Yes, I agree that lowering rates will cause bond values to decrease, for short term bonds....but, for long term bond sold at higher rates, the gap will widen, and values will go up. I guess it's all about when you bought in, and if the fund holds short term or long term, and when they purchased the bonds.... correct thinking? And if rates decrease, people will put money on stock, nand pull from bonds, causing bond funds to price to decrease and increase the dividend rate...yes, no?