Business: Fannie Mae (Federal National Mortgage Assoc.), 5.375% Non-Cumulative Convertible Series 2004-1 Preferred Stock, liquidation preference $100,000 per share, redeemable at the issuer's option on or after 1/5/2008 at $105,000 per share plus declared and unpaid dividends, with no stated maturity, and with non-cumulative distributions of 5.375% ($5375.00) per annum paid quarterly on 3/31, 6/30, 9/30 & 12/31 to holders of record on the date fixed by the board, not more than 45 days or less than 10 days prior to the payment date (NOTE: the ex-dividend date is one business day prior to the record date). 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. The preferred shares are convertible any time at the holder's option into 1060.3329 common shares of Fannie Mae (NYSE: FNM), an initial conversion price of $94.31 per common share. In regards to payment of dividends and upon liquidation, the preferred shares rank equally with other preferreds and senior to the common shares of the company. See the IPO prospectus for further information on the convertible preferred stock and the conversion provisions by clicking on the ‘Link to IPO Prospectus’ provided below.