WORLD TRADE
ORGANIZATIONWT/L/497
29 November 2002
(02-6591)
General Council
10–11 December 2002
WTO PENSION PLAN
MANAGEMENT BOARD
ANNUAL REPORT1
2001
                                                     
1 This Annual Report is published in accordance with Article 5 of the Regulations of the Plan.WT/L/497
Page 2
TABLE OF CONTENTS
PAGE
Introduction 3
Structure of the Pension Plan 3
Meetings of the Management Board 4Participation in the Pension Plan 6
Accounts 6
Actuarial position of the Plan 7Opinion of the External Auditors on the accounts of the WTO Pension Plan 8
for the Financial Year Ended 31 December 2001
ANNEXES
Annex 1: Structure of the WTO Pension Plan
Annex 2: Return on passive and active portfolios in 2001
Annex 3: Income and Expenditure Statement for the period 1.1.2001 – 31.12.2001
Annex 4: Surplus account as of 31 December 2001
Annex 5: Balance Sheet as of 31 December 2001Annex 6: Source and Application of Funds for the Period 1.1.2001 – 31.12.2001
Annex 7: Glossary of terms
Annex 8: Exchange rates used for the valuation of assets in 2000 and 2001Annex 9: Report of the External Auditor on the accounts of the WTO Pension Plan
 for the Year Ended 31 December 2001WT/L/497
Page 3
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 Rulesof 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 present report for the period from 1 January 2001 to 31 December 2001 has been prepared by the
Management Board in accordance with Article 5 of the Regulations of the Plan for presentation to theGeneral Council and to the Plan participants.  The annual reports for 1999 and 2000 were issued undercover of documents WT/GC/W/426 and WT/GC/W/463, respectively.  Individual statements of
account will be made available to all participants together with the Annual Report.
STRUCTURE OF THE PENSION PLAN
4. (a) Management Board
The Management Board was composed as follows on 31 December 2001:
Ambassador Jaegil Lee, Chairman
Mr. Roberto Carvalho Azevedo Mr. Jacques Chabert
Mr. Mark Linscott Mr. Hector Millan
Mr. Remo Moretta Mr. Anthony Mistri
Mr. Peter van der GaastMembers elected
by the General
Council
Mr. Paul RolianMembers appointed by
the Director-General
Mr. Andrew Johnston Ms. Monette David
Mr. Jean-Marc Mignon Mr. Zdenek Drabek
Mr. Matthew Nwagwu Mr. Jean-Pierre Lapalme
Mr. Stig TraavikAlternates elected
by the General
Council
Mr. Jan-Eirik SørensenAlternates appointed
by the Director-
General
(b) Secretary
Robert Luther
- Support services
Jean-Pierre Helary
Christine Dresti
(c) Consulting Actuary
Cameron Hannah (William M. Mercer S.A.).WT/L/497
Page 4
(d) External Auditor
Drs. G. de Jong, Member of the Boar d of the Netherlands Court of Audit.
(e) Medical Adviser
Dr. H. Celton, Director, United Nations Joint Medical Service.
(f) Global Custodian
The Northern Trust Company.
(g) Fund Managers
Barclays Global Investors (BGI) (passive portfolio)2.
ING Investment Management (active portfolio)3.
Wellington Management International (active portfolio).
5. An organizational chart is reproduced in Annex 1.
MEETINGS OF THE MANAGEMENT BOARD
6. The Management Board held six meetings in 2001.  These meetings were held on 30 January, 3 April,
18 May, 6 June, 11 September and 19 November 2001.  The agendas included the continuous review ofinvestment performance, the preparation of a transfer agreement with the Organization for EconomicCooperation and Development, the drafting of rules of procedure, the outsourcing of specialist support
services, the establishment of an investment monitoring mechanism, the request for admission to the
Plan of the staff of the Advisory Centre on WTO Law and stop-loss insurance arrangements.  Theseitems are dealt with in greater detail below.
7. Regular progress reports were made available to the Plan participants.
Review of Investment Performance
8. Reports on investment performance were submitted to the Management Board at each meeting.  In
January 2001 the Management Board decided that contributions should be swept regularly not onlyinto the BGI passive portfolios but also into the active portfolios managed by ING and Wellington in
order to maintain the correct balance between the different components of the investment strategy
approved by the Management Board.
9. In May 2001, the Management Board decided that contributions should henceforth be swept
exclusively into the active portfolios, again for reasons of rebalancing.  In November 2001, theManagement Board decided to sweep no further contributions into the ING portfolio pending
clarification of certain issues concerning the management of and compliance with its mandate.
10. In the course of 2001 representatives of all three fund managers attended meetings of the Management
Board on 18 May and on 6 June in order to present progress reports.
11. The performance of the BGI passive portfolios and of the ING and Wellington active portfolios over
the period ending 31 December 2001 is summarized in Annex 2.
                                                     
2 A "passive" fund manager manages a portfolio by linking the investments to a given index so that the
portfolio value moves with that index.
3 An "active" fund manager manages a portfolio by selecting investments in a manner designed to
achieve outperformance of a benchmark (i.e. reference index) over time.WT/L/497
Page 5
12. The Plan achieved a nominal rate of return of - 10.13%, corresponding to a real rate of return of    -
10.43% after deduction of the movement of 0.30% in the Swiss cost-of-living index in 2001.  It isrecalled that the long-term target for the Plan is a real rate of return of 3.5%.
Rules of Procedure
13. Article 5(c) of the Regulations of the Pension Plan states that the duties and authority of the
Management Board as well as rules for the auditing of accounts shall be laid down in rules of
procedure which shall be approved by the General Council.
14. The Management Board completed its work on the drafting of rules of procedure, and the final text
approved by the General Council on 8 May 2001 was circulated in document WT/GC/W/430.
Outsourcing of Specialist Support Services
15. Further to the decision by the Management Board to select Trianon S.A. of Lutry (VD) and the
signature of the contract on 1 June 2001, work pro ceeded on the adaptation of the Trianon software to
meet the needs of the Plan and on the arrangements for the monthly transfer of payroll data to Trianon.The start of parallel runs to test the link with Trianon had to be postponed to 2002 owing to certaindifficulties in the setting-up of the computerized system.
Establishment of an Investment Monitoring Mechanism
16. The Management Board approved the terms of reference of the Investment Committee which would
serve as an expert subsidiary body to advise the Management Board on the maintenance anddevelopment of the investment strategy.  The Management Board agreed that the Investment
Committee should be comprised of three outside experts with the Chairman of the Management Board
and the Secretary of the Plan attending as observers
4.  The Management Board has not yet concluded
its deliberations on the granting of observer status to a participants’ representative on the InvestmentCommittee.
Request for Admission to the Plan of the Staff of the Advisory Centre on WTO Law
17. In January 2001, the Chairman of the Management Board received a letter from the Chairman of the
Preparatory Committee for the Advisory Centre on WTO Law requesting the Management Board toconsider allowing the staff of the Advisory Centre to become participants in the Pension Plan.  TheManagement Board examined the matter at three separate meetings and concluded that it was not in a
position to give favourable consideration to the Chairman’s request.
Stop-Loss Insurance Arrangements
18. The Management Board decided to instruct the consulting actuary to undertake a study in the context
of the first actuarial valuation in 2002 of the need for a stop-loss insurance to protect the Plan against
major death and disability risks.  Such reinsurance was typically taken out by smaller pension plans in
order to limit their exposure to the cost of major death and disability claims.  The Management Boardnoted that the Plan was confronted with two different types of death and disability risk, the first relatingto individual cases and the second to the case of larg e groups of participants traveling to or attending
events such as the Ministerial Conference.  The Management Board concluded that the Plan should not
bear any liability arising from the second type of risk.  Partial cover for the death and disability risk
associated with the Doha Ministerial Conference wa s secured with J. Van Breda & C° International.
                                                     
4 Messrs. Feller, Schoen and Spillmann were designated by the Management Board as members of the
Investment Committee in February 2002.WT/L/497
Page 6
PARTICIPATION IN THE PENSION PLAN
19. The following table shows the trends in the numbers of participants and beneficiaries in the Pension
Plan in the course of 2001.
Participants in the Pension Plan in 2001
Total number on 1 January 2001 581
Movements in 2001
-e n t r i e s
- separations84
47
Total number on 31 December 2001 618
Breakdown of separations in 2001
- retirement
- early retirement- deferred retirement- withdrawal settlement- deferment of decision4
42
30
7
Beneficiaries of the Pens ion Plan on 31 December 2001
Retirement benefits 5
Early retirement benefits 9
Deferred retirement 2
Total number of beneficiaries on 31 December 2001 16
ACCOUNTS
20. 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 curre nt 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 (see paragraph 26, below).
21. The accounting year is 1 January to 31 December.
22. The income and expenditure for the period 1.1.2001 – 31.12.2001 and surplus account as at 31.12.2001
are reproduced in Annexes 3 and 4, respectively.
23. The balance sheet as at 31.12.2001 is reproduced in Annex 5.
24. The source and application of funds for the period 1.1.2001 – 31.12.2001 is reproduced in Annex 6.
25. A glossary of terms to facilitate an understanding of the tables is reproduced in Annex 7.WT/L/497
Page 7
Valuation of assets
26. Up until 31 December 2000, the value of securities r ecorded in the accounts co rresponded to the lower
of the purchase price or market value.  In 2001 the Management Board decided that it would be more
realistic to record the value of securities according to their market value on the basis of the exchangerate applied by the global custodian.  The accounts for 2001 were therefore prepared on that basis.
27. This change in valuation method resulted in a total revaluation of the securities of CHF 4,914,435 as a
result of the switch from purchase price to market value and a devaluation of CHF 12,086,823 due to
the change in exchange rate (rate applied by the global custodian instead of the Pension Plan exchangerate).  The overall impact of the change in valuation method was thus a devaluation of the securities ofCHF 7,172,388.  The corresponding exchange rates are listed in Annex 8.
28. This decrease in value is shown in the accounts for 2001 as follows:
Decrease in value of securities at 01.01.2001 CHF 7,172,388
Dissolution of reserve for unrealized loss on securities CHF 3,465,349
Securities revaluation: CHF 3,707,039
The balance not absorbed by the disso lution of the reserve is covered by:
The dissolution of the currency revaluation reserve (surplus account) CHF 5,029,727
29. The loss on securities represents the net result recorded in 2001 on the investment portfolios, i.e.:
Realized loss on securities CHF –12,040,455
Unrealized loss on securities CHF   –7,142,811
Loss on securities CHF –19,183,266
Interest earned on  invested cash
30. In 2000, interest earned on invested cash was shown separately in the profit and loss account
(CHF 1,022,964).  In 2001, the result was included in the overall result on investments (net loss ofCHF 19,183,266).
ACTUARIAL POSITION OF THE PLAN
31. The triennial actuarial valuation of the Plan as at 31 December 2001 was carried out in 20025.
                                                     
5 The main findings are firstly that there has been a large increase in the liabilities of the Plan due to the
increase in the active workforce and secondly that th e performance of the investments has been less than
expected, in particular for the calendar year 2001. The low investment performance has the effect of increasingthe normal contribution rate whereas the increase in th e active workforce has the effect of decreasing the normal
contribution rate slightly.  The Management Board approved the recommendation of the consulting actuary tomaintain the contribution rate at 22.5%, of which 7.5% is payable by the members and 15.0% by the WTO,subject to the need for  monitoring on an annual basis,  in the event that the assets continue to perform below
expectations.WT/L/497
Page 8
OPINION OF THE EXTERNAL AUDITOR ON THE ACCOUNTS OF THE WTO PENSION PLAN
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 20016
I have examined the appended Financial Statements of the WTO Pension Plan for the year ended 31
December 2001. The examination included a general review of the accounting procedures and such tests of the
accounting records and other supporting evidence as consid ered necessary in the circumstances. As a result of
the examination, the opinion is given that these statements present fairly the financial position of the WTOPension Plan as at 31 December 2001 and the operations for 2001.
(signed )
Drs. G. de Jong
Member of the Board of the Netherlands Court of Audit
19 November 2002
                                                     
6 The report of the External Auditor on the accounts of the WTO Pension Plan for the year ended
31 December 2001 is attached as Annex 9.WT/L/497
Page 9ANNEX 1
STRUCTURE OF THE WTO PENSION PLAN
EXTERNAL AUDITORS
ASSET MANAGEMENT SERVICESINVESTMENT COMMITTEEMANAGEMENT BOARDPARTICIPANTS GENERAL COUNCIL
CONSULTING ACTUARYDIRECTOR-GENERAL
MEDICAL ADVISERADMINISTRATIVE
SERVICESWT/L/497
Page 10
ANNEX 2
RETURN ON PASSIVE AND ACTIVE PORTFOLIOS IN 2001
PortfolioMarket value at 31
December 2001
(in CHF)Return on portfolio
in
2001Movement of
benchmarks in 2001
Swiss bonds (BGI) 34,475,035 3.91% 4.34%
Global bonds ex-Switzerland (BGI) 34,687,861 1.54% 1.49%
Swiss equities (BGI) 24,465,130 -20.09% -20.13%
European equities ex-Switzerland (BGI) 24,186,983 -18.03% -18.01%
Global equities ex-Switzerland (ING) 29,059,238 -20.08% -14.30%
Global equities ex-Switzerland (Wellington) 36,098,495 -10.58% -14.30%WT/L/497
Page 11ANNEX 3
Income and Expenditure Statement
(Expressed in Swiss francs)
Expenditure at 31.12.2001 at 31.12.2000 Income at 31.12.2001 at 31.12.2000
Benefits Contributions
Lump sum Participants 5,890,159 5,592,747
Withdrawal settlement – Art. 26 607,959 254,678 Organization 11,779,487 11,185,462
Commutation – Art. 23(c) & Art. 24(c) 1,747,638 Interest 349 -
2,355,597 254,678 17,669,995 16,778,209
Periodic benefits
Retirement benefit – Art. 23 224,868 23,352
Early retirement benefit – Art. 24 270,966 191,881
Children benefit – Art. 30 972 -
496,806 215,233
Investment and Other Administrative
ExpensesInvestment Income
- Loss on securities 19,183,266 Interest on current accounts 12,241 16,925
- Securities revaluation 3,707,039 Interest on deposit accounts 2,551 1,022,964
- Currency revaluation 63,558 Income on securities - 8,497,648
- Bank charges 1,011 385 Currency revaluation reserve fund - 1,309,579
- Audit fees 10,000 39,238 14,792 10,847,116
- Management fees 620,569 558,027
- Actuarial expenses 32,760 18,912
- Administrative costs 50,000 15,535
23,668,203 632,097
Other income 28,429 -
Excess income over expenditure - 26,523,317 Excess expenditure over income 8,807,390
26,520,606 27,625,325 26,520,606 27,625,325WT/L/497
Page 12ANNEX 4
Surplus Account
(expressed in Swiss francs)
Debit at 31.12.2001 at 31.12.2000 Credit at 31.12.2001 at 31.12.2000
Excess expenditure over income 8,807,390 - Excess income over expenditure - 26,523,317
Provision for currency revaluation - 1,309,579 Dissolution currency revaluation 5,029,727
Provision for unrealized loss on securities - 3,465,349 reserve fund
Provision for administration fees 250,000 500,000
250,000 5,274,928
Surplus - 21,248,389 Loss 4,027,663 -
9,057,390 26,523,317 9,057,390 26,523,317WT/L/497
Page 13ANNEX 5
Balance Sheet
(expressed in Swiss francs)
Assets at 31.12.2001 at 31.12.2000 Liabilities at 31.12.2001 at 31.12.2000
Securities 182,972,742 191,268,022 Capital 1.1 185,752,531 164,504,143
Current and investment accounts 176,094 3,020,832
183,148,836 194,288,854
Reserve funds
Currency revaluation reserve fund - 5,029,727
Unrealized loss on securities reserve fund - 3,465,349
Operating cost 750,000 500,000
750,000 8,995,076
Current assets Current liabilities
Withholding taxes to be recovered 5,177 602,961 Benefits due to participants 455,945 15,806
Accrued interest - 61,832 Contributions payable 319 -
Contributions receivable - 6,300 Accrued expenses 222,881 196,533
5,177 671,093 679,145 212,339
Loss 4,027,663 - Surplus 21,248,389
187,181,676 194,959,947 187,181,676 194,959,947WT/L/497
Page 14
ANNEX 6
Source and Application of Funds
(expressed in Swiss francs)
Source1.1.2001-31.12.2001 1.1.2000-31.12.2000
Funds as at 1.1 194,959,947 171,823,538
Receipt of contributions 17,669,995 16,778,209
Return on investments - 6,072,188
Increase in reserve funds - 1,837,803
Increase in current liabilities 466,806 50,217
Other income 28,429 -
213,125,177 196,561,955
Less:
Application
Loss on investments 17,909,344
Settlement of benefits 2,852,403 469,911
Expenditure 964,340 1,132,097
Decrease in reserve funds 8,245,076 -
29,971,163 1,602,008
Funds as at 31.12 183,154,014 194,959,947WT/L/497
Page 15
ANNEX 7
GLOSSARY OF TERMS
Accrued expenses  includes benefits due and expenses incurred but not paid in the current financial year.
Accrued interest  refers to interest earned on deposit accounts.
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 fees  includes fees charged by the External Audito r in connection with the audit of the 2000 accounts.
Contributions receivable  refers to contributions due in respect of contributory service in 2000 but received
after 31.12.2000.
Currency revaluation  represents the exchange rate losses on the Crédit Suisse US$ account.
Fees for investment advice  includes fees paid to external advisers for assistance with respect to the
establishment of the investment strategy.
Foreign exchan ge difference  refers to a realized exchange rate gain.
Income on pooled trust funds  refers to investment income from the BGI passive mandates.
Management fees  includes fees paid to fund managers for the management of WTO portfolios.  In 2001 these
fees amounted to CHF 132738 for BGI, CHF 126894 for ING, CHF 162944 for Wellington and CHF 197993
for Northern Trust.
Provision for operating costs  refers to the reserve established to cover operating costs not currently charged to
the Plan.
Withholding taxes to be recovered  includes amounts of withholding tax levied by the Swiss authorities and
subject to recovery after 31.12.2000.WT/L/497
Page 16
ANNEX 8
EXCHANGE RATES USED FOR THE VALUATION OF ASSETS IN 2000 AND 2001
Currency Rate used for account
closure on 31.12.2000Rate used for revaluation
on 31.01.2001
ING portfolio UR 1.5223 1.5214
USD 1.7599 1.6205
JPY 0.0160 0.0142
SEK 0.1750 0.1717
GBP 2.5145 2.4207
Wellington portfolio EUR 1.5223 1.5214
USD 1.7599 1.6205
JPY 0.0160 0.0142
SEK 0.1750 0.1717
GBP 2.5145 2.4207
AUD 0.9229 0.9004
CAD 1.1429 1.0789
HKD 0.2078 0.2078
SGD 0.9345 1.0057
BGI portfolios USD 1.7600 1.6205WT/L/497
Page 17
ANNEX 9
REPORT OF THE EXTERNAL AUDITOR ON THE ACCOUNTS OF THE WTO
PENSION PLAN FOR THE YEAR ENDED 31 DECEMBER 2001
The external auditor of the WTO is also appointed as the external auditor of the WTO Pension Plan.
The audit year 2001 is the last year for the Netherlands Court of Audit.  For the WTO Pension Plan the audityear 2001 is also the last audit year.  The Austrian Court of Audit is the external auditor for the year 2002.
The negative economic development has had an impact on the assets and investment performance of
the Pension Plan.  In contrast with the two previous years, the year 2001 closed with a deficit.
For the maintenance of the investment strategy and the monitoring of investment performance, the
Management Board decided in 2001 that an Investment Committee should be set up.  The experts were onlydesignated in 2002.  The auditor is of the opinion that such a committee is an important instrument.  For thatreason it is recommended that the Investment Committee begin its work as quickly as possible.
The auditors advise that the Management Board give attention to each r ecommendation mentioned in
the actuarial valuation report that was released in August 2002.  The auditors draw attention to onerecommendation in particular.  As explained in the annual report the Management Board decided to change thevaluation of the securities from purchase price to market value.  One of the recommendations of the actuary is
that the Management Board may wish to consider whether an explicit investment reserve or a smoothing
approach be adopted (for example to take the average market value over a three-year period).  The auditorsstipulate the importance of a consistent valuation policy.
Financial Management
∙ Operating Costs
Referring to the remarks in 1999 and 2000 reports, the auditors noted that, although a reserve for the
operating costs had been created, a definitive solution was still pending.
∙ Outsourcing of specialist services
The auditors noted that they had received full cooperation in obtaining information from the service
provider.
Referring to their 2000 report, the auditors stressed the need for a written record of administrative
procedures and internal control measures as an important management tool.  This is more important foractivities in the future which will be carried out by a service provider.
The auditors remark that the accounts gave a good impression and were verifiable.  It was not usual to
show periodical interim figures. The auditors suggested that those figures be shown on a six-month
basis.
Final remarks
The representatives of the Netherlands Court of Audit wish to record their appreciation for the willing
cooperation given by the officers of the Pension Plan Secretariat during their audits in the past three years.
__________