Questions and Answers About Share Prices

July 1, 2008

1.  When did the TSP start expressing share prices to four decimal places?

Beginning July 1, 2008, the TSP began expressing share prices to four decimal places. The share prices for July 1 and after reflect the actual prices at four decimal places. (This change from two to four decimal places allows for greater precision in calculating account balances and tracking the TSP funds to the indexes with which they are associated.) Historical share prices for dates prior to July 1 were also changed to show four decimal places. However, in this case, we simply added two zeros to the end of each share price. Therefore, account balance calculations prior to July 1 are based on the historical prices and do not reflect the value to four decimal places.

2.  Why did the TSP start expressing share prices to four decimal places?

Using four decimal places, rather than two, allows for greater precision in making calculations, both in terms of valuing accounts and enabling the TSP funds to better track the indexes with which they are associated.

3.  How does the change make a difference in the value of my G Fund investment?

Previously, TSP share prices were truncated to two decimal places.  For example, if a fund’s price were $12.0099, the TSP record keeping system would show a price of $12.00 when valuing a participant’s holdings.  Under that two-decimal-place system, a participant who bought shares in the G Fund would see a 0% return on those shares for up to five or six days.  The G Fund price would only change when the price change was a full penny.  When the G Fund price is expressed to four decimal places, it shows the daily incremental change and reflects a steady gain.  (See the chart below for an example of how this works.)

Value of 10,000 Shares of the G Fund with Pricing at 4 and 2 Decimal Places

	Example Using 4-Decimal Places			Example Using 2-Decimal Places
	$ Price of G Fund	$ Value of Account		$ Price of G Fund	$ Value of Account
Purchase Date	12.0000	120,000		12.00	120,000
Day 1	12.0017	120,017		12.00	120,000
Day 2	12.0033	120,033		12.00	120,000
Day 3	12.0050	120,050		12.00	120,000
Day 4	12.0067	120,067		12.00	120,000
Day 5	12.0083	120,083		12.00	120,000
Day 6	12.0100	120,100		12.01	120,100

 

Under the new pricing, if the owner of the G Fund redeems his or her shares on Day 3, he or she receives $33 more than under the old system.

4.  How does the change affect the tracking of the TSP fund indexes?

In the same way that the new calculation allows greater precision in the calculation of G Fund balances (see Question 3), it also impacts the precision of the other funds.

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