"But to see 20% makes me wonder how generally comparing interest rates and bond NAV's is going to be difficult when the fund manager has so many options (pun intended) to manage the account outside of buying and selling in the cash market."Matthew,Interesting idea, since I really have no satisfactory explanation for the data I've posted. I don't know how to find historical data on the funds, but I suspect the 20% is unusual, if ever, and I'm guessing the prospectus you looked at is not for the bond index funds, just the bond picking funds (Iseem to remembers separate reports for the two categories).Here's the current short term holdings for the funds I've looked at on the shrinking NAV issue:1% for Total Index, 1.8% for Long Corporate, 8% for Intermediate Treasury.I would agree that the use of derivatives and short term instruments would make a simple comparison between a tracking yield (e.g., 10-year Treasuries) and a fund's NAV problematic. But the shrinking NAV data correspond to the actual SEC yields on the funds—Treasury yields are easy to find historically, so the provide a useful starting point. The use of derivatives should, somehow, show up in the SEC yields.My concern remains that even if you manage to buy and reinvest at the average NAV each interest rate cycle, when you go to sell your shares in the long hereafter, you will be selling for an average loss, so your total return will be less than the compounded average yield over your time of investing. Compounded average yield is what you get from laddering individual bonds (or CDs).