"We consistently review these notes to determine when to buy them back," Smith says. "We're buying them back because it's more cost effective to do so."The notes can be redeemed at a redemption price equal to 100% of the principal plus accrued interest to the redemption date, Smith said.

Maturity dates range from Sept. 18, 2001 through Dec. 6, 2002 with interest rates average 6.4%. The CUSIP designations are: 31364KBF6, 31364KAW0, 31364CQP6, 31364CTC2, 31364C2T4, 31364FEX5, 31364FFN6, 31364FGU9, 31364FHL8, and 31364FJK8.

Fannie Mae is a New York Stock Exchange company and the largest non-bank financial services company in the world. It operates by federal charter and is the nation's largest source of financing for home mortgages. Since 1968, Fannie Mae has provided $2.9 trillion of mortgage financing for over 35 million families.