In a reopening, we issue additional amounts of previously issued securities rather than sell new issues of those securities. The reopened securities have the same maturity date and interest rate as the original securities; however, as compared to the original securities, the reopened securities have a different issue date (which creates a shorter overall term) and, usually, a different purchase price.

What is the schedule for reopenings?

Currently, we reopen these securities: 10-year fixed-principal note. Reopenings occur in March, June, September, and December. In each case, the reopening is for the 10-year fixed-principal note originally issued the previous month. 5-year TIPS. In April 2005 and October 2005, we will reopen the 5-year TIPS we issue in October 2004. 10-year TIPS. Reopenings occur in April and October for 10-year TIPS originally issued in January and July, respectively. 20-year TIPS. In January 2005 and July 2005, we will reopen the 20-year TIPS we issue in July 2004.

Will the term of a security at reopening be the same as the term at original issue?

No. The maturity date remains the same as at original issue, so the term of the reopened security will be equal to the term of the security at original issue minus the time between original issue and reopening.

How can I tell that a particular security is a reopening of a previously issued security?

The offering announcement, a press release that announces the upcoming auction of a security, shows the offering is a reopening. This is indicated on the line showing the "Term and type of security." Also, our Table of Treasury Securities shows our general schedule for reopenings.

Will the interest rate of a security at reopening be the same as the rate at original issue?

Yes.

How does the price of a reopened security compare to the price of the same security at original issue?

The price of the reopened security could be greater than, less than, or equal to the price at original issue. The price of the reopened security will be determined at an auction. Because the security is being auctioned at two separate times, market conditions probably won't be the same and, therefore, the prices likely won't be the same either.

If I buy a security at original issue and that security later is reopened, how does the reopening affect me?

It doesn't. The terms established at original issue remain in effect through the life of your security.

If the prices at original issue and the reopening are different, how does that affect the person who buys at the reopening?

It will affect him or her only if the price determined at the reopening exceeds the par value of the security; in that case, he will owe a premium. If he uses our convenient service called Pay Direct, we automatically will debit the security's price from the bank account the buyer designated when he chose Pay Direct. If he doesn't use Pay Direct, we will send the buyer a Payment Due Notice and he will pay us by check or money order.

Will the person who buys at reopening have to pay anything besides the purchase price and possibly a premium?

Sometimes when you buy a reopened security, you have to pay "accrued interest" -- the interest the security earned before we issued the security to you. If you have to pay accrued interest, we pay it back to you in your first semiannual interest payment. The offering announcement for each reopened security gives information about the accrued interest for that security.

Can I make accrued interest and premium payments through Pay Direct?

It depends. If you chose Pay Direct when you placed your bid for the security, yes, we automatically will deduct the proper amount from your account. On the other hand, if you didn't choose to pay through Pay Direct and you owe accrued interest or a premium, we will send you a Payment Due Notice showing what you owe, and you must pay by check or money order.

How much time do I have to submit the amount shown on the Payment Due Notice?

Payment is due when you receive the notice.

Why wasn't I informed that securities can be reopened and that investors who buy securites at reopening may have to pay accrued interest and premiums?

The offering announcement for each note we sell provides information on accrued interest, premium, and discount. Also, the back of the Reinvest Direct Notice addresses reopenings and explains that investors may have to pay accrued interest or a premium.

When I reinvest, what happens if the par amount of my maturing security isn't enough to cover the cost (including accrued interest and possibly a premium) of my new purchase?

You will receive: 1) a Statement of Account showing a reduction in the par amount, and 2) a Payment Due Notice requesting the amount due. When you pay the amount shown on your Payment Due Notice, you will receive another Statement of Account showing an increase in the par amount.

In terms of whether an investor will owe money or receive a refund payment, what are the different scenarios that can develop when he or she buys or reinvests into a reopened security?

Here are three examples of what can happen when an investor submits $10,000 for a reopened security: SCENARIO 1 At auction, the security's price is set at $96 per $100 and the accrued interest amounts to $15 per $1,000. For a $10,000 purchase, the price is $9,600 and the accrued interest is $150. The discount ($10,000 minus $9,600) is $400. The discount is greater than the accrued interest, so the owner receives a refund for the difference, which in this case is $250. SCENARIO 2 The price is $99 per $100 and the accrued interest is $15 per $1,000. For a $10,000 purchase, the price is $9,900 and accrued interest is $150. The discount ($10,000 minus $9,900) is $100. The accrued interest is greater than the discount, so the owner will owe the difference, $50. For Pay Direct customers, on issue day we will automatically deduct the total amount; for other customers, we will mail a Payment Due Notice for the additional $50. SCENARIO 3 The price is $105 per $100 and accrued interest is $15 per $1,000. For a $10,000 purchase, the price is $10,500 and accrued interest is $150. The cost of the security ($10,500) is greater than the par value of the security ($10,000), so the owner owes a premium of $500. The owner also must pay the accrued interest. All told, then, he will owe $650. For Pay Direct customers, on issue day we will automatically deduct the total amount; for other customers, we will mail a Payment Due Notice for the additional $650.