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OFFERING CIRCULAR

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Universal Debt Facility
Debt Securities with maturities of one day or longer

We, the Federal National Mortgage Association, or Fannie Mae, may issue an unlimited amount of Debt Securities from time to time under our Universal Debt Facility. We will designate some Debt Securities as Benchmark Securities(SM), which are U.S. dollar denominated, regularly scheduled issues in large principal amounts. Our current Benchmark Securities are:


We may issue other Debt Securities, denominated in U.S. dollars or other currencies, with maturities of one day or longer. The Debt Securities will have various terms, as described in this Offering Circular and any applicable pricing supplement. These Debt Securities will be:


The Debt Securities, together with interest thereon, are not guaranteed by the United States and do not constitute a debt or obligation of the United States or of any agency or instrumentality thereof other than Fannie Mae.

An investment in Debt Securities may involve risks for some investors. It is important that you read the "Risk Factors" section beginning on page 7.

We may sell Debt Securities to or through one or more Dealers as principal or otherwise, or directly to investors. We cannot assure you that there will be a secondary market for the Debt Securities or how liquid the market will be if one develops.

We have made an application to list Debt Securities issued under this Universal Debt Facility through December 21, 2000 on the Luxembourg Stock Exchange. We also may issue unlisted Debt Securities and Debt Securities listed on other stock exchanges.

This Offering Circular applies to Debt Securities settling upon original issuance on or after January 3, 2000.

The date of this Offering Circular is December 21, 1999.

"Benchmark Securities", "Benchmark Bills", "Benchmark Notes", "Callable Benchmark Notes" and "Benchmark Bonds" are service marks of Fannie Mae.

Stabilization

In connection with any issue of Debt Securities, a Dealer identified as stabilizing manager in the applicable Pricing Supplement may, subject to applicable laws and regulations, overallot or effect transactions which stabilize or maintain the market price of the Debt Securities of such issue at a level above that which might otherwise prevail in the open market. Such transactions may be effected on any exchange on which the Debt Securities may be listed, in an over-the-counter market or otherwise. Such stabilization, if commenced, may be discontinued at any time.

Selling Restrictions

We are not required to register the Debt Securities under the U.S. Securities Act of 1933, as amended. Accordingly, we have not filed a registration statement with the U.S. Securities and Exchange Commission. The Debt Securities are "exempted securities" within the meaning of the Securities Exchange Act of 1934, as amended. Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved these Debt Securities or determined if this Offering Circular, any Pricing Supplement or any other supplement or amendment is truthful or complete. Any representation to the contrary is a criminal offense.

We may not distribute this Offering Circular, any Pricing Supplement or any other supplement in the United Kingdom to any person unless that person is of a kind described in Article 11(3) of the Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996, as amended, or is a person to whom we may otherwise lawfully issue or distribute this Offering Circular, any Pricing Supplement or any other supplement. We have not registered the Debt Securities under the Securities and Exchange Law of Japan, and we may not make offers and sales, direct or indirect, of Debt Securities in Japan or to any resident of Japan or to any person for reoffering or resale, directly or indirectly, in Japan or to any resident of Japan except in compliance with, or pursuant to an exemption from, the registration requirements of the Securities and Exchange Law available thereunder and in compliance with other relevant laws of Japan. For a further description of restrictions on offers, sales and deliveries of the Debt Securities and on the distribution of this Offering Circular, any Pricing Supplement or any other supplement hereto, see "Plan of Distribution— Selling Restrictions" and Appendix D.

The distribution of this Offering Circular, any Pricing Supplement or any other supplement and the offer, sale, and delivery of Debt Securities in certain jurisdictions may be restricted by law. Persons who come into possession of this Offering Circular, any Pricing Supplement or any other supplement must inform themselves about and observe any applicable restrictions.

This Offering Circular, any Pricing Supplement or any other supplement is not an offer to sell or a solicitation of an offer to buy any securities other than the Debt Securities or an offer to sell or a solicitation of an offer to buy Debt Securities in any jurisdiction or in any other circumstance in which an offer or solicitation is unlawful or not authorized.

Pricing Supplements Relating to Specific Debt Securities

When we offer Debt Securities other than Benchmark Bills or Short-Term Notes, we will provide you with a Pricing Supplement describing the terms of the specific issue of Debt Securities, including the offering price. The Pricing Supplement also may amend or supplement this Offering Circular with respect to a specific issue of Debt Securities. You should read the Pricing Supplement and any other applicable supplement together with this Offering Circular.

TABLE OF CONTENTS
Page
Summary 3
Risk Factors 7
Description of the Debt Securities 11
Clearance and Settlement 30
United States Taxation 33
Plan of Distribution 45
Validity of the Debt Securities 48
General Information 48
Fannie Mae 49
Use of Proceeds 49
Capitalization 50
Additional Information About Fannie Mae 51
Appendix A: Benchmark Securities A-1
Appendix B: Benchmark Bills and Short-Term Notes B-1
Appendix C: Index Descriptions C-1
Appendix D: Selling Restrictions D-1
Appendix E: Redenomination to the Euro E-1
Appendix F: Location of Defined Terms* F-1
Appendix G: Targeted Registered Debt Securities G-1

* We use capitalized terms in this Offering Circular. See Appendix F for the page locations of the definitions of the principal capitalized terms.

TABLE OF CONTENTS

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SUMMARY

This summary highlights information contained elsewhere in this Offering Circular, including in the Appendices. It does not contain all of the information you should consider before investing in the Debt Securities. You also should read the more detailed information in this Offering Circular and any applicable supplement, including any Pricing Supplement for a particular issue of Debt Securities. This Offering Circular sets forth the general terms of the Debt Securities; the applicable Pricing Supplement will describe the particular terms of any issue of Debt Securities (other than Benchmark Bills and Short-Term Notes), and the extent, if any, that any of the general terms will not apply to particular Debt Securities. You should read Appendix B for more specific information regarding Benchmark Bills and Short-Term Notes.

Fannie Mae

Fannie Mae is a federally chartered and stockholder-owned corporation organized and existing under the Federal National Mortgage Association Charter Act. We are the largest investor in home mortgage loans in the United States. We were established in 1938 as a United States government agency to provide supplemental liquidity to the mortgage market and were transformed into a stockholder-owned and privately managed corporation by legislation enacted in 1968.

Description of the Debt Securities

Issuer................... Fannie Mae
Debt Securities Offered:

Benchmark Securities........ We plan to issue Benchmark Securities, which are U.S. dollar denominated, regularly scheduled issues in large principal amounts, in the form of Benchmark Bills, Benchmark Notes, Callable Benchmark Notes and/or Benchmark Bonds. Issuances may consist of new issues of Benchmark Securities or the "reopening" of an existing issue.
Other Debt Securities....... We plan to issue other Debt Securities from time to time denominated in U.S. dollars or other currencies with maturities of one day or longer. We will issue these Debt Securities as Short-Term Notes, Notes or Bonds.
Pricing Supplement.......... We will describe in a Pricing Supplement specific terms, pricing information and other information for each issue of Debt Securities other than Benchmark Bills or Short-Term Notes.
Amount...................... We may issue an unlimited amount of Debt Securities.
Specified Currencies........ Debt Securities may be denominated in, and principal and interest on Debt Securities may be paid in, U.S. dollars and other currencies or currency units that we determine. Government or monetary authorities may require that debt securities denominated in certain currencies or currency units have certain denominations or have minimum or maximum maturities.
Denomination................ We will issue U.S. dollar denominated Debt Securities in minimum denominations of U.S. $1,000 and additional increments of U.S. $1,000. We will issue non-U.S. dollar denominated Short-Term Notes in the denominations listed in Appendix B. The applicable Pricing Supplement will indicate the denominations for other non-U.S. dollar denominated Debt Securities.
Principal Amount............ The principal amount payable at maturity may be a fixed amount, which may be par or a specified amount above or below par. The principal amount payable at maturity also may be a variable amount determined by reference to one or more indices, such as interest or exchange rate indices, or other formulas. The principal may be amortized through periodic payments during the term of the Debt Securities.
Interest.................... Debt Securities may bear interest at fixed or variable rates (or a combination of fixed and variable rates), or may bear interest that is indexed by reference to an interest or currency exchange rate or in some other manner, or may not bear interest.
Offering Price.............. Debt Securities will be offered at fixed prices equal to par, or a discount to or premium over par, or at varying prices relating to prevailing market prices at the time of resale as determined by the applicable Dealer.
No Acceleration Rights...... The Debt Securities will not contain any provisions permitting the Holders to accelerate the maturity of the Debt Securities if a default or other event occurs.
Form........................ We will issue most Debt Securities in book-entry form either through the U.S. Federal Reserve Banks or through another depository. Except in the limited circumstances described in this Offering Circular, we will not issue Debt Securities in definitive form.
Eligibility for Stripping... The Pricing Supplement will indicate whether Fed Book-Entry Securities will be eligible to be separated ("stripped") into their separate interest and principal components on the book—entry records of the Federal Reserve Bank of New York.
Status...................... The Debt Securities will be unsecured general obligations of Fannie Mae issued under Section 304(b) of the Charter Act. The Debt Securities, together with interest thereon, are not guaranteed by the United States and do not constitute a debt or obligation of the United States or of any agency or instrumentality thereof other than Fannie Mae.
Redemption.................. The Pricing Supplement for a particular issue of Debt Securities will specify whether the Debt Securities are subject to mandatory or optional redemption, in whole or in part, prior to maturity and, if redeemable, will describe terms applicable to the redemption. Benchmark Bills and Short-Term Notes will not be redeemable.
Governing Law............... Fed Book-Entry Securities (including rights and obligations) will be governed by, and construed in accordance with, regulations adopted by the U.S. Department of Housing and Urban Development or any other U.S. governmental body or agency that are applicable to the Fed Book-Entry Securities, and, to the extent that these regulations do not apply, the laws of the State of New York, U.S.A. Global Book-Entry Securities will be governed by, and construed in accordance with, the laws of the State of New York, U.S.A.
Tax Status.................. The Debt Securities and payments thereon generally are subject to taxation by the United States and generally are not exempt from taxation by other U.S. or non-U.S. taxing jurisdictions. Non-U.S. Persons generally will be subject to U.S. income and withholding tax unless they provide required certifications or statements.
Listing..................... The Pricing Supplement relating to each issue of Debt Securities will indicate the exchange, if any, on which we will list the Debt Securities. We have made an application for certain Debt Securities issued under this Universal Debt Facility to be listed on the Luxembourg Stock Exchange. The current minimum maturity for Debt Securities listed on the Luxembourg Stock Exchange is seven days. We also may issue unlisted Debt Securities, and Debt Securities listed on other or additional exchanges. We do not intend to list Benchmark Bills or Short- Term Notes on any exchange.

Clearance and Settlement

Clearance and
Settlement..................
Depending on the terms of an issue of Debt Securities and where those Debt Securities are to be offered, Debt Securities may clear and settle through one or more of the following:
  • the U.S. Federal Reserve Banks
  • DTC
  • Euroclear
  • Cedelbank
  • other designated clearing systems

We expect most issues of Debt Securities denominated and payable in U.S. dollars, including all Benchmark Securities, to clear and settle through the Fed Book-Entry System. These Debt Securities generally may be held indirectly through other clearing systems, such as the systems operated by Euroclear and Cedelbank.
We expect issues of Debt Securities denominated or payable in a Specified Currency other than U.S. dollars (and Debt Securities denominated and payable in U.S. dollars not cleared and settled through the Fed Book-Entry System) to clear and settle through the systems operated by DTC, and indirectly through Euroclear and Cedelbank. We expect issues of Debt Securities distributed solely outside of the United States to clear and settle through the systems operated by Euroclear, Cedelbank or other designated clearing systems and, in some cases, DTC, irrespective of the Specified Currency in which the Debt Securities are denominated or payable.

Fiscal and Global Agents

Fiscal Agents............ The Federal Reserve Bank of New York will act as fiscal agent for Benchmark Bills and for Short-Term Notes that are Fed Book-Entry Securities. The U.S. Federal Reserve Banks will act as fiscal agent for other Fed Book-Entry Securities.
Global Agent................ The Chase Manhattan Bank will act as global agent for Global Book-Entry Securities.

Distribution of Debt Securities

Dealers.................. The current Dealers under this Universal Debt Facility are named under "Plan of Distribution—Dealers." We may add other securities dealers or banks from time to time in connection with the distribution of the Debt Securities or a particular issue of Debt Securities.
Method of Distribution...... We generally will sell Debt Securities to Dealers acting as principal, whether individually or in a syndicate, for resale to investors either at a fixed price or at varying prices determined by the Dealers. Alternatively, Debt Securities may be sold through Dealers on a non-underwritten basis, or may be sold by us directly to investors.
Selling Restrictions........ Restrictions exist in certain jurisdictions on the Dealers' offer, sale and delivery of Debt Securities and the distribution of offering materials relating to the Debt Securities.
Secondary Market
Information.................
Dealers have agreed to provide, for Benchmark Securities, indicative pricing information for posting on a designated screen page.

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RISK FACTORS

This section describes the principal risks with respect to the Debt Securities. There may be other risks not discussed below that you should consider. These risks depend on a number of factors, including financial, economic and political events, that are beyond our control.

Not Every Debt Security is a Suitable Investment for Every Investor

As a potential investor in the Debt Securities, you must determine the suitability of that investment in light of your own circumstances.


Some Debt Securities are complex financial instruments. Sophisticated institutional investors generally do not purchase complex Debt Securities as stand-alone investments. They purchase complex Debt Securities as a way to reduce risk or enhance yield with an understood, measured, appropriate addition of risk to their overall portfolios. You should not invest in complex Debt Securities unless you have the expertise (either alone or with a financial advisor) to evaluate how the Debt Securities will perform under changing conditions, the resulting effects on their value and the impact this investment will have on your overall investment portfolio.

Risks Related to the Structure of a Particular Issue of Debt Securities

Debt Securities Subject to Optional Redemption by Fannie Mae

An optional redemption feature of Debt Securities is likely to limit their market value. During any period when we may elect to redeem Debt Securities, the Debt Securities' market value generally will not rise substantially above the price at which we can redeem the Debt Securities. This also may be true prior to any redemption period.

We may be expected to redeem Debt Securities when our cost of borrowing is lower than the interest rate on the Debt Securities. At those times, you generally would not be able to reinvest the redemption proceeds at an effective interest rate as high as the interest rate on the Debt Securities being redeemed. The reinvestment may be at a significantly lower rate. You should consider reinvestment risk in light of other investments available at that time.

Debt Securities with Principal or Interest Linked to an Index or Formula

We may issue Debt Securities with principal or interest determined by reference to one or more interest rate indices, currencies or currency units or other indices or formulas (each, an "Applicable Index"). You should be aware that:


Risks Related to Market, Liquidity and Yield

The Secondary Market Generally

Debt Securities may have no established trading market when issued, and one may never develop. If a market does develop, it may not be very liquid. Therefore, you may not be able to sell your Debt Securities easily or at prices that will provide you with a yield comparable to similar investments that have a developed secondary market. This is particularly the case for Debt Securities that are especially sensitive to interest rate, currency or market risks, are designed for specific investment objectives or strategies or have been structured to meet the investment requirements of limited categories of investors. These types of Debt Securities generally would have a more limited secondary market and more price volatility than conventional debt securities. Illiquidity may have a severely adverse effect on the market value of Debt Securities.

Variable Rate Securities with a Multiplier or Other Leverage Factor

Variable Rate Securities can be volatile investments. If they are structured to include multipliers or other leverage factors, or caps or floors, or any combination of those features, their market values may be even more volatile than comparable securities that do not include those features.

Inverse Variable Rate Securities

Inverse Variable Rate Securities have an interest rate equal to a fixed rate minus a rate based upon an Applicable Index. The market values of inverse Variable Rate Securities typically are more volatile than market values of our conventional variable rate debt securities based on the same Applicable Index (and with otherwise comparable terms). Inverse Variable Rate Securities are more volatile because an increase in the Applicable Index not only decreases the interest rate of the Debt Security, but also reflects an increase in prevailing interest rates, which further adversely affects the market value of these Debt Securities.

Fixed/Variable Rate Securities

Fixed/Variable Rate Securities may bear interest at a rate that we may elect to convert from a fixed rate to a variable rate, or from a variable rate to a fixed rate. Our ability to convert the interest rate will affect the secondary market and the market value of the Debt Securities since we may be expected to convert the rate when it is likely to produce a lower overall cost of borrowing. If we convert from a fixed rate to a variable rate, the Spread on the fixed/variable rate securities may be less favorable than then prevailing spreads on our comparable variable rate debt securities tied to the same Applicable Index. In addition, the new variable rate at any time may be lower than the rates on other Debt Securities. If we convert from a variable rate to a fixed rate, the fixed rate may be lower than then prevailing rates on our Debt Securities.

Debt Securities Eligible for Stripping

Some issues of Fixed Rate Securities and Step Rate Securities will be eligible to be separated ("stripped") into Interest Components and Principal Components. The secondary market, if any, for the Components may be more limited and have less liquidity than the secondary market for Debt Securities of the same issue that have not been stripped. The liquidity of an issue of Debt Securities also may be reduced if a significant portion of the Debt Securities are stripped. See "Description of the Debt Securities—Eligibility for Stripping of Fed Book-Entry Securities" for more information on stripping.

Debt Securities Issued at a Substantial Discount or Premium

The market values of securities issued at a substantial discount or premium from their principal amount tend to fluctuate more in relation to general changes in interest rates than do prices for conventional interest-bearing securities. Generally, the longer the remaining term of the securities, the greater the price volatility as compared to conventional interest-bearing securities with comparable maturities. The market values of Benchmark Bills, Short-Term Notes, Zero-Coupon Securities, Interest Components and some Principal Components would be expected to behave this way.

Exchange Rate Risks and Exchange Controls

As mentioned above, principal of or interest on Debt Securities may be determined by reference to one or more currencies or currency units (including exchange rates and swap indices between currencies or currency units). Government and monetary authorities may impose (as some have done in the past) exchange controls that could adversely affect an applicable exchange rate. As a result, you may receive less interest or principal than you expected, or no interest or principal.

We will pay principal and interest on the Debt Securities in the Specified Payment Currency. See "Description of the Debt Securities—Specified Currencies and Specified Payment Currencies." This presents certain risks relating to currency conversions if your financial activities are denominated principally in a currency or currency unit ("Your Currency") other than the Specified Payment Currency. These include the risk that exchange rates may significantly change (including changes due to devaluation of the Specified Payment Currency or revaluation of Your Currency) and the risk that authorities with jurisdiction over Your Currency may impose or modify exchange controls. An appreciation in the value of Your Currency relative to the Specified Payment Currency would decrease (1) Your Currency-equivalent yield on the Debt Security, (2) Your Currency-equivalent value of the principal payable on the Debt Security, and (3) Your Currency-equivalent market value of the Debt Security.

As mentioned above, government or monetary authorities may impose exchange controls that could adversely affect an applicable exchange rate. Even if there are no actual exchange controls, it is possible that the Specified Payment Currency for a particular Debt Security may no longer be used by the government issuing the Specified Payment Currency or used for settlement of transactions by public institutions of or within the international banking community, or that the Specified Payment Currency may not be available for any other reason when payments on the Debt Security are due. If the government that previously issued the Specified Payment Currency has issued a new legal currency, we will make payments in that new legal currency. If there is no new legal currency or the Specified Payment Currency is unavailable due to circumstances beyond our control (such as exchange controls), we will make payments in U.S. dollars.

Legal Investment Considerations

The investment activities of certain investors are subject to legal investment laws and regulations, or review or regulation by certain authorities. You should consult your legal advisors to determine whether and to what extent (1) Debt Securities are legal investments for you, (2) Debt Securities can be used as collateral for various types of borrowing and (3) other restrictions apply to your purchase or pledge of any Debt Security. Financial institutions should consult their legal advisors or the appropriate regulators to determine the appropriate treatment of Debt Securities under any applicable risk-based capital or similar rules.

If you are subject to the jurisdiction of any of the following agencies of the United States or a governmental agency of the United States or any jurisdiction outside the United States with similar authority (for example, central banks), you should review and consider that regulator's rules, guidelines, regulations and policy statements prior to purchasing or pledging Debt Securities:


Credit Ratings

One or more independent credit rating agencies may assign credit ratings to Debt Securities. The ratings may not reflect the potential impact of all risks related to structure, market, additional factors discussed above, and other factors that may affect the value of the Debt Securities.

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DESCRIPTION OF THE DEBT SECURITIES

The description set forth below contains general provisions that apply to all Debt Securities, except as otherwise specified in this Offering Circular or a supplement to it. You should read Appendix B for a detailed description of Benchmark Bills and Short-Term Notes, in particular for those provisions that, as noted below, differ from the following provisions. Benchmark Securities also are discussed in Appendix A.

General

We may issue an unlimited amount of Debt Securities from time to time under the Universal Debt Facility. The Debt Securities may be issued as:



We will sell Debt Securities in one or more issues consisting of Debt Securities having (as applicable) the same interest rate or formula, Interest Payment Dates, Maturity Date, redemption provisions, amortization provisions, denominations and other variable terms referred to below.

We will issue Debt Securities in book-entry form:


Except under the limited circumstances described under "Description of the Debt Securities— Exchange of Global Book-Entry Securities for Definitive Debt Securities," Debt Securities will not be available in definitive form. We will establish terms of issues of Fed Book-Entry Securities pursuant to a "Statement of Terms."

Fed Book-Entry Securities other than Benchmark Bills and Short-Term Notes will be issued under the Fiscal Agency Agreement dated as of April 23, 1974, as amended or supplemented, between us and the U.S. Federal Reserve Banks, collectively acting as the Fiscal Agent. Global Book-Entry Securities will be issued under the Global Agency Agreement, dated as of December 21, 1999, as it may be amended or supplemented, between us and The Chase Manhattan Bank, as Global Agent. Benchmark Bills and Short-Term Notes that are book-entry securities will be issued under the Short-Term Note Fiscal Agency Agreement dated as of January 2, 1969, as amended or supplemented, between us and the Federal Reserve Bank of New York. Statements under this heading and in Pricing Supplements are subject to the detailed provisions of (1) any applicable Statement of Terms or other document establishing the terms of an issue of Fed Book-Entry Securities and the applicable Fiscal Agency Agreement or (2) the Global Book-Entry Securities and the Global Agency Agreement.

You can review copies of any applicable Statement of Terms or other document establishing the terms of an issue of Fed Book-Entry Securities, the Fiscal Agency Agreement and the Short-Term Note Fiscal Agency Agreement at our principal office in Washington, D.C. You also can review a copy of the Fiscal Agency Agreement and the Short-Term Note Fiscal Agency Agreement at the Federal Reserve Bank of New York, 33 Liberty Street, New York, New York 10045. You can review a copy of the Global Agency Agreement at our principal office in Washington, D.C., the principal U.S. corporate trust office of the Global Agent at 450 West 33rd Street, 15th Floor, New York, New York 10001-2697, and at Banque Internationale à Luxembourg S.A. at 69, route d'Esch, L-2953 Luxembourg. You can review a copy of the terms of the Global Book-Entry Securities at the same corporate trust office of the Global Agent.

Specified Currencies and Specified Payment Currencies

Fed Book-Entry Securities will be denominated and payable only in U.S. dollars. Appendix B contains provisions relating to Short-Term Notes denominated and payable in a Specified Currency. We will set forth in the applicable Pricing Supplement any provisions relating to any non-U.S. dollar currency or currency unit (each a "Specified Currency") in which any other Debt Security may be denominated or in which payments on such Debt Security may be made.

Except as described below, we will make interest payments in the Specified Currency designated for interest payments and principal payments in the Specified Currency designated for principal payments. (We refer to the specified interest currency and specified principal currency collectively in this Offering Circular as the "Specified Payment Currency.") However, for Global Book-Entry Securities issued through DTC that are denominated and payable in a Specified Payment Currency other than U.S. dollars, we will make arrangements for the conversion of any payment in a non-U.S. dollar currency into U.S. dollars unless the Holders elect to receive payments in the Specified Payment Currency. We understand that Euroclear and Cedelbank, unless specifically requested not to do so 15 days before the applicable Interest Payment Date or Principal Payment Date, will receive all payments of principal and interest for such Global Book-Entry Securities held through them in the applicable Specified Payment Currency if it is other than U.S. dollars. See "Description of the Debt Securities—Currency Conversions—Payment for Debt Securities."

It is possible that the Specified Payment Currency for a particular Debt Security may no longer be used by the government issuing the Specified Payment Currency or used for settlement of transactions by public institutions of or within the international banking community, or that the Specified Payment Currency may not be available for any other reason, when payments on the Debt Security are due. If the government that previously issued the Specified Payment Currency has issued a new legal currency, we will make payments in that new legal currency. If there is no new legal currency or the Specified Payment Currency is unavailable due to circumstances beyond our control, such as exchange controls, we will make payments in U.S. dollars. In addition, in the circumstances and on the terms described in Appendix E, Debt Securities originally denominated in currencies expected to be replaced by the Euro may be redenominated to Euro.

Denomination

We will issue Debt Securities in minimum denominations of U.S. $1,000 original principal amount and additional increments of U.S. $1,000 original principal amount, or other denominations that we specify in the applicable Pricing Supplement (or, with respect to Benchmark Bills and Short-Term Notes, in Appendix B). We will express denominations of Zero-Coupon Securities in terms of the principal amount payable on the Maturity Date.

Debt Securities originally denominated in a currency that is issued by a member state of the European Union that adopts the Euro as its single currency may be redenominated to the Euro. Provisions relating to redenomination are set forth in Appendix E.

Reopenings

We may issue additional Debt Securities with the same terms as previously issued Debt Securities (other than the date of issuance, interest commencement date and offering price, which may vary) that will form a single issue with the previously issued Debt Securities. This type of offering often is referred to as a "reopening". We may issue additional Debt Securities in this manner from time to time and without the consent of any Holder of a Debt Security.

Maturity

Each Debt Security will mature on a date (the "Maturity Date") one day or longer from its issue date, unless redeemed prior to that date. The Maturity Date for any Benchmark Bill or Short-Term Note will be 360 days or less from the date of its issuance. We will specify the Maturity Date for other Debt Securities in the applicable Pricing Supplement.

The principal amount payable on the Maturity Date of a Debt Security will be either:


Interest

Benchmark Bills and most Short-Term Notes will not bear interest but will be issued at a discount to their principal amount payable at maturity. Other Debt Securities may bear interest at one or more fixed rates or variable rates or may not bear interest. We will specify in the applicable Pricing Supplement whether these other Debt Securities are Fixed Rate Securities, Step Rate Securities, Variable Rate Securities, Fixed/Variable Rate Securities or Zero-Coupon Securities.


You can obtain the current interest rate on Variable Rate Securities and Fixed/Variable Rate Securities from Fannie Mae by accessing our World Wide Web site at www.fanniemae.com or calling (800) 701-4791 (for international callers, (202) 752-5499). We may discontinue providing this information at any time without notice. If the rules of the Luxembourg Stock Exchange so require, the Calculation Agent will provide certain interest rate information on Variable Rate Securities listed on the exchange to the Luxembourg Stock Exchange within two Business Days of having determined the information.

Descriptions of interest rate indices that may be used with respect to Variable Rate Securities or Fixed/Variable Rate Securities are contained in Appendix C to this Offering Circular.

We will specify in the applicable Pricing Supplement when interest will be paid on the related Debt Securities. We will pay interest in arrears on the Interest Payment Dates specified for the Debt Securities (each an "Interest Payment Date") and on the Principal Payment Date.

Each issue of interest-bearing Debt Securities will bear interest from and including the most recent Interest Payment Date or, if no interest has been paid or made available for payment on that issue of Debt Securities, from and including the issue date of the Debt Securities (or any other date we may specify for the Debt Securities) to but excluding the next applicable Interest Payment Date or the applicable Principal Payment Date. In this Offering Circular, we refer to each of these periods as an "Interest Period."

In this Offering Circular, we refer to the Maturity Date or any earlier date of redemption or principal repayment of an issue of Debt Securities as the "Principal Payment Date" with respect to the principal repayable on that date. No interest on the principal repaid will accrue on or after the Principal Payment Date.

Interest on any Debt Security accrues on the then outstanding principal amount. Payments on Debt Securities will be rounded, in the case of U.S. dollars, to the nearest cent or, in the case of a Specified Payment Currency other than U.S. dollars, to the nearest smallest transferable unit (with one-half cent or unit rounded upwards).

If any jurisdiction imposes a withholding or other tax on a payment on any Debt Security, we will not be obligated to pay additional interest or other amounts, or to redeem the Debt Securities prior to maturity.

Interest rates or yields with respect to Debt Securities may differ depending upon, among other things, the principal amount of Debt Securities the applicable Dealer expects to sell to an investor in a single transaction and the price at which the Dealer purchases the Debt Securities from us (or, in connection with sales on a non-underwritten basis, the Dealer's commission).

Variable Interest Rates

Debt Securities that have a variable interest rate component may bear interest at a variable rate determined by reference to one or more interest rate indices, or otherwise, (1) plus or minus a Spread, if any, or (2) multiplied by a Multiplier, if any. We will specify the applicable interest rate index and any Spread or Multiplier in the Pricing Supplement for an issue of Debt Securities with a variable interest rate component. Debt Securities also may bear interest in any other manner described in the applicable Pricing Supplement.

"Spread" means a constant or variable amount to be added to or subtracted from the relevant index. "Multiplier" means a constant or variable number (which may be greater or less than 1) by which the relevant index will be multiplied. "Index Maturity" means the period to maturity of the instrument or obligation as to which the relevant index will be calculated.

Debt Securities with a variable interest rate component also may have either or both of the following:


In addition, in no event will the effective rate of interest (determined on the basis of the actual number of days in the period and in the year) exceed 24% per annum for any Interest Reset Period, regardless of the accrual method used to compute interest on the Debt Security.

We will specify in the applicable Pricing Supplement how frequently the rate of interest will reset, which may be daily, weekly, monthly, quarterly, semiannually, annually or any other frequency. We also will specify in the applicable Pricing Supplement the effective dates for new rates of interest, subject to the following sentence (each a "Reset Date"). If the interest rate will reset within an Interest Period, then:


If any Reset Date would otherwise be a day that is not a Business Day, the applicable Reset Date will be postponed to the next day that is a Business Day. However, if LIBOR is the applicable interest rate index and the next Business Day falls in the next calendar month, then the Reset Date will be the immediately preceding Business Day. In addition, in the case of a Debt Security with daily Reset Dates, the rate in effect on any day that is not a Business Day will be the rate in effect on the most recent previous Business Day.

Each period beginning on the applicable Reset Date and ending on the day preceding the next Reset Date is an "Interest Reset Period." During each Interest Reset Period:


If the rate of interest will reset within an Interest Period, accrued interest will be calculated by multiplying the principal amount of the Debt Security by an accrued interest factor. This accrued interest factor will be computed by totaling the interest factors calculated for all days in the Interest Period. The interest factor for each day will be computed by dividing the interest rate for that day by the number of days in the year referred to in the applicable accrual method.

Example. An interest rate of 3.12345% would be expressed in decimal format as .0312345. Assuming a year of 360 days, the applicable interest rate would be calculated by dividing .0312345 by 360 resulting in an interest factor of .0000868 for one day.

In calculating the interest rate, all numbers will be expressed as a decimal and rounded to the seventh digit after the decimal point. (If the eighth digit to the right of the decimal point is five or greater, the seventh digit will be rounded up by one.)

Example. 3.123445% would be expressed as 0.03123445, which would be rounded to 0.0312345 (which is equivalent to 3.12345%).

Numbers subject to this rounding convention include all value inputs into indexing formulas, intermediate calculations, numbers resulting from any calculation, interest rates, interest factors and accrued interest factors.

If the format of a page, screen, display, press release or other source related to an index to be used in determining the rate of interest on a Debt Security changes but, in the discretion of the Calculation Agent, the source continues to disclose the information necessary to determine the rate substantially as described in this section or in the applicable Pricing Supplement, then the procedure for obtaining information from the source shall be deemed to be amended as determined by the Calculation Agent.

We will specify the applicable interest rate index in the Pricing Supplement for an issue of Debt Securities. Only the provisions contained in Appendix C under the heading of the specified interest rate index will apply to the related Debt Securities.

The Calculation Agent's determination of the interest rate will be final and binding on all parties, absent manifest error. The "Calculation Agent" will be Fannie Mae or a bank or broker-dealer that we designate. We will be the initial Calculation Agent unless we specify otherwise in the applicable Pricing Supplement.

If the rules of the Luxembourg Stock Exchange so require, the Calculation Agent will provide to the Exchange the interest rate, the amount of interest payable on the next Interest Payment Date and the dates of the current Interest Period with respect to Variable Rate Securities listed on such Exchange, no later than the first day of each new Interest Period.

Amortizing Securities

We may issue Debt Securities on which there are periodic payments of principal during the term of the Debt Securities ("Amortizing Securities"). Amortizing Securities may bear interest at fixed or floating rates. We will describe in the Pricing Supplement for an Amortizing Note how interest will be calculated and how principal will be paid.

Indexed Securities

We may issue Debt Securities on which the amount of principal or interest (or both) payable will be determined by reference to the price or prices of specified commodities or stocks, to the exchange rate of one or more currencies or currency units (including swap indices between currencies or currency units) relative to one or more other currencies or currency units, to other prices or exchange rates, or in any other manner described in the Pricing Supplement ("Indexed Securities"). The Pricing Supplement will describe the method for determining the amount of principal and interest, if any, payable on Indexed Securities. In no event, however, will the effective rate of interest (determined on the basis of the actual number of days in the period and in the year) on an Indexed Security that bears interest at a floating rate exceed 24% per annum for any Interest Reset Period, regardless of the accrual method used to compute interest on the Indexed Security.

Accrual Methods

Each interest-bearing Debt Security will have an accrual method (i.e., day count convention) for calculating interest or any other relevant accrual factor on the related Debt Securities, which may incorporate one or more of the following methods. The numbers in the denominators of each term refer to the number of days in a year or an assumed year, as applicable.


The accrual method for Fixed-Rate Securities, Step Rate Securities and the fixed-rate component of Fixed/Variable Rate Securities will be "30/360" unless we specify otherwise in the applicable Pricing Supplement. We will specify the accrual method for other Debt Securities in the applicable Pricing Supplement.

Business Day Convention

If an Interest Payment Date or Principal Payment Date is not a Business Day, we will pay the interest or principal on the next Business Day. In that case, you will receive no interest on the delayed interest or principal payment for the period from and after the scheduled Interest Payment Date or Principal Payment Date to the actual date of payment.

For Fed Book-Entry Securities, "Business Day" means any day other than:


For Global Book-Entry Securities, "Business Day" means any day other than:


"Principal Financial Center" means the capital city of the country issuing the Specified Payment Currency, except that with respect to U.S. dollars, Australian dollars, British pounds sterling, Canadian dollars, Hong Kong dollars and Swiss francs, the Principal Financial Center will be The City of New York, Sydney, London, Toronto, Hong Kong, and Zurich, respectively.

No Rights of Acceleration

The Debt Securities will not contain any provisions permitting Holders to accelerate maturity of the Debt Securities upon the occurrence of any default or other event.

Book-Entry Systems

We will issue and maintain Debt Securities as either Fed Book-Entry Securities, which will be held only on the book-entry system of the U.S. Federal Reserve Banks (the "Fed Book-Entry System") or Global Book-Entry Securities, which will be held through the facilities of one or more other depositories.

Fed Book-Entry System

The U.S. Federal Reserve Banks, as fiscal agents for Fannie Mae, will issue Fed Book-Entry Securities in book-entry form, maintain book-entry accounts with respect to the Fed Book-Entry Securities and make payments, on our behalf, of principal and interest on the Fed Book-Entry Securities in U.S. dollars on the applicable payment dates by crediting Holders' accounts at the U.S. Federal Reserve Banks.

Regulations that currently govern the use of the Fed Book-Entry System for our securities issued in book-entry form and the pledging and transfer of interests in the securities have been adopted by the U.S. Department of Housing and Urban Development and are contained in 24 CFR Part 81, Subpart H (which regulations, as they may be amended from time to time or replaced or supplemented by regulations adopted by any other U.S. governmental body or agency, are referred to in this Offering Circular as the "HUD Book-Entry Regulations"). The HUD Book-Entry Regulations apply to all Fed Book-Entry Securities. The HUD Book-Entry Regulations may be modified, amended, supplemented, superseded, eliminated or otherwise altered without the consent of any Holder of Fed Book-Entry Securities.

The accounts of Holders of Fed Book-Entry Securities also are governed by applicable operating circulars and letters of the U.S. Federal Reserve Banks.

Other Book-Entry Systems

We will issue Global Book-Entry Securities that are either registered in the name of a nominee of The Depository Trust Company ("DTC") in New York, New York, or registered in the name of the common depositary (or a nominee of the common depositary) for one of the following:


The Chase Manhattan Bank will act as the custodian for Global Book-Entry Securities held by DTC and as the "Common Depositary" for Global Book-Entry Securities held by Euroclear and Cedelbank. We will exchange Global Book-Entry Securities for definitive Debt Securities only under the limited circumstances described under "Description of the Debt Securities—Exchange of Global Book-Entry Securities for Definitive Debt Securities."

Eligibility for Stripping of Fed Book-Entry Securities

We may designate specific issues of Fed Book-Entry Securities that are Fixed Rate Securities or Step Rate Securities (the "Eligible Securities") as eligible to be separated ("stripped") into their separate Interest Components and Principal Components on the book-entry records of the FRBNY. We may designate Fed Book-Entry Securities as Eligible Securities either at the time of original issuance or at any time thereafter until the Cut-off Date (as defined below). We have no obligation, however, to designate any issue of Fed Book-Entry Securities as eligible to be stripped into Components.

The "Components" of an Eligible Security are:


The initial or final interest payment on a Fed Book-Entry Security, however, will not be an Interest Component if the applicable Interest Period is shorter or longer than other Interest Periods, based on a 360-day year consisting of twelve 30-day months. In that case, the initial or final interest payment will remain with the Principal Component. Each Component will receive a CUSIP number.

To be stripped into Components, the principal amount of the Eligible Security must be in an amount that, based on the stated interest rate of the Eligible Security, will produce an interest payment of $1,000 or an integral multiple thereof on each Interest Payment Date for the Fed Book-Entry Security. You currently may find out the minimum principal amount required to strip an Eligible Security by calling our Treasurer's Office at (202) 752-7916. If a Fed Book-Entry Security is eligible to be stripped upon original issuance, we generally will disclose in the applicable Pricing Supplement the minimum principal amount required to strip the Fed Book-Entry Securities.

In some cases, Interest Components of two or more issues of Fed Book-Entry Securities may be due on the same day. These Interest Components may have the same or different CUSIP numbers. We currently expect that most Interest Components due on the same day (regardless of Fed Book-Entry Security issue) will have the same CUSIP number. However, we may designate them to receive different CUSIP numbers. We also may designate at any time that Interest Components of issues of Fed Book-Entry Securities originally issued on or after a specified time receive CUSIP numbers different than Interest Components of issues of Fed Book-Entry Securities originally issued prior to that time.

A Holder of an Eligible Security currently may request that the Fed Book-Entry Security be separated into its Components at any time from the date it becomes eligible to be stripped until the Cut-off Date. The Holder must make a request for separation to the FRBNY and comply with any requirements and procedures, including payment of applicable fees, if any, of the FRBNY then in effect.

The Components may be maintained and transferred on the book-entry system of the U.S. Federal Reserve Banks in integral multiples of $1,000. Payments on Components will be made in U.S. dollars on the applicable payment dates (or the following Business Day if payment on the related Fed Book-Entry Security is or would be made on the following Business Day as described above in "Description of the Debt Securities—Business Day Convention" and below in "Description of the Debt Securities—Payments") by credit to the account at a U.S. Federal Reserve Bank of the Holding Institutions whose names appear on the book-entry records of the U.S. Federal Reserve Banks as the entities to whose account the Components have been deposited ("Component Holders").

If any modification, amendment or supplement of the terms of an issue of Fed Book-Entry Securities requires any consent of Holders, the consent for Fed Book-Entry Securities that have been stripped will be provided by the Component Holders of Principal Components. Component Holders of Interest Components will have no right to give or withhold consent. See "Description of the Debt Securities—Modification and Amendments."

Currently, at the request of a Component Holder holding a Principal Component and all applicable unmatured Interest Components, the FRBNY will restore ("reconstitute") the Principal Components of a stripped Fed Book-Entry Security and the applicable unmatured Interest Components (all in appropriate amounts) to the Fed Book-Entry Security in fully constituted form. The FRBNY charges a fee to reconstitute Fed Book-Entry Securities. Generally, for purposes of reconstituting a Debt Security, the Principal Component of an issue of Fed Book-Entry Securities may be combined with either Interest Components of that issue or Interest Components, if any, with the same CUSIP numbers from other issues of Fed Book-Entry Securities. Component Holders wishing to reconstitute Components into a Fed Book-Entry Security also must comply with all applicable requirements and procedures of the FRBNY relating to the stripping and reconstitution of securities.

The preceding discussion is based on our understanding of the way the FRBNY currently strips and reconstitutes securities on the Fed Book-Entry System. The FRBNY may cease stripping or reconstituting Eligible Securities or may change the way this is done or the applicable requirements, procedures or charges at any time without notice.

Status

The Debt Securities will be unsecured general obligations of Fannie Mae issued under Section 304(b) of the Charter Act. The Debt Securities will not limit other indebtedness or securities that we may incur or issue. The Debt Securities will not contain any financial or similar restrictions on us or any restrictions on our ability to secure other indebtedness.

The Debt Securities, together with interest thereon, are not guaranteed by the United States and do not constitute a debt or obligation of the United States or of any agency or instrumentality thereof other than Fannie Mae.

Debt Securities will not be issued under an indenture. There will be no trustee with respect to the Debt Securities.

Redemption

We may not redeem Debt Securities prior to maturity, unless we specify otherwise in the applicable Pricing Supplement. We will not redeem Benchmark Bills or Short-Term Notes prior to maturity.

The most common form of redemption is redemption at our option. If we specify redemption at our option in the applicable Pricing Supplement, we may redeem all the Debt Securities or a portion of the Debt Securities from time to time. We may have the option to redeem the Debt Securities on one or more specified dates, at any time on or after a specified date, or during one or more specified periods of time. The applicable Pricing Supplement will contain the redemption price, or describe the method of determining the redemption price. Holders will receive accrued and unpaid interest on the principal amount redeemed to the date fixed for redemption.

If we elect to redeem an issue of Debt Securities, we will give notice to Holders of the Debt Securities not less than 10 days prior to the date of redemption in the manner described under "Description of the Debt Securities—Notices."

We may specify in the applicable Pricing Supplement that an issue of Debt Securities will be subject to mandatory redemption by us, in whole or in part, from time to time upon terms and at prices described in the Pricing Supplement. We will give no notice to Holders of mandatory redemption.

If we redeem a portion of an issue of Fed Book-Entry Securities, we will redeem a pro rata portion of the then outstanding principal amount of each Fed Book-Entry Security of the issue. If we redeem a portion of an issue of Global Book-Entry Securities, the Global Agent will reduce the principal amount of one or more Global Book-Entry Securities by an aggregate amount equal to the amount of the redemption, ensuring that the principal amount of each Global Book-Entry Security of the issue remains in an authorized denomination. The actual impact of our redeeming a portion of an issue of Global Book-Entry Securities on the beneficial owners will depend on the procedures of the applicable clearing system. If the beneficial owner is not a participant with that clearing system, the effect also will depend on the procedures of the participant through which the beneficial owner owns its interest in the Global Book-Entry Security.

We also may issue Debt Securities that are redeemable at the option of the Holders upon terms and procedures described in the applicable Pricing Supplement.

Corrections

All value inputs into indexing formulas, intermediate calculations, numbers resulting from any calculation, interest rates, interest factors, accrued interest factors, principal amounts or components used to determine principal or interest payable on an issue of Debt Securities are subject to correction within 30 days from the applicable Interest Payment Date or Principal Payment Date. The source of a corrected value input must be the same page, screen, display, press release or other source from which the previously-used value input was to be obtained. A correction might result in an adjustment to an amount paid to a Holder.

Example. Assume that the applicable Pricing Supplement for a Variable Rate Security specifies LIBOR as the applicable interest rate index for determining the rate of interest payable on the Debt Security. If LIBOR for a Reset Date is obtained from the Reuters ISDA Page in accordance with Appendix C on page C-1, the rate may be superseded only by a corrected rate for that Reset Date obtained from the Reuters ISDA Page. The corrected rate would be used to determine the rate of interest payable in respect of the Variable Rate Security as of the applicable Interest Payment Date.

Repurchases

We may purchase Debt Securities at any price or prices, in the open market or otherwise, at any time. We may hold, sell or cancel any Debt Securities that we repurchase.

Ownership of Debt Securities

Fed Book-Entry Securities

The Fed Book-Entry Securities may be held of record only by entities eligible to maintain book-entry accounts with a U.S. Federal Reserve Bank (the "Holding Institutions"). The entities whose names appear on the book-entry records of a U.S. Federal Reserve Bank as the entities to whose accounts Fed Book-Entry Securities have been deposited are referred to as "Holders" of the Fed Book-Entry Securities. A Holder is not necessarily the beneficial owner of the Fed Book-Entry Security. Beneficial owners ordinarily hold Fed Book-Entry Securities through one or more financial intermediaries, such as banks, brokerage firms and securities clearing organizations. A Holder that is not the beneficial owner, and each other financial intermediary holding one or more Fed Book-Entry Securities directly or indirectly on behalf of the beneficial owner, will have the responsibility of establishing and maintaining accounts for their respective customers.

Beneficial owners of Fed Book-Entry Securities may exercise their rights with respect to Fannie Mae and the U.S. Federal Reserve Banks only through the Holders of the Fed Book-Entry Securities. Fannie Mae and the U.S. Federal Reserve Banks will have no obligation to a beneficial owner of a Fed Book-Entry Security (unless the beneficial owner is also the Holder). The U.S. Federal Reserve Banks will act only upon the instructions of Holders in recording transfers of interests in Fed Book-Entry Securities and will effect transfers of interests in Fed Book-Entry Securities only to Holding Institutions. Fannie Mae and the U.S. Federal Reserve Banks may treat the Holders as the absolute owners of Fed Book-Entry Securities for the purpose of making payments on the Fed Book-Entry Securities and for all other purposes, whether or not the Fed Book-Entry Securities are overdue and notwithstanding any notice to the contrary.

Global Book-Entry Securities

The person in whose name a Global Security is registered in the "Register" maintained by the Global Agent as registrar (in this capacity, the "Registrar") will be the "Holder" of the Global Security. We will register Global Book-Entry Securities to be held by DTC in the name of Cede & Co. and Global Book-Entry Securities to be held by the Common Depositary in the name of Chase Nominees Limited, or other nominee of DTC or the Common Depositary, as the case may be. Accordingly, Cede & Co. and Chase Nominees Limited will be the Holders of the related Global Book-Entry Securities. Beneficial interests in a Global Book-Entry Security will be represented, and transfers thereof will be effected, only through book-entry accounts of financial institutions acting on behalf of the beneficial owners of that Global Book-Entry Security, as a direct or indirect participant in the applicable clearing system for that Global Book-Entry Security.

We and the Global Agent may treat the Holders as the absolute owners of Global Book-Entry Securities for the purpose of making payments and for all other purposes. Owners of beneficial interests in a Global Book-Entry Security are not the owners or Holders of that Global Book-Entry Security and, except under limited circumstances described under "Description of the Debt Securities— Exchange of Global Book-Entry Securities for Definitive Debt Securities," are not entitled to have Debt Securities registered in their names or to receive definitive Debt Securities. Accordingly, any beneficial owner must rely on the procedures of the applicable clearing system or on the procedures of the participant through which the beneficial owner owns its interest, to exercise any rights of a Holder of the Global Security.

We understand that, if we request any action of Holders or if beneficial owners desire to take any action that a Holder is entitled to take, DTC, Euroclear or Cedelbank, or their respective nominees, as the Holder of the related Global Book-Entry Security, would authorize the participants through which the relevant beneficial interests are held to take the action. The participants in turn would authorize beneficial owners owning through the participants to take the relevant action, in each case in accordance with the rules and procedures of the applicable system.

DTC, Euroclear and Cedelbank can act only on behalf of their respective participants, who in turn act on behalf of indirect participants. Therefore, the ability of a beneficial owner to pledge its interest in the Global Book-Entry Securities to persons or entities that do not participate in the applicable system, or otherwise take actions in respect of that interest, may be limited by the lack of a definitive certificate. If the laws of a jurisdiction require that certain purchasers of securities take physical delivery of their securities in definitive form, this also may impair your ability to transfer beneficial interests in a Global Book-Entry Security.

Payments

Fed Book-Entry Securities

We will make payments of principal and interest on Fed Book-Entry Securities in U.S. dollars on the applicable payment dates to Holders as of the end of the Business Day preceding the payment dates. See also "Description of Debt Securities—Business Day Convention." Payments on Fed Book-Entry Securities will be made by credit of the payment amount to the Holders' accounts at the U.S. Federal Reserve Banks. All payments to or upon the order of a Holder will be valid and effective to discharge the liability of Fannie Mae and the Fiscal Agent. The Holders and each other financial intermediary holding Fed Book-Entry Securities directly or indirectly on behalf of beneficial owners will have the responsibility of remitting payments for the accounts of their customers. All payments on the Fed Book-Entry Securities are subject to any applicable law or regulation.

Global Book-Entry Securities

We will make payments on the Global Book-Entry Securities to DTC, Euroclear, Cedelbank, and any other applicable clearing system (or their nominees) as the Holders thereof. We will make payments in the Specified Payment Currency (except as described under "Description of the Debt Securities—Specified Currencies and Specified Payment Currencies" or as otherwise described on Appendix E). For certain currency conversion facilities with respect to Global Securities held by DTC see "Description of the Debt Securities—Currency Conversions—Payment on Debt Securities". All payments to or upon the order of the Holder of a Global Book-Entry Security will be valid and effective to discharge our liability in respect of that Global Book-Entry Security. Normal conventions observed by the system will determine ownership positions within each system. Neither we nor the Global Agent will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in a Global Book-Entry Security or for maintaining, supervising or reviewing any records relating to the beneficial ownership interests.

DTC has advised us that, when DTC receives any payment of principal of or interest on a Global Book-Entry Security held by it, it will credit its participants' accounts with payments proportionate to their respective beneficial interests in the principal amount of that Global Book-Entry Security. Payments by participants to owners of beneficial interests in that Global Book-Entry Security held through those participants are the responsibility of the participants, as is now the case with securities held for the accounts of customers registered in "street name." Euroclear and Cedelbank also have advised us that payments on Global Book-Entry Securities held through them will be credited to Euroclear participants or Cedelbank participants in accordance with the applicable system's rules and procedures.

We will pay interest on Global Book-Entry Securities on the applicable Interest Payment Date. We will make interest payments to the Holder of each Global Book-Entry Security at the close of business on the fifteenth day (whether or not a Business Day) (each, a "Record Date") preceding the Interest Payment Date. (Owners of beneficial interests in a Global Book-Entry Security should be aware that the applicable clearing system may apply a different record date for the payment of interest to its participants on an Interest Payment Date.) We will make the first payment of interest on any Global Book-Entry Security originally issued between a Record Date and the related Interest Payment Date on the Interest Payment Date following the next Record Date to the Holder on the next Record Date. We will owe the principal of each Global Book-Entry Security, together with accrued and unpaid interest thereon, on the Principal Payment Date for the Global Book-Entry Security (subject to the Holder's right on the related Record Date to receive interest due on an Interest Payment Date that is on or prior to the Principal Payment Date) and will pay the Holder when the Holder presents and surrenders the Global Book-Entry Security. See also "Description of the Debt Securities—Business Day Convention."

All payments on Global Book-Entry Securities are subject to any applicable law or regulation. If a payment outside the United States is illegal or effectively precluded by exchange controls or other similar restrictions, we will make payments on the related Global Book-Entry Securities at the office of any paying agent in the United States.

All money paid by us to the Global Agent or to any paying agent for principal and interest payments on any Global Book-Entry Security that remains unclaimed or undistributed at the end of one year after the principal or interest is due and payable will be repaid to us, and the Holder of the Global Book-Entry Security thereafter may look only to us for payment.

Additional provisions related to payments on non-U.S. dollar denominated Debt Securities appear under "Description of the Debt Securities—Currency Conversions".

Modification and Amendment

Fed Book-Entry Securities

We may modify, amend or supplement the Statement of Terms which would modify, amend or supplement the terms of Fed Book-Entry Securities without the consent of Holders of any Fed Book-Entry Securities, in any manner that we determine will not adversely affect in any material way the interests of the Holders of Fed Book-Entry Securities, including:


In addition, with either the written consent, or the affirmative vote at a meeting, of the Holders of at least a majority of the aggregate then outstanding principal amount of an issue of Fed Book-Entry Securities, we may modify, amend or supplement the Statement of Terms of such issue to add any provisions or change in any manner or eliminate any provisions of those Fed Book-Entry Securities or modify in any manner the rights of the Holders. However, without the written consent or affirmative vote of the Holder of the principal amount of that Fed Book-Entry Security, no modification, amendment or supplement may:


Holders entitled to vote a majority of the then outstanding aggregate principal amount of an issue of Fed Book-Entry Securities will constitute a quorum at any meeting of Holders. Fed Book-Entry Securities that we own may not be counted toward establishing a quorum, or consenting to or voting for any matter presented to Holders.

Any instrument given by or on behalf of any Holder of a Fed Book-Entry Security in connection with any consent to a modification, amendment or supplement will be irrevocable once given and will be conclusive and binding on all subsequent Holders of that Fed Book-Entry Security. Except as set forth above, any modification, amendment or supplement of the terms of Fed Book-Entry Securities will be conclusive and binding on all Holders of Fed Book-Entry Securities, whether or not they have given consent or were present at any meeting.

Global Book-Entry Securities

We and the Global Agent may modify, amend or supplement the Global Agency Agreement and the terms of one or more issues of Global Book-Entry Securities without the consent of Holders of any Global Book-Entry Securities, in any manner that we and the Global Agent determine will not adversely affect in any material way the interests of the Holders, including:

In addition, with the written consent, or the affirmative vote at a meeting, of the Holders of at least a majority of the aggregate then outstanding principal amount of Global Book-Entry Securities or an issue of Global Book-entry Securities, we may modify, amend or supplement the Global Agency Agreement or the terms of an issue of Global Book-Entry Securities, respectively, to add any provisions or change in any manner or eliminate any provisions of Global Book-Entry Securities or modify in any manner the rights of the Holders. However, without the written consent or affirmative vote of the Holder of a Global Book-Entry Security, no modification, amendment or supplement may:

Holders entitled to vote a majority of the aggregate principal amount of the Global Book-Entry Securities or applicable issue of Global Book-Entry Securities at the time outstanding will constitute a quorum at any meeting of Holders, except that at any reconvened meeting adjourned for lack of a quorum, 25% in aggregate principal amount of the Global Book-Entry Securities or applicable issue of Global Book-Entry Securities entitled to vote shall constitute a quorum. Global Book-Entry Securities that we own may not be counted toward establishing a quorum, or consenting to or voting for any matter presented to Holder.

Special rules for determining the "principal amount" of Global Book-Entry Securities in specific circumstances are described below.

The "principal amount," for purposes of this section, for a Global Book-Entry Security that is a Zero-Coupon Security or was issued at an "issue price" of 80% or less of its principal amount will be calculated as provided in the Global Agency Agreement by adding the "issue price" of the Global Book-Entry Security, plus the "original issue discount" that has accrued since the issue date of the Global Book-Entry Security, minus any part of the "stated redemption price at maturity" of the Global Book-Entry Security that has been paid since the issue date of the Global Book-Entry Security. See "United States Taxation—U.S. Persons—Debt Securities Issued For Less Than Their Principal Amount" for an explanation of terms used in this paragraph.

The "principal amount," for purposes of this section, of a Global Book-Entry Security whose Specified Principal Currency is other than U.S. dollars will be the U.S. dollar equivalent, determined on the issue date, of the principal amount of the Global Book-Entry Security.

The "principal amount" of a Global Book-Entry Security with principal determined by reference to an index, exchange rate or formula will be described in the applicable Pricing Supplement.

As provided in the Global Agency Agreement, we may establish a record date for the determination of Holders entitled to vote at any meeting of Holders of Global Book-Entry Securities, to grant any consent in respect of Global Book-Entry Securities and to receive notice with respect to any meeting or consent of Holders.

Any instrument given by or on behalf of any Holder of a Global Book-Entry Security in connection with any consent to a modification, amendment or supplement will be irrevocable once given and will be conclusive and binding on all subsequent Holders of the Global Book-Entry Security. Except as set forth above, any modification, amendment or supplement of the terms of Global Book- Entry Securities will be conclusive and binding on all Holders of Global Book-Entry Securities, whether or not they have given consent or were present at any meeting.

Notices

We will give notices to Holders of Fed Book-Entry Securities by broadcast through the communication system of the U.S. Federal Reserve Banks. Notice by broadcast will be considered given on the date of broadcast or, if broadcasted more than once, on the date of first broadcast. Instead of notice by broadcast, we may give notices to Holders in any reasonable manner that we determine. Notice by another manner will be considered given on the date of dissemination or, if disseminated more than once, on the date of first dissemination.

We, or the Global Agent, will give notices to Holders of Global Book-Entry Securities by mail to the addresses of the Holders as they appear in the Register. Notices by mail will be considered given on the date of mailing.

If an issue of Debt Securities is listed on the Luxembourg Stock Exchange and its rules so require, we also will give notices with respect to that issue of Debt Securities in a general circulation newspaper in Luxembourg (which is expected to be the Luxemburger Wort) or, if publication in Luxembourg is not practical, elsewhere in Europe. Notice by publication will be considered given on the date of publication or, if published more than once, on the date of first publication.

Failure to give notice or a defect in a notice to one Holder will not affect the validity of notice to other Holders.

Exchange of Global Book-Entry Securities for Definitive Debt Securities

If we issue definitive Debt Securities in exchange for Global Book-Entry Securities as described below, the definitive Debt Securities will have the same terms as the Global Book-Entry Securities for which they were exchanged, except as described below.

Issuance of Definitive Debt Securities. A Holder can exchange beneficial interests in a Global Book-Entry Security for definitive Debt Securities only under the following circumstances:

(1)       the exchange is permitted by applicable law; and
(2)
  • in the case of a Global Book-Entry Security held through DTC, DTC notifies us that it is no longer willing or able to act as a depository or ceases to be a "clearing agency" registered under the Securities Exchange Act of 1934 and we cannot find a successor within 90 days after we receive notice;
  • in the case of Global Book-Entry Securities held through another depository, if all of the clearing systems for those Global Book-Entry Securities are closed for business for 14 consecutive days, or are permanently closed and we cannot find a successor within 90 days;
  • a Holder has initiated a judicial proceeding to enforce the Holder's rights under the Global Security in court and counsel has advised the Holder that it is necessary to have a definitive Debt Security; or
  • except in the case of 183 Day Notes (as defined in Appendix B), we, either at a Holder's request and expense or otherwise, in our own discretion, decide to issue definitive securities.

In any of the above circumstances, we will execute and deliver definitive Debt Securities to the Global Agent for their delivery to the Holders as soon as practicable.

Title. The person in whose name a definitive Debt Security is registered in the Register will be the "Holder" of the definitive Debt Security. We and the Global Agent may treat the Holders as the absolute owners of definitive Debt Securities for the purpose of making payments and for all other purposes whether or not any payments on the definitive Debt Securities are overdue.

Payments. We will pay interest on a definitive Debt Security on each applicable Interest Payment Date. We will pay by check mailed to the Holder at the close of business on the Record Date preceding the Interest Payment Date at the Holder's address appearing in the Register. We will pay the principal of each definitive Debt Security, together with accrued and unpaid interest, on the Principal Payment Date against presentation and surrender of the definitive Debt Security by check at the appropriate office of the Global Agent or other paying agent or mailed by the Global Agent to the Holder of the definitive Debt Security. We will use a United States bank for checks in U.S. dollars and a bank office located outside the United States for checks in other Specified Payment Currencies. If an issue of Debt Securities of which definitive Debt Securities form a part is listed on the Luxembourg Stock Exchange and that exchange so requires, we will maintain a paying agent in Luxembourg with respect to that issue of Debt Securities. See "Description of the Debt Securities—Notices" for a description of how we will notify the Holders of definitive Debt Securities of the appointment and location of the paying agent.

The Holder of an aggregate principal amount of at least $10,000,000 (or the equivalent in the Specified Currency) of an issue of Debt Securities of which definitive Debt Securities form a part may elect to receive payments by wire transfer of immediately available funds in the Specified Payment Currency to an account with a bank designated by the Holder that is acceptable to us. In order for the Holder to receive the payments, the Global Agent or other paying agent, if applicable, must receive the following by mail, hand or telex at its principal U.S. corporate trust office or its specified office, respectively:


All payments on definitive Debt Securities are subject to any applicable law or regulation. If a payment outside the United States is illegal or effectively precluded by exchange controls or similar restrictions, payments in respect of the related definitive Debt Securities may be made at the office of any paying agent in the United States.

Partial Redemption. If we redeem a portion of an issue of definitive Debt Securities, the Global Agent will select by lot, or in any other manner that the Global Agent deems fair and appropriate, those definitive Debt Securities to be redeemed, ensuring that the principal amount of each outstanding definitive Debt Security after the redemption is in an authorized denomination.

Transfer and Exchange. Holders may present definitive Debt Securities for transfer or exchange at the office of the Registrar or any other transfer agent, with transfer documentation completed and payment of any taxes and other governmental charges. If an issue of Debt Securities of which definitive Debt Securities form a part is listed on the Luxembourg Stock Exchange and that Exchange so requires, we will maintain a transfer agent in Luxembourg for that issue of Debt Securities.

Holders may transfer or exchange definitive Debt Securities in whole or in part only in the authorized denominations of the Global Book-Entry Securities for which they were exchanged. See "Description of the Debt Securities—Denomination." In the case of a transfer of a definitive Debt Security in part, the Registrar will issue a new definitive Debt Security for the balance not transferred.

Currency Conversions

Payment for Debt Securities

Purchasers of Debt Securities must pay for the Debt Securities in the applicable Specified Currency. Dealers to whom or through whom Debt Securities are sold may arrange for the conversion of the investor's currency into the Specified Currency to enable purchasers to pay for the Debt Securities if purchasers so request no later than the day determined by that Dealer. We will not be involved in any manner in, and will have no responsibility for, that conversion. Each Dealer will make the conversion on terms and subject to any conditions, limitations and charges that the Dealer may establish. The purchasers of the Debt Securities will bear all costs of conversion.

Payment on Debt Securities

Except as described above, we must make payments of principal of and any interest on all Debt Securities in the Specified Payment Currency. At the present time, there are limited facilities in the United States for the conversion of foreign currencies or currency units into U.S. dollars, and commercial banks generally do not offer non-U.S. dollar checking or savings account facilities. Accordingly, in the case of Global Book-Entry Securities whose Specified Payment Currency is other than U.S. dollars, the currency exchange bank specified in the applicable Pricing Supplement (the "Currency Exchange Bank"), for the Holders of the Global Book-Entry Securities, will convert any amounts paid by us in the Specified Payment Currency into U.S. dollars, unless the Holders elect to receive payments in the Specified Payment Currency as hereinafter described. We will not be involved in any manner in, and will have no responsibility for, the conversion of the Specified Payment Currency for the Global Book-Entry Securities into U.S. dollars.

The U.S. dollar amount to be received by a Holder of a Global Book-Entry Security in respect of which payments are to be converted from the Specified Payment Currency into U.S. dollars will be determined by the Currency Exchange Bank in the morning of the day that would be considered the date for "spot" settlement of the Specified Payment Currency on the applicable payment date in accordance with market convention (generally two New York business days prior to the payment date) at the market rate determined by the Currency Exchange Bank to accomplish the conversion on the payment date of the aggregate amount of the Specified Payment Currency payable in respect of Global Book-Entry Securities scheduled to receive payments converted into U.S. dollars. All currency exchange costs will be borne by the Holders of the Global Book-Entry Securities (and, accordingly, by the related beneficial owners) by deductions from the payments. Holders of Global Book-Entry Securities are subject to the risk of market disruption and the risk that all or any portion of the Specified Payment Currency will not be convertible into U.S. dollars. In those cases, Holders of the Global Book-Entry Securities will receive payment in the Specified Payment Currency.

The Holder of a Global Book-Entry Security held through DTC to be paid in a Specified Payment Currency other than U.S. dollars will have the option to receive payments of the principal of and any interest on the Global Book-Entry Security in the Specified Payment Currency by notifying DTC no later than the third New York business day after the related Record Date, in the case of payments on an Interest Payment Date, or the date 12 days prior to the Principal Payment Date, in the case of payments on the Principal Payment Date. We understand that Euroclear and Cedelbank, unless specifically requested not to do so by a participant prior to the 15th day preceding the applicable Interest Payment Date or Principal Payment Date, will elect to receive all payments of principal and interest in respect of Global Book-Entry Securities held through them in the applicable Specified Payment Currency if it is other than U.S. dollars.

Governing Law and Judgments

Fed Book-Entry Securities

The Fed Book-Entry Securities (including our rights and obligations with respect to the Fed Book-Entry Securities) will be governed by, and construed in accordance with, (1) regulations adopted by the U.S. Department of Housing and Urban Development or any other U.S. governmental body or agency, as from time to time in effect, that apply to our Fed Book-Entry Securities, currently the HUD Book-Entry Regulations, and (2) to the extent the regulations identified in clause (1) do not apply, the laws of the State of New York, U.S.A.

Global Book-Entry Securities

The Global Book-Entry Securities will be governed by, and construed in accordance with, the laws of the State of New York, U.S.A.

Courts in the United States customarily have not rendered judgments for money damages denominated in any currency other than U.S. dollars. New York law currently provides, however, that a judgment or decree based upon an obligation denominated in a currency other than U.S. dollars will be rendered in the foreign currency of the underlying obligation and converted into U.S. dollars at a rate of exchange prevailing on the date of the entry of the judgment or decree. As a result, the Holder of a Global Book-Entry Security would be subject to exchange rate fluctuations between the date of entry of the judgment or decree and the time the foreign currency judgment or decree is paid to the Holder in U.S. dollars (whether or not the Holder then converts any amounts paid into the Specified Payment Currency).

Fiscal Agent and Global Agent

Benchmark Bills and Short-Term Notes that are Fed Book-Entry Securities

As described in Appendix B, Benchmark Bills and Short-Term Notes that are Fed Book-Entry Securities are issued under a fiscal agency agreement between Fannie Mae and FRBNY dated as of January 2, 1969, as amended or supplemented. The provisions of that agreement are substantially similar to the terms of the Fiscal Agency Agreement described below.

Other Fed Book-Entry Securities

The U.S. Federal Reserve Banks will be the fiscal agents for Fed Book-Entry Securities that are not Benchmark Bills or Short-Term Notes. The U.S. Federal Reserve Banks currently act as Fiscal Agent under the Fiscal Agency Agreement with Fannie Mae, dated as of April 23, 1974, as amended or supplemented. Fannie Mae and the U.S. Federal Reserve Banks may amend, modify or supplement in any respect, or may terminate, substitute or replace, the Fiscal Agency Agreement without the consent of any Holder of Fed Book-Entry Securities. Where we refer in this Offering Circular to the "Fiscal Agency Agreement," we mean the agreement in effect from time to time under which the U.S. Federal Reserve Banks act as the Fiscal Agent for the Fed Book-Entry Securities. We have engaged in, and in the future may engage in, other business relationships with them.

In acting under the Fiscal Agency Agreement, the Fiscal Agent acts solely as our fiscal agent and does not assume any obligation or relationship of agency or trust for or with any Holder.

Global Book-Entry Securities

We have appointed The Chase Manhattan Bank as the global agent for the Global Book-Entry Securities. The Chase Manhattan Bank acts as Global Agent under an agreement with Fannie Mae, dated as of December 21, 1999, as it may be amended and supplemented. The Chase Manhattan Bank, which has its principal U.S. corporate trust office at 450 West 33rd Street, 15th Floor, New York, NY 10001-2697, is the fiscal agent under some of our debt securities and has other business relationships with us.

In acting under the Global Agency Agreement, the Global Agent acts solely as our fiscal agent and does not assume any obligation or relationship of agency or trust for or with any Holder of a Global Book-Entry Security, except that any moneys held by the Global Agent for payment on a Global Book-Entry Security will be held in trust for the Holder (as provided in the Global Agency Agreement).

We have appointed initially the Global Agent as Registrar, Transfer Agent and Paying Agent for the Global Book-Entry Securities. We may vary or terminate the appointment of the Global Agent as the Registrar, Transfer Agent or Paying Agent or appoint additional or other transfer agents or paying agents or approve any change in the office through which the Registrar or any transfer agent or paying agent acts.

If any of the Debt Securities are listed on the Luxembourg Stock Exchange, and the rules of such Exchange so require, notice of any such change in appointments shall be published for the information of the Holders of Debt Securities.

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CLEARANCE AND SETTLEMENT

General

Debt Securities may be held through organizations participating in one or more international and domestic clearing systems, principally the systems operated by the U.S. Federal Reserve Banks and DTC, in the United States, and Euroclear and Cedelbank, in Europe. Electronic securities and payment transfer, processing, depositary and custodial arrangements among these systems and others, either directly or indirectly through custodians and depositaries, may enable Debt Securities to be issued, held and transferred among the systems as described below. Special procedures among these systems allow clearance and settlement of certain Debt Securities traded across borders in the secondary market. Cross-market transfers of Debt Securities denominated in some Specified Currencies may be cleared and settled using these procedures. However, there can be no assurance that cross-market transfers of any Debt Securities will be possible at any particular point in the future.

Each relevant system has its own separate operating procedures and arrangements with participants or accountholders that govern the relationship between them and the system and in respect of which we are not and will not be a party. The clearing systems may impose fees for the maintenance and operation of the accounts in which beneficial interests in the Debt Securities are maintained.

We expect that:

(1) most Debt Securities denominated and payable in U.S. dollars will clear and settle through the Fed Book-Entry System, and indirectly through other clearing systems, such as Euroclear or Cedelbank,

(2) Debt Securities denominated or payable in a Specified Currency other than U.S. dollars (and Debt Securities denominated and payable in U.S. dollars that are not cleared and settled in accordance with clause (1) above) will clear and settle through the system operated by DTC, and indirectly through other clearing systems, such as Euroclear or Cedelbank, and

(3) Debt Securities, irrespective of the Specified Currency in which they are denominated or payable, distributed solely outside of the United States will clear and settle through the systems operated by Euroclear, Cedelbank or other clearing system indicated in the applicable Pricing Supplement and, in certain cases, DTC.

The Clearing Systems

Fed Book-Entry System. The U.S. Federal Reserve Banks operate a book-entry system, which provides book-entry holding and settlement for U.S. dollar denominated securities issued by the U.S. Government, some of its agencies and instrumentalities and international organizations of which the United States is a member. The system enables Holding Institutions to hold, make payments and transfer securities and funds through the U.S. Federal Reserve Banks' Fedwire system.

DTC. DTC is a limited-purpose trust company organized under the laws of the State of New York, and is a member of the U.S. Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934, as amended. DTC holds securities for DTC participants and facilitates the clearance and settlement of transactions between DTC participants through electronic book-entry changes in accounts of DTC participants.

Euroclear and Cedelbank. Euroclear was created in 1968 to hold securities for its participants and to clear and settle transactions between its participants through simultaneous electronic book-entry delivery against payment. Euroclear is operated by Morgan Guaranty, and all Euroclear securities clearance and cash accounts are with Morgan Guaranty. They are governed by the Terms and Conditions governing use of Euroclear and the related Operating Procedures of the Euroclear System, and applicable Belgian law. Cedelbank is incorporated under the laws of Luxembourg as a limited company. A participant's overall contractual relations with Cedelbank are governed by the general Terms and Conditions, related operating rules and procedures and applicable Luxembourg law.

Cedelbank and Euroclear each hold securities for their customers and facilitate the clearance and settlement of securities transactions by electronic book-entry transfer between their respective account holders. Euroclear and Cedelbank have established an electronic bridge between their two systems across which their respective participants may settle trades with each other.

Other. We will describe in the applicable Pricing Supplement or other supplement any other clearing system that is available for a particular issue of Debt Securities.

Clearance and Settlement Procedures—Primary Distribution

On initial issue, Debt Securities will be credited through one or more of the systems described above or any other system specified in the applicable Pricing Supplement. Payment from the applicable Dealer for Fed Book-Entry Securities will be on a delivery versus payment basis and for Global Book-Entry Securities will be on a delivery versus payment or free delivery basis, as agreed to by us. Clearance and settlement procedures may vary according to the Specified Currency in which the Debt Securities are denominated or payable. The customary clearance and settlement procedures of certain systems are described below.

U.S. Federal Reserve Banks. Fed Book-Entry Securities will be issued and settled through the Fed Book-Entry System in same-day funds and will be held by designated Holding Institutions. After initial issue, all Fed Book-Entry Securities will continue to be held by those Holding Institutions in the Fed Book-Entry System unless arrangements are made for the transfer thereof to another Holding Institution.

DTC. DTC participants acting on behalf of investors holding Global Book-Entry Securities through DTC will follow the delivery practices applicable to securities eligible for DTC's Same-Day Funds Settlement System. Global Book-Entry Securities held through DTC will be credited to DTC participants' securities accounts following confirmation of receipt of payment to us on the relevant issue date.

Euroclear and Cedelbank. Investors holding Global Book-Entry Securities through Euroclear and Cedelbank will follow the settlement procedures applicable to conventional eurobonds. These Global Book-Entry Securities will be credited to Euroclear and Cedelbank participants' securities clearance accounts either on the relevant issue date or on the settlement day following the relevant issue date against payment in same-day funds, for value on the relevant issue date.

Clearance and Settlement Procedures—Secondary Market Transfers

Fed Book-Entry Securities. Transfers of Fed Book-Entry Securities can take place only in book-entry form on the Fed Book-Entry System. These transfers will occur between Holding Institutions in accordance with the rules of the Fed Book-Entry System.

Global Book-Entry Securities. Transfers of beneficial interests in Global Book-Entry Securities within the various systems that may be clearing and settling interests therein will be made in accordance with the usual rules and operating procedures of the relevant system applicable to the Specified Currency in which the Global Book-Entry Securities are denominated or payable and the nature of the transfer.

General. For issues of Debt Securities that are cleared and settled through more than one system, time zone differences may result in the securities account of an investor in one system being credited during the settlement processing day immediately following the settlement date of the other system and the cash account being credited for value on the settlement date but only being available as of the day following the settlement date.

Although the U.S. Federal Reserve Banks, DTC, Euroclear, Cedelbank and other clearing systems have procedures to facilitate transfers of beneficial interests in Debt Securities among their respective Holding Institutions, participants and accountholders, they are under no obligation to perform or continue to perform those procedures, and those procedures may be modified or discontinued at any time. None of us, the Fiscal Agent, the Global Agent or any other agent will have any responsibility for the performance by any system (other than the Fiscal Agent with respect to the Fed Book-Entry System) or their respective direct or indirect participants or accountholders of their respective obligations under the rules and procedures governing their operations.

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UNITED STATES TAXATION

The Debt Securities and payments thereon generally are subject to taxation. Therefore, you should consider the tax consequences of owning and receiving payments on the Debt Securities before acquiring them.

We have engaged Arnold & Porter as special tax counsel to review the following discussion. They have given us their written legal opinion that the discussion correctly describes the principal aspects of the U.S. federal tax treatment of beneficial owners ("Owners") of Debt Securities.

The following discussion is general and may not apply to your particular circumstances for any of the following (or other) reasons.


Because the following discussion may not apply to you, we advise you to consult your own tax advisors regarding the tax consequences of purchasing, owning and disposing of Debt Securities (or Interest Components or Principal Components), including the advisability of making any of the elections described below.

We sell many different types of Debt Securities, and the federal income tax rules that will apply to a Debt Security will depend both on the terms of that Debt Security and who owns it. The following discussion addresses an Owner who is a U.S. Person and some of the general rules applicable to the Debt Securities we sell. This section then discusses specific rules that apply to particular Debt Securities. These rules are grouped under the following headings, which describe a particular term a Debt Security may have or the circumstances under which it was acquired:


Our discussion addressed to Owners who are U.S. Persons concludes with descriptions of an elective method of determining income on the Debt Securities, the federal income tax consequences of selling or otherwise disposing of a Debt Security, the special rules that apply to Debt Securities with payments based on a non-U.S. currency and the rules that apply to Debt Securities that have been stripped into Interest and Principal Components.

The final two sections of the following discussion describe some of the federal tax rules of particular interest to Owners who are not U.S. Persons and rules concerning our reporting to the U.S. Internal Revenue Service (the "IRS") income that Owners earn on a Debt Security.

Special rules governing debt securities targeted to foreign markets are described in Appendix G.

U.S. Persons

The following discussion applies to you if you are a U.S. person.

In General

For purposes of the following discussion, a "U.S. Person" means:


If you are a U.S. Person and own a Debt Security, income from that Debt Security is subject to U.S. federal income taxation, and if you own the Debt Security when you die, the Debt Security will be included in your estate subject to U.S. federal estate tax.

Tax Status of Debt Securities for Building and Loans, Savings Banks and REITs

The IRS has ruled that Fannie Mae is an instrumentality of the United States for purposes of section 7701(a)(19) of the federal income tax code. Therefore, domestic building and loan associations and savings banks may treat investments in our securities as part of the percentage of total assets they must invest in specified assets, which includes "stock or obligations of a corporation which is an instrumentality of the United States." Further, the IRS permits real estate investment trusts (REITs) to treat holdings of Fannie Mae securities as "government securities" for purposes of the requirement that 75 percent of the value of their total assets consists of real estate assets, cash and cash items (including receivables), and government securities.

Proposed Regulations Governing Reopenings of Debt Instruments

In November 1999, the IRS issued proposed regulations that would establish new standards regarding when debt securities sold through reopenings will be considered, for tax purposes, part of the same issue as the original debt securities. These new standards are proposed to be effective only if and when the regulations become final. The proposed regulations are subject to change before they become final and the preamble to the proposed regulations states: "For debt instruments issued prior to the effective date of the regulations, no inference is intended as to how the term issue should be interpreted under the current final regulations."

Payments of Interest

Interest paid on a Debt Security generally is taxable as ordinary interest income. You must report this income when it accrues or you receive it, depending on your method of accounting for U.S. federal income tax purposes. You may have to follow special reporting rules, however, if your Debt Security has "original issue discount" ("OID"), as described in the following paragraphs.

Debt Securities Issued for Less Than Their Principal Amount

If you purchase a Debt Security at original issuance at a price below its principal amount, the federal tax laws generally treat the difference between the amount you paid and the Debt Security's principal amount as OID. In addition, if you purchase at original issuance a Debt Security that matures one year or less from its issuance date, that Debt Security has OID as described below under "United States Taxation—U.S. Persons—Debt Securities with a Term of One Year or Less." Rules in the federal tax laws (the "OID Regulations") define OID as the excess of the "stated redemption price at maturity" (defined below) of each such Debt Security over its "issue price" (defined below) if such excess equals or exceeds a de minimis amount. If all of the principal to be paid on a Debt Security is to be paid in a single payment, de minimis OID is defined as one-quarter of one percent of such Debt Security's stated redemption price at maturity multiplied by the number of complete years to its maturity. The "stated redemption price at maturity" of a Debt Security is the sum of all payments on the Debt Security other than interest based on a fixed rate (or a variable rate, unless an applicable Pricing Supplement states otherwise) and payable unconditionally at least annually. The "issue price" of a Debt Security is the first price at which a substantial amount of that issue of Debt Securities is sold to the public for cash (ignoring sales to bond houses, underwriters, placement agents and other wholesalers).

If you own a Debt Security with a de minimis amount of OID you must include any de minimis OID in income, as capital gain, on a pro rata basis as principal payments are made on the Debt Security.

If your Debt Security has more than de minimis OID, you must include the OID in income as it accrues, which may be before you receive cash attributable to such income. You must include OID in income using the yield to maturity of the Debt Security (as defined in the OID Regulations), which is computed based on a constant annual rate of interest and compounding at the end of each accrual period. The OID Regulations permit you to use accrual periods of any length from one day to one year to compute accruals of OID, provided each scheduled payment of principal or interest occurs either on the first or the last day of an accrual period. Under these rules, you must include in income increasingly greater amounts of OID in successive accrual periods, unless payments that are part of the stated redemption price at maturity of a Debt Security are made before its final maturity.

Different specific rules may apply to variable rate Debt Securities that are subject to a maximum or minimum interest rate, Debt Securities with a zero or reduced interest rate for an initial period, and certain other situations. Unless we describe these rules in an applicable Pricing Supplement, these other special rules will not apply to you.

Debt Securities That We May Redeem Before Maturity

The OID Regulations contain additional rules that apply to Debt Securities that we may redeem ("call") prior to their final maturity date. Under these rules, we will be presumed to exercise a call right if doing so would lower the yield to maturity of the callable Debt Security. If we do not exercise the call right, the Debt Security will be deemed reissued at the call price for purposes of determining subsequent accruals of interest and OID.

The rules concerning callable Debt Securities are especially important for determining the treatment of "Step-Up Debt Securities." Step-Up Debt Securities are Debt Securities that are issued at par, have an initial fixed interest rate that increases to a higher fixed rate on a specified date, and are redeemable at par on the date the rate changes (including Debt Securities that also may be redeemable prior to that date or that may increase to a higher fixed rate at a later date). Because the yield to maturity on Step-Up Debt Securities would be lower if they were called prior to an increase in the stated interest rate, each issue of Step-Up Debt Securities will be treated as maturing on the first permissible call date. If an issue of Step-Up Debt Securities is not in fact called on that date, or is called only in part, the Step-Up Debt Securities (to the extent of their remaining outstanding principal amount) will be deemed to be called and reissued at 100% of the then outstanding principal amount. The above rules also apply to any deemed reissued Debt Securities that would be a Step-Up Debt Security if issued on the deemed reissue date. As a result of these special rules, Step-Up Debt Securities do not have any OID solely as a result of the structure of their interest rates. Thus, if you own Step-Up Debt Securities you should take stated interest on such Debt Securities into account under your regular method of accounting.

Debt Securities with a Term of One Year or Less

All stated interest payments on a Debt Security that matures one year or less from the date it is issued (a "Short-Term Obligation") are included in the stated redemption price at maturity of the Debt Security and, therefore, are treated as OID.

If you use the cash method of accounting, which most individual taxpayers do (a "cash method Owner"), you must report OID on a Short-Term Obligation as follows, unless you either are required or elect (as described below) to include OID on a Short-Term Obligation in income currently:


A cash method Owner of a Short-Term Obligation who is not otherwise required to account for interest or OID on a Short-Term Obligation as it accrues may elect to include in income OID as it accrues (as if the Owner used the accrual method of accounting, under the rules described in the following paragraph). This election will apply to all debt obligations having a maturity of one year or less that the Owner holds in the taxable year of the election and in all subsequent years. An Owner may revoke the election described in this paragraph only with the consent of the IRS.

If you use the accrual method of accounting ("accrual method Owner"), or if you are a bank, regulated investment company or are described in section 1281(b) of the federal income tax code, you are required to include OID on a Short-Term Obligation in income as it accrues on a straightline basis, regardless of your method of accounting. Alternatively, you may make an irrevocable election to accrue such OID on the basis of the Debt Security's yield to maturity and daily compounding.

In addition, any Owner may make the election described below under "United States Taxation— U.S. Persons—Accrual Method Election" for a Short-Term Obligation. That election is independent of the elections described in the preceding paragraphs.

In certain cases, Step-Up Debt Securities may provide for a fixed interest rate that increases to a higher fixed interest rate exactly one year (or less) after the date of issuance. In such cases, the Step-Up Debt Securities would not be characterized as Short-Term Obligations under the OID Regulations, even though it is presumed for purposes of computing accruals of interest and OID that we will call the Step-Up Debt Securities one year or less after they are issued.

The federal income tax laws are unclear concerning how to determine the amount of interest or OID income accruing on a variable rate Debt Security with a term of one year or less. One method would be to treat the stated interest on such a Debt Security as interest that is taxable as ordinary interest income. Alternatively, the stated interest on a variable rate Debt Security that is also a Short-Term Obligation could be treated as OID under the rules described above for Short-Term Obligations. Generally, the two methods will not produce materially different results.

Debt Securities Purchased for More Than Their Issue Price

If you purchase a Debt Security for more than its principal amount (or, in the case of a Debt Security with OID, its stated redemption price at maturity) you will have premium ("Premium") with respect to such Debt Security in the amount of such excess. See "—Debt Securities Purchased at a Premium" below.

If you purchase a Debt Security with OID at a price above its adjusted issue price (as defined below) but less than its stated redemption price at maturity, you will have acquisition premium ("Acquisition Premium") with respect to such Debt Security in the amount of such excess over the adjusted issue price. The "adjusted issue price" of a Debt Security is defined as the sum of the issue price of the Debt Security and the aggregate amount of previously accrued OID, if any, less any prior payments of amounts included in its stated redemption price at maturity. See "—OID Debt Securities Purchased at an Acquisition Premium" below.

Debt Securities Purchased at a Premium

Owners who purchase a Debt Security at a Premium may elect to treat such Premium as "amortizable bond premium." If you make this election, the amount of interest that you must include in income for each accrual period (where such Debt Security is not optionally redeemable prior to its Maturity Date) is reduced by the portion of the Premium allocable to such period based on the Debt Security's yield to maturity. If the amortizable bond premium allocable to an accrual period exceeds the interest allocable to the accrual period, you treat the excess as a bond premium deduction for the accrual period. However, the amount treated as a bond premium deduction is limited to the amount by which your total interest income on the Debt Security in prior accrual periods exceeds the total amount treated by you as a bond premium deduction on the Debt Security in prior accrual periods. If a Debt Security may be called prior to maturity, but after you acquired it, you generally may not assume that the call will be exercised and must amortize Premium to the Maturity Date. If the Debt Security is in fact called, you may deduct any unamortized Premium in the year of the call. If you make the election described above, the election will apply to all debt securities the interest on which is not excludible from gross income ("Fully Taxable Bonds") that you hold at the beginning of the first taxable year to which the election applies and to all Fully Taxable Bonds you later acquire. You may revoke this election only with the consent of the IRS.

If you do not make this election, you must include the full amount of each interest payment in income in accordance with your regular method of accounting and you will receive a tax benefit from the Premium only in computing your gain or loss upon the sale or other disposition or retirement of the Debt Security. In the case of a Short-Term Obligation, the election is available only to those cash-method Owners that neither are required nor have elected to account for interest or OID on the Short-Term Obligation as it accrues.

If you purchase a Debt Security with OID at a Premium, you are not required to include in income any OID with respect to such Debt Security.

OID Debt Securities Purchased at an Acquisition Premium

If you purchase a Debt Security with OID at an Acquisition Premium, the amount of OID you will include in income in each taxable year will be reduced by that portion of the Acquisition Premium properly allocable to such year. Unless you make the accrual method election described below in "United States Taxation—U.S. Persons—Accrual Method Election," Acquisition Premium is allocated on a pro rata basis to each accrual of OID, so that you are allowed to reduce each accrual of OID by a constant fraction.

Debt Securities Purchased for Less than Their Issue Price

If you purchase a Debt Security (other than a Short-Term Obligation) at a price less than its stated redemption price at maturity (or, in the case of a Debt Security with OID, its adjusted issue price) you will have market discount ("Market Discount") with respect to such Debt Security in the amount of such shortfall. If you purchase a Debt Security (other than a Short-Term Obligation) at a Market Discount you are required (unless such Market Discount is less than a de minimis amount) to treat any principal payments on, or any gain realized upon the disposition or retirement of such Debt Security, as interest income to the extent of the Market Discount that accrued while you held such Debt Security, unless you elect to include such Market Discount in income on a current basis. Market Discount is considered to be de minimis if it is less than one-quarter of one percent of a Debt Security's stated redemption price at maturity multiplied by the number of complete years to maturity after the Owner acquired such Debt Security. If you dispose of a Debt Security with more than a de minimis amount of Market Discount in a nontaxable transaction (other than a nonrecognition transaction described in section 1276(d) of the federal income tax code), accrued Market Discount is includible as ordinary income as if you had sold the Debt Security at its then fair market value.

If you acquire a Debt Security at a Market Discount and you do not elect to include Market Discount in income on a current basis, you may be required to defer the deduction of a portion of the interest expense on any indebtedness you incurred or continued to purchase or carry the Debt Security until the deferred income is realized.

Accrual Method Election

You may elect to include in gross income your entire return on a Debt Security (i.e., the excess of all remaining payments to be received on the Debt Security over the amount you paid for the Debt Security) based on the compounding of interest at a constant rate. Such an election for a Debt Security with amortizable bond premium (or Market Discount) will result in a deemed election for all your debt instruments with amortizable bond premium to amortize the premium (or currently include the Market Discount). You may revoke the accrual method election only with the permission of the IRS.

Disposition or Retirement of Debt Securities

When you sell, exchange or otherwise dispose of a Debt Security, or when we retire a Debt Security (including by redemption), you will recognize gain or loss equal to the difference, if any, between the amount you realize upon the disposition or retirement and your tax basis in the Debt Security. Your tax basis for determining gain or loss on the disposition or retirement of a Debt Security generally is your U.S. dollar cost of such Debt Security, increased by the amount of OID and any Market Discount includible in your gross income with respect to such Debt Security, and decreased by the amount of any payments under the Debt Security that are part of its stated redemption price at maturity and by the portion of any Premium previously taken into account.

Gain or loss you realize on a disposition or retirement of a Debt Security is capital gain or loss (except to the extent the gain represents accrued interest, OID or Market Discount on the Debt Security not previously included in gross income, to which extent such gain or loss would be treated as ordinary income). Any capital gain or loss is long-term capital gain or loss if at the time of disposition or retirement you held the Debt Security for more than one year. The deductibility of capital losses is subject to limitations. Tax rates on capital gain for individual Owners vary depending on each Owner's income and holding period for the Debt Security. Owners who are individuals should contact their own tax advisors for more information or for the capital gains tax rate applicable to a specific Debt Security.

If you own redeemable Debt Securities, such as Step-Up Debt Securities, and if a call right that is presumed exercised is not in fact exercised, the deemed reissuance of the Debt Securities for purposes of computing subsequent accruals of interest and OID will not result in a deemed disposition or retirement of the Step-Up Debt Securities.

Debt Securities with Payments Based on a Non-U.S. Currency

Special rules govern the taxation of Debt Securities whose interest and principal payments are made in a currency other than U.S. dollars (a "Non-U.S. Currency") or are determined by reference to a single Non-U.S. Currency. Generally, an Owner will first compute its interest or OID income on such a security in the Non-U.S. Currency and then translate that income into U.S. dollars. The method and timing of the translation will depend on an Owner's usual method of accounting and whether the Debt Security has OID.

Debt Securities without OID

If you are a cash method Owner and your interest payment is made in or determined by reference to a Non-U.S. Currency, the amount of income you recognize will be the U.S. dollar value of the interest payment you receive, based on the spot exchange rate on the date you receive it.

If you are an accrual method Owner, the amount of income you recognize will be based on the average exchange rate during the interest accrual period. When an accrual period includes parts of two taxable years, which will occur whenever a payment of interest is not due on the last day of your taxable year, the exchange rate you will use to determine your income for that portion of the accrual period in each of the years will be the average exchange rate for the portion of the accrual period in that year.

Alternatively, an accrual method Owner may elect to use the exchange rate in effect on the last day of the accrual period to translate interest income into U.S. dollars. When an accrual period includes parts of two taxable years, you will determine your income for that portion of the accrual period in the first taxable year based on the exchange rate in effect at the end of the year, and you will use the exchange rate in effect at the end of the accrual period to determine your income for that portion of the accrual period in the second year. Further, if an accrual method Owner receives a payment of interest within five business days of the last day of the accrual period or taxable year, that Owner instead may elect to use the exchange rate in effect on the day the payment is received to translate such accrued interest into U.S. dollars. If you make this election, it will apply to all debt instruments you hold at the beginning of the first taxable year to which the election applies or thereafter acquired. You may revoke the election only with the consent of the IRS.

When you receive an interest payment denominated in or determined by reference to a Non-U.S. Currency (including a payment attributable to accrued but unpaid interest you receive when you sell a Debt Security or we retire it), you will recognize ordinary income or loss due to changes in exchange rates, which will be measured by the difference between the amount of interest income accrued and the value of the interest payment received.

Debt Securities with OID

If all of the payments on a Debt Security with OID are determined by reference to a single Non-U.S. Currency, an Owner will compute the accruals of OID in that Non-U.S. Currency. The accruals will then be translated into U.S. dollars under the rules described above for accrual method Owners. The rules in this paragraph apply to both cash method Owners and accrual method Owners.

Disposition or Retirement of Debt Securities

When you sell, exchange or otherwise dispose of a Debt Security, or when we retire a Debt Security (including by redemption), you will recognize gain or loss equal to the difference, if any, between the amount you realize upon the disposition or retirement and your tax basis in the Debt Security. The amount you realize on a disposition or retirement when you are paid an amount in a Non-U.S. Currency will be the U.S. dollar value of that amount either on the date of disposition or retirement or on the settlement date, the latter applying only in the case of a Debt Security traded on an established securities market and sold by a cash method Owner or an electing accrual method Owner. If an Owner is paid in U.S. dollars upon the disposition or retirement of a Debt Security payable by its terms in a Non-U.S. Currency, that amount may not be the same as the amount you realize for tax purposes, which is described in the preceding sentence.

Your tax basis for determining gain or loss on the disposition or retirement of a Debt Security will be your U.S. dollar cost of such Debt Security, increased by the amount of OID and Market Discount includible in your gross income from the Debt Security, and decreased by the amount of any payments under the Debt Security that are part of its stated redemption price at maturity and by the portion of any Premium previously taken into account. The U.S. dollar cost of Debt Securities purchased with Non-U.S. Currency generally will be the U.S. dollar value of the purchase price either on the date of purchase or on the settlement date for the purchase, the latter applying only in the case of Debt Securities traded on an established securities market and purchased by a cash method Owner or an electing accrual method Owner. If you purchase a Debt Security by converting U.S. dollars into the Non-U.S. Currency in which that Debt Security is payable, the U.S. dollar amount so converted may not be the same as the U.S. dollar value of the purchase price on the date of purchase or settlement, which, as described in the preceding sentence, is used to calculate your tax basis.

Gain or loss you realize on a disposition or retirement of a Debt Security will be capital gain or loss, with two exceptions: (1) to the extent the gain represents accrued interest, OID or Market Discount on the Debt Security not previously included in gross income or (2) to the extent the gain or loss is attributable to changes in exchange rates. To the extent gain or loss falls into these exceptions, such gain or loss would be ordinary income. More information about the treatment of capital gains and losses is described above under "Disposition or Retirement of Debt Securities" in the U.S. Person discussion.

Exchanges of Non-U.S. Currency

Non-U.S. Currency you receive as interest on a Debt Security or on the disposition or retirement of a Debt Security will have a tax basis equal to its U.S. dollar value at the time you receive the interest or at the time of the disposition or retirement. Non-U.S. Currency you purchase generally will have a tax basis equal to the U.S. dollar value of such Non-U.S. Currency on the date of purchase. Any gain or loss recognized on a sale or other disposition of a Non-U.S. Currency (for example, if you use it to purchase Debt Securities or exchange it for U.S. dollars) will be ordinary income or loss.

Conversion to the Euro

A conversion of an amount payable on a Debt Security from a national currency of a participating member state of the European Union ("legacy currencies") to the Euro will not be treated as an event giving rise to the recognition of gain or loss for federal income tax purposes. Similarly, the conversion of an amount paid on a Debt Security from a legacy currency into Euro will not be a recognition event.

Interest and Principal Components of Eligible Securities

Owners of Interest and Principal Components

Under federal tax law, each time an Interest or Principal Component of an Eligible Debt Security is bought, that Component will be treated as if it had been issued to the new Owner on the date of the ownership change for an issue price equal to the purchase price paid by the new Owner for the Component. Accordingly, the tax consequences to an Owner of an Interest or Principal Component are determined as if the Component were a Debt Security issued on the date of acquisition or, in the case of a Component maturing one year or less from the date of acquisition, a Short-Term Obligation issued on that date. The stated redemption price at maturity of an Interest or Principal Component is the amount payable on that Component (or the sum of all amounts payable, in the case of certain Principal Components calling for more than one payment).

Special rules apply to Principal Components of Eligible Debt Securities, such as Step-Up Debt Securities, that we may redeem before they mature ("Callable Principal Components"). As described above in "United States Taxation—U.S. Persons—Debt Securities That We May Redeem Before Maturity," if a debt instrument may be called prior to its maturity, a presumption is made that the call will be exercised if the yield to the call date is less than the yield to maturity. In applying this rule to a Callable Principal Component, it is not clear whether this determination is to be made separately for the Callable Principal Component or with respect to the underlying Eligible Debt Securities. If the call is presumed to be exercised, but is not exercised in fact, the Callable Principal Component is treated, solely for purposes of accruing OID, as if the call had been exercised and a new Eligible Debt Security issued on the presumed exercise date for an amount equal to the call price. In such event, the interest payments on the new Debt Security should be treated as interest in accordance with the Owner's normal method of accounting. If, conversely, the call is presumed not exercised and in fact is exercised, then the Callable Principal Component is considered to have been redeemed prior to maturity.

Tax Consequences of Stripping an Eligible Debt Security

An Owner of an Eligible Debt Security is taxed on income from the Debt Security as if the ability to "strip" the Debt Security did not exist, unless and until both the Eligible Debt Security is stripped and the Owner disposes of some or all of the resulting Components. The mere exchange of an Eligible Debt Security for Interest and Principal Components, without the disposition of any of those Components, should not be treated as a taxable event. If you exchange an Eligible Debt Security for Interest and Principal Components and dispose of all of those Components, you effectively will be treated as if you had disposed of the Eligible Debt Security. See "United States Taxation—U.S. Persons— Disposition or Retirement of Debt Securities." If you dispose of less than all the Components resulting from the stripping transaction, you will be required to take the following steps:


Generally, any gain or loss on the disposition of an Interest or Principal Component is capital gain or loss.

You will be taxed on each retained Component as if you had purchased the retained Component for an amount equal to the basis allocated to that Component.

Ownership of Pro Rata Share of Outstanding Interest and Principal Components

If you purchase the same pro rata share of Principal Components and the related unmatured Interest Components, while the matter is not free from doubt, it appears that you should treat each Component separately, rather than as a combined Eligible Debt Security. You may purchase the same pro rata share of Principal Components and the applicable Interest Components and request the FRBNY to reconstitute such Components as an Eligible Debt Security. While the matter again is not free from doubt, it appears that you should not treat the reconstitution as a taxable exchange and you should continue to treat each Component separately. The IRS could assert, however, that combined treatment as an Eligible Debt Security should apply to an investor owning a pro rata share of all outstanding Components or that combined treatment applies once there has been a reconstitution.

Non-U.S. Persons

The following discussion applies to you if you are a non-U.S. person.

Interest and OID

If you own a Debt Security and are a non-U.S. Person, each payment of interest (including OID, if any) on the Debt Security will be subject to a 30 percent U.S. federal income and withholding tax, unless one of the following exemptions applies:


(1) the last U.S. payor in the chain of payment prior to payment to a non-U.S. Person (the "Withholding Agent") has received in the year in which such payment occurs, or in either of the two preceding years, a statement signed by you under penalties of perjury that certifies that you are not a U.S. Person and provides your name, address and taxpayer identification number, if any;

(2) the Withholding Agent and all intermediaries between you and the Withholding Agent do not have actual knowledge that your non-U.S. beneficial ownership statement is false; and

(3) you are not an "excluded person" (i.e., (a) a bank that receives payments on the Debt Securities that are described in section 881(c)(3)(A) of the federal income tax code, (b) a 10 percent shareholder of Fannie Mae within the meaning of section 871(h)(3)(B) of the federal income tax code, or (c) a "controlled foreign corporation" related to Fannie Mae within the meaning of section 881(c)(3)© of the federal income tax code).

You may make the non-U.S. beneficial ownership statement on an IRS Form W-8BEN or a substantially similar substitute form. You must inform the Withholding Agent (or the last intermediary in the chain between you and the Withholding Agent) of any change in the information on the statement within 30 days of the change. If you hold a Debt Security through a securities clearing organization or certain other financial institutions, the organization or institution may provide a signed statement to the Withholding Agent on your behalf. In such case, however, the signed statement must be accompanied by a copy of a Form W-8BEN or substitute form provided by you to the organization or institution. In all cases, the Form W-8BEN or substitute form must be filed by the Withholding Agent with the IRS. The U.S. Treasury Department is empowered to publish a determination that a beneficial ownership statement from any person or class of persons will not be sufficient to preclude the imposition of U.S. federal withholding tax with respect to payments of interest made at least one month after the publication of such determination.


In certain circumstances, you may be able to claim amounts that are withheld as a refund or as a credit against your U.S. federal income tax.

Special rules may apply to certain Short-Term Notes payable in full within 183 days after the date of original issue which are sold under arrangements reasonably designed to ensure that they will be sold only to persons who are not U.S. persons. See Appendix B, "Benchmark Bills and Short-Term Notes—United States Taxation".

New regulations relating to withholding, backup withholding and information reporting with respect to payments made to non-U.S. Persons generally are effective for payments made after December 31, 2000. However, withholding certificates that are valid under the present rules and that are held by a Withholding Agent on December 31, 1999, remain valid until the earlier of December 31, 2000 or the expiration date of the certificate under the present rules, unless otherwise invalidated due to changes in your circumstances.

When effective, the new regulations will streamline and, in some cases, alter the types of statements and information that must be furnished to claim a reduced rate of withholding. The regulations also clarify the duties of Withholding Agents and modify the rules concerning withholding on payments made to non-U.S. Persons through foreign intermediaries. With some exceptions, the new regulations treat a payment to a foreign partnership as a payment directly to the partners, so that the partners are required to provide any required certifications.

Disposition or Retirement of Debt Securities

Except as provided below in "United States Taxation—Information Reporting and Backup Withholding," if you are a non-U.S. Person (other than certain nonresident alien individuals present in the United States for a total of 183 days or more during his or her taxable year) you will not be subject to U.S. federal income tax, and no withholding of such tax will be required, with respect to any gain that you realize on the disposition or retirement of a Debt Security.

Federal Estate Tax

If you are a non-U.S. Person and are not domiciled in the U.S., the Debt Securities will not be includible in your estate if interest paid (including OID, if any) on the Debt Securities to you at the time of your death would have been exempt from U.S. federal income and withholding tax as described above under "United States Taxation—Non-U.S. Persons—Interest and OID—General Exemption for Non-U.S. Persons" (without regard to the requirement that a non-U.S. beneficial ownership statement has been received).

Information Reporting and Backup Withholding

Payments of interest (including OID, if any) on Debt Securities held by U.S. Persons other than corporations and other exempt holders are required to be reported to the IRS.

Backup withholding of U.S. federal income tax at a rate of 31 percent may apply to payments made in respect of the Debt Securities, as well as payments of proceeds from the sale of Debt Securities. Backup withholding will apply on such payments to holders or Owners that are not "exempt recipients" and that fail to provide certain identifying information (such as their taxpayer identification numbers) in the manner required. Individuals generally are not exempt recipients, whereas corporations and certain other entities generally are exempt recipients.

If a Debt Security is sold before its Maturity Date to (or through) a "broker," the broker may be required to withhold 31 percent of the entire sale price. The broker will not withhold if either the broker determines that the seller is a corporation or other exempt recipient or the seller provides, in the required manner, certain identifying information and, in the case of a non-U.S. Person, certifies that such seller is a non-U.S. Person (and certain other conditions are met). The broker must report such a sale to the IRS unless the broker determines that the seller is an exempt recipient or the seller certifies its non-U.S. status (and certain other conditions are met). Certification of the Owner's non-U.S. status normally would be made on IRS Form W-8 under penalties of perjury, although in certain cases it may be possible to submit certain other signed forms. The term "broker," as defined by Treasury regulations, includes all persons who, in the ordinary course of business, stand ready to effect sales made by others. This information reporting requirement generally will apply to a U.S. office of a broker and to a foreign office of a U.S. broker, as well as to a foreign office of a foreign broker (i) that is a "controlled foreign corporation" within the meaning of section 957(a) of the federal income tax code, (ii) 50 percent or more of whose gross income from all sources for the three-year period ending with the close of its taxable year preceding the payment (or for such part of the period that the foreign broker has been in existence) was effectively connected with the conduct of a trade or business within the United States, or (iii) (in the case of payments made after December 31, 2000) that is a foreign partnership with certain connections to the U.S., unless such foreign office has both documentary evidence that the seller is a non-U.S. Person and no actual knowledge that such evidence is false.

An Owner may claim any amounts withheld under the backup withholding rules as a refund or a credit against the Owner's U.S. federal income tax, provided that the required information is furnished to the IRS. Furthermore, the IRS may impose certain penalties on a holder or Owner who is required to supply information but who does not do so in the proper manner.

Payments of interest (including payments of OID, if any) on a Debt Security that is beneficially owned by a non-U.S. Person will be reported annually on IRS Form 1042S, which the Withholding Agent must file with the IRS and furnish to the Owner.

General Information

The U.S. federal tax discussion set forth above is included for your general information only and may not apply in your particular situation. You should consult your own tax advisors with respect to the tax consequences of your purchase, ownership and disposition of the Debt Securities, including the tax consequences under the tax laws of the United States, states, localities, countries other than the United States and any other taxing jurisdictions and the possible effects of changes in such tax laws.

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PLAN OF DISTRIBUTION

We will offer the Debt Securities to or through the Dealers under the terms and conditions set forth in a Dealer Agreement (the "Dealer Agreement") among us and the Dealers listed on page 47. Under the terms of the Dealer Agreement, we may add other securities dealers or banks in connection with the distribution of the Debt Securities or any particular issue of Debt Securities. Those securities dealers or banks, together with the Dealers named herein, are referred to in this Offering Circular collectively as the "Dealers."

Benchmark Bills and Short-Term Notes

We will offer and sell Benchmark Bills and Short-Term Notes through the Dealers as described under "Distribution of Benchmark Bills and Short-Term Notes" in Appendix B.

Other Benchmark Securities and Debt Securities

Sales to Dealers as Principal

We will sell Debt Securities primarily to Dealers as principal, either individually or as part of a syndicate. These sales may be by auction or other methods. Dealers will resell Debt Securities to investors at a fixed offering price or at variable offering prices related to market prices prevailing at the time of resale. Except in certain circumstances, Dealers may sell the Debt Securities to other dealers at a concession, in the form of a discount, to be received by other Dealers. The concession may be all or a portion of the underwriting compensation. Dealers will advise us whether an offering is on a fixed price or variable price basis and of any concessions or reallowances that will be provided to other dealers. We will include that information, as provided by the Dealers, in the applicable Pricing Supplement. After an initial offering of Debt Securities, the offering price (in the case of a fixed price offering), the concession and the reallowance may change.

Sales Through Dealers to Customers

We may authorize Dealers to solicit customer offers to purchase Debt Securities on a non-underwritten basis on terms we determine. Dealers have agreed to use their best efforts when soliciting non-underwritten sales. Dealers also may approach us on behalf of investors and other purchasers with offers to purchase Debt Securities on a non-underwritten basis. We will sell Debt Securities on a non-underwritten basis at 100% of the principal amount, unless we specify otherwise in the applicable Pricing Supplement. We will pay the Dealers through whom a Debt Security is sold a commission in an amount specified in the applicable Pricing Supplement. The commission will be expressed as a percentage of the principal amount of the Debt Securities (or the initial offering price for Zero-Coupon Debt Securities and certain other Debt Securities sold at a discount). We will have the sole right to accept offers to purchase Debt Securities and may reject all or a portion of any offer. Each Dealer will have the right, using reasonable discretion, to reject all or a portion of any offer to purchase Debt Securities solicited on a non-underwritten basis.

Sales Directly to Investors

We also may sell Debt Securities directly to investors on our own behalf. We will not pay a commission to any Dealer on direct sales.

Trading Markets and Secondary Market Information

We have applied for certain Debt Securities issued under this Universal Debt Facility to be listed on the Luxembourg Stock Exchange. We also may issue unlisted Debt Securities and Debt Securities listed on other exchanges. The Pricing Supplement will identify any exchange to which an initial listing application will be made.

There may be no established trading market for Debt Securities when issued. Dealers have agreed to use their best efforts to facilitate secondary market transactions in each issue of Debt Securities for which they were a participating Dealer, but a secondary market may not develop. If a secondary market develops, it may not be very liquid. See "Risk Factors—Risks Related to Market Liquidity and Yield."

Dealers have agreed to provide certain indicative pricing information to Bloomberg L.P. or another information service designated by us for Benchmark Securities. Dealers will be solely responsible for the indicative information so provided, which is indicative of, but may not reflect actual, secondary market prices.

Market Transactions

When Dealers purchase Debt Securities as principal for resale on a fixed-price basis, they may engage in transactions that stabilize the price of the Debt Securities. These transactions may include entering stabilizing bids or effecting syndicate covering transactions. A stabilizing bid means the placing of a bid or the effecting of a purchase for the purpose of pegging, fixing or maintaining the price of Debt Securities. A syndicate covering transaction means placing a bid on behalf of a dealer or dealer syndicate or making a purchase to reduce a short position (i.e., a position resulting from the sale of Debt Securities in an aggregate principal amount in excess of that specified in the applicable Pricing Supplement) created in connection with an offering of Debt Securities. Dealers in Debt Securities are not required to engage in any of these transactions. When they do, Dealers do so on their own behalf and not as our representatives. If Dealers commence these transactions, Dealers may discontinue them at any time.

In connection with any particular issue of Debt Securities, we may enter into swaps, other hedging transactions or reverse repurchase transactions with, or arranged by, the applicable Dealer or an affiliate. The Dealer or other parties may receive compensation, trading gain, temporary funding or other benefits from these transactions. We also may from time to time engage in other hedging activities or reverse repurchase transactions involving Debt Securities, in the open market or otherwise. We are not required to engage in any of these transactions. If we commence these transactions, we may discontinue them at any time. Counterparties to these hedging activities also may engage in market transactions involving Debt Securities.

Neither we nor the Dealers make any representation or prediction as to the direction or magnitude of any effect that the transactions described in the two preceding paragraphs may have on the price of Debt Securities.

Additional Information

Neither we nor the Dealers have authorized anyone to give you any information or to make any representation not contained in this Offering Circular or an applicable Pricing Supplement or other applicable supplement. Neither delivery of this Offering Circular, any Pricing Supplement or any other supplement nor any sale of Debt Securities shall imply that there has been no change in our affairs since the dates of those documents. Information in those documents may not be correct as of any time subsequent to the date of the information.

The purchase price of Debt Securities must be paid to us in immediately available funds. Your payment will be effective only upon our receipt of the funds. In a non-underwritten sale, the Dealer will act on behalf of the purchaser of Debt Securities in transmitting the purchaser's funds to us.

We and the Dealers have agreed to indemnify each other against, and contribute toward, certain liabilities.

Purchasers of Debt Securities may be required to pay stamp taxes and other charges in accordance with the laws and practices of the country of purchase. We do not, and any Dealer does not, represent that the Debt Securities may be sold lawfully at any time in compliance with any applicable registration or other requirements in any jurisdiction, or pursuant to an available exemption, nor do we or any Dealer assume any responsibility for facilitating those sales.

From time to time, Fannie Mae may request, and the Dealers may disclose to Fannie Mae, the identity of the purchasers of Debt Securities and volume and pricing information for secondary market transactions, including repurchase transactions. Fannie Mae will use the information for internal purposes only, and make no further disclosure of it.

The Dealers and their affiliates engage in transactions with us and perform services for us in the ordinary course of business.

Dealers

The following securities dealers and banks currently may act as Dealers under the Universal Debt Facility. Other securities dealers and banks may be added from time to time in connection with the distribution of the Debt Securities or any particular issue of Debt Securities. As noted above, any applicable Pricing Supplement will identify any applicable Dealer or Dealers for an issue of Debt Securities.

ABN AMRO Incorporated
Banc of America Securities LLC
Banc One Capital Markets, Inc.
Barclays Capital Inc.
Bear, Stearns & Co. Inc.
Berean Capital Incorporated
Blaylock & Partners, L.P.
Chase Securities Inc.
Countrywide Securities Corporation
Credit Suisse First Boston Corporation
Deutsche Bank Securities Inc.
Donaldson, Lufkin & Jenrette Securities Corporation
First Tennessee Bank National Association
First Union Capital Markets, Inc.
Fuji Securities Inc.
Gardner Rich & Co.
Goldman, Sachs & Co.
HSBC Securities (USA) Inc.
J.P. Morgan Securities Inc.
Jackson Securities Incorporated
Aubrey G. Lanston & Co. Inc.
LaSalle National Bank
Lehman Brothers Inc.
Merrill Lynch Government Securities, Inc.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Morgan Keegan & Co., Inc.
Morgan Stanley & Co. Incorporated
Myerberg & Company, L.P.
Ormes Capital Markets, Inc.
PaineWebber Incorporated
Paribas Corporation
Prudential Securities Incorporated
Pryor, Counts & Co., Inc.
Redwood Securities Group, Inc.
Robert Van Securities, Inc.
Salomon Smith Barney Inc.
SBK-Brooks Investment Corporation
Siebert Brandford Shank & Co., L.L.C
Tokyo-Mitsubishi International plc
Utendahl Capital Partners, L.P.
Vining-Sparks IBG, Limited Partnership
Walton Johnson & Company
Warburg Dillon Read LLC
The Williams Capital Group, L.P.

Selling Restrictions

The Debt Securities may be offered or sold only where it is legal to do so. The Dealers have represented and agreed that they will comply with all applicable laws and regulations in each jurisdiction in which they may purchase, offer, sell or deliver Debt Securities or distribute this Offering Circular, any Pricing Supplement or any other offering material. The Dealers also have agreed to comply with certain selling restrictions relating to certain countries. A description of some of those restrictions, as in effect as of the date of this Offering Circular, are set forth in Appendix D. We and the Dealers may modify selling restrictions at any time.

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VALIDITY OF THE DEBT SECURITIES

Brown & Wood LLP, New York, New York, will pass upon the validity of the Debt Securities for Fannie Mae. Sullivan & Cromwell, Washington, D.C., will pass upon the validity of the Debt Securities for the Dealers. Arnold & Porter, Washington, D.C., will pass upon U.S. federal income tax matters for Fannie Mae.

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GENERAL INFORMATION

Application has been made for Debt Securities issued under this Universal Debt Facility through December 21, 2000 to be listed on the Luxembourg Stock Exchange. The Luxembourg Stock Exchange has allocated the number 9170 to the Universal Debt Facility for listing purposes. As of the date of this Offering Circular, Debt Securities with maturities of less than seven days may not be listed on the Luxembourg Stock Exchange. In connection with the listing, our Charter Act and bylaws and a legal notice relating to the issuance of Debt Securities have been deposited with the Chief Registrar of the District Court of Luxembourg, where copies may be inspected or obtained upon request. Holders also may obtain, free of charge, the documents incorporated in this Offering Circular by reference from the Luxembourg Listing Agent. Copies of the Fiscal Agency Agreement and the Global Agency Agreement will be available for inspection by Holders at the office of the Luxembourg Listing Agent during the term of the Debt Securities.

So long as Debt Securities are listed on the Luxembourg Stock Exchange, we will maintain in Luxembourg an intermediary to respond to inquiries from Holders of Debt Securities. Banque Internationale à Luxembourg S.A. initially has been appointed as the intermediary.

Our issuance of the Debt Securities is authorized pursuant to the actions of our Board of Directors on February 19, 1980 and November 19, 1985. In August 1996, the U.S. Treasury Department approved our issuance of an unlimited amount of Debt Securities.

As of the date of this Offering Circular, we have no litigation, actual or pending, that is material in the context of the issuance of the Debt Securities.

As of the date of this Offering Circular, there has been no material adverse change in our financial position since September 30, 1999.

We have given an undertaking in connection with the listing of the Debt Securities on the Luxembourg Stock Exchange to the effect that, so long as any Debt Securities remain outstanding and listed on the Exchange, in the event of any material adverse change in our business or our financial position that is not reflected in the Information Statement as then amended or supplemented, we will prepare an amendment or supplement to the Information Statement or publish a new Information Statement for use in connection with any subsequent offering and listing by us of the Debt Securities.

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FANNIE MAE

Fannie Mae is a federally chartered and stockholder-owned corporation organized and existing under the Federal National Mortgage Association Charter Act, 12 U.S.C. §1716 et seq. (the "Charter Act"). See "Government Regulation and Charter Act" in the Information Statement. We are the largest investor in home mortgage loans in the United States. We were established in 1938 as a United States government agency to provide supplemental liquidity to the mortgage market and were transformed into a stockholder-owned and privately managed corporation by legislation enacted in 1968.

Fannie Mae provides funds to the mortgage market by purchasing mortgage loans from lenders, thereby replenishing their funds for additional lending. We acquire funds to purchase these loans by issuing debt securities to capital market investors, many of whom ordinarily would not invest in mortgages. In this manner, we are able to expand the total amount of funds available for housing.

Fannie Mae also issues mortgage-backed securities ("MBS"), receiving guaranty fees for our guarantee of timely payment of principal and interest on MBS certificates. We issue MBS primarily in exchange for pools of mortgage loans from lenders. The issuance of MBS enables us to further our statutory purpose of increasing the liquidity of residential mortgage loans.

In addition, Fannie Mae offers various services to lenders and others for a fee. These services include issuing certain types of MBS and providing technology services for originating and underwriting mortgage loans. See "Business" in the Information Statement.

Fannie Mae's principal office is located at 3900 Wisconsin Avenue, N.W., Washington, D.C. 20016 (telephone: (202) 752-7000).

Ratio of Earnings to Fixed Charges

Nine Months
Ended
September 30, Year Ended December 31,
1999 1998 1998 1997 1996 1995 1994
Ratio of earnings to fixed
charges 		1.18:1 1.19:1 1.18:1 1.19:1 1.19:1 1.17:1 1.22:1

For the purpose of calculating the ratio of earnings to fixed charges, "earnings" consist of income (before federal income taxes and extraordinary items) and fixed charges. "Fixed charges" consist of interest expense.

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USE OF PROCEEDS

We will use the net proceeds from the sale of the Debt Securities to retire our outstanding debt securities or add the proceeds to our working capital and use them for general corporate purposes. We anticipate the need for additional financing from time to time, including financing through various types of debt securities. The amount and nature of the financing will be dependent upon a number of factors, including the volume of our maturing debt obligations, the volume of mortgage loan prepayments, the volume and type of mortgage loans we purchase, and general market conditions.

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CAPITALIZATION

The following table sets forth our capitalization as of September 30, 1999.

Average Average
Maturity Cost(1) Outstanding
(Dollars in
millions)
Debentures, notes, and bonds, net:
    Due within one year:
          Short-term notes 2 mos. 5.30% $145,461
          Global Debt 7 mos. 5.64 7,643
          Debentures 4 mos. 8.35 5,182
          Medium-term notes(2) 8 mos. 5.46 55,510
          Other(3) — 5.79 1,432
                  
                   Total due within one year 215,228
                  
    Due after one year:
          Global Debt 6 yrs. 10 mos. 5.96 111,988
          Debentures 5 yrs. 7 mos. 7.24 12,513
          Medium-term notes(2) 5 yrs. 3 mos. 6.15 181,068
          Other 17 yrs. 1 mo. 7.90 4,083
                  
                   Total due after one year 309,652
                  
    Total debentures, notes, and bonds $524,880
                  
Stockholders' equity:
          Preferred stock, $50 stated value;
              100,000,000 shares authorized—
              26,000,000 shares issued
                   Series A, 7,500,000 shares issued 		$375
                   Series B, 7,500,000 shares issued 375
                   Series C, 5,000,000 shares issued 250
                   Series D, 3,000,000 shares issued 150
                   Series E, 3,000,000 shares issued 150
          Common stock, $.525 stated value, no
              maximum authorization–1,129 million
              shares issued 		593
    Additional paid-in capital 1,585
    Retained earnings 17,674
Accumulated other comprehensive loss (167)
                  
                   20,985
                  
    Less treasury stock, at cost–108 million
          shares 		3,930
                  
    Total stockholders' equity $17,055
                  
(1) Represents weighted-average cost, which includes the amortization of discounts, premiums, issuance costs, hedging results, and the effects of currency and debt swaps.
(2) Medium-term notes may have maturities of one day or longer.
(3) Average maturity is indeterminate because the outstanding amount includes investment agreements that have varying maturities.

We issue debentures, notes, and other debt obligations frequently. The amount of debentures, notes, and other debt obligations outstanding, and stockholders' equity, on any date subsequent to September 30, 1999 may differ from that shown in the table above.

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ADDITIONAL INFORMATION ABOUT FANNIE MAE

We are incorporating by reference in this Offering Circular documents listed below that we publish from time to time. This means that we are disclosing information to you by referring you to those documents. Those documents are considered part of this Offering Circular, so you should read this Offering Circular, and any applicable supplements or amendments, together with those documents.

You should rely only on the information provided or incorporated by reference in this Offering Circular and any applicable supplement, and you should rely only on the most current information.

The following documents are incorporated by reference in this Offering Circular:


The Information Statement contains important financial and other information about Fannie Mae. We publish the Information Statement annually and update it from time to time to reflect quarterly and annual financial results and as we otherwise determine. The term "Information Statement" as used in this Offering Circular means the most recent Information Statement published while offers are being made under this Offering Circular, together with any supplements to that Information Statement.

You can read the Information Statement, proxy statements and other information about Fannie Mae at the offices of the New York Stock Exchange, the Chicago Stock Exchange and the Pacific Exchange. Since we are not subject to the periodic reporting requirements of the Securities Exchange Act of 1934, we do not file reports or other information with the U.S. Securities and Exchange Commission.

You can obtain copies of the Information Statement and all documents incorporated in this Offering Circular by reference without charge from our Office of Investor Relations, Fannie Mae, 3900 Wisconsin Avenue, N.W., Washington, D.C. 20016 (telephone: (202) 752-7115) and, if and so long as any Debt Securities are listed on the Luxembourg Stock Exchange, from Banque Internationale Luxembourg S.A., 69, route d'Esch, L-2953 Luxembourg (telephone: 352-4590).

You can obtain copies of this Offering Circular and any supplements or amendments from the Dealers where lawful to do so. In connection with the initial distribution of an issue of Debt Securities other than Benchmark Bills and Short-Term Notes, you also should obtain the applicable Pricing Supplement from the Dealers for the issue.

The following information is available from Fannie Mae by accessing our World Wide Web site at www.fanniemae.com or calling us at (800) 701-4791 (for international callers, (202) 752-5499).


We supply this material only for informational purposes. We may discontinue providing it at any time without notice. You should contact a Dealer or other appropriate securities dealer or bank to obtain the appropriate Offering Circular, Pricing Supplement and other information.

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APPENDIX A


BENCHMARK SECURITIES

Set forth below, for informational purposes only, is a general description of our Benchmark Securities program. We may change the details of the program from time to time, and any changes may not be reflected in an amendment or supplement to the Offering Circular. The specific terms of Benchmark Securities are contained in the Offering Circular of which this Appendix forms a part, and any applicable Pricing Supplements to the Offering Circular.

Benchmark Securities may be issued in the form of:


We plan to issue Benchmark Securities in large issues on a regularly scheduled basis. All Benchmark Securities are U.S. dollar denominated. Fannie Mae has announced its plans for issuance of Benchmark Securities in year 2000, which includes:


Issuances may be new issues or reopenings of existing issues. The schedule of anticipated Benchmark Securities issuances, as well as more recently announced updates of our financing plans, are available on our World Wide Web site, www.fanniemae.com.

Fannie Mae has indicated that, subject to market conditions, at least one of its issuances in each month will be of Callable Benchmark Notes, which include five-year notes with either a two-year or three-year no-call provision and ten-year notes with either a three-year or five-year no-call provision. Callable Benchmark Note issuances may be new issues or reopenings of existing issues.

Settlement of Benchmark Securities issues is made through the Fed Book-Entry System, on the same basis as for other Fed Book-Entry Securities. See "Clearance and Settlement" in the Offering Circular.

Benchmark Notes, Callable Benchmark Notes and Benchmark Bonds may be strip-eligible. See "Description of the Debt Securities—Eligibility for Stripping of Fed Book-Entry Securities" in the Offering Circular.

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APPENDIX B


BENCHMARK BILLS AND SHORT-TERM NOTES

Set forth below is information about our Benchmark Bills and Short-Term Notes. (See also Appendix A for a more general description of our Benchmark Securities program). Except as set forth in this Appendix, the general description of Debt Securities set forth in the Offering Circular applies to Benchmark Bills and Short-Term Notes. Unless otherwise specified, cross-references are to sections in the Offering Circular of which this Appendix forms a part and capitalized terms are used as defined in the Offering Circular. This Appendix is hereby incorporated in and made a part of the Offering Circular. Pricing Supplements will not be prepared for Benchmark Bills or Short-Term Notes.

Summary Description of Benchmark Bills and Short-Term Notes

Specified Currencies..... Benchmark Bills will be denominated only in U.S. dollars. Short-Term Notes may be denominated in U.S. dollars or non-U.S. dollar currencies.
Denomination................ Benchmark Bills and Short-Term Notes other than 183 Day Notes (as defined under "United States Taxation" in this Appendix B) denominated in U.S. dollars generally will have minimum denominations of $1,000 and additional increments of $1,000.
We will establish denominations for Short-Term Notes denominated in British pounds sterling, Canadian dollars, Euros, yen or other non-U.S. dollar currencies at the time we issue those Short-Term Notes.
183 Day Notes will have minimum denominations of $500,000 or, in the case of non-U.S. dollar denominated 183 Day Notes, the foreign currency equivalent (determined using the spot rate on the date of issuance).
Maturity.................... 360 days or less.
Principal Amount............ The amount payable at maturity of Benchmark Bills and Short-Term Notes will be their face amount. See also "Description of the Debt Securities—Payments."
Interest.................... Benchmark Bills and most Short-Term Notes will not bear interest but will be sold at a discount from their principal amount at maturity. We also may issue interest-bearing Short-Term Notes, the terms of which we will establish at the time of issuance.
Business Day Convention..... For Fed Book-Entry Securities, "Business Day" means any day other than a Saturday, a Sunday, a day on which the Federal Reserve Bank of New York is closed, or, with respect to any required payment, a day on which the U.S. Federal Reserve Bank maintaining the book-entry account relating to the Fed Book-Entry Security is closed.
For Global Book-Entry Securities, "Business Day" means any day other than a Saturday, a Sunday, a day on which banking institutions are closed in New York, New York, a day on which banking institutions are closed in the Principal Financial Center of the country issuing the Specified Payment Currency (in the case where the Specified Payment Currency is other than U.S. dollars or Euro), or a day on which banking institutions are required or permitted by law to close in the place of payment to the Holder (in the case where the Specified Payment Currency is Euro, whether or not pursuant to redenomination).
If an Interest Payment Date or Principal Payment Date is not a Business Day, we will pay the interest or principal on the next Business Day. In that case, you will receive no interest on the delayed interest or principal payment for the period from and after the scheduled Interest Payment Date or Principal Payment Date to the actual date of payment.
Form........................ We will issue Benchmark Bills and most U.S. dollar-denominated Short-Term Notes as Fed Book-Entry Securities. We will issue other Short-Term Notes as Global Book-Entry Securities through DTC, Euroclear, Cedelbank or other book-entry systems. See "Description of the Debt Securities—Book-Entry Systems" and "—Title to Debt Securities in Book-Entry Form."
We will issue 183 Day Notes as Global Book-Entry Securities.
Redemption.................. Benchmark Bills and Short-Term Notes will not be redeemable prior to maturity.
Tax Matters................. Benchmark Bills and Short-Term Notes and payments thereon generally are subject to taxation by the United States and generally are not exempt from taxation by other U.S. or non- U.S. taxing jurisdictions. Non-U.S. Persons generally will be subject to U.S. income and withholding tax unless they provide required certifications or statements. See "United States Taxation" below and in the Offering Circular for additional information.
Listing..................... We do not intend to list Benchmark Bills and Short-Term Notes on any exchange.
Offering Price.............. Benchmark Bills and non-interest bearing Short-Term Notes will be offered at a discount to par. See "Distribution of Benchmark Bills and Short-Term Notes" below for additional information.
Clearance and Settlement.... Depending on the terms of an issue of Benchmark Bills or Short-Term Notes and where they are to be offered, Benchmark Bills or Short-Term Notes may clear and settle through one or more of the following:
  • the U.S. Federal Reserve Banks
  • DTC
  • Euroclear
  • Cedelbank
  • other designated clearing systems
We expect issues of Benchmark Bills and most Short-Term Notes denominated and payable in U.S. dollars, to clear and settle through the Fed Book-Entry System. These Debt Securities generally may be held indirectly through other clearing systems, such as the systems operated by Euroclear and Cedelbank.
We expect issues of Short-Term Notes denominated and payable in U.S. dollars not cleared and settled through the Fed Book-Entry System to clear and settle through the systems operated by DTC, and indirectly through Euroclear and Cedelbank. We expect issues of Short-Term Notes denominated or payable in a specified currency other than U.S. dollars to clear and settle through the systems operated by Euroclear, Cedelbank or other designated clearing systems.
Governing Law............... Benchmark Bills and Short-Term Notes issued as Fed Book-Entry Securities (including rights and obligations) will be governed by, and construed in accordance with, regulations adopted by the U.S. Department of Housing and Urban Development or any other U.S. governmental body or agency that are applicable to the Fed Book-Entry Securities, and, to the extent that these regulations do not apply, the laws of the State of New York, U.S.A. Benchmark Bills and Short-Term Notes issued as Global Book-Entry Securities will be governed by, and construed in accordance with, the laws of the State of New York, U.S.A.
Fiscal and Global Agents.... The Federal Reserve Bank of New York will act as fiscal agent for Benchmark Bills and Short-Term Notes issued as Fed Book-Entry Securities, under a Fiscal Agency Agreement effective as of January 2, 1969, between Fannie Mae and the Federal Reserve Bank of New York. The Chase Manhattan Bank will act as global agent for Global Book-Entry Securities. See "Description of the Debt Securities—Fiscal Agent and Global Agent."
Selling Restrictions........ Restrictions exist in certain jurisdictions on the Dealers' offer, sale and delivery of Benchmark Bills and Short-Term Notes and the distribution of offering materials relating to Benchmark Bills and Short-Term Notes. See "Distribution of Benchmark Bills and Short-Term Notes–183 Day Notes Selling Restriction" below and Appendix D to the Offering Circular for a description of these restrictions.

United States Taxation

The principal aspects of U.S. federal income tax treatment of Benchmark Bills and Short-Term Notes are set forth in the Offering Circular. However, some Short-Term Notes having a maturity of 183 days or less will be sold under arrangements reasonably designed to ensure that they will be sold (or resold in connection with their original issuance) only to persons who are not U.S. Persons ("183 Day Notes"). This section provides a discussion of the U.S. federal income tax treatment of 183 Day Notes held by non-U.S. Persons.

Payments of principal of, and interest (including original issue discount) on, a 183 Day Note to any person who is not a U.S. Person will not be subject to United States federal withholding or income tax.

Backup withholding and information reporting will not apply to payments on 183 Day Notes provided, in each case, that we or our paying agent do not have actual knowledge that the payee is a United States person and certain other requirements are met. Accordingly, payments on 183 Day Notes will be made only outside the United States or its possessions. In addition, 183 Day Notes will be registered in the name of an exempt recipient, generally Euroclear or Cedelbank, and 183 Day Notes will bear the following legend: "By accepting this obligation, the holder represents and warrants that it is not a United States person (other than an exempt recipient described in section 6049(b)(4) of the Internal Revenue Code and the regulations thereunder) and that it is not acting for or on behalf of a United States person (other than an exempt recipient described in section 6049(b)(4) of the Internal Revenue Code and the regulations thereunder)."

Distribution of Benchmark Bills and Short-Term Notes

General

Benchmark Bills and Short-Term Notes typically will be offered initially at fixed prices representing a discount from the principal amount payable at maturity, with the amount of the discount based, in part, on the maturity of the Benchmark Bills or Short-Term Notes. We may sell Debt Securities to Dealers acting as principal or through Dealers on a non-underwritten basis. We also may sell Debt Securities directly to investors. Benchmark Bills and Short-Term Notes sold to Dealers as principal may be resold to investors at a fixed offering price or at varying prices related to market prices prevailing at the time of resale or otherwise as determined by the applicable Dealer. Offering prices may be established through the posting of rates, negotiations with dealers, auctions (which may include standard auctions, Dutch auctions and other formats) or otherwise.

We will post discount rates for Short-Term Notes, and the range of maturities offered, on market information screens. We generally will offer Short-Term Notes each business day through the Dealers, and there may be more than one sale on a given day.

In order to facilitate overnight confirmation of sales to investors abroad, Short-Term Notes also generally are sold before and after our business hours (except holidays and weekends) to one or more of the Dealers as principal. The Dealers may resell the Short-Term Notes to investors or to other dealers we may authorize from time to time.

Dealers will receive compensation (in the form of a discount or commission) on the Short-Term Notes confirmed and delivered to them equal to .02% per annum of the principal amount due at maturity.

In transactions where they are acting as principal, the Dealers will purchase the Short-Term Notes from us at a discount from the principal amount due at maturity. In these transactions, their compensation will be equal to the difference between the price at which they sell the Short-Term Notes and their purchase price. Subject to certain limitations, Dealers may reallow a portion of the discount they receive to other securities dealers or banks. With respect to non-underwritten sales, the Dealers' compensation will take the form of a commission.

Trading Markets and Secondary Market Information

We do not intend to list Benchmark Bills or Short-Term Notes on any exchange. There may be no established trading market for Benchmark Bills and Short-Term Notes when issued. Dealers have agreed to use their best efforts to facilitate secondary market transactions in each issue of Benchmark Bills and Short-Term Notes for which they were an applicable Dealer, but a secondary market may not develop. If a secondary market develops, it may not be very liquid. See "Risk Factors—Risks Related to Market Liquidity and Yield" in the Offering Circular.

Dealers may provide indicative pricing information to Bloomberg L.P. or another information service designated by us for Benchmark Bills and Short-Term Notes. Dealers will be solely responsible for the indicative information so provided, which may not reflect actual secondary market prices.

Market Transactions

When Dealers purchase Benchmark Bills and Short-Term Notes as principal for resale on a fixed-price basis, they may engage in transactions that stabilize the price of the Benchmark Bills and Short-Term Notes. These transactions may include entering stabilizing bids of effecting syndicated covering transactions. A stabilizing bid means the placing of a bid or the effecting of a purchase for the purpose of pegging, fixing or maintaining the price of Benchmark Bills and Short-Term Notes. A syndicate covering transaction means placing a bid on behalf of a dealer or dealer syndicate or making a purchase to reduce a short position created in connection with an offering of Benchmark Bills and Short-Term Notes. Dealers in Benchmark Bills and Short-Term Notes are not required to engage in any of these transactions. When they do, Dealers do so on their own behalf and not as our representatives. If Dealers commence these transactions, Dealers may discontinue them at any time.

In connection with any particular issue of Benchmark Bills and Short-Term Notes, we may enter into swaps, other hedging transactions or reverse repurchase transactions with, or arranged by, the applicable Dealer or an affiliate. The Dealer or other parties may receive compensation, trading gain, temporary finding or other benefits from these transactions. We also may from time to time engage in other hedging activities or reverse repurchase transactions that involving Benchmark Bills and Short-Term Notes, in the open market or otherwise. We are not required to engage in any of these transactions. If we commence these transactions, we may discontinue them at any time. Counterparties to these hedging activities may also engage in market transactions involving Benchmark Bills and Short-Term Notes.

183 Day Notes Selling Restriction

Each Dealer who will sell 183 Day Notes has represented and agreed that, except to the extent permitted by relevant United States tax law, it has not offered or sold, and will not offer or sell, the 183 Day Notes to a person who is within the United States or its possessions or to a U.S. Person during the "restricted period," as defined in U.S. tax regulations, and it has not delivered and will not deliver 183 Day Notes within the United States or its possessions in connection with sales of the 183 Day Notes during such restricted period. The Dealer will also represent that it has and will continue to have in effect procedures reasonably designed to ensure that its employees or agents who are directly engaged in selling 183 Day Notes are aware that the 183 Day Notes may not be offered or sold to a person who is within the United States or its possessions or to a U.S. Person during the restricted period, except as permitted by relevant United States federal tax law. If the Dealer is a U.S. Person, it must represent that it is acquiring the 183 Day Notes for purposes of resale in connection with their original issuance and, if it retains any 183 Day Notes for its own account, it will do so only in accordance with the requirements of relevant United States federal tax law. Each Dealer has also represented and agreed that any affiliate that acquires the 183 Day Notes from it or another affiliate for purposes of offering or selling the 183 Day Notes during the restricted period will make the same representations.

Dealers

The securities dealers and banks listed in the Offering Circular under "Plan of Distribution-Dealers" also may act as Short-Term Note Dealers under the Universal Debt Facility. Other securities dealers and banks may be added from time to time in connection with the distribution of Benchmark Bills and Short-Term Notes or any particular issue of such securities.

See also "Plan of Distribution—Additional Information" in the Offering Circular for further information about the distribution of Debt Securities, including Benchmark Bills and Short-Term Notes.

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APPENDIX C


INDEX DESCRIPTIONS

This Appendix is incorporated in and made a part of the Offering Circular.

General

The Pricing Supplement for any Debt Securities will indicate which index, as described below, applies to the Debt Securities, or may designate a different index, which will be described in the Pricing Supplement.

Several sources for indices are pages or screens provided by Bridge Telerate Information Services, Inc. ("Bridge Telerate") and Reuters Monitor Money Rates Service ("Reuters"). If a page or screen, or its provider, is replaced, the Calculation Agent will select the appropriate successor page, screen or provider, if any.

LIBOR

If we specify LIBOR as the applicable interest rate index for determining the interest rate for the related Debt Securities, the following provisions will apply:

"LIBOR" means, with respect to any Reset Date:

(1) the rate that appears, at 11:00 a.m. (London time) on the LIBOR Determination Date, on Telerate Page 3750 for Deposits in the Index Currency having the Index Maturity;

(2) if a rate does not so appear, then LIBOR will be the rate that appears, at 11:00 a.m. (London time) on the LIBOR Determination Date, on Reuters ISDA page for Deposits in the Index Currency having the Index Maturity;

(3) if a rate does not so appear, then the Calculation Agent will request the principal London offices of five leading banks in the London interbank market selected by the Calculation Agent (after consultation with Fannie Mae, if Fannie Mae is not then acting as Calculation Agent) to provide those banks' offered quotations to prime banks in the London interbank market for Deposits in the Index Currency having the Index Maturity as of 11:00 a.m. (London time) on the LIBOR Determination Date and in a Representative Amount. If at least three quotations are provided, then LIBOR will be the arithmetic mean determined by the Calculation Agent of the quotations obtained (and, if five quotations are provided, eliminating the highest quotation (or in the event of equality, one of the highest) and the lowest quotation (or in the event of equality, one of the lowest));

(4) if fewer than three quotations are so provided, then the Calculation Agent will request five major banks in the applicable Principal Financial Center selected by the Calculation Agent (after consultation with Fannie Mae, if Fannie Mae is not then acting as Calculation Agent) to provide those banks' offered quotations to leading European banks for loans, commencing on the applicable Reset Date, in the Index Currency having the Index Maturity as of approximately 11:00 a.m. (London time) in the applicable Principal Financial Center on the LIBOR Determination Date and in a Representative Amount. If at least three quotations are provided, then LIBOR will be the arithmetic mean determined by the Calculation Agent of the quotations obtained (and, if five quotations are provided, eliminating the highest quotation (or in the event of equality, one of the highest) and the lowest quotation (or in the event of equality, one of the lowest)); and

(5) if fewer than three quotations are so provided, then LIBOR will be LIBOR determined for the immediately preceding Reset Date. If the applicable Reset Date is the first Reset Date, then LIBOR will be the rate for deposits in the Index Currency having the Index Maturity that appeared, as of 11:00 a.m. (London time) on the most recent London Banking Day preceding the LIBOR Determination Date for which the rate was displayed, on either Telerate Page 3750 or Reuters ISDA page with respect to deposits commencing on the second London Banking Day following that date (and, if the rate appears on both screens on that London Banking Day, using Telerate Page 3750).

The following definitions apply only to the preceding description of LIBOR (additional definitions on page C-3 also apply).


EURIBOR

If we specify EURIBOR as the applicable interest rate index for determining the interest rate for the related Debt Securities, the following provisions will apply:

"EURIBOR" means, with respect to any Reset Date:

(1) the rate that appears at 11:00 a.m. (Brussels time) on the EURIBOR Determination Date, on Telerate Page 248 under the caption "EURIBOR" for Deposits in Euro having the Index Maturity;

(2) if a rate does not so appear, then the Calculation Agent will request five major banks in the Euro-Zone selected by the Calculation Agent (after consultation with Fannie Mae, if Fannie Mae is not then acting as Calculation Agent) to provide those banks' offered quotations to prime banks in the Euro-Zone interbank market for Deposits in Euro having the Index Maturity as of 11:00 a.m. (Brussels time) on the EURIBOR Determination Date and in a Representative Amount. If at least three quotations are provided, then EURIBOR will be the arithmetic mean determined by the Calculation Agent of the quotations obtained (and, if five quotations are provided, eliminating the highest quotation (or in the event of equality, one of the highest) and the lowest quotation (or in the event of equality, one of the lowest));

(3) if fewer than three quotations are so provided, then the Calculation Agent will request five major banks in the Euro-Zone selected by the Calculation Agent (after consultation with Fannie Mae, if Fannie Mae is not then acting as Calculation Agent) to provide those banks' offered quotations to leading European banks for loans, commencing on the applicable Reset Date, in Euro having the Index Maturity as of approximately 11:00 a.m. (Brussels time) on the EURIBOR Determination Date and in a Representative Amount. If at least three quotations are provided, then EURIBOR will be the arithmetic mean determined by the Calculation Agent of the quotations obtained (and, if five quotations are provided, eliminating the highest quotation (or in the event of equality, one of the highest) and the lowest quotation (or in the event of equality, one of the lowest)); and

(4) if fewer than three quotations are so provided, then EURIBOR will be EURIBOR determined for the immediately preceding Reset Date. If the applicable Reset Date is the first Reset Date, then EURIBOR will be the rate for deposits in Euro having the Index Maturity that appeared, as of 11:00 a.m. (Brussels time) on the most recent TARGET Business Day preceding the EURIBOR Determination Date for which the rate was displayed, on Telerate Page 248 under the caption "EURIBOR" with respect to deposits commencing on the second TARGET Business Day following that date.

The following definitions apply only to the preceding description of EURIBOR.


Additional Definitions Related to LIBOR and EURIBOR Descriptions

With respect to the preceding descriptions of LIBOR and EURIBOR:


Federal Funds Rates

Federal Funds Rate (Daily)

If we specify Federal Funds Rate (Daily) as the applicable interest rate index for determining the interest rate for the related Debt Securities, the following provisions will apply:

The "Federal Funds Rate (Daily)" means, with respect to any Reset Date:

(1) the rate that appears, at 11:00 a.m. on the Reset Date, on Telerate Page 120 under the caption "FED FUNDS EFFECTIVE" and the column heading "EFF" for the Business Day preceding the Reset Date;

(2) if a rate does not so appear, then the Federal Funds Rate (Daily) will be the rate that appears, at 11:00 a.m. on the Reset Date, on Reuters NYAA Page for the Business Day preceding the Reset Date;

(3) if a rate does not so appear, the Calculation Agent will request five leading brokers of federal funds transactions in The City of New York selected by the Calculation Agent (after consultation with Fannie Mae, if Fannie Mae is not then acting as Calculation Agent) to provide a quotation of those brokers' effective rate for transactions in overnight federal funds arranged by the broker settling on the Business Day preceding the Reset Date. If at least three quotations are provided, then the Federal Funds Rate (Daily) will be the arithmetic mean determined by the Calculation Agent of the quotations obtained (and, if five quotations are provided, eliminating the highest quotation (or, in the event of equality, one of the highest) and the lowest quotation (or in the event of equality, one of the lowest));

(4) if fewer than three quotations are so provided, then the Calculation Agent will request five leading brokers of federal funds transactions in The City of New York selected by the Calculation Agent (after consultation with Fannie Mae, if Fannie Mae is not then acting as Calculation Agent) to provide a quotation of those brokers' rate for the last transaction in overnight federal funds arranged by the broker as of 11:00 a.m. on the Business Day preceding the Reset Date. If at least three quotations are provided, then the Federal Funds Rate (Daily) will be the arithmetic mean determined by the Calculation Agent of the quotations obtained (and, if five quotations are provided, eliminating the highest quotation (or, in the event of equality, one of the highest) and the lowest quotation (or in the event of equality, one of the lowest)); and

(5) if fewer than three quotations are so provided, then the Federal Funds Rate (Daily) will be the Federal Funds Rate (Daily) determined for the immediately preceding Reset Date. If the applicable Reset Date is the first Reset Date, then the Federal Funds Rate (Daily) will be the daily federal funds rate that appeared, at 11:00 a.m. on the most recent Business Day preceding the Reset Date for which the rate was displayed, on either Telerate Page 120 under the caption "FED FUNDS EFFECTIVE" and the column heading "EFF" or Reuters Screen NYAA Page (and, if the rate appears on both screens on that Business Day, using Telerate Page 120).

Federal Funds Rate (Weekly Average)

If we specify Federal Funds Rate (Weekly Average) as the applicable interest rate index for determining the interest rate for the related Debt Securities, the following provisions will apply:

The "Federal Funds Rate (Weekly Average)" means, with respect to any Reset Date:

(1) the rate published in the latest H.15(519) available at 11:00 a.m. on the Reset Date, opposite the caption "Federal funds (effective)" and under the caption "Week Ending" for the Friday immediately preceding the Reset Date. (As described in the footnotes to the H.15(519), the rate shown for the week ending on a Friday preceding a Reset Date actually will be the rate for the week ending on (and including) the Wednesday preceding the Reset Date (the "Seven-Day Period").);

(2) if a rate is not so published, then the Federal Funds Rate (Weekly Average) will be the arithmetic mean determined by the Calculation Agent of the rate, determined in the manner described in subclauses (y) and (z) below (as applicable), for each day in the Seven-Day Period (each a "Day Rate"), provided that the Calculation Agent determines a Day Rate for each day in the Seven-Day Period;

(y) The Day Rate for a Business Day will be the rate that appears, at 11:00 a.m. on the Reset Date, on Telerate Page 120 under the caption "FED FUNDS EFFECTIVE" and the column heading "EFF" for that Business Day. If a rate for that Business Day does not appear on Telerate Page 120 at 11:00 a.m. on the Reset Date, the Calculation Agent will request five leading brokers of federal funds transactions in The City of New York selected by the Calculation Agent (after consultation with Fannie Mae, if Fannie Mae is not then acting as Calculation Agent) to provide a quotation of those brokers' rate for the last transaction in overnight federal funds arranged by the broker as of 11:00 a.m. on that Business Day. If at least three quotations are provided, then the Day Rate will be the arithmetic mean determined by the Calculation Agent of the quotations obtained (and, if five quotations are provided, eliminating the highest quotation (or, in the event of equality, one of the highest) and the lowest quotation (or in the event of equality, one of the lowest)); and

(z) The Day Rate for a day other than a Business Day will be the rate for the preceding Business Day, whether or not the Business Day falls within the relevant Seven-Day Period, determined in accordance with the provisions of subclause (y) above; and

(3) if the Day Rate for each day in the Seven Day Period is not so determined, then the Federal Funds Rate (Weekly Average) will be the Federal Funds Rate (Weekly Average) determined for the immediately preceding Reset Date. If the applicable Reset Date is the first Reset Date, then the Federal Funds Rate (Weekly Average) will be the rate published in the latest H.15(519) available at 11:00 a.m. on the Reset Date, opposite the caption "Federal funds (effective)" and under the caption "Week Ending" for the Friday most recently preceding the Reset Date.

Please note that the Federal Funds Rate (Weekly Average) as published in the H.15(519) is a weekly average, while the Federal Funds Rate (Weekly Average) as calculated under clause (2) is based on an average of daily rates.

Additional Federal Funds Rate Definitions


Prime Rate

If we specify Prime Rate as the applicable interest rate index for determining the interest rate for the related Debt Securities, the following provisions will apply:

The "Prime Rate" means, with respect to any Reset Date:

(1) the arithmetic mean determined by the Calculation Agent of the rates (after eliminating certain rates, as described below in this clause (1)) that appear, at 11:00 a.m. on the Prime Rate Determination Date, on Telerate Page 38 as the U.S. dollar prime rate or base lending rate of each bank appearing thereon, provided that at least three rates appear. In determining the arithmetic mean:


(2) if fewer than three rates so appear, then the Prime Rate will be the arithmetic mean determined by the Calculation Agent of the rates (after eliminating certain rates, as described below in this clause (2)) that appear, at 11:00 a.m. on the Prime Rate Determination Date, on Reuters USPRIME 1 Page as the U.S. dollar prime rate or base lending rate of each bank appearing thereon, provided that at least three rates appear. In determining the arithmetic mean:


(3) if fewer than three rates so appear, then the Calculation Agent will request five major banks in The City of New York selected by the Calculation Agent (after consultation with Fannie Mae, if Fannie Mae is not then acting as Calculation Agent) to provide a quotation of those banks' U.S. dollar prime rate or base lending rate on the basis of the actual number of days in the year divided by 360 as of the close of business on the Prime Rate Determination Date. If at least three quotations are provided, then the Prime Rate will be the arithmetic mean determined by the Calculation Agent of the quotations obtained (and, if five quotations are provided, eliminating the highest quotation (or in the event of equality, one of the highest) and the lowest quotation (or in the event of equality, one of the lowest));

(4) if fewer than three quotations are so provided, the Calculation Agent will request five banks or trust companies organized and doing business under the laws of the United States or any state thereof, each having total equity capital of at least U.S. $500,000,000 and being subject to supervision or examination by federal or state authority, selected by the Calculation Agent (after consultation with Fannie Mae, if Fannie Mae is not then acting as Calculation Agent), to provide a quotation of those banks' or trust companies' U.S. dollar prime rate or base lending rate on the basis of the actual number of days in the year divided by 360 as of the close of business on the Prime Rate Determination Date. (In making the selection of five banks or trust companies, the Calculation Agent will include each bank, if any, that provided a quotation as requested in clause (3) above and exclude each bank that failed to provide a quotation as requested in clause (3).) If at least three quotations are provided, then the Prime Rate will be the arithmetic mean determined by the Calculation Agent of the quotations obtained (and, if five quotations are provided, eliminating the highest quotation (or in the event of equality, one of the highest) and the lowest quotation (or in the event of equality, one of the lowest)); and

(5) if fewer than three quotations are so provided, then the Prime Rate will be the Prime Rate determined for the immediately preceding Reset Date. If the applicable Reset Date is the first Reset Date, then the Prime Rate will be the rate calculated pursuant to clause (1) or (2) for the most recent New York Banking Day preceding the Reset Date for which at least three rates appeared at 11:00 a.m. on either Telerate Page 38 or Reuters USPRIME1 Page (and, if rates appear on both screens on that New York Banking Day, using Telerate Page 38).

Prime Rate Definitions


Treasury Bill Rate

The "Treasury Bill Rate" means, with respect to any Reset Date:

(1) the auction average rate for direct obligations of the United States ("Treasury Bills") having the Index Maturity obtained from the most recent auction of Treasury Bills prior to the Reset Date (the "Reference T-Bill Auction") as announced by the United States Department of the Treasury in the form of a press release under the heading "Investment Rate" by 3:00 p.m. on the Reset Date;

(2) if the rate is not so announced, then the Treasury Bill Rate will be the auction average rate for Treasury Bills having the Index Maturity obtained from the Reference T-Bill Auction as otherwise announced by the United States Department of the Treasury by 3:00 p.m. on the Reset Date as determined by the Calculation Agent;

(3) if the rate is not so announced, the Calculation Agent will request five leading primary United States government securities dealers in The City of New York selected by the Calculation Agent (after consultation with Fannie Mae, if Fannie Mae is not then acting as Calculation Agent) to provide a quotation of those dealers' secondary market bid yield, as of 3:00 p.m. on that Reset Date, for Treasury Bills with a remaining maturity closest to the Index Maturity (or, in the event that the remaining maturity is equally close, the longer remaining maturity). If at least three quotations are provided, then the Treasury Bill Rate will be the arithmetic mean determined by the Calculation Agent of the quotations obtained (and, if five quotations are provided, eliminating the highest quotation (or, in the event of equality, one of the highest) and the lowest quotation (or, in the event of equality, one of the lowest)); and

(4) if fewer than three quotations are so provided, the Treasury Bill Rate will be the Treasury Bill Rate for the immediately preceding Reset Date. If the applicable Reset Date is the first Reset Date, the Treasury Bill Rate will be the auction average rate for Treasury Bills having the Index Maturity from the most recent auction of Treasury Bills prior to the Reset Date for which the rate was announced by the United States Department of the Treasury in the form of a press release under the heading "Investment Rate".

The auction average rate for Treasury Bills and the secondary market bid yield for Treasury Bills will be obtained expressed as a bond equivalent on the basis of a year of 365 or 366 days, as applicable (or, if not so expressed, will be converted by the Calculation Agent to a bond equivalent yield).

All times in the Treasury Bill description refer to New York City time.

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APPENDIX D


SELLING RESTRICTIONS

This Appendix is incorporated in and made a part of the Offering Circular.

General

The Debt Securities may be offered or sold only where it is legal to do so. The Dealers have represented and agreed that they will comply with all applicable laws and regulations in each jurisdiction in which they may purchase, offer, sell or deliver Debt Securities or distribute this Offering Circular, any Pricing Supplement or any other offering material. The Dealers also have agreed to comply with selling restrictions relating to specific countries. We and the Dealers may modify selling restrictions at any time. Some of the restrictions that may be applicable to the offer and sale of Debt Securities are set forth below.

Australia

Each Dealer acknowledges that no prospectus in relation to the Debt Securities has been lodged with or registered by the Australian Securities and Investments Commission. Each Dealer has represented and agreed that it:

(1) has not, directly or indirectly, offered for subscription or purchase or issued invitations to subscribe for or buy nor has sold any Debt Securities;

(2) will not, directly or indirectly, offer for subscription or purchase or issue invitation to subscribe for or buy nor will it sell any Debt Securities; and

(3) has not distributed any Offering Circular, Pricing Supplement or any other offering material or other document inviting applications or offers to subscribe for or buy any Debt Securities or offering any Debt Securities for subscription or purchase;

in Australia or to any resident of Australia (including corporations and other entities organized under the laws of Australia but not including a permanent establishment of such corporation or other entity located outside of Australia) other than, if any of the Debt Securities are to be offered in Australia, by way of an excluded issue of securities, an excluded offer of securities for subscription or purchase, or an excluded invitation to subscribe for or buy securities in compliance with the Corporations Law. In addition, each Dealer has represented and agreed that after the initial distribution of any Debt Securities, it will not directly or indirectly offer for subscription or purchase, or issue invitations to subscribe for, or buy or sell, the Debt Securities or distribute any Offering Circular, Pricing Supplement or any other offering material or other document in relation to any such offer, invitation or sale in Australia except in accordance with the Corporations Law, the Corporations Regulations and any other applicable laws.

Belgium

The Dealers have represented, warranted and agreed that the Offering will not be a public offering in Belgium. The Offering Circular may not be distributed to the public in Belgium and the Debt Securities referred to herein may not be publicly offered for sale in Belgium and no steps may be taken which would constitute or result in a public offering in Belgium. Any Subscription to the Debt Securities within Belgium should be (i) for a minimum amount of BEF 10,000,000 each or (ii) made in the name and for the account of institutional Investors mentioned in article 3Degree Sign++, 2 of the Royal Decree of 9 January 1999.

China

The Dealers acknowledge that the Debt Securities have not been and will not be registered under the relevant laws of the People's Republic of China. Accordingly, the Dealers represent, warrant and agree to and with Fannie Mae that they have not made, and will not make, any offer, promotion, solicitation for sales or sale of or for, as the case may be, any Debt Securities in the People's Republic of China, except where permitted by the State Council of the People's Republic of China or where the activity otherwise is permitted under the laws of the People's Republic of China.

France

We and each Dealer have represented and agreed that the Debt Securities are being issued outside of France, and that, in connection with their initial distribution, we have not offered or sold, and will not offer or sell Debt Securities in France, and have not distributed and will not distribute or cause to be distributed in France this Offering Circular or any other offering material relating to the Debt Securities except (1) to qualified investors (investisseurs qualifiés) and/or (2) within a restricted circle of investors (cercle restreint d'investisseurs), all as defined in Article 6 of Ordinance dated 28th September, 1967 (as amended) and Decree no. 98-880 dated 1st October, 1998.

Germany

In connection with the initial placement of the Debt Securities in Germany, the Dealers have represented and agreed that they will offer and sell Debt Securities (i) only for an aggregate purchase price per purchaser of at least DM 80,000 (or the foreign currency equivalent) or any other amount which may be stipulated from time to time by applicable German law and (ii) otherwise in accordance with the provisions of the German Securities Prospectus Act of 13th December, 1990, as amended, or any other laws applicable in Germany governing the issue, offering and sale of securities.

Hong Kong

The Dealers have represented and agreed that they have not, directly or indirectly, offered or sold and will not, directly or indirectly, offer or sell in Hong Kong, by means of any document, any Debt Securities other than to persons whose ordinary business it is to buy or sell shares or debentures, whether as principal or agent, or in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap. 32) of Hong Kong. The Dealers have further represented and agreed that, unless they are persons who are permitted to do so under the securities laws of Hong Kong, they have not issued, or had in their possession for the purpose of issuing, and they will not issue, or have in their possession for the purposes of issuing, any advertisement, invitation or document relating to the Debt Securities other than with respect to Debt Securities intended to be disposed of to persons outside Hong Kong or to persons in Hong Kong whose business involves the acquisition, disposal or holding of securities, whether as principal or as agent.

Italy

The Dealers have represented, warranted and agreed to and with Fannie Mae that the Debt Securities will be issued outside Italy and that such Dealer and its Affiliates have not offered or sold, and will not offer or sell, directly or indirectly, any Debt Securities to the public in Italy, and the Offering Circular or any other offering material relating to such Debt Securities will not be distributed or caused to be distributed to the public in Italy. Each Dealer agrees that no offer, sale or solicitation will be made in Italy without prior notification to and clearance from the Bank of Italy or, if required, the Italian Commission for Companies and Exchange.

Japan

The Debt Securities have not been registered under the Securities and Exchange Law of Japan (the "Securities and Exchange Law") and the Dealers have represented and agreed that they will not offer or sell any Debt Securities, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan), or to others for re-offering or resale, directly or indirectly, in Japan or to a resident of Japan except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Securities and Exchange Law of Japan and any other applicable laws and regulations of Japan.

Netherlands

The Dealers have represented and agreed that they (i) have not offered or sold, and will not offer or sell, Debt Securities and (ii) have not distributed, and will not distribute, this Offering Circular, in each case to any person or entity in the Netherlands other than natural persons and/or legal entities which trade or invest in securities in the course of their profession or business (which includes banks, investment banks, pension funds, insurance companies, securities firms, investment institutions and other entities, including, without limitation, treasuries and finance companies of large enterprises which trade or invest in securities). The foregoing restrictions will not apply to any offer or sale of Debt Securities in the Netherlands in respect of which (i) the denomination is in excess of Dutch Guilders 100,000 or the equivalent thereof in other currencies or currency units, (ii) another exemption specified in the Securities Transactions Supervision Act or any of its implementing regulations applies and the requirements applicable to that exemption are complied with or (iii) the prohibition contained in Article 3 sub-section 1 of the Securities Transactions Supervision Act does not apply.

New Zealand

The Dealers have represented, warranted and agreed to and with Fannie Mae that they (i) have not offered or sold, and will not offer or sell, directly or indirectly, any Debt Securities and (ii) have not distributed and will not distribute, directly or indirectly, any offering materials or advertisement in relation to any offer of Debt Securities, in each case in New Zealand other than (x) to persons whose principal business is the investment of money or who, in the course of and for the purposes of their business, habitually invest money or who in all the circumstances can properly be regarded as having been selected otherwise than as members of the public or (y) in other circumstances where there is no contravention of the Securities Act 1978 of New Zealand (or any statutory modification or re-enactment of, or statutory substitution for, the Securities Act 1978 of New Zealand).

Portugal

The Dealers have represented and agreed that offers and sales, direct or indirect, of Debt Securities have not been and will not be made in Portugal except pursuant to an exemption from the registration requirements of the Portuguese Stock Exchange Law available thereunder, and in compliance with other relevant laws of Portugal.

Singapore

The Dealers have acknowledged that this Offering Circular has not been registered as a prospectus with the Registrar of Companies in Singapore. Accordingly, the Dealers have represented and agreed that they have not offered or sold, and will not offer or sell, any Debt Securities, nor will they circulate or distribute this Offering Circular or any other offering document or material relating to the Debt Securities, directly or indirectly, to the public or any member of the public in Singapore other than (i) to an institutional investor or other person specified in Section 106C of the Companies Act, Chapter 50 of Singapore, (ii) to a sophisticated investor, and in accordance with the conditions, specified in Section 106D of the Companies Act or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the Companies Act.

Spain

The Dealers have acknowledged that this Offering Circular has not been registered with the Comisión Nacional del Mercado de Valores. Accordingly, the Dealers have represented and agreed that this Offering Circular has not been and will not be distributed in the Kingdom of Spain to any person. The Dealers also have represented and agreed that they have not offered or sold and will not offer or sell any Debt Securities to the public in Spain, and have not made and will not make any kind of advertisement of the Debt Securities to the public in Spain, except according to Spanish regulations regarding public offerings and issuance of securities (Ofertas publicas de ventas y suscripciones de valores). The Dealers also have acknowledged that the issuance of Debt Securities denominated in Spanish pesetas by a non-Spanish resident issuer requires prior notice to the Dirección General del Tesoro y Política Financiera.

Sweden

The Dealers have represented, warranted and agreed to and with Fannie Mae that such Dealer and its Affiliates (i) have not, directly or indirectly, offered or sold and will not, directly or indirectly, offer or sell in Sweden any Debt Securities by way of public offer, and (ii) have not offered or sold and will not offer or sell any Debt Securities to any investor in Sweden unless the minimum purchase by such investor is to be at least Swedish kronor 300,000 in aggregate principal amount of such Debt Securities, or the equivalent thereof in another currency.

Switzerland

The Dealers have represented, warranted and agreed to and with Fannie Mae that they have not, directly or indirectly, offered or sold and will not, directly or indirectly, offer or sell in Switzerland, by means of any document, any Swiss franc denominated or Swiss franc related Debt Securities other than in compliance with the guidelines of the Swiss National Bank regarding the issue of Swiss franc denominated or Swiss franc related debt securities; such guidelines currently require the involvement of a bank domiciled in Switzerland that is regulated under the Federal Act on Banks of 1934 (as amended) or a securities dealer domiciled in Switzerland that is regulated under the Swiss Stock Exchange Act of 1997, acting as lead manager of the Swiss franc or Swiss franc related issue.

Taiwan

The Dealers have acknowledged that the Debt Securities have not and will not be registered under the Securities and Exchange Law of the Republic of China. Accordingly, the Dealers have represented and agreed that they have not made, and will not make, any offers, promotion, solicitation for sales and sales of any Debt Securities in Taiwan.

United Kingdom

The Dealers have represented and agreed as follows:

(1) they have not offered or sold Debt Securities that have an original maturity of one year or more and, prior to six months after the issue date of the Debt Securities, will not offer or sell any Debt Securities having an original maturity of one year or more to persons in the United Kingdom except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses or otherwise in circumstances which have not resulted and will not result in an offer to the public in the United Kingdom within the meaning of the Public Offers of Securities Regulations 1995 (as amended),

(2) they have complied and will comply with all applicable provisions of the Financial Services Act 1986 with respect to anything done by them in relation to the Debt Securities in, from or otherwise involving the United Kingdom, and

(3) they have only issued or passed on and will only issue or pass on in the United Kingdom any document received by them in connection with an issue of Debt Securities to a person who is of a kind described in Article 11(3) of the Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996 (as amended) or is a person to whom the document may otherwise lawfully be issued or passed on.

United States

Please see "Distribution of Benchmark Bills and Short-Term Notes–183 Day Notes Selling Restriction" in Appendix B to the Offering Circular for the selling restriction that applies to 183 Day Notes and "Targeted Registered Debt Securities—Selling Restrictions" in Appendix G to the Offering Circular for the selling restrictions that apply to Targeted Registered Securities.

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APPENDIX E


REDENOMINATION TO THE EURO

This Appendix is incorporated in and made a part of the Offering Circular.

The following provisions govern redenomination to the Euro of Debt Securities originally denominated in currencies expected to be replaced by the Euro, the new currency of the European economic and monetary union.

Definitions

The following definitions refer to terms used in this Appendix:


Austrian schilling 13.7603 Irish punt 0.787564
Belgian franc 40.3399 Italian lira 1936.21
Dutch guilder 2.20371 Luxembourg franc 40.3399
Finnish markka 5.94573 Portuguese escudo 200.482
French franc 6.55957 Spanish peseta 166.386
German mark 1.95583


The Euro

During the third stage of European economic and monetary union, which commenced on January 1, 1999, and runs through December 31, 2001, the Euro is a currency in its own right. During this stage:


Once Euro banknotes and coins are issued at the end of the transitional period, they will have legal tender status in all Participating Member States, and the national currency units of the Participating Member States will cease to exist. References to those national currency units in legal instruments still existing at the end of the transitional period will be deemed references to the Euro unit according to the relevant Fixed Conversion Rates.

Redenomination

With respect to any Debt Security originally denominated in an Original Specified Payment Currency, on the Selected Redenomination Date, we may change the currency unit in which these applicable Debt Securities (the "Applicable Debt Securities") are denominated and payable from the Original Specified Payment Currency to the Euro. In order to change the currency unit, we must give the Holders of the Applicable Debt Securities and the applicable clearing system at least 30 days' prior notice by sending the Redenomination Notice. We also will notify the Global Agent in writing of our intention to change the currency unit at least 45 days prior to the Selected Redenomination Date. We may change the currency unit, however, without the consent of the Holders or beneficial owners of the Applicable Debt Securities, the Global Agent, or the applicable clearing system.

The Redenomination Notice given by us will state the Selected Redenomination Date and describe the manner in which the redenomination will be effected. The Redenomination Notice also will describe the rounding convention to be used by us when redenominating the Applicable Debt Securities and the effect of that rounding convention. See "Description of the Debt Securities—Notices" for certain other general provisions regarding notices to Holders of Debt Securities.

If we elect to redenominate an issue of Applicable Debt Securities into Euro, we will redenominate all, not just a part, of the outstanding issue of Applicable Debt Securities. We will effect redenomination by converting the aggregate outstanding principal amount of the Applicable Debt Securities, as stated in the Original Specified Payment Currency, into Euro by using the Fixed Conversion Rate and by rounding in compliance with rules regarding rounding set forth in applicable European Community regulations. However, if we determine, in consultation with the Global Agent, that the manner of the redenomination and/or rounding is not consistent with existing or anticipated market practice for the redenomination into Euro of debt obligations issued in the euromarket (regardless of the original currency in which the debt obligations were denominated) and held in any international clearing system, or is not practicable given the manner in which the Applicable Debt Securities are held and cleared through the applicable clearing system, we may, in consultation with the Global Agent, adopt another method which is, or we reasonably believe will be, so consistent or practicable.

Immediately after redenomination on the Selected Redenomination Date, Euro will be deemed the new Specified Payment Currency in which we will make payments of any amounts on the Applicable Debt Securities after the Selected Redenomination Date. On the Selected Redenomination Date, however, we may pay any interest or principal then due on the Debt Securities either in the Original Specified Payment Currency or in Euro, as we may decide in our sole discretion and as we will describe in the Redenomination Notice.

In the event that we do not redenominate Debt Securities denominated in an Original Specified Payment Currency prior to the end of the transitional period, the Treaty provides that references in the Debt Securities to the Original Specified Payment Currency will be deemed references to the Euro unit, according to the relevant Fixed Conversion Rate. The Redenomination Date may be after the end of the transitional period.

In connection with the redenomination that occurs on the Selected Redenomination Date, we may determine, in consultation with the Global Agent, that additional changes to the terms of the Applicable Debt Securities are advisable in order to conform the Applicable Debt Securities to conventions then applicable to the issue or trading of instruments denominated or payable in Euro ("Additional Conforming Changes"). The Additional Conforming Changes may include changes to Minimum Denominations and Additional Increments of the Applicable Debt Securities, accrual methods, the definition of "Business Day", and/or certain other terms of the Applicable Debt Securities. We may amend and/or replace any related Applicable Debt Securities, definitive Debt Securities, and/or the Global Agency Agreement in order to reflect the changes described in the Redenomination Notice and all Additional Conforming Changes.

Any Additional Conforming Changes will not take effect until we have given at least 30 days prior notice to the Holders of the Applicable Debt Securities and the applicable clearing system and at least 45 days prior notice to the Global Agent (unless we and the Global Agent mutually agree to a shorter time for notice to the Global Agent).

Notwithstanding any provisions contained in this Offering Circular under "Description of the Debt Securities—Modification and Amendment", we will be able to take all of the actions described in and contemplated by this section without the consent of any Holders or beneficial owners of the Applicable Debt Securities.

There is a discussion of the tax consequences of redenominating a Debt Security to Euro in this Offering Circular under "United States Taxation—U.S. Persons—Debt Securities with Payments Based on a Non-U.S. Currency—Conversion to the Euro."

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APPENDIX F


LOCATION OF DEFINED TERMS

Each term listed below is defined or explained in the Offering Circular or one of its Appendices on the page indicated.

Terms Page
183 Day Notes B-1
A
Accrual Methods 		17
Amortizing Securities 16
B
Benchmark Securities 		3
Business Day Conventions 17
C
Calculation Agent 		16
Cap 14
Cedelbank 18
Charter Act 3
D
Dealers 		6
Determination Date 15
DTC 18
E
EURIBOR 		C-3
Euroclear 18
F
Fed Book Entry Securities 		11
Federal Funds Rates C-4
Federal Funds Rate (Daily) C-4
Federal Funds Rate (Weekly Average) C-5
Fiscal Agency Agreement 29
Fiscal Agent 6
Floor 15
Fixed Principal Repayment Amount 13
Fixed Rate Securities 13
Fixed/Variable Rate Securities 13
G
Global Agency Agreement 		30
Global Book-Entry Securities 11
H
Holder 		21
Holding Institutions 21
HUD Book-Entry Regulations 18
I
Indexed Securities 		16
Index Maturity 14
Interest Component 19
Information Statement 51
Interest Payment Date 14
Interest Period 14
Interest Reset Period 15
L
LIBOR 		C-1
M
Maturity Date 		13
Multiplier 14
P
Pricing Supplement 		3
Prime Rate C-6
Principal Component 19
Principal Payment Date 14
R
Record Date 		23
Registrar 22
Reopening 13
Reset Date 15
S
Selling Restrictions 		47
Specified Currency 12
Spread 14
Step Rate Securities 13
Stripping 19
T
TARGET System 		17
Targeted Registered Securities G-1
Treasury Bill Rate C-8
V
Variable Principal Repayment Amount 		13
Variable Rate Securities 13
W
Withholding Agent 		42
Z
Zero-Coupon Securities 		13

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APPENDIX G


TARGETED REGISTERED DEBT SECURITIES

This Appendix is incorporated in and made a part of the Offering Circular. Except as set forth in this Appendix, the general description of Debt Securities set forth in the Offering Circular (and, if applicable, Appendix B) applies to Targeted Registered Securities.

Certain issues of Debt Securities ("Targeted Registered Securities") may be "targeted to foreign markets" under U.S. tax regulations. These regulations generally do not allow Targeted Registered Securities, in connection with their original issuance, to be offered or sold to persons who are within the United States or its territories or possessions or to or for the account of U.S. Persons (as defined under "United States Taxation—U.S. Persons—In General"). Such regulations also require Holders, and in certain cases beneficial owners, of Targeted Registered Securities to comply with certain periodic certification requirements, including certification of non-U.S. beneficial ownership. In addition, these regulations generally prohibit the delivery of Debt Securities representing Targeted Registered Securities within the United States or its territories or possessions. Only the Dealers named in the Offering Circular (and those Dealers identified in an applicable Pricing Supplement to the Offering Circular relating to Targeted Registered Securities (the "Targeted Registered Supplement") that have represented and warranted as to those matters summarized below and certain other matters) may offer or sell Targeted Registered Securities.

If we issue Targeted Registered Securities, special provisions applicable to such Targeted Registered Securities, including form, selling and transfer restrictions and tax considerations and certifications, will be described in the Targeted Registered Supplement and, in certain cases, any applicable Pricing Supplement. The combined offering document (as defined in the Targeted Registered Supplement) generally may not be distributed in the United States or to U.S. Persons. Targeted Registered Securities will only be issued as Global Book-Entry Securities.

United States Taxation

New regulations relating to withholding, backup withholding and information reporting with respect to payments made to non-U.S. Persons generally are effective for payments made after December 31, 2000. However, withholding certificates that are valid under the present rules and that are held by a Withholding Agent on December 31, 1999, remain valid until the earlier of December 31, 2000 or the expiration date of the certificate under the present rules, unless otherwise invalidated due to changes in your circumstances.

When effective, the new regulations will streamline and, in some cases, alter the types of statements and information that must be furnished to claim a reduced rate of withholding. With some exceptions, the new regulations treat a payment to a foreign partnership as a payment directly to the partners, so that the partners are required to provide any required certification.

Reference is made to "United States Taxation" in the Offering Circular for a further discussion of tax matters relevant to investors in Debt Securities.

Distribution of Targeted Registered Securities

No Dealer participating in the distribution of Targeted Registered Securities (whether as principal or agent) may allow any person (including an affiliate) to participate in the distribution of Targeted Registered Securities without our prior written consent and such person having entered into an agreement with us.

Selling Restrictions

If we issue Targeted Registered Securities, the Targeted Registered Supplement will describe the selling restrictions that apply to the Targeted Registered Securities. Each Dealer named in the Offering Circular has represented and agreed, and each Dealer identified in the Targeted Registered Supplement will have represented and agreed, as follows:

(1) that each Dealer will not offer or sell Targeted Registered Securities during a "restricted period," as defined in U.S. tax regulations, to persons who are within the United States or its territories or possessions (with certain exceptions) or to or for the account of U.S. Persons (with certain exceptions) and

(2) that each Dealer has in effect procedures reasonably designed to ensure that its employees and agents who will be directly engaged in offering or selling the Targeted Registered Securities are aware of these selling restrictions.

You also should review the selling restrictions set forth in Appendix D to the Offering Circular.

LOGO

FANNIE MAE'S PRINCIPAL OFFICE
3900 Wisconsin Avenue, NW
Washington, D.C. 20016

FISCAL AGENT
as to Fed Book-Entry Securities

Federal Reserve Bank of New York
33 Liberty Street
New York, New York 10045

GLOBAL AGENT, REGISTRAR AND TRANSFER AGENT
as to Global Book-Entry Securities

The Chase Manhattan Bank
450 West 33rd Street, 15th Floor
New York, New York 10001-2697

LUXEMBOURG LISTING AGENT

Banque Internationale á Luxembourg S.A.
69, route d'Esch
L-2953 Luxembourg

SPECIAL UNITED STATES COUNSEL TO
FANNIE MAE

Brown & Wood LLP
One World Trade Center
New York, New York 10048

SPECIAL UNITED STATES TAX COUNSEL
TO FANNIE MAE

Arnold & Porter
555 12th Street, NW
Washington, D.C. 20004

INDEPENDENT AUDITORS TO FANNIE MAE

KPMG LLP
2001 M Street, NW
Washington, D.C. 20036

UNITED STATES COUNSEL TO THE DEALERS

Sullivan & Cromwell
1701 Pennsylvania Avenue, NW
Washington, D.C. 20006