Japanese investors nearly single-handedly bought up two new mortgage securities-based mutual funds totaling $701 million, the U.S. Federal National Mortgage Association said. The purchases show the strong interest of Japanese investors in U.S. mortgage-based instruments, Fannie Mae's chairman, David O. Maxwell, said at a news conference. He said more than 90% of the funds were placed with Japanese institutional investors. The rest went to investors from France and Hong Kong. Earlier this year, Japanese investors snapped up a similar, $570 million mortgage-backed securities mutual fund. That fund was put together by Blackstone Group, a New York investment bank. The latest two funds were assembled jointly by Goldman, Sachs & Co. of the U.S. and Japan's Daiwa Securities Co. The new, seven-year funds -- one offering a fixed-rate return and the other with a floating-rate return linked to the London interbank offered rate -- offer two key advantages to Japanese investors. First, they are designed to eliminate the risk of prepayment -- mortgage-backed securities can be retired early if interest rates decline, and such prepayment forces investors to redeploy their money at lower rates. Second, they channel monthly mortgage payments into semiannual payments, reducing the administrative burden on investors. By addressing those problems, Mr. Maxwell said, the new funds have become ``extremely attractive to Japanese and other investors outside the U.S.'' Such devices have boosted Japanese investment in mortgage-backed securities to more than 1% of the $900 billion in such instruments outstanding, and their purchases are growing at a rapid rate. They also have become large purchasers of Fannie Mae's corporate debt, buying $2.4 billion in Fannie Mae bonds during the first nine months of the year, or almost a tenth of the total amount issued. TEXT Japanese investors nearly single-handedly bought up two new mortgage securities-based mutual funds totaling $ 701 million , the U.S. Federal National Mortgage Association said . The purchases show the strong interest of Japanese investors in U.S. mortgage-based instruments , Fannie Mae 's chairman , David O. Maxwell , said at a news conference . He said more than 90 % of the funds were placed with Japanese institutional investors . The rest went to investors from France and Hong Kong . Earlier this year , Japanese investors snapped up a similar , $ 570 million mortgage-backed securities mutual fund . That fund was put together by Blackstone Group , a New York investment bank . The latest two funds were assembled jointly by Goldman , Sachs & Co. of the U.S. and Japan 's Daiwa Securities Co . The new , seven-year funds -- one offering a fixed-rate return and the other with a floating-rate return linked to the London interbank offered rate -- offer two key advantages to Japanese investors . First , they are designed to eliminate the risk of prepayment -- mortgage-backed securities can be retired early if interest rates decline , and such prepayment forces investors to redeploy their money at lower rates . Second , they channel monthly mortgage payments into semiannual payments , reducing the administrative burden on investors . By addressing those problems , Mr. Maxwell said , the new funds have become `` extremely attractive to Japanese and other investors outside the U.S. '' Such devices have boosted Japanese investment in mortgage-backed securities to more than 1 % of the $ 900 billion in such instruments outstanding , and their purchases are growing at a rapid rate . They also have become large purchasers of Fannie Mae 's corporate debt , buying $ 2.4 billion in Fannie Mae bonds during the first nine months of the year , or almost a tenth of the total amount issued . 2~4 10~12~14~16~18~20~22~24~26~28~30~32 14~16~18~20~22~24~26~28~30~32 36~38~40~42~44~46 53~55 59~61~63~65~67~69 67~69 73~75~77 81~83 81~83~85~87~89~91~93~95 103~105~107 112 116~118~120~122~124~126~128 126~128 136~138~140 145~147 153~155~157~159~161~163 157 161~163 168~170~172 176~178 184~186~188~190~192~194~196~198~200~202 207~209 219~221~223~225~227~229~231~233 227~229 238~240~242~244 254~256~258~260~262~264~266~268 254~256~258~260~262~264~266~268~270~272~274~276~278~280 266~268 272 272~274~276~278~280 285~287~289~291~293~295~297~299~301~303~305~307~309~311~313~315~317~319~321~323~325~327~329~331~333 297 301~303~305 309~311 315~317~319~321~323~325~327~329~331~333 325~327~329~331~333 327 339~341~343 347~349 358 374~376~378~380~382~384~386~388~390~392~394~396 378~380 392~394 402~404 408 414 414~416 420~422 431 435~437~439 443~445 451~453~455~457~459 459 468~470 474~476 482~484~486 500,506 500~502~504~506~508~510~512 504~506~508~510~512 510~512 519~521 527~529 533~535 539~541~543~545~547~549~551~553~555~557~559~561~563 549~551~553~555 559~561 569 569~571 579~581~583 588 596~598 602~604 602~604~606~608~610 616~618~620~622~624~626~628 624~626 632~634~636~638~640~642~644 642~644 652~654~656~658~660~662~664 658~660~662~664 Japanese institutional investors|1602,1608,1616,1622,1641,1659,1669,1672,1673 The purchases|1603,1606 the funds|1604,1615,1627,1633,1642,1651,1658,1663 Fannie Mae|1605,1610,1674,1677 the strong interest of Japanese investors|1607 U.S. mortgage-based instruments|1609 Fannie Mae's chairman|1611,1613,1657 a news conference|1612 more than 90 % of the funds|1614 The rest|1617 investors from France and Hong Kong|1618 France|1619 Hong Kong|1620 Earlier this year|1621 $570 million mortgage-backed securities mutual fund|1623,1624 Blackstone Group|1625 New York|1626 Goldman, Sachs & Co. of the U.S.|1628 Goldman, Sachs & Co. of the U.S. and Japan's Daiwa Securities Co|1629 the U.S.|1630,1662 Japan|1631 Japan's Daiwa Securities Co|1632 one of the funds|1634 a fixed-rate return|1635 the other fund|1636 a floating-rate return|1637 the London interbank offered rate|1638 London|1639 two key advantages|1640 prepayment|1643,1646 mortgage-backed securities|1644,1665,1668 interest rates|1645 investors|1647,1648,1655 their money|1649 lower rates|1650 monthly mortgage payments|1652 semiannual payments|1653 the administrative burden on investors|1654 those problems|1656 Japanese and other investors outside the U.S.|1660 other investors|1661 Japanese investment|1664,1670 more than 1 % of the $900 billion|1666 the $900 billion|1667 a rapid rate|1671 Fannie Mae's corporate debt|1675,1681 $2.4 billion|1676 the first nine months of the year|1678 the year|1679 a tenth of the total amount issued|1680 1602|MOD:DIST:2|NUC:DIST:4 1603|NUC:DIST:10~12|MOD:DIST:14~16~18~20~22~24~26~28~30~32 1604|MOD:DIST:14|MOD:DIST:16|MOD:DIST:18|MOD:DIST:20|MOD:DIST:22|NUC:DIST:24|MOD:DIST:26~28~30~32 1605|MOD:DIST:36|MOD:DESC:38|NUC:DIST:40~42~44~46 1606|MOD:DIST:53|NUC:DIST:55 1607|MOD:DIST:59|MOD:DESC:61|NUC:DIST:63|MOD:DIST:65~67~69 1608|MOD:DIST:67|NUC:DIST:69 1609|MOD:DIST:73|MOD:DIST:75|NUC:DIST:77 1610|NUC:DIST:81~83 1611|MOD:DESC:81~83~85~87|NUC:DIST:91~93~95 1612|MOD:DIST:103|MOD:DIST:105|NUC:DIST:107 1613|NUC:DIST:112 1614|MOD:DIST:116~118|NUC:DIST:120~122|MOD:DIST:124~126~128 1615|MOD:DIST:126|NUC:DIST:128 1616|MOD:DIST:136|MOD:DIST:138|NUC:DIST:140 1617|MOD:DIST:145|NUC:DIST:147 1618|NUC:DIST:153|MOD:DIST:155~157~159~161~163 1619|NUC:DIST:157 1620|NUC:DIST:161~163 1621|NUC:DIST:168|MOD:DIST:170~172 1622|MOD:DIST:176|NUC:DIST:178 1623|MOD:DIST:184|MOD:DESC:186|MOD:DIST:190~192~194|MOD:DIST:196|MOD:DIST:198|MOD:DIST:200|NUC:DIST:202 1624|MOD:DIST:207|NUC:DIST:209 1625|NUC:DIST:219~221|MOD:DESC:225~227~229~231~233 1626|NUC:DIST:227~229 1627|MOD:DIST:238|MOD:DIST:240|MOD:DIST:242|NUC:DIST:244 1628|NUC:DIST:254~256~258~260~262|MOD:DESC:264~266~268 1629|NUC:DIST:254~256~258~260~262~264~266~268~270~272~274~276~278~280 1630|MOD:DIST:266|NUC:DIST:268 1631|NUC:DIST:272 1632|MOD:DESC:272~274|NUC:DIST:276~278~280 1633|MOD:DIST:285|MOD:DIST:287|MOD:DIST:291|NUC:DIST:293|MOD:DESC:297~299~301~303~305~307~309~311~313~315~317~319~321~323~325~327~329~331~333 1634|NUC:DIST:297 1635|MOD:DIST:301|MOD:DIST:303|NUC:DIST:305 1636|MOD:DIST:309|NUC:DIST:311 1637|MOD:DIST:315|MOD:DIST:317|NUC:DIST:319|MOD:DIST:321~323~325~327~329~331~333 1638|MOD:DIST:325|MOD:DIST:327|MOD:DIST:329|MOD:DIST:331|NUC:DIST:333 1639|NUC:DIST:327 1640|MOD:DIST:339|MOD:DESC:341|NUC:DIST:343 1641|MOD:DIST:347|NUC:DIST:349 1642|NUC:DIST:358 1643|NUC:DIST:374|MOD:DIST:378~380~382~384~386~388~390~392~394~396 1644|MOD:DIST:378|NUC:DIST:380 1645|MOD:DIST:392|NUC:DIST:394 1646|MOD:DIST:402|NUC:DIST:404 1647|NUC:DIST:408 1648|NUC:DIST:414 1649|MOD:DIST:414|NUC:DIST:416 1650|MOD:DIST:420|NUC:DIST:422 1651|NUC:DIST:431 1652|MOD:DIST:435|MOD:DIST:437|NUC:DIST:439 1653|MOD:DIST:443|NUC:DIST:445 1654|MOD:DIST:451|MOD:DIST:453|NUC:DESC:455|MOD:DIST:457~459 1655|NUC:DIST:459 1656|MOD:DIST:468|NUC:DIST:470 1657|MOD:DIST:474|NUC:DIST:476 1658|MOD:DIST:482|MOD:DIST:484|NUC:DIST:486 1659|MOD:DIST:500|NUC:DIST:506 1660|NUC:DIST:500~502~504~506~508~510~512 1661|MOD:DIST:504|NUC:DIST:506|MOD:DIST:508~510~512 1662|MOD:DIST:510|NUC:DIST:512 1663|MOD:DIST:519|NUC:DIST:521 1664|MOD:DIST:527|NUC:DIST:529 1665|MOD:DIST:533|NUC:DIST:535 1666|MOD:DIST:539~541|NUC:DIST:543~545|MOD:DIST:547~549~551~553~555~557~559~561~563 1667|MOD:DIST:549|NUC:DIST:551~553~555 1668|MOD:DIST:559|NUC:DIST:561 1669|NUC:DIST:569 1670|MOD:DIST:569|NUC:DIST:571 1671|MOD:DIST:579|MOD:DESC:581|NUC:DIST:583 1672|NUC:DIST:588 1673|MOD:DESC:596|NUC:DIST:598 1674|NUC:DIST:602~604 1675|MOD:DIST:602~604~606|MOD:DIST:608|NUC:DIST:610 1676|NUC:DIST:616~618~620|MOD:DIST:622~624~626~628 1677|NUC:DIST:624~626 1678|MOD:DIST:632|MOD:DIST:634|MOD:DIST:636|NUC:DIST:638|MOD:DIST:640~642~644 1679|MOD:DIST:642|NUC:DIST:644 1680|MOD:DIST:652|NUC:DIST:654|MOD:DIST:656~658~660~662~664 1681|MOD:DIST:658|MOD:DIST:660|NUC:DIST:662|MOD:DIST:664