This Pricing Supplement relates to the issue of Medium-Term Notes, Series B described below (the "Notes"). You should read it together with the Offering Circular dated September 15, 1998 (the "Offering Circular") relating to the Medium-Term Notes, Series B 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 6. The following discussion 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.
You should consult your own financial and legal advisors about:
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. This is particularly the case if your circumstances may 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.
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, if we redeem the Notes before the Maturity Date, you generally will 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.
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 left outstanding may not be very liquid.
CUSIP Number: 31364GQ51
Certain Securities Terms
1. Principal Amount: $15,000,000.00
2. Issue Date (expected Settlement Date): May 26, 1999
3. Maturity Date: May 26, 2011
a. Amount Payable on the Maturity Date: 100% of principal amount
4. Subject to Redemption
Prior to Maturity Date
No
X
Yes; in whole or in part, at our option, at a
redemption price of 100% of the principal amount redeemed, plus
accrued interest thereon to the date of redemption
X at any time (and from time to time) on or
after May 26, 2000
on
on each Interest Payment Date commencing
If we elect to redeem the Notes, we will give notice of our intention to Holders of Notes not less than 10 days prior to the date of redemption in the manner described under "Description of the Notes - Notices" in the Offering Circular. If we redeem a portion of the Notes, we will redeem a pro rata portion of the outstanding principal amount of each Note.
5. Interest Category: Fixed Rate Notes
6. Interest
a. Frequency
of Interest Payments
Semiannually
X
Other: Monthly
b. Interest Payment Dates: 26th day of each month
c. First Interest Payment Date: June 26, 1999
d. Interest rate per annum: 6.50%
7. Denominations: $1,000 and additional increments of $1,000
Offering
1. Pricing Date: May 6, 1999
2. Method of Distribution: X Principal Non-Underwritten
3. Dealer(s): Underwriting Commitment
Morgan Stanley & Co. Incorporated $15,000,000.00
a. If Multiple Dealers, Representative(s): N/A
4. Offering Price:
Fixed Offering Price:
, plus accrued interest, if any, from
X
Variable Price Offering
5. If Fixed Offering Price, discount to Dealer(s): N/A of Principal Amount
6. Price to Dealer(s): 98.75% of Principal Amount
7. Our Proceeds: $14,812,500.00
8. Concession: N/A
and
reallowance: N/A
United States Taxation
The Notes and payments thereon generally are subject to taxation. Therefore, you should consider the tax consequences of owning and receiving payments on the Notes before acquiring them.
We have engaged Arnold & Porter as special tax counsel to review the discussion in the Offering Circular under the heading "United States Taxation." They have given us their written legal opinion that the discussion correctly describes the principal aspects of the U.S. federal tax treatment of beneficial owners ("Owners") of Notes. They have also given us their written legal opinion that the following discussion is a correct summary of some of the tax rules described in the Offering Circular that are particularly important to individual investors who purchase Notes. This discussion, and the discussion in the Offering Circular, are general discussions that may not apply to your particular circumstances.
An Owner of a Note generally will include interest on the Note as ordinary income in accordance with his or her method of accounting for federal income tax purposes. Cash-method Owners, including most individuals, include interest in income in the year in which they receive payment. Accrual-method Owners generally include interest in income during the year in which it is earned or accrued, without regard to when they receive payment.
When you sell, exchange or otherwise dispose of a Note you generally will recognize gain or loss equal to the difference between the amount you paid for the Note and the sales price. Such gain or loss generally will be capital gain or loss. Any capital gain or loss will be long-term capital gain or loss if at the time of disposition you have held the Note for more than one year.
Payments of interest on, and proceeds from the sale of, a Note held by an individual and certain others generally must be reported to both the Internal Revenue Service and to the Owner. Backup withholding at a rate of 31 percent may apply to payments made on a Note unless you provide your taxpayer identification number, certified under penalties of perjury, and certain other information. Generally, an individual's taxpayer identification number is his or her Social Security number.
For a more detailed discussion of the tax rules applicable to Owners, see "United States Taxation" in the Offering Circular. Different rules may apply to investors who are not U.S. persons, do not hold the Notes as capital assets, or to whom other special circumstances may apply. If you are considering purchasing a Note you should consult your own tax advisors to determine the tax consequences to you.
X Additional Tax Information: The Notes
may be issued with OID or at a premium. See "United States Taxation - U.S.
Persons - Notes Issued for Less Than Their Principal Amount" and "United
States Taxation - U.S. Persons - Notes Purchased for More Than Their Issue
Price" in the Offering Circular.