up.date Social Responsibility Not only a question of honour... News for Investors. May 2004.

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2 up.date News for Investors. May Social Responsibility Not only a question of honour...

3 e.ditorial KFW INTERNET LINKS. Dear Reader, On May 17 we held our Annual Press Conference on the balance-sheet figures of the financial year As usual we want to inform you about all important facts and developments. To enable you to find background information on our topics easily and quickly we have compiled links to our website in a table. You can order printed copies of the individual publications such as the current Annual Report. The list also covers the topics dealt with in the following articles and tables. We are frequently asked in which way KfW deliberately supports the environment and social issues. Traditionally, environmental and climate protection has been one focus of KfW s work. But in the social field we also have a lot to offer. The following article entitled Social Responsibility gives a brief overview of our efforts to harmonise economic, ecological and social objectives. Topic 2003 Annual Report Press release on the Annual Press Conference Speech by the Chairman of the Board of Managing Directors Hans W. Reich on the occasion of the Annual Press Conference Internet Link All about the KfW group News Press Press Conferences Printed Version In the first four months of the year we raised funds equivalent to EUR 24.1 billion in the capital markets. This represents almost half of the total volume of EUR 50 to 55 billion planned for the year as a whole. In 2004 so far, we have issued bonds and notes in 14 different currencies, among them for the first time Hungarian forint and Singapore dollars. On the statistics page you will find a list of all borrowed funds broken down by currencies and instruments. In our funding in British pounds (GBP) we have seen a very positive development since the beginning of the year. With an issuance volume equivalent to approximately EUR 2.5 billion in the first four months of 2004 we have clearly exceeded the total volume raised in the same period last year. So we take this as an occasion to present the GBP bond curve of KfW with volumes raised and maturities. I hope that this edition of update, too, will offer you interesting news and facts about our activities. Gerhard Lewark Treasurer of KfW Financing Programmes 2003 Environmental Report of KfW Carbon Fund Development Cooperation The new SEC Report (18K) for the annual registration of KfW in the United States Current list of KfW bonds and notes listed and traded on the Frankfurt and Luxembourg Stock Exchanges English English All about the KfW group Socially Responsible Investors KfW Carbon Fund English Publications Annual Reports Prospectuses for KfW s securities Listed securities 2002 Report on the Cooperation with Developing Countries may be requested under (2003 Report will be published end of June): Investor

4 Social Responsibility Not only a question of honour... Key words, for which you may find internet links in the above table, have been underlined! Companies are frequently questioned about the ethical principles by which they are governed. KfW Bankengruppe is no exception to this. But it needs not fear comparison. On the contrary, both as a promotional bank and as an employer KfW already meets very strict criteria. Priority areas of environmental protection and environmental compatibility in the lending business. KfW Bankengruppe can look back on a long tradition in the promotion of environmental projects and investments. This is particularly reflected in the domestic lending programmes. But in the fields of export and project finance and in the cooperation with developing countries, too, KfW Bankengruppe has permanently increased the volume of funds provided for environmental projects in the last few years. In the year 2002, KfW Bankengruppe supported projects pursuing environmental objectives with a total volume of EUR 5.8 billion (not including DEG). With its programmes and projects KfW Bankengruppe actively supports the environmental policy of the German federal government and the European Union. Every project financing, especially in countries outside of the OECD, is subject to a comprehensive environmental impact assessment. For this purpose, KfW Bankengruppe has developed its own detailed guidelines, which cover and assess all foreseeable environmental effects of a project. It makes sure that all legal and official requirements are met and, if possible, goes even further than that. Promising environmental technologies are being promoted in demonstration projects. The focus of the business activities of KfW Bankengruppe is on the promotion of renewable energies. In all business areas, for instance export and project finance, Financial Cooperation with developing countries and investment finance in Germany and Europe, KfW Bankengruppe successfully offers ways and means to promote climate protection. In this way KfW Bankengruppe makes an important contribution to the sustainable development in Germany and abroad. These activities are documented in the Environmental Report, which is published every three years. KfW Bankengruppe works very closely together with the German federal government and other government bodies and, in accordance with the UNEP Statement (United Nations Environment Programme), discloses the results of its environmental activities on a regular basis. The UNEP Statement is a voluntary undertaking by financial institutions on the environment and sustainable development. Environmental protection in practice KfW Bankengruppe as a pacesetter. The declared objective of KfW Bankengruppe in its business operations is to exceed the statutory environmental standards and do even better. One example is the Ostarkade (Eastern Arcade), the new building at our Frankfurt headquarters, where the latest environmental technology was used, especially to reduce energy and water consumption and to create an environmentally friendly room climate. KfW Bankengruppe is currently working on the development of a Carbon Fund, which is based on the regulations laid down in the Kyoto Protocol for the reduction of global CO2 emissions. From 2005 the Carbon Fund will trade in CO2 emission credit certificates, acting on behalf of the companies involved. Especially smaller enterprises, which cannot build on their own know-how in this area, will benefit. KfW Bankengruppe, which can draw on decades of experience in the field of environmental protection and has been committed also in financial terms, can make a positive contribution here. The establishment of the Carbon Fund is implemented in close cooperation with the competent government departments. KfW Bankengruppe and the Federal Republic of Germany each hold a 50% stake in Deutsche Energie-Agentur ( dena ). KfW Bankengruppe actively participates in the ongoing work, which aims at increasing the efficiency of energy consumed and expanding the use of regenerative energies in Germany. Social aspects of lending. Supporting the aim of sustainable development increasingly has to take social objectives into account. In its domestic financing business KfW Bankengruppe offers several programmes in this respect, for instance the Programme for the Promotion of Home Ownership for Young Families, loans in the field of education ( Meister-Bafög, which offers financial assistance for master craftsmen trainees) and the promotion of structurally weak regions. In addition, there are many projects in the field of development cooperation, which aim specifically at improving the living conditions of the population in the developing countries. This includes projects in the field of drinking water supply and medical care, waste disposal, education and the promotion of women and children in disadvantaged regions. And what about social aspects inside KfW Bankengruppe? The Gemeinnützige Hertie-Stiftung (Hertie Charitable Foundation) developed the Beruf & Familie (Occupation and a Family) audit, which pursues the aim of promoting a family-conscious staff policy. In 2001 KfW Bankengruppe expressly committed itself to this goal and was awarded the basic certificate in May Since then an active policy of flexibilisation has been pursued with regard to working time, working place and staff development. The KfW Compass contains a list of social objectives, comprising aspects such a fair play and in-house communication. It gives an insight into KfW and serves as a corporate model for the approximately 3,600 staff of KfW Bankengruppe. At the beginning of 2004 KfW expanded its investor relations presence in the internet to comprise a separate section entitled Socially Responsible Investors. The information presented in this section covers ecological and economic aspects and is continuously updated with current facts.

5 Volume issued in 2004, by currencies (value date) Currency In mio EUR In % EUR USD GBP JPY AUD CHF SGD CAD NZD HUF HKD NOK SEK ZAR Total Volume issued in 2004, by instruments (value date) In mio EUR In % Transactions Bonds Private Placements Public Bonds Benchmarks Bonds Targeted Transactions Loans Schuldscheindarlehen CLS (Securitization) Total KfW Sterling Bonds Volume and Maturity Structure as per Volume 2004 in million GBP 2004 Volume Per 2004 Volume Dec 04 Jun 06 Dec 06 Dec 08 Dec 10 Dec 15. Aug 17 Jun 21 Jun 25 Dec 28 Jun 32 Jun 36 Maturity

6 WSTICKER FROM THE NEWSTICKER FROM THE NEWSTICKER FR DYNAMIC DEVELOPMENT OF THE FINANCING VOLUME. In the first quarter of 2004 KfW committed altogether EUR 9.7 billion to support investments in the German and European economies. This was an increase of 17% over the volume committed in the same period last year. KFW MITTELSTANDSBANK (KFW SME BANK). From January to March 2004 KfW Mittelstandsbank made new commitments of EUR 2.6 billion. This is a decrease of approximately 10% against the same period last year, which is mainly due to lower commitments for global loans and a lower number of securitisation transactions. UNTERNEHMERKAPITAL - NEW MEZZANINE PRODUCT FAMILY LAUNCHED. On March 1, 2004, KfW Mittelstandsbank launched the new mezzanine product family Unternehmerkapital (entrepreneur capital). Under this programme, KfW Mittelstandsbank for the first time offers comprehensive and standardized subordinated financing to business start-ups, young companies, but also to established SMEs and self-employed professionals. The economic effect of mezzanine capital in the form of subordinated loans is similar to that of equity capital and improves the financing structure of German SMEs. KFW FÖRDERBANK (KFW PROMOTIONAL BANK). KfW Förderbank focuses on investments in environmental and climate protection, the promotion of owner-occupied housing and housing modernisation, investments in municipal infrastructure and education. The volume of promotion of KfW Förderbank in the first three months of this year was EUR 7.1 billion, which is EUR 1.9 billion less than in the same period last year. PROMOTION OF CLIMATE PROTECTION IN THE HOUSING SECTOR CLEARLY EXTENDED. In the first quarter of 2004 KfW Förderbank committed almost EUR 3 billion to promote owner-occupied housing, the modernisation and repair of housing and the reduction in CO2 emissions from residential buildings. KER FROM THE NEWSTICKER FROM THE NEWSTICKER FROM

7 OM THE KfW Bankengruppe Palmengartenstraße 5-9, Frankfurt am Main Phone , Fax Investor Relations Horst Seissinger Phone , Fax Presseinfo Kapitalmarkt: Nathalie Drücke Phone , Fax WHAT OUR BONDS STAND FOR. Quality Liquidity Performance März Transparency E