The Government Securities Investment
Fund is invested in short-term non-marketable
U.S. Treasury securities that are specially
issued to the TSP. The G Fund interest rate is a
weighted average of market rates of return on
outstanding U.S. Treasury securities with 4 or more
years to maturity.
There is no credit risk (that is, risk of non-payment
of principal or interest) for the Treasury securities
in the G Fund. In addition, market risk (risk that
investments may fluctuate in value as interest rates
change) is eliminated by the FRTIB's current policy
of investing the G Fund in short-term rather than
longer-term securities. However, G Fund rates of
return may well be lower than those of the other
TSP funds over the long term. See the official G Fund information site and historical return site.
The Fixed Income Index Investment
Fund is invested in a bond index fund that
tracks the Lehman Brothers U.S. Aggregate (LBA)
bond index. This index consists primarily of high quality
fixed-income securities representing the
U.S. Government, mortgage-backed, corporate, and
foreign government sectors of the U.S. bond
market.
The F Fund offers the potential for increased rates
of return relative to the G Fund over the long term,
especially in periods of generally declining interest
rates. At such times, the market value of the bonds
held in the F Fund should increase, unlike those of
the short-term securities held in the G Fund.
Unlike the G Fund, the F Fund carries credit risk,
market risk, and prepayment risk. Thus, the
F Fund also has the potential for negative returns,
which would result in losses. See the official F Fund information site and historical return site.
The C, S, and I Funds
are stock index funds. The advantages of investing
in stock index funds are: (1) the potential for the
relatively high investment returns that are sometimes
available from stocks; (2) diversification
among a broad range of stocks, which mitigates the
effect on overall returns from the poor performance
of an individual security or industry; and (3)
relatively low investment management fees and
trading costs.
The main risk of investing in a stock index fund is
that it may experience a sharp decline with unfavorable
changes in overall economic conditions. The
total return on a stock fund could be negative,
resulting in a loss.
The Common Stock Index Investment
Fund is a large company stock fund. The
C Fund tracks the Standard & Poor’s 500 (S&P 500)
stock index, which consists of the stocks of 500
companies traded in the U.S. stock markets.
The C Fund gives you the opportunity to invest in a
diversified portfolio of large U.S. companies. The
risk of investing in the C Fund is that the value of
stocks can decline sharply, and the total return on
the C Fund could be negative, resulting in a loss.
See the official C Fund information site and historical return site.
The Small Capitalization Stock
Index Investment Fund is the TSP’s medium and
small company stock fund. The S Fund tracks the
Wilshire 4500 stock index, which consists of the
stocks of U.S. companies not included in the S&P
500 index.
The S Fund gives you the opportunity to further
diversify your stock investments. The Wilshire 4500
index is the broadest measure of the U.S. stock
markets that excludes the companies in the S&P
500 index. Thus, the S Fund in combination with
the C Fund covers virtually the entire U.S. stock
market.
Investing in the S Fund includes the additional risk
associated with stocks of mid-size and smaller
companies, which tend to be more volatile than the
stocks of the larger companies in the C Fund’s S&P
500 index. See the official S Fund information site and historical return site.
The International Stock Index Investment
Fund is the TSP’s foreign company stock
fund. The I Fund tracks the EAFE (Europe,
Australasia, Far East) stock index, which consists
of common stocks of large international companies
in 21 countries.
The I Fund gives you the opportunity to further
diversify your stock investments to include stock
markets of developed countries outside the U.S.
The additional risk of investing in the I Fund is that
I Fund investments include both the increased
volatility of foreign markets and the risk of foreign
currency fluctuations. See the official I Fund information site and historical return site.
If you choose to invest in the F, C, S, or
I Fund, you must acknowledge the risks
involved. There is no assurance that future rates
of return will replicate the rates shown in previous examples.
The Guide to TSP Investments, available from your
personnel office or the TSP Web site, offers more
detail about TSP investments.
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