Business: Freddie Mac Variable Rate Non-Cumulative Preferred, liquidation preference $50 per share, redeemable at the issuer's option on 06/30/2003 and every June 30th in every Second year thereafter at $50 per share plus declared and unpaid dividends, and with no stated maturity. Non-cumulative distributions of the Annual Fixed Dividend Rate will be paid quarterly on 3/31, 6/30, 9/30 & 12/31 to holders of record on the record date fixed by the board prior to the payment date (NOTE: the ex-dividend date is one business day prior to the record date). The Annual Fixed Dividend Rate will be 4.48% until the first redemption date, then it will be equal to the sum of the average interest rate of U.S. Treasury securities having an index maturity of two years on the applicable fixed rate calculation date plus 0.20% (with a maximum of 10.80%), resetting every 2 years thereafter on applicable fixed rate calculation date (see prospectus for more details). Dividends paid by this preferred security are eligible for the preferential income tax rate of 15% to a maximum of 20% depending on the holder's tax bracket (and under IRS specified holding restrictions) and are also eligible for the dividends received deduction for corporate holders. In regard to the payment of dividends and upon liquidation, the preferred shares rank junior to the company's senior debt, equally with other preferreds of the company, and senior to the common shares of the company. See the IPO prospectus for further information on the preferred stock by clicking on the ‘Link to IPO Prospectus’ provided below.