Fannie Mae Announces New One-Year Benchmark Bills Auctions, will be Issued Bi-Weekly; Designates Benchmark Bill Syndication Group for Discount Notes.

Business Editors

WASHINGTON--(BUSINESS WIRE)--Oct. 4, 2000

Fannie Mae (NYSE:FNM
FNM Free National Movement (Bahamas)
FNM Foot and Mouth ), the nation's largest source of financing for home mortgages, today announced it will begin offering one-year Benchmark Bills(SM) through its web-based Dutch auction system effective October 11, 2000.

Since the introduction of the Benchmark Bills in November 1999, the market has benefited from the enhanced liquidity and transparency that these securities offer, and in the process Fannie Mae has developed a short-term yield curve to further enhance its entire Benchmark yield curve.

"Investors have been telling us they are seeking high credit quality, liquid investments in the short end of the market," according to Linda Knight, Fannie Mae's Senior Vice President and Treasurer. "We try to be responsive to the market's needs."

Beginning on Wednesday, October 11, and on every other Wednesday thereafter, Fannie Mae will auction a minimum of $1 billion in one-year Benchmark Bills. Sizing above $1 billion will be based on investor demand coupled with portfolio needs.

Auctions sizes and maturities will be announced on the Tuesday prior to the auction, occurring at the same time as the three- and six-month Bill announcement. Maturity dates will be 360 days from the issuance date or the first available business day prior if a weekend or holiday occurs 360 days from issuance.

Also, beginning with the November 1, 2000 Benchmark Bill auction, Fannie Mae will designate a syndicate group from its core discount note dealers. Through the remainder of 2000, the syndicate dealers will change bi-weekly. Beginning in 2001, changes will be made on a monthly basis at Fannie Mae's discretion.

The syndicate approach will further improve transparency and liquidity in the market, and enhance secondary market trading activity.

The following securities dealers and banks are authorized to sell Fannie Mae Discount Notes and Benchmark Bills:

Banc of America Securities LLC 

Banc One Capital Markets, Inc.

Berean Capital, Incorporated

Blaylock & Partners, L.P.

Credit Suisse First Boston Corporation

Chase Securities, Inc.

Deutsche Bank Securities Inc.

Fuji Securities Inc.

Gardner Rich & Company

Goldman, Sachs & Co.

HSBC Securities (USA) Inc.

Jackson Securities, Incorporated

J.P. Morgan Securities Inc.

Lehman Brothers Inc.

Merrill Lynch Government Securities, Inc.

Morgan Stanley & Co. Incorporated

Myerberg & Company, L.P.

Ormes Capital Markets Inc.

PaineWebber Incorporated

Prudential Securities Incorporated

Pryor, McClendon, Counts & Co., Inc.

Redwood Securities Group, Inc.

Robert Van Securities, Inc.

Salomon Smith Barney Inc.

Siebert, Brandford, Shank & Co., L.L.C.

SBK-Brooks Investment Corp.

Utendahl Capital Partners, L.P.

Walton Johnson & Company

The Williams Capital Group, L.P.

Additional information about Benchmark Bills Auction is available on Fannie Mae's Web site at www.fanniemae.com.

Fannie Mae is a New York Stock Exchange company and the largest non-bank financial services company in the world. It operates pursuant to a federal charter and is the nation's largest source of financing for home mortgages. Over the past 31 years, Fannie Mae has provided nearly $2.9 trillion of mortgage financing for over 35 million families.

More information about Fannie Mae can be found on the Internet at http://www.fanniemae.com.

Benchmark Bills is a service mark of Fannie Mae. Unauthorized use of this mark is prohibited.

Style Usage: Fannie Mae's Board of Directors has authorized the company to operate as "Fannie Mae," and the company's stock is now listed on the NYSE as "Fannie Mae." In order to facilitate clarity and avoid confusion, news organizations are asked to refer to the company exclusively as "Fannie Mae."