)

38. The adoption of IPSAS can be seen as one of the challenges WTOPP has to face in the coming years.

39. As a matter of fact e.g. all UN related organisations are currently in a process of implementing the IPSAS. They have committed themselves to be fully compliant with IPSAS as of 2010. It has to be noted that in case no relevant IPSAS has been defined the relevant International Financial Reporting Standard / International Accounting Standard (IFRS / IAS) has to be applied.

40. Although IPSAS have to be applied as a whole as no exemption exists, the following IPSAS and IFRS / IAS will have the most impact on the accounting of the WTOPP:

 IPSAS 1 – Presentation of Financial Statements  IPSAS 15 – Financial Instruments: Disclosure and Presentation  IFRS 7 – Financial Instruments: Disclosure  IAS 19 – Employee Benefits  IAS 39 – Financial Instruments: Recognition and Measurement

41. The External Auditor recommends to:

 establish a roadmap for the implementation of IPSAS;  when introducing Financial Rules and Regulations in WTOPP (see recommendation above) the compulsory application of IPSAS should be referred to;  co-operate with the responsible department for the implementation of IPSAS at WTO; and  involve Trianon S.A., Lausanne, to ensure a coordinated approach. WT/L/706 Page 12

Budget

42. As already mentioned in the previous year’s reports, the legal framework of the WTOPP (Regulations, Administrative Rules and Rules of Procedures) does not foresee any specific regulation regarding the preparation of budget estimates as defined for WTO in their Financial Rules (WT/L/157) and Regulations (WT/L/156).

43. The External Auditor recommends implementing an appropriate budgetary process in the WTOPP.

Fluctuation reserve

44. The purpose of a fluctuation reserve in pension funds is to ensure that liquid assets are available in the occurrence of e.g. unexpected cash needs. The External Auditor noted that the implementation of a fluctuation reserve is mandatory for pension funds in a number of European countries and consequently specific accounting standards have been developed to determine the value of the fluctuation reserve.

45. Therefore, the External Auditor recommends to WTOPP considering the implementation of a fluctuation reserve to be able to react on liquidity needs and to avoid short-term adaptations of WTO pension contributions.

Financial impact of a WTO Staff Severance Plan

46. As mentioned under paragraph 14 of the WTOPP Annual Report, the Management Board considered the implication of a possible implementation of a staff severance plan by the WTO.

47. The External Auditor highlighted that if WTO decides on a measure of personnel policy, whose implementation would affect the long-term stability of the WTOPP, the resulting cost should be compensated by WTO.

48. The External Auditor recommends requesting the actuary to assume, as a working hypothesis, the financial consequences of such a policy.

Personnel issues

49. As already mentioned in the report of the External Auditor in the Director General’s Budgetary and Financial Report for 2006 (WT/BFA/W/157) the Director of Administration and General Services Division acts also as Secretary of WTOPP. As Director of Administration and General Division, he reports to the Deputy Director-General. However, as Secretary of the WTOPP he acts under the authority of the Management Board of WTOPP (WTOPP(05)3/Rev.1). The External Auditor suggests a segregation of duty between those two functions to avoid a potential conflict of interest.

50. As mentioned under paragraph 20 of the WTOPP Annual Report, the Management Board noted the need to strengthen the resources of the Plan Secretariat. The External Auditor highlighted the necessity of a back-up function for the Assistant Secretary of WTOPP. WT/L/706 Page 13

(signed) ______Josef Moser President of the Austrian Court of Audit WT/L/706 Page 14

Opinion of the External Auditor on the Accounts of the WTO Pension Plan for the Year Ended 31 December 2006

51. The representatives of the Austrian Court of Audit have examined the appended Financial Statements contained in the Annual Report for 2006, comprising Statements 1 to 3 and Schedules A and B of the WTO Pension Plan for the year ending 31 December 2006. As a result of the examination, the opinion is given that these statements, which were prepared in conformity with the accounting policies described in Annex 2 of the Annual Report for 2006 and applied on a basis consistent with that of the preceding financial period, present fairly the financial position of the WTO Pension Plan as at 31 December 2006 and the operations for 2006.

52. The accounting system of the WTO Pension Plan was outsourced to Trianon3, which prepared the accounts for 2006. Trianon provided the report of its external auditor including the financial statements for the year 2006 for information. Trianon also provided the accounting transactions for the year 2006 to the representatives of the Austrian Court of Audit for examination. This examination included a general review of the accounting procedures and such tests of the accounting records and other supporting evidence as were feasible in the circumstances.

(signed) ______Josef Moser President of the Austrian Court of Audit

3 Trianon Conseils SA, Lausanne, Switzerland STATEMENT 1

WT/L/706 Income and Expenditure Statement Page 15 (Expressed in Swiss francs) Expenditure at 31.12.2006 at 31.12.2005 Income at 31.12.2006 at 31.12.2005 Benefits Contributions Lump sum Participants 8,208,003 7,882,842 Withdrawal settlement – Art. 26 905,909 938,669 Organization 16,415,999 15,765,658 Commutation – Art. 23(c) & Art. 24(c) 3,891,157 1,988,002 Interest on validations 1,156 1,293 Transfer to other organizations 438,243 288,721 Restorations – Article 18 30,418 4,313 Interest on transfers 10,050 12,948 Interest on restorations 503 232 5,245,359 3,228,340 24,656,079 23,654,338

Periodic benefits Transfer values Retirement benefit – Art. 23 2,356,241 1,895,920 Early retirement benefit – Art. 24 1,558,329 1,365,751 Transfer from other organizations 274,960 1,296,563 Surviving spouse benefit – Art. 29 124,249 103,905 274,960 1,296,563 Child benefit – Art. 30 62,372 29,764 Disability benefit – Art. 28 265,647 243,213 4,366,838 3,638,553

Investment and Other Admin. expenses Investment Income Currency revaluation - - Profit on securities 29,309,220 56,859,698 Bank charges 815 1,107 Currency revaluation 47,613 334 Audit costs 5,603 5,524 Interest on current accounts 65,281 37,083 Management fees (see Schedule A, footnote 2 for breakdown) 1,903,092 1,595,582 Consultancy fees 117,046 202,385 Actuarial expenses 29,875 98,660 29,422,114 56,897,115 Administrative costs 167,978 117,011 2,224,409 2,020,269 Other income - 11,875

Excess income over expenditure 42,516,547 72,972,729 Excess expenditure over income 54,353,153 81,859,891 54,353,153 81,859,891

______Esra Demir Robert Luther Chairman Secretary WTOPP Management Board WTO Pension Plan WT/L/706 Page 16 STATEMENT 2

WT/L/706 Page 17 Surplus Account (expressed in Swiss francs)

Debit at 31.12.2006 at 31.12.2005 Credit at 31.12.2006 at 31.12.2005

Excess income over expenditure 42,516,547 72,972,729

Profit 42,516,547 72,972,729

42,516,547 72,972,729 42,516,547 72,972,729

______Esra Demir Robert Luther Chairman Secretary WTOPP Management Board WTO Pension Plan STATEMENT 3

WT/L/706 Page 18 Balance Sheet (expressed in Swiss francs)

Assets at 31.12.2006 at 31.12.2005 Liabilities at 31.12.2006 at 31.12.2005

Securities 337,134,000 294,198,432 Capital 1.1 295,758,680 222,785,951 Current accounts 1,823,062 2,316,881 338,957,062 296,515,313 Reserve funds Operating cost 250,000 250,000

Current assets Current liabilities Withholding taxes to be recovered 22,855 9,717 Accrued expenses 454,690 520,747 Contributions receivable - 988 Restoration amounts receivable - 3,409 22,855 14,114

Profit 42,516,547 72,972,729

338,979,917 296,529,427 338,979,917 296,529,427

______Esra Demir Robert Luther Chairman Secretary WTOPP Management Board WTO Pension Plan WT/L/706 Page 19

SCHEDULE A

Source and Application of Funds (expressed in Swiss francs)

Source 1.1.2006-31.12.2006 1.1.2005-31.12.2005

Funds as at 1.1 296,529,427 223,344,222 Receipt of contributions 24,656,079 23,654,338 Transfer values 274,960 1,296,563 Profit on securities 29,422,114 56,897,115 Increase in current liabilities - 212,476 Other income - 11,875 350,882,580 305,416,589 Less: Application

Settlement of benefits 9,612,197 6,866,893 Expenditure4 2,224,409 2,020,269 Decrease in current liabilities 66,057 - 11,902,663 8,887,162 Funds as at 31 December 338,979,917 296,529,427

4 Including management fees totalling CHF 1,903,092 and broken down as follows:

Northern Trust CHF 378,713 Pictet CHF 389,505 Rogge CHF 189,671 Wellington CHF 945,203 WT/L/706 Page 20

SCHEDULE B

Investment Mandate Overview

Assets % of Fund Manager (in m SAA* Asset Class Index Assets CHF)

Wellington Mgmt. 71.4 21.1% 21.0% Actively managed global MSCI World Intl. Ltd equities Developed (Opportunities) Wellington Mgmt. 131.5 38.8% 39.0% Enhanced managed global MSCI World Intl. Ltd equities Developed (Intersection) Pictet & Cie 41.7 12.3% 10.0% Actively managed MSCI Emerging emerging market equities Markets Rogge Global 65.2 19.2% 20.0% Actively managed foreign Citigroup World Partners PLC bonds, hedged Govt. Bond Index hedged into Cohen & Steers 23.2 6.9% 5.0% Actively managed EPRA Europe European real estate securities Warburg 4.0 1.2% 5.0% Actively managed 6.5% p.a. Henderson** European real estate Cash 1.8 0.5% - Total 339.0 100% 100%

Added- Ex- Expected Value IR since Fund Manager post Location Website TE* since inception* TE* inception Wellington - 1.5 – 2.5% -0.9% -0.4 Boston, wellington.com Mgmt. Intl. Ltd MA; (Opportunities) London England Wellington 2.3 3 – 6% 0.9% 0.4 Boston, wellington.com Mgmt. Intl. Ltd MA; (Intersection) London England Pictet & Cie 4 6 – 9 % 0.6% 0.2 London, pictet.ch England Rogge Global - 1 – 2% 0.2% 0.9 London, rogge.co.uk Partners PLC England Cohen & Steers - 3 – 4% -1.0% -0.4 Brussels, cohenandsteers.com Belgium Warburg - - - - Hamburg, Warburg- Henderson** Germany henderson.com

* TE = Tracking Error IR = Information Ratio SAA = Strategic Asset Allocation

** First capital call December 2006,, target return 6.5% p.a. WT/L/706 Page 21

SCHEDULE C

Performance and Asset Allocation

Return Statistics (annualized)* last over over over since market value Consolidation quarte ytd 2 3 TE** IR** 1 year incept % of total r years years Consolidated Securities 5.5% 9.7% 9.7% 17.5% 13.2% 2.9% 2.3 -0.4 339.0 Custom Benchmark 5.9% 11.8% 11.8% 17.8% 13.5% 3.7% -- -- 100%

Equities Consolidated Equities 6.2% 9.8% 9.8% 20.8% 16.0% 1.7% 2.0 -0.5 244.7 Custom Benchmark 6.8% 12.8% 12.8% 21.5% 16.3% 2.6% -- -- 72.2%

Wellington (Intersection) 4.5% 7.0% 7.0% 17.3% 13.4% -1.4% 2.4 0.4 131.5 MSCI World 5.5% 11.2% 11.2% 18.8% 14.2% -2.3% -- -- 38.8%

Wellington (Opportunities) 5.0% 8.7% 8.7% -- -- 21.1% 2.3 -0.4 71.4 MSCI World 5.5% 11.2% 11.2% -- -- 22.0% -- -- 21.1%

Pictet Emerging Markets 14.4% 21.7% 21.7% -- -- 38.5% 4.1 0.2 41.7 MSCI EM 14.5% 22.4% 22.4% -- -- 37.9% -- -- 12.3%

Fixed Income Consolidated Fixed Income -0.8% -1.3% -1.3% 1.8% 1.8% 2.8% 1.2 0.2 67.1 Custom Benchmark -0.3% -0.6% -0.6% 0.9% 1.6% 2.8% -- -- 19.8%

Rogge Global -0.8% -1.3% -1.3% -- -- 0.7% 1.5 0.9 65.2 Citi World Govt Hedged -0.3% -0.6% -0.6% -- -- 0.5% -- -- 19.2%

NT € Cash 0.0 0.0%

Credit Suisse Cash*** 1.8 0.5%

Real Estate Consolidated Real Estate 18.1% 55.9% 55.9% -- -- 41.2% 2.9 -0.4 27.2 Custom Benchmark 18.5% 54.6% 54.6% -- -- 42.2% -- -- 8.0%

HR European Real Estate 18.1% 55.9% 55.9% -- -- 41.2% 2.9 -0.4 23.2 Benchmark 18.5% 54.6% 54.6% -- -- 42.2% -- -- 6.9%

WH European Real Estate ------4.0 Benchmark ------1.2%

* All other mandates are calculated gross of fees (before fees), with the exception of HR (now Cohen & Steers) and WH, which are calculated net of fees. ** TE = Tracking error IR = Information Ratio. TE and IR shown for complete investment period. * * * Although CSAM cash is shown for the total asset allocation, it is not used in the performance calculation. WT/L/706 Page 22

SCHEDULE D

Investment Performance Since Inception

50 Aug Feb Aug Feb Aug Feb Aug Feb Aug Feb Aug Feb Aug Feb Aug 1999 2000 2000 2001 2001 2002 2002 2003 2003 2004 2004 2005 2005 2006 2006

Total Benchmark Eq. Total Eq. Benchmark FI Total FI Benchmark

53. The underperformance of the equity allocation as indicated in the graph above reflects the underperformance of one of the initial global equity managers whose contract has since been terminated. Both of the Wellington mandates underperformed their benchmarks in 2006. Since inception, however, the Wellington mandates in aggregate outperformed their benchmarks.

54. The real estate allocation is reflected in the total return graph. It includes the Warburg Henderson European real estate fund which made its first capital call in December 2006 and the Cohen & Steers European real estate securities mandate.

55. With the selection of Rogge, the aggregate performance of the fixed income component exceeds its benchmark since inception. WT/L/706 Page 23

SCHEDULE E

Exchange rates used for the valuation of assets in 2006

Currency Rate used for closing on 31.12.2006 EUR 0.621 USD 0.819 JPY 97.612 GBP 0.419 AUD 1.039 CAD 0.953 HKD 6.371 SGD 1.257

Currency Breakdown as of 31 December 2006

WTOPP: Currency Exposure as of 31.12.2006

AUD CAD 0.4% 1.7% CHF USD 20.8% 30.0%

SGD 0.2% Emerging Markets 12.3% JP Y HKD GBP EUR 7.8% 0.7% 4.5% 21.6%

* The Rogge global fixed income mandate which comprised 19.2% of total assets hedges foreign currency exposure into Swiss Francs, the reference currency of the Plan. At year end 2006, the mandate was 92% hedged into Swiss Francs and within guidelines. The pie chart above counts the global bond mandate as fully hedged. SCHEDULE F STRUCTURE OF THE WTO PENSION PLAN WT/L/ 706 Page DIRECTOR-GENERAL PARTICIPANTS GENERAL COUNCIL 24

ADMINISTRATIVE EXTERNAL AUDITOR SERVICES

CONSULTING ACTUARY MANAGEMENT BOARD

MEDICAL ADVISER

INVESTMENT COMMITTEE

ASSET MANAGEMENT SERVICES INVESTMENT ANALYST/CONSULTANT WT/L/706 Page 25

SCHEDULE G

GLOSSARY OF TERMS

Accrued expenses includes expenses incurred but not paid in the current financial year.

Active Investment Management is a form of portfolio management whereby the portfolio manager invests the assets in a manner different from the benchmark in an attempt to produce higher returns than the benchmark. The disadvantages of such a management style are characterised by higher management fees, higher trading costs as well as the chance to significantly underperform the benchmark.

Actuarial expenses includes expenses charged by the consulting actuary for the provision of actuarial services.

Administrative costs includes costs incurred in the general administration of the Pension Plan.

Audit costs includes costs (travel, per diem) incurred by the External Auditor in connection with the audit of the 2006 accounts.

Consultancy fees includes the fees charged by the investment analyst/consultant.

Contributions receivable refers to contributions due in respect of contributory service in 2006 but received after 31 December 2006.

Currency revaluation represents exchange rate losses.

Information Ratio is defined as the outperformance of the investment manager above the index divided by the portfolio’s tracking error. The information ratio is used to represent a manager’s skill. Generally, any ratio over 0.30 is thought of as having skill.

Interest on validations refers to interest payments made under Article 20(d) of the Plan Regulations.

Management fees includes fees paid for the management of WTO portfolios.

Provision for operating costs refers to the reserve established to cover operating costs not currently charged to the Plan.

Regulations and Administrative Rules refers to the Regulations and Administrative Rules adopted by the General Council on 16 October 1998.

Time-weighted return is a measure of compound return. It reduces the distorting effect of inflows and outflows and is used to compare the returns of investment managers. The time-weighted return is very similar to the geometric mean return.

Tracking error is defined as the standard deviation of the portfolio’s outperformance versus the benchmark. It is used as a measure to determine the risk of the portfolio versus its benchmark. This measure should not be confused with absolute risk; even though a portfolio has a very low tracking error, it can still be very risky due to the underlying nature of the market in which it invests. A tracking error for a passive mandate would be low—dependent upon the mandate, usually less than 0.8. Anything above this would be considered active.

Withholding taxes to be recovered includes amounts of withholding tax levied by the Swiss authorities and subject to recovery after 31 December 2006. WT/L/706 Page 26

ANNEX 1

Investment Principles

1. Pursuant to Article 13 of the Regulations of the Pension Plan and Rule A.9 of the Rules of Procedure, the Management Board shall be responsible for the secure investment of all Plan assets, the formulation of investment policies after taking appropriate professional advice, and the appointment of investment managers to implement that policy.

2. The investment strategy of the Plan is based on an asset allocation designed to ensure the adequate funding of the Plan's liabilities over the long term. A careful balance is drawn between maximization of returns on the assets of the Plan and the maintenance of a reasonable level of risk. The strategy is geared to achieve a actuarial rate of return of 3.5% net of price inflation, which is the assumption on which the feasibility study and contribution rates of the Plan were originally based.

3. The WTOPP’s three asset classes are defined by differences in their expected response to economic conditions, such as price inflation or changes in interest rates and are weighted in the portfolio by considering their expected returns, risk and correlations.

4. Derivatives may be used within the global hedged fixed income mandate for hedging purposes, where they provide the opportunities to achieve the objective of the Plan more efficiently than would be the case through the direct dealing in underlying securities. Derivative instruments for this mandate are restricted to forward foreign currency contracts, futures, covered bond options and interest rate options. Leverage and net short positions are not allowed.

(signed) (signed) ______Esra Demir Robert Luther Chairman Secretary WTOPP Management Board WTO Pension Plan WT/L/706 Page 27

ANNEX 2

Statement of Significant Accounting Policies

1. Pursuant to Article 14(a) of the Regulations of the Pension Plan, the unit of account of the Pension Plan is the Swiss franc. For practical reasons, the current United Nations operational rates of exchange are used for the conversion of other currencies into the Swiss franc, except in the case of the investment portfolios where the rates shown in Schedule C were used for valuation purposes.

2. The accounting year is 1 January to 31 December.

3. Pursuant to Article 13 of the Regulations of the Plan and Rule A.8 of the Rules of Procedure, the Management Board shall be responsible for the financial security and probity of the Plan and in particular the maintenance of its actuarial balance and of financial controls and accounts.

4. Pursuant to Article 5(e) of the Regulations of the Plan and Rule C.1 of the Rules of Procedure, an audit of the accounts of the Plan shall be made annually by the External Auditor, namely the External Auditor of the WTO. The provisions of Chapter XI ("External Audit") and the Appendix ("Additional terms of reference governing external audit") of the WTO Financial Regulations shall apply mutatis mutandis to the audit.

(signed) (signed) ______Esra Demir Robert Luther Chairman Secretary WTOPP Management Board WTO Pension Plan

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