Index

Indexes provide investors comparisons and guidance concerning the performance of overall markets. Bond indexes, similar to stock indexes, can be broad-based or specialized. The three broad-based indexes most commonly used are the Lehman Brothers Aggregate Index, the Merrill Lynch Domestic Master Index, and the Salomon Smith Barney Broad Index. All three indexes include all of the liquid securities across maturities in the treasury, agency, corporate, and asset-backed/mortgage-backed sectors. Specialized indexes focus on one particular sector, and/or maturity range of the bond market. For example, the Lehman 1-3 year Government Index is used as a representative index for the Ambassador Short-Term Government Bond Fund. The determination of the proper index to use for comparison purposes will incorporate any restrictions in an investment policy, as well as the objectives and risk tolerance of the investor.