Treasury Inflation Protected Securities (TIPS)

The principal amount of TIPS are adjusted for changes in the level of inflation. Every six months the Treasury pays interest based on a fixed rate of interest determined at auction. Semiannual interest payments are determined by multiplying the inflation-adjusted principal amount by one-half the stated rate of interest on each interest payment date. TIPS are issued with 5-year, 10-year, and 20-year maturities.