RESTRICTED  
  
WT/L/985  
13 July 2016  
(16-3749)  Page: 1/28  
 
 
 WTO PENSION PLAN 
ANNUAL REPORT OF THE MANAGEMENT BOARD 
FOR THE YEAR ENDING 
31 DECEMBER 2015 WT/L/985 
 
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  CONTENTS 
 
CONTENTS ........................................................................................................................ 2  
MESSAGE FROM THE CHAIRMAN OF THE MANAGEMENT BOARD ....................................... 3  
1   HIGHLIGHTS ............................................................................................................... 4 
1.1   Investme nt retu rn ..................................................................................................... 4  
1.2   Asset allocati on ........................................................................................................ . 4 
1.3   Participants an d beneficiar ies 2015 .............................................................................. 5  
2   SUMMARY OF MANAGEME NT BOARD ACTIVITIES ........................................................ 6  
3   REVIEW OF THE INVESTMENT STRATEGY .................................................................... 7  
4   ACTUARIAL POSITI ON OF THE PLAN ........................................................................... 8  
5   ORGANIZATION AND STRUCTURE OF THE PENSION PLAN ON 
31 DECEMBER 2015 .......................................................................................................... 9  
6   ACCO UNTS ................................................................................................................ 1 0 
7   IPSAS ACCRUED LIABIL ITIES OF TH E PLAN .............................................................. 10  
8   EXTERNAL AUDITOR .................................................................................................. 11  
9   FINANCIAL STATEMENTS .......................................................................................... 12  
9.1   Management lette r of repres entation ........................................................................... 12 
9.2   Statement 1: Income and expenditure statement .......................................................... 13 
9.3   Statement 2:  Balance sheet ....................................................................................... 14 
9.4   Schedule A: Source and application of funds ................................................................. 15 
9.5   Schedule B: Brea kdown of expe nditures ...................................................................... 15 
9.6   Schedule C: Invest ment mandate overview .................................................................. 16 
9.7   Schedule D: Asset allo cation ...................................................................................... 17 
9.8   Schedule E: In vestment pe rformance .......................................................................... 18 
9.9   Schedule F: Investment performance history since inception to 31 December 2015 ............ 19 
9.10   Schedule G: Exchange rates us ed for closing on 31 December 2015 ............................... 19 
9.11   Schedule H: Particip ation in the Pe nsion Plan .............................................................. 20 
9.12   Schedule I: Structur e of the WTO Pe nsion Plan ........................................................... 21 
9.13   Schedule J: Glossary of terms ................................................................................... 21 
ANNEXES ........................................................................................................................ 24  
ANNEX 1 NOTES TO THE FINANCIAL STATEMENTS ......................................................... 24  
ANNEX 2 INVESTMENT PRINCIPLES  OF THE PENSION PLAN .......................................... 26  
 
 WT/L/985  
 
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  MESSAGE FROM THE CHAIRMAN OF THE MANAGEMENT BOARD 
The Management Board of the World Trade Organization Pension Plan (WTOPP) is pleased to 
present to you its 2015 Annual Report. 2015 was a more challenging year for financial markets than the previous few and the return of the WT OPP investment portfolio reflects this.  The 
Management Board's investment strategy slightly beat its benchmark and delivered a nominal rate 
of return of -0.2% (versus -1.3% for the benchmark).  Due to a deflationary environment in Switzerland the real rate of return for 2015 was 1.1%.  This is below the long term target rate of 
return used in the actuarial assumptions, but no t unexpected due to higher than expected returns 
in the prior three years.  It is important to understand that price volatility as measured by the value of the portfolio on 31 December of each year  is often not a good indicator of the underlying 
economic potential of the investments.  It is normal that in some years the return will be above 
the expected level and in others it will be below.   
 Nonetheless, current economic circumstances are challenging for investors and likely to remain so 
for some time.  However, as a long term invest or the WTOPP can tolerate, and even benefit from, 
this short term volatility. More information on the investment philosophy of the Management Board and details on the allocation of assets ca n be found in the report and its annexes. 
 
In 2015, the principal focus of the Management Bo ard was on formulating proposals to address the 
actuarial imbalance identified in the most recent triennial actuarial valuation and reported to stakeholders in the 2014 annual report.  The Management Board met six times in formal meetings 
and six times in working group meetings during the year.  In addition to the actuarial issues, the 
Board reviewed general governance matters, disability pension procedures and investment strategies.   
 
The work of the Management Board in 2015 culminated when a revised set of Regulations, primarily focused on addressing the actuarial defi cit, was approved by the General Council at its 
meeting in on 30 November 2015. 
 The Management Board is fully engaged in ensuri ng the continued good governance of the WTO 
Pension Plan and is pleased to share this annual report with you. 
 
The present report for the period from 1 January 2015 to 31 December 2015 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 and beneficiaries. 
   
 
   
Johannes, Rühl, Chair of the Management Board WT/L/985 
 
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  1  HIGHLIGHTS 
1.1  Investment return   
Table 1 Investment return 
 Net Real 
2013 8.4% 8.3% 
2014 8.1% 8.4% 
2015 -0.2% 1.1% 
 
Figure 1 Historical returns net of inflation and fees 
-40%-30%-20%-10%0%10%20%30%
99 2000 01 02 03 04 05 06 07 08 09 10 11 12 13 14 2015 
 
1.2  Asset allocation   
Figure 2 Asset allocation, actual vs. strategy 2015 
0%5%10%15%20%25%30%35%40%45%
Global Equities CHF Bonds Real Estate CashAllocation
Strategy
 
 WT/L/985  
 
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  Figure 3 Detailed asset allocation 2015 
International 
Equities
32.9%
Emerging Markets 
Equities
7.2%
Swiss 
Confederation 
Bonds
1.7%US  bonds
12.9%Emerging Countries 
Bonds
13.5%Senior Loans
7.4%Euro Real Estate
4.6%Prisa Lp
4.6%Swiss Real Estate
10.2%Cash
4.9%
 
 
 
1.3  Participants and beneficiaries 2015   
Figure 4 Plan membership by type 
Participants
73%24%Disability
2%Surviving spouses
1%
Retireesa
 
a Including deferred retirement benefits. 
 
Table 2 Plan membership   
Membership 2014 2015 
Number of Participants 721 712 
Number of Beneficiaries 261 284 
 WT/L/985 
 
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  Table 3 Types of benefits   
Types of benefits Total number Average monthly benefit 
Year 
2014 Year 
2015 Year 
2014 Year 
2015 
Retirement benefits 120  131  CHF 6,600   CHF 6,600  
Early retirement benefits 79 88  CHF 5,100   CHF 5,000  
Disability benefits 18 19  CHF 4,900   CHF 5,000  
Surviving spouse's benefits 9 10  CHF 4,000   CHF 3,800  
Child's benefits 20 19  CHF 430   CHF 430  
Deferred retirement benefits 15 17 - - 
     
Figure 5 Contribution income and benefit expenditure 
04,0008,00012,00016,00020,00024,00028,00032,000
1999 2000 01 02 03 04 05 06 07 08 09 10 11 12 13 14 2015Thousands
of Swiss Francs
Periodic Benefits Lump sum payments Contributions received ab
 
a Including transfer values paid to other Organizations. 
b Including transfer values received from other Organizations. 
 
 
2  SUMMARY OF MANAGE MENT BOARD ACTIVITIES   
 1.  The Management Board held six meetings in  2015. One meeting in special session took place 
on 16 January, and five meetings in regular se ssions took place respectively on 3 February, 
24 April, 24 June, 18 September and 27 November. The agendas included as standing items the presentation of investment situation and a report by the Secretary on matters arising since the 
previous meeting of the Management Board. Ad ditionally, working groups of the Management 
Board met six times to address specific points on general governance issues (largely focused on revising the Regulations), on disability processes, and on investment issues.  
2.  Communication with, and services to, stakehol ders is important to the Management Board. On 
12 May, Members of the Management Board appointed by the Director General organized an information session for Staff members which included a presentation of the proposals for changing the Plan's Regulations to address the actuarial imbalance. They also reported at the Staff Council 
General Assembly on 6 July. Retiree Observers to the Board reported to the beneficiaries and more 
information was made available to retirees via their new dedicated WTO website. The Chair of the Management Board provided periodic updates to Members in the CBFA, particularly with regard to 
the proposed amendments to the Regulations. Finally, the WTOPP Secretariat makes itself 
available to participants and beneficiaries to prov ide a range of services and information on an on-
going basis.   WT/L/985  
 
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  3.  One of the Management Board's main achievements in 2015 was to recommend a set of 
revised Regulations designed to address the persiste nt actuarial imbalance identified at the last full 
actuarial valuation of the Plan as at 31 Decemb er 2013. These new Regulations were approved by 
the General Council on 30 November 2015. The following four amendments were adopted: 
Table 4 Overview of the amendments to the Regulations 
Actuarial measures Description 
Actuarial measure 1 Lump sum maximum raised from 1/3 to 1/2 of the full pension 
entitlement 
Actuarial measure 2 Increase of the Final Average Remuneration averaging period from 3 to 
5 years (for staff hired on or after 01/01/2016) 
Actuarial measure 3 Increase the early retirement benefit-reduction from 3% to 6% per year 
(for staff hired on or after 01/01/2016) 
Actuarial measure 4 Scope of pre-retirement cost-of-living  indexation reduced from the full 
pension entitlement to 1/3 of it, corresponding to the former staff 
member's contributions (for staff hired on or after 01/01/2016). 
 
4.  In addition to the actuarially related amen dments summarized in the table above, the changes 
to the regulations addressed a recommendation of th e external auditors to make explicit in the 
regulations the longstanding practice by which th e costs associated with providing the WTOPP with 
a Secretariat are borne by the WTO. 
5.  The Management Board is also pleased to report that it worked with the WTO administration to 
ensure that the WTOPP was compensated for the actuarial costs associated with a staff restructuring exercise implemented at the end of 2015.  This is an example of good faith 
cooperation between the WTO Administration and the Management Board to avoid the long term 
viability of the WTOPP being negatively impacted by management decisions.  
 
3  REVIEW OF THE INVESTMENT STRATEGY   
 6.  The investment portfolio had a nominal return of -0.2% in 2015, compared to -1.3% for the 
Pension Plan's benchmark. Swiss inflation for 2015 was -1.3%. Hence, the portfolio's real return 
was +1.1% for the year. Real estate investments generated positive nominal returns in 2015 while 
equities and fixed income had negative returns. 
7.  Government bond yields fell to new historical lows by the end on 2015. The average yield 
offered to investors by Swiss Government bonds is negative. The current level of yields on these 
bonds guarantees mediocre returns in the medium term. 
8.  The slight decline in the Plan's portfolio resu lted from negative returns on bonds and equities, 
partly offset by gains on real estate. 
9.  Equity investments, which represent 40% of the Pension Plan's target asset allocation, had a 
return of -1.8% against -2.6% for the benchmarks. The outperformance came from the emerging 
market equities portion of the portfolio, which ou tperformed its benchmark by 4.4%. The dividend 
yield of the Pension Plan's equity portfolio stood at 2.9% compared to 2.8% a year ago. 
10.  The fixed income investments (40% of the Pe nsion Plan's target asset allocation) returned 
-2.9% vs. -2.9% for the Plan's benchmark. This was however lower than the return achieved by 
Swiss Government bonds which gained 2.0% in 2015, courtesy of yields falling below zero. It 
should be noted that the gains on the latter ar e theoretical because the Swiss government bonds 
will be redeemed at maturity with a loss offse tting the paper gains made during the last year. 
11.  In general, high quality fixed income investments in the portfolio are likely to see modest 
returns in the future. Effectively, recent gains in bonds were made at the expense of future yields. 
Low current yields make these investments more susceptible to the risk of potential rising yields 
and potential credit deterioration. On the other ha nd, credit spreads (excess yield paid to investors 
to compensate higher credit risk) on higher cr edit risk investment categories have widened 
in 2015. This widening was not necessarily explained by a deterioration of credit quality and has created investment opportunities in this investment category. WT/L/985 
 
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  12.  Real Estate Funds represent 20% of the target  asset allocation. The return on this portion of 
the portfolio was 9.6% in 2015. The Swiss real estate fund had a return of 13.3% in 2015. The SXI index, which tracks the return of Swiss publicly traded real estate funds, had a return of 4.2%.  
13.  The international real estate funds, which in clude the Plan's investment in Warburg Henderson 
fund and the new investment in PRISA LP, had a co nsolidated return of 5.6% for the year despite 
the negative currency effect. 
14.  The Plan's portfolio made annual gains of 5.3%  and 4.9% in nominal terms, respectively over 
the last three and five years. Swiss inflation has been -0.5% per year. In other words, the Plan's 
real returns have been well above its target.  
15.  A part of these gains is due to higher asset valuations, particularly in bonds. Quantitative 
easing programmes of central banks have pushed interest rates to extremely low, and in many 
cases negative, levels. 
16.  The US Federal Reserve has already put an end to its QE programme and has started raising 
short term rates, albeit very slowly. The ECB and Bank of Japan are still amid the implementation 
of their QE. As anticipated, the end of US QE has caused increased volatility in financial markets. 
When Europe and Japan end their QE, it is also like ly to contribute to high er volatility and possibly 
create better investment opportunities. The Plan's systematic rebalancing is also an effective 
mechanism to take advantage of short term market volatility. 
17.  A summary of the Plan's investment principles is provided in Annex 2 of this report.  
4  ACTUARIAL POSITION OF THE PLAN 
18.  The last formal actuarial valuation based on data as of 31 December 2013 identified an 
actuarial imbalance that had persisted through two valuation cycles (2010 and 2013). Consequently, the consulting actuary recommended  that the Board consider taking actions to 
address the imbalance. During 2014 and 2015, a joint actuarial/governance working group 
developed proposals for the Board designed to close the actuarial gap by amending the benefits of the Pension Plan rather than adjusting the le vels of contributions. The working group's 
recommendations were endorsed by the Board and subsequently endorsed by the CBFA. The 
corresponding amendments to the Regulations of th e WTOPP (identified in Table 4 on page 7) were 
adopted on 30 November 2015 by the General Council.  
19.  The latest interim actuarial valuation of the Plan at 31 December 2015 takes into account the 
changes to the regulations specified in Table 4. While the current contribution rate is 23.7% of 
pensionable earnings (corresponding to 7.9% co ntributions by participants and 15.8% by the 
organization) the long term cost of the Plan expre ssed in terms of the long term contribution rate 
is estimated to be 24.1%. This is an importan t improvement compared with 25.0% at the prior 
interim valuation as of 31 December 2014. Although, a gap of -0.4% remains, this estimate will be revised in future actuarial valuations where the long term contribution rate is assessed against 
actual experience regarding investment performance, demographic evolutions and the Plan's other 
characteristics. 
20.  Thus, the consulting actuary did not recommend that any further action be taken at this point, 
and recommended that the Board continue assessing the long term contribution rate and 
monitoring the gap between the current and long term contribution rate. He noted that the long 
term contribution rate had decreased to a rate more comparable to the existing contribution rate, and declared that the Plan is more balanced actu arially, and is considered more sustainable over 
the long term. The long term actuarial position of the Plan will be assessed in greater detail when 
the next full valuation takes place based on data as of 31 December 2016, and will likely show a revised estimate of the long term contribution rate. The next actuarial report will be available in 
mid-2017 and reflected in the 2016 Annual Report. WT/L/985  
 
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  5  ORGANIZATION AND STRUCTURE OF THE PENSION PLAN ON 31 DECEMBER 2015 
21.  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. 
22.  The Regulations and Administrative Rules of the WTO Pension Plan were adopted by the 
General Council on 16 October 1998 (WT/L/282). The Regulations of the WTO Pension Plan were 
amended by the General Council on 1 December  2005, on 28 July 2009 and on 26 October 2011, 
and on 30 November 2015. The Administrative Rules were amended by the Management Board on 
23 September 2005. 
23.  The General Council approved the Rules of Procedure of the Management Board on 
8 May 2001 (WT/L/402). 
24.  Key components of the governance and administrative structure of the Pension Plan included 
the following on 31 December 2015. 
Mr. Johannes Rühl, Chairman 
Mr. Till Gerards 
Members elected by 
the General Council Ms. Victoria Donaldson 
Members appointed by 
the Director-General Mr. Robert Prochazka Mr. Anthony Mistri 
Mr. Felipe Sandoval Ms. Paulette Planchette 
Mr. Christopher Wilson Mr. Antony Taubman 
Mr. James Baxter 
Alternates elected 
by the General 
Council Ms. Antonia Carzaniga 
Alternates appointed 
by the Director-
General Ms. Eunice Huang Mr. Pablo Jenkins 
Mr. Andrew Staines Mr. Evan Rogerson 
Ms. Junko Ueno  Mr. Raymundo Valdes 
Mr. Robert Luther Observer on behalf of the beneficiaries 
Mr. Paul Rolian Alternate observer on behalf of the beneficiaries  
 
Secretariat John Breckenridge, Secretary 
Yann Marcus, Pensions Officer Virginie Guirado, Pension Specialist Corine Becker, Pension Specialist 
 
Outsourced support services 
Trianon S.A., Renens Lausanne 
Consulting Actuary Cameron Hannah (Mercer HR Consulting S.A.) 
Medical Adviser Vacant 
Investment Analyst/Consultant MBS Capital Advice SA 
Global Custodians  The Northern Trust Company 
Pictet Asset Management S.A. 
Fund Managers 
 Babson Capital (senior loans portfolio hedged in CHF) 
Comgest (emerging market equities portfolio) Crédit Suisse (Swiss real estate portfolio and senior loans 
portfolio hedged in CHF) 
GMO (emerging market bonds portfolio hedged in CHF) HSBC (emerging market bonds portfolio hedged in CHF) 
ING (senior loans portfolio hedged in CHF) 
MFS (emerging market bonds portfolio hedged in CHF) Pictet (global equities indexed portfolio) 
Warburg Henderson (European real estate portfolio) 
Prisa LP (US Real Estate portfolio) Vanguard (USD government bonds) 
External Auditor Bundesrechnungshof 
Supreme Audit Institution of Germany 
 25.  An organizational chart is  reproduced in Schedule I. WT/L/985 
 
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  6  ACCOUNTS 
26.  The financial statements and schedules are pr esented in Section 11 of this Report. The notes 
to the financial statements found in Annex 1 include important additional explanations about the accounts. These notes are integral to understanding the accounts and the financial position of the 
Plan. 
27.  The income and expenditure statement for the period 1 January-31 December 2015 is 
reproduced in Statement 1. 
28.  The balance sheet as at 31 December 2015 is reproduced in Statement 2. 
29.  The source and application of funds for the period 1 January-31 December 2015 is reproduced 
in Schedule A. 
30.  Details of the exchange rates used for closing the accounts on 31 December 2015 and the 
currency breakdown as of 31 December 2015, af ter hedging, are provided in Schedule G. 
31.  A glossary of terms to facilitate an understan ding of the tables is reproduced in Schedule J. 
32.  Explanations of significant events in the 2015 accounts can be found in the notes in Annex 1. 
 
7  IPSAS ACCRUED LIABILITIES OF THE PLAN 
33.  Since 2012, the WTO has reported based on International Public Sector Accounting Standards 
(IPSAS). To conform to these standards the Organiza tion is obligated to report on its actuarially 
estimated accrued liabilities for employee benefits . The most significant among these are for the 
Pension Plan and for After-Service Health Insurance. As the WTO Pension Plan also produces an actuarially derived estimate of its long-term obligations and funding costs (as described in the 
previous section) there are two different actuarial reports, albeit based on different key 
assumptions. 
34.  The purpose of these two valuations is di fferent. The purpose of the IPSAS valuation is to 
create a set of numbers for disclosure purposes in the accounts of the WTO that estimate the 
accrued liabilities of the Plan at 31 December of  each year based on a closed group (only current 
participants and retirees). The specific actuarial method and assumption setting process are 
dictated by IPSAS 25 and more detail about the IPSAS valuations can be found in the Annual 
Report of the WTO. 
35.  The purpose of the valuation prepared for the WTOPP Management Board is to assess the 
long-term cost of the Plan. This valuation is fully reviewed and updated at least once every three 
years and unlike the IPSAS version takes into cons ideration past and future service accrual and 
assumes an open group. (That new entrants will come into the Plan to replace those who depart due to retirement, death in service, permanent disability or termination.) It also takes into 
consideration the investment strategy adopted by the Plan in setting the long-term assumed rate 
of return (for setting the discount rate). 
36.  It is principally the different discount rates, closed versus open group, and past versus future 
service assumptions that explain the different resulting valuations. Both valuations are reported 
together with the balance sheet, in Statement 2. WT/L/985  
 
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  8  EXTERNAL AUDITOR 
37.  The report of the External Auditor on th e Accounts of the WTO Pension Plan for the Year 
Ended 31 December 2015 is produced separately from the Annual Report. 
OPINION OF THE EX TERNAL AUDITOR 
Identification of the financial statements 
I have audited the financial statements of the Wo rld Trade Organization Pension Plan (hereinafter 
''WTOPP'') for the financial year ended 31 December 2015, comprising 
 the income and expenditure statement, 
 the surplus account, 
 the balance sheet, 
 and supporting notes and annexes to the Financial Statements. 
 
Statement of responsibilities 
In accordance with WTOPP's Rules and Regulations, the Management Board is responsible for 
preparing the financial statements. 
 My responsibility is to express an opinion on these financial statements based on my audit. 
 
Basis of opinion 
I conducted my audit in conformity with Internat ional Standards on Auditing (ISA) as adopted and 
expanded by the International Organization of Su preme Audit Institutions (INTOSAI) and issued as 
International Standards for Supreme Audit Institutions (ISSAIs). These standards require that I 
Plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit includes assessing the accounting principles used 
and significant estimates made by the Management  Board, as well as evaluating the overall 
financial statement presentation. I believe that my audit provides a reasonable basis for the audit opinion. 
 
Opinion 
As a result of my audit, I am of the opinion that the financial statements present fairly, in all 
material respects, the financial position as at 31 December 2015, that they have been prepared 
according to WTOPP's stated accounting policies, and that the transactions have been in 
accordance with the Regulations of the Pension Plan and its Rules and Procedures.  
I have placed an unqualified audit opinion on the Financial Statements of WTO's Pension Plan for 
the year ended 31 December 2015.  
Report reference 
I have also prepared a long-form report on the WTOPP's financial statements. 
 
(signed) 
____________________ 
 
Christian Ahrendt 
Vice-President of the Bundesrechnungshof 
Supreme Audit Institution of Germany 
External Auditor 
  
Bonn, 31 May 2016WT/L/985 
 
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9  FINANCIAL STATEMENTS 
9.1  Management letter of representation 38.  The Management Board of the WTO Pension Plan  is responsible for these financial statements, 
which have been prepared in accordance with the Plan's Regulations and Rules. The financial 
disclosures in this report are intended to fairly present the Plan's financial results in a manner that is complete and understandable. 
39.  The Management Board is responsible for establishing and maintaining adequate internal 
control over financial reporting so as to provide reasonable assurance regarding the reliability of these financial statements for external purposes. This includes policies and procedures that 1) provide for the maintenance of records that accurately and fairly reflect the transactions of the 
Plan, 2) provide reasonable assurance that transactions are authorized and recorded in compliance 
with the Plan's Regulations and Rules and 3)  provide reasonable assurance regarding the 
prevention or timely detection of unauthorized acquisition, use or disposition of the Plan's assets. 
However, due to the inherent limitations of internal control over financial reporting, these controls 
may not prevent or detect all misstatements. 
40.  Based on the above, the Management Board has concluded that these financial statements 
present fairly the Plan's financial position and performance as of 31 December 2015. 
 
  
 
  
 
  
 
   
 
  
 
  
 
 
(signed) 
____________________ (signed) 
____________________ 
Johannes Rühl  
Chairman 
WTOPP Management Board John Breckenridge 
Secretary 
WTO Pension Plan WT/L/985  
 
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  9.2  Statement 1: Income and expenditure statement 
INCOME AND EXPENDITURE STATEMEN T (expressed in Swiss Francs) 
  2015 2014 
Income     
Investment income     
Profit on securities 492,023 36,503,921  
Currency revaluation - 321,383  
Credit interests - 26,714  
 492,023 36,852,018  
Contributions      
Organization, regular contributions 19,337,667 19,694,429  
Organization, additional contributions 2,279,100 -  
Participants, regu lar contributions 9,668,837 9,847,219  
Interests on validations 351 228  
Restorations  33,251 - 
Interests on restorations 665 -  
Transfers from other organizations - 88,472  
  31,319,871 29,630,348  
Dissolution of reserve for operating cost 250,000 - 
Other income - 37,563  
Total income 32,061,894 66,519,929  
Expenditure     
Periodic benefits      
Retirement benefits  (Art.23) 10,054,647 9,093,591  
Early retirement be nefits  (Art.24) 5,097,378 4,571,896  
Disability benefits – (Art. 28)a 1,072,232 1,067,673  
Surviving Spouse benefits (Art. 29)a   430,408 391,011  
Child benefits (Art. 30)a   89,143 103,609  
  16,743,808 15,227,780  
Lump sum benefits     
Withdrawal settle ments  (Art. 26) 876,510 1,882,618  
Commutations  (Articles 23c), 24c), and 25c)) 2,116,629 671,940  
Residual settlements   (Article 33) - 68,231  
  2,993,139 2,622,789  
Participants' death and disability coverage 1,064,971 1,106,145  
Loss on investment      
Loss on securities - - 
Currency revaluation 906,774 -  
Negative credit interest 135,538 - 
  1,042,312 -  
Investment and other administrative expenses     
Management fees 364,388 354,199  
Trianon and other administrative costs 213,289 191,932  
Consultancy fees 120,000 120,000  
Actuarial expenses 35,000 60,000  
Legal fees 4,021 23,830  
Bank charges 15,519 11,589  
Audit costs - 2,991  
  752,217 764,541  
Total expenditure 22,596,447 19,721,255  
Profit for the period 9,465,447 46,798,674  
a Owing to a data entry error, the amounts reported in the 2014 financial statements appearing in the 
2014 Annual Report were incorrectly allocated betw een disability benefits , surviving spouse's 
benefits and child's benefi ts. This error, which does  not affect the total amount of periodic benefits 
paid, has now been corrected. WT/L/985 
 
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9.3  Statement 2: Balance sheet 
Balance sheet  
(expressed in Swiss Francs) 
Assets At 
31.12.2015 At 
31.12.2014 Liabilities At 
31.12.2015 At 
31.12.2014 
Investments     Current liabilities    
Securities 468,725,778 464,498,839  Accrued expenses 148,913 172,331  
Cash and cash 
equivalents 24,330,784 21,601,084    148,913 172,331  
  493,056,562 486,099,923      
Current Assets     Reserves     
Withholding taxes 
to be recovered 552,573 597,281  Operating cost   
-  250,000  
Accrued income 9,998   
-  Unrecoverable 
withholding taxes 388,000 379,000  
Receivable 
additional contributions 2,279,100 -
    
388,000 629,000  
  2,841,671 597,281  Capital     
      Capital as at 1 
January 485,895,873 439,097,199  
      Profit / Loss (-) 9,465,447 46,798,674  
        495,361,320 485,895,873  
Total assets 495,898,233 486,697,204  Total liabilities 495,898,233 486,697,204  
 
41.  In the WTO's financial statements, the Pension Plan's asset value of CHF 496 million and 
liabilities estimated at CHF 856 million are reflected, resulting in a net estimated accrued liability 
for employee benefits of CHF 359 million calculated according to IPSAS accounting rules. This value represents the hypothetical liability of th e Organization to cover all its current employees 
and retirees' acquired pension entitlements as at 31 December 2015. It differs from the long-term 
valuation used in managing the Plan mainly in that it does not consider future pension contributions receivable from current and future st aff, and uses a different  methodology for setting 
the discount rate.  The exact discount rate approach changed in 2015 due to concerns about the 
high volatility in the estimated liability introduced by the previous approach.  The WTO has agreed 
with its external auditors to adopt an approach based on a smoothed reference interest rate determined by the Swiss Chamber of Pension Fund Experts (CSEP).  The objective is to provide an 
e s t i m a t e d  l i a b i l i t y  t h a t  w i l l  b e  m o r e  c o m p a r a b l e  y e a r  o v e r  y e a r  a n d  t h u s  m o r e  u s e f u l  t o  t h e  
readers of the financial statements. 
42.  On the other hand, the actuarial model used in managing the Plan takes into account future 
pension contributions and benefits for an open group of participants, and a projected real return 
rate of 3.5% for the Plan's assets. This model es timates the present value of future benefits at 
CHF 1,312 million which will be met over the long run by future staff's pension contributions and 
the Plan's assets and their future returns. 
 
  
 
  
 
 WT/L/985  
 
- 15 - 
 
   
9.4  Schedule A: Source and application of funds 
Source and application of funds  
(expressed in Swiss Francs) 
 2015 2014 
Funds as at 1 January                     486,697,204                               440,342,527  
Plus:   
Source   
Receipt of contributions 31,319,871                                 29,630,348  
Investment income -                               36,852,018  
Increase in other income                           250,000                                       37,563  
Total 31,569,871 66,519,929 
Less :   
Application   
Loss on investment  550,289                                              -  
Settlement of benefits                      19,736,947                                17,850,569  
Participants' death and disability coverage                        1,064,971                                  1,106,145  
Expenditure                           752,217                                     764,541  
Reduction in short term commitment                             23,418                                     124,997  
Changes in reserves                           241,000                                     319,000  
Total                      22,368,842                               20,165,252  
Funds as at 31 December 495,898,233                             486,697,204  
 
9.5  Schedule B: Breakdown of expenditures 
Expenditures 
(expressed in Swiss Francs)
 2015 2014  
Management fees  
Lombard Odier 12,383 30,066 
MFS 142,031 121,794 
Northern trust 61,818 62,894 
Pictet - International equities 139,905 132,867 
Pictet – Senior loans  7,376 6,015 
Pictet – US real estate PRISA LP 875 - 
Totala   364,388 354,199  
Consultancy fees  
MBS Capital Advice 120,000 120,000 
Actuarial expenses  
Mercer 35,000 60,000 
Legal fees  
Akin Gump 4,021 23,830 
Administrative costs  
Trianon and other administrative costs 213,289 191,932 
Other expenses   
(bank charges and extern al audit) 15,519 14,579 
Total 752,217 764,541  
a The 2014 total includes a CHF 563 fee for the management of high-yield bonds that is not separately 
identified in this table as the investment was liquidated in March 2014. 
Note:  Management fees for mutual  fund investment vehicles are fre quently imbedded in the reported 
value of the holdings. These fees are not presented separately in the statement of expenditure and total CHF 1,689,242 for 2015. They increased by 7.9% compared with 2014, mainly due to increases in costs of the Warburg-Henderso n real estate fund from an esti mated 0.87% to 1.32%, and of the 
senior loan investment owing to a rise in the Plan's holdings. 
 WT/L/985 
 
- 16 - 
 
  9.6  Schedule C: Investment mandate overview 
Investment mandate overview 
Asset  
class Fund  
Manager Benchmark Ex-ante 
tracking 
error Inception  Location Website 
Global 
Equities Pictet & 
Cie 40% MSCI 
Europe, 40% 
MSCI 
North America, 
20% MSCI Pacifi
c Indexed January 
2011 Geneva, 
Switzerland pictet.com 
Emerging 
Markets Equities Comgest 
SA MSCI Emerging 
Markets Free 6%-9% January 
2011 Paris,  
France comgest.com 
Inv. 
Grade 
Bonds 
USD Vanguard Barc.US 5-10 Y 
Gov/Cdt 1%-2% May  
2015 Valley Forge 
United States Vanguard.com 
Emerging 
Market Bonds HSBC JP Morgan EMBI 
hedged in CHF 2%-3% January 
2011 London,  
England hsbc.com 
Emerging 
Market 
Bonds MFS JP Morgan EMBI 
hedged in CHF 2%-3% January 
2011 Boston, 
United States mfs.com 
Emerging 
Market Bonds GMO JP Morgan EMBI 
hedged in CHF 3%-5% January 
2011 Boston, 
United States gmo.com 
Senior 
Loans Babson 
Capital CS Loans index 
hedged in CHF 3%-5% October 
2012 New York, 
United States babsoncapital.com 
Senior 
Loans Credit 
Suisse CS Loans index 
hedged in CHF 2%-4% October 
2012 New York, 
United States credit-suisse.com 
Senior 
Loans NN CS Loans index 
hedged in CHF 2%-4% October 
2012 Phoenix, 
United States Inginvestment.com 
European 
Real Estate Warburg 
Henderson 6.5% p.a. - December
 
2006 Hamburg, 
Germany warburg-henderson.c
om 
US 
Real 
Estate PRISA LP NCREIF Fund 
Index ODCE - February 
2015 Madison, 
United States pramericarei.com 
Swiss Real Estate Credit 
Suisse SXI Real Estate 
Fund Index - November
 
2008 Zürich, 
Switzerland credit-suisse.com 
 
 WT/L/985  
 
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  9.7  Schedule D: Asset allocation 
Asset Allocation  
as of 31 December 2015 
Assets MCHF Current 
weightings Strategy Deviation from 
the strategy 
Global equities 197.9 40.2% 40.0% +0.2% 
Developed markets 162.3 32.9% 32.0% +0.9% 
Emerging Markets 35.6 7.2% 8.0% -0.8% 
CHF bondsa  175.2 35.6% 40.0% -4.4 % 
CHF Short term investmentsb   8.3 1.7% 4.0% -2.3% 
Investment grade bonds USD 63.4 12.9% 14.0% -1.1% 
Emerging countries bonds 66.8 13.6% 14.0% -0.4% 
Senior loansc   36.7 7.4% 8.0% -0.6% 
Real estate  95.7 19.3%  20.0%  -0.7%  
Warburg Henderson  22.5 4.6%  5.0%  -0.4%  
PRISA LP 22.8 4.6% 5.0% -0.4% 
Credit Suisse 50.4 10.2% 10.0% +0.2% 
Cash  24.4 4.9%  0.0%  +4.9%  
Total 493.2    
a Bonds hedged in CHF. 
b PostFinance cash account held in lieu of Swiss government bonds.  In the current environment these 
bonds have lower yield and higher risk than hold ing cash. Hence there is no opportunity cost to 
substituting short-term cash for this asset category pend ing a change in conditions. 
c Senior loans are floating rate fixed income inst ruments, granted to sub-in vestment grade borrowers, 
have the highest level of seniority in the capital structure of corporate issuers and are secured by 
the assets of the borrowing company. 
 
 
 WT/L/985 
 
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  9.8  Schedule E: Investment performance 
Investment Performance as of 31 December 2015 
(expressed in nominal terms) 
 Over 
1 year p.a. Over 
3 years p.a. Since  
inception p.a. TEa   IRb  
TOTAL      
Consolidated securities -0.2%  5.3%  1.8%c  0.9%  0.7 
Added value +1.2% +0.6% +0.2%   
EQUITY      
Consolidated equities -1.8%  10.1%  1.3%c  1.1%  1.3 
Added value +0.8% +1.4% 0.0%   
Developed markets 0.2%      
Added value -0.1%     
Emerging markets -9.9%      
Added value +4.4%     
FIXED INCOME      
Consolidated fixed incomed   -2.9%  0.5%  2.9%c  1.4%  -0.4 
Added value 0.0% -0.6% -0.2%   
Emerging countries bonds  -1.5%      
Added value -1.3%     
Senior loans  0.6%      
Added value +0.8%     
Investment grade bonds USDe   0.1%      
Added value +1.4%     
REAL ESTATE       
Consolidated real estate  9.6%  5.3%  1.8%f  --- --- 
Added valueg        
Warburg Henderson  5.3%  2.6%  0.3%h  --- --- 
Added valueg        
Prisai   --- --- --- --- --- 
Added value       
Credit Suisse 13.3%  7.3%  7.2%j  --- --- 
Added valuek  +9.1% +2.0% 0.0%   
      
a TE = tracking error over 3 years 
b IR = information ratio over 3 years c Inception in August 1999. d The consolidated Fixed Income performance is ca lculated taking into account the performance of 
Euro Government Bonds investments,  which do not appear as a sepa rate entry in the table because 
they were liquidated in May 2015. In addition to the bonds' performance, the consolidated fixed income performance also includes the interest paid on the Plan's cash. 
e Inception in June 2015. f Inception in February 2005. g There is no formal benc hmark for this  investment. 
h Inception in December 2006. Euro investment not hedged in CHF. Performance in euro is 4.6% p.a. 
since inception. 
i The first investment was done on Q1 2015. 
j Inception in November 2008. k Benchmark: SXI Real Estate Funds Index. 
 WT/L/985  
 
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  9.9  Schedule F: Investment performance history since inception to 31 December 2015 
5060708090100110120130140150Total PortfolioTota l Portfolio Benchmark
5060708090100110120130140150Equitie sEquities Benchmark
5060708090100110120130140150160170180Fixed IncomeFixed income Benchmark
5060708090100110120130140150160170180190200Real EstateReal Estate
 
 
9.10  Schedule G: Exchange rates used for closing on 31 December 2015  
Currency Exchange rates 
CHF per 1 EUR  1.0863  
CHF per 1 USD  1.0010  
CHF per 1 JPYa 0.0082  
CHF per 1 GBP  1.4739  
a JPY per 1 CHF: 120.2945 
Figure 1: Currency breakdown, after hedging 
 
 WT/L/985 
 
- 20 - 
 
  9.11  Schedule H: Participation in the Pension Plan 
The following tables show the trends in the numbers of participants and beneficiaries in the 
Pension Plan in the course of 2015. 
Number of participants and be neficiaries on 31 December 2015 
 2014 2015 
Active members 721 712 
Beneficiaries 261 284 
 
Participants in the Pension Plan in 2015 
Total number on 31 December 2014 721 
  
Movements in 2015  
  
- Entries 56 
- of which re-entries under the terms of Art. 15(b) of the Regulations 1 
- Separations 65 
  
  
Total number on 31 December 2015 712 
  
Breakdown of separations in 2015  
  
- retirement 10 
- early retirement 9 
- deferred retirement 2 
- withdrawal settlement 21 
- transfer out 0 
- deferment of decision 22 
- death 0 
- disability 1 
  
Total separations 65 
 
Benefits paid by the Pension Plan 
Type of benefit At 31 
December 
2014 New benefits 
in 2015 Benefits ended 
 in 2015 At 31 
December 
2015 
Retirement 120 11a   131 
Early retirement 79 10b  -1 88 
Deferred retirementc 15 4 -2 17 
Surviving spouse's benefit 9 1  10 
Partial /total disability benefit 18 1  19 
Child’s benefit 20 2 -3 19 
Total benefits 261  29 -6 284  
a Includes one deferred benefit that commenced being paid in 2015.     
b Includes one deferred benefit that co mmenced being paid in 2015.     
c Includes only deferred pension be nefits not yet in payments. Defe rred pensions in payments are 
classified as retirement or  early retirement benefits. 
 
 WT/L/985  
 
- 21 - 
 
  9.12  Schedule I: Structure of the WTO Pension Plan 
 
 
9.13  Schedule J: Glossary of terms 
Accrued expenses  include expenses incurred but not paid in the current accounting year. 
Accrued income includes income which has been earned  but not yet received in the current 
accounting 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 disa dvantages of such a management style are 
characterized by higher management fees, higher trading costs as well as the chance to 
significantly underperform the benchmark. 
Actuarial expenses  include expenses charged by the consulting actuary for the provision of 
actuarial services. 
Administrative costs  include costs incurred in the general administration of the Pension Plan. 
Audit costs  include costs (travel, per diem) incurred by the External Auditor in connection with 
the audit of the 2015 accounts. 
Commutation  refers to retirement benefits, early re tirement benefits and deferred retirement 
benefits commuted at the request of the particip ant, into a lump sum not exceeding 1/2 of the 
actuarial equivalent of the benefit or the amount of the participant's own contributions, whichever is the larger. 
Consultancy fees  include the fees charged by the investment analyst/consultant. 
Contributions  refer to sums payable for restoration, validation and benefit as detailed in Art. 20 
of WTOPP regulations. WT/L/985 
 
- 22 - 
 
  Contributions receivable  refers to contributions due in respect of contributory service in the 
accounting year but received after 31 December of the accounting year. 
Currency revaluation  this represents the adjustment of foreign currency-denominated bank 
account balances at 31 December 2015 to the exchange rate for that day. This adjustment reflects 
the variation in the exchange rate applicable to foreign currency-denominated bank account 
balances at the beginning of the year and in the exchange rates applicable to movements in the same accounts during the year, at the time each transaction took place.  
Indexed management  is a form of portfolio management that attempts to deliver the returns of 
the underlying benchmark by replicating exactly or by getting as close to the composition of the benchmark as possible at any point in time. It differs from active management in that it is significantly less costly and does not reflect the views, forecasts or opinions of the investment 
manager. 
IR or 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. IR refers to the 
information ratio over 3 years. 
Interest on validations  refers to interest payments made under Article 20(d) of the Plan 
Regulations. 
Management fees  include fees paid for the management of WTO portfolios. 
Operating costs  (reserve for)  refers to the reserve established to cover operating costs not 
currently charged to the Plan. This reserve is di ssolved following the November 2015 revision of 
the Plan Regulations, which codified the coverage  by the WTO of the Plan Secretariat's costs. 
Organization, additional contributions  refers to the additional contributions paid by the 
Organization to compensate for the additional actuarial cost generated by the early separation of 
participants in the context of restructuring exercises. 
Profit/loss on securities  is the result of: 
 capital gain/loss realized on securities; 
 profit arising from the distribution of divi dends and interest received on investments; 
 revaluation of securities at their market pr ice at 31 December 2015 (unrealized profit or 
loss). 
Rate of return  is the percentage of change in value of the portfolio over a specified period, taking 
into account both the investment income and the change in the market value of the portfolio. It is 
expressed as an equivalent annual rate. The nominal rate of return is the financial return of the 
assets and is before correction for inflation (measured on the basis of the annual movement of the 
consumer price index in Switzerland). The real rate of return is calculated by subtracting the 
change in the Swiss CPI from the nominal rate of return. The term gross means that the return is 
calculated before the deduction of investment rela ted costs while the term net refers to the return 
including all investment related expenses. The target real rate of return is the long term real rate 
of return that the Plan needs to achieve in order to meet its liabilities. 
Rebalancing  refers to the realignment of the allocation of the Plan's portfolio with its strategy. A 
predefined process identifies the triggers and other operational aspects (e.g. timing) of 
Rebalancing actions. The rules are approved by the Board and applied automatically. This 
mechanism takes advantage of the inevitable excesses of financial markets. 
Regulations and Administrative Rules  refer to the Regulations and Administrative Rules 
adopted by the General Council on 16 October 1998, as amended by the General Council on 
1 December 2005, on 28 July 2009, on 26 October 2011 and on 30 November 2015. 
Restoration  refers to the inclusion in contributory service of the prior contributory service of a 
former participant who again becomes a participant. WT/L/985  
 
- 23 - 
 
  Senior loans  are floating rate fixed income instruments, granted to sub investment grade 
borrowers, have the highest level of seniority in the capital structure of corporate issuers and are secured by the assets of the borrowing company. 
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 and their 
respective benchmarks. The time-weighted return is very similar to the geometric mean return. 
TE or 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 passi ve mandate would be low-dependent upon the 
mandate, usually less than 0.8. Anything above this would be considered active. TE is over 3 
years. 
Unrecoverable tax  reports primarily on situations where the Plan has had trouble having its tax-
exempt status recognized and continues to pursue the recovery of withholding tax on Plan 
investments but the deadline for recovery may have passed. For example, in the cases of Canada and Italy where, despite continuing efforts by the Secretariat, significant amounts still remained to 
be recovered and the deadline for recovery of certain sums had already passed some amounts 
may not be recovered. 
Validation  is defined in Art. 2(v) of WTOPP regulations, as the inclusion in contributory service of 
a period of non-contributory service which occurred prior to the commencement of participation   
Withholding taxes to be recovered  includes amounts of withholding tax levied by national tax 
authorities and subject to recovery after 31 December 2015. Recoverable withholding tax reflects the Plan's recognition as a tax ex empt entity due to its connection to the WTO. As an International 
Organization, the WTO is exempted from most national taxes such as value added tax (VAT), 
federal stamp duty and tax on the interest earned on investments. Annually the Plan files tax reimbursement claims to the Swiss and other authorities. Occasionally the Plan's tax exempt 
status is not automatically recognized by some national jurisdictions in which case significant 
administrative and political intervention are often required to have this status fully recognized. 
 WT/L/985 
 
- 24 - 
 
  ANNEXES 
ANNEX 1 NOTES TO THE FINANCIAL STATEMENTS 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 reas ons, the current United Nations operational rates 
of exchange are used for the conversion of othe r currencies into the Swiss franc, except in the 
case of the investment portfolios where the rates shown in Schedule G were used for valuation purposes. 
2.  The accounting year is 1 January to 31 December. 
3.  Pursuant to Article 13 of the Regulations of th e Plan and Rule A.8 of the Rules of Procedure, the 
Management Board shall be responsible for the fina ncial 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 ma de 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. 
 
Statement of income and expenditure 
5.  Contributions received from the Organization and the participants were the main source of 
income for the Plan in 2015. Regular contributions amounted to CHF 29.0 million, which was slightly less than the previous year. However, the Plan also received CHF 2.3 million additional 
contributions from the Organization as a compensation for the actuarial cost generated by the 
early separation of participants in the context of a restructuring exercise. An additional CHF 250,000 income was also registered in 2015 as a result of the dissolution of the reserve for 
operating cost from the liabilities side of the Balance Sheet (see further below).  
6.  Investment income was close to zero in 2015.  The portfolio registered a CHF 0.6 million loss, 
as the negative currency revaluation and interest exceeded the modest CHF 0.5 million profit on 
securities. This represented a -0.2% return since the beginning of the year. On 
31 December 2015, the value of the Plan's assets had thus returned to a level close to that of 1 January after a volatile year, reflecting general trends in financial markets.  
7.  The negative currency revaluation (CHF -0.9 million) was partly due to a depreciation of the 
Plan's non-CHF cash, especially after the removal of the 1.20 EUR/CHF floor by the Swiss National 
Bank in January. It also resulted from differences in foreign exchange incurred in the execution of large currency conversions for the implementation of the investment in Vanguard USD bonds 
hedged in Swiss Francs. The Plan also paid CHF 135,538 negative interests since their introduction 
by the Swiss National Bank in January.  
8.  Lump sum benefits paid by the Plan amounted to CHF 3.0 million, which is slightly higher than 
in 2014. The value of these benefits varies unpredictably from one year to another depending on 
staff movements out of the Organization and retiring staff's personal preferences.  
9.  Insurance premiums are paid for a "death disability" insurance policy taken out jointly by the 
Plan and the WTO in 2010 to cover serving staff. The premium expense reported only concerns the 
Plan's share of the total premium.  
10.  Consultancy fees in 2015 are solely those paid by the Plan to its investment advisor, MBS 
Capital which receives an annual fee of CHF 120,000 for its services.  
11.  Actuarial fees are those paid by the Plan to  its consulting actuary, Mercer. The 2015 figure 
includes a flat fee of CHF 30,000 plus additional services provided by Mercer in the context of 
assessing the cost of a voluntary separation programme by the Organization.  WT/L/985  
 
- 25 - 
 
  12.  Legal fees reflect payments made when the Plan engages specialized external legal advice. 
The amount of CHF 4,021 was paid to Akin Gump STRAUSS HAUER & FELD LLP in relation to the 
finalization of a review of  investment in PRISA LP. 
13.  Administrative fees are primarily those paid by the Plan to its service provider, Trianon S.A. 
for administrative and accounting services.  
14.  Transfers to and from other organizations reflect the flow of assets into and out of the Plan 
when new and departing Plan participants transfer their pension rights from or to another 
organization with which the Plan has a transfer agreement. The fluctuation in amounts represents 
years of service associated with the specific transfers in any given year as well as the number of transfers. No transfer was completed in 2015. 
15.  Investment and other administrative expenses are presented in further details in Schedule B 
"Breakdown of Expenditures".  
 
Balance sheet 
16.  Cash and cash equivalents represent cash held for managing the operations of the Plan. In 
2015, the amount is higher than the normal practi ce due to an accumulation of positive cash 
inflows at the end of the year in anticipation of the annual portfolio rebalancing exercise conducted 
in the first quarter 2016 and the pending increase of investment in the PRISA LP real estate fund. 
Finally, this amount, which reflects the cash available on Credit Suisse accounts, also includes part of the cash previously held on a Postfinance account in lieu of Swiss government bonds.  
17.  The Plan continues to pursue the recovery of withholding tax on Plan investments from 
national tax authorities. In 2015, the reserve for "unrecoverable withholding taxes" increased 
slightly as a result of the currency revaluation of these liabilities. This reserve is not shown under the position "Capital" as it is highly unsure whether this amount will be refunded to the WTOPP. 
See the glossary for further explanations. 
18.  The reserve for operating costs is dissolved in 2015 following the November 2015 revision of 
the Plan's Regulations, which codified the coverage  by the WTO of the Plan Secretariat's costs.   
 
   
 
 WT/L/985 
 
- 26 - 
 
  ANNEX 2 INVESTMENT PRINCIPL ES OF THE PENSION PLAN 
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 afte r taking appropriate professional advice, and the 
appointment of investment managers to implement that policy. 
2.  Derivatives may be used within the global hedged fixed income mandate for hedging purposes, 
where they provide the opportunities to achieve th e 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 cu rrency contracts, futures, covered bond options 
and interest rate options.  Leverage and net short positions are not allowed. 
3.  In 2013 the Management Board approved a consolidated set of investment guidelines to more 
precisely articulate the Plan's approach to investment. A summary of these guidelines was shared 
with Plan participants and beneficiaries and can be found below. 
 
Summary of the WTO Pension Plan's approach to investment 
Long term investing 4.  The WTOPP is a long term investor because its commitments are long term and because 
behavior and decisions made with a long term view are more likely to succeed. The long term 
focus is rooted in the belief – supported by hist orical analysis – that in the long run, market 
returns will tend to reflect the assets' economic achievements. 
5.  This long-term orientation enables the Management Board to efficiently deploy its time by 
focusing on investment decisions with significant impact on portfolio returns while avoiding time 
spent on issues where the outcome is random or where the long term impact is negligible. 
6.  Cognizant of the unreliable nature of short or medium term forecasts and the potential losses 
they may cause, the Management Board will no t engage in "timing" short-term market 
fluctuations. Bets on the short or medium term evolution of financial markets may convert temporary losses into permanent impairment of capital. 
 
Investment risk 
7.  The WTOPP should be concerned with permanent capital impairment. Non-recoverable loss 
permanently reduces future earning power. For example, money lent to a borrower that cannot 
fully honor its debt will not only permanently impair capital but also its capacity to generate future 
earnings. 
8.  Price volatility is commonly considered as a measure of investment risk. However, volatility 
fails to measure long term investment risk and is only a threat to long-term investors if they 
misread its significance. For example, if a company' s share price quickly falls by 50%, its volatility 
will skyrocket. However, if the long term perspe ctive of the company has not changed, the risk for 
investors has been greatly reduced, not increased. Thus, investors should focus on the long term 
perspective not on market driven price volatility. 
9.  The valuation of an asset affects its future retu rns. Therefore, the valuation of assets is a risk 
that can produce damages similar to permanent capital loss. This is why it should be monitored on 
an on-going basis. 
10.  Monitoring the valuation does not constitute an attempt to predict the short term evolution of 
market prices, but to appraise the long term potential profitability of an investment given its 
current characteristics. 
 WT/L/985  
 
- 27 - 
 
  Allocation of assets 
11.  Asset Allocation is the main source of portfolio returns. Particular attention will therefore be 
paid to the definition and implementation of WTOPP's "strategic asset allocation". 
12.  Each asset class in the portfolio must generate a measurable income and must contribute to 
increasing the value of the WTOPP's assets. This increase must be driven by reliable, identifiable 
economic factors. The prospective return potential of each asset class may be assessed on the basis of these appropriate factors. 
13.  The WTOPP will maintain adequate diversific ation because expected returns on asset classes 
may take a long time to materialize and because the correlation of different assets helps dampen volatility and hence help avoid unconsidered decisions. 
14.  Asset classes and financial structures that do not produce income, lack transparency or use 
significant leverage are not appropriate for WTOPP. Commodities, hedge funds, venture capital, as 
well as structured products are therefore excluded from WTOPP's investment universe. 
15.  The WTOPP seeks to avoid changes in asse t allocation based on short term views and 
forecasts: all too often such changes only result in increasing costs. Changes in asset allocation 
are only warranted when justified by significant changes in the measurable characteristics of the Plan's investments allocated to an asset catego ry or by fundamental changes in the Plan's 
liabilities or structure. 
 
Style of management  
16.  The objective of the implementation process is to execute the investment strategy as closely 
as possible while minimizing costs and avoiding unwanted implementation risks. 
17.  The Management Board implements the WTOP P's strategic allocation predominately through 
indexed vehicles or portfolios.
1 Indices will be selected with utmost care, so that they truly 
represent the asset class in which the WTOPP's strategy intended to invest. 
18.  The choice of passive management is motivated by the observation that, over time, active 
management has performed less well, is less diversified, less predictable and more costly. 
Moreover, active management tends to be base d, in most cases, on short-term views. 
19.  The WTOPP may use active management when passive management is not feasible or when 
tangible and clearly identifiable reasons lead to believe that active management represents a better path. 
20.  Overall, the Plan will strive to minimize ri sks related to the implementation of the investment 
strategy. These risks include, but are not limited to, active management risk, unwanted credit risk and legal structure risk. 
Rebalancing 
21.  The WTOPP adopts a counter-cyclical approach through a systematic annual rebalancing 
mechanism whose function is to maintain the weight of the assets aligned with the strategic 
allocation. 
22.  The systematic rebalancing is an effective way for the Plan to maintain a stable exposure to 
the market while taking advantage of market volatility. 
 
                                               
1 Indexed vehicles aim to gene rate returns that ar e equal to those of a market index. WT/L/985 
 
- 28 - 
 
  Cost and conflicts of interest 
23.  Cost sensitivity is an integral part of the investment strategy. Costs should be maintained as 
low as possible without hindering the Plan's capacity to achieve its targets. 
24.  The supply of investment services or products is primarily driven by the financial interests of 
providers rather than by investors. The Management Board will therefore be particularly vigilant in 
choosing investment solutions that fit in its strategy and targets. The WTOPP will avoid investment vehicles in which the investment manager is paid a performance based fee
2. 
25.  The investment guidelines adopted by the Management Board are intended to generate 
sustainable returns over time and promote sound decisions even in times of economic stress and 
uncertainty. The guidelines are periodically review ed to ensure they remain appropriate to the 
structure and circumstances of the Plan. 
__________  
                                               
2 Such arrangements are unfair for investors be cause of the asymmetry of risk and reward.