JMS,My question is: If this fund "invests in debt issued directly by the government in the form of Treasury bills," why would an investment in it ever lose value at any point? If an intial investment is made, and if interest is paid at certain intervals, even if rates change, why would there ever be a subtraction in the value of the investment that has already been accumulated?The simplest way to put it is this:A government or any "guarantee" generally only refers to the guarantee that at the specified dates, you will get a fixed amount of principal and/or interest payments.But few investments guarantee what the market value of these principal and interest claims will be worth.The generally small short term fluctuations in prices you see are just the collective market judgements of the changing value of these guaranteed cash flows.Even with the shortest term bonds that are gov guaranteed, inflation expectation, real return expectations, changes in liquidity requirements, and other movements may alter what market participants think the cash flows are worth.If you look at longer term "guaranteed" instruments like US long term bonds, these fluctuations can be absolutely huge.There are a few kinds of investments where there is a regulatory or insurance guarantee such as Money Market funds (who's investments do fluctuate, but as long as they remain within 0.5% of their $1.00 NAV, they are allowed to report no change in their NAV), or Stable Value Funds (used in retirement accounts, these funds have an insurance company that essentially smooths any price changes over time via a guarantee which essentially masks the underlying market change to investors), or non-brokered FDIC insured CDs (which may charge a penalty for early withdrawal which is partly intended to compensate for market value loss effects).But in general, anything that is traded in the market will fluctuate daily. That is true in fund or individual security form.Hope that helps.Ben
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