National Savings and Investments

2-YEAR FIXED INTEREST NATIONAL SAVINGS CERTIFICATES—NEW ISSUE

26th Issue 2-year Fixed Interest Savings Certificates went on sale on 20 May 2004. A Certificate will grow in value at a guaranteed rate each year as follows: Year 1        3.15% Year 2        3.36% If a Certificate is held for two years, these rates will give a tax-free and guaranteed return equal to 3.25% pa compound.

5-YEAR FIXED INTEREST NATIONAL SAVINGS CERTIFICATES—NEW ISSUE

76th Issue 5-year Fixed Interest Savings Certificates went on sale on 20 May 2004. A Certificate will grow in value at a guaranteed rate each year as follows: Year 1        3.05% Year 2        3.15% Year 3        3.35% Year 4        3.65% Year 5        4.06% If a Certificate is held for five years, these rates will give a tax-free and guaranteed return equal to 3.45% pa compound.

3-YEAR INDEX-LINKED NATIONAL SAVINGS CERTIFICATES—NEW ISSUE

7th Issue 3-year Index-linked Interest Savings Certificates went on sale on 20 May 2004. The value of a Certificate will move in line with the rate of inflation as measured by the Retail Prices Index (subject to the detailed rules set out in the terms and conditions), plus extra interest as follows:

Purchase price	+ Index-linking    for year 1	+ 0.80% of    Purchase price	= 1st    Anniversary    Value
1st Anniversary Value	+ Index-linking    for year 2	+ 1.00% of 1st    Anniversary Value	= 2nd    Anniversary    Value
2nd Anniversary Value	+ Index-linking    for year 3	+ 1.36% of 1st    Anniversary Value	= Maturity    Value

If a Certificate is held for three years, these rates will give a tax-free and guaranteed return equal to 1.05% pa compound in addition to index-linking.

5-YEAR INDEX-LINKED NATIONAL SAVINGS CERTIFICATES—NEW ISSUE

34th Issue 5-year Index-linked Interest Savings Certificates went on sale on 20 May 2004. The value of a Certificate will move in line with the rate of inflation as measured by the Retail Prices Index (subject to the detailed rules set out in the terms and conditions), plus extra interest as follows:

Purchase price	+ Index-linking    for year 1	+ 0.80% of    Purchase price	= 1st    Anniversary    Value
1st Anniversary Value	+ Index-linking    for year 2	+ 1.00% of 1st    Anniversary Value	= 2nd    Anniversary    Value
2nd Anniversary Value	+ Index-linking    for year 3	+ 1.20% of 2nd    Anniversary Value	= 3rd    Anniversary    Value
3rd Anniversary Value	+ Index-linking    for year 4	+ 1.40% of 3rd    Anniversary Value	= 4th    Anniversary    Value
4th Anniversary Value	+ Index-linking    for year 5	+ 1.61% of 4th    Anniversary Value	= Maturity    Value

If a Certificate is held for five years, these rates will give a tax-free and guaranteed return equal to 1.20% pa compound in addition to index-linking.

NATIONAL SAVINGS AND INVESTMENTS CAPITAL BONDS—NEW SERIES

Series 18 Capital Bonds went on sale on 20 May 2004. A Bond will grow in value at a guaranteed gross rate each year as follows: Year 1        4.20% Year 2        4.50% Year 3        4.80% Year 4        5.10% Year 5        5.41% If a Bond is held for five years, these rates will give a guaranteed return equal to 4.80% pa compound. The interest is credited gross and is taxable.

NATIONAL SAVINGS AND INVESTMENTS CHILDREN’S BONUS BONDS—NEW ISSUE

Issue 14 Children’s Bonus Bonds went on sale on 20 May 2004. For the first five years each £25 unit will earn interest at 3.00% pa compound. On the fifth anniversary of purchase it also earns a bonus of £2.18 (8.72% of purchase price). At these rates a Bond will earn a tax-free return equal to 4.50% pa compound over the first five years.