Pricing Supplement Dated December 02, 2004 
(To Offering Circular dated January 19, 2004 
and Offering Circular Supplement, dated August 27, 2004)

Fannie Mae Investment Notes

Universal Debt Facility

CUSIP Number: 3135A0CB3
Title: Step Rate Notes Due December 09, 2009

This Pricing Supplement relates to the issue of Fannie Mae Investment Notes described below (the " Notes "). You should read it together with the Offering Circular, dated January 19, 2004 (the "Offering Circular"), and the Offering Circular Supplement, dated August 27, 2004 (the "Supplement"), relating to the Universal Debt Facility of the Federal National Mortgage Association ("Fannie Mae"). Capitalized terms used in this Pricing Supplement have the meanings we gave to them in the Offering Circular, unless we specify otherwise.

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

You should read and understand the following discussion of certain risk factors before purchasing the Notes. You also should read and understand the more complete discussion of risk factors that appears in the Offering Circular beginning on page 7. The following discussion, the Supplement and the Risk Factors section in the Offering Circular may not describe all of the risks and investment considerations (including those relating to your particular circumstances) of an investment in the Notes . 

Risk Factors

You should consult your own financial and legal advisors about:

*
the risks of an investment in the Notes (for example, the risks associated with the Notes' redemption feature and Survivor's Option (as defined in the Supplement));
*
the suitability of your investing in the Notes in light of your particular situation;
*
the appropriate tools to analyze a possible investment in the Notes; and
*
possible economic and interest rate scenarios and other factors that may affect your investment in the Notes.

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Merrill Lynch & Co.

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You should not purchase the Notes unless you understand, can evaluate and are able to bear all risks of an investment in the Notes. These risks include the risks that the Notes may not be readily saleable, that the value of the Notes will fluctuate over time, and that such fluctuations may be significant and could result in significant losses to you. These risks are especially important to understand if circumstances arise that will not permit you to hold the Notes until the Maturity Date. If you sell a Note prior to the Maturity Date, you may receive sales proceeds (less applicable transaction costs) that are less than the amount you originally invested.

Our ability to redeem the Notes before the Maturity Date is likely to affect the market value of the Notes. During any period when we may elect to redeem the Notes, the Notes' market value generally will not rise substantially above the price at which we may redeem the Notes because of the increased likelihood of redemption. This also may be true prior to any redemption period.

We may be expected to redeem the Notes when our cost of borrowing is lower than the interest rate on the Notes. Because we are most likely to redeem the Notes when interest rates have fallen, principal is likely to be returned to you upon redemption at a time when prevailing interest rates are lower. Therefore, you generally would not be able to reinvest redemption proceeds at an effective interest rate as high as the interest rate on the Notes, and your reinvestment might be at a significantly lower rate. You should consider the related reinvestment risk in light of other investments available to you at that time.

If you are considering purchasing Notes at a premium (or a discount), you should consider the risk that a redemption relatively early (or late) following issuance of the Notes could result in an actual yield that is lower than your anticipated yield.

If we redeem a portion of the Notes, the market for the Notes remaining outstanding may not be very liquid.

We will have a discretionary right to limit the aggregate principal amount of Notes subject to that Survivor's Option that may be exercised in any calendar year. We also will have the discretionary right to limit the aggregate principal amount of Notes subject to the Survivor's Option that may be exercised in any calendar year on behalf of any individual deceased beneficial owner of Notes. Accordingly, we cannot assure you that exercise of a Survivor's Option for the desired amount will be permitted in any single calendar year. Furthermore, a Survivor's Option may not be exercised until at least twelve months following the issue date of the Note.

You should consult your own financial and legal advisors about the suitability of your investing in the Notes in light of your particular situation (for example, if you need to receive the principal amount on the Maturity Date or need to receive fixed interest payments until the Maturity Date, the Notes may not be an appropriate investment for you because of the Notes' redemption feature).

CUSIP Number: 3135A0CB3

Certain Securities Terms

1. Title: Step Rate Notes Due December 09, 2009

2. Aggregate Original Principal Amount: $26,500,000.00 

3. Issue Date: December 10, 2004

4. Maturity Date: December 09, 2009

5. Subject to Redemption by Fannie Mae Prior to Maturity Date
__ No
Yes; in whole or in part, at our option, at any time (and from time to time) on or after December 09, 2005 at a redemption price of 100% of the principal amount redeemed, plus accrued interest thereon to the date of redemption.

6. Survivor's Option:
__ No
Yes; additional details about the Survivor's Option are set forth in Annex A to the Supplement, and the form to be used to exercise the Survivor's Option is attached as Annex B to the Supplement.

7. Interest

a. Frequency of Interest Payments: semiannually

b. Interest Payment Dates: the 9th day of each June and December 

c. First Interest Payment Date: June 09, 2005

d The interest rate on the outstanding principal amount will be as follows:

from and including to but excluding interest rate per annum

December 10, 2004 December 09, 2005 3.00%
December 09, 2005 December 09, 2006 4.00%
December 09, 2006 December 09, 2007 4.50%
December 09, 2007 December 09, 2008 5.00%
December 09, 2008 December 09, 2009 6.00%

Offering

1. Pricing Date: December 02, 2004

2. Fixed Offering Price:

100.00 % of principal amount, plus accrued interest, if any, from the Settlement Date

3. Dealer Purchase Price: 99.0625% of principal amount

a. Concession: 0.875%

b. Reallowance: 0.75%

c. Proceeds to Fannie Mae: $26,251,562.50 

Settlement

1. Settlement Date:  December 10, 2004

2. Settlement Basis:  delivery versus payment

3. Settlement Clearing System: DTC

4. Form:  Global Book-Entry Securities

Recent Developments

     On November 15, 2004, we filed a Form 12b-25 with the Securities and Exchange Commission, stating that we were not be able to file our Form 10-Q for the September 30, 2004 quarter by the November 15, 2004 due date.  We included an announcement about the Form 12b-25 as an exhibit to a Form 8-K that we filed with the SEC on November 16, 2004.

     We were not able to timely file a Form 10-Q that complies with the SEC’s rules because we have been advised by our independent auditor that it is unable to complete its review of our interim unaudited financial statements for the quarter ended September 30, 2004. The SEC’s rules require that such a review be completed for interim financial statements on Form 10-Q, and the absence of such a review renders a Form 10-Q non-compliant and untimely.

     On September 20, 2004, the Office of Federal Housing Enterprise Oversight (“OFHEO”) delivered its report to Fannie Mae’s Board of Directors of its findings to date of the agency’s special examination. Among other matters, the OFHEO report raises a number of questions and concerns about our accounting policies and practices with respect to Financial Accounting Standard No. 91, Accounting for Nonrefundable Fees and Costs Associated with Originating or Acquiring Loans and Initial Direct Costs of Leases (“FAS 91”) and Financial Accounting Standard No. 133, Accounting for Derivative Instruments and Hedging Activities (“FAS 133”). We have submitted letters to the SEC Staff presenting our views on our accounting policies and practices under FAS 91 and FAS 133, and our independent auditor concurred with our accounting interpretations as set forth in the letters. On November 5, 2004, we, accompanied by our independent auditor, presented our views to the SEC’s Office of the Chief Accountant (“OCA”). We will modify our accounting, if necessary, to comply with the SEC’s views.

     Completion of the review by our independent auditor is subject to resolution of the issues before OCA described above and the independent auditor’s completion of certain other procedures, including its evaluation of results that are not yet available of the investigation of certain matters in the OFHEO report being conducted by independent counsel on behalf of the Board of Directors.

     The Form 8-K that we filed with the SEC on November 16 includes discussions of our results of operations for the quarter ended September 30, 2004 and of the impact on our financial results in prior periods if it is determined that we have not been in compliance with generally accepted accounting principles ("GAAP") in our application of FAS 133 or FAS 91, or both.  The Form 8-K also addresses the impact on our financial results in 2001, 2002 and 2003 arising from our recent determination that our methodology for performing calculations to measure the catch-up adjustment required by FAS 91 in 2001 and 2002 was not consistent with GAAP.

     Form 8-K’s that we file with the SEC prior to the completion of the offering of the Notes are incorporated by reference in our Offering Circular.  This means that we are disclosing information to you by referring you to those documents. You should refer to “Additional  Information about Fannie Mae” in our Offering Circular for further details on the information that we incorporate by reference in our Offering Circular and where to find it.