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Subject:  Re: Beginner's Qs on Bonds Date:  7/15/2004  11:25 AM
Author:  jbking Number:  10464 of 35923

Greetings CMW,

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

The term refers to how long the bond will be around assuming it isn't called. Long-term bonds are usually 20-30 years in length, intermediate is shorter like 7-10 and short-term is 2-3 roughly. Typically, the longer the term the more sensitive the bond will be to interest rate shifts as if rates go up 1% this means more if the bond isn't maturing for another 20 years compared to a bond maturing in another year or two so shorter-term is usually less volitile. A full bond market index fund will hold bonds of all maturities and thus has a mix of short, intermediate and long which should make it move like an intermediate with a bit more kick but that is just a guess from my part.

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?

Definition time from M*:

R-Squared vs. Standard Index
R-squared ranges from 0 to 100 and reflects the percentage of a fund's movements that are explained by movements in its benchmark index. An R-squared