Direct UC Endowment and Retirement Investments

Benefitting from the Illegal Occupation of Palestine

UC Berkeley Divestment Working Group

Executive Summary
The University of California system manages a number of large investment pools for the operations of the
individual universities, totalling over $55 billion in assets. This document describes the structure of UC investment
pools and examines direct investments in securities in the UC-managed General Endowment Pool (GEP) and UC
Retirement Pool (UCRP) for companies that benefit from the illegal Israeli occupation of Palestine. The GEP
and UCRP invest in at least five companies that benefit from occupation: General Electric, Hewlett Packard,
L3 Communications, Loral, and United Technologies. Divestment efforts should begin by divesting from these
corporations.

1 Structure of UC Investments/Assets
As of June 2009, the University of California Treasurer’s Office (UCTO) managed $55.1 billion worth of assets,
including $41.8 billion in retirement-related investments1 . Table 1 and Figure 1 show the breakdown of UC assets
across UCTO-controlled investments.

Table 1: UC Investment Breakdown ($ in Billions)

Area Fund Value
Retirement UC Retirement Plan (UCRP) 32.4
Retirement Defined Contribution Plan 9.4
Endowment General Endowment Pool (GEP) and Other Endowments 5.8
Short Term Investment Pool (STIP) 6.0
Total Return Investment Pool (TRIP) 1.5
Total 55.1

The Short Term Investment Pool (STIP) is a cash investment pool intended to maximize short-term profit with
minimal risk. Similarly, the Total Return Investment Pool (TRIP) is intended for long-term cash investment, and
maximizes long-term profit potential at the cost of short-term volatility. Holdings in these two funds do not appear
to be published publicly.

1.1 Endowments
In the UC system, endowment funds are split between the UCTO and the individual university foundations.
The UCTO controls the General Endowment Pool (GEP), which is the largest individual endowment fund and
had a market value of $5.2 billion as of mid-2009. Individual universities invest differing percentages of their
endowment funds into the GEP, ranging from 100% (e.g. UCR) to as low as 0% (UCSF). Generally speaking,
individual university foundations use external investment management2 for funds not in the GEP.
1 http://www.ucop.edu/treasurer/report/UCTreasurer_AnnualReport_2009.pdf
2 http://www.ucop.edu/treasurer/foundation/foundation.pdf

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 TRIP!
Externally-Managed!
Other! $1.5!
STIP! Securities ($0.2)!
$6! Externally-Managed! Fixed Income! Externally-Managed!
Equity ($1.9)! Securities ($1.0)! Alternative Assets ($1.9)!
GEP!
Endowment!
$5!

DCP!
$9.5!

Externally-Managed!
Securities ($1.5)!
Retirement!
Externally-Managed! Fixed Income!
Equity ($16.9)! Securities ($8.5)!

UCRP!
$32.4!

Externally-Managed!
Alternative Assets ($4.4)!

Figure 1: Breakdown of UCTO-managed investments, with dollar amounts (in billions). The scope of this report is
shown on the right in red; we only consider fixed-income securities directly invested in by the UCOP as part of the
General Endowment Pool and the UC Retirement Pool.

The UCTO releases GEP holdings yearly, and the individual foundations include limited information about
holding values and assets in their yearly reports.

1.2 Retirement
By far the largest area of investment for the UC system, the UC Retirement Plan and Defined Contribution Plan
(DCP) constitute over 75% of UC assets. The UCRP consists of employee contributions before 1990, while
mandatory contributions are now invested in the DCP, which consists of 20 individual funds, twelve of which are
funds of funds. As of March 2010, employee contributions will revert to the UCRP.
UCRP holdings are released annually. For the DCP, some funds release limited amounts of information (such
as the top investment sectors and top invested corporations) while others do not; complete information on holdings
in the individual DCP funds are not available on the UCTO website.

1.3 Investment Types

In both the endowment and retirement funds, the majority of holdings are externally-managed, and include secu-
rities, externally-managed equity funds, and so-called “Alternative Assets” which include real estate funds as well
as private equity. A relatively small segment of the GEP and UCRP are internally managed and directly invested
in securities.

2 Methodology
Due to the mix of investment types in the GEP and the UCRP, varying levels of public information are available.
Direct bond investments constitute 20% of the GEP and 31% for the UCRP; for these, it is clear whom the
investment ultimately benefits. However, externally-managed funds constitute the bulk of both the GEP and

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 UCRP investment pools, and the varying classes of such funds present differing amounts of public information,
from full disclosure of all investments to complete opacity.
In light of this, we began by examining GEP and UCRP direct investments (in particular, fixed-income securi-
ties) for companies that directly benefit from or aid the illegal Israeli occupation of the Palestinian territories and
Israel’s numerous violations of international and human rights law. Examples of such material assistance include,
inter alia, the construction of illegal settlements and the provision of weapons used against civilian populations.
To find these companies we consulted human rights organization reports by Amnesty International and Human
Rights Watch among others;3 the WhoProfits website,4 an Israeli database of companies materially supporting
Israel’s occupation; and reports by divestment task forces from religious and academic institutions, such as the
United Methodist Church and Hampshire College, where last year the administration decided to remove univer-
sity investments from companies recommended for divestment because of their support of the Israeli occupation5 .
In addition, each company’s main areas of business was collected in order to create a comprehensive picture of
which industries the UC system invests in. The investments examined in the document account for 17.2% of total
UCTO-controlled assets.

3 Results
A company-by-company examination of GEP and UCRP securities reveals the following companies that benefit
from the illegal occupation:
• General Electric holds service contracts with the Israeli military and builds propulsion systems for a large
number of Israeli aircraft, including the US-made F-16 fighter jets as well as the Apache helicopters used
extensively against civilian populations of the Occupied Territories6 . Value: $55.0 million.
• Through its subsidiary EDS, Hewlett Packard provides biometric access technology used in checkpoints
(the so-called Basel System for controlling worker access). In addition, HP provides computer systems to
the IDF7 . Value: $21.6 million.
• L3 Communications provides baggage scanning equipment for checkpoints in the occupied territories8 .
Value: $30.3 million.
• Loral Corporation is a weapons manufacturer that developed and produced Multiple Launch Rocket Sys-
tems (MLRS), which are capable of launching several different kinds of rockets, for the IDF9 . Value: $21.0
million.
• United Technologies holds fleet management contracts with the Israeli military and manufactures Sikorsky
helicopters and other military vehicles used for troop movement by the Israel Army, as well as engines for
F-15 and F-16 aircraft, all of which have been used in attacks on the civilian population 10 . Value: $8.0
million.
It is very likely that other companies complicit in the Israeli occupation receive UC investment through
externally-managed funds. Further research will examine indirect investments in the GEP and UCRP to find
additional companies that benefit from the occupation.
3 Among them, Amnesty International’s "Fueling Conflict: Foreign Arms Supplies to Israel/Gaza" and Human Rights Watch’s "Fatal

Strikes" report.
4 http://whoprofits.org, a project of the Coalition of Women for Peace.
5 New England Conference of the United Methodist Church Divestment Task Force Report and Recommendations

http://www.neumc.org/pages/detail/178 and Hampshire College divestment recommendations http://www.hsjp.org/divestment/

6 See the Amnesty International and Human Rights Watch reports in footnote 3 and the United Methodist Divestment Task Force report in

footnote 5.
7 http://www.whoprofits.org/Company%20Info.php?id=624
8 http://whoprofits.org/Newsletter.php?nlid=29
9 http://www.allbusiness.com/defense-aerospace/defense-industry-defense-electronics/7133965-1.html
10 See the Amnesty International report in footnote 3 and the United Methodist Divestment Task Force report in footnote 5.

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4 Recommendations
The UC Berkeley Divestment Working Group recommends the initial targets for divestment should be the five
companies listed above. UC policy should prohibit investment in companies that benefit from illegal occupation,
war crimes, and the use of weapons against civilian populations. A good first step would be for the UC system to
divest from direct investment in these companies.
Furthermore, we urge the UC to be more transparent about the various UCTO-controlled funds, including
releasing up-to-date investment profiles for DCP, STIP, and TRIP funds.
The Working Group will continue investigating UC investments, as this document only investigates 17.2%
of all UCTO-controlled assets. Future work will investigate indirect investments in the various UC-wide funds,
as well as invididual university foundations, using a separate methodology necessary for externally-managed
investments.