Guaranteed REMIC Pass-Through CertiÑcates Fannie Mae REMIC Trust

Transcription

1 Prospectus Supplement (To REMIC Prospectus dated May 1, 2002) $1,749,999,925 Guaranteed REMIC Pass-Through CertiÑcates Fannie Mae REMIC Trust The CertiÑcates Original Final We, the Federal National Mortgage Association Class Group Class Balance Principal Type Interest Rate Interest Type CUSIP Number Distribution Date (""Fannie Mae''), will issue the classes of certiñ- NM(1) ÏÏÏ 1 $117,673,125 SCH/NSJ/AD 5.00% FIX 31393BAA3 May 2018 cates listed in the chart on this page. Q ÏÏÏÏÏÏ 1 347,326,800 SCH 5.00 FIX 31393BAB1 May 2018 ZG ÏÏÏÏÏÏ 1 35,000,000 SUP/NSJ 5.00 FIX/Z 31393BAC9 May 2018 Payments to CertiÑcateholders F ÏÏÏÏÏÏ 2 24,708,450 SUP (2) FLT 31393BAD7 March 2032 We will make monthly payments on the certiñ- FE ÏÏÏÏÏÏ 2 11,589,286 SUP (2) FLT 31393BAE5 May 2033 cates. You, the investor, will receive FL ÏÏÏÏÏÏ 2 20,784,437 SUP (2) FLT 31393BAF2 May 2033 interest accrued on the balance of your certiñ- GF ÏÏÏÏÏÏ 2 1,100,000 SUP (2) FLT 31393BAG0 May 2033 GJ ÏÏÏÏÏÏ 2 53,838,791 SUP 5.50 FIX 31393BAH8 July 2032 cate (except in the case of the accrual class), GK ÏÏÏÏÏÏ 2 6,628,247 SUP 5.50 FIX 31393BAJ4 November 2032 and GL ÏÏÏÏÏÏ 2 11,194,871 SUP 5.50 FIX 31393BAK1 May 2033 principal to the extent available for payment on GS ÏÏÏÏÏÏ 2 381,666 SUP (2) INV 31393BAL9 May 2033 your class. GT ÏÏÏÏÏÏ 2 18,334 SUP (2) INV 31393BAM7 May 2033 HA ÏÏÏÏÏÏ 2 20,056,982 PAC 5.50 FIX 31393BAN5 February 2033 We may pay principal at rates that vary from time HB ÏÏÏÏÏÏ 2 8,022,792 PAC 5.50 FIX 31393BAP0 May 2033 to time. We may not pay principal to certain HH(3) ÏÏÏ 2 3,000,000(4) RTL/SUP 5.25 FIX 31393BAQ8 May 2033 classes for long periods of time. IO ÏÏÏÏÏÏ 2 135,388,675(5) NTL 5.50 FIX/IO 31393BAR6 December 2031 The Fannie Mae Guaranty JJ(3)ÏÏÏÏÏ 2 8,654,000(4) RTL/SUP 5.50 FIX 31393BAS4 May 2033 LA ÏÏÏÏÏÏ 2 38,494,000 SUP 5.50 FIX 31393BAT2 December 2031 We will guarantee that required payments of prin- LB ÏÏÏÏÏÏ 2 1,964,000 SUP 5.50 FIX 31393BAU9 January 2032 cipal and interest on the certiñcates are distributed LC ÏÏÏÏÏÏ 2 3,856,000 SUP 5.50 FIX 31393BAV7 February 2032 to investors on time. LD ÏÏÏÏÏÏ 2 7,304,000 SUP 5.50 FIX 31393BAW5 June 2032 LF ÏÏÏÏÏÏ 2 1,466,666 SUP (2) FLT 31393BAX3 May 2033 The Trust and its Assets LG ÏÏÏÏÏÏ 2 9,868,000 PAC 5.50 FIX 31393BAY1 January 2033 LH ÏÏÏÏÏÏ 2 1,966,000 PAC 5.50 FIX 31393BAZ8 February 2033 The trust will own LJ ÏÏÏÏÏÏ 2 1,862,000 PAC 5.50 FIX 31393BBA2 March 2033 Fannie Mae MBS and LK ÏÏÏÏÏÏ 2 3,692,000 PAC 5.50 FIX 31393BBB0 May 2033 LM ÏÏÏÏÏÏ 2 1,822,000 PAC 5.50 FIX 31393BBC8 May 2033 three separate non-interest bearing cash depos- LN ÏÏÏÏÏÏ 2 2,334,000 SUP 5.50 FIX 31393BBD6 July 2032 its of $ LP ÏÏÏÏÏÏ 2 21,838,000 SUP 5.50 FIX 31393BBE4 May 2033 LS ÏÏÏÏÏÏ 2 508,888 SUP (2) INV 31393BBF1 May 2033 The mortgage loans underlying the Fannie Mae LT ÏÏÏÏÏÏ 2 24,446 SUP (2) INV 31393BBG9 May 2033 MBS are Ñrst lien, single-family, Ñxed-rate loans. MM(3)ÏÏÏ 2 1,500,000(4) RTL/SUP 6.00 FIX 31393BBH7 May 2033 NF ÏÏÏÏÏÏ 2 1,031,250 SUP (2) FLT 31393BBJ3 May 2033 NS ÏÏÏÏÏÏ 2 468,750 SUP (2) INV 31393BBK0 May 2033 Carefully consider the risk factors starting on OA ÏÏÏÏÏÏ 2 15,662,314 PAC 5.50 FIX 31393BBL8 June 2011 page S-10 of this prospectus supplement and OE ÏÏÏÏÏÏ 2 35,000,000 PAC 5.50 FIX 31393BBM6 August 2028 on page 10 of the REMIC prospectus. Unless OG ÏÏÏÏÏÏ 2 50,105,000 PAC 5.50 FIX 31393BBN4 December 2031 you understand and are able to tolerate these OH ÏÏÏÏÏÏ 2 85,574,364 PAC 5.50 FIX 31393BBP9 May 2033 risks, you should not invest in the certiñcates. OL ÏÏÏÏÏÏ 2 25,252,000 PAC 3.00 FIX 31393BBQ7 July 2022 You should read the REMIC prospectus as OM ÏÏÏÏÏÏ 2 23,500,000 PAC 4.00 FIX 31393BBR5 July 2022 ON ÏÏÏÏÏÏ 2 19,000,000 PAC 2.50 FIX 31393BBS3 July 2018 well as this prospectus supplement. OP ÏÏÏÏÏÏ 2 5,500,000 PAC 3.00 FIX 31393BBT1 July 2018 Prospective investors in the HH, JJ and OQ ÏÏÏÏÏÏ 2 112,105,000 PAC 5.00 FIX 31393BBU8 December 2031 MM Classes and all other classes should con- OY ÏÏÏÏÏÏ 2 140,378,000 PAC 4.50 FIX 31393BBV6 January 2027 sider carefully whether such an investment is S ÏÏÏÏÏÏ 2 5,820,410 SUP (2) INV 31393BBW4 March 2032 appropriate for their investment objectives. SE ÏÏÏÏÏÏ 2 3,160,714 SUP (2) INV 31393BBX2 May 2033 The certiñcates, together with interest thereon, SF ÏÏÏÏÏÏ 2 2,020,172 SUP (2) INV 31393BBY0 March 2032 are not guaranteed by the United States and do SK ÏÏÏÏÏÏ 2 4,629,262 SUP (2) INV 31393BBZ7 May 2033 not constitute a debt or obligation of the SL ÏÏÏÏÏÏ 2 1,039,222 SUP (2) INV 31393BCA1 May 2033 United States or any agency or instrumentality TB ÏÏÏÏÏÏ 2 30,742,000 PAC 5.00 FIX 31393BCB9 August 2028 thereof other than Fannie Mae. TK ÏÏÏÏÏÏ 2 128,781,686 PAC 3.00 FIX 31393BCC7 July 2018 TY ÏÏÏÏÏÏ 2 41,752,000 PAC 4.50 FIX 31393BCD5 July 2022 The certiñcates are exempt from registration under the Securities Act of 1933 and are CE(1)ÏÏÏÏ 3 172,674,419 SEQ 3.00 FIX 31393BCE3 June 2017 CK ÏÏÏÏÏÏ 3 25,000,000 SEQ 5.00 FIX 31393BCF0 May 2018 ""exempted securities'' under the Securities IJ ÏÏÏÏÏÏ 3 5,000,000(5) NTL 5.00 FIX/IO 31393BCG8 February 2017 Exchange Act of IK(1) ÏÏÏÏ 3 69,069,768(5) NTL 5.00 FIX/IO 31393BCH6 June 2017 JA ÏÏÏÏÏÏ 3 50,000,000 SEQ 4.50 FIX 31393BC J 2 February 2017 If you own certiñcates of certain classes, you can JX ÏÏÏÏÏÏ 3 2,325,581 SEQ 5.00 FIX 31393BCK9 June 2017 exchange them for the corresponding RCR cer- RS ÏÏÏÏÏÏ (6) 0 NPR 0 NPR 31392J 7 K 9 May 2018 tiñcates to be issued at the time of the exchange. R ÏÏÏÏÏÏ (7) 0 NPR 0 NPR 31393BCL7 May 2033 The IM, NJ, NK, NR, CA, CB, CD and RL ÏÏÏÏÏÏ (7) 0 NPR 0 NPR 31393BCM5 May 2033 C Classes are the RCR classes, as further described in this prospectus supplement. (1) Exchangeable classes. (5) Notional balances. These classes are interest only (2) Based on LIBOR. classes. The dealer will oåer the certiñcates from time to (3) The HH, JJ and MM Classes are retail classes. (6) The RS Class relates to Group 1 only. time in negotiated transactions at varying prices. (4) The retail certiñcates are oåered in $1,000 incre- (7) The R and RL Classes relate to Groups 2 and 3 only. We expect the settlement date to be April 30, ments Merrill Lynch & Co. The date of this Prospectus Supplement is March 12, 2003.

2 TABLE OF CONTENTS Page Page AVAILABLE INFORMATION ÏÏÏÏÏÏÏÏÏÏ S- 3 Notional Classes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-26 REFERENCE SHEETÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S- 4 Floating Rate and Inverse Floating Rate ADDITIONAL RISK FACTORSÏÏÏÏÏÏÏÏÏ S-10 ClassesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-26 DESCRIPTION OF THE CALCULATION OF LIBOR ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-26 CERTIFICATES ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-11 DISTRIBUTIONS OF PRINCIPAL ÏÏÏÏÏÏÏÏÏÏÏÏ S-27 GENERALÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-11 Categories of Classes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-27 StructureÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-11 Principal Distribution Amount ÏÏÏÏÏÏÏÏÏ S-27 Fannie Mae Guaranty ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-12 Group 1 Principal Distribution Amount ÏÏ S-27 Characteristics of CertiÑcatesÏÏÏÏÏÏÏÏÏÏÏ S-12 ZG Accrual Amount ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-27 Authorized Denominations ÏÏÏÏÏÏÏÏÏÏÏÏÏ S-13 Group 1 Cash Flow Distribution Distribution Dates ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-13 Amount ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-28 Record Date ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-13 Group 2 Principal Distribution Amount ÏÏ S-28 Class Factors ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-13 Group 3 Principal Distribution Amount ÏÏ S-30 No Optional Termination ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-13 STRUCTURING ASSUMPTIONS ÏÏÏÏÏÏÏÏÏÏÏÏÏ S-30 CHARACTERISTICS OF THE RETAIL Pricing Assumptions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-30 CERTIFICATES ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-13 Prepayment Assumptions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-30 General ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-13 Structuring RangesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-30 Method of Payment ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-14 Initial EÅective Ranges ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-31 Retail Interest PaymentsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-14 YIELD TABLES ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-32 Retail Principal Payments ÏÏÏÏÏÏÏÏÏÏÏÏÏ S-14 General ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-32 General ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-14 The Fixed Rate Interest Only Classes ÏÏÏ S-32 Rounding of Retail Principal Payments ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-15 The Inverse Floating Rate Classes ÏÏÏÏÏÏ S-33 Retail Principal Payment Requests ÏÏÏ S-15 WEIGHTED AVERAGE LIVES OF THE Withdrawing a Retail Principal CERTIFICATES ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-36 Payment Request ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-15 DECREMENT TABLES ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-37 Excess Retail Principal Payment by CHARACTERISTICS OF THE RS, R AND Random Lot ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-16 RL CLASSES ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-47 BeneÑcial Owners ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-16 CERTAIN ADDITIONAL FEDERAL Tax Information ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-17 INCOME TAX CONSEQUENCES ÏÏÏÏÏ S-48 Certain Principal Payment REMIC ELECTIONS AND SPECIAL TAX ConsiderationsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-17 ATTRIBUTES ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-48 Weighted Average Lives of the Retail TAXATION OF BENEFICIAL OWNERS OF CertiÑcates ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-18 REGULAR CERTIFICATES ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-48 Investment Determination ÏÏÏÏÏÏÏÏÏÏÏÏÏ S-22 TAXATION OF BENEFICIAL OWNERS OF COMBINATION AND RECOMBINATIONÏÏÏÏÏÏÏ S-22 RESIDUAL CERTIFICATES ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-49 General ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-22 TAXATION OF BENEFICIAL OWNERS OF RCR CERTIFICATES Procedures ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-23 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-49 Additional Considerations ÏÏÏÏÏÏÏÏÏÏÏÏÏ S-23 General ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-49 BOOK-ENTRY PROCEDURESÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-23 Strip RCR Classes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-49 General ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-23 Combination RCR ClassesÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-51 Method of Payment ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-24 ExchangesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-51 THE MBS ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-24 TAX RETURN DISCLOSURE REQUIREMENTS ÏÏ S-51 FINAL DATA STATEMENT ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-25 PLAN OF DISTRIBUTION ÏÏÏÏÏÏÏÏÏÏÏÏÏ S-51 DISTRIBUTIONS OF INTEREST ÏÏÏÏÏÏÏÏÏÏÏÏÏ S-25 General ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-51 Categories of Classes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-25 Increase in CertiÑcates ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-51 General ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-25 LEGAL MATTERS ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-52 Interest Accrual Periods ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-26 SCHEDULE 1 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A- 1 Accrual Class ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-26 PRINCIPAL BALANCE SCHEDULES ÏÏ B- 1 S-2

3 AVAILABLE INFORMATION You should purchase the certiñcates only if you have read and understood this prospectus supplement and the following documents (the ""Disclosure Documents''): our Prospectus for Fannie Mae Guaranteed REMIC Pass-Through CertiÑcates dated May 1, 2002 (the ""REMIC Prospectus''); our Prospectus for Fannie Mae Guaranteed Mortgage Pass-Through CertiÑcates (Single- Family Residential Mortgage Loans) dated April 1, 2003 (the ""MBS Prospectus''); and Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K that we Ñle with the SEC during the period speciñed in the Ñnal paragraph of this page. You can obtain copies of the Disclosure Documents by writing or calling us at: Fannie Mae MBS Helpline 3900 Wisconsin Avenue, N.W., Area 2H-3S Washington, D.C (telephone or ). In addition, the Disclosure Documents, together with the class factors, are available on our corporate web site at and our business to business web site at You also can obtain copies of the Disclosure Documents by writing or calling the dealer at: Merrill Lynch, Pierce, Fenner & Smith Incorporated Prospectus Department 44B Colonial Drive Piscataway, New Jersey (telephone ). In the Ñrst quarter of 2003, we began Ñling periodic reports with the SEC under the Exchange Act. These Ñlings will include the Form 10-K's, Form 10-Q's and Form 8-K's. Our SEC Ñlings are available at the SEC's website at You may also read and copy any document we Ñle with the SEC by visiting the SEC's Public Reference Room at 450 Fifth Street, NW, Washington, D.C Please call the SEC at SEC-0330 for further information about the operation of the Public Reference Room. We are providing the address of the SEC's Internet site solely for the information of prospective investors. We do not intend the Internet address to be an active link. Information contained in any Form 10-K, Form 10-Q and Form 8-K that we Ñle with the SEC prior to the termination of the oåering of the certiñcates is hereby incorporated by reference in this prospectus supplement. In cases where we ""furnish'' information to the SEC on Form 8-K, as provided under the Exchange Act, that information is not incorporated by reference in this prospectus supplement. S-3

4 REFERENCE SHEET This reference sheet is not a summary of the transaction and does not contain complete information about the certiñcates. You should purchase the certiñcates only after reading this prospectus supplement and each of the additional disclosure documents listed on page S-3. The Retail CertiÑcates (HH, JJ and MM Classes) Description The retail certiñcates represent an indirect interest in the mortgage loans underlying the Group 2 MBS. The retail certiñcates are guaranteed by us but are not guaranteed by, and are not a debt or obligation of, the United States. Timing of Principal Payments It is possible that no principal will be available for payment to holders of the retail certiñcates for a substantial period. Thereafter, the amount of principal available for payment to such holders is likely to Öuctuate, and may vary widely from period to period. As a result, the retail certiñcates may not be an appropriate investment for you if you require a particular payment of principal on a speciñed date or an otherwise predictable stream of principal payments. See ""Description of the CertiÑcatesÌDistributions of PrincipalÌPrincipal Distribution Amount'' in this prospectus supplement. Investment Objective You should determine, after consulting with your investment advisor, whether or not the retail certiñcates satisfy your individual investment objectives. Liquidity If you sell a retail certiñcate before its maturity, you may receive sales proceeds that, after taking into account transaction costs, are less than the amount originally invested. Merrill Lynch, Pierce, Fenner & Smith Incorporated intends to make a market for the purchase and sale of the retail certiñcates after their initial issuance, but is not obligated to do so. We cannot be sure that a market for resale of the retail certiñcates will develop or, if it develops, that it will continue. Federal Income Taxes Interest on the retail certiñcates will be taxed in the year it is earned, which may not be the year it is paid. Annually, relevant federal income tax information for the preceding calendar year will be mailed to investors who owned retail certiñcates during that year, as required by the Internal Revenue Service. You should be aware, however, that this information need not be furnished before March 15 of any calendar year following a calendar year in which income accrues on a retail certiñcate. Maturity Unlike many other Ñxed income securities, the retail certiñcates do not have Ñxed principal redemption schedules. The timing of principal payments may vary considerably based upon a number of factors, including changes in prevailing interest rates. If prevailing interest rates decrease, principal payments on the retail certiñcates may accelerate due to increased mortgage loan prepayments, and any reinvestment of those payments might be at such lower prevailing interest rates. Conversely, if prevailing interest rates increase, principal payments on the retail certiñcates may slow down due to decreased mortgage loan prepayments, and you might not be able to reinvest your principal at such higher prevailing interest rates. In such case, the market value of your retail certiñcates is likely to have declined. S-4

5 Assets Underlying Each Group of Classes Group Assets 1 Group 1 MBS 2 Group 2 MBS 3 Group 3 MBS Assumed Characteristics of the Mortgage Loans Underlying the MBS (as of April 1, 2003) Approximate Approximate Original Weighted Average Weighted Approximate Approximate Term to Remaining Term Average Weighted Principal Maturity to Maturity Loan Age Average Balance (in months) (in months) (in months) Coupon Group 1 MBS $ 499,999, % Group 2 MBS $1,000,000, % Group 3 MBS $ 250,000, % The actual remaining terms to maturity, weighted average loan ages and interest rates of most of the mortgage loans will diåer from the weighted averages shown above, perhaps signiñcantly. Class Factors The class factors are numbers that, when multiplied by the initial principal balance of a certiñcate, can be used to calculate the current principal balance of that certiñcate (after taking into account principal payments in the same month). We publish the class factors on or shortly after the 11th day of each month. Settlement Date We expect to issue the certiñcates on April 30, Distribution Dates We will make payments on the certiñcates on the 25th day of each calendar month, or on the next business day if the 25th day is not a business day. Retail Class Units The HH, JJ and MM Classes consist of retail certiñcates. We will issue each class of retail certiñcates in units having $1,000 denominations. Since these units cannot be divided into smaller denominations, you can purchase one or more retail class units in whole but not in part. On each distribution date, principal on the retail certiñcates may be paid to owners of retail class units, but only in increments of $1,000. Accordingly, certain retail class units will be paid in full on a particular distribution date, while the remaining retail class units will receive no principal payments on that date. The investors in retail class units who receive principal payments on a particular distribution date will Ñrst be selected from the investors in that class who request them. If on any distribution date the amount of principal payable on any class of retail certiñcates exceeds the total amount of principal requested by retail investors in that class, then remaining retail investors will be selected randomly to receive principal payments on that date in the amount of the excess. Book-Entry and Physical CertiÑcates We will issue the book-entry certiñcates through the U.S. Federal Reserve Banks and DTC, as applicable, which will electronically track ownership of the certiñcates and payments on them. We will issue physical certiñcates in registered, certiñcated form. S-5

6 We will issue the classes of certiñcates in the following forms: Fed Book-Entry DTC Book-Entry Physical All Classes of certiñcates other than the HH, JJ and MM RS, R and RL Classes HH, JJ, MM, RS, R and RL Classes Classes Exchanging CertiÑcates Through Combination and Recombination If you own certain certiñcates, you will be able to exchange them for a proportionate interest in the related RCR certiñcates as shown on Schedule 1. We will issue the RCR certiñcates upon such exchange. You can exchange your certiñcates by notifying us and paying an exchange fee. We use the principal and interest of the certiñcates exchanged to pay principal and interest on the related RCR certiñcates. Schedule 1 lists the available combinations of the certiñcates eligible for exchange and the related RCR certiñcates. Interest Payments We will make the Ñrst interest payment in May 2003 in the following approximate amounts with respect to each retail class unit: HH Class ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $4.37 JJ Class ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $4.58 MM Class ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $5.00 We will continue to pay interest in that approximate amount on each monthly distribution date on each retail class unit until it is retired. During each interest accrual period, the Ñxed rate classes will bear interest at the applicable annual interest rates listed on the cover of this prospectus supplement or on Schedule 1. During the initial interest accrual period, the Öoating rate and inverse Öoating rate classes will bear interest at the initial interest rates listed below. During subsequent interest accrual periods, the Öoating rate and inverse Öoating rate classes will bear interest based on the formulas indicated below, but always subject to the speciñed maximum and minimum interest rates: Initial Maximum Minimum Formula for Interest Interest Interest Calculation of Class Rate Rate Rate Interest Rate(1) F ÏÏÏÏÏÏÏÏÏ % % 1.50% LIBOR 150 basis points FE ÏÏÏÏÏÏÏÏÏ % % 1.50% LIBOR 150 basis points FL ÏÏÏÏÏÏÏÏÏ % % 1.50% LIBOR 150 basis points GF ÏÏÏÏÏÏÏÏÏ % % 1.35% LIBOR 135 basis points GS ÏÏÏÏÏÏÏÏÏ % % 0.00% % ( LIBOR) GT ÏÏÏÏÏÏÏÏÏ % % 0.00% 369% (60 LIBOR) LF ÏÏÏÏÏÏÏÏÏ % % 1.35% LIBOR 135 basis points LS ÏÏÏÏÏÏÏÏÏ % % 0.00% % ( LIBOR) LT ÏÏÏÏÏÏÏÏÏ % % 0.00% % ( LIBOR) NF ÏÏÏÏÏÏÏÏÏ %(2) % 1.00% LIBOR 100 basis points NS ÏÏÏÏÏÏÏÏÏ %(2) % 0.00% 15.4% (2.2 LIBOR) S ÏÏÏÏÏÏÏÏÏ % % 0.00% % ( LIBOR) SE ÏÏÏÏÏÏÏÏÏ % % 0.00% % ( LIBOR) SF ÏÏÏÏÏÏÏÏÏ % % 3.00% % ( LIBOR) SK ÏÏÏÏÏÏÏÏÏ % % 0.00% % ( LIBOR) SL ÏÏÏÏÏÏÏÏÏ % % 0.00% % ( LIBOR) (1) We will establish LIBOR on the basis of the ""BBA Method.'' S-6

7 (2) Interest will accrue on the NF and NS Classes at their respective initial interest rates during the initial twelve interest accrual periods ending on March 30, 2004, and thereafter will bear interest during each interest accrual period on the basis of the applicable formulas, subject to the speciñed maximum and minimum rates. We will apply interest payments from exchanged REMIC certiñcates to the corresponding RCR certiñcates, on a pro rata basis, following any exchange. Notional Classes A notional class will not receive any principal. Its notional principal balance is the balance used to calculate accrued interest. The notional principal balances will equal the percentages of the outstanding balances speciñed below immediately before the related distribution date: Class IM ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ IO ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ IJ ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ IK ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 20% of the NM Class % of the ON Class % of the OP Class % of the OM Class % of the TY Class % of the OL Class % of the OY Class % of the TB Class % of the OQ Class % of the TK Class 10% of the JA Class 40% of the CE Class Distributions of Principal Group 1 Principal Distribution Amount ZG Accrual Amount To the NM Class to zero, and thereafter to the ZG Class. Group 1 Cash Flow Distribution Amount 1. To the Q Class to its Scheduled Balance. 2. If the principal balance of the Group 1 MBS is less than the Group 1 MBS SpeciÑed Balance for that date, to the ZG Class to zero. 3. To the NM Class to its Scheduled Balance. 4. To the ZG Class to zero. 5. To the NM Class to zero. 6. To the Q Class to zero. Group 2 Principal Distribution Amount 1. To Aggregate Group I to its Planned Balance. 2. (a) 25% of the remaining amount to the GJ, GK and GL Classes, in that order, to zero, and (b) % of such remaining amount as follows: Ñrst, to Aggregate Group II to its Planned Balance; second, (x) % to the FL, SK and SL Classes, pro rata, to zero, and S-7

8 (y) % as follows: Ñrst, to the F, S and SF Classes, pro rata, to zero; and second, to the FE, SE, MM*, HH* and JJ* Classes, pro rata, to zero; and third, to Aggregate Group II to zero, and (c) % of such remaining amount as follows: Ñrst, to Aggregate Group III to its Planned Balance; second, to the LA, LB, LC, LD and LN Classes, in that order, to zero; third, to the LP, GF, GS, GT, NF, NS, LF, LS and LT Classes, pro rata, to zero; and fourth, to Aggregate Group III to zero. 3. To Aggregate Group I to zero. For a description of Aggregate Groups I, II and III, see ""Description of the CertiÑcatesÌ Distributions of PrincipalÌGroup 2 Principal Distribution Amount'' in this prospectus supplement. Group 3 Principal Distribution Amount 1. (a) % to the CE Class to zero, and (b) % to the JA and JX Classes, in that order, to zero. 2. To the CK Class to zero. We will apply principal payments from exchanged REMIC certiñcates to the corresponding RCR certiñcates, on a pro rata basis, following any exchange. * The MM, HH and JJ Classes are retail classes. S-8

9 Weighted Average Lives (years)* PSA Prepayment Assumption Group 1 Classes 0% 100% 189% 190% 191% 200% 250% 300% 353% 500% 700% 800% NM, IM, NJ, NK and NR ÏÏÏÏÏÏÏÏ Q ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ ZG ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ PSA Prepayment Assumption Group 2 Classes 0% 100% 115% 125% 170% 200% 250% 350% 500% 800% F, S and SF ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ FE, HH**, JJ**, MM** and SE FL, SK and SL ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ GF, GS, GT, LF, LP, LS, LT, NF and NS ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ GJ ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ GK ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ GL ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ HA ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ HB ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ IO ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ LA ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ LB ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ LC ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ LD ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ LG ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ LH ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ LJ ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ LK ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ LMÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ LN ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ OA ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ OE and TB ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ OG and OQ ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ OH ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ OL, OM and TY ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ ON and OP ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ OY ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ TK ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ PSA Prepayment Assumption Group 3 Classes 0% 200% 424% 650% 850% CE, IK, CA, CB, CD and C ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ CK ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ IJ and JA ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ JX ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ * Determined as speciñed under ""Description of the CertiÑcatesÌWeighted Average Lives of the CertiÑcates'' in this prospectus supplement. Prepayments will not occur at any assumed rate shown or any other constant rate, and the actual weighted average lives of the certiñcates are likely to diåer from those shown, perhaps signiñcantly. ** The weighted average lives shown in the table apply to each entire retail class as a whole and are not likely to reöect the experience of any particular investor in a class of retail certiñcates. Because investors will receive principal payments subject to the distribution priorities and allocations as described under ""Description of the CertiÑcatesÌDescription of the Retail CertiÑcatesÌCharacteristics of the Retail CertiÑcatesÌRetail Principal Payments'' in this prospectus supplement, the weighted average lives of retail class units will vary among individual investors. See ""Description of the CertiÑcatesÌDescription of the Retail CertiÑcatesÌCharacteristics of the Retail CertiÑcatesÌCertain Principal Payment Considerations'' in this prospectus supplement. S-9

10 ADDITIONAL RISK FACTORS The rate of principal payments on the cer- yields. For an illustration of the sensitivity of tiñcates will be aåected by the rate of principal weighted average lives to this feature, see the payments on the underlying mortgage loans. related decrement tables for these classes in this The rate at which you receive principal pay- prospectus supplement. ments on the certiñcates will be sensitive to the Weighted average lives and yields on the rate of principal payments on the mortgage certiñcates are aåected by actual characteristics loans underlying the related MBS, including of the underlying mortgage loans. We have asprepayments. Because borrowers generally may sumed that the mortgage loans underlying the prepay their mortgage loans at any time without MBS have certain characteristics. However, the penalty, the rate of principal payments on the actual mortgage loans probably will have diåermortgage loans is likely to vary over time. It is ent characteristics from those we assumed. As a highly unlikely that the mortgage loans will result, your yields could be lower than you exprepay pect, even if the mortgage loans prepay at the at any of the prepayment rates we as- indicated constant prepayment rates. In addisumed in this prospectus supplement, or tion, slight diåerences between the assumed at any constant prepayment rate until mortgage loan characteristics and the actual maturity. mortgage loans could aåect the weighted aver- Yields may be lower than expected due to age lives of the classes of certiñcates. unexpected rate of principal payments. The accertain Level of Öoating rate index aåects yields on tual yield on your certiñcates probably will be certiñcates. The yield on any Öoating lower than you expect: rate or inverse Öoating rate certiñcate will be aåected by the level of its interest rate index. If if you buy your certiñcates at a premium the level of the index diåers from the level you and principal payments are faster than expect, then your actual yield may be lower than you expect, or you expect. if you buy your certiñcates at a discount and principal payments are slower than Delay classes have lower yields and market you expect. values. Since the classes do not receive interest immediately following each interest accrual pe- Furthermore, in the case of interest only riod, they have lower yields and lower market certiñcates and certiñcates purchased at a prevalues than they would if there were no such mium, you could lose money on your investment delay. if prepayments occur at a rapid rate. Reinvestment of certiñcate payments may You must make your own decisions not achieve same yields as certiñcates. The rate about the various applicable assumptions, of principal payments of the certiñcates is unincluding prepayment assumptions, when certain. You may be unable to reinvest the paydeciding whether to purchase the ments on the certiñcates at the same yields certiñcates. provided by the certiñcates. Weighted average life of the Non-Sticky Unpredictable timing of last payment af- Jump classes are especially sensitive to prepayfects yields on certiñcates. The actual Ñnal payments under certain scenarios. The weighted ment of your class is likely to occur earlier, and average lives of the Non-Sticky Jump classes are could occur much earlier, than the Ñnal distribuespecially sensitive to the rate of principal paytion date listed on the cover page of this proments, including prepayments, of the related spectus supplement. If you assume that the mortgage loans. This sensitivity to prepayments actual Ñnal payment will occur on the Ñnal is not necessarily proportional to the changes in distribution date speciñed, your yield could be prepayment rates. In some scenarios, small lower than you expect. changes in prepayment rates of the related mortgage loans may have a dramatic eåect on Some investors may be unable to buy certhe weighted average lives of the Non-Sticky tain classes. Investors whose investment activi- Jump classes and, accordingly, may aåect their ties are subject to legal investment laws and S-10

11 regulations, or to review by regulatory authorities, may be unable to buy certain certiñcates. You should obtain legal advice to determine whether you may purchase the certiñcates. timing of principal payments on the Group 2 MBS. Principal payments on the classes of retail certiñcates will also be aåected by the Uncertain market for the certiñcates could payment priorities governing the Group 2 make them diçcult to sell and cause their values Classes, including the classes of retail certiñcates. As a result, the classes of retail certiñcates are likely to receive no principal payments for extended periods and thereafter may receive principal pay- ments that vary widely from period to period. to Öuctuate. We cannot be sure that a market for resale of the certiñcates will develop. Further, if a market develops, it may not continue or be suçciently liquid to allow you to sell your certificates. Even if you are able to sell your certiñcates, the sale price may not be comparable to similar investments that have a developed market. Moreover, you may not be able to sell small or large amounts of certiñcates at prices compa- rable to those available to other investors. You should purchase certiñcates only if you understand and can tolerate the risk that the value of your certiñcates will vary over time and that your certiñcates may not be easily sold. Additional Risk Factors AÅecting the Retail CertiÑcates Other owners of retail certiñcates might be entitled to earlier principal payments because they submitted earlier requests. Requests submitted on behalf of deceased owners of retail certiñcates are honored in substantially greater amounts than requests submitted by living owners. We cannot provide any assurance about whether or when any request for principal payment will be honored. We cannot predict the timing of honoring requests for principal payments on the retail certiñcates. Owners of retail certiñcates may request payments of principal, but several factors aåect the timing of honoring these requests. Retail certiñcates may not be appropriate for all investors. If you require a principal pay- ment on a speciñc date or a predictable stream Principal payments on the classes of re- of principal payments, the retail certiñcates are tail certiñcates will be aåected by the not an appropriate investment for you. DESCRIPTION OF THE CERTIFICATES The material under this heading summarizes certain features of the CertiÑcates. You will Ñnd additional information about the CertiÑcates in the other sections of this prospectus supplement, as well as in the additional Disclosure Documents and the Trust Agreement. If we use a capitalized term in this prospectus supplement without deñning it, you will Ñnd the deñnition of that term in the applicable Disclosure Document or in the Trust Agreement. General Structure. We will create the Fannie Mae REMIC Trust speciñed on the cover of this prospectus supplement (the ""Trust'') pursuant to a trust agreement dated as of April 1, 2003 (the ""Issue Date''). We will issue the Guaranteed REMIC Pass-Through CertiÑcates (the ""REMIC CertiÑcates''), which include the HH, JJ and MM Classes of CertiÑcates (the ""Retail CertiÑcates''), pursuant to that trust agreement. We will issue the Combinable and Recombinable REMIC CertiÑcates (the ""RCR CertiÑcates'' and, together with the REMIC CertiÑcates, the ""CertiÑcates'') pursuant to a separate trust agreement dated as of the Issue Date (together with the trust agreement relating to the REMIC CertiÑcates, the ""Trust Agreement''). We will execute the Trust Agreement in our corporate capacity and as trustee (the ""Trustee''). In general, the term ""Classes'' includes the Classes of REMIC CertiÑcates and RCR CertiÑcates. S-11

12 The assets of the Trust will consist of three groups of Fannie Mae Guaranteed Mortgage Pass- Through CertiÑcates (the ""Group 1 MBS,'' ""Group 2 MBS'' and ""Group 3 MBS'' and, together, the ""MBS''). Each MBS represents a beneñcial ownership interest in a pool of Ñrst lien, one- to four-family (""single-family''), Ñxed-rate residential mortgage loans (the ""Mortgage Loans'') having the characteristics described in this prospectus supplement. The Trust will include ""REMIC 1,'' ""Upper Tier REMIC 2'' and ""Lower Tier REMIC 2'' as ""real estate mortgage investment conduits'' (each a ""REMIC'' under the Internal Revenue Code of 1986, as amended (the ""Code'')). The following chart contains information about the assets, the ""regular interests'' and the ""residual interests'' of each REMIC. Residual REMIC Designation Assets Regular Interests Interest REMIC 1 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Group 1 MBS Group 1 Classes RS Upper Tier REMIC 2ÏÏÏÏ Lower Tier REMIC 2 Group 2 and 3 Classes R Regular Interests and three separate non-interest bearing cash deposits of $999.99, each relating to a Class of Retail CertiÑcates (the ""Retail Cash Deposits'') Lower Tier REMIC 2 ÏÏÏ Group 2 and 3 MBS Interests in Lower Tier RL REMIC 2 other than the RL Class (the ""Lower Tier REMIC 2 Regular Interests'') Fannie Mae Guaranty. We guarantee that we will distribute to CertiÑcateholders: required installments of principal and interest on the CertiÑcates on time, and the principal balance of each Class of CertiÑcates no later than its Final Distribution Date, whether or not we have received suçcient payments on the MBS. In addition, we guarantee that we will distribute to each holder of an MBS: scheduled installments of principal and interest on the underlying Mortgage Loans on time, whether or not the related borrowers pay us, and the full principal balance of any foreclosed Mortgage Loan, whether or not we recover it. Our guarantees are not backed by the full faith and credit of the United States. See ""Description of CertiÑcatesÌThe Fannie Mae Guaranty'' in the REMIC Prospectus, ""Description of the CertiÑcatesÌFannie Mae Guaranty'' in the MBS Prospectus. Characteristics of CertiÑcates. We will issue the CertiÑcates (except the HH, JJ, MM, RS, R and RL Classes) in book-entry form on the book-entry system of the U.S. Federal Reserve Banks (the ""Fed Book-Entry CertiÑcates''). Entities whose names appear on the book-entry records of a Federal Reserve Bank as having had CertiÑcates deposited in their accounts are ""Holders'' or ""CertiÑcateholders.'' The HH, JJ and MM Classes each will be represented by a single certiñcate (the ""DTC CertiÑcates'') to be registered at all times in the name of the nominee of The Depository Trust Company (""DTC''), a New York-chartered limited purpose trust company, or any successor or depository selected or approved by us. We refer to the nominee of DTC as the ""Holder'' or ""CertiÑcateholder'' of the DTC CertiÑcates. DTC will maintain the DTC CertiÑcates through its book-entry facilities. A Holder is not necessarily the beneñcial owner of a CertiÑcate. BeneÑcial owners ordinarily will hold CertiÑcates through one or more Ñnancial intermediaries, such as banks, brokerage Ñrms and securities clearing organizations. See ""Description of CertiÑcatesÌDenominations and Form'' in the REMIC Prospectus. S-12

13 We will issue the RS, R and RL CertiÑcates in fully registered, certiñcated form. The ""Holder'' or ""CertiÑcateholder'' of the RS, R or RL CertiÑcate is its registered owner. The RS, R or RL CertiÑcate can be transferred at the corporate trust oçce of the Transfer Agent, or at the oçce of the Transfer Agent in New York, New York. U.S. Bank National Association in Boston, Massachusetts (""US Bank'') will be the initial Transfer Agent. We may impose a service charge for any registration of transfer of the RS, R or RL CertiÑcate and may require payment to cover any tax or other governmental charge. See also ""ÌCharacteristics of the RS, R and RL Classes'' below. The Holder of the RS Class will receive the proceeds of any remaining assets of REMIC 1, the Holder of the R Class will receive the proceeds of any remaining assets of Upper Tier REMIC 2, and the Holder of the RL Class will receive the proceeds of any remaining assets of Lower Tier REMIC 2, in each case only by presenting and surrendering the related CertiÑcate at the oçce of the Paying Agent. US Bank will be the initial Paying Agent. Authorized Denominations. We will issue the CertiÑcates, other than the HH, JJ, MM, RS, R and RL Classes, in minimum denominations of $1,000 and whole dollar increments. We will issue each Class of Retail CertiÑcates in an integral number of units (the ""Retail Class Units''), each of which will be issued in a denomination of $1,000. We will issue the RS, R and RL Classes as single CertiÑcates with no principal balances. Distribution Dates. We will make monthly payments on the CertiÑcates on the 25th day of each month (or, if the 25th is not a business day, on the Ñrst business day after the 25th). We refer to each of these dates as a ""Distribution Date.'' We will make the Ñrst payments to CertiÑcateholders the month after we issue the CertiÑcates. Record Date. On each Distribution Date, we will make each monthly payment on the CertiÑcates to Holders of record on the last day of the preceding month. Class Factors. On or shortly after the eleventh calendar day of each month, we will publish a factor (carried to eight decimal places) for each Class of CertiÑcates. When the applicable class factor is multiplied by the original principal balance (or notional principal balance) of a CertiÑcate of any Class other than a Retail Class, the product will equal the current principal balance (or notional principal balance) of that CertiÑcate after taking into account payments on the Distribution Date in the same month (as well as any addition to principal in the case of the Accrual Class). When the applicable class factor is multiplied by the original aggregate principal balance of a Class of Retail CertiÑcates, the product will equal the current aggregate principal balance of the Retail CertiÑcates of that Class after taking into account payments on the Distribution Date in the same month. As a result, the factor for each Class of Retail CertiÑcates will reöect the reduction in aggregate principal balance of that Class taken as a whole, and will not reöect the reduction in principal balance of the Retail CertiÑcates owned by any particular investor. For purposes of determining the factor for each Class of Retail CertiÑcates, we will disregard any rounding of the principal payment on that Class. No Optional Termination. We have no option to eåect an early termination of any REMIC. Further, we will not repurchase the Mortgage Loans underlying any MBS in a ""clean-up call.'' See ""Description of the CertiÑcatesÌTermination'' in the MBS Prospectus. Characteristics of the Retail CertiÑcates General The HH, JJ and MM Classes will consist of Retail CertiÑcates. Each Class of Retail CertiÑcates will be represented by one certiñcate to be registered at all times in the name of the nominee of DTC, or any successor or depository selected or approved by us (the ""Depository''). We refer to the nominee of the Depository as the ""Holder'' or ""CertiÑcateholder'' of the Classes of Retail CertiÑcates. The Depository will maintain the Classes of Retail CertiÑcates in even $1,000 increments through its book- S-13

14 entry facilities. For purposes of calculating principal payments, each Retail Class Unit will have the initial principal balance shown below: Initial Principal Number of Class Balance Per Unit Retail Class Units HH ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $1,000 3,000 JJ ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $1,000 8,654 MM ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $1,000 1,500 Under its normal procedures, the Depository will record the amount of Retail CertiÑcates held by each Ñrm which participates in the book-entry system of the Depository (each, a ""Depository Participant''), whether held for its own account or on behalf of another person. Initially, US Bank will act as paying agent for the Retail CertiÑcates. US Bank will also perform certain administrative functions in connection with the Retail CertiÑcates. A ""beneñcial owner'' or an ""investor'' is anyone who acquires a beneñcial ownership interest in the Retail CertiÑcates. As an investor, you will not receive a physical certiñcate. Instead, your interest will be recorded on the records of the brokerage Ñrm, bank, thrift institution or other Ñnancial intermediary (a ""Ñnancial intermediary'') that maintains an account for you. In turn, the record ownership of the Ñnancial intermediary that holds your Retail Class Units will be recorded by the Depository. If the intermediary is not a Depository Participant, the record ownership of the intermediary will be recorded by a Depository Participant acting on its behalf. Therefore, you must rely on these various arrangements to record your ownership of the Retail CertiÑcates and to relay the distributions to your account. You may transfer your beneñcial ownership interest in the Retail CertiÑcates only under the procedures of your Ñnancial intermediary and of Depository Participants. In general, ownership of Retail CertiÑcates will be subject to the prevailing rules, regulations and procedures governing the Depository and Depository Participants. Method of Payment US Bank will direct payments on the Classes of Retail CertiÑcates to the Depository in immediately available funds. In turn, the Depository will credit the payments to the accounts of the appropriate Depository Participants, in accordance with the Depository's procedures. These procedures currently provide for payments made in same-day funds to be settled through the New York Clearing House. Depository Participants and Ñnancial intermediaries will direct the payments to the investors in Retail CertiÑcates that they represent. Retail Interest Payments We will pay interest on each Class of Retail CertiÑcates on each Distribution Date in an amount equal to one month's interest at the annual interest rate speciñed below, accrued on their outstanding principal balances immediately before that Distribution Date. Class Annual Interest Rate HH ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 5.25% JJ ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 5.50% MM ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 6.00% See ""ÌDistributions of Interest'' below. Retail Principal Payments General. We will pay principal on each Class of Retail CertiÑcates on any Distribution Date (each, a ""Retail Principal Payment'') in increments of $1,000, based on the priorities and limitations described in this prospectus supplement. Either US Bank or the Depository will determine the portion of the Retail Principal Payment to be paid to particular Retail Class Units held for the account of Depository Participants. Financial intermediaries and Depository Participants will in turn determine S-14

15 the portion of the Retail Principal Payment to be paid to particular Retail Class Units held for the account of each investor that they represent. Rounding of Retail Principal Payments. On each Distribution Date when principal is to be paid on a Class of Retail CertiÑcates (as described below under ""ÌDistributions of Principal''), the payment amount will be rounded to the nearest $1,000 increment. When we Ñrst make a Retail Principal Payment to a Class of Retail CertiÑcates, we will round that payment upward to the nearest $1,000 by withdrawing from the related Retail Cash Deposit the necessary amount. After the initial Retail Principal Payment, we will apply the amount available as principal of that Retail Class, Ñrst, to replenish the related Retail Cash Deposit and, second, as a Retail Principal Payment (rounded to the nearest $1,000). We will repeat this procedure on each Distribution Date until the principal balance of each Class of Retail CertiÑcates is reduced to zero. On any Distribution Date, a Retail Principal Payment may be slightly more or less than it would be in the absence of rounding, but any such diåerence will never exceed $ The total amount of all Retail Principal Payments made through any Distribution Date will never be less than it would have been in the absence of rounding. Retail Principal Payment Requests. As an investor, you may request that principal of your Retail Class Unit or Units be paid to you in increments of $1,000 on the earliest possible Distribution Date (each, a ""Retail Principal Payment Request''). You must submit a Retail Principal Payment Request to the Ñnancial intermediary that maintains the account reöecting your interest in the applicable Class. If the Ñnancial intermediary is not a Depository Participant, it must notify the related Depository Participant of the request. The Depository Participant must then make the request to the Depository in writing, on a form that the Depository requires. The Depository will establish procedures for determining the order in which it receives requests. When the Depository receives a request, it will date and time stamp the request and forward it to US Bank. US Bank will not be liable for any delay in delivery to it of Retail Principal Payment Requests or for the withdrawal of requests. US Bank will maintain a list of Depository Participants representing investors that have submitted Retail Principal Payment Requests. The list will include the order of receipt and the amounts of such requests. US Bank will notify the Depository and the applicable Depository Participants as to which requests to honor on each Distribution Date. The Depository will honor Retail Principal Payment Requests according to the procedures, and subject to the priorities and limitations, described below. Either US Bank or the Depository will establish the procedures for determining such priorities and limitations. The decisions of US Bank and the Depository concerning such matters will be Ñnal and binding on all aåected persons. Withdrawing a Retail Principal Payment Request. To withdraw a Retail Principal Payment Request, you must notify the Ñnancial intermediary that maintains the account reöecting your interest in the applicable Class. If the Ñnancial intermediary is not a Depository Participant, it must notify the related Depository Participant, which will forward the withdrawal to US Bank, on a form that the Depository requires. A Retail Principal Payment Request will be considered withdrawn upon the transfer of beneñcial ownership of the related Retail CertiÑcate, but only if US Bank receives notiñcation of the withdrawal on the proper form. The Depository can honor a Retail Principal Payment Request on any Distribution Date only if it receives the request and forwards it to US Bank by the last day of the month before the month in which that Distribution Date occurs (the ""Record Date''). The Depository can honor the withdrawal of a request on any Distribution Date only if the Depository Participant receives the withdrawal and forwards it to US Bank by the Record Date. Priority will be given to investors on whose behalf Retail S-15