This document sets out the guidelines established for the time being by the Governing Board of the KPST. These guidelines will be formally reviewed at each Board meeting.

1. The Board recognises that a balance needs to be struck between the interests of contributors who are close to retirement and those who have many years of saving ahead of them before a pension will be required. In the medium term, and subject to the development of a new IT system, this issue will be addressed through the offering of different ‘portfolios’ to contributors. These will be designed to use the time horizon and risk profile most appropriate to each individual cohort. In the meantime, the need for balance argues for a policy which contains a reasonable but not excessive percentage of long term assets with high returns but high volatility, such as equities, combined with a larger part of the asset pool where there is greater certainty of return, with lower volatility. While the demographic profile of contributors suggests a tolerance for high risk, the growing number of retirees requires a more muted approach until such time as the system can offer contributor choice.

2. Although, the Board believes that, over the long term, equities are likely to generate higher total returns than bonds, cash or absolute return vehicles, it acknowledges that the risks inherent in the pursuit of a policy too heavily weighted towards equities are unacceptably high for the time being.

3. The Board has established a process for the identification and appointment of suitable asset managers to manage the assets of the Trust. KPST will invest in pooled vehicles, i.e. mutual funds, which offer excellent diversification at relatively low cost. The Board will include the use of ‘Index Funds’ to meet its equity investment needs, but recognises that for the balance of the assets an index approach may be inappropriate. The Board therefore uses its collective knowledge to identify suitable managers, who are then researched and interviewed prior to appointment. The Board may use external advice to assist in this process. It is very important that the managers selected are of the highest integrity and financial security.

4. The Board will invest as required by the relevant legislation. The Board believes that pooled vehicles organised under the relevant local OECD jurisdiction fall into this category.

5. The Board is responsible for setting targets for the asset allocation of the Trust’s assets, and devotes time to this task both at and between Board meetings. For the time being, the Board expresses the policy as a target mix of assets to be split between three asset classes: equities; absolute return products; and other, a category which includes bonds and cash. Targets are given in a range, so that cash flows into the Trust can be deployed sensibly. These target ranges will be reviewed regularly and serve as guidelines for the target mix of assets over time.

6. Although the accounts and market baskets of the individual participants are Euro denominated, the Board believes that it is appropriate to invest both inside and outside the Eurozone, if the returns available justify the risk. In these circumstances, the Board will consider whether non-Eurozone assets should be acquired only through pooled products which are automatically hedged back into Euros, or whether to run the currency risk.

7. The Board reviews regularly the suitability of investment opportunities within Kosovo. To meet the criteria for investment, any such investments must comply with the investment guidelines then in force, as well as with the relevant legislation.

These guidelines should be read in conjunction with the Statement of Investment Principles, and the Law No. 03/L-084 on Kosovo Pension Trust.

Prishtina, Kosovo

25 January 2010