Here's another shrinking NAV data point. I tried the Intermediate Index Fund, because the Total Bond Fund is probably more variable with maturities. I'm also going to assume, like with a Treasury ladder, that you don't reinvest dividends, just take the dividends and spend them or save them elsewhere.

If you bought shares on the fund on 12/29/95 you would have paid $10.37. If you cashed out on 12/29/05 you would have gotten back $10.37. However, the fund yield went from 5.87% to 4.88%.

Now, there may have been some capital gains distributions, but with the index funds in particular these seem to be small. Looking at the income returns (which include compounding through reinvested dividends), the initial yield would be about the average dividend for 10 years. So with durations of around 6, I think this fund is leaking around .5% per year over 10 years compared to buying a 10 year bond at the end of '95 with a 5.87% yield.