Fund broad and narrow, broadly speaking, the Fund is a certain amount of funds established for some purpose. For example, investment trusts, unit trusts, provident funds, insurance funds, pension funds, foundations fund. On the existing securities market funds, including closed-end funds and open-end funds, and revenue functions and characteristics of the value-added potential. Dialysis from an accounting point of view, the Fund is a narrow concept, which refers to specific purposes and uses of funds. Government funders and institutions are not required to return on investment and payback, but requires the use of the funds by the law or the wishes of funders in the specified purposes, and the formation of a fund.
G Fund Government Securities Investment Fund Fund Information Key Features As of December 31, 2011 • The G Fund offers the opportunity to earn rates of interest similar to those of U.S. Government notes and bonds but without any risk of loss Net Assets of principal and very little volatility of earnings. $147.7 billion • The objective of the G Fund is to maintain a higher return than inflation without exposing the fund to risk of default or changes in market prices. 2011 Administrative Expenses • The G Fund is invested in short-term U.S. Treasury securities specially $0.25 per $1,000 issued to the TSP. Payment of principal and interest is guaranteed by the account balance, U.S. Government. Thus, there is no “credit risk.” .025% (2.5 basis points) • The interest rate resets monthly and is based on the weighted average yield of all outstanding Treasury notes and bonds with 4 or more years to maturity. • Earnings consist entirely of interest income on the securities. • Interest on G Fund securities has, over time, outpaced inflation and 90-day T-bills. Returns After Expenses G Fund Returns 1-Year 2.45% 1988 – 2011 3-Year 2.75% 5-Year 3.37% 10 10-Year 3.96% Since Inception 5.86% Percent Return April 1, 1987 5 Growth of $100 0 1990 1995 2000 2005 2011 Since Inception 450 400 G Fund $ 410 350 300 Inﬂation 250 $201 200 150 100 4/87 12/11 7/12 G Fund Facts By law, the G Fund must be invested in nonmarketable U.S. Treasury secu- G Fund Yield Advantage rities specially issued to the TSP. The G Fund investments are kept by elec- April 1987 – December 2011 tronic entries which do not involve 12% any transaction costs to the TSP. The G Fund rate is set once a month by 10% the U.S. Treasury based on a statu- Percent Return torily prescribed formula (described 8% G Fund Rate below), and all G Fund investments 6% earn that interest rate for the month. (The G Fund rate is also used in other 4% Government programs, such as the Social Security and Medicare trust 2% 3-Month T-Bill Rate i funds and the Civil Serv ce Retire- 0% ment and Disability Fund.) 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 Although the securities in the G Fund earn a long-term interest rate, the Board’s investment in the G Fund is redeemable on any business day with no risk to principal. The value weight in the calculation.) The Trea- of G Fund securities does not fluctu- sury securities used in the G Fund ate; only the interest rate changes. rate calculation have a weighted Thus, when the monthly G Fund inter- average maturity of approximately est rate goes up, G Fund earnings ac- 11 years. crue faster; when the G Fund interest rate declines, G Fund earnings accrue The G Fund Yield Advantage — The more slowly. G Fund rate calculation described above results in an intermediate- Calculation of G Fund Rate — term rate being earned on short-term G Fund securities earn a statutory securities. Because intermediate- interest rate equal to the average term interest rates are generally market yield on outstanding market- higher than short-term rates, G Fund able U.S. Treasury securities with 4 or securities usually earn a higher rate more years to maturity. The G Fund of return than do short-term market- rate is calculated by the U.S. Treasury able Treasury securities. In the chart as the weighted average yield of ap- above, the G Fund rate is compared proximately 120 U.S. Treasury securi- with the rate of return on 3-month ties on the last day of the previous u marketable Treasury sec rities month. The yield of the security has a (T-bills). From January 1988 through weight in the G Fund rate calculation December 2011, the G Fund rate was, based on the amount outstanding. on average, 1.80 percentage points (The larger the dollar amount of a higher per year than the 3-month security outstanding, the larger its T-bill rate. Page 2 TSPLF14G
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