Use of Proceeds

The issuer trustee will apply all or substantially all of the net proceeds from the sale of each series of notes under the Program for one or more of the following purposes:

o to purchase the assets of the relevant trust;

o to repay indebtedness which has been incurred to obtain funds to acquire the assets of the relevant trust; and

o to pay costs of structuring and issuing the notes, including the costs of obtaining any credit enhancement.

Legal Aspects of the Mortgage Loans

The following discussion is a summary of the material legal aspects of Australian mortgage loans and mortgages. It is not an exhaustive analysis of the relevant law. Some of the legal aspects are governed by the laws of the applicable State or Territory. Laws may differ between States and Territories. The summary does not reflect the laws of any particular jurisdiction or cover all relevant laws of all jurisdictions in which a mortgaged property may be situated, although it reflects the material aspects of the laws of New South Wales (except where it expressly provides otherwise), without referring to any specific legislation of that state. In the event that the laws of a particular jurisdiction having a high concentration of mortgaged properties are material to prospective investors of a series of notes, the applicable laws of that jurisdiction, to the extent material to investors and not addressed under this "Legal Aspects of the Mortgage Loans", will be summarized in the prospectus supplement for that series of notes.

General

There are two parties to a mortgage. The first party is the mortgagor, who is either the borrower and homeowner or, where the relevant loan is guaranteed and the guarantee is secured by a mortgage, the guarantor. The mortgagor grants the mortgage over its property. The second party is the mortgagee, who is the lender. Each mortgage loan securitized under the Program will be secured by a mortgage which has either a first or second ranking priority in respect of the mortgaged property over all other mortgages granted by the relevant borrower or guarantor and over all unsecured creditors of the borrower, except in respect of certain statutory rights such as some rates and taxes, which are granted statutory priority. Each borrower under the mortgage loans is prohibited under its loan documents from creating another mortgage or other security interest over the relevant mortgaged property without the consent of the seller of that mortgage loan or, where consent is not required under the laws of a particular State or Territory, without entering into a satisfactory priority agreement.

Types of Security

There are a number of different forms of title to land in Australia. The most common form of title in Australia is "Torrens title."

Torrens title

"Torrens title" is freehold or leasehold title, interests in which are created by registration in one or more central land registries of the relevant State or Territory. Each parcel of land is represented by a specific certificate of title. The original certificate is maintained by the registry, and in most States and Territories a duplicate certificate is issued to the owner. Pro forma instruments are used to register most dealings with the relevant land.

Ordinarily the relevant certificate of title, or any registered plan referred to in it, will reveal the position and dimensions of the land, the present owner, and any leases, mortgages, registered easements and other dealings to which it is subject. In some jurisdictions, leases of more than three years are required to be registered. Otherwise, leases are generally not registered. The certificate is conclusive evidence, except in limited circumstances, such as fraud, of the matters stated in it.

Some Torrens title property securing mortgage loans and thus comprised in the mortgaged property will be "strata title," "stratum title" or "residential Crown leasehold."

Strata title and Stratum title

Strata title and Stratum title is a system of a title (under Torrens title) under which land and the airspace above it is divided into a number of units (similar to condominiums in the United States) and is governed by the laws of the state or territory in which the property is situated. The proprietor has title to a unit of that land and may freely deal with that unit. Certain parts of the property, such as the land on which the building is erected, the stairwells, entrance lobbies, are referred to as "common property" and are held by a "owners corporation" or "service company" for the benefit of the individual proprietors. All proprietors are members of the owners corporation or service company, which is vested with the control, management and

administration of the common property and the strata or stratum scheme generally, including the regulations governing the apartment block, for the benefit of the proprietors. In general, the owners corporation or service company will have a charge, either registered or created by Statute, over the units of its members to secure fees payable by the members or will have rights enforceable against any assignee of a member. This charge, or those rights payable as a matter of practice, will take priority over the mortgage securing the mortgage loan.

Only Torrens title land can be the subject of strata or stratum title in this way, and so the provisions referred to in this section in relation to Torrens title apply to the title in an apartment unit held by a strata or stratum proprietor.

Residential Crown Leasehold

All land in the Australian Capital Territory is owned by the Commonwealth of Australia and is subject to a leasehold system of land title known as Crown leasehold. Mortgaged residential property in that jurisdiction comprises a Crown lease, and developments of the land are subject to the terms of that lease. A Crown lease is any right, power or privilege over, or in connection with land, granted by the Commonwealth, a State or a Territory or an authority of the Commonwealth, a State or a Territory. The lease is granted under a statutory law of the Commonwealth, State or Territory for a certain purpose.

Any lease of this type:

(1) cannot have a term exceeding 99 years, although the term can be extended under a straightforward administrative process, whereby the existing lease is surrendered and a new lease is granted for a term not exceeding 99 years, unless the Commonwealth or the Australian Capital Territory Government considers that the land is required for a public purpose; and

(2) where it involves residential property, is subject to a nominal rent of 5 cents (Australian) per annum on demand.

Crown leasehold land is held under Torrens title. The borrower's leasehold interest in the land is entered in a central register and the borrower may deal with its leasehold interest, including granting a mortgage over the property, without consent from the government.

In all cases where mortgaged property consists of a leasehold interest, the unexpired term of the lease must exceed the term of the mortgage loan secured by that mortgaged property.

Leasehold property may become subject to native title claims. Native title has only quite recently been recognized by Australian courts. Native title to particular property is based on the traditional laws and customs of indigenous Australians and is not necessarily extinguished by grants of Crown leases over that property. The extent to which native title exists over property, including property subject to a Crown lease, depends on how that property was previously used by the indigenous claimants asserting native title, and whether the native title has been extinguished by the granting of the leasehold interest. To give statutory recognition to indigenous Australians' common law rights and to resolve a number of land management issues, the Commonwealth legislated the Native Title Act in 1993 of Australia, and amended it in 1998. The

amended Native Title Act contains a schedule of tenures that extinguish native title, which includes residential leases. Although there are a number of test cases before the courts, the current view is that a lease entered into on or before December 23, 1996 which confers the right of exclusive possession over the property, which is typically the case with residential leases, will extinguish native title over the relevant property. Whether a lease confers exclusive possession will depend on a construction of the lease and the legislation under which the lease was granted.

Old System Title

Old System Title is another form of freehold title. Here, interests are created by deeds between parties, or by will. Proof of title involves searching back for a number of years to establish an unbroken "chain" of title. The documents which evidence this chain can include deeds of conveyance, deeds of mortgage and testamentary wills. The courts and the legislative bodies recognized the difficulties in tracing this chain of documents to the original grant. The response of the courts was to allow ownership to be proven if a chain of documents for an unbroken period of 60 years could be traced back to a document, which provided a satisfactory documentary starting point. Australian conveyancing laws have since shortened this unbroken period to 30 years. The documents which prove this ownership are generally registered with the land titles office of the relevant State or Territory. This registration process assists in locating and identifying the chain of documents needed to prove ownership of the land.

Company Title

Company title is an exclusive right conferred by a home unit company on a shareholder to occupy a particular part of a building which the company owns. The shareholder has a contractual right against the home unit company but does not acquire ownership of that part of the building which he or she occupies pursuant to the ownership of the shares.

Taking Security over Land

The law relating to the granting of securities over real property in Australia is complicated by the fact that each State and Territory has separate governing legislation. The following is a summary of the material issues involved in taking security over land in Australia.

Under Torrens title, registration of a mortgage using the prescribed form executed by the mortgagor is required in order for the mortgagee to obtain both the remedies of a mortgagee granted by statute and the relevant priorities against other secured creditors. To this extent, the mortgagee is said to have a legal or registered title. However, registration does not transfer title in the property, and the mortgagor remains as legal owner; in short, the Torrens mortgage operates as a statutory charge. The mortgagee does not obtain an estate in the property but does have an interest in the land which is marked on the register and the certificate of title for the property. A search of the register by any subsequent creditor or proposed creditor will reveal the existence of the prior mortgage.

In most States and Territories, a mortgagee will retain a duplicate certificate of title which mirrors the original certificate of title held at the relevant land registry office. Although the certificate is not a document of title as such, the procedure for replacement is sufficiently onerous to act as a deterrent against most mortgagor fraud. Failure to retain the certificate may in

certain circumstances constitute negligent conduct resulting in a postponement of the mortgagee's priority to a later secured creditor.

In Queensland under the Land Title Act 1994 and the Northern Territory, duplicate certificates of title are no longer issued to mortgagees as a matter of practice. A record of the title is stored on computer at the land registry office and the mortgage is registered on that computerized title.

Once the mortgagor has repaid his or her debt, a discharge executed by the mortgagee is lodged with the relevant registrar by the mortgagor or the mortgagee, and the mortgage is noted as having been released.

A mortgage under old system title does not operate as a statutory charge but rather is a transfer of the mortgagor's interest in the land to the mortgagee with a right to have that interest re-transferred to the mortgagor upon repayment on the due date. Old system title land can only be legally mortgaged by the execution of a deed which complies with the various requirements of the conveyancing laws of the relevant State or Territory. All mortgages acquired by any trust which relate to old system title land will be secured by a legal mortgage and will be documented by way of a deed of mortgage.

A lender may also take a second ranking mortgage over real property in Australia. This discussion assumes that each of the first and second ranking mortgages are registered with the relevant land titles office.

The consent of the holder of the first ranking mortgage is generally required for the granting of a second ranking mortgage and a priority agreement may be entered into between the mortgagees. The priority agreement will generally regulate the enforcement and sale process in respect of the related property and the application of the sale proceeds between the first and second ranking mortgages.

If no such priority agreement is entered into, then the holder of a second ranking mortgage may commence the enforcement and sale process in respect of the related property, without the consent or control of the holder of the first ranking mortgage, but upon the sale of the related property will be required to obtain the release of the first ranking mortgage from the related property, by payment of all amounts secured to the first mortgage. Equally, the holder of the first ranking mortgage may take these actions and is required only to account to the holder of a second ranking mortgage for any sale proceeds that exceed the amount due to the holder of the first ranking mortgage.

In each case, the sale proceeds are generally applied first towards repayment of all amounts due to the holder of the first ranking mortgage. The holder of the second ranking mortgage is entitled to the sale proceeds only to the extent that all amounts due to the holder of the first ranking mortgage have been paid in full.

Enforcement of Registered Mortgages

Enforcement Generally

The law relating to the enforcement of registered mortgages over real properties in Australia is complicated by the fact that each State or Territory has separate governing legislation. The following is a summary of the material issues involved in enforcing registered mortgages in Australia.

Subject to the discussion in this section, if a borrower defaults under a mortgage loan, the loan documents provide that all moneys under the mortgage loan become due and payable either, in limited circumstances, immediately, or otherwise after a default notice has been given and the default has not been remedied within a prescribed period of time (generally at least 30 days). The lender then has a number of remedies, including the right to sue to recover all outstanding principal, interest and fees under the borrower's personal covenant to repay the amounts set out in the loan documents.

In addition, the lender may enforce a registered mortgage in a number of ways. They include:

o selling the property: This power of sale is usually expressly contained in the mortgage documents, and is also implied in registered mortgages under the relevant Torrens title legislation. The Torrens title legislation prescribes certain forms and periods of notice to be given to the mortgagor prior to enforcement. The mortgagee is under certain duties in the conduct of the sale. The sale may be by public auction or private treaty. Once registered, the purchaser of property sold pursuant to a mortgagee's power of sale becomes the absolute owner of the property;

o leasing the property. The lender may, in limited circumstances, lease the property to third parties;

o entering into possession of the property. If it does so, it does so in its own right and not as agent of the mortgagor, and so may be personally liable for mismanagement of the property and to third parties as occupier of the property. The mortgagee may apply rent or profits received from the possession of the property in satisfaction of the amount owing in respect of the mortgage loan and the related mortgage or it may sell the property. Upon taking possession, the mortgagee has a number of duties including the duty to account, to realize assets conscientiously, to get in rents and other income, to improve the property and make repairs, and to maintain the security for the benefit of the guarantor (if any);

o foreclosing on the property. Under foreclosure procedures, the mortgagor's right, title and interest in the property is extinguished (including any right to redeem the mortgage) so that the mortgagee becomes the absolute owner of the property. This remedy is, because of procedural constraints, rarely used except where the value of the loan outstanding is higher than the value of the property likely to be realized by the sale. In such a case the mortgagee may then consider it worthwhile to take title to the property in satisfaction of the debt and wait for the market to improve to recoup

the outstanding loan. However, if the mortgagee forecloses on the property, it loses the right to sue the borrower under the personal covenant to repay and can look only to the value of the property for satisfaction of the debt. This enforcement option is rarely, if ever, used in the case of Australian residential mortgage loans;

o appointing a receiver to deal with the property or with income from the property or exercise other rights delegated to the receiver by the mortgagee. A receiver will generally manage and administer the property in the interests of the mortgagee in order to preserve the mortgagee's security and set off the income from the property against payments due under the mortgage loan and the related mortgage. A receiver is the agent of the mortgagor and so, unlike when the mortgagee enters possession of property, in theory the mortgagee is not liable for the receiver's acts or as occupier of the property. In practice, however, the receiver will require indemnities from the mortgagee that appoints it; or

o obtaining an order for judicial sale under an application to the relevant Court. This remedy is rarely used, as most mortgage documents now contain express provisions allowing the mortgagee to sell the property, or the mortgagee has the power to do so under the relevant Torrens title legislation. It is likely to only be used where the mortgage document does not itself confer the requisite power to sell the property, such as where an equitable mortgage over land is created by the deposit of title deeds.

A mortgagee's ability to call in all amounts under a mortgage loan or enforce a mortgage which is subject to the Australian Consumer Credit Code is limited by various demand and notice procedures which must be followed. For example, as a general rule enforcement cannot occur unless the relevant default is not remedied within 30 days after a default notice is given. Borrowers may also be entitled to initiate negotiations with the mortgagee for a postponement of enforcement proceedings.

Penalties and Prohibited Fees

Australian courts will not enforce a borrower's obligation to pay interest on a default or delinquent payment if the interest rate charged on default is seen to be a "penalty." Some jurisdictions prescribe a maximum recoverable interest rate. However, most do not specify what is a penalty; in those circumstances, whether a rate is a penalty will be determined by such factors as prevailing market interest rates. The Australian Consumer Credit Code does not impose a limit on the rate of default interest. However, legislation in New South Wales, Queensland, South Australia, Western Australia, the Australian Capital Territory and the Northern Territory prevents a lender from recovering interest under a consumer loan at a rate that exceeds 48% per annum while in Victoria, a mortgage is void if the interest rate under the relevant loan exceeds 30% and the loan contract itself is unenforceable if the interest rate exceeds 48% per annum. In addition, throughout Australia, if a rate is too high, the borrower may be entitled to have the loan agreement reopened on the ground that it is unjust. Under the Corporations Act of the relevant Australian jurisdiction, the liquidator of a company may avoid a loan under which an extortionate interest rate is levied.

The Australian Consumer Credit Code requires that any fee or charge to be levied in connection with the mortgage loan must be authorized, and sometimes specified in the contract, otherwise it cannot be levied. The regulations under the Australian Consumer Credit Code may also prohibit certain fees and charges. The Australian Consumer Credit Code also requires that establishment fees, termination fees and prepayment fees be reasonable, or they may be reduced or set aside.

Bankruptcy and Insolvency

The insolvency of a natural person is governed by the provisions of the Bankruptcy Act 1966 of Australia, which is a Federal statute. Generally, secured creditors of a natural person, such as mortgagees under real property mortgages, stand outside the bankruptcy. That is, the property of the bankrupt which is available for distribution by the trustee in bankruptcy does not include the secured property. The secured creditor may prove, or file a claim, in the bankruptcy proceeding as an unsecured creditor in a number of circumstances, including if they have realized the related mortgaged property and their debt has not been fully repaid, in which case they can prove for the unpaid balance.

Certain dispositions of property by a bankrupt may be avoided by a trustee in bankruptcy. These include where:

(a) the disposition was made to defraud creditors; or

(b) the disposition was made by an insolvent debtor within 6 months of the petition for bankruptcy and that disposition gave a preference to an existing creditor over at least one other creditor.

The insolvency of a company is governed by the Corporations Act of the relevant Australian jurisdiction. Again, secured creditors generally stand outside the insolvency. However, a liquidator may avoid a mortgage which is voidable under the Corporations Act because it is an uncommercial transaction, or an unfair preference to a creditor or a transaction for the purpose of defeating creditors, and that transaction occurred:

(a) when the company was insolvent, or an act was done to give effect to the transaction when the company was insolvent, or the company became insolvent because of the transaction or the doing of an act to give effect to the transaction; and

(b) within a prescribed period before the winding up of the company.

The liquidator may also avoid a loan under which an extortionate interest rate is levied.

Environmental Considerations

Real property which is mortgaged to a lender may be subject to unforeseen environmental problems, including land contamination. Environmental legislation which deals with liability for such problems exists at both State and Federal levels, although the majority of relevant legislation is imposed by the States. No Australian statute expressly imposes liability on

"passive" lenders or security holders for environmental matters, and some States expressly exclude such liability. However, liability in respect of environmentally damaged land, including the cost of rectifying the damage, may attach to a person who is, for instance, an owner, occupier or person in control of the relevant property. In some but not all States, lenders are expressly excluded from the definitions of one or more of these categories.

Merely holding security over property does not convert a lender into an occupier. However, a lender or receiver who takes possession of contaminated mortgaged property or otherwise enforces its security may be liable as an occupier.

Some environmental legislation provides that security interests may be created over contaminated or other affected property to secure payment of the costs of any necessary rectification of the property. The security interests may have priority over pre-existing mortgages.

To the extent that the issuer trustee or a receiver appointed on the issuer trustee's behalf incurs any of these liabilities, it will be entitled to be indemnified out of the assets of the trust.

Tax Treatment of Interest on Australian Mortgage Loans

Under Australian law, interest on loans used to purchase a person's primary place of residence is not ordinarily deductible for taxation purposes. Conversely, interest payments on loans and other non-capital expenditures relating to non-owner occupied residential properties that generate taxable income are generally allowable as tax deductions.

The Seller as Mortgagee

The Seller is, and until a Title Perfection Event occurs intends to remain, the registered mortgagee of all the mortgages. The borrowers and guarantors will not be aware of the equitable assignment of the mortgage loans and mortgages to the issuer trustee.

Prior to any Title Perfection Event, the Servicer will undertake any necessary enforcement action with respect to defaulted mortgage loans and mortgages. Following a Title Perfection Event, the issuer trustee is entitled, under an irrevocable power of attorney granted to the issuer trustee by the Seller, to be registered as mortgagee of the mortgages. Until that registration is achieved, the issuer trustee or the Trust Manager is entitled, but not obligated, to lodge caveats on the register to publicly notify its interest in the mortgages.

Insolvency Considerations

Each equitable assignment of the mortgage loans is designed to mitigate insolvency risk. For example, the equitable assignment of the mortgage loans by the Seller to the issuer trustee, should ensure that the mortgage loans are not assets available to the liquidator or creditors of the Seller in the event of the Seller's insolvency. Similarly, the assets in the trust should not be available to creditors of the issuer trustee in its personal capacity or as trustee of any other trust in the event of an insolvency of the issuer trustee.

If an Insolvency Event occurs with respect to the issuer trustee, the Master Security Trust Deed and the deed of charge may be enforced by the security trustee at the direction of the Voting Secured Creditors. The security created by the Master Security Trust Deed and the related deed of charge in respect of a trust will stand outside any liquidation of the issuer trustee of the relevant trust, and the assets the subject of that deed of charge will not be available to the liquidator or any creditor of the issuer trustee of the relevant trust, other than a creditor which has the benefit of the Master Security Trust Deed and the related deed of charge in respect of a trust, until the secured obligations have been satisfied. The proceeds of enforcement of the Master Security Trust Deed and the related deed of charge in respect of a trust are to be applied by the security trustee as set out in the supplemental deed for the relevant trust. If the proceeds from enforcement of the Master Security Trust Deed and the related deed of charge are not sufficient to redeem the notes in full, some or all of the noteholders will incur a loss.

Australian Consumer Credit Code

The Australian Consumer Credit Code is the substantially identical governing legislation of each State or Territory in Australia. The following is a summary of certain of the material provisions of the Australian Consumer Credit Code that may affect the mortgage loans and the issuer trustee. The majority of the mortgage loans located in Australia are regulated by the Australian Consumer Credit Code. Mortgage loans which are unregulated by the Australian Consumer Credit Code are unregulated by Australian statute. Under the Australian Consumer Credit Code, a borrower has the right to apply to a court to do the following, among other things:

(a) vary the terms of a mortgage loan on the grounds of hardship or because it is an unjust contract (guarantees and mortgages can also be varied on grounds that they are unjust);

(b) reduce or cancel any interest rate payable on a mortgage loan if the interest rate is changed in a way which is unconscionable;

(c) have certain provisions of a mortgage loan which are in breach of the Australian Consumer Credit Code declared unenforceable;

(d) obtain an order for a civil penalty against the lender in relation to a breach of certain key requirements of the Australian Consumer Credit Code, the amount of which may be set off against any amount payable by the borrower under the applicable mortgage loan; or

(e) obtain additional restitution or compensation from the lender for breaches of the Australian Consumer Credit Code in relation to a mortgage loan or mortgage (guarantors may also obtain restitution or compensation for breaches of the Australian Consumer Credit Code in relation to mortgages or guarantees).

The issuer trustee will become liable for compliance with the Australian Consumer Credit Code if it acquires legal title to the mortgage loans. It will take this legal title subject to any breaches of the Australian Consumer Credit Code by the relevant lender. In particular, once the issuer trustee acquires legal title it may become liable to orders of the type referred to in (d) and

(e) above in relation to breaches of the Australian Consumer Credit Code. Criminal fines may be imposed on the Seller in respect of breaches of the Australian Consumer Credit Code by it while it held legal title to the mortgage loans. In addition, a mortgagee's ability to enforce a mortgage which is subject to the Australian Consumer Credit Code is limited by various demand and notice procedures which must be followed. Any order under the Australian Consumer Credit Code may affect the timing or amount of interest or principal payments or repayments under the relevant mortgage loan, which might in turn affect the timing or amount of interest or principal payments or repayments to the noteholders under the notes in respect of a trust. For example, as a general rule enforcement cannot occur unless the relevant default is not remedied within 30 days after a default notice is given. Borrowers may also be entitled to initiate negotiations with the mortgagee for a postponement of enforcement proceedings.

The Seller will indemnify the issuer trustee against any loss that the issuer trustee may incur as a result of a failure by the relevant Seller to comply with the Australian Consumer Credit Code in respect of a mortgage loan or related mortgage.

The Seller will give certain representations and warranties that the mortgage loans and related mortgagees which it assigns to the issuer trustee comply in all material respects with the Australian Consumer Credit Code in force at the time documents were executed. The Servicer of the relevant trust will undertake to comply with the Australian Consumer Credit Code in connection with servicing the mortgage loans and related mortgages where failure to do so would result in an event which will materially and adversely affect the amount of any payment to be made to any noteholder of a trust, or will materially and adversely affect the timing of such payment. In some circumstances, the issuer trustee of a trust may have the right to claim damages from the Seller or the Servicer, as the case may be, where that issuer trustee suffers a loss in connection with a breach of the Australian Consumer Credit Code which is caused by a breach of a relevant representation or undertaking.

Material United States Federal Income Tax Matters

Overview

The following is a summary of the material United States federal income tax consequences of the purchase, ownership and disposition of the notes of any series or class by investors who are subject to United States federal income tax on a net basis. This summary is based upon current provisions of the Internal Revenue Code of 1986 of the United States (the "Code"), as amended, proposed, temporary and final Treasury regulations under the Code, and published rulings and court decisions, all of which are subject to change, possibly retroactively, or to a different interpretation at a later date by a court or by the Internal Revenue Service (the "IRS"). The parts of this summary which relate to matters of law or legal conclusions represent the opinion of Sidley Austin Brown & Wood LLP, special United States federal income tax counsel for the Trust Manager and are as qualified in this summary. We have not sought and will not seek any rulings from the IRS about any of the United States federal income tax consequences we discuss, and we cannot assure you that the IRS will not take contrary positions.

Sidley Austin Brown & Wood LLP has prepared or reviewed the statements under the heading "Material United States Federal Income Tax Matters" and is of the opinion that these statements discuss all material United States federal income tax consequences to investors generally of the purchase, ownership and disposition of the notes. However, the following discussion does not discuss, and Sidley Austin Brown & Wood LLP is unable to opine as to, the unique tax consequences of the purchase, ownership and disposition of the notes by investors that are given special treatment under the United States federal income tax laws, including:

o banks and thrifts;

o insurance companies;

o regulated investment companies;

o dealers in securities;

o investors that will hold the notes as a position in a "straddle" for tax purposes or as a part of a "synthetic security," "conversion transaction" or other integrated investment comprised of the notes and one or more other investments;

o foreign investors except as specifically set forth below;

o trusts and estates; and

o pass-through entities, the equity holders of which are any of the foregoing.

Additionally, the discussion regarding the notes is limited to the United States federal income tax consequences to the initial investors and not to a purchaser in the secondary market and is limited to investors who will hold the notes as "capital assets" within the meaning of Section 1221 of the Code.

It is suggested that prospective investors consult their own tax advisors about the United States federal, state, local, foreign and any other tax consequences specific to them of the purchase, ownership and disposition of the notes, including the advisability of making any election discussed under "--Market Discount."

The issuer trustee will be reimbursed for any United States federal income taxes imposed on it in its capacity as trustee of a trust out of the assets of such trust and any imposition of such taxes on the trust could result in a reduction in the amounts available for distributions to the holders of notes. Based on the representation of the Trust Manger that the trust does not and will not have an office in the United States, the trust does not and will not avail itself of the office of an agent in the United States, and the trust its not conducting, and will not conduct, either directly or through an agent, any activities in the United States, other than in connection with its issuance of the notes, the issuer trustee will not be subject to entity-level United States federal income tax solely as a result of any activities that it conducts in its capacity as issuer trustee of the trust, and the trust will not be subject to any entity-level tax for United States federal income tax purposes.

Although there is no authority directly on point, the Offered Notes will be characterized as debt for United States federal income tax purposes. We will agree, and if you purchase notes of any class or series, you will agree by your purchase of the notes, to treat the notes as indebtedness for United States federal, state and local income and franchise tax purposes. Each noteholder, by the acceptance of a note, will agree to treat the notes as indebtedness for federal income tax purposes.

Original Issue Discount, Indexed Securities, etc.

Under Treasury regulations, called the "OID Regulations", a note will be considered issued with original issue discount ("OID") if its "stated redemption price at maturity" exceeds its "issue price" (i.e., the price at which a substantial portion of the notes is first sold (not including sales to the underwriters). In general, a note's "stated redemption price at maturity" is the sum of all payments to be made on the note other than payments of "qualified stated interest". Further, if the notes have any original issue discount, it will be de minimis if it is less than 1/4% of the principal amount of the offered notes multiplied by the number of full years included in their term.

Interest Income on the Notes

Except as discussed below, you will be required to report as ordinary interest income the stated interest and OID, if any, on the notes that you hold in accordance with your method of tax accounting. Under the OID Regulations, if you hold a note issued with a de minimis amount of OID, you must include this OID in income, on a pro rata basis, as principal payments are made on the note. If you purchase a note for more or less than its principal amount, you will generally be subject, respectively, to the premium amortization or market discount rules of the Code, discussed below.

Sale of Notes

If you sell a note, you will recognize gain or loss in an amount equal to the difference between the amount realized on the sale, other than amounts attributable to, and taxable as, accrued interest, and your adjusted tax basis in the note. Your adjusted tax basis in a note will equal your cost for the note, decreased by any amortized premium and any payments other than interest made on the note and increased by any market discount or OID included in your income. Any gain or loss will generally be a capital gain or loss, other than amounts representing accrued interest or market discount, and will be long-term capital gain or loss if the note was held as a capital asset for more than one year. In the case of an individual taxpayer, the maximum long-term capital gains tax rate is lower than the maximum ordinary income tax rate. Any capital losses realized may be deducted by a corporate taxpayer only to the extent of capital gains and by an individual taxpayer only to the extent of capital gains plus U.S. $3,000 of other United States income.

Market Discount

You will be considered to have acquired a note at a "market discount" to the extent the remaining principal amount of the note exceeds the amount you paid for the note, unless the excess does not exceed a prescribed de minimis

amount. If the excess exceeds the de minimis amount, you will be subject to the market discount rules of Sections 1276 and 1278 of the Code with regard to the note.

In the case of a sale or other disposition of a note subject to the market discount rules, Section 1276 of the Code requires that gain, if any, from the sale or disposition be treated as ordinary income to the extent the gain represents market discount accrued during the period the note was held by you, reduced by the amount of accrued market discount previously included in income.

In the case of a partial principal payment of a note subject to the market discount rules, Section 1276 of the Code requires that the payment be included in ordinary income to the extent the payment does not exceed the market discount accrued during the period the note was held by you, reduced by the amount of accrued market discount previously included in income.

Generally, market discount accrues under a straight line method, or, at the election of the taxpayer, under a constant interest rate method. However, in the case of bonds with principal payable in two or more installments, such as the notes, the manner in which market discount is to be accrued will be described in Treasury regulations not yet issued. Until these Treasury regulations are issued, you should follow the explanatory Conference Committee Report to the Tax Reform Act of 1986 for your accrual of market discount. This Conference Committee Report indicates that holders of these obligations may elect to accrue market discount either on the basis of a constant interest rate or as follows:

o for those obligations that have OID, market discount shall be deemed to accrue in proportion to the accrual of OID for any accrual period; and

o for those obligations which do not have OID, the amount of market discount that is deemed to accrue is the amount of market discount that bears the same ratio to the total amount of remaining market discount that the amount of stated interest paid in the interest period bears to the total amount of stated interest remaining to be paid on the obligation at the beginning of the interest period.

Under Section 1277 of the Code, if you incur or continue debt that is used to purchase a note subject to the market discount rules, and the interest paid or accrued on this debt in any taxable year exceeds the interest and OID currently includible in income on the note, deduction of this excess interest must be deferred to the extent of the market discount allocable to the taxable year. The deferred portion of any interest expense will generally be deductible when the market discount is included in income upon the sale, repayment, or other disposition of the indebtedness.

Section 1278 of the Code allows a taxpayer to make an election to include market discount in gross income currently. If an election is made, the previously described rules of Sections 1276 and 1277 of the Code will not apply to the taxpayer.

Due to the complexity of the market discount rules, we suggest that you consult your tax advisors as to the applicability and operation of these rules.

Premium

You will generally be considered to have acquired a note at a premium if your tax basis in the note exceeds the remaining principal amount of the note. In that event, if you hold a note as a capital asset, you may amortize the premium as an offset to interest income under Section 171 of the Code, with corresponding reductions in your tax basis in the note if you have made an election under Section 171 of the Code. Generally, any amortization is on a constant yield basis. However, in the case of bonds with principal payable in two or more installments, like the notes, the previously discussed conference report, which indicates a Congressional intent that amortization be in accordance with the rules that will apply to the accrual of market discount on these obligations should be followed for amortization of such premium. We suggest that you consult your tax advisors as to the applicability and operation of the rules regarding amortization of premium.

Backup Withholding Taxes

Backup withholding taxes will be imposed on payments to you at the rate of 28%, for payments made during the year 2003 through 2010, on interest paid, and OID accrued, if any, on the notes if, upon issuance, you fail to supply the Trust Manager or its broker with a certified statement, under penalties of perjury, containing your name, address, correct taxpayer identification number, and a statement that you are not required to pay backup withholding. For payments of such amounts made after 2010, the backup withholding rate will be increased to 31%. Exempt investors, such as corporations, tax-exempt organizations, qualified pension and profit sharing trusts, individual retirement accounts or non-resident aliens who provide certification of their status as non-resident are not subject to backup withholding. Information returns will be sent annually to the IRS by the Trust Manager and to you stating the amount of interest paid, OID accrued, if any, and the amount of tax withheld from payments on the notes. We suggest that you consult your tax advisors about your eligibility for, and the procedure for obtaining, exemption from backup withholding.

A foreign investor generally will be exempt from backup withholding and information reporting requirements, assuming payments on the notes are otherwise exempt from United States federal income tax, provided that such foreign investor complies with certain certification and identification procedures in order to prove its exemption. In order for a foreign investor to prove its exemption, such foreign investor should submit the appropriate Internal Revenue Service Form W-8BEN, or other similar form attesting to such foreign investor's foreign status. We suggest that you consult your tax advisors about your eligibility for, and the procedure for obtaining, such an exemption.

Material Australian Tax Consequences

Australian Taxation

The following is a summary of the material Australian tax consequences of the purchase, ownership and disposition of the notes to holders who are not residents of Australia for Australian tax purposes and who purchase notes upon original issuance at the stated offering price and hold the notes as capital assets and of the taxation of each trust under the Program.

The statements of law or legal conclusions in this summary represent the opinion of Mallesons Stephen Jaques, Australian tax counsel to the Trust Manager, on the basis of Australian law as in effect on the date of this prospectus, which is subject to change, possibly with retroactive effect.

Each prospective investor may wish to consult his or her own tax advisors concerning the tax consequences, in their particular circumstances, of the purchase, ownership and disposition of the notes.

Interest Withholding Tax

An exemption from Australian interest withholding tax ("IWT") imposed under Division 11A of Part III of the Income Tax Assessment Act of 1936 ("Australian Tax Act") is available, in respect of the notes issued by the issuer trustee, under section 128F of the Australian Tax Act if the following conditions are met:

(a) the issuer trustee is a company as defined in section 128F(9) (which includes certain trusts) and is either a resident of Australia or a non-resident carrying on business at or through a permanent establishment in Australia when it issues those notes and when interest (as defined in section 128A(1AB) of the Australian Tax Act) is paid. Interest is defined to include amounts in the nature of, or in substitution for, interest and certain other amounts;

(b) those notes are issued in a manner which satisfies the public offer test. There are five principal methods of satisfying the public offer test, the purpose of which is to ensure that lenders in capital markets are aware that the issuer trustee is offering those notes for issue. In summary, the five methods are:

o offers to 10 or more unrelated financiers or securities dealers;

o offers to 100 or more investors;

o offers of listed notes;

o offers via publicly available information sources; and

o offers to a dealer, manager or underwriter who offers to sell those notes within 30 days by one of the preceding methods.

In addition, the issue of any of those notes (whether in global form or otherwise) and the offering of interests in any of those notes by one of these methods should satisfy the public offer test;

(c) the issuer trustee does not know, or have reasonable grounds to suspect, at the time of issue, that those notes or interests in those notes were being, or would

later be, acquired, directly or indirectly, by an "associate" of the issuer trustee, except as permitted by section 128F(5) of the Australian Tax Act; and

(d) at the time of the payment of interest, the issuer trustee does not know, or have reasonable grounds to suspect, that the payee is an "associate" of the issuer trustee, except as permitted by section 128F(6) of the Australian Tax Act.

Associates

An "associate" of the issuer trustee for the purposes of section 128F of the Australian Tax Act includes (i) a person or entity which holds more than 50% of the voting shares of, or otherwise controls, the issuer trustee, (ii) an entity in which more than 50% of the voting shares are held by, or which is otherwise controlled by, the issuer trustee, (iii) a trustee of a trust where the issuer trustee is capable of benefiting (whether directly or indirectly) under that trust, and (iv) a person or entity who is an "associate" of another person or company which is an "associate" of the issuer trustee under any of the foregoing.

Where, as in this case, the issuer trustee is a trustee of a trust, the entities that are associates of the issuer trustee for the purposes of section 128F of the Australian Tax Act also include:

o any entity that benefits, or is capable of benefiting, under the trust ("Beneficiary"), either directly or through any interposed entities; and

o any entity that is an associate of a Beneficiary. An associate of a Beneficiary for these purposes includes an entity which would be an associate of the Beneficiary on the basis set out in the preceding paragraph.

However, for the purposes of sections 128F(5) and (6) of the Australian Tax Act (see paragraphs (c) and (d) above), "associate" does not include:

(A) onshore associates (that is, Australian resident associates who do not hold the notes in the course of carrying on business at or through a permanent establishment outside Australia and non-resident associates who hold the notes in the course of carrying on business at or through a permanent establishment in Australia); or

(B) offshore associates (that is, Australian resident associates that hold the notes in the course of carrying on business at or through a permanent establishment outside Australia and non-resident associates who do not hold the notes in the course of carrying on business through a permanent establishment in Australia) who are acting in the capacity of:

(i) in the case of section 128F(5), a dealer, manager or underwriter in relation to the placement of the relevant notes, a clearing house, custodian, funds manager or responsible entity of a registered managed investment scheme; or

(ii) in the case of section 128F(6), a clearing house, paying agent, custodian, funds manager, responsible entity of a registered managed investment scheme.

Compliance with section 128F of the Australian Tax Act

Unless otherwise specified in any relevant prospectus supplement, the issuer trustee intends to issue the notes in a manner which will satisfy the requirements of section 128F of the Australian Tax Act.

US and UK resident noteholders

The Australian government has signed a number of new or amended double tax conventions ("New Treaties") with the Specified Countries. The New Treaties apply to interest derived by a resident of a Specified Country.

The New Treaties generally prevent IWT from applying to interest derived by:

o governments of the Specified Countries and certain governmental authorities and agencies in a Specified Country; and

o certain unrelated financial institutions resident in a Specified Country which substantially derive their profits by carrying on a business of raising and providing finance.

Under the New Treaties, back-to-back loans and economically equivalent arrangements generally will be subject to the 10% IWT rate and the anti- avoidance provisions in the Australian Tax Act can apply.

Specified Countries means the United States and the United Kingdom. The New Treaty for the United States applies to any interest paid on or after July 1, 2003. The New Treaty for the United Kingdom will apply to interest paid on or after July 1, 2004.

Payment of additional amounts

Despite the fact that the notes are intended to be issued in a manner which will satisfy the requirements of section 128F of the Australian Tax Act and unless expressly provided to the contrary in any relevant prospectus supplement, if the issuer trustee is at any time compelled or authorized by law to deduct or withhold an amount in respect of any Australian withholding taxes imposed or levied by the Commonwealth of Australia in respect of the notes, the issuer trustee will deduct that amount (and remit it to the relevant authorities) and is not obliged to pay any additional amounts in respect of such deduction or withholding.

Other Tax Matters

Subject to the discussion under the heading "Recent Developments" below, under Australian laws as presently in effect:

(a) income tax - assuming the requirements of section 128F of the Australian Tax Act are satisfied with respect to the notes, payment of principal and interest (as defined in section 128A(1AB) of the Australian Tax Act) to a holder of the notes, who is a non-resident of Australia and who, during the taxable year, does not hold the notes in the course of carrying on business at or through a permanent establishment in Australia, will not be subject to Australian income taxes; and

(b) gains on disposal of notes - a holder of the notes, who is a non-resident of Australia and who, during the taxable year, does not hold the notes in the course of carrying on business at or through a permanent establishment in Australia, will not be subject to Australian income or capital gains tax on gains realized during that year on sale or redemption of the notes, provided such gains do not have an Australian source. A gain arising on the sale of notes by a non-Australian resident holder to another non-Australian resident where the notes are sold outside Australia and all negotiations are conducted, and documentation executed, outside Australia would not be regarded as having an Australian source; and

(c) death duties - no notes will be subject to death, estate or succession duties imposed by Australia, or by any political subdivision or authority therein having power to tax, if held at the time of death; and

(d) stamp duty and other taxes - no ad valorem stamp, issue, registration or similar taxes are payable in Australia on the issue or transfer of any notes; and

(e) other withholding taxes on payments in respect of notes - section 12-140 of the Taxation Administration Act 1953 of Australia ("Taxation Administration Act") imposes a type of withholding tax at the rate of (currently) 48.5% on the payment of interest on certain registered securities unless the relevant payee has quoted an Australian tax file number ("TFN"), (in certain circumstances) an Australian Business Number ("ABN") or proof of some other exception (as appropriate). Assuming the requirements of section 128F of the Australian Tax Act are satisfied with respect to the notes, then the requirements of section 12-140 do not apply to payments to a holder of notes in registered form who is not a resident of Australia and not holding those notes in the course of carrying on business at or through a permanent establishment in Australia. Payments to other classes of holders of notes in registered form may be subject to a withholding where the holder of those notes does not quote a TFN, ABN or provide proof of an appropriate exemption (as appropriate);

(f) supply withholding tax - payments in respect of the notes can be made free and clear of the "supply withholding tax" imposed under section 12-190 of the Taxation Administration Act;

(g) goods and services tax ("GST") - neither the issue nor receipt of the notes will give rise to a liability for GST in Australia on the basis that the supply of notes will comprise either an input taxed financial supply or (in the case of an offshore

subscriber) a GST-free supply. Furthermore, neither the payment of principal or interest by the issuer trustee, nor the disposal of the notes, would give rise to any GST liability in Australia; and

(h) debt/equity rules - Division 974 of the Australian Tax Act ("Division 974"), which applies from July 1, 2001, contains tests for characterizing debt (for all entities) and equity (for companies) for Australian tax purposes, including for the purposes of dividend withholding tax and IWT. The issuer trustee intends to issue notes which are not to be characterized as "equity interests" for the purposes of the tests contained in Division 974 and the returns paid on the notes are to be "interest" for the purpose of section 128F of the Australian Tax Act. Accordingly, Division 974 is unlikely to affect the Australian tax treatment of holders of notes.

Recent developments

Thin capitalisation

The thin capitalisation rules are contained in Division 820 of the Australian Tax Act. These rules deal with Australian resident groups and other Australian resident entities with overseas operations, where the relevant Australian resident entities are deemed to have excessive debt.

If the thin capitalisation rules adversely apply to a trust, a certain proportion of the debt deductions (including the interest) paid by the issuer trustee under the notes will be denied from being deductible.

Under section 820-39 of the Australian Tax Act (introduced by Taxation Laws Amendment Act (No. 5) 2003), certain bona fide securitization vehicles being exempt from the thin capitalisation rules. The exemption applies with retrospective effect from July 1, 2001. An entity will come within the proposed exemption where the following conditions are met:

(a) the entity is established for the purpose of managing some or all of the economic risk associated with assets, liabilities or investments (whether the entity assumes the risk from another entity or creates the risk itself);

(b) at least 50% of the entity's assets are funded by debt interests; and

(c) the entity is an insolvency remote special purpose entity according to the criteria of an internationally recognized rating agency applicable to the entity's circumstances.

Each trust under the Program is expected to satisfy the above conditions (and thus be exempt from the thin capitalisation rules). In particular, if the notes are rated, then a trust should satisfy condition (c) above.

In any event, if a trust did not satisfy the above conditions and the thin capitalisation rules adversely applied to it, the tax payable (as a consequence of the denial of debt deductions)

should not be borne by the issuer trustee (but rather by the person which is the Residual Income Unitholder of the trust).

Tax consolidation rules

New rules establishing a system of tax consolidation of groups of companies and trusts have been enacted. The new rules take effect generally as from July 1, 2002, subject to certain elections being made (and various transitional arrangements).

Under the new rules, a trust should qualify as a wholly owned subsidiary of the National which holds the Residual Income Unit and the Residual Capital Unit in each trust. A trust may therefore become part of the same consolidated group as the National, depending on whether an election to consolidate is made. It is expected that the National group would not choose to consolidate until it was clear that to do so would not have any adverse consequences on a trust's ability to service interest and principal payments on the notes. Under consolidation, the transactions entered into by the members of the group are effectively ignored for income tax purposes and attributed to the head company (which would be the National). The head company has the liability to pay the income tax of the group. However, if it defaults there is, prima facie, joint and several liability on all group members (including a trust) to pay that tax. That joint and several liability can be avoided by allocating the defaulted tax obligation to the group members on a reasonable basis under a tax sharing agreement ("TSA"). It is expected, but cannot yet be confirmed, that upon consolidation of the National group, a TSA would be entered into that confirmed a nil allocation of the group's tax to the issuer trustee (and a reasonable amount to the National). If that was not possible, it is expected that steps would be taken to deconsolidate each trust from the National group.

Additional withholdings from certain payments to non-residents

Section 12-315 of the Taxation Administration Act (introduced by the Taxation Laws Amendment Act (No. 4) 2003) gives the Governor-General power to make regulations requiring withholding from certain payments to non-residents after July 1, 2003. No draft regulations have yet been released, so it is not possible to determine what types of payments would be caught by the new rules nor the rate of withholding. However, section 12-315 expressly provides that the regulations will not apply to interest and other payments which are treated as interest under the current IWT rules. Further, regulations may only be made if the responsible minister is satisfied the specified payments are of a kind that could reasonably relate to assessable income of foreign residents. The issuer trustee has been advised by Mallesons Stephen Jaques that they do not expect the regulations to apply to repayments of principal under the notes, as in the absence of any issue discount, such amounts will generally not be reasonably related to assessable income. The possible application of any regulations to the proceeds of any sale of the notes will need to be monitored.

Taxation of foreign exchange gains and losses

The New Business Tax System (Taxation of Financial Arrangements) Act (No.
1) 2003 contains new rules to deal with the taxation consequences of foreign exchange transactions entered into after July 1, 2003 (unless a taxpayer elects for them to apply to earlier transactions).

The new rules are complex and will apply to the issuer trustee in respect of any notes denominated in a currency other than Australian dollars as well as any currency hedging arrangements entered into in respect of such notes. Nevertheless the issuer trustee should be able to manage its position under the new rules so that the tax consequences are effectively the same as the commercial position (that is that any net foreign exchange gains and losses recognized for tax purposes should be represented by similar cash gains and losses).

The new rules are complex and may also apply to any holders of notes who are non-residents that hold notes that are not denominated in Australian dollars in the course of carrying on business in Australia. Any such note holders should consult their professional advisors for advice as to how to tax account for any foreign exchange gains or losses arising from their holding of those notes.

Goods and Services Tax

From July 1, 2000, a goods and services tax ("GST") applies in Australia. If an entity makes any taxable supplies after July 1, 2000 it will have to remit goods and services tax to the Australian Taxation Office equal to 10% of those supplies.

In the case of supplies by the issuer trustee, if the supply is:

o "GST free," the issuer trustee does not pay a goods and services tax on the supply and can obtain input tax credits for goods and services taxes paid on things acquired to make the supply;

o "taxable," the issuer trustee pays goods and services tax on the supply and can obtain input tax credits for goods and services tax paid on things acquired to make the supply; or

o "input taxed," ("GST Exempt") which includes financial supplies, the issuer trustee does not pay a goods and services tax on the supply, but is not entitled to input tax credits for goods and services tax paid on things acquired to make the supply. In some circumstances a "reduced input tax credits" may be available.

In the opinion of Mallesons Stephen Jaques, the issue of notes and the payment of interest or principal on the notes will constitute financial supplies and will accordingly be input taxed or GST free, as the case may be.

Services provided to the issuer trustee will be a mixture of taxable and input taxed supplies for goods and services tax purposes. If a supply is taxable, the supplier has the primary obligation to account for goods and services tax in respect of that supply and must rely on a contractual provision to recoup that goods and services tax from the issuer trustee. Under the supplemental deed, certain fees paid by the issuer trustee, namely the Trust Manager's fee, the issuer trustee's fee, the security trustee's fee and the Servicer's fee, will only be able to be increased by reference to the supplier's goods and services tax liability, if any, if:

o the issuer trustee, the Trust Manager and the recipient of the relevant fee agree, which agreement shall not be unreasonably withheld; and

o the increase will not result in the downgrading or withdrawal of the rating of any notes.

The issuer trustee may not be entitled to a full input tax credit where fees payable by the issuer trustee are treated as the consideration for a taxable supply or are increased by reference to the relevant supplier's goods and services tax liability. The issuer trustee may not be entitled to a full input tax credit for that increase and the trust expenses will increase, resulting in a decrease in funds available to the trust to pay interest on the notes.

The goods and services tax may increase the cost of repairing or replacing damaged properties offered as security for mortgage loans. However, it is a condition of the Seller's mortgage documentation that the borrower must maintain full replacement value property insurance at all times during the loan term.

The goods and services tax legislation, in certain circumstances, treats the issuer trustee as making a taxable supply if it enforces security by selling the mortgaged property and applying the proceeds of sale to satisfy the mortgage loan. The issuer trustee will have to account for goods and services tax out of the sale proceeds with the result that the remaining sale proceeds may be insufficient to cover the unpaid balance of the related loan. However, the general position is that a sale of residential property is an input taxed supply for goods and services tax purposes and so the enforced sale of property which secures the mortgage loans will generally not be treated as a taxable supply under these provisions. As an exception, the issuer trustee may still have to account for goods and services tax out of the proceeds of sale recovered when a mortgage loan is enforced where the borrower is an enterprise which is registered or required to register for goods and services tax purposes, uses the mortgaged property as an asset of its enterprise and any of the following are relevant:

o the property is no longer being used as a residence;

o the property is used as commercial residential premises such as a hostel or boarding house;

o the borrower is the first vendor of the property and the borrower built the property; or

o the mortgaged property has not been used predominantly as a residence.

Because the issuer trustee is an insured party under the mortgage insurance policies, it may in certain limited circumstances have to account for goods and services tax in respect of any claim payment received. Generally, if certain compliance procedures have been followed, the insured does not have to account for goods and services tax in respect of the claim payment.

Any reduction as a result of goods and services tax in the amount recovered by the issuer trustee when enforcing the mortgage loans will decrease the funds available to the trust to pay you to the extent not covered by the mortgage insurance policies. The extent to which the issuer trustee is able to recover an amount on account of the goods and services tax, if any, payable on the proceeds of sale in the circumstances described in this section, will depend on the terms of the related mortgage insurance policy.

ERISA Considerations

Subject to the considerations discussed in this section (and except as otherwise specified in the prospectus supplement for a series of notes), the notes are eligible for purchase by employee benefit plans.

Section 406 of the Employee Retirement Income Security Act of the United States ("ERISA") and Section 4975 of the Code prohibit a pension, profit-sharing or other employee benefit plan, as well as an individual retirement account or Keogh plan, from engaging in certain transactions with persons that are "parties in interest" under ERISA or "disqualified persons" under the Code with respect to these benefit plans. A violation of these "prohibited transaction" rules may result in an excise tax or other penalties and liabilities under ERISA and the Code for these persons and in liabilities for the fiduciary that causes a plan to engage in the transaction. Title I of ERISA also requires that fiduciaries of a benefit plan subject to ERISA make investments that are prudent, diversified (unless clearly prudent not to do so), and in accordance with governing plan documents.

Some transactions involving the purchase, holding or transfer of the notes might be deemed to constitute prohibited transactions under ERISA and the Code if assets of the trust were deemed to be assets of a benefit plan. Under a regulation issued by the United States Department of Labor, the assets of the trust would be treated as plan assets of a benefit plan for the purposes of ERISA and Section 4975 of the Code only if the benefit plan acquires an "equity interest" in the trust and none of the exceptions contained in the regulation is applicable. An equity interest is defined under the regulation as an interest in an entity other than an instrument which is treated as indebtedness under applicable local law and which has no substantial equity features. Although there can be no assurances in this regard, unless otherwise indicated in the prospectus supplement for a series of notes, it appears that, at the time of their initial issuance, the notes should be treated as debt without substantial equity features for purposes of the regulation. The debt characterization of the notes could change after their initial issuance if the trust incurs losses or the rating of the notes declines.

However, without regard to whether the notes are treated as an equity interest for these purposes, the acquisition or holding of the notes by or on behalf of a benefit plan could be considered to give rise to a prohibited transaction if the trust, the owner of the equity interests in the trust, including the holders of any classes of notes that are treated as equity, the issuer trustee, the note trustee, the Seller or the security trustee is or becomes a party in interest or a disqualified person with respect to the benefit plan. In such case, certain exemptions from the prohibited transaction rules could be applicable depending on the type and circumstances of the plan fiduciary making the decision to acquire a note. Included among these exemptions are:

o Prohibited Transaction Class Exemption ("PTCE") 96-23, regarding transactions effected by an "in-house asset manager";

o PTCE 90-1, regarding investments by insurance company pooled separate accounts;

o PTCE 95-60, regarding investments by insurance company general accounts;

o PTCE 91-38, regarding investments by bank collective investment funds; and

o PTCE 84-14, regarding transactions effected by a "qualified professional asset manager."

There is no assurance that a prohibited transaction exemption will apply to all transactions that may arise in connection with a benefit plan's acquisition and holding of a note. By its acquisition of a note, each fiduciary of a benefit plan and each investor of plan assets of a benefit plan shall be deemed to represent and warrant that its purchase and holding of the note will not result in a non-exempt prohibited transaction under ERISA or
Section 4975 of the Code because the purchase and holding of the note will satisfy the requirements for exemptive relief under PTCE 96-23, PTCE 90-1, PTCE 91-38, PTCE 95-60, PTCE 84-14 or a similar exemption.

Moreover, the trust, the issuer trustee, the Trust Manager, the Servicer, the note trustee, the Seller, the security trustee or any underwriter may be the sponsor or the investment advisor with respect to one or more benefit plans. Because these parties may receive certain benefits in connection with the sale of the notes, the purchase of notes using plan assets over which any of them has investment authority might be deemed to be a violation of the prohibited transaction rules of ERISA and Section 4975 of the Code for which no exemption may be available. Accordingly, any benefit plan for which the trust, the issuer trustee, the Trust Manager, the Servicer, the note trustee, the Seller, the security trustee or any underwriter or any of their respective affiliates:

o has investment or administrative discretion with respect to plan assets;

o has authority or responsibility to give, or regularly gives, investment advice with respect to plan assets for a fee and pursuant to an agreement or understanding that the advice will serve as a primary basis for investment decisions with respect to plan assets, and will be based on the particular investment needs for the plan; or

o is an employer maintaining or contributing to the plan

should consult with its counsel about potential prohibited transactions under ERISA and Section 4975 of the Code before investing in the notes.

Employee benefit plans that are governmental plans, as defined in Section 3(32) of ERISA, and certain church plans, as defined in Section 3(33) of ERISA, are not subject to ERISA requirements, but may be subject to State or other Federal law requirements which may impose restrictions similar to those under ERISA and the Code discussed above. By its acquisition of a note, each fiduciary of a benefit plan subject to such a similar law and each investor of plan assets of such a plan will be deemed to represent and warrant that its purchase and holding of the note will not result in a non-exempt violation of such similar law.

The sale of securities to a benefit plan is in no respect a representation by the trust, the issuer trustee, the Trust Manager or the underwriters that this investment meets all relevant legal requirements with respect to investments by benefit plans generally or any particular benefit

plan, or that this investment is appropriate for benefit plans generally or any particular benefit plan.

Enforcement of Foreign Judgments in Australia

Each of the issuer trustee and the Trust Manager with respect to a particular trust and series of notes will be an Australian public company registered with limited liability under the Corporations Act. Any final and conclusive judgment of any New York State or United States Federal Court sitting in the Borough of Manhattan in the City of New York having jurisdiction recognized by the relevant Australian jurisdiction in respect of an obligation of the issuer trustee in respect of a note or of the Trust Manager, which is for a fixed sum of money and which has not been stayed or satisfied in full, would be enforceable by action against the issuer trustee or the Trust Manager (as the case may be) in the courts of the relevant Australian jurisdiction without a re-examination of the merits of the issues determined by the proceedings in the New York State or United States Federal Court, as applicable, unless:

o the proceedings in New York State or United States Federal Court, as applicable, involved a denial of the principles of natural justice;

o the judgment is contrary to the public policy of the relevant Australian jurisdiction;

o the judgment was obtained by fraud or duress or was based on a clear mistake of fact;

o the judgment is a penal or revenue judgment; or

o there has been a prior judgment in another court between the same parties concerning the same issues as are dealt with in the judgment of the New York State or United States Federal Court, as applicable.

A judgment by a court may be given in some cases only in Australian dollars. Pursuant to the underwriting agreement to be entered into among the National, the Trust Manager, the issuer trustee and the underwriters in connection with a series of notes, the issuer trustee and the Trust Manager will expressly submit to the jurisdiction of New York State and United States Federal Courts sitting in the Borough of Manhattan in the City of New York for the purpose of any suit, action or proceeding arising out of the offering of such notes in the United States. The Trust Manager will appoint [ ], and the issuer trustee will appoint [ ] (or some other party acceptable to the underwriters), as its agent upon whom process may be served in any such action.

All of the directors and executive officers of the issuer trustee and the Trust Manager, and certain experts named in this prospectus will reside outside the United States in the Commonwealth of Australia. Substantially all or a substantial portion of the assets of all or many of such persons will be located outside the United States. As a result, it may not be possible for holders of notes to effect service of process within the United States upon such persons or to enforce against them judgments obtained in United States courts predicated upon the civil liability provisions of federal securities laws of the United States. Mallesons Stephen Jaques, Australian counsel to the Trust Manager, has advised that, based on the restrictions discussed in

this section, there is doubt as to the enforceability in the Commonwealth of Australia, in original actions or in actions for enforcement of judgments of United States courts, of civil liabilities predicated upon the federal securities laws of the United States.

Legal Investment Considerations

The notes will not constitute "mortgage related securities" for purposes of the Secondary Mortgage Market Enhancement Act of 1984 of the United States, because the originator of the mortgage loans was not subject to State or Federal regulatory authority in the United States. Accordingly, some U.S. institutions with legal authority to invest in comparably rated securities based on such mortgage loans may not be legally authorized to invest in the notes. No representation is made as to whether the notes constitute legal investments under any applicable statute, law, rule, regulation or order for any entity whose investment activities are subject to investment laws and regulations or to review by any regulatory authorities.

Where You Can Find More Information

The Trust Manager has filed with the SEC a registration statement under the Securities Act of 1933, as amended, with respect to the notes. This prospectus, which forms a part of the registration statement, omits certain information contained in the registration statement pursuant to the Rules and Regulations of the SEC. The registration statement and the exhibits thereto can be inspected and copied at the public reference facilities maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, and at certain of its Regional Offices located as follows:

o Midwest Regional Office, 175 W. Jackson Boulevard, Suite 900, Chicago, Illinois 60604; and

o Northeast Regional Office, 233 Broadway, New York, New York 10279.

Copies of these materials can also be obtained from the Public Reference
Section of the SEC, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The SEC also maintains a site on the World Wide Web at "http://www.sec.gov" at which users can view and download copies of reports, proxy and information statements and other information filed electronically through the Electronic Data Gathering, Analysis and Retrieval ("EDGAR") system. The Trust Manager has filed the registration statement, including all exhibits thereto, through the EDGAR system and therefore these materials should be available by logging onto the SEC's Web site. The SEC maintains computer terminals providing access to the EDGAR system at each of the offices referred to above.

The Trust Manager will also file reports and other information with the SEC about the trust issuing your notes. Such SEC filings are available to the public over the Internet at the SEC's web site described above. You may also read and copy any document we file at the SEC's public reference facilities at the addresses specified above.

   To: [                    ] Trust                To: [                ] Trust
200[ ]-[ ] as to United States law            200[ ]-[ ] as to Australian law
Sidley Austin Brown & Wood LLP                Mallesons Stephen Jaques
787 Seventh Avenue                            Level 60
New York, New York 10019                      Governor Phillip Tower
                                              1 Farrer Place
                                              Sydney NSW 2000
                                              Australia