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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 16, 2003

Federal National Mortgage Association

(Exact name of registrant as specified in its charter)

Fannie Mae


Federally chartered corporation (State or other jurisdiction of incorporation)		0-50231 (Commission File Number)		52-0883107 (IRS Employer Identification Number)


3900 Wisconsin Avenue, NW Washington, DC (Address of principal executive offices)		20016 (Zip Code)

Registrant’s telephone number, including area code: 202-752-7000

Item 5. Other Events.

On October 16, 2003, Fannie Mae (formally, the Federal National Mortgage Association), issued its monthly financial summary release for the month of September 2003, a copy of which is filed as Exhibit 99.2 to this Report, and which is incorporated herein by reference.

Item 7. Financial Statements and Exhibits.


	(a) Not applicable.

	(b) Not applicable.

	(c) Exhibits.


	An index to exhibits has been filed as part of this Report immediately following the signature page, and is incorporated herein by reference.

Item 12. Results of Operations and Financial Condition.

On October 16, 2003, Fannie Mae issued a press release relating to the Company’s earnings for the third quarter of fiscal year 2003. A copy of the press release is attached as Exhibit 99.1 to this Report, and is incorporated herein by reference.

This information furnished under “Item 12. Results of Operations and Financial Condition”, including the exhibit related hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any disclosure document of the Company, except as shall be expressly set forth by specific reference in such document.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.


	FEDERAL NATIONAL MORTGAGE ASSOCIATION

	By	/s/ Leanne G. Spencer

		Leanne G. Spencer
		Senior Vice President and Controller

Date: October 16, 2003

EXHIBIT INDEX

The following is a list of the Exhibits furnished herewith.


Exhibit Number		Description of Exhibit

99.1		Press release issued by Fannie Mae on October 16, 2003, relating to earnings for the third quarter of fiscal year 2003.

99.2		Monthly summary release for September 2003 issued by Fannie Mae on October 16, 2003.

exv99w1

Janis Smith
202-752-6673

October 16, 2003

Fannie Mae Reports Third Quarter 2003 Financial Results

Net income at $2,666 million, up 168 percent over the third quarter of 2002;
Diluted earnings per share at $2.69, up 175 percent

Core business earnings at $1,826 million, up 12 percent over the third quarter of 2002;
Core business diluted earnings per share at $1.83, up 13 percent

WASHINGTON, DC – Fannie Mae (FNM/NYSE), the nation’s largest source of financing for home mortgages, today reported financial results for the third quarter of 2003. The company’s reported results are based on generally accepted accounting principles (GAAP). Management also tracks and analyzes Fannie Mae’s financial results based on a supplemental non-GAAP measure called “core business earnings,” which management uses as its primary measure in operating Fannie Mae’s business (see “Core Business Earnings” and attachments).

Reported GAAP Results


	For the Quarter Ended							For the Nine Months Ended
	September 30,							September 30,

	2003		2002		Change			2003		2002		Change

Net Income (in millions)	$	2,666	$	994		168.2	%	$	5,708	$	3,667		55.7	%
EPS* (in dollars)	$	2.69	$	0.98		174.5	%	$	5.70	$	3.59		58.8	%

Core Business Earnings


	For the Quarter Ended							For the Nine Months Ended
	September 30,							September 30,

	2003		2002		Change			2003		2002		Change

Core Business Earnings (in millions)	$	1,826	$	1,631		12.0	%	$	5,536	$	4,722		17.2	%
Core Business EPS* (in dollars)	$	1.83	$	1.62		13.0	%	$	5.52	$	4.65		18.7	%

*		Diluted

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Third Quarter Earnings
Page Two

Highlights

Highlights of Fannie Mae’s financial performance in the third quarter of 2003 compared with the third quarter of 2002 include:

	•		Reported net interest income of $3,489.3 million, up 34.7 percent;

	•		Core net interest income of $2,668.8 million, up 21.7 percent;

	•		Guaranty fee income of $613.2 million, up 32.6 percent;

	•		Credit-related expenses of $28.6 million compared with $13.2 million;

	•		Losses of $902.0 million from the call and repurchase of debt compared with $138.0 million; and

	•		A $185.1 million after-tax gain resulting from the adoption of FASB Statement No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities (“FAS 149”).

Franklin D. Raines, Fannie Mae’s Chairman and Chief Executive Officer, said, “Fannie Mae delivered outstanding financial results in the third quarter, driven by record business volume and portfolio growth. In a quarter marked by historic levels of volatility in the fixed income markets, our company continued to benefit from the disciplined strategies for growth that have resulted in consistently strong financial performance through a wide range of economic and financial environments. The 21.9 percent year-to-date growth rate in our mortgage portfolio was achieved even as refinancing activity slowed and portfolio liquidations reached an all-time high. The strength of our performance also enabled us to repurchase nearly $6.8 billion in higher cost outstanding debt, which will benefit our shareholders in the future.”

Raines added, “We are particularly pleased by the demonstrated effectiveness of our corporate risk disciplines in a period of sustained volatility and stress in the financial markets. Our duration gap remained within our preferred range in each month of the third quarter, and while our credit loss ratio increased slightly compared with the second quarter of 2003, this measure remains at extremely low historical levels.”

Raines further noted that Congress is currently considering legislation that would change Fannie Mae’s regulatory structure. “We believe a consensus is forming around an approach that would provide for a strong, well-funded financial regulator at Treasury, which would not undermine Fannie Mae’s mission, charter, or status. We intend to continue working with policymakers in the Legislative and Executive Branches to achieve that goal.”

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Third Quarter Earnings
Page Three

Fannie Mae’s Vice Chairman and Chief Financial Officer, Timothy Howard, said, “The consistency and strength of our financial performance was not compromised by an extremely challenging and volatile market. Our core business earnings per share increased by 13.0 percent compared with the third quarter of 2002. This growth rate was substantially reduced by the impact of over $900 million in costs associated with the repurchase of outstanding debt, partially offset by a one-time after-tax gain of $185 million associated with the adoption of FAS 149, an amendment to FAS 133 that will result in the majority of Fannie Mae’s mortgage purchase commitments being accounted for as derivatives. Our portfolio business recorded exceptional financial performance in the third quarter, with core net interest income up 22 percent over the third quarter of 2002. Guaranty fee income increased by 33 percent compared with the prior year quarter.”

Howard said that the 62.4 percent annualized increase in the company’s mortgage portfolio during the third quarter was driven by record purchases of $254 billion. These purchases reflected a combination of the settlement of outstanding commitments, which totaled $135 billion at June 30, 2003, and new commitments made during the quarter. Said Howard, “In addition to seeing the very positive impact of the settlement of outstanding commitments, we were able to take advantage of attractive mortgage-to-debt spreads at different points during the quarter, and also benefited from intermittent selling of MBS by banks and other investors.” Howard added that outstanding portfolio mortgage commitments were $30 billion at September 30, 2003.

Howard noted that the duration gap on Fannie Mae’s mortgage portfolio averaged a positive one month in September. Howard said, “Our duration gap stayed within our preferred range during each month of a quarter in which yields on 10-year treasuries surged 105 basis points and then declined by 66 basis points in September. That is a very positive testament to the effectiveness of our stringent, publicly-disclosed financial and risk disciplines.”

Howard added, “During the quarter we capitalized on particularly attractive opportunities to repurchase shares of Fannie Mae common stock, while at the same time significantly strengthening our capital position to support the extraordinary growth of our mortgage portfolio.” Specifically, Howard said, Fannie Mae repurchased 5.5 million shares of common stock during the quarter, while the company’s core capital rose to $32.8 billion compared with $30.7 billion at June 30, 2003.

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Third Quarter Earnings
Page Four

Reported Results

Fannie Mae’s reported net income of $2,666 million for the third quarter of 2003 increased 168.2 percent over reported net income of $994 million in the third quarter of 2002. Diluted earnings per share (EPS) were $2.69 in the third quarter of 2003, up 174.5 percent from $0.98 in the third quarter of 2002.

Reported net income for the first nine months of 2003 was $5,708 million, up 55.7 percent from the first nine months of 2002. Diluted EPS were $5.70 during the first nine months of 2003, up 58.8 percent from the comparable period the previous year.

In accordance with FAS 133, the company recorded $472 million of unrealized mark-to-market gains on purchased options during the third quarter of 2003 compared with $1,378 million in unrealized mark-to-market losses in the third quarter of 2002. These unrealized gains were due primarily to increases in the fair value of the time value of purchased options during the quarter that resulted from the generally higher interest rate environment.

Strong growth in net interest income contributed positively to the company’s reported results for the quarter. Net interest income for the third quarter of 2003 was $3,489 million, up 34.7 percent over the third quarter of 2002. This increase primarily resulted from a 15.3 percent rise in the average net investment balance and a 21 basis point increase in the net interest yield.

The company’s net interest yield averaged 156 basis points in the third quarter of 2003 compared with 135 basis points in the third quarter of 2002. The increased amount of purchased options used as a substitute for callable debt compared with the prior year quarter had a positive effect on Fannie Mae’s net interest yield, because the cost of purchased options is not reflected in net interest yield or reported net interest income. Core net interest income and net interest margin, supplemental non-GAAP measures discussed below, include purchased options amortization expense and are calculated consistently with Fannie Mae’s methodology prior to the adoption of FAS 133.

Core Business Earnings

Core business earnings for the third quarter of 2003 totaled $1,826 million, a 12.0 percent increase over core business earnings of $1,631 million in the third quarter of 2002. Core business diluted EPS for the third quarter of 2003 were $1.83, or 13.0 percent above the third quarter of 2002. Growth in core business earnings and diluted EPS was paced by a 21.7 percent increase in core net interest income and a 32.6 percent increase in guaranty fee income.

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Third Quarter Earnings
Page Five

Fannie Mae management relies on core business earnings in operating the company’s business. Management believes that core business earnings better reflects the company’s risk management strategies, and provides investors with a better measure of the company’s financial results than GAAP net income. Core business earnings was developed in conjunction with the company’s January 1, 2001 adoption of Financial Accounting Standard No. 133, Accounting for Derivative Instruments and Hedging Activities (FAS 133), to adjust for the use of purchased options as an alternative to issuing callable debt, alternatives that produce similar economic results but require different accounting treatment under FAS 133. The difference in the amounts and percentage changes between net income and core business earnings, and EPS and core business EPS, are entirely attributable to these accounting differences for interest rate hedges. The attachments to this release include a reconciliation of the company’s non-GAAP financial measures to its GAAP results.

Outlook

Vice Chairman Howard said, “As we noted in our second quarter earnings release and conference call, the exceptional growth in core business EPS Fannie Mae delivered between the fourth quarter of 2000 and the second quarter of 2003 — averaging 22 percent annually — was above trend and fueled by a substantial and temporary increase in our net interest margin. We indicated that the margin would begin to move down once interest rates stabilized or moved higher. Interest rates did increase in the third quarter, and the margin fell by ten basis points. We expect a further margin decline during the fourth quarter.”

Howard said that for the next few quarters declines in the company’s net interest margin should result in lower-than-trend growth in Fannie Mae’s core business EPS, relative to the same quarter in the previous year. For the full year 2004, however, Howard said that the company expects to achieve double-digit growth in core business EPS. Said Howard, “We expect to be able to meet the current analyst consensus of $8.00 per share next year, while adhering firmly to our recently announced risk management disciplines.”

Howard added that even with the increased variability in core business EPS envisioned for the next few quarters, the company still expects its pattern of earnings to remain less volatile than the median company with a AA or AAA credit rating.

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Third Quarter Earnings
Page Six

Howard noted that very rapid mortgage portfolio growth during the third quarter had caused the company to moderately increase its expectation for core business EPS growth during the second half of this year. Said Howard, “We now anticipate that core business EPS growth for all of 2003 will be closer to 15 percent, compared with the 12 to 14 percent range we had indicated previously.”

Howard said that in spite of extremely strong portfolio growth in the third quarter the company has not increased its expectation for full year portfolio growth from the mid-teens. Said Howard, “During the third quarter we drew down over $100 billion in outstanding mortgage commitments. In the fourth quarter we likely will have slow or even negative portfolio growth as we rebuild our commitment pipeline.” For 2004, Howard said, Fannie Mae expects the portfolio to benefit from a continued strong purchase market, and to potentially benefit from increased bank selling of mortgages and mortgage securities. At this point, said Howard, the company was estimating low-teens portfolio growth for 2004.

Howard added that while strong financial performance enabled Fannie Mae to capitalize on attractive opportunities to repurchase outstanding debt during the first three quarters of 2003, the company expected lower levels of debt repurchase during the fourth quarter, and substantially lower amounts of debt repurchase next year. In addition, Howard said, the company expects growth in administrative costs to slow to single digits in 2004.

Howard noted that it was probable that Fannie Mae’s credit losses for the remainder of this year and 2004 would be somewhat higher than the average credit losses during the first three quarters of 2003. Howard said that a portion of these increases would result from growth in the credit book. Additionally, Howard said, with single-family home prices likely to rise less rapidly, the company anticipates increases in both the number of foreclosures and the loss per case on foreclosed properties. Howard added, however, that Fannie Mae’s credit-related losses totaled only $80 million for the first three quarters of 2003, resulting in an average credit loss ratio of one-half of one basis point, and that any dollar increase in the company’s 2004 credit losses should be relatively modest.

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Third Quarter Earnings
Page Seven

Howard reiterated that the company had no fixed targets for long-term core business EPS growth, but that it expected EPS to grow somewhat faster over time than the market for residential mortgage debt in which it operates. Said Howard, “Even in an environment of rising mortgage rates and slowing housing activity, we expect the growth of mortgage debt outstanding to slow only moderately from the pace of recent years. For the remainder of the decade, we still expect average growth in mortgage debt outstanding of between 7 and 9.5 percent per year. This is substantially higher than the expected growth in nominal GDP, and certainly a solid foundation for core business EPS growth through the remainder of the decade.”

Fannie Mae is unable to provide a meaningful outlook for net income and net interest yield, the most comparable GAAP measures to core business earnings and net interest margin. These GAAP measures may fluctuate considerably from quarter to quarter because they include unrealized gains or losses in the time value of purchased options. These unrealized gains or losses are heavily influenced by the volume and mix of purchased options used to finance the company’s portfolio as well as fluctuations in interest rates, which cannot reliably be projected.

Details of Fannie Mae’s third quarter 2003 financial performance follow.

Business Volume

Fannie Mae’s business volume – mortgages purchased for portfolio plus MBS issues acquired by other investors – totaled a record $427.8 billion in the third quarter of 2003, compared with $186.8 billion in the third quarter of 2002 and $410.5 billion in the second quarter of 2003. Business volume in the third quarter of 2003 consisted of $253.9 billion in portfolio purchases and $173.9 billion in MBS issues acquired by investors other than Fannie Mae’s portfolio, compared with $74.2 billion and $112.6 billion, respectively, in the third quarter of 2002. Retained commitments to purchase mortgages were $149.0 billion in the third quarter of 2003, compared with $128.0 billion in the third quarter of 2002 and $190.7 billion in the second quarter of 2003. Outstanding portfolio commitments for mandatory delivery dropped to $29.6 billion at September 30, 2003 from $134.6 billion at June 30, 2003.

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Third Quarter Earnings
Page Eight

Fannie Mae’s combined book of business – the gross balance of mortgages held in portfolio and outstanding MBS and other mortgage-related securities guaranteed by Fannie Mae and held by other investors – grew at a compound annual rate of 16.2 percent during the third quarter of 2003 to $2.1 trillion. This growth resulted from a 62.4 percent annualized growth in the gross mortgage portfolio and an 8.3 percent annualized decline in outstanding MBS.

Portfolio Investment Business Results

Fannie Mae’s portfolio investment business manages the interest rate risk of the company’s mortgage portfolio and other investments. The results of this business are largely reflected in core net interest income, which is net interest income less the amortization expense of purchased options. Core net interest income for the third quarter of 2003 was $2,668.8 million, up 21.7 percent from $2,192.1 million in the third quarter of 2002. This increase was driven by a 15.3 percent rise in the average net investment balance and a four basis point increase in the net interest margin.

Fannie Mae’s net investment balance – consisting of the company’s liquid investment portfolio together with its mortgage portfolio net of unrealized gains or losses on available for sale securities, deferred balances, and the allowance for loan losses – averaged $926 billion during the third quarter of 2003 compared with $803 billion during the third quarter of 2002. The net investment balance was $977 billion at September 30, 2003.

The company’s net interest margin averaged 120 basis points in the third quarter of 2003 compared with 116 basis points in the third quarter of 2002 and 130 basis points in the second quarter of 2003. Fannie Mae’s net interest margin declined from the second quarter of this year as record low interest rates during the spring drove heavy mortgage liquidations of older, higher-coupon mortgages that were replaced with new, current-coupon mortgages.

For the third quarter of 2003 the company realized losses from debt repurchases and debt calls of $902.0 million compared with losses of $138.0 million in the third quarter of 2002. Losses on debt repurchases totaled $878.2 million during the quarter, while losses on debt calls totaled $23.8 million. Debt repurchased and debt called in the third quarter totaled $6.8 billion and $56.9 billion, respectively. Fannie Mae regularly calls or repurchases debt as part of its interest rate risk management program.

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Third Quarter Earnings
Page Nine

Credit Guaranty Business Results

Fannie Mae’s credit guaranty business manages the company’s credit risk. The results of this business are primarily reflected in guaranty fee income and credit-related losses. Guaranty fee income was $613.2 million in the third quarter of 2003, a 32.6 percent increase over the third quarter of 2002. The increase in guaranty fee income was driven by a 26.1 percent rise in average outstanding MBS and a 5.3 percent increase in the effective guaranty fee rate on that business. The effective guaranty fee rate in the third quarter of 2003 was 20.0 basis points compared with 19.0 basis points in the third quarter of 2002 and 21.2 basis points in the second quarter of 2003. The increase in the effective guaranty fee rate between the third quarters of 2003 and 2002 was a result of increased risk-based pricing fees on new business, together with the faster revenue recognition of deferred fee income due to accelerated prepayments. The decline in the effective guaranty fee rate during the third quarter compared to the second quarter was the result of slower recognition of deferred fee income due to the expectation of a slowdown in prepayments because of rising interest rates.

Credit-related losses – charge-offs plus foreclosed property income – increased during the quarter but remained at historically low levels. Credit-related losses totaled $37.0 million in the third quarter of 2003 compared with $13.9 million in the third quarter of 2002. This increase reflects continued growth in the number of single-family properties acquired through foreclosure, together with a modest increase in loss severity during the quarter.

Fannie Mae’s credit loss rate – credit-related losses as a percentage of the average combined book of business – was 0.7 basis points in the third quarter of 2003 compared with 0.3 basis points in the third quarter of 2002 and 0.5 basis points for full-year 2002.

Credit-related expense, which includes the provision for losses and foreclosed property income and is the amount recorded on the company’s income statement, totaled $28.6 million in the third quarter of 2003 and $15.4 million higher than the third quarter of 2002. The company’s allowance for loan losses and guaranty liability for MBS totaled $800 million at September 30, 2003, down slightly from December 31, 2002.

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Third Quarter Earnings
Page Ten

Fannie Mae’s conventional single-family serious delinquency rate, an indicator of potential future loss activity, was 0.58 percent at August 31, 2003 compared with 0.57 percent at December 31, 2002. The company’s reporting of delinquent loans includes the performance of all seriously delinquent conventional loans, without considering the benefits of credit enhancement.

Fee and Other Income

Fee and other income in the third quarter of 2003 totaled $104.4 million compared with $91.6 million in the third quarter of 2002. Fee and other income includes technology fees, transaction fees, multifamily fees and other miscellaneous items, and is net of operating losses from certain tax-advantaged investments – primarily investments in affordable housing which qualify for the low income housing tax credit. Tax credits associated with housing tax credit investments are included in the provision for federal income taxes. Fee and other income also includes any amounts recorded as other than temporary impairment.

Administrative Expenses

Administrative expenses totaled $347.0 million in the third quarter of 2003, up 10.3 percent from the third quarter of 2002. Management expects that the growth rate for administrative expenses will slow to single digits in 2004.

The company’s ratio of administrative expense to the average combined book of business decreased in the third quarter of 2003 to .066 percent from .073 percent in the third quarter of 2002. Fannie Mae’s efficiency ratio — administrative expense divided by core taxable-equivalent revenue — was 9.1 percent in the third quarter of 2003 compared with 10.5 percent in the third quarter of 2002.

Income Taxes

The provision for federal income taxes on net income was $1,019.8 million in the third quarter of 2003 compared with $307.0 million in the third quarter of 2002. The effective federal income tax rate on net income was 28 percent in the third quarter of 2003 compared with 24 percent for the same period last year. The increase in the effective rate on reported income is attributable to an increase in taxable income during the third quarter of 2003.

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Third Quarter Earnings
Page Eleven

The provision for federal income taxes on core business earnings was $567.5 million in the third quarter of 2003, compared with $649.7 million in the third quarter of 2002. The effective federal income tax rate on core business earnings was 24 percent in the third quarter of 2003, compared with 28 percent in the same period last year. The decrease in the effective rate on core business earnings is primarily attributable to an increase in tax credits recognized during the third quarter of 2003.

Implementation of New Accounting Standard FAS 149

Effective July 1, 2003 Fannie Mae adopted a new accounting standard—FASB Statement No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities (“FAS 149”). As a result of the adoption of FAS 149, the company will now account for the majority of commitments to purchase mortgage loans or MBS as derivatives and will record the fair value of these commitments on its balance sheet. FAS 149 applies to mortgage loan commitments entered into or modified after June 30, 2003 and MBS commitments entered into after and outstanding at June 30, 2003. Certain of these commitments will qualify as cash flow hedges of forecasted purchases or sales with resulting changes in their fair value recorded in Accumulated Other Comprehensive Income (AOCI). When the loan or security commitment is settled, the company will amortize the amount recorded in AOCI in earnings along with an equal and offsetting amount from the amortization of the matching premium or discount recorded on the loan or security over its life. Consequently, this amortization will have no ongoing effect on earnings.

Fannie Mae will not apply hedge accounting to certain other commitments, primarily those that represent matched buy/sell commitments. Accordingly, the company will mark these commitments to market through earnings. However, the company expects associated gains and losses to largely offset, with minimal effect on earnings.

Fannie Mae recorded a transition gain of $185.1 million net of taxes as a result of the July 1, 2003 adoption of FAS 149. The transition gain primarily relates to recording the fair value of open portfolio MBS purchase commitments totaling $113 billion at June 30, 2003. Subsequent to June 30, these commitments will qualify as cash flow hedges and will be accounted for as discussed above. This transition gain is included in core business earnings in the third quarter of 2003 and will amortize into future earnings as premium expense in net interest income over the life of the mortgages.

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Third Quarter Earnings
Page Twelve

Capital Account Management

Fannie Mae repurchased 5.5 million shares of common stock during the third quarter of 2003 compared with 4.3 million shares in the third quarter of 2002. Through September 30, 2003, the company has repurchased a total of 19.5 million shares against the Board of Directors authorization to purchase up to 49.4 million shares of the company’s common stock, or 5 percent of shares outstanding as of December 31, 2002. At September 30, 2003 Fannie Mae had 971.1 million shares of common stock outstanding compared with 988.8 million shares at December 31, 2002.

The company issued $225 million of preferred stock during the third quarter of 2003. At September 30, 2003, preferred stock made up 12.5 percent of Fannie Mae’s core capital. The company also issued $1.0 billion of subordinated debentures in the third quarter of 2003, and had $10.9 billion of subordinated debt outstanding at September 30, 2003. Subordinated debt serves as an important risk-bearing supplement to Fannie Mae’s equity capital, although it is not a component of core capital. After providing for capital to support its off-balance sheet MBS, Fannie Mae’s total capital and outstanding subordinated debt as a percent of on-balance sheet assets was 3.8 percent at September 30, 2003. By the end of 2003, the company expects to meet its voluntary initiative to issue sufficient subordinated debt to bring the sum of total capital and outstanding subordinated debt to at least 4 percent of on-balance sheet assets, after providing capital to support off-balance sheet MBS.

Fannie Mae’s core capital, which is the basis for the company’s statutory minimum capital requirement, was $32.8 billion at September 30, 2003 compared with $28.1 billion at December 31, 2002 and $26.5 billion at September 30, 2002. Core capital was an estimated $1.351 billion above the statutory minimum at September 30, 2003. At June 30, 2003, core capital was $1.527 billion above the statutory minimum.

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Third Quarter Earnings
Page Thirteen

Total capital includes core capital and the total allowance for loan losses and guaranty liabilities for MBS, less any specific loss allowances, and is the basis for the risk-based capital standard. Total capital was $33.5 billion at September 30, 2003 compared with $28.9 billion at December 31, 2002 and $27.3 billion at September 30, 2002. Fannie Mae’s total capital exceeded the risk-based requirement by $13.4 billion as of June 30, 2003, the latest period for which a risk-based capital requirement has been determined. The risk-based standard uses a stress test to determine the amount of total capital the company needs to hold in order to protect against credit and interest rate risk, and requires an additional 30 percent capital for management and operations risk. The higher of Fannie Mae’s risk-based or minimum capital standard is binding.

Voluntary Disclosures

As part of Fannie Mae’s voluntary market discipline, liquidity, safety and soundness initiatives of October 2000, the company discloses on a quarterly basis its liquid assets as a percent of total assets along with the sensitivity of its future credit losses to an immediate 5 percent decline in home prices.

At September 30, 2003 Fannie Mae’s ratio of liquid assets to total assets was 5.6 percent compared with 6.9 percent at December 31, 2002. Liquid assets totaled $57.4 billion at September 30, 2003. Fannie Mae has committed to maintain a portfolio of high-quality, liquid investments equal to at least 5 percent of total assets.

At June 30, 2003 the present value of Fannie Mae’s net sensitivity of future credit losses to an immediate 5 percent decline in home prices was $758 million, taking into account the beneficial effect of third-party credit enhancements. This compares with $596 million at December 31, 2002. The June 30 figure reflects a gross credit loss sensitivity of $2,084 million before the effect of credit enhancements, and is net of projected credit risk sharing proceeds of $1,326 million.

Fannie Mae’s quarterly disclosures, together with the monthly interest-rate-risk disclosures, are included in the attachments to this release.

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Third Quarter Earnings
Page Fourteen

Derivatives and FAS 133

Fannie Mae uses derivative instruments as substitutes for noncallable and callable debt issued in the cash markets to help match the cash flow characteristics of its debt with those of its mortgages and reduce the interest rate risk in its portfolio. Fannie Mae accounts for its derivatives under FAS 133. Beginning in the third quarter of 2003 with the implementation of FAS 149, the company also accounts for certain commitments to purchase mortgages and MBS as derivatives.

FAS 133 requires that Fannie Mae mark to market on its income statement the changes in the time value, but not the total value, of its purchased options – interest rate swaptions and interest rate caps. The mark to market of the time value of Fannie Mae’s purchased options during the third quarter of 2003 resulted in a net mark-to-market gain of $471.7 million compared with a net mark-to-market loss of $1,378.3 million in the third quarter of 2002, which is reported on the purchased option expense line of the income statement. Purchased option expense in the third quarter of 2003 includes $820.5 million in amortization expense, which was included in net interest income prior to FAS 133 and currently is included in core net interest income and in core business earnings. This amortization expense represents the straight-line amortization of the up-front premium paid to purchase the options over the expected life of the options together with any acceleration of expense related to options extinguished prior to exercise.

FAS 133 also requires that the company record any change in the fair values of certain derivatives, including interest rate swaps it uses as substitutes for noncallable debt, on the balance sheet in AOCI. For these types of transactions FAS 133 does not require or permit noncallable debt to be marked to market. At September 30, 2003, the AOCI component of stockholders’ equity included a reduction of $16.1 billion, or 1.8 percent of the net mortgage balance, from the marking to market of these derivatives. This compares to a reduction of $17.0 billion at June 30, 2003 and $16.3 billion at December 31, 2002. In addition, the company recorded a reduction of $2.4 billion in AOCI related to the fair value of certain mortgage-related purchase and sell commitments designated as cash flow hedges by FAS 149. Accumulated other comprehensive income is a separate component of stockholders’ equity and is not a component of core capital for regulatory purposes.

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Third Quarter Earnings
Page Fifteen

Fannie Mae’s primary credit exposure on derivatives is that a counterparty might default on payments due, which could result in Fannie Mae having to replace the derivative with a different counterparty at a higher cost. Fannie Mae’s exposure on derivative contracts (taking into account master settlement agreements that allow for netting of payments and excluding collateral received) was $5.684 billion at September 30, 2003. All of this exposure was to counterparties rated A-/A3 or higher. Fannie Mae held $5.455 billion of collateral through custodians to offset the risk of the exposure for these instruments. Fannie Mae’s exposure, net of collateral, was $229 million at September 30, 2003 versus $197 million at December 31, 2002.

Conference Call

Fannie Mae will host a conference call with CFO Howard to discuss the company’s third quarter earnings release and respond to investor questions on Thursday, October 16, 2003 at 4:00 p.m. ET. The dial-in number for the call is 1-888-428-4478 or, for international callers, 1-651-291-5254. The confirmation code is 701529. Please dial in 5 to 10 minutes prior to the start of the call. Investors are invited to participate in the question and answer session via phone or e-mail. Questions may be submitted beginning at 9:00 a.m. ET on October 16 to ask_the_cfo@fanniemae.com; follow-up questions may be submitted to this e-mail address both during and after the call. Fannie Mae also will provide an audio Webcast of the conference call, which interested parties can access from Fannie Mae’s Web site. A replay of the conference call will be available on Fannie Mae’s Web site starting October 16, 2003 at 7:30 p.m. ET. This press release, including the attachments that provide a reconciliation of the company’s non-GAAP financial measures to its GAAP results, is available on Fannie Mae’s Web site at www.fanniemae.com/ir.

Forward-Looking Statements

This release includes forward-looking statements based on management’s estimates of trends and economic factors in the markets in which Fannie Mae is active as well as the company’s business plans. Such estimates and plans may change without notice and future results may vary from expected results if there are significant changes in economic, regulatory, or legislative conditions affecting Fannie Mae or its competitors. For a discussion of these factors, investors should review Fannie Mae’s Annual Report on Form 10-K for the year ended December 31, 2002 and other documents filed with the Securities and Exchange Commission (SEC), which are available on the company’s Web site at www.fanniemae.com/ir and SEC’s Web site at www.sec.gov under “Federal National Mortgage Association” or CIK number 0000310522. Fannie Mae undertakes no duty to update these forward-looking statements.

(more)

Third Quarter Earnings
Page Sixteen

# # #

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. Fannie Mae is working to shrink the nation’s “homeownership gaps” through a $2 trillion “American Dream Commitment” to increase homeownership rates and serve 18 million targeted American families by the end of the decade. Since 1968, Fannie Mae has provided over $5.2 trillion of mortgage financing for more than 55 million families. More information about Fannie Mae can be found on the Internet at http://www.fanniemae.com.

This press release does not constitute an offer to sell or the solicitation of an offer to buy securities of Fannie Mae. Nothing in this press release constitutes advice on the merits of buying or selling a particular investment. Any investment decision as to any purchase of securities referred to herein must be made solely on the basis of information contained in Fannie Mae’s Offering Circular dated January 23, 2003, and that no reliance may be placed on the completeness or accuracy of the information contained in this press release.

You should not deal in securities unless you understand their nature and the extent of your exposure to risk. You should be satisfied that they are suitable for you in the light of your circumstances and financial position. If you are in any doubt you should consult an appropriately qualified financial advisor.

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 “FNM.” In order to facilitate clarity and avoid confusion, news organizations are asked to refer to the company exclusively as “Fannie Mae.”

Glossary of Business Terms

Purchased options amortization expense– the cost of purchased options used to hedge interest rate risk amortized over the original expected life of the options, together with any acceleration of expense related to options extinguished prior to exercise. Included in core business earnings instead of the unrealized gains and losses on purchased options to make it consistent with the accounting for the embedded options in our callable debt and the vast majority of our mortgages.

Business Volume – Mortgages purchased for portfolio plus MBS issues acquired by other investors.

Combined Book of Business – The gross mortgage portfolio plus outstanding MBS. Also referred to as the book of business. (Formerly referred to as total book of business).

Core Capital – Total stockholders’ equity excluding other comprehensive income (OCI). Represents a regulatory measure of capital.

Total Capital – Core capital plus the total allowance for loan losses and guaranty liability for MBS, less any specific loss allowances. Represents a regulatory measure of capital.

Core Net Interest Income – Net interest income and purchased options amortization expense (Comparable to net interest income pre-FAS 133).

Core Taxable-Equivalent Revenue – The sum of core net interest income, guaranty fee income, and fee and other income, together with a taxable-equivalency adjustment for tax-exempt income and investment credits (principally mortgage revenue bonds and low income housing tax credit investments).

Efficiency Ratio – Administrative expense divided by core taxable-equivalent revenue.

Gross Mortgage Portfolio – Unpaid principal balance of mortgages held in portfolio, excluding the effect of unrealized gains or losses on available for sale securities, deferred balances and the allowance for loan losses.

MBS Issues Acquired by Other Investors – Lender-originated MBS issues less MBS purchased by Fannie Mae’s mortgage portfolio. Also referred to as MBS issues. (Formerly referred to as net MBS issues). Does not include Fannie Mae-originated MBS, which generally are immaterial and disclosed in a footnote.

Net Interest Margin – Annualized taxable-equivalent core net interest income (including purchased options amortization expense) divided by the weighted average net investment balance.

Net Interest Yield – Annualized taxable-equivalent net interest income divided by the weighted average net investment balance.

Net Investment Balance – The sum of Fannie Mae’s net mortgage portfolio and other liquid investments (including float).

Net Mortgage Portfolio – Unpaid principal balance of mortgages held in portfolio including the effect of unrealized gains or losses on available for sale securities, unamortized purchase premium or discount and deferred price adjustments, and allowance for loan losses.

Outstanding MBS – Mortgage-backed securities (MBS) and other mortgage related-securities held by investors other than Fannie Mae’s mortgage portfolio. (Formerly referred to as net MBS outstanding).

Realized Common Equity – Total stockholders’ equity excluding preferred stock and OCI. Realized common equity is used in calculating return on equity.

(FANNIEMAE LOGO)

(Dollars and shares in millions, except per share amounts)


			Quarter Ended

			9/30/2003			6/30/2003			3/31/2003			12/31/2002			9/30/2002

Income Statement:
	Net interest income		$	3,489.3		$	3,500.3		$	3,368.4		$	3,012.3		$	2,591.3
	Guaranty fee income			613.2			632.3			546.6			522.3			462.5
	Fee and other income (expense), net			104.4			231.5			113.3			95.4			91.6
	Credit-related expenses			(28.6	)		(22.6	)		(20.3	)		(32.6	)		(13.2	)
	Administrative expenses			(347.0	)		(354.2	)		(343.8	)		(313.2	)		(314.6	)
	Purchased options income (expense)			471.7			(1,882.7	)		(624.6	)		(1,881.1	)		(1,378.3	)
	Debt extinguishments, net			(902.0	)		(739.8	)		(392.2	)		(176.1	)		(138.0	)

	Income before taxes			3,401.0			1,364.8			2,647.4			1,227.0			1,301.3
	Federal income taxes			(920.1	)		(262.9	)		(706.9	)		(274.8	)		(307.0	)
	Cumulative effect of change in accounting principle (1)			185.1			—			—			—			—

	Net income		$	2,666.0		$	1,101.9		$	1,940.5		$	952.2		$	994.3

	Preferred stock dividends			(41.9	)		(34.2	)		(30.3	)		(19.9	)		(21.6	)
	Earnings per diluted common share:
		Before cumulative effect of change in accounting principle	$	2.50		$	1.09		$	1.93		$	.94		$	.98
		After cumulative effect of change in accounting principle		2.69			1.09			1.93			.94			.98
	Cash dividends per share			.45			.39			.39			.33			.33
	Weighted average diluted common shares outstanding			975.9			982.3			990.2			992.4			994.1
	Effective tax rate on reported income (1)			28	%		19	%		27	%		22	%		24	%
	Return on common equity			64.9	%		31.3	%		53.6	%		26.6	%		28.9	%
Core Business Earnings Data: (2)
	Core business earnings (3)		$	1,826.1		$	1,860.4		$	1,849.7		$	1,671.9		$	1,630.7
	Core business earnings per diluted common share (3)			1.83			1.86			1.84			1.66			1.62
	Core net interest income (4)			2,668.8			2,784.5			2,604.1			2,238.4			2,192.1
	Core taxable-equivalent revenue (5)			3,803.0			3,979.8			3,603.2			3,098.0			2,986.7
	Core taxable-equivalent revenue growth			27.3	%		33.9	%		26.9	%		7.9	%		15.3	%
	Effective tax rate on core business earnings (1)			24	%		27	%		26	%		28	%		28	%
	Return on average realized common equity (6)			25.4	%		27.7	%		28.0	%		26.4	%		26.2	%

[Additional columns below]

[Continued from above table, first column repeated]


			Nine Months Ended September 30,

			2003			2002

Income Statement:
	Net interest income		$	10,358.1		$	7,553.8
	Guaranty fee income			1,792.0			1,293.6
	Fee and other income (expense), net			449.2			136.8
	Credit-related expenses			(71.5	)		(59.1	)
	Administrative expenses			(1,045.1	)		(906.0	)
	Purchased options income (expense)			(2,035.5	)		(2,663.7	)
	Debt extinguishments, net			(2,034.0	)		(534.4	)

	Income before taxes			7,413.2			4,821.0
	Federal income taxes			(1,889.9	)		(1,154.4	)
	Cumulative effect of change in accounting principle (1)			185.1			—

	Net income		$	5,708.4		$	3,666.6

	Preferred stock dividends			(106.3	)		(78.5	)
	Earnings per diluted common share:
		Before cumulative effect of change in accounting principle	$	5.51		$	3.59
		After cumulative effect of change in accounting principle		5.70			3.59
	Cash dividends per share			1.23			.99
	Weighted average diluted common shares outstanding			982.9			998.7
	Effective tax rate on reported income (1)			26	%		24	%
	Return on common equity			50.5	%		31.5	%
Core Business Earnings Data: (2)
	Core business earnings (3)		$	5,536.1		$	4,722.1
	Core business earnings per diluted common share (3)			5.52			4.65
	Core net interest income (4)			8,057.5			6,514.0
	Core taxable-equivalent revenue (5)			11,386.0			8,797.8
	Core taxable-equivalent revenue growth			29.4	%		20.3	%
	Effective tax rate on core business earnings (1)			26	%		27	%
	Return on average realized common equity (6)			27.0	%		26.0	%

(1)		Cumulative effect of change in accounting principle represents a one-time after-tax gain associated with the adoption of FAS 149, an amendment to FAS 133 that will result in the majority of Fannie Mae’s mortgage purchase commitments being accounted for as derivatives. The effective tax rate includes the tax effect associated with FAS 149.

(2)		Core business earnings data are non-GAAP (generally accepted accounting principles) measures management uses to track and analyze financial performance. For information regarding why management believes non-GAAP financial measures provide useful information to investors and how management uses these measures, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Core Business Earnings and Business Segment Results” in our Annual Report on Form 10-K for the year ended December 31, 2002.

(3)		Excludes unrealized gains and losses on purchased options recorded under FAS 133 and includes purchased option premiums amortized on a straight-line basis over the original estimated life of the option. Presented on a net of tax basis.

(4)		Includes non-GAAP adjustment for straight-line amortization of purchased options premiums that would have been recorded prior to the adoption of FAS 133 in 2001.

(5)		Includes revenues net of operating losses on low-income housing tax credit limited partnerships and amortization expense of purchased options premiums, plus taxable-equivalent adjustments for tax-exempt income and investment credits using the applicable federal income tax rate.

(6)		Core business earnings less preferred stock dividends divided by average realized common stockholders’ equity (common stockholders’ equity excluding accumulated other comprehensive income).

(FANNIEMAE LOGO)

(Dollars in millions)


			Quarter Ended

			9/30/2003			6/30/2003			3/31/2003			12/31/2002			9/30/2002

Other Data:
	Mortgage portfolio (1):
	Retained commitments		$	148,991		$	190,726		$	115,883		$	149,322		$	128,026
	Mortgage purchases			253,908			127,960			132,005			148,551			74,227
	Mortgage liquidations			147,774			125,947			105,608			107,824			62,148
	Mortgage sales			1,477			5,425			1,271			1,386			1,436
	Mortgage portfolio, gross (2)			917,123			812,467			815,964			790,800			751,423
	Mortgage portfolio growth, gross (compounded)			62.4	%		-1.7	%		13.3	%		22.7	%		5.9	%
	Mortgage-Backed Securities (1):
	MBS issues acquired by others (3)		$	173,858		$	282,502		$	203,934		$	155,955		$	112,592
	Outstanding MBS liquidations			201,043			157,789			127,029			125,219			69,087
	Outstanding MBS (4)			1,211,079			1,237,461			1,107,520			1,029,456			990,393
	Outstanding MBS growth rate (compounded)			(8.3	%)		55.9	%		34.0	%		16.7	%		20.4	%
	Average effective MBS guaranty fee rate (bp)			20.0			21.2			20.3			20.4			19.0
	Book-of-Business (1):
	Business volume		$	427,766		$	410,462		$	335,938		$	304,506		$	186,819
	Book of business			2,128,202			2,049,928			1,923,484			1,820,256			1,741,816
	Book of business growth rate (compounded)			16.2	%		29.0	%		24.7	%		19.3	%		13.8	%
	Expense Ratios:
	Ratio of administrative expense to average net mortgage portfolio and average outstanding MBS (annualized)			0.066	%		0.071	%		0.073	%		0.070	%		0.073	%
	Efficiency ratio (5)			9.1	%		8.9	%		9.5	%		10.1	%		10.5	%

	Credit-related:
	Single-family properties acquired			6,882			6,569			5,918			5,415			5,060
	Single-family conventional serious delinquency rate (6)
		Non-credit enhanced		0.29	% (7)		0.29	%		0.30	%		0.31	%		0.29	%
		Credit enhanced		1.52	% (7)		1.42	%		1.34	%		1.29	%		1.12	%
		Total		0.58	% (7)		0.56	%		0.57	%		0.57	%		0.53	%
	Multifamily serious delinquency rate (8)			0.13	% (7)		0.13	%		0.09	%		0.05	%		0.08	%
	Charge-offs:
		Single-family	$	30.7		$	22.6		$	21.6		$	27.0		$	25.2
		Multifamily		5.4			3.8			1.5			15.6			1.0

		Total		36.1			26.4			23.1			42.6			26.2
	Foreclosed property (income) expense:
		Single-family		(0.2	)		(3.6	)		(2.7	)		(8.4	)		(12.1	)
		Multifamily		1.1			0.1			—			0.1			(0.2	)

		Total		0.9			(3.5	)		(2.7	)		(8.3	)		(12.3	)
	Credit-related losses			37.0			22.9			20.4			34.3			13.9
	Allowance for loan losses and guaranty liability for MBS			799.6			808.0			808.2			808.4			808.1
	Provision for losses (6)			27.7			26.1			23.0			40.9			25.5
	Credit-related expenses			28.6			22.6			20.3			32.6			13.2
	Credit-related losses as a percentage of average net mortgage portfolio and average outstanding MBS (annualized)			0.007	%		0.005	%		0.004	%		0.008	%		0.003	%

[Additional columns below]

[Continued from above table, first column repeated]


			Nine Months Ended September 30,

			2003			2002

Other Data:
	Mortgage portfolio (1):
	Retained commitments		$	455,600		$	238,737
	Mortgage purchases			513,873			222,090
	Mortgage liquidations			379,329			169,595
	Mortgage sales			8,173			8,196
	Mortgage portfolio, gross (2)			917,123			751,423
	Mortgage portfolio growth, gross (compounded)			21.9	%		8.5	%
	Mortgage-Backed Securities (1):
	MBS issues acquired by others (3)		$	660,293		$	322,305
	Outstanding MBS liquidations			485,861			198,958
	Outstanding MBS (4)			1,211,079			990,393
	Outstanding MBS growth rate (compounded)			24.2	%		20.9	%
	Average effective MBS guaranty fee rate (bp)			20.5			18.6
	Book-of-Business (1):
	Business volume		$	1,174,166		$	544,395
	Book of business			2,128,202			1,741,816
	Book of business growth rate (compounded)			23.2	%		15.4	%
	Expense Ratios:
	Ratio of administrative expense to average net mortgage portfolio and average outstanding MBS (annualized)			0.070	%		0.073	%
	Efficiency ratio (5)			9.2	%		10.3	%

	Credit-related:
	Single-family properties acquired			19,369			14,085
	Single-family conventional serious delinquency rate (6)
		Non-credit enhanced		N/A			N/A
		Credit enhanced		N/A			N/A
		Total		N/A			N/A
	Multifamily serious delinquency rate (8)			N/A			N/A
	Charge-offs:
		Single-family	$	74.9		$	78.0
		Multifamily		10.7			2.8

		Total		85.6			80.8
	Foreclosed property (income) expense:
		Single-family		(6.5	)		(27.9	)
		Multifamily		1.2			(0.2	)

		Total		(5.3	)		(28.1	)
	Credit-related losses			80.3			52.7
	Allowance for loan losses and guaranty liability for MBS			799.6			808.1
	Provision for losses (6)			76.8			87.2
	Credit-related expenses			71.5			59.1
	Credit-related losses as a percentage of average net mortgage portfolio and average outstanding MBS (annualized)			0.005	%		0.004	%

(1)		Represents unpaid principal balance.

(2)		Represents unpaid principal balance. Excludes the effect of unrealized gains or losses on available for sale securities, deferred balances, and the allowance for loan losses.

(3)		MBS and other mortgage-related securities guaranteed by Fannie Mae.

(4)		MBS and other mortgage-related securities guaranteed by Fannie Mae and held by investors other than Fannie Mae’s portfolio.

(5)		Administrative expense divided by core taxable-equivalent revenue.

(6)		Includes conventional loans three or more months delinquent or in foreclosure process as a percent of the number of loans.

(7)		As of August 31, 2003, most recent data available.

(8)		Includes loans two or more months delinquent as a percent of loan dollars.

(FANNIEMAE LOGO)

(Dollars in millions)


										Quarter Ended									Nine Months Ended September 30,

				9/30/2003			6/30/2003			3/31/2003			12/31/2002			9/30/2002			2003			2002

Net Interest Yield and Net Interest Margin:
	Average balances:
			Net mortgage investment	$	840,523		$	808,215		$	804,804		$	756,560		$	738,812		$	817,847		$	729,071
			Liquid investments		85,504			81,966			67,135			75,696			64,584			78,202			66,312

			Total net investment	$	926,027		$	890,181		$	871,939		$	832,256		$	803,396		$	896,049		$	795,383

	Net interest yield, taxable-equivalent basis (1)				1.56	%		1.63	%		1.60	%		1.51	%		1.35	%		1.58	%		1.34	%
	Net interest margin, taxable-equivalent basis (2)				1.20	%		1.30	%		1.25	%		1.14	%		1.16	%		1.25	%		1.16	%

Fee and Other Income (Expense):
	Transaction fees			$	132.2		$	159.7		$	136.7		$	91.8		$	43.2		$	428.6		$	113.0
	Technology fees				68.0			91.8			70.1			62.1			60.6			229.9			134.9
	Multifamily fees				37.9			31.7			34.0			26.2			20.4			103.6			59.7
	Tax-advantaged investments				(80.1	)		(52.4	)		(71.3	)		(27.5	)		(57.0	)		(203.8	)		(197.0	)
	Credit enhancement expense				(36.6	)		(45.1	)		(41.4	)		(38.2	)		(20.5	)		(123.1	)		(84.8	)
	Other				(17.0	)		45.8			(14.8	)		(19.0	)		44.9			14.0			111.0

		Total		$	104.4		$	231.5		$	113.3		$	95.4		$	91.6		$	449.2		$	136.8


			September 30,			June 30,			March 31,			December 31,			September 30,
			2003			2003			2003			2002			2002

Selected Balance Sheet Data:
	Mortgage portfolio, net		$	919,424		$	820,276		$	823,329		$	797,693		$	758,100
	Liquid assets			57,432			69,089			61,142			61,553			53,358
	Total assets			1,018,135			923,795			913,264			887,515			837,880
	Debentures, notes, and bonds, net			975,734			884,081			873,920			850,982			800,255
Stockholders’ Equity:
	Preferred stock		$	4,108		$	3,882		$	3,078		$	2,678		$	1,678
	Realized common equity			28,644			26,792			26,438			25,402			24,807
	Accumulated other comprehensive income (OCI)
		Unrealized gains on securities, net		2,136			3,642			4,237			4,459			4,974
		Cash flow hedging results, net— FAS 133		(16,092	)		(16,952	)		(15,849	)		(16,251	)		(16,495	)
		Cash flow hedging results, net— FAS 149		(2,408	)		—			—			—			—

	Total accumulated OCI			(16,364	)		(13,310	)		(11,612	)		(11,792	)		(11,521	)

	Total stockholders’ equity		$	16,388		$	17,364		$	17,904		$	16,288		$	14,964

	Core capital (3)		$	32,752		$	30,675		$	29,517		$	28,079		$	26,484
	Total capital (4)			33,542			31,469			30,309			28,871			27,282

(1)		Annualized net interest income on a tax-equivalent basis divided by the weighted average net investment balance.

(2)		Annualized core net interest income on a tax-equivalent basis divided by the weighted average net investment balance.

(3)		The sum of (a) the stated value of common stock, (b) the stated value of outstanding noncumulative prepetual preferred stock, (c) paid-in capital, and (d) retained earnings, less (e) treasury stock. Represents a regulatory measure of capital.

(4)		The sum of (a) core capital and (b) the total allowance for loan losses and guaranty liability for MBS, less (c) any specific loss allowances. Represents a regulatory measure of capital.

(FANNIEMAE LOGO)

Dollars and shares in millions, except per share amounts


		Quarter Ended									Quarter Ended
		September 30, 2003									September 30, 2002

		Core									Core
		Business			Reconciling			Reported			Business			Reconciling			Reported
		Earnings			Items			Results			Earnings			Items			Results

Net interest income		$	3,489.3		$	—		$	3,489.3		$	2,591.3		$	—		$	2,591.3
Purchased options amortization expense (1)			(820.5	)		820.5			—			(399.2	)		399.2			—

Core net interest income			2,668.8			820.5			3,489.3			2,192.1			399.2			2,591.3
Guaranty fee income			613.2			—			613.2			462.5			—			462.5
Fee and other income (expense), net			104.4			—			104.4			91.6			—			91.6
Credit-related expenses			(28.6	)		—			(28.6	)		(13.2	)		—			(13.2	)
Administrative expenses			(347.0	)		—			(347.0	)		(314.6	)		—			(314.6	)
Purchased options expense under FAS 133 (2)			—			471.7			471.7			—			(1,378.3	)		(1,378.3	)
Debt extinguishments, net			(902.0	)		—			(902.0	)		(138.0	)		—			(138.0	)

Income before federal income taxes			2,108.8			1,292.2			3,401.0			2,280.4			(979.1	)		1,301.3
Provision for federal income taxes (3)			(467.8	)		(452.3	)		(920.1	)		(649.7	)		342.7			(307.0	)
Cumulative effect of change in accounting principle			185.1			—			185.1			—			—			—

	Net income	$	1,826.1		$	839.9		$	2,666.0		$	1,630.7		$	(636.4	)	$	994.3

Preferred stock dividends		$	(41.9	)	$	—		$	(41.9	)	$	(21.6	)	$	—			(21.6	)
Weighted average diluted common shares outstanding			975.9			—			975.9			994.1			—			994.1
Diluted earnings per common share		$	1.83		$	0.86		$	2.69		$	1.62		$	(0.64	)	$	0.98

[Additional columns below]

[Continued from above table, first column repeated]


		Nine Months Ended									Nine Months Ended
		September 30, 2003									September 30, 2002

		Core									Core
		Business			Reconciling			Reported			Business			Reconciling			Reported
		Earnings			Items			Results			Earnings			Items			Results

Net interest income		$	10,358.1		$	—		$	10,358.1		$	7,553.8		$	—		$	7,553.8
Purchased options amortization expense (1)			(2,300.6	)		2,300.6			—			(1,039.8	)		1,039.8			—

Core net interest income			8,057.5			2,300.6			10,358.1			6,514.0			1,039.8			7,553.8
Guaranty fee income			1,792.0			—			1,792.0			1,293.6			—			1,293.6
Fee and other income (expense), net			449.2			—			449.2			136.8			—			136.8
Credit-related expenses			(71.5	)		—			(71.5	)		(59.1	)		—			(59.1	)
Administrative expenses			(1,045.1	)		—			(1,045.1	)		(906.0	)		—			(906.0	)
Purchased options expense under FAS 133 (2)			—			(2,035.5	)		(2,035.5	)		—			(2,663.7	)		(2,663.7	)
Debt extinguishments, net			(2,034.0	)		—			(2,034.0	)		(534.4	)		—			(534.4	)

Income before federal income taxes			7,148.1			265.1			7,413.2			6,444.9			(1,623.9	)		4,821.0
Provision for federal income taxes (3)			(1,797.1	)		(92.8	)		(1,889.9	)		(1,722.8	)		568.4			(1,154.4	)
Cumulative effect of change in accounting principle			185.1			—			185.1			—			—			—

	Net income	$	5,536.1		$	172.3		$	5,708.4		$	4,722.1		$	(1,055.5	)	$	3,666.6

Preferred stock dividends		$	(106.3	)	$	—		$	(106.3	)	$	(78.5	)	$	—		$	(78.5	)
Weighted average diluted common shares outstanding			982.9			—			982.9			998.7			—			998.7
Diluted earnings per common share		$	5.52		$	0.18		$	5.70		$	4.65		$	(1.06	)	$	3.59


		Reported Results												Core Business Earnings

		Quarter Ended						Nine Months Ended						Quarter Ended						Nine Months Ended
		9/30/03			9/30/02			9/30/03			9/30/02			9/30/03			9/30/02			9/30/03			9/30/02

Net interest income		$	3,489.3		$	2,591.3		$	10,358.1		$	7,553.8		$	3,489.3		$	2,591.3		$	10,358.1		$	7,553.8
Taxable-equivalent adjustment on tax-exempt investments (4)			118.4			128.4			360.6			377.5			118.4			128.4			360.6			377.5

Taxable-equivalent net interest income		$	3,607.7		$	2,719.7		$	10,718.7		$	7,931.3			3,607.7			2,719.7			10,718.7			7,931.3

Purchased options amortization expense															(820.5	)		(399.2	)		(2,300.6	)		(1,039.8	)

Taxable-equivalent core net interest income														$	2,787.2		$	2,320.5		$	8,418.1		$	6,891.5

Average net investment balance		$	926,027		$	803,396		$	896,049		$	795,383		$	926,027		$	803,396		$	896,049		$	795,383
Average investment yield			5.40	%		6.37	%		5.66	%		6.42	%		5.40	%		6.37	%		5.66	%		6.42	%
Average borrowing cost			4.03	%		5.19	%		4.25	%		5.25	%		4.03	%		5.19	%		4.25	%		5.25	%
Purchased options amortization expense															0.35	%		0.21	%		0.35	%		0.20	%
Average core borrowing cost (5)															4.38	%		5.40	%		4.60	%		5.45	%
Net interest yield, taxable- equivalent basis (6)			1.56	%		1.35	%		1.58	%		1.34	%
Net interest margin, taxable-equivalent basis (7)															1.20	%		1.16	%		1.25	%		1.16	%
Net interest income		$	3,489.3		$	2,591.3		$	10,358.1		$	7,553.8		$	3,489.3		$	2,591.3		$	10,358.1		$	7,553.8
Guaranty fee income			613.2			462.5			1,792.0			1,293.6			613.2			462.5			1,792.0			1,293.6
Fee and other income (expense), net			104.4			91.6			449.2			136.8			104.4			91.6			449.2			136.8

	Total revenues		4,206.9			3,145.4			12,599.3			8,984.2			4,206.9			3,145.4			12,599.3			8,984.2

Investment tax credits (8)			298.2			112.1			726.7			475.9			298.2			112.1			726.7			475.9
Tax-exempt investments (4)			118.4			128.4			360.6			377.5			118.4			128.4			360.6			377.5

	Total taxable-equivalent adjustments		416.6			240.5			1,087.3			853.4			416.6			240.5			1,087.3			853.4

Taxable-equivalent revenues		$	4,623.5		$	3,385.9		$	13,686.6		$	9,837.6			4,623.5			3,385.9			13,686.6			9,837.6

Purchased options amortization expense															(820.5	)		(399.2	)		(2,300.6	)		(1,039.8	)

Core taxable-equivalent revenues														$	3,803.0		$	2,986.7		$	11,386.0		$	8,797.8

(1)		This amount represents the straight-line amortization of purchased options expense allocated to interest expense over the original expected life of the options. Included in core business earnings instead of the unrealized gains and losses on purchased options to make it consistent with the accounting for the embedded options in our callable debt and the vast majority of our mortgages.

(2)		This amount represents unrealized gains and losses on purchased options recorded in accordance with FAS 133.

(3)		The reconciling item represents the net federal income tax effect of core business earnings adjustments based on the applicable federal income tax rate of 35 percent.

(4)		Reflects non-GAAP adjustments to permit comparison of yields on tax-exempt and taxable assets based on a 35 percent marginal tax rate.

(5)		Includes the effect of purchased options amortization expense allocated to interest expense over the original expected life of the options.

(6)		Annualized taxable-equivalent net interest income divided by the weighted average net investment balance.

(7)		Annualized taxable-equivalent core net interest income divided by the weighted average net investment balance.

(8)		Represents non-GAAP adjustments for tax credits related to losses on certain affordable housing tax-advantaged equity investments and other investment tax credits using a 35 percent marginal tax rate.

(FANNIEMAE LOGO)

INTEREST RATE RISK


			Rate Level Shock (50bp)						Rate Slope Shock (25bp)

	Effective		1 Year Portfolio			4 Year Portfolio			1 Year Portfolio			4 Year Portfolio
	Duration Gap		Net Interest			Net Interest			Net Interest			Net Interest
	(in months)		Income at Risk			Income at Risk			Income at Risk			Income at Risk

2000
1st Qtr		5		0.1	%		4.3	%		1.0	%		3.0	%
2nd Qtr		4		0.6	%		4.8	%		1.0	%		3.0	%
3rd Qtr		2		0.8	%		4.3	%		1.0	%		3.1	%
4th Qtr		-3		0.5	%		2.0	%		3.0	%		4.3	%
2001
1st Qtr		1		3.8	%		3.2	%		3.1	%		4.7	%
2nd Qtr		5		1.7	%		4.4	%		0.9	%		2.0	%
3rd Qtr		-1		2.4	%		3.6	%		2.8	%		4.0	%
4th Qtr		5		5.1	%		4.5	%		2.4	%		4.3	%
2002
1st Qtr		5		3.8	%		6.1	%		1.0	%		3.1	%
2nd Qtr		-4		1.2	%		2.4	%		3.0	%		5.7	%
3rd Qtr		-10		4.4	%		3.9	%		5.3	%		6.4	%
4th Qtr		-5		0.6	%		1.6	%		4.7	%		6.6	%
2003
January		-3		2.9	%		3.8	%		3.5	%		5.7	%
February		-5		3.6	%		1.3	%		4.9	%		6.8	%
March		-2		1.7	%		2.8	%		4.4	%		6.7	%
April		-2		2.1	%		2.5	%		4.6	%		6.5	%
May		-5		0.7	%		2.2	%		5.3	%		7.1	%
June		-1		2.1	%		6.6	%		3.9	%		5.9	%
July		6		9.3	%		8.7	%		1.9	%		2.9	%
August		4		4.8	%		3.2	%		3.4	%		5.2	%
September		1		2.7	%		1.3	%		5.2	%		6.8	%


o		Effective duration gap - measures the extent the effective duration of the portfolio’s assets and liabilities are matched. A positive duration gap indicates that the effective duration of our assets exceeds the effective duration of our liabilities by that amount, while a negative duration gap indicates the opposite.

		Effective January 2003, the duration gap is a weighted average for the month. Prior to 2003, the duration gap was calculated on the last day of the month.

o		Net interest income at risk - compares Fannie Mae’s projected change in portfolio net interest income under the financially more adverse of a 50 basis point increase and decrease in interest rates. Fannie Mae also compares the expected change in portfolio net interest income for the more adverse of a 25 basis point decrease and increase in the slope of the yield curve. Both measurements are done for one-year and four-year periods.

		A positive number indicates the percent by which net interest income could be reduced by the increased rate shock. A negative number would indicate the percent by which net interest income could be increased by the shock.

LIQUIDITY


Ratio of liquid to total assets	Ratio

December 31, 2000		8.2	%
December 31, 2001		9.5	%
March 31, 2002		7.1	%
June 30, 2002		7.8	%
September 30, 2002		6.4	%
December 31, 2002		6.9	%
March 31, 2003		6.7	%
June 30, 2003		7.5	%
September 30, 2003		5.6	%


o		Fannie Mae will maintain at least three months of liquidity to ensure the company can meet all of its obligations in any period of time in which it does not have access to the debt markets. Fannie Mae also will comply with the Basel Committee on Banking Supervision’s fourteen principles for sound liquidity management.

o		To fulfill its liquidity commitment, Fannie Mae will maintain more than five percent of its on-balance sheet assets in high-quality, liquid investments.

CREDIT RISK


	Before		After
Lifetime credit loss	credit		credit
sensitivity as of:	enhancements		enhancements

(Dollars in millions)
December 31, 2000	$	1,065	$	295
December 31, 2001	$	1,332	$	487
March 31, 2002	$	1,285	$	425
June 30, 2002	$	1,361	$	465
September 30, 2002	$	1,738	$	501
December 31, 2002	$	1,838	$	596
March 31, 2003	$	1,798	$	635
June 30, 2003 (1)	$	2,084	$	758


o		Lifetime credit loss sensitivity measures the sensitivity of Fannie Mae’s expected future credit losses to an immediate five percent decline in home values for all single-family mortgages held in Fannie Mae’s retained portfolio and underlying guaranteed MBS.

o		Credit loss sensitivity is reported in present value terms and measures expected losses in two ways: before receipt of private mortgage insurance claims and any other credit enhancements and after receipt of expected mortgage insurance and other credit enhancements.

RISK-BASED CAPITAL


	Risk-based		Total
Risk-based capital	Capital		Capital		Capital
stress test	Requirement		Held		Surplus

(Dollars in billions)
September 30, 2002	$	21.440	$	27.278	$	5.838
December 31, 2002		17.434		28.871		11.437
March 31, 2003		16.555		30.309		13.754
June 30, 2003 (1)		18.114		31.469		13.355


o		The risk-based capital standard became effective on September 13, 2002. The standard uses a stress test to determine the amount of total capital the company needs to hold in order to protect against credit and interest rate risk, and requires an additional 30 percent capital for management and operations risk. The higher of Fannie Mae’s risk-based or minimum capital standard is binding.

(1)		Most recent data available.

exv99w2

EXHIBIT 99.2

SEPTEMBER 2003

Fannie Mae’s summary of monthly business volumes, delinquency rates, and interest rate risk measures reflect the company’s continued record of disciplined growth.

Because of increased levels of actual and anticipated variability in performance measures on a month-to-month and quarter-to-quarter basis, management believes that it is important to view these measures on a year-to-date basis, and in the context of our longer-term outlook.

HIGHLIGHTS FOR SEPTEMBER INCLUDE:

•		Total business volume rose to a record $145.6 billion in September.

•		Due to the extraordinarily high amount of outstanding commitments that settled in September, portfolio purchases surged to a record $98.8 billion. Extremely strong growth during the month brought annualized year-to-date portfolio growth to 21.9 percent. Outstanding commitments at month-end fell to $29.6 billion, from $101 billion on August 31.

•		Retained commitments were $28.0 billion, reflecting a narrowing of mortgage to debt spreads during the month.

•		Outstanding MBS contracted in September despite new issues of $120.3 billion, due to record portfolio purchases and $63.6 billion in MBS liquidations.

•		Liquidations for both the mortgage portfolio and MBS outstanding declined from August’s record high levels.

•		The duration gap on Fannie Mae’s mortgage portfolio averaged a positive one month during September.

•		The conventional single-family delinquency rate rose one basis point to 0.58 percent. The multifamily delinquency rate remained unchanged at 0.13 percent.

BUSINESS BALANCES AND GROWTH ($ in Millions) (1)


	Mortgage Portfolio, Gross (2)					Outstanding MBS (3)					Book of Business
	End Balance		Growth Rate (4)			End Balance		Growth Rate (4)			End Balance		Growth Rate (4)

October 2002	$	751,347		-0.1	%	$	1,018,303		39.6	%	$	1,769,650		21.0	%
November 2002		760,759		16.1	%		1,019,031		.9	%		1,779,790		7.1	%
December 2002		790,800		59.2	%		1,029,456		13.0	%		1,820,256		31.0	%

YTD 2002	$	790,800		11.9	%	$	1,029,456		19.9	%	$	1,820,256		16.4	%

January 2003	$	810,609		34.6	%	$	1,047,903		23.8	%	$	1,858,512		28.3	%
February 2003		816,747		9.5	%		1,073,564		33.7	%		1,890,311		22.6	%
March 2003		815,964		-1.1	%		1,107,520		45.3	%		1,923,484		23.2	%
April 2003		817,894		2.9	%		1,156,205		67.6	%		1,974,099		36.6	%
May 2003		815,560		-3.4	%		1,186,128		35.9	%		2,001,688		18.1	%
June 2003		812,467		-4.5	%		1,237,461		66.3	%		2,049,928		33.1	%
July 2003		836,104		41.1	%		1,248,869		11.6	%		2,084,973		22.6	%
August 2003		863,170		46.6	%		1,227,115		(19.0	%)		2,090,285		3.1	%
September 2003		917,123		107.0	%		1,211,079		(14.6	%)		2,128,202		24.1	%

YTD 2003	$	917,123		21.9	%	$	1,211,079		24.2	%	$	2,128,202		23.2	%

BUSINESS VOLUMES ($ in Millions) (1)


	MBS

					Total		Fannie Mae		MBS Issues
	Single-family		Multifamily		Lender-originated		MBS		Acquired		Portfolio		Business
	Issues		Issues		Issues (5)		Purchases (6)		by Others		Purchases		Volume

October 2002	$	80,624	$	699	$	81,323	$	19,043	$	62,280	$	32,853	$	95,132
November 2002		80,375		951		81,326		33,535		47,791		47,807		95,599
December 2002		94,054		3,777		97,831		51,947		45,884		67,891		113,775

YTD 2002	$	710,961	$	12,336	$	723,299	$	245,039	$	478,260	$	370,641	$	848,901

January 2003	$	105,256	$	1,390	$	106,646	$	42,858	$	63,788	$	57,281	$	121,069
February 2003		92,720		465		93,185		27,530		65,655		40,420		106,075
March 2003		92,023		719		92,742		18,252		74,490		34,304		108,794
April 2003		120,976		667		121,643		25,648		95,995		43,028		139,024
May 2003		107,447		989		108,436		23,180		85,256		43,749		129,005
June 2003		121,457		1,449		122,906		21,655		101,251		41,183		142,434
July 2003		118,545		1,420		119,965		48,266		71,699		72,447		144,146
August 2003		108,866		796		109,662		54,295		55,367		82,656		138,023
September 2003		116,105		4,192		120,297		73,504		46,793		98,804		145,597

YTD 2003	$	983,395	$	12,087	$	995,482	$	335,189	$	660,293	$	513,873	$	1,174,166

MORTGAGE PORTFOLIO COMMITMENTS, PURCHASES, AND SALES ($ in Millions) (1)


			Purchases
												Mortgage
	Retained		Single-				Total					Portfolio
	Commitments		family		Multifamily		Purchases		Net Yield (7)			Sales

October 2002	$	67,342	$	32,297	$	556	$	32,853		5.61	%	$	951
November 2002		52,766		47,131		676		47,807		5.52	%		142
December 2002		29,214		66,703		1,188		67,891		5.42	%		293

YTD 2002	$	388,059	$	363,149	$	7,492	$	370,641		5.92	%	$	9,582

January 2003	$	25,097	$	56,402	$	879	$	57,281		5.44	%	$	60
February 2003		51,238		39,814		606		40,420		5.32	%		780
March 2003		39,548		33,621		683		34,304		5.20	%		431
April 2003		41,427		42,395		633		43,028		5.20	%		646
May 2003		73,784		42,795		954		43,749		5.12	%		1,894
June 2003		75,515		40,306		877		41,183		4.96	%		2,885
July 2003		77,679		70,246		2,201		72,447		4.86	%		513
August 2003		43,351		81,255		1,401		82,656		4.83	%		384
September 2003		27,961		97,693		1,111		98,804		4.85	%		581

YTD 2003	$	455,600	$	504,528	$	9,345	$	513,873		5.03	%	$	8,173

(1)		Represents unpaid principal balance.

(2)		Excludes mark-to-market adjustments, deferred balances and allowance for losses. Includes $590 billion of Fannie Mae MBS as of September 30, 2003.

(3)		MBS held by investors other than Fannie Mae’s portfolio.

(4)		Growth rates are compounded.

(5)		Excludes MBS issued from Fannie Mae’s portfolio, which was $2,551 million in September 2003.

(6)		Included in total portfolio purchases.

(7)		Yields shown on a taxable-equivalent basis.

LIQUIDATIONS ($ in Millions) (1)


	Mortgage Portfolio					Outstanding MBS
	Liquidations					Liquidations

	Amount		Annual Rate			Amount		Annual Rate

October 2002	$	31,990		51.09	%	$	35,321		42.20	%
November 2002		38,265		60.73	%		47,184		55.58	%
December 2002		37,569		58.11	%		42,714		50.04	%

YTD 2002	$	277,419		37.35	%	$	324,177		34.37	%

January 2003	$	37,423		56.09	%	$	45,343		52.38	%
February 2003		33,517		49.43	%		40,771		46.12	%
March 2003		34,668		50.96	%		40,915		45.02	%
April 2003		40,465		59.44	%		47,956		50.84	%
May 2003		44,203		64.95	%		57,226		58.64	%
June 2003		41,279		60.85	%		52,607		52.09	%
July 2003		48,309		70.33	%		60,611		58.51	%
August 2003		55,220		77.99	%		76,854		74.50	%
September 2003		44,244		59.65	%		63,577		62.58	%

YTD 2003	$	379,329		60.96	%	$	485,861		56.21	%

DELINQUENCY RATES


	Single-family Conventional (2)

	Non-Credit			Credit						Multifamily
	Enhancement (3)			Enhancement (4)			Total (5)			Total (6)

October 2002		0.29	%		1.16	%		0.53	%		0.08	%
November 2002		0.30	%		1.24	%		0.56	%		0.10	%
December 2002		0.31	%		1.29	%		0.57	%		0.05	%
January 2003		0.32	%		1.34	%		0.59	%		0.03	%
February 2003		0.31	%		1.36	%		0.59	%		0.06	%
March 2003		0.30	%		1.34	%		0.57	%		0.09	%
April 2003		0.29	%		1.34	%		0.56	%		0.09	%
May 2003		0.29	%		1.38	%		0.55	%		0.15	%
June 2003		0.29	%		1.42	%		0.56	%		0.13	%
July 2003		0.29	%		1.47	%		0.57	%		0.13	%
August 2003		0.29	%		1.52	%		0.58	%		0.13	%

AVERAGE INVESTMENT BALANCES ($ in Millions)


	Net		Liquid		Total Net
	Mortgages		Investments		Investments

October 2002	$	746,529	$	64,923	$	811,452
November 2002		749,432		76,959		826,391
December 2002		773,717		85,206		858,923

YTD 2002	$	735,943	$	68,658	$	804,601

January 2003	$	794,278	$	75,849	$	870,127
February 2003		808,377		63,706		872,083
March 2003		811,757		61,851		873,608
April 2003		809,928		75,874		885,804
May 2003		806,511		83,895		890,406
June 2003		808,205		86,136		894,341
July 2003		813,728		82,011		895,739
August 2003		832,100		95,607		927,708
September 2003		875,740		78,892		954,633

YTD 2003	$	817,847	$	78,202	$	896,050

INTEREST RATE RISK DISCLOSURES


			Rate Level Shock (50bp) (8)						Rate Slope Shock (25bp) (8)

	Effective		1 Year Portfolio			4 Year Portfolio			1 Year Portfolio			4 Year Portfolio
	Duration Gap (7)		Net Interest			Net Interest			Net Interest			Net Interest
	(in months)		Income at Risk			Income at Risk			Income at Risk			Income at Risk

October 2002		-6		2.7	%		2.0	%		6.0	%		7.5	%
November 2002		2		6.3	%		4.9	%		3.5	%		5.9	%
December 2002		-5		0.6	%		1.6	%		4.7	%		6.6	%
January 2003		-3		2.9	%		3.8	%		3.5	%		5.7	%
February 2003		-5		3.6	%		1.3	%		4.9	%		6.8	%
March 2003		-2		1.7	%		2.8	%		4.4	%		6.7	%
April 2003		-2		2.1	%		2.5	%		4.6	%		6.5	%
May 2003		-5		0.7	%		2.2	%		5.3	%		7.1	%
June 2003		-1		2.1	%		6.6	%		3.9	%		5.9	%
July 2003		6		9.3	%		8.7	%		1.9	%		2.9	%
August 2003		4		4.8	%		3.2	%		3.4	%		5.2	%
September 2003		1		2.7	%		1.3	%		5.2	%		6.8	%

(1)		Represents unpaid principal balance.

(2)		Includes conventional loans three or more months delinquent or in foreclosure process as a percent of the number of loans.

(3)		Loans without primary mortgage insurance or any credit enhancements.

(4)		Loans with primary mortgage insurance and other credit enhancements.

(5)		Total of single-family non-credit enhanced and credit enhanced loans.

(6)		Includes loans two or more months delinquent as a percent of loan dollars and includes the total credit book of business.

(7)		Effective January 2003, the duration gap is a weighted average for the month. Prior to 2003, the duration gap was calculated on the last day of the month.

(8)		Expresses projected core net interest income under the more adverse of the interest rate and yield curve scenarios as a percentage of projected net interest income without the rate shocks.

The information presented in this report is unaudited and includes, in the opinion of management, all adjustments (consisting of normally recurring accruals) necessary for a fair presentation. The data should be read in conjunction with audited financial statements and notes to financial statements that are available from the corporation. For more information regarding Fannie Mae, or for a more detailed quarterly report on Fannie Mae’s activity, please visit www.fanniemae.com or contact us at (202) 752-7115.