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V OÅering Circular dated December 30, 1998 Freddie Mac Global Debt Facility OÅered Securities: Notes. Amount: No prescribed limit. Maturities: Various, of one day or longer. OÅering Terms: The Notes are oÅered by means of this OÅering Circular and related Pricing Supplements on the terms described in those Pricing Supplements. Currencies: Notes may be denominated in U.S. dollars or in other currencies speciÑed in the related Pricing Supplement. Priority: The Notes will be unsecured general obligations of Freddie Mac having the same priority as its other unsecured and unsubordinated debt. Tax Status: The Notes and income derived from the Notes generally are not exempt from taxation. NonU.S. owners generally will be subject to United States federal income and withholding tax unless they establish an exemption. Form of Securities: Non-U.S. dollar denominated Notes: Registered (global or deÑnitive). U.S. dollar denominated Notes: Book-entry (U.S. Federal Reserve Banks) or registered (global or deÑnitive). Some Notes are complex Ñnancial instruments and are not suitable investments for all investors. Investors should consider carefully the risk factors and investment considerations described beginning on page 8. An investor should not purchase Notes unless it understands and is able to bear these and any other applicable risks. Capitalized terms used on this page and in this OÅering Circular have the meanings given to them in the text of this OÅering Circular or in the Glossary (Exhibit A). The Notes are exempt from the registration requirements of the Securities Act of 1933 and are ""exempted securities'' within the meaning of the Securities Exchange Act of 1934. Investors should read this OÅering Circular in conjunction with the applicable Pricing Supplement and any additional documents incorporated by reference or speciÑed in those two documents. See ""Availability of Information and Incorporation by Reference.'' The Notes are obligations of Freddie Mac only. The Notes, including any interest or return of discount on the Notes, are not obligations of, or guaranteed by, the United States or any agency or instrumentality of the United States other than Freddie Mac. Freddie Mac has applied to list the Notes that are agreed at the time of issue to be so listed on the Luxembourg Stock Exchange and the Stock Exchange of Singapore Limited. Such application with the Luxembourg Stock Exchange applies to Notes issued within twelve months of the date of this OÅering Circular. Unlisted Notes and Notes listed on other stock exchanges also may be issued under the Facility. The Notes may be oÅered and sold outside of the United States, within the United States or simultaneously outside of and within the United States, only where it is legal to make such oÅers and sales. Arranger Lehman Brothers In connection with any issue of Notes under the Facility, the Dealer (if any) identiÑed as Stabilizing Manager in the applicable Pricing Supplement may, subject to applicable laws and regulations, overallot or eÅect transactions that stabilize or maintain the market price of the Notes. Such transactions may include stabilizing and the purchase of Notes to cover syndicate short positions. Such transactions may be eÅected on the Luxembourg Stock Exchange, in an over-the-counter market or otherwise. The Stabilizing Manager may discontinue any of these activities at any time without notice. For a description of these activities, see ""Plan of Distribution Ì Distribution.'' This OÅering Circular, together with any Pricing Supplement, is an oÅer to sell only the related Notes, and only in jurisdictions and under circumstances where it is lawful to do so. Freddie Mac has not authorized any broker, dealer or salesperson, or anyone else, to provide information or make representations not contained in this OÅering Circular, the applicable Pricing Supplement, or the other documents and sources of information that are listed under ""Availability of Information and Incorporation by Reference.'' Investors must not rely on unauthorized information or representations. The information contained in this OÅering Circular is current only as of its date. Certain jurisdictions may restrict by law the distribution of this OÅering Circular or any Pricing Supplement and the oÅer, sale and delivery of Notes. Persons who receive this OÅering Circular or any Pricing Supplement should know and observe any such restrictions. United Kingdom: This OÅering Circular, any Pricing Supplement or any other applicable supplement or amendment may not be issued or passed on in the United Kingdom to any person unless that person is of a kind described in Article 11(3) of the Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996, as amended, or is a person to whom this OÅering Circular and any Pricing Supplement or any other supplement or amendment may otherwise lawfully be issued or passed on. Any Note (including a Note denominated in Sterling) in respect of which proceeds are to be accepted by Freddie Mac in the United Kingdom and which is issued pursuant to an exempt transaction under regulation 13(1) or 13(3) of the Banking Act 1987 (Exempt Transactions) Regulations 1997 (the ""Banking Act Regulations'') will constitute commercial paper issued in accordance with regulations made under section 4 of the Banking Act 1987, a shorter term debt security issued in accordance with regulations made under section 4 of the Banking Act 1987 or a longer term debt security issued in accordance with regulations made under section 4 of the Banking Act 1987, as the case may be. Freddie Mac is not an authorized institution or a European authorized institution (as such terms are deÑned in the Banking Act Regulations) and repayment of the principal and payment of any interest or premium in connection with the Notes have not been guaranteed. Japan: The Notes have not been registered under the Securities and Exchange Law of Japan (the ""Securities and Exchange Law''), and direct or indirect oÅers and sales of Notes may not be made in Japan or to any resident of Japan or to any person for reoÅering or resale, directly or indirectly, in Japan or to any resident of Japan except in compliance with, or pursuant to an available exemption from, the registration requirements of the Securities and Exchange Law and in compliance with other relevant laws of Japan. See ""Plan of Distribution Ì Selling Restrictions.'' Neither the Luxembourg Stock Exchange nor the Stock Exchange of Singapore Limited (the ""Singapore Stock Exchange'') assumes responsibility for the correctness of any of the statements made or opinions expressed or reports contained or incorporated by reference in this OÅering Circular. Admission to the OÇcial List of the Luxembourg Stock Exchange and/or the Singapore Stock Exchange is not to be taken as an indication of the merits of Freddie Mac or the Notes. Freddie Mac, having made all reasonable inquiries as of the date of this OÅering Circular, conÑrms that this OÅering Circular contains all information with regard to the Notes which, when read together with the applicable Pricing Supplement and the documents incorporated by reference, is material, in the context of the initial issue of such Notes; that the information contained in this OÅering Circular, as of its date, is true and accurate in all respects and is not misleading and that there are no facts the omission of which makes this OÅering Circular as a whole or any such information misleading in any material respect. Neither this OÅering Circular nor any Pricing Supplement describes all of the risks and investment considerations of an investment in Notes resulting from principal or interest being payable in or determined by reference to one or more currencies or to one or more interest rate, currency or other indices or formulas. Freddie Mac and the Dealers disclaim any responsibility to advise prospective investors of such risks and investment considerations as they exist at the date of this OÅering Circular or any Pricing Supplement or as such risks may change from time to time. Prospective investors should consult their own Ñnancial and legal advisors as to the risks and investment considerations arising from an investment in such Notes. Such Notes are not an appropriate investment for investors who are unsophisticated with respect to currency transactions or transactions involving the applicable interest rate, currency or other indices or formulas. See ""Risk Factors and Investment Considerations.'' This OÅering Circular replaces the OÅering Circular dated May 19, 1995, as amended by the OÅering Circular Supplement dated April 7, 1998, for issues of Notes priced on and after the date of this OÅering Circular. This OÅering Circular relates to Notes issued under the Facility and not to any other securities of Freddie Mac, including Debentures, Medium-Term Notes, Discount Notes and Euro Discount Notes. Freddie Mac oÅers these other securities under separate oÅering circulars. 2 TABLE OF CONTENTS Description Availability of Information and Incorporation by ReferenceÏÏÏÏÏÏÏ Summary ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Freddie MacÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Capitalization ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Risk Factors and Investment Considerations ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Suitability ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Structure Risks ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Exchange Rate Risks and Exchange Controls ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Market, Liquidity and Yield Considerations ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Secondary Markets and Market Values ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Redeemable NotesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Fixed Rate and Zero Coupon Notes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Step Notes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Variable Rate NotesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Legal Investment Considerations ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Credit Ratings ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Description of the NotesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ General ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ SpeciÑed Currencies and SpeciÑed Payment Currencies ÏÏ Denominations ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Status of NotesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Maturity, Redemption and Optional RepaymentÏÏÏÏÏÏÏÏÏÏÏ Payment Terms of the Notes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Corrections ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Business Day Convention ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Targeted Registered Issues ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Further Issues ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Repurchase ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Clearance and Settlement ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ General ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Clearing Systems ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Clearance and Settlement ProceduresÌPrimary Distribution ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Clearance and Settlement ProceduresÌSecondary Market Transfers ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Book-Entry NotesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Title ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Payments ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Fiscal Agent ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Registered Notes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Title ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Payments ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Global Agent ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Exchange for DeÑnitive Notes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Currency ConversionsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Payment for Notes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Page Description 4 5 8 8 8 8 9 9 10 10 11 12 12 12 13 13 13 13 14 15 15 15 16 21 21 22 22 22 22 22 23 Payment on DTC Registered Notes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Global Facility Agreement ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Binding EÅect of the Global Facility Agreement ÏÏÏÏÏÏÏÏÏÏÏÏÏ Certain Matters Regarding Freddie Mac ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Events of Default ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Rights Upon Event of Default ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Amendment ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Replacement ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Securities Owned by Freddie Mac ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Notice ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Governing Law ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Certain United States Federal Tax Consequences ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ U.S. Owners ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ In GeneralÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Payments of Interest ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Debt Obligations with Original Issue Discount ÏÏÏÏÏÏÏÏÏÏÏÏ Callable Debt Obligations ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Debt Obligations with a Term of One Year or Less ÏÏÏÏÏÏÏ Acquisition Premium and Market Discount ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Debt Obligations Purchased at a Premium ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Accrual Method ElectionÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Disposition or Retirement of Debt Obligations ÏÏÏÏÏÏÏÏÏÏÏÏ Exchange of Amounts in Non-U.S. Currency ÏÏÏÏÏÏÏÏÏÏÏÏÏ Non-U.S. Owners ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Interest ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Disposition or Retirement of Debt Obligations ÏÏÏÏÏÏÏÏÏÏÏÏ U.S. Federal Estate and Gift Taxes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Information Reporting and Backup WithholdingÏÏÏÏÏÏÏÏÏÏÏÏÏ Application of Proceeds ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Plan of Distribution ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Distribution ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Trading Markets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Selling Restrictions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ General ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ United Kingdom ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ JapanÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ France ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Germany ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Hong KongÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Singapore ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Targeted Registered Notes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Legality of the Notes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ General Information ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Capitalization Table ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Form of Pricing Supplement ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Exhibit A Ì Glossary ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 24 24 25 25 25 26 26 26 27 28 28 30 30 3 Page 30 31 31 31 32 32 33 34 34 34 35 35 36 36 37 37 38 39 39 40 41 41 42 42 42 43 43 43 44 44 44 46 46 46 46 47 47 47 47 47 48 48 48 50 51 55 AVAILABILITY OF INFORMATION AND INCORPORATION BY REFERENCE Freddie Mac prepares an annual Information Statement that describes Freddie Mac, its business and operations and contains Freddie Mac's audited Ñnancial statements. From time to time, Freddie Mac prepares Information Statement Supplements that include unaudited Ñnancial data and other information concerning its business and operations. As of the date hereof, Freddie Mac's current Information Statement is dated March 31, 1998 and its current Information Statement Supplement is dated November 3, 1998. Investors can obtain any of these documents and any other documents made available by Freddie Mac by writing, calling or e-mailing Freddie Mac's Debt Securities Marketing oÇce, 8200 Jones Branch Drive, McLean, Virginia U.S.A. 22102 (phone 703/903-5280; e-mail: debt securities@freddiemac.com). Investors should read this OÅering Circular in conjunction with Freddie Mac's most recent Information Statement and any supplement thereto (collectively, the ""Information Statement''), each of which is incorporated by reference in this OÅering Circular. References to ""this OÅering Circular'' mean this document, any supplements (other than Pricing Supplements) or amendments to this document and any documents incorporated by reference in this document, except to the extent that any such document is superseded or modiÑed by any subsequent document incorporated by reference. In connection with the application to list the Notes to be issued under the Facility on the Luxembourg Stock Exchange, the Freddie Mac Act and Bylaws of Freddie Mac and a legal notice relating to the issuance of the Notes have been deposited with the Chief Registrar of the District Court of Luxembourg, where copies may be inspected or obtained upon request. Holders of the Notes may obtain, free of charge, copies of Freddie Mac's most recent Information Statement and all Information Statement Supplements to such Information Statement from Banque Generale du π π Luxembourg, S.A., as listing agent (the ""Luxembourg Listing Agent''), in Luxembourg so long as any Notes issued hereunder are listed on the Luxembourg Stock Exchange. Holders may also obtain, free of charge, from the Luxembourg Listing Agent, the documents incorporated herein by reference and this OÅering Circular and Pricing Supplements applicable to Notes listed on the Luxembourg Stock Exchange. Copies of the Fiscal Agency Agreement and the Global Agency Agreement will be available for inspection by Holders at the oÇce of the Luxembourg Listing Agent. Freddie Mac has given an undertaking in connection with the listing of the Notes on the Luxembourg Stock Exchange, and has agreed in connection with the listing of the Notes on the Singapore Stock Exchange, that, so long as any Notes remain outstanding and listed on the Luxembourg Stock Exchange and the Singapore Stock Exchange, respectively, in the event of any material adverse change in the business or the Ñnancial position of Freddie Mac that is not reÖected in this OÅering Circular as then amended or supplemented (including the documents incorporated by reference), Freddie Mac will prepare an amendment or supplement to this OÅering Circular or publish a new OÅering Circular for use in connection with any subsequent oÅering or listing by Freddie Mac of the Notes. If the terms of the Facility are modiÑed or amended in a manner which would make this OÅering Circular, as amended or supplemented, inaccurate or misleading, a further amendment to this OÅering Circular or a new OÅering Circular will be prepared. 4 SUMMARY This Summary contains selected information about the Notes. This summary is qualiÑed by, and investors should refer to, the remainder of this OÅering Circular and any applicable Pricing Supplements for further information. The Notes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Unsecured debt securities issued from time to time under the Global Debt Facility (the ""Facility''). The Facility is governed by the Global Debt Facility Agreement dated as of December 30, 1998 (the ""Global Facility Agreement''). Issuer ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Federal Home Loan Mortgage Corporation (""Freddie Mac''). ArrangerÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Lehman Brothers International (Europe). AmountÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Freddie Mac may issue Notes in an unlimited amount. Legal Status ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ The Notes will be unsecured general obligations of Freddie Mac. They will rank on a parity with all other unsecured and unsubordinated debt of Freddie Mac. The United States does not guarantee the Notes or any interest or return of discount on the Notes. The Notes are not debts or obligations of the United States or any agency or instrumentality of the United States other than Freddie Mac. Pricing Supplements ÏÏÏÏÏÏÏÏÏÏ A Pricing Supplement will describe the speciÑc terms of each issue of Notes. If a Pricing Supplement contains diÅerent information from this OÅering Circular, investors should rely on the Pricing Supplement. SpeciÑed Currencies ÏÏÏÏÏÏÏÏÏÏ Freddie Mac may denominate and make payments on the Notes in any of the following SpeciÑed Currencies or in another currency speciÑed in the applicable Pricing Supplement. Australian dollars British pounds sterling Canadian dollars Danish kroner Euros Hong Kong dollars Japanese yen New Zealand dollars Swedish kronor Swiss francs U.S. dollars Maturities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Notes may have maturities of one day or longer. However, government or monetary authorities or clearing systems may require that certain Notes have minimum or maximum maturities. For example, as of the date of this OÅering Circular, the minimum maturity for Notes listed on the Luxembourg Stock Exchange is seven days and for Notes listed on the Singapore Stock Exchange is one month. Freddie Mac may issue Notes with the minimum or maximum maturities or variable maturities as applicable regulatory authorities, laws or regulations may allow or require. Denominations ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Government or monetary authorities may require that Notes denominated in certain currencies or currency units have certain denominations. Freddie Mac will issue and maintain the Notes in the minimum denominations speciÑed in the applicable Pricing Supplement and as applicable regulatory authorities, laws or regulations may allow or require. Redemption and Repayment ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Freddie Mac may have the option to redeem certain Notes, in whole or in part, before their Maturity Date (including redemption by installment). Holders of certain Notes may have the option to require repayment of such Notes before their Maturity Date. The Pricing Supplement for an issue of Notes will specify whether the Notes are redeemable at Freddie Mac's option or repayable at the Holder's option and, if so, will describe the terms and procedures that apply to the redemption or repayment. 5 Payment Terms ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Notes may be interest-bearing or non-interest-bearing. Notes that have a Ñxed principal repayment amount will be payable at par or at a speciÑed amount above or below par, in each case as speciÑed in the applicable Pricing Supplement. Notes that have a variable principal repayment amount will be payable at a principal amount determined by reference to one or more interest rate or exchange rate indices or otherwise, in each case as speciÑed in the applicable Pricing Supplement. Freddie Mac may provide that certain Notes may be stripped into interest and principal components, as speciÑed in the applicable Pricing Supplement. Fixed Rate Notes ÏÏÏÏÏÏÏÏÏÏÏ Notes that bear interest at a single Ñxed rate speciÑed in the applicable Pricing Supplement. Step Notes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Notes that bear interest at diÅerent Ñxed rates in diÅerent speciÑed periods, as speciÑed in the applicable Pricing Supplement. Variable Rate NotesÏÏÏÏÏÏÏÏÏ Notes that bear interest at a variable interest rate, as determined on the basis of a direct or inverse relationship to one or more speciÑed interest rate or exchange rate indices, or otherwise, in each case as speciÑed in the applicable Pricing Supplement. Fixed/Variable Rate Notes ÏÏ Notes that bear interest at a Ñxed rate for one or more periods and at a variable rate for other periods, in each case as speciÑed in the applicable Pricing Supplement. Zero Coupon Notes ÏÏÏÏÏÏÏÏÏ Notes that do not bear interest and are issued at a discount to their principal amount. Tax StatusÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ The Notes and income derived from the Notes generally are not exempt from taxation. Unless otherwise speciÑed in the applicable Pricing Supplement, Non-U.S. Owners generally will be subject to United States federal income and withholding tax unless they establish an exemption. See ""Certain United States Federal Tax Consequences Ì Non-U.S. Owners Ì Interest.'' Freddie Mac will not pay additional interest or other amounts or redeem the Notes prior to maturity if any jurisdiction imposes any withholding or other tax on payments on the Notes. If any particular issue of Notes is ""targeted to foreign markets'' under U.S. tax regulations, the Pricing Supplement for the Notes will describe any special tax considerations that apply. Form of Notes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Freddie Mac will issue Notes in either book-entry form or registered form and not in bearer form. Book-Entry Notes ÏÏÏÏÏÏÏÏÏÏÏ Notes denominated and payable in U.S. dollars that are issued in book-entry form on the Fed Book-Entry System. Holders may not exchange Book-Entry Notes for deÑnitive Notes. Registered Notes ÏÏÏÏÏÏÏÏÏÏÏ Notes that are not Book-Entry Notes. Freddie Mac generally will issue Registered Notes in global registered form but may issue Registered Notes in deÑnitive registered form if speciÑed in the applicable Pricing Supplement. Holders may exchange Registered Notes in global registered form for deÑnitive Notes only in the limited circumstances described in this OÅering Circular. See ""Description of the Notes Ì Registered Notes Ì Exchange for DeÑnitive Notes.'' Fiscal Agents ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ The U.S. Federal Reserve Banks will act as Fiscal Agents for BookEntry Notes pursuant to a Fiscal Agency Agreement (the ""Fiscal Agency Agreement''). Global Agent ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Citibank, N.A.'s London oÇce (""CitibankÌLondon'') will act as the Global Agent for Registered Notes pursuant to a Global Agency Agreement (the ""Global Agency Agreement''). 6 Clearance and Settlement ÏÏÏÏÏ Depending on the terms of an issue of Notes and where such Notes are oÅered, the Notes may clear and settle through one or more of the following: the U.S. Federal Reserve Banks, DTC, Euroclear, Cedelbank or another designated clearing system. Most Notes denominated and payable in U.S. dollars will clear and settle through the Fed Book-Entry System. Most Notes denominated and payable in a SpeciÑed Currency other than U.S. dollars will clear and settle through DTC if distributed within the United States and through Euroclear, Cedelbank or any other relevant clearing system if distributed outside the United States. Governing LawÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ The Notes will be governed by the laws of the United States. The local laws of the State of New York will be deemed to reÖect the laws of the United States, unless there is applicable precedent under federal law or the application of New York law would frustrate the purposes of the Freddie Mac Act or the Global Facility Agreement. Listing ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Freddie Mac may agree to list some Notes on the Luxembourg Stock Exchange and the Singapore Stock Exchange and has applied for such listings. Such application with the Luxembourg Stock Exchange applies to Notes issued within twelve months of the date of this OÅering Circular. Freddie Mac may list an issue of Notes on one, both or neither of these two exchanges. Freddie Mac may also list Notes on other exchanges or no exchange at all. Method of DistributionÏÏÏÏÏÏÏÏÏ In general, Freddie Mac will sell the Notes to one or more Dealers as principals. The applicable Pricing Supplement will specify the names of these Dealers. Freddie Mac may allow certain Dealers to solicit purchases of Notes on an agency basis and may also sell Notes directly. OÅering Price ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ At Ñxed prices equal to par, or at a discount to or premium over par, or at varying prices to be determined at the time of sale, as speciÑed in the applicable Pricing Supplement. Selling Restrictions ÏÏÏÏÏÏÏÏÏÏÏ Some jurisdictions, including the United Kingdom, Japan, France, Germany, Hong Kong and Singapore, restrict the oÅers and sales of Notes and the distribution of oÅering materials. If any particular issue of Notes is ""targeted to foreign markets'' under U.S. tax regulations, the Pricing Supplement for the Notes will describe the selling restrictions that apply. See ""Plan of Distribution Ì Selling Restrictions.'' 7 FREDDIE MAC Freddie Mac is a shareholder-owned United States government-sponsored enterprise (""GSE'') chartered on July 24, 1970 pursuant to the Federal Home Loan Mortgage Corporation Act, Title III of the Emergency Home Finance Act of 1970, as amended, 12 U.S.C. ÛÛ1451-1459 (the ""Freddie Mac Act''). Freddie Mac's statutory purposes are, in the United States, (i) to provide stability in the secondary market for residential mortgages, (ii) to respond appropriately to the private capital market, (iii) to provide ongoing assistance to the secondary market for residential mortgages (including activities relating to mortgages on housing for low- and moderate-income families involving a reasonable economic return that may be less than the return earned on other activities) and (iv) to promote access to mortgage credit throughout the United States (including central cities, rural areas and other underserved areas) by increasing the liquidity of mortgage investments and improving the distribution of investment capital available for residential mortgage Ñnancing. The principal activity of Freddie Mac consists of the purchase of residential mortgages and mortgage-related securities from lenders, other mortgage sellers and securities dealers. Freddie Mac Ñnances such purchases through the sale of mortgage-related and debt securities, other liabilities and equity capital. Neither the United States nor any agency or instrumentality of the United States is obligated, either directly or indirectly, to fund the mortgage purchase or Ñnancing activities of Freddie Mac. CAPITALIZATION The Information Statement and Information Statement Supplements show Freddie Mac's capitalization as of the end of the related annual and quarterly periods. Freddie Mac engages in transactions aÅecting stockholders' equity from time to time and issues or retires debt obligations on an ongoing basis. Accordingly, on any date subsequent to the date of an Information Statement or Information Statement Supplement, stockholders' equity may diÅer, and the amount of debt obligations outstanding will diÅer, and may diÅer substantially, from the Ñgures in the Capitalization Table in this OÅering Circular. See ""Capitalization Table.'' RISK FACTORS AND INVESTMENT CONSIDERATIONS This section describes some of the general risks and considerations that an investor should examine before investing in the Notes. These risks and considerations, however, may vary depending on an investor's particular circumstances and on various economic and interest rate scenarios. Therefore, a prospective investor should consult its own Ñnancial and legal advisors to determine the suitability of investing in a particular issue of Notes in the context of that investor's Ñnancial situation and anticipated economic and interest rate scenarios. Suitability The Notes are not suitable investments for all investors. Before investing in a particular issue of Notes, an investor should: ‚ possess, either alone or with an investment advisor, the knowledge, experience, expertise and analytical tools necessary to evaluate, in the context of that investor's Ñnancial situation, the particular features of the Notes, the risks and beneÑts of investing in the Notes and the eÅect of the Notes on the investor's overall investment portfolio; ‚ have suÇcient Ñnancial resources and liquidity to bear the risks associated with the Notes; ‚ understand the information contained and incorporated in this OÅering Circular and the applicable Pricing Supplement; ‚ understand the terms of the Notes; and 8 ‚ understand any applicable legal investment restrictions. Sophisticated institutional investors generally do not purchase complex Notes as stand-alone investments. Rather, they invest in certain Notes to reduce the risk of their overall portfolio or to enhance their yield by adding an appropriate level of risk to their overall portfolio. No investor should purchase any Notes unless the investor understands and is able to bear the associated yield, market, liquidity and structure risks, including risks associated with any redemption provisions, periodic interest rate adjustments and exchange rates and controls. An investor should decide whether to invest in an issue of Notes based on the investor's own Ñnancial needs and the anticipated performance of the Notes under a variety of economic and interest rate scenarios. Structure Risks If principal or interest on an issue of Notes is either directly or inversely determined by reference to one or more interest rates, currencies (including exchange rates and swap indices between currencies or currency units) or other indices, then an investment in the Notes would entail signiÑcant risks not associated with an investment in a conventional Ñxed rate debt security. These risks include the possibility that: ‚ the applicable index or indices may change signiÑcantly; ‚ changes in the applicable index or indices may not correlate with changes in interest rates or currencies generally or with changes in other indices; ‚ changes in the applicable index or indices will be magniÑed or diminished if the Notes' principal or interest formula contains a leverage factor or a deleverage factor; ‚ two or more indices or formulas that an investor may expect to move in tandem or in some other relationship to each other may unexpectedly converge, diverge or otherwise not move as expected; ‚ the resulting interest rate may be less than the interest rate payable on a conventional Ñxed rate debt security issued by Freddie Mac at the same time and may be as low as zero; ‚ an investor may receive repayments of principal at times other than when the investor expects; ‚ an investor may lose all or a substantial portion of the principal of its Note (whether payable at maturity, upon redemption or otherwise); ‚ the value of Notes with complex formulas or other terms may be volatile; and ‚ currency devaluations may occur or authorities with jurisdiction over an applicable currency may impose or modify currency exchange controls (see ""Exchange Rate Risks and Exchange Controls'' below). These risks may depend on a number of interrelated factors that Freddie Mac cannot control, including Ñnancial, economic and political events. In recent years, certain interest rates, currencies, currency units, exchange rates and indices have been highly volatile. This volatility may continue in the future. Past Öuctuations in any particular interest rate, currency, currency unit, exchange rate or index, however, do not necessarily indicate the Öuctuations that may occur in the future. Exchange Rate Risks and Exchange Controls Freddie Mac will denominate each issue of Notes in one or more SpeciÑed Currencies in which it will pay principal and any interest on the Notes. Freddie Mac may determine the amount of principal or interest payments on an issue of Notes by reference to one or more SpeciÑed Currencies (including exchange rates and swap indices between currencies or currency units) other than the denominated SpeciÑed Currency. Investors in an issue of Notes may conduct their Ñnancial activities in a currency or currency unit (the ""Investor's Currency'') other than the Notes' denominated SpeciÑed Currencies or other than the SpeciÑed Currencies that determine the amount 9 of the Notes' principal or interest payments. In those cases, an investment in the Notes involves more risks than if the Notes were denominated in or indexed solely to the Investor's Currency. These risks include the possibility that: ‚ the rate of exchange between the applicable SpeciÑed Currency and the Investor's Currency may change signiÑcantly (including changes as a result of devaluation of the SpeciÑed Currency or revaluation of the Investor's Currency); ‚ changes in exchange rates may decrease the eÅective yield on the Notes and, in certain circumstances, investors could lose all or a substantial portion of the principal of the Notes; and ‚ authorities with jurisdiction over the applicable SpeciÑed Currency or Investor's Currency may impose or modify currency exchange controls. In recent years, certain exchange rates and indices have been highly volatile. This volatility may continue in the future. Past Öuctuations in any particular exchange rate or index, however, do not necessarily indicate the Öuctuations that may occur in the future. If the value of the Investor's Currency appreciates relative to the value of the applicable SpeciÑed Currency, the yield on the Notes, the value of payments on the Notes and the market value of the Notes all would decrease in terms of the Investor's Currency. A depreciation in the value of the Investor's Currency relative to the value of the applicable SpeciÑed Currency would have the opposite eÅect. Government and monetary authorities have imposed, and may impose in the future, exchange controls that could aÅect exchange rates as well as the availability of the applicable SpeciÑed Currency when payments of principal or interest are due on an issue of Notes. Even in the absence of actual exchange controls, it is possible that when payments on a particular issue of Notes are due: ‚ the government issuing the applicable SpeciÑed Currency (or any successor to that SpeciÑed Currency) may no longer use the SpeciÑed Currency (or any successor currency); ‚ the international banking community may no longer use the applicable SpeciÑed Currency (or any successor currency) to settle transactions; and ‚ the applicable SpeciÑed Currency (or any successor currency) may no longer be available for any other reason. In these cases, Freddie Mac will be entitled to satisfy its obligations on the Notes as described in ""Description of the Notes Ì General Ì SpeciÑed Currencies and SpeciÑed Payment Currencies Ì Unavailability.'' Market, Liquidity and Yield Considerations Secondary Markets and Market Values The Notes generally will have no established trading market when issued. Although Dealers are not obligated to make a secondary market in the Notes that they oÅer, certain Dealers have advised Freddie Mac that they intend to do so. However, because these Dealers may stop their secondary market making at any time without notice, there is no assurance that a secondary market for any of the Notes will develop. If a secondary market does develop, it may not be suÇciently liquid to allow investors to sell their Notes readily or at prices comparable to similar instruments with a developed secondary market. Also, investors may not be able to sell relatively small or relatively large amounts of Notes at prices comparable to those available to other investors. Such limited liquidity may severely decrease the market value of certain types of Notes. The market values of the Notes likely will Öuctuate over time, perhaps signiÑcantly. These Öuctuations could cause signiÑcant losses to investors in Notes, especially to those investors who cannot hold their Notes until maturity. The market prices of instruments issued at either a substantial 10 discount (such as Zero Coupon Notes) or a substantial premium (such as Notes with signiÑcantly above-market interest rates) from their principal amount tend to Öuctuate more in relation to general changes in interest rates than do the prices of securities with comparable maturities that are not issued at such a discount or premium. A number of factors may aÅect any secondary market for, and the market value of, an issue of Notes, including: ‚ the creditworthiness of Freddie Mac; ‚ the value, complexity and volatility of any applicable index or indices; ‚ the method of calculating the principal or any interest payments on the Notes; ‚ the time remaining to the maturity of the Notes; ‚ any redemption features of the Notes; ‚ the outstanding amount of the Notes; ‚ the amount of other securities linked to any applicable index or indices; ‚ the amount of Notes being sold in any secondary market from time to time; ‚ any legal restrictions or tax treatment that limits demand for the Notes; ‚ the availability of comparable securities; ‚ Öuctuations in the ""spread'' of the Notes to comparable U.S. Treasury securities; and ‚ the level, direction and volatility of market interest rates generally. No investor should purchase any Notes unless it understands and can bear the risks that it may not be able to resell certain Notes easily, that the Notes' value will Öuctuate over time and that these Öuctuations may be signiÑcant and cause losses to the investor. These risks of limited liquidity and price volatility are greatest for Notes that are: ‚ especially sensitive to interest rate, currency or market risks; ‚ designed for speciÑc investment objectives or strategies; ‚ structured to meet the investment requirements of limited categories of investors; or ‚ not held until maturity. Redeemable Notes As described in the applicable Pricing Supplement, Freddie Mac may have the option to redeem certain Notes after a speciÑed date, typically at 100% of their principal amount plus accrued interest. These optional redemption provisions tend to restrict the market values that the Notes would otherwise have. For example, the market price of the Notes generally will not rise substantially above the redemption price during (and possibly before) any period when Freddie Mac may redeem the Notes because of the increased likelihood of redemption. In general, Freddie Mac is most likely to redeem such Notes when prevailing interest rates and its costs of borrowing are low and is least likely to redeem when these rates and costs are high. Freddie Mac's decision to redeem or not to redeem an issue of Notes may also be aÅected by any related hedge or derivative transactions that Freddie Mac has entered into. If Freddie Mac redeems the Notes when prevailing interest rates are relatively low, an investor may not be able to reinvest the redemption proceeds in comparable securities with similar yields. Certain Notes may be redeemable at a variable amount determined by reference to one or more interest rate or exchange rate indices. The redemption proceeds of those Notes will vary depending on the level of the applicable index, and investors in those Notes may receive less than 100% of their original principal amount upon redemption. 11 Fixed Rate and Zero Coupon Notes Fixed Rate Notes, if held to maturity, will provide return of their principal and the certainty of interest payments at a Ñxed rate. Similarly, Zero Coupon Notes, if held to maturity, will provide return of their principal, including return of the applicable discount. However, the market values of Fixed Rate and Zero Coupon Notes are likely to Öuctuate with changes in prevailing interest rates. In a falling interest rate environment, the market values of Ñxed rate and discount instruments generally will rise. In a rising interest rate environment, the market values of these instruments generally will fall, which creates risk of loss of investment capital if they are sold prior to maturity. This eÅect on market values is generally greater for Notes that have relatively long remaining terms to maturity (especially in the case of Zero Coupon Notes or other Notes issued at substantial discounts) than for Notes that have relatively short remaining terms to maturity. Step Notes Step Notes provide for one or more prescribed increases (or decreases) in their interest rates at speciÑed dates. However, Freddie Mac typically will have the option to redeem Step Notes at the beginning of a step period or at any time after a step period has begun. Therefore, investors should consider the possibility that Freddie Mac may redeem Step Notes if the Step Notes' subsequent interest rates exceed the interest rates then available to Freddie Mac for comparable borrowings. Although the interest rate on a Step Note may increase on the speciÑed dates, the increased interest rate may be below the interest rate then available on newly issued but otherwise comparable instruments with the same remaining term to maturity as the Step Note. Variable Rate Notes If a Variable Rate Note's interest rate is based on a direct relationship to a speciÑed index or indices, lower than anticipated levels of the index or indices could result in actual yields that are lower than anticipated. Conversely, if a Variable Rate Note's interest rate is based on an inverse relationship to a speciÑed index or indices, higher than anticipated levels of the index or indices could result in actual yields that are lower than anticipated. The interest rate formula for a Variable Rate Note may include a multiplier that is applied to an index in determining the applicable interest rate. In general, a multiplier of greater than one will cause changes in the interest rate of the Note to be more pronounced than changes in the value of the applicable index, while a multiplier of less than one will have the opposite eÅect. Variable Rate Notes with multipliers of greater than one are referred to as ""leveraged,'' and those with multipliers of less than one are referred to as ""deleveraged.'' In general, the volatility associated with the level of an applicable index is higher for leveraged Notes and lower for deleveraged Notes. For example, the interest rate of a leveraged Variable Rate Note based on an inverse relationship to a speciÑed index generally will decline sharply as the value of the applicable index increases. By contrast, the interest rate of a deleveraged Variable Rate Note based on an inverse relationship to a speciÑed index generally will decline more slowly as the value of the applicable index increases. In addition, investors in Variable Rate Notes should consider the eÅects on interest rates and yields of any applicable maximum interest rates (""Caps'') or minimum interest rates (""Floors'') and of any delays in periodic interest rate adjustments. The indices applicable to Variable Rate Notes are not likely to remain constant at any level. The timing of changes in the level of an applicable index may aÅect the actual yield to an investor, even if the average level is consistent with the investor's expectation. In general, the earlier a change in the level of an applicable index, the greater the eÅect on an investor's yield, especially for Notes that provide for repayment of principal at one or more times prior to maturity. As a result, the eÅect on an investor's yield of an index that is higher (or lower) than the rate anticipated by the investor during earlier periods is not likely to be oÅset by a later equivalent reduction (or increase). Moreover, changes in the index applicable to a particular Variable Rate Note may not correlate with changes in interest rates generally or with changes in other indices. An investor's yield could be either adversely 12 or positively aÅected if changes in the index applicable to that investor's Note do not reÖect changes in interest rates generally. Legal Investment Considerations Investors should consult their own legal advisors in determining whether and to what extent the Notes are legal investments for them and whether and to what extent they can pledge the Notes as collateral for various types of borrowings. In addition, Ñnancial institutions should consult their legal advisors or regulators to determine how to treat Notes under any applicable risk-based capital or similar rules. Certain legal investment laws and regulations or regulatory authorities may restrict an institution's investment in certain types of Notes or in Notes generally. An institution under the jurisdiction of regulatory agencies should review any applicable regulations, policy statements and guidelines before purchasing or pledging Notes. Credit Ratings Any credit ratings assigned to Notes may not reÖect the potential impact of all risks related to structure, yield, market, liquidity and other factors aÅecting their value. A credit rating is not a recommendation to buy, sell or hold securities and may be revised or withdrawn by the rating agency. DESCRIPTION OF THE NOTES The Notes will be issued pursuant to authority vested in Freddie Mac by Section 306(a) of the Freddie Mac Act and pursuant to the Global Facility Agreement. Copies of the Global Facility Agreement are available from Freddie Mac's Debt Securities Marketing oÇce upon request. By receiving and accepting a Note, or an interest in a Note, each Holder, Ñnancial intermediary for the Note and BeneÑcial Owner agrees to be bound by the terms and conditions of the Global Facility Agreement, as amended from time to time. Freddie Mac may require a Holder of a Note, as a condition to payment of principal of or interest on such Note or as a condition to transfer or exchange of such Note, to present a certiÑcate in the form prescribed by Freddie Mac to enable Freddie Mac to determine its duties and liabilities with respect to any taxes or other charges which may be required to be deducted or withheld under United States law or any reporting or other requirements as described in ""Certain United States Federal Tax Consequences.'' The Notes are obligations of Freddie Mac only. The Notes, including any interest or return of discount on the Notes, are not guaranteed by the United States and do not constitute debts or obligations of the United States or any agency or instrumentality of the United States other than Freddie Mac. The following description will apply to the Notes unless otherwise speciÑed in the Pricing Supplement for an issue of Notes or in any amendment or supplement to this OÅering Circular. With respect to any particular issue of Notes, the description of Notes in this OÅering Circular can be superseded or replaced, in whole or in part, by such Pricing Supplement, amendment or supplement. Investors should read such Pricing Supplement, amendment or supplement in conjunction with this OÅering Circular. General Freddie Mac may issue Notes from time to time under the Facility in an unlimited amount. The Notes will be unsecured general obligations of Freddie Mac. Freddie Mac will prepare a Pricing Supplement for each issue of Notes that describes the terms of, and pricing information for, the Notes of that issue. 13 Notes of any issue will be in book-entry, global registered or deÑnitive registered form. The U.S. Federal Reserve Banks will act as Ñscal agents for Book-Entry Notes pursuant to the Fiscal Agency Agreement between Freddie Mac and the Federal Reserve Bank of New York, acting on behalf of the U.S. Federal Reserve Banks (singly or collectively, the ""FRB''). CitibankÌLondon will act as Global Agent for Registered Notes pursuant to the Global Agency Agreement between Freddie Mac and Citibank, N.A., acting through its London oÇce. SpeciÑed Currencies and SpeciÑed Payment Currencies Each Note will be denominated and payable in one or more currencies or currency units (each, a ""SpeciÑed Currency'') as determined by Freddie Mac, including Australian dollars, British pounds sterling, Canadian dollars, Danish kroner, Euros, Hong Kong dollars, Japanese yen, New Zealand dollars, Swedish kronor, Swiss francs and U.S. dollars. Book-Entry Notes will be denominated and payable in U.S. dollars only. Except under the limited circumstances referred to in ""Description of the Notes Ì General Ì SpeciÑed Currencies and SpeciÑed Payment Currencies Ì Unavailability,'' Freddie Mac will make payments of any interest on Notes in the SpeciÑed Currency provided for the payment of interest (the ""SpeciÑed Interest Currency'') and will make payments of the principal of Notes in the SpeciÑed Currency provided for the payment of principal (the ""SpeciÑed Principal Currency''). The SpeciÑed Currency for the payment of interest and principal with respect to any Note will be speciÑed in the applicable Pricing Supplement. Such SpeciÑed Interest Currency and SpeciÑed Principal Currency are referred to in this OÅering Circular collectively as the ""SpeciÑed Payment Currency.'' See ""Description of the Notes Ì Registered Notes Ì Payments.'' However, any amounts paid to Holders in the United States by Freddie Mac on DTC Registered Notes in a SpeciÑed Payment Currency other than U.S. dollars will be converted into U.S. dollars for payment to such Holders as described under ""Currency Conversions Ì Payment on DTC Registered Notes,'' unless such Holders elect to receive payments in such SpeciÑed Payment Currency. Government or monetary authorities or laws or regulations applicable to currencies or currency units in which Notes are denominated or payable and regulations applicable to Notes listed on certain stock exchanges may require from time to time certain denominations or minimum or maximum maturities for Notes denominated in such currencies or currency units. Some requirements with respect to such denominations and maturities are described in this OÅering Circular. The Pricing Supplement for an issue of Notes will describe additional requirements, if any, applicable to such Notes. European Economic and Monetary Union The treaty establishing the European Community (the ""EC''), as amended by the treaty on European Union (as so amended, the ""Treaty''), contemplated that European economic and monetary union (""EMU'') would occur in three stages. The Treaty provided that the third stage of EMU will start January 1, 1999 and on that date the currencies of certain participating member states, as determined by the Council of the European Union, will be replaced by a single currency. On May 2, 1998, the Council of the European Union decided that the participating member states would be Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain. Consequently, the currencies of those countries will be replaced by the new currency. On June 17, 1997, the Council of the European Union adopted Council Regulation (EC) No. 1103/97, which recites that, in accordance with the Treaty, the name of that currency will be the Euro. Unavailability Except as set forth below, if the principal of, premium, if any, or interest on, any Note is payable in a SpeciÑed Currency other than U.S. dollars and such SpeciÑed Currency is not available to Freddie Mac for making payments due to the imposition of exchange controls or other circum14 stances beyond the control of Freddie Mac or is no longer used by the government of the country issuing such currency or for the settlement of transactions by public institutions within the international banking community, then Freddie Mac will be entitled to satisfy its obligations to Holders of the Notes by making such payments in U.S. dollars on the basis of the noon U.S. dollar buying rate in New York City for cable transfers for such SpeciÑed Currency published by the Federal Reserve Bank of New York on the date of such payment, or, if such currency exchange rate is not available on such date, as of the most recent prior practicable date. Notwithstanding the provisions of the preceding sentence, if Euros have replaced such SpeciÑed Currency as described under ""Description of the Notes Ì General Ì SpeciÑed Currencies and SpeciÑed Payment Currencies Ì European Economic and Monetary Union'' above, Freddie Mac may at its option (or will, if so required by applicable law), without the consent of the Holders of such Notes, eÅect the payment of principal of, premium, if any, or interest on, any Note denominated in such SpeciÑed Currency in Euros in lieu of such SpeciÑed Currency, in conformity with legally applicable measures taken pursuant to, or by virtue of, the Treaty or other applicable legal or regulatory requirements. Any payment made in U.S. dollars or in Euros as described above where the required payment is in an unavailable or replaced SpeciÑed Currency will not constitute an Event of Default. Denominations The Notes will be issued and maintained in the minimum denominations speciÑed in the applicable Pricing Supplement and as may be allowed or required from time to time by the relevant regulatory authority or any laws or regulations applicable to the relevant SpeciÑed Currency. In the case of Zero Coupon Notes, denominations will be expressed in terms of the principal amount payable on the Maturity Date. Status of Notes The Notes will be unsecured general obligations of Freddie Mac. The Global Facility Agreement will not limit other indebtedness or securities that may be incurred or issued by Freddie Mac and will not contain any Ñnancial or similar restrictions on Freddie Mac or any restrictions on its ability to secure indebtedness. Maturity, Redemption and Optional Repayment Each Note will mature on a date (the ""Maturity Date'') one day or longer from its issue date, as speciÑed in the applicable Pricing Supplement, unless redeemed earlier at the option of Freddie Mac or repaid at the option of the Holder. As of the date of this OÅering Circular, the minimum maturity for Notes listed on the Luxembourg Stock Exchange is seven days and for Notes listed on the Singapore Stock Exchange is one month. Notes may be issued with such minimum or maximum maturities or variable maturities as may be allowed or required from time to time by the relevant regulatory or stock exchange authority or clearing system or any laws or regulations applicable to the SpeciÑed Currency. The Pricing Supplement relating to any particular issue of Notes will specify whether such Notes may be redeemable at Freddie Mac's option or repayable at the Holder's option, in whole or in part, prior to their Maturity Date. If so speciÑed in the applicable Pricing Supplement, an issue of Notes will be subject to redemption at the option of Freddie Mac, in whole or from time to time in part, on one or more speciÑed dates, at any time on or after a speciÑed date, or during one or more speciÑed periods of time. The redemption price for Notes that are redeemed will be an amount speciÑed in, or determined in a manner described in, the applicable Pricing Supplement, together with accrued and unpaid interest to the date Ñxed for redemption. Unless otherwise speciÑed in the applicable Pricing Supplement, notice of optional redemption will be given to Holders of the related Notes not less than 10 calendar days nor more than 60 15 calendar days prior to the date of redemption in the manner described under ""Global Facility Agreement Ì Notice.'' In the case of a partial redemption of an issue of Book-Entry Notes by Freddie Mac, such BookEntry Notes will be redeemed pro rata. In the case of a partial redemption of an issue of Registered Notes by Freddie Mac, one or more of such Registered Notes will be reduced by the Global Agent in the amount of such redemption, subject to the principal amount of such Registered Notes remaining after redemption being in authorized denominations. The eÅect of any partial redemption of an issue of Registered Notes on the BeneÑcial Owners of such Registered Notes will depend on the procedures of the applicable clearing system and, if such BeneÑcial Owner is not a participant in the applicable clearing system, on the procedures of the participant through which such BeneÑcial Owner owns its interest. In certain circumstances, Freddie Mac may issue Notes that are repayable at the option of the Holders of the Notes, on one or more speciÑed dates, at any time on or after a speciÑed date, or during one or more speciÑed periods of time, upon terms and procedures described in the applicable Pricing Supplement. The principal amount payable on the Maturity Date or upon redemption or repayment of a Note will be a Ñxed amount (the ""Fixed Principal Repayment Amount'') equal to 100% of the principal amount (i.e., par), or a speciÑed amount above or below such principal amount, or an amount (the ""Variable Principal Repayment Amount'') determined by reference to one or more interest rate or exchange rate indices or otherwise, in each case as speciÑed in the applicable Pricing Supplement. Payment Terms of the Notes Notes may bear interest at one or more Ñxed rates or variable rates or may not bear interest. Freddie Mac will specify in the applicable Pricing Supplement whether such Note is a Fixed Rate Note, a Step Note, a Variable Rate Note, a Fixed/Variable Rate Note, a Zero Coupon Note or otherwise. Each type of Note is deÑned below: ‚ ""Fixed Rate Notes'' are Notes that bear interest at a single Ñxed rate. ‚ ""Step Notes'' are Notes that bear interest at diÅerent Ñxed rates in diÅerent speciÑed periods. ‚ ""Variable Rate Notes'' are Notes that bear interest at a variable rate determined by reference to one or more interest rate or exchange rate indices, or otherwise. ‚ ""Fixed/Variable Rate Notes'' are Notes that bear interest at a Ñxed rate for one or more periods and at a variable rate for other periods. ‚ ""Zero Coupon Notes'' are Notes that do not bear interest and are issued at a discount to their principal amount. If the applicable Pricing Supplement provides, Notes may be separated by a Holder into an interest component that includes the right to receive all interest payments, or speciÑed portions thereof, and a principal component that includes the right to receive principal payments only or payments of principal and speciÑed portions of interest. The applicable Pricing Supplement will specify the frequency with which interest, if any, is payable on the related Notes. Interest on Notes will be payable in arrears on the Interest Payment Dates speciÑed in the applicable Pricing Supplement. Each issue of interest-bearing Notes will bear interest from and including the most recent Interest Payment Date or, if no interest has been paid or made available for payment in respect of such issue of Notes, from and including the issue date of such issue of Notes (or other date speciÑed in the applicable Pricing Supplement) to but excluding the applicable Interest Payment Date (each such period is referred to in this OÅering Circular as an ""Interest Period''). T