Question: You don't have the option to "hold it till maturity", so you are invariably exposed to interest rate risk, and as a consequence, you will probably gain or lose on your principal in the end. Isn't it better to invest in individual bonds, where if things go sour with the interest rate, you can hold them till maturity and recover your full principal?

Answer: 
According to the U.S. Bureau of Engraving and Printing, if you have clearly more than one-half of the current bill remaining, you should be able to take it to your bank and exchange it. But if for some reason your bank will not take it, you can submit it to Bureau of Engraving and Printing Office of Currency Standards.

Question asked on <https://www.moneyfactory.gov/resources/faqs.html>

> 
> **I have some currency that was damaged. My bank will not exchange it for undamaged currency. What can I do?** The Bureau of Engraving and
> Printing's Office of Currency Standards processes all requests for
> reimbursement for damaged United States currency. They decide the
> redemption value of torn or otherwise unfit currency by measuring the
> portions of the notes submitted. Generally, they reimburse the full
> face value if clearly more than one-half of the original note remains.
> Currency fragments measuring less than one-half are not redeemable. Go
> to the [Damaged Money section of our website](https://www.moneyfactory.gov/services/currencyredemption.html) for additional information
> and the procedures to redeem mutilated currency.
> 
> 
> 

However take notice of this:

> 
> Any badly soiled, dirty, defaced, disintegrated, limp, torn, worn, out
> currency note that is CLEARLY MORE than one-half of the original note,
> and does not require special examination to determine its value. These
> notes should be exchanged through your local bank.
> 
> 
>
There is usually contact information for the owner of the machine printed somewhere on it. Call that number. If it is in a business you could always try the clerk. 

Whether you get your money back is up to that person, I suppose.