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Subject:  Beginner's Qs on Bonds Date:  7/15/2004  10:30 AM
Author:  cmwallace Number:  10463 of 36390

This is my first posting on this board and I am a relatively new investor (long-term buy & hold). I am trying to diversify my portfolio by adding bonds. I prefer the ease of an index fund. I am investigating the Vanguard long term bond index fund.

1) What's the economic difference between a long-term, intermediate-term, short-term, or full bond market index fund?

2) This is what I found under the section marked "Risk Attributes"

Historic Volatility Measures as of 05/31/2004
Benchmark R-squared* Beta*
Lehman Long Government/Credit Index 1.00 0.99
Lehman Brothers Aggregate Bond Index 0.93 2.17

*R-squared and beta are calculated from trailing 36-month fund returns relative to the associated benchmark.

What do R squred and beta mean? It seems to measure how closely this fund tracks with a given benchmark. Is that right? Why is it important to my investment decision?

3) Could you recommend links/readings/etc. that would bring me up to speed on investing in bonds.

4) Are there other funds competitive with Vanguard?

5) Does anyone have experience with these Vanguard funds?

6) Please confirm my understanding that a bond is govt debt. It's as if I am loaning money to a govt entity (state/fed) and they pay me interest in return. Is that accurate? Am I leaving out any important detail?

who is enjoying the heck out of all the info available from TMF!!!! : }
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