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The interest rate on an adjustable rate mortgage is calculated by adding the margin to the index the loan was based on.
For example, if you have a 5% rate fixed for the first 2 years. Lets assume your loan was based on the LIBOR index which is around 1.8% currently and you have a margin of 2.75%. The maximum that loan can be upon adjustment would be 4.55%(1.8% LIBOR+2.75% margin).
In most cases page 2, section D of the Adjustable Rate RIDER will say the rate can not go below a certain rate, that is usually the rate it starts at. As you mentioned, that is not an issue in your case as it has gone down.
After the first adjustment there is another section of the RIDER that indicates how often the rate will be recalculated, the margin is constant but if the LIBOR goes up or down, so may your rate.
What would cause my arm to go down again. It went down 1% about a year ago.