Subordinated Notes

Subordinated Notes (Subordinated Deferrable Interest Notes) are a retail security which may be purchased through a broker and are issued at a $25 par value with maturities of up to 40 years. They currently trade in the secondary market at prices that may be above or below par value. CFC has three issues outstanding, which are traded on the New York Stock Exchange under the symbols NRN, NRC, and NRU.

Interest earned on Subordinated Notes investments is paid quarterly. The securities are subordinated to National Rural's senior debt and provide an interest rate deferral option to National Rural for five years.

Current Subordinated Notes Issuances

¹Since National Rural Utilities Cooperative Finance Corporation ("National Rural") is a well-known seasoned issuer with the Securities and Exchange Commission ("SEC"), Securities Offering Reform issued by the SEC in July 2005 allows National Rural to file a shelf with the SEC with an indeterminate amount of Subordinated Debt Securities being registered as may from time to time be sold at indeterminate prices. National Rural may only issue Subordinated Debt Securities up to the amount authorized and approved by the Board of Directors.

The issuer has filed a registration statement (including a prospectus) with the SEC for the offering to which this communication relates. Before you invest, you should read the prospectus and other documents NRUCFC has filed with the SEC for more complete information about the issuer and this offering. You can get a free copy of documents by visiting www.nrucfc.coop or at www.sec.gov.