G Fund

Government Securities Investment Fund

The G Fund is managed internally by the Federal Retirement Thrift Investment Board. The G Fund buys a non-marketable U.S. Treasury security that is guaranteed by the U.S. Government. This means that the G Fund cannot lose money. The objective of the G Fund is to produce a rate of return that is higher than inflation while avoiding exposure to credit (default) risk and market price fluctuations.

Risk

The G Fund is subject to inflation risk, or the possibility that your G Fund investment will not grow enough to offset the reduction in purchasing power that results from inflation.

Return

The payment of G Fund principal and interest is guaranteed by the U.S. Government. This means that the U.S. Government will always make the required payments. G Fund returns are generally lower than other fund returns, but they are the safest (least risky) option.

F Fund

Fixed Income Index Investment Fund

The objective of the F Fund is to match the performance of the Barclays Capital U.S. Aggregate Bond Index, a broad index representing the U.S. bond market. The F Fund invests in a bond index fund that tracks the Barclays Capital U.S. Aggregate Bond Index. This broad index includes U.S. Government, mortgage-backed, corporate, and foreign government (issued in the U.S.) sectors of the U.S. bond market.

Risk

Because the F Fund returns move up and down with the returns in the bond market, your F Fund investment is subject to market risk. The F fund is also subject to credit (default) risk, inflation risk, and prepayment risk.

Return

Although there are several types of risks associated with the F Fund, the overall risk is relatively low in comparison to other fixed income investments in the market because the F Fund includes only investment-grade securities. As a result, over time the F Fund has potential to yield higher return rates than short-term securities such as the G Fund.

C Fund

Common Stock Index Investment Fund

The objective of the C Fund is to match the performance of the Standard and Poor’s 500 (S&P 500) Index, a broad market index made up of stocks of 500 large to medium-sized U.S. companies. The earnings consist primarily of dividend income and gains (or losses) in the price of stocks.

Risk

The C Fund is subject to market risk because the prices of the stocks in the S&P 500 Index rise and fall. The C Fund is also subject to inflation risk.

Return

Investing in the C Fund offers opportunity to experience gains from equity ownership of large and mid-sized U.S. company stocks.

S Fund

Small Cap Stock Index Investment Fund

The objective of the S Fund is to match the performance of the Dow Jones U.S. Completion Total Stock Market Index, a broad market index made up of stocks of U.S. companies that are not included in the S&P 500 Index. The earnings consist of dividend income and gains (or losses) in the price of stocks.

Risk

The S Fund is subject to market risk because the Dow Jones U.S. Completion Total Stock Market Index returns will fluctuate (move up and down) in response to overall economic conditions. The S Fund is also subject to inflation risk.

Return

Investing in the S Fund offers the opportunity to experience gains from equity ownership of small to mid-sized U.S. companies. It also provides an excellent means of further diversifying your domestic portfolio.

I Fund

International Stock Index Investment Fund

The objective of the I Fund is to match the performance of the Morgan Stanley Capital International EAFE (Europe, Australasia, Far East) Index. The earnings consist of gains (or losses) in the price of stocks, dividend income, and change in the relative value of currencies.

Risk

The I Fund is subject to market risk because the Morgan Stanley Capital International EAFE Index returns will fluctuate (move up and down) in response to overall economic conditions. Because of its exposure to currency risk, the EAFE Index (and the I Fund returns) will rise or fall as the value of the U.S. dollar decreases or increases relative to the value of the currencies of the countries represented in the EAFE index. The S Fund is also subject to inflation risk.

Return

Investing in the I Fund offers the opportunity to experience gains from equity ownership of non-U.S. companies. Because it represents the stocks of companies in many developed countries (excluding the U.S.), it is an excellent way to diversify the stock portion of your TSP allocation.

L Funds

Lifecycle Funds

Lifecycle funds use professionally determined investment mixes that are designed to meet investment objectives based on various time horizons. The objective is to strike an optimal balance between the expected risk and return associated with each fund. The L Funds’ strategy is to invest in an appropriate mix of the G, F, C, S, and I Funds for a particular time horizon, or target retirement date.

Risk

The L funds incur the same risks associated with the chosen G, F, C, S, and I funds.

Return

The L funds offer various rates of return depending on your chosen fund allocations and target retirement date.