Those that mature between one and 10 years are called notes, and those with longer maturity dates are called bonds. Even though precious few advisers would recommend a portfolio made up entirely of Treasury bonds if you wanted, there really is no way for an individual to duplicate the trust funds' portfolios for two reasons. However, the interest rates on the special issue bonds are based on the average rate investors get on regular long-term bonds. This means the trust funds don't get more or less in interest than the investing public. Second, the value of these special issue bonds doesn't fluctuate with market interest rates and they don't gain or lose value when sold before their maturity dates.
Regular bonds see their value fall when interest rates go up and the rise when interest rates drop.
Investors can capitalize on those changes in value, but the trust funds can't. This year the trust funds are projected to earn average interest rates of 6.7 percent, with an annual yield of 6.8 percent. When you consider an estimated 3.1 percent growth in inflation in 2000, the real rate of return on the trust funds' investments is 3.7 percent. During the presidential campaign, a figure of 1 percent or 2 percent rate of return was mentioned frequently. The advisory council for the trust funds engaged in these mathematical gymnastics to produce a table listing several rates of return, most of which fell in the range of 2 percent to 3 percent.