When a place name is more than 38 characters (I think) in length, the place name will be truncated in some fashion on the Family Group Report. This is because of the fixed length of this field on this report. I don’t believe that this has anything to do with the margins. As Bob has stated, this does not happen with the Family Journal.
And yes, indexing can be done with Family Group Reports. When printing Family Group Reports from UFT to Word, or any other word processor, and an index is desired, in UFT be sure to check the box INCLUDE INDEX which is found by clicking on PRINT SETUP and then on the EXTERNAL SUPPORT tab. This box is on the left side, second from the bottom. UFT will then index mark all names on the report.
As Bob has stated, if you turn on the show codes in Word you can then see the index marking as well as other formatting codes. (These codes can also be turned on with the short cut keys CNTRL +*).
After all reports are assembled in the preferred order in Word, setup your preferred page number formatting and then generate the index in Word – not in UFT. Word will index each individual with the correct page number(s). To generate the index in Word, go to the end of the document (CNTRL+END), click on INSERT, BREAK, NEXT PAGE. Space several lines down and set up any chapter heading you desire, such as Name Index, space several lines down, make sure you are left justified, and then generate the index by clicking on INSERT, INDEX and TABLES and then OK. You can experiment on different formats of indexing and two or three columns etc. (You can generate a new index over an old index).