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To: lurqer who wrote (22244)	7/15/2003 10:18:17 AM
From: Jim Willie CB	Read Replies (2) \| Respond to of 89467

FannyMae drops 2pts on news of reduced portfolios UPDATE - Fannie Mae duration gap narrows, portfolio shrinks Tuesday July 15, 9:55 am ET biz.yahoo.com NEW YORK, July 15 (Reuters) - Fannie Mae (NYSE:FNM - News), the No. 1 U.S. mortgage finance company, said on Tuesday its duration gap, a key measure of its interest rate risk exposure, narrowed to an average of -1 month in June from -5 months in May. The June duration reading is the lowest this year and well within the company's target range of plus to minus six months. Fannie Mae's duration gap is a monthly barometer of how well the company is matching its mortgage investments and mortgage-backed securities it guarantees with the bonds it issues to buy mortgage assets. The June figure shows that the company's assets on average will be repaid and then replenished at lower interest rates 1 month sooner than its outstanding debt. Fannie Mae and its smaller sibling Freddie Mac (NYSE:FRE - News) engage in two main lines of business to support the $7 trillion U.S. mortgage market. Both government-sponsored enterprises buy mortgages from banks and lenders for their own investment and guarantee mortgage bonds. Fannie Mae also said its investment portfolio in home loans and mortgage-backed securities shrank for a second straight month at an annualized rate of 4.5 percent last month, after a 3.4 percent decline in May. During the second quarter, its portfolio decreased at an annualized rate of 1.7 percent. At the end of June, its investment portfolio totaled $812.5 billion. The growth rate of Fannie Mae's investment portfolio is considered a proxy for how quickly the company's earnings is growing. For Fannie Mae's full latest monthly financial summary, please visit fanniemae.com