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Australian Securitisation Management Pty Ltd – ‘S-11/A’ on 1/21/04

On:  Wednesday, 1/21/04, at 2:08pm ET   ·   Accession #:  1047469-4-1463   ·   File #:  333-110126

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 1/21/04  Australian Securitisation Mg… Ltd S-11/A                16:3.7M                                   Merrill Corp/New/FA

Document/Exhibit                   Description                      Pages   Size 

 1: S-11/A      Pre-Effective Amendment to Registration Statement   HTML   1.20M 
                          for Securities of a Real Estate Company                
 2: EX-1.1      Underwriting Agreement                                35    113K 
 3: EX-3.1      Articles of Incorporation/Organization or By-Laws   HTML    188K 
 4: EX-4.1      Instrument Defining the Rights of Security Holders   233    781K 
 5: EX-4.2      Instrument Defining the Rights of Security Holders     8     22K 
 6: EX-4.4      Instrument Defining the Rights of Security Holders    44    155K 
 7: EX-4.5      Instrument Defining the Rights of Security Holders   133    487K 
 8: EX-5.1      Opinion re: Legality                                   3     16K 
 9: EX-8.2      Opinion re: Tax Matters                                2     11K 
10: EX-10.1     Material Contract                                   HTML    105K 
11: EX-10.2     Material Contract                                   HTML    563K 
12: EX-10.3     Material Contract                                     17     65K 
13: EX-10.4     Material Contract                                     17     66K 
14: EX-10.5     Material Contract                                     23     78K 
15: EX-25.1     Statement re: Eligibility of Trustee                HTML     40K 
16: EX-99.1     Miscellaneous Exhibit                                  2     11K 

As filed with the Securities and Exchange Commission on January 20, 2004

Registration No. 333-110126

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

PRE-EFFECTIVE AMENDMENT NO. 2
TO
FORM S-11
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

Australian Securitisation Management Pty Limited
(ABN 32 103 852 428)
(Exact name of registrant as specified in its governing instruments)

Level 6
12 Castlereagh Street
Sydney, New South Wales 2000
Australia
Telephone: 612-8236-8800
(Address, including zip code/post code, and telephone number, including area code,
of registrant's principal executive offices)

agent for service
CT Corporation System
111 Eighth Avenue
13^th Floor
New York, NY 10011
Telephone: (212) 590-9100
(Name, address, including zip code and telephone number, including area code, of agent for service)

With a copy to:

        Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of the registration statement, as determined by market conditions.

        If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.

        If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

        If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

        If delivery of the prospectus is expected to be made pursuant to Rule 434 check the following box.    o

CALCULATION OF REGISTRATION FEE

*

Registration fee for US$1,000,000,000 outstanding principal amount of bonds (outstanding principal amount of € bonds converted at a rate equal to € 1= US$1.238) previously paid upon initial filing at US$80.90 per million filing fee. US$265,000,000 outstanding principal amount of bonds are being registered based upon US$126.70 per million filing fee.

        The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any State where the offer or sale is not permitted.

SUBJECT TO COMPLETION DATED JANUARY 7, 2004

ARMS II GLOBAL FUND 3
US$[*] CLASS A-1(a) MORTGAGE BACKED FLOATING RATE BONDS
€[*] CLASS A-1(b) MORTGAGE BACKED FLOATING RATE BONDS
US$[*] CLASS B-1(a) MORTGAGE BACKED FLOATING RATE BONDS
€[*] CLASS B-1(b) MORTGAGE BACKED FLOATING RATE BONDS

AUSTRALIAN SECURITISATION MANAGEMENT PTY LIMITED
(ABN 32 103 852 428)
Trust Manager

PERMANENT CUSTODIANS LIMITED
(ACN 001 426 384)
Issuer Trustee

        The Class A-1(a) bonds, the Class A-1(b) bonds, the Class B-1(a) bonds and the Class B-1(b) bonds, collectively the Offshore bonds, which are being offered hereby will be collateralized by a pool of housing loans secured by properties located in Australia. ARMS II Global Fund 3 will be governed by the laws of New South Wales, Australia.

        The Offshore bonds are not deposits and neither the Offshore bonds nor the underlying housing loans are insured or guaranteed by any governmental agency or instrumentality. The Offshore bonds represent obligations of Permanent Custodians Limited solely in its capacity as trustee of ARMS II Global Fund 3 and do not represent obligations of, or interests in, Australian Securitisation Management Pty Limited or Permanent Custodians Limited in any other capacity and are not guaranteed by Australian Securitisation Management Pty Limited or Permanent Custodians Limited or any of their associates.

        Application will be made to the Irish Stock Exchange for each class of Offshore bonds to be admitted to the Daily Official List. There can be no assurance that any such listing will be obtained. The issuance and settlement of each class of Offshore bonds on the initial issue date is not conditioned on the listing of such Offshore bonds on the Irish Stock Exchange.

        INVESTING IN THE BONDS INVOLVES RISKS—SEE "RISK FACTORS" ON PAGE 20.

        Delivery of the Offshore bonds in book-entry form through The Depository Trust Company, Clearstream, Luxembourg and the Euroclear System will be made on or about [January 29], 2004.

        These securities have not been approved or disapproved by the Securities and Exchange Commission or any state securities commission nor has the Securities and Exchange Commission or any state securities commission passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

The date of this prospectus is [*], 2004

**

The underwriting discounts and commissions will be paid separately by Australian Mortgage Securities Ltd and not from the proceeds to the issuer trustee.

TABLE OF CONTENTS

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vi

DISCLAIMERS WITH RESPECT TO SALES TO NON-U.S. INVESTORS

        This section applies only to the offering of the Offshore bonds in countries other than the United States of America. In this section, references to Permanent Custodians Limited are to that company only in its capacity as trustee of ARMS II Global Fund 3, and not its personal capacity or as trustee of any other trust. Permanent Custodians Limited is not responsible or liable for this prospectus in any capacity. Australian Securitisation Management Pty Limited is solely responsible for this prospectus. Australian Securitisation Management Pty Limited, as trust manager, has taken all reasonable care to ensure that the information contained in this prospectus is true and accurate in all material respects and that in relation to this prospectus there are no material facts the omission of which would make misleading any statement herein, whether fact or opinion.

        Other than in the United States of America, no person has taken or will take any action that would permit a public offer of the Offshore bonds in any country or jurisdiction. The Offshore bonds may be offered non-publicly in other jurisdictions. The Offshore bonds may not be offered or sold, directly or indirectly, and neither this prospectus nor any form of application, advertisement or other offering material may be issued, distributed or published in any country or jurisdiction, unless permitted under all applicable laws and regulations. The underwriters have represented that all offers and sales by them have been in compliance, and will comply, with all applicable restrictions on offers and sales of the Offshore bonds. You should inform yourself about and observe any of these restrictions. For a description of further restrictions on offers and sales of the Offshore bonds, see "Plan of Distribution".

        This prospectus does not and is not intended to constitute an offer to sell or a solicitation of any offer to buy any of the Offshore bonds by or on behalf of Permanent Custodians Limited in any jurisdiction in which the offer or solicitation is not authorized or in which the person making the offer or solicitation is not qualified to do so or to any person to whom it is unlawful to make an offer or solicitation in such jurisdiction.

        Except and unless otherwise explicitly provided in this prospectus if at all, none of Permanent Custodians Limited, in its personal capacity and as issuer trustee, Permanent Registry Limited, as security trustee, Australian Mortgage Securities Ltd, as servicer, The Bank of New York, as bond trustee, principal paying agent, calculation agent, US$ registrar and € registrar, the underwriters, ABN AMRO Bank N.V., London Branch, as fixed-floating rate swap provider, Deutsche Bank AG, as the currency swap provider or PMI Mortgage Insurance Ltd, GE Capital Mortgage Insurance Corporation (Australia) Pty Ltd and the Commonwealth of Australia (as managed by GE Mortgage Insurance Pty Limited) as mortgage insurers accept any responsibility for any information contained in this prospectus and none of them has separately verified the information contained in this prospectus or makes any representation, warranty or undertaking, express or implied, as to the accuracy or completeness of any information contained in this prospectus or any other information supplied in connection with the bonds.

        Permanent Custodians Limited, in its personal capacity and as issuer trustee, Australian Securitisation Management Pty Limited, as trust manager, Australian Mortgage Securities Ltd as servicer, Permanent Registry Limited, as security trustee, The Bank of New York, as bond trustee, principal paying agent, calculation agent, US$ registrar and € registrar, ABN AMRO Bank N.V., London Branch, as fixed-floating rate swap provider and Deutsche Bank AG as the currency swap provider, PMI Mortgage Insurance Ltd, GE Capital Mortgage Insurance Corporation (Australia) Pty Ltd and the Commonwealth of Australia (as managed by GE Mortgage Insurance Pty Limited), as mortgage insurers and the underwriters do not recommend that any person should purchase any of the Offshore bonds and do not accept any responsibility or make any representation as to the tax consequences of investing in the Offshore bonds.

        Each person receiving this prospectus acknowledges that he or she has not relied on the entities listed in the preceding paragraph nor on any person affiliated with any of them in connection with his or her investigation of the accuracy of the information in this prospectus or his or her investment decisions; acknowledges that this prospectus and any other information supplied in connection with the Offshore bonds is not intended to provide the basis of any credit or other evaluation; acknowledges

that the underwriters have expressly not undertaken to review the financial condition or affairs of the Fund or any party named in the prospectus during the life of the Offshore bonds; should make his or her own independent investigation of the Fund and the Offshore bonds; and should seek its own tax, accounting and legal advice as to the consequences of investing in any of the Offshore bonds.

        No person has been authorized to give any information or to make any representations other than those contained in this prospectus in connection with the issue or sale of the Offshore bonds. If such information or representation is given or received, it must not be relied upon as having been authorized by Permanent Custodians Limited, the trust manager, the servicer, the bond trustee, the underwriters or any of their respective affiliates.

        Neither the delivery of this prospectus nor any sale made in connection with this prospectus shall, under any circumstances, create any implication that:

•

there has been no material change in the affairs of the Fund or any party named in this prospectus since the date of this prospectus; or



•

any other information supplied in connection with the Offshore bonds is correct as of any time subsequent to the date on which it is supplied or, if different, the date indicated in the document containing the same.

        Permanent Custodians Limited's liability to make payments of interest and principal on the bonds is limited to its right of indemnity from the assets of the Fund. All claims against Permanent Custodians Limited in relation to the bonds may only be satisfied out of the assets of the Fund and are limited in recourse to the assets of the Fund.

        None of the rating agencies, being Standard & Poor's (Australia) Pty Limited (S&P) and Moody's Investors Service Inc. (Moody's) have been involved in the preparation of this prospectus.

        Application will be made to the Irish Stock Exchange for the Offshore bonds to be admitted to the Daily Official List. There can be no assurance that any such listing will be obtained. The issuance and settlement of the Offshore bonds is not conditioned on the listing of such Offshore bonds on the Irish Stock Exchange. So long as the Offshore bonds are listed on the Irish Stock Exchange, listed Offshore bonds will be freely transferable and negotiable in accordance with the rules of the Irish Stock Exchange.

        Any projections, forecasts and estimates contained herein are forward looking statements and are based upon certain assumptions that the trust manager considers reasonable. Projections are necessarily speculative in nature, and it can be expected that some or all of the assumptions underlying the projections will not materialize or will vary significantly from actual results. Accordingly, the projections are only an estimate. Actual results may vary from the projections, and the variations may be material.

        Some important factors that could cause actual results to differ materially from those in any forward looking statements include changes in interest rates, market, financial or legal uncertainties, timing and frequency of defaults on the housing loans, mismatches between the timing of accrual and receipt of interest collections and principal collections, defaults under housing loans and the effectiveness of the swap agreements, among others. Consequently, the inclusion of projections herein should not be regarded as a representation by the issuer trustee, the trust manager, the security trustee, the bond trustee, the underwriters or any of their respective affiliates or any other person or entity of the results that will actually be achieved by the Fund.

        None of the issuer trustee, the trust manager, the bond trustee, the security trustee, the underwriters or their respective affiliates has any obligation to update or otherwise revise any projections, including any revisions to reflect changes in economic conditions or other circumstances arising after the date hereof or to reflect the occurrence of unanticipated events, even if the underlying assumptions do not come to fruition.

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AUSTRALIAN DISCLAIMERS

•

The bonds do not represent deposits or other liabilities of Australian Securitisation Management Pty Limited or associates of Australian Securitisation Management Pty Limited.



•

The holding of the bonds is subject to investment risk, including possible delays in repayment and loss of income and principal invested.



•

None of Australian Securitisation Management Pty Limited, any associate of Australian Securitisation Management Pty Limited, Permanent Custodians Limited, in any capacity, any associate of Permanent Custodians Limited, Permanent Registry Limited, in any capacity, any associate of Permanent Registry Limited, The Bank of New York, as bond trustee, principal paying agent, calculation agent, US$ registrar and € registrar, nor the underwriters in any way stands behind the capital value or the performance of the bonds or the assets of the Fund except to the limited extent provided in the transaction documents for the Fund.



•

None of Permanent Custodians Limited, in any capacity, Australian Securitisation Management Pty Limited, as trust manager, Australian Mortgage Securities Ltd, as servicer, Permanent Registry Limited, as security trustee, The Bank of New York, as bond trustee, principal paying agent, US$ registrar, € registrar and calculation agent, ABN AMRO Bank N.V., London Branch, as fixed-floating rate swap provider and Deutsche Bank AG, as the currency swap provider, or any underwriter guarantees the payment of interest or the repayment of principal due on the bonds.



•

None of the obligations of Permanent Custodians Limited, in its capacity as trustee of the Fund, are guaranteed in any way by Australian Securitisation Management Pty Limited or any associate of Australian Securitisation Management Pty Limited or by any associate of Permanent Custodians Limited, in any capacity. None of Permanent Custodians Limited, in any capacity, or Permanent Registry Limited, in any capacity, guarantees the success or performance of the Fund or the repayment of capital or any particular rate of capital or income return.

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[This page intentionally left blank.]

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SUMMARY

        This summary highlights selected information from this document and does not contain all of the information that you need to consider in making your investment decision. This summary contains an overview of some of the concepts and other information to aid your understanding. All of the information contained in this summary is qualified by the more detailed explanations in other parts of this prospectus.

Parties to the Transaction

5

Structural Diagram

6

SUMMARY OF THE BONDS

        The issuer trustee may issue fast prepayment bonds which will be collateralized by the same pool of housing loans as the Offshore bonds. The fast prepayment bonds have not been and will not be registered in the United States and are not being offered by this prospectus. When used in this prospectus the term "US$ bonds" will mean the Class A-1(a) bonds and the Class B-1(a) bonds and the term "US$ bondholders" when used in this prospectus will mean the holders of any Class A-1(a) bonds and/or Class B-1(a) bonds. The term "Class A bonds" when used in this prospectus will mean the Class A-1(a) bonds and the Class A-1(b) bonds and the term "Class B bonds" when used in this prospectus will mean the Class B-1(a) bonds and the Class B-1(b) bonds. The term "Offshore bonds" when used in this prospectus will mean the Class A bonds and the Class B bonds. The term "bonds" when used in this prospectus will mean the Offshore bonds and, if issued, the fast prepayment bonds.

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Structural Overview

        The ARMS II securitization program was established pursuant to a master trust deed dated March 7, 1995 among Permanent Custodians Limited and Australian Mortgage Securities Ltd, as amended and restated from time to time. The master trust deed provides the general terms and structure for securitizations under the program. Supplementary bond terms will set out the specific details of ARMS II Global Fund 3 and the bonds, which may vary from the terms set forth in the master trust deed. Each securitization under the program is a separate transaction with a separate trust—known as a "fund". The assets of ARMS II Global Fund 3 will not be available to pay the obligations of any other fund under the program, and the assets of other funds under the program will not be available to pay the obligations of Permanent Custodians Limited as trustee of ARMS II Global Fund 3. See "Description of the Fund".

        ARMS II Global Fund 3 involves the securitization of housing loans originated by Australian Mortgage Securities Ltd in the name of Permanent Custodians Limited, as trustee of a number of warehouse funds, and secured by mortgages over residential property located in Australia. Permanent Custodians Limited will issue the bonds to fund the acquisition of the housing loans. Upon receipt of the issue proceeds of the bonds, in accordance with the master trust deed, Permanent Custodians Limited will hold the issue proceeds as trustee of the relevant warehouse funds and the housing loans as trustee of ARMS II Global Fund 3.

        The issuer trustee will grant a first ranking floating charge over all assets which are subject to the Fund under the security trust deed in favor of Permanent Registry Limited, as security trustee, to secure the issuer trustee's payment obligations to the bondholders and its other creditors. A first ranking floating charge is a first priority security interest over a class of assets, but does not attach to specific assets unless or until it crystalizes, which means it becomes a fixed charge. The charge will crystalize if, among other events, an event of default occurs under the security trust deed. Once the floating charge crystalizes, the issuer trustee will no longer be able to dispose of or create interests in the assets of the Fund without the consent of the security trustee. For a description of floating charges and crystallization see "Description of the Transaction Documents—The Security Trust Deed—Nature of the Charge".

        Payments of interest and principal on the bonds will come only from the housing loans and other assets of the Fund. The assets of the parties to the transaction are not available to meet the payments of interest and principal on the bonds. If there are losses on the housing loans, the Fund may not have sufficient assets to repay the bonds.

Credit Enhancements

        Payments of interest and principal on the Class A-1(a) bonds and the Class A-1(b) bonds will be supported by the following forms of credit enhancement.

Subordination

        The Class B-1(a) bonds and the Class B-1(b) bonds will be subordinated to the Class A-1(a) bonds and the Class A-1(b) bonds in their right to receive interest and principal payments. The Class B-1(a) bonds and the Class B-1(b) bonds will rank pari passu.

        The credit support provided by the Class B-1(a) bonds and the Class B-1(b) bonds is intended to enhance the likelihood that the Class A-1(a) bonds and the Class A-1(b) bonds will receive expected quarterly payments of interest and principal. The following chart describes the initial credit support provided to the Class A-1(a) bonds and the Class A-1(b) bonds by the Class B-1(a) bonds and the Class B-1(b) bonds:

        The initial support percentage in the preceding table is the Australian dollar equivalent of the principal amount of the Class B-1(a) bonds and the Class B-1(b) bonds as a percentage of the Australian dollar

8

equivalent of the principal amount of all of the bonds on the initial issue date.

        To the extent there is a loss on a housing loan not covered by a mortgage insurance policy or by the application of excess interest collections, the amount of such loss will be borne by the Class B-1(a) bonds and the Class B-1(b) bonds before it is borne by the Class A-1(a) bonds, the Class A-1(b) bonds and the fast prepayment bonds. See "Description of the Offshore Bonds—Charge-offs".

Mortgage Insurance Policies

        Mortgage insurance policies issued by, or transferred to, GE Capital Mortgage Insurance Corporation (Australia) Pty Ltd, PMI Mortgage Insurance Ltd and the Commonwealth of Australia (as managed by GE Mortgage Insurance Pty Limited) will provide full coverage for the balance outstanding on each housing loan irrespective of its original or current LVR. The mortgage insurance policies are subject to some exclusions from coverage and rights of termination which are described in "The Mortgage Insurance Policies".

Excess Interest Collections

        Any interest collections on the housing loans remaining after payments of interest on the bonds and the Fund's expenses will be available to cover any losses on the housing loans that are not covered by the mortgage insurance policies.

Liquidity Enhancement

        To enable the issuer trustee to make timely payments of interest on the bonds, the trust manager is required to ensure that, at all times while the Australian dollar equivalent of the outstanding principal amount of all Offshore bonds is greater than or equal to 25% of the aggregate Australian dollar equivalent of the principal amount of the Offshore bonds on the initial issue date, the Fund has an amount equal to at least 0.25% of the Australian dollar equivalent of the aggregate principal amount of the bonds on the initial issue date invested in highly-rated, short-term investments. Part of the issue proceeds from the Offshore bonds, after conversion into A$ under the relevant currency swap, will be applied to meet this requirement on the initial issue date. These liquid authorized investments are available to make interest payments on the bonds if there are not enough interest collections from the housing loans available to make those payments.

        Each mortgage insurance policy includes timely payment cover for losses as a result of a borrower under a housing loan failing to pay all or part of a payment when due. This timely payment cover comprises at least twenty four months of missed payment installments for each housing loan.

Redraw Advances, Further Advances, Line of Credit Advances and Fast Prepayment Bonds

Redraw Advances, Further Advances and Line of Credit Advances

        Under the terms of most variable rate housing loans a borrower may, at the absolute discretion of the issuer trustee, redraw previously prepaid principal. In exercising any such discretion, the issuer trustee acts on proposals given to it by the servicer. A borrower may redraw an amount equal to the difference between the scheduled principal amount of the loan and the current principal amount of the loan. In addition, in certain circumstances the issuer trustee may make a further advance to a borrower where, after that further advance, the principal amount of the loan exceeds the scheduled principal amount of the loan at that time. Under a line of credit loan, the issuer trustee may also permit a borrower to make multiple borrowings up to the credit limit on the loan. The amount that the issuer trustee may advance to a borrower in respect of a particular housing loan from time to time depends on the circumstances described under "ARMS II Residential Loan Program—Redraw Advances, Further Advances and Line of Credit Advances".

        Any redraw advances, further advances and line of credit advances will be funded from the advances reserve. In addition, to the extent there are insufficient interest collections from the housing loans available to make interest payments on the bonds, the advances reserve shall be applied, after the cash reserve, towards

9

payment of the deficiency. If, at any time, the advances reserve is insufficient to fund redraw advances, further advances and line of credit advances, then the trust manager may give the issuer trustee a direction to, and the issuer trustee must, issue a series of fast prepayment bonds. The trust manager must not give this direction unless, among other things, it has received confirmation from each rating agency that the issue of the fast prepayment bonds would not result in a downgrade or withdrawal of a rating of any bond then outstanding. See "ARMS II Residential Loan Program—Redraw Advances, Further Advances and Line of Credit Advances".

Fast Prepayment Bonds

        In certain circumstances, the issuer trustee may issue fast prepayment bonds in A$. See "ARMS II Residential Loan Program—Advances Reserve and Fast Prepayment Bonds". No fast prepayment bonds are being offered under this prospectus.

        If issued, fast prepayment bonds will, prior to the occurrence of an event of default and enforcement of the charge under the security trust deed, rank equally with the Class A-1(a) bonds and the Class A-1(b) bonds in their right to receive interest payments. Fast prepayment bonds in respect of which the fast prepayment period has not expired will rank in priority to the Class A-1(a) bonds and the Class A-1(b) bonds in their right to receive principal payments. Fast prepayment bonds in respect of which the fast prepayment period has expired will rank equally with the Class A-1(a) bonds and the Class A-1(b) bonds in their right to receive principal payments. Following the occurrence of an event of default and enforcement of the charge under the security trust deed, the fast prepayment bonds will rank equally with the Class A-1(a) bonds and the Class A-1(b) bonds in their right to receive both interest and principal payments.

Hedging Arrangements

        To hedge its interest rate and currency exposures, the issuer trustee will enter into the following hedging arrangements:

•

fixed-floating rate swaps to hedge the basis risk between the interest rates on the housing loans which are subject to a fixed rate of interest and the floating rate obligations of the Fund, which includes the issuer trustee's interest payments to the currency swap provider under each currency swap. At no time will the aggregate of the notional amounts and contract amounts of all fixed-floating rate swaps entered into by the issuer trustee exceed 20% of the aggregate principal amount of all housing loans at that time.



•

currency swaps to hedge the currency risk between, on the one hand, the collections on the housing loans and the amounts received by the issuer trustee under the fixed-floating rate swaps, which are denominated in Australian dollars, and, on the other hand, the obligation of the Fund to pay interest and principal on the Offshore bonds, which are denominated in U.S. dollars or Euros, as the case may be, together with the basis risk between, on the one hand, amounts in respect of interest calculated under the fixed-floating rate swaps by reference to the Australian bank bill rate and, on the other hand, amounts in respect of interest calculated under the Offshore bonds by reference to LIBOR or EURIBOR, as the case may be.

Optional Redemption

        The trust manager will have the option to direct the issuer trustee to redeem all of the bonds on any payment date occurring on or after the earlier of:

•

October 10, 2009;



•

the date on which the Australian dollar equivalent of the total principal amount of the Offshore bonds is equal to or less than 10% of the Australian dollar

10

equivalent of the total principal amount of such bonds on the initial issue date; or

•

the date on which the trust manager delivers to the bond trustee an opinion of counsel that either: on the next payment date the issuer trustee will be required to deduct or withhold from any payment of principal or interest on any bonds any amount for or on account of any present or future tax of any Australian government body; or the total amount payable in respect of interest on the housing loans ceases to be receivable by reason of any deduction or withholding for or on account of any present or future tax of any Australian government body; or



•

the date on which any currency swap is terminated and not replaced on terms such that the rating of any bond is downgraded, qualified or withdrawn.

        If the trust manager directs the issuer trustee to redeem the bonds, the issuer trustee must so redeem the bonds and the bondholders will receive a payment equal to the outstanding principal amount of the bonds plus any outstanding interest on the bonds. As to the circumstances in which the trust manager may give such a direction, see "Description of the Offshore bonds—Redemption of the Bonds Upon Issuer Call Option Event".

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The Housing Loan Pool

        The housing loan pool will consist of residential housing loans bearing either a fixed rate or variable rate of interest, secured by mortgages on owner occupied and non-owner occupied residential properties. The housing loans will have original terms to stated maturity of no more than 30 years. The pool of housing loans has the following characteristics:

Selected Housing Loan Pool Data as of the Close of Business on December 28, 2003

        The original loan to value ratio of a housing loan is calculated by comparing the initial principal amount of the housing loan or, in the case of a line of credit loan, the initial maximum credit limit applicable to that line of credit loan, to:

•

where the principal secured under that housing loan is to be used in whole or in part to purchase the property securing that housing loan, the lower of:



•

the most recent valuation of that property; and



•

the purchase price paid by the borrower to purchase that property; or



•

in any other case, the most recent valuation of the property securing that housing loan.

        Thus, if collateral has been released from the mortgage securing a housing loan or if the property securing the housing loan has been revalued, the original loan to value ratio may not reflect the actual loan to value ratio at the date of acquisition of that housing loan by the Fund.

        The current loan to value ratio of a housing loan, at any time, is calculated by comparing the actual outstanding principal amount of the housing loan at that time to the current property valuation, which will be determined as follows:

•

where a new valuation of the property securing that housing loan has been obtained since the date the housing loan was originated, that valuation; or



•

where:



•

a new valuation of the property securing that housing loan has not been obtained since the date the housing loan was originated; and



•

the principal secured under that loan was not used in whole or in part to purchase that property;

the most recent valuation of the property securing that housing loan as at the date the housing loan was originated; or

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•

where:



•

a new valuation of the property securing that housing loan has not been obtained since the date the housing loan was originated; and



•

the principal secured under that loan was used in whole or in part to purchase that property,

the lower of:

•

the most recent valuation of the property securing that housing loan as at the date the housing loan was originated; and



•

the purchase price paid by the borrower to purchase that property.

        In respect of a further advance, as to which see the second bullet point under "ARMS II Residential Loan Program—Redraw Advances, Further Advances and Line of Credit Advances—Further Advances", the adjusted loan to value ratio is calculated by comparing the scheduled principal balance immediately prior to the further advance, together with the amount of the further advance and any undrawn line of credit under the housing loan, to the current property valuation.

        Before the issuance of the bonds, housing loans may be added to or removed from the housing loan pool. New housing loans may also be substituted for housing loans that are removed from the housing loan pool. This addition, removal or substitution of housing loans may result in changes in the housing loan pool characteristics shown in the preceding table and could affect the weighted average lives and yields of the bonds. The trust manager will not add, remove or substitute any housing loans prior to the initial issue date if this would result in a change of more than 5% in any of the characteristics of the pool of housing loans described in the above table other than a change in the Housing Loan Pool Size, Total Number of Housing Loans or Total Valuation of the Properties where the change is due to adding or removing loans due to a fluctuation in the A$/US$ exchange rate or the A$/€ exchange rate, unless a revised prospectus is delivered to prospective investors.

13

U.S. Tax Status

        In the opinion of Mayer, Brown, Rowe & Maw LLP, special U.S. tax counsel to the trust manager, the Offshore bonds will be characterized as debt for U.S. federal income tax purposes and the issuer trustee and the Fund will not be subject to United States federal income tax. Each Offshore bondholder, by acceptance of an Offshore bond, agrees to treat the bonds as indebtedness. See "United States Federal Income Tax Matters".

Australian Tax Status

        The Offshore bonds should be characterized as debt for Australian tax purposes. See "Australian Tax Matters".

Australian Withholding Tax

        Payments of principal and interest on the Offshore bonds will be reduced by any applicable withholding taxes assessed on the issuer trustee or any paying agent and could be reduced if any withholding taxes are assessed in respect of payments under the housing loans. Neither the issuer trustee nor the bond trustee nor any paying agent nor any borrower is obliged to pay any additional amounts to the Offshore bondholders to cover any withholding taxes.

        If an Australian government body requires the withholding of amounts:

•

from payments of principal or interest to the bondholders; or



•

from interest payments by borrowers under the housing loans with the effect that those interest payments cease to be receivable by the issuer trustee,

        due to taxes, duties, assessments or other governmental charges, the issuer trustee must, when so directed by the trust manager and provided the issuer trustee will be in a position to discharge all of its liabilities in respect of the bonds, redeem all of the bonds. See "Australian Tax Matters".

Legal Investment

        The Offshore bonds will not constitute "mortgage-related securities" for the purposes of the Secondary Mortgage Market Enhancement Act of 1984. No representation is made as to whether the bonds 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 regulatory authorities. You are urged to consult with your own legal advisors concerning the status of the Offshore bonds as legal investments for you. See "Legal Investment Considerations".

ERISA Considerations

        Subject to considerations discussed herein under "ERISA Considerations", the Offshore bonds will be eligible for purchase by retirement plans subject to the Employee Retirement Income Security Act of 1974, as amended (ERISA) or Section 4975 of the Internal Revenue Code of 1986, as amended (the Code). Investors should consult their counsel with respect to the consequences under ERISA and the Code of the plan's acquisition and ownership of the Offshore bonds. See "ERISA Considerations."

Book-Entry Registration

        Persons acquiring beneficial ownership interests in the Offshore bonds will hold their Offshore bonds through The Depository Trust Company in the United States or Clearstream, Luxembourg or Euroclear outside of the United States. Transfers within The Depository Trust Company, Clearstream, Luxembourg or Euroclear will be in accordance with the usual rules and operating procedures of the relevant system. Crossmarket transfers between persons holding directly or indirectly through The Depository Trust Company, on the one hand, and persons holding directly or indirectly through Clearstream, Luxembourg or Euroclear, on the other hand, will take place in The Depository Trust Company through the relevant depositories of Clearstream, Luxembourg or Euroclear.

14

Listing on Irish Stock Exchange

        Application will be made to the Irish Stock Exchange for each class of Offshore bonds to be admitted to the Daily Official List. There can be no assurance that any such listing will be obtained. The issuance and settlement of each class of Offshore bonds on the initial issue date is not conditional on the listing of such Offshore bonds on the Irish Stock Exchange. See "General Information—Listing on Irish Stock Exchange".

Interest and Principal Collections

        The issuer trustee will receive for each calculation period the following amounts, which are known as interest collections:

•

payments of interest and fees under the housing loans;



•

amounts received under the fixed-floating rate swaps;



•

income derived from authorized investments standing to the credit of the cash reserve, except if, the Australian dollar equivalent of the total principal amount of the Offshore bonds is equal to or less than 10% of the Australian dollar equivalent of the total principal amount of such bonds on the initial issue date, then interest on authorized investments standing to the credit of the cash reserve must be credited to the cash reserve;



•

indemnity payments from the trust manager in respect of the expenses of the Fund; and



•

payments of all other amounts under or in respect of the assets of the Fund which the trust manager determines to be of an income nature.

        The issuer trustee will receive for each calculation period the following amounts, which are known as principal collections:

•

payments of principal under the housing loans; and



•

payments of all other amounts under or in respect of the assets of the Fund which are not interest collections.

        Interest collections are normally used to pay fees and expenses of the issuer trustee in connection with the Fund, together with interest on the bonds. Principal collections are normally used to pay principal on the bonds. However, if there are not enough interest collections to pay interest on the bonds on a payment date, the trust manager must direct the issuer trustee to, and the issuer trustee must, apply liquid authorized investments, if any, first, from the cash reserve, and then, to the extent that there is still a shortfall, from the advances reserve, to meet those interest payments. Any liquid authorized investments used to make interest payments on the bonds will be replenished on future payment dates from excess interest collections, to the extent available.

        If there are excess interest collections after the payment of all interest on the bonds and the replenishment of liquid authorized investments from the cash reserve and the advances reserve, such excess will be applied:

•

first, to reduce, pro rata, any charge-offs on the Class A-1(a) bonds, the Class A-1(b) bonds and the fast prepayment bonds, if any;



•

second, to reinstate, pro rata, the stated amount of the Class A-1(a) bonds, the Class A-1(b) bonds and the fast prepayment bonds, if any;



•

third, to reduce, pro rata, any charge-offs on the Class B-1(a) bonds and the B-1(b) bonds; and



•

fourth, to reinstate, pro rata, the stated amount of the Class B-1(a) bonds and the B-1(b) bonds.

        Any remaining interest collections will be distributed to the residual income beneficiary on each payment date.

Interest on the Bonds

        Interest on the bonds will be payable quarterly in arrears on each payment date. This period is referred to as an interest period. Amounts available to make interest payments on the bonds will be allocated pro rata between the Class A-1(a) bonds, the Class A-1(b) bonds and

15

the fast prepayment bonds, if any. Amounts available to make interest payments on the bonds will be allocated to pay interest on the Class A-1(a) bonds, the Class A-1(b) bonds and the fast prepayment bonds, if any, before any allocation is made to pay interest on the Class B-1(a) bonds and the Class B-1(b) bonds. Interest on each class of bonds is calculated for each interest period as follows:

•

on a daily basis at the bond's interest rate;



•

on the outstanding principal amount of that bond at the beginning of that interest period, after giving effect to any payments of principal with respect to that bond on that day; and



•

on the basis of the actual number of days in that interest period and a year of 360 days for the Offshore bonds, or 365 days for the fast prepayment bonds.

Principal on the Bonds

        Principal on the Offshore bonds will be payable on each payment date. If any fast prepayment bonds have been issued, principal will be repaid first on the fast prepayment bonds in respect of which the fast prepayment period has not expired and then, pro rata, between the Class A-1(a) bonds, the Class A-1(b) bonds and the fast prepayment bonds in respect of which the fast prepayment period has expired. The Class B-1(a) bonds and the Class B-1(b) bonds will not receive any principal payments unless amounts allocated to pay principal on the Class A-1(a) bonds, the Class A-1(b) bonds and the fast prepayment bonds are sufficient to repay the outstanding principal amount of the Class A-1(a) bonds, the Class A-1(b) bonds and the fast prepayment bonds in full. On each payment date, the outstanding principal amount of each bond will be reduced by the amount of the principal payment made on that date on that bond. If the charge under the security trust deed is enforced after an event of default, the proceeds from the enforcement will be distributed pro rata between the Class A-1(a) bonds, the Class A-1(b) bonds, fast prepayment bonds, the currency swap provider in respect of the Class A US$ currency swap, the currency swap provider in respect of the Class A € currency swap and the fixed-floating rate swap provider prior to any distributions to the Class B-1(a) bonds and the Class B-1(b) bonds.

Allocation of Cash Flows

        On each payment date, the issuer trustee will repay principal and interest to each bondholder to the extent that there are collections received for those payments on that date. The charts on the next two pages summarize the flow of payments.

16

DISTRIBUTION OF INTEREST COLLECTIONS ON
EACH PAYMENT DATE PRIOR TO THE ENFORCEMENT OF THE CHARGE IN THE SECURITY TRUST DEED

		Payment or reimbursement of all taxes in respect of the Fund payable or paid during the corresponding calculation period or which the issuer trustee on the advice of the trust manager considers it necessary, on or before the date which is three Business Days before the payment date relating to that calculation period, to make provision for.
		Payment or reimbursement of all Expenses of the Fund—except for the manager's fee—payable or paid during the corresponding calculation period or which the issuer trustee on the advice of the trust manager considers it necessary, on or before the date which is three Business Days before the payment date relating to that calculation period, to make provision for.
		Payment or reimbursement of the aggregate fixed-floating rate swap payments for that calculation period other than any break costs payable to the fixed-floating rate swap provider.
		Payment of the manager's fee, including any manager's fee remaining unpaid from previous payment dates.
		Payment, pari passu and rateably:     •  to the currency swap provider of the Class A US$ Currency Swap Payment Amount for that payment date;     •  to the currency swap provider of the Class A € Currency Swap Payment Amount for that payment date; and     •  to the bondholders of fast prepayment bonds (if any) of the interest due and payable on those bonds in respect of the interest period ending on that payment date, pari passu and rateably.
		Payment, pari passu and rateably:     •  to the currency swap provider of the Class B US$ Currency Swap Payment Amount for that payment date; and     •  to the currency swap provider of the Class B € Currency Swap Payment Amount for that payment date.
		Crediting to the cash reserve an amount equal to the aggregate of all amounts previously applied from the cash reserve under "Description of the Offshore Bonds-Use of Cash Reserve and Advances Reserve", to the extent not previously credited under this provision.
		Crediting to the advances reserve an amount equal to the aggregate of all amounts previously applied from the advances reserve under "Description of the Offshore Bonds—Use of Cash Reserve and Advances Reserve", to the extent not previously credited under this provision.
		Reducing pari passu and rateably, any Charge-offs that would otherwise occur on that date in relation to the fast prepayment bonds, if any, and the Class A bonds, and any amount so applied will constitute part of the Available Amortisation Amount.

17

		Reinstating pari passu and rateably, the stated amount of the fast prepayment bonds and the Class A bonds to the extent of the Unreimbursed Charge-offs in relation to the fast prepayment bonds and the Class A bonds and any amount so applied will constitute part of the Available Amortisation Amount.
		Reducing pari passu and rateably, any Charge-offs that would otherwise occur on that date in relation to the Class B bonds, and any amount so applied will constitute part of the Available Amortisation Amount.
		Reinstating pari passu and rateably the stated amount of the Class B bonds to the extent of the Unreimbursed Charge-offs in relation to the Class B bonds, and any amount so applied will constitute part of the Available Amortisation Amount.
		Payment to the fixed-floating rate swap provider of all break costs paid or payable during the corresponding calculation period in respect of the termination of the fixed-floating rate swap.
		Payment of the balance (if any) to the residual income beneficiary by way of a distribution of the income of the Fund.

18

DISTRIBUTION OF THE AVAILABLE AMORTISATION AMOUNT ON
EACH PAYMENT DATE PRIOR TO THE ENFORCEMENT OF THE CHARGE IN THE SECURITY TRUST DEED

		Repayment of the principal amount of all fast prepayment bonds (if any) in respect of which the fast prepayment period has not expired, pari passu and rateably among each tranche of fast prepayment bonds in order of issue.
		Payment or repayment, pari passu and rateably:     •  to the currency swap provider of an amount equal to the A$ Equivalent of the aggregate principal amount of the Class A-1(a) bonds on that payment date;     •  to the currency swap provider of an amount equal to the A$ Equivalent of the aggregate principal amount of the Class A-1(b) bonds on that payment date; and     •  of the principal amount of all fast prepayment bonds (if any) in respect of which the fast prepayment period has expired, pari passu and rateably.
		Payment, pari passu and rateably:     •  to the currency swap provider of an amount equal to the A$ Equivalent of the aggregate principal amount of the Class B-1(a) bonds on that payment date; and     •  to the currency swap provider of an amount equal to the A$ Equivalent of the aggregate principal amount of the Class B-1(b) bonds on that payment date.

19

RISK FACTORS

        The Offshore bonds are complex securities issued by a foreign entity and secured by property located in a foreign jurisdiction. You should consider the following risk factors in deciding whether to purchase any Offshore bonds. There may be other unforeseen reasons why you might not receive principal or interest on your Offshore bonds. You should also read the detailed information set out elsewhere in the prospectus.

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21

22

23

24

25

26

27

28

29

CAPITALIZED TERMS

        The capitalized terms used in this prospectus, unless defined elsewhere in this prospectus, have the meanings set forth in the Glossary starting on page 143.

U.S. DOLLAR AND EURO PRESENTATION

        In this prospectus, references to "U.S. dollars" and "US$" are references to U.S. currency, references to "Australian dollars" and "A$" are references to Australian currency and references to "Euros" and "€" are references to the lawful currency of the member states of the European Union that adopt the single currency in accordance with the EC treaty. Unless otherwise stated in this prospectus, any translations of Australian dollars into U.S. dollars have been made at a rate of US$0.7702 = A$1.00, the noon buying rate in New York City for cable transfers in Australian dollars as certified for customs purposes by the Federal Reserve Bank of New York on January 6, 2004 and any translations of Australian dollars into Euros have been made at a rate of €0.6058 = A$1.00, the exchange rate as displayed on the Bloomberg Service under ADEU currency HP on January 6, 2004. Use of such rate is not a representation that Australian dollar amounts actually represent such U.S. dollar or Euro, as the case may be, amounts or could be converted into U.S. dollars or Euros, as the case may be, at that rate.

30

THE ISSUER TRUSTEE, THE TRUST MANAGER AND THE SERVICER

The Issuer Trustee

        Permanent Custodians Limited (PCL) was incorporated on December 21, 1976 as V.G. Consultants Pty. Limited. Its name was changed to Permanent Custodians Limited (with one intermediate name change) on April 30, 1981. It was incorporated as, and continues to operate as, a limited liability public company under the Corporations Act 2001 of Australia. The Australian Company Number of PCL is 001 426 384 and its registered office is at Level 4, 35 Clarence Street, Sydney, New South Wales, Australia.

        The total authorized and issued share capital of PCL is A$10,000 divided into 10,000 ordinary shares with a nominal value of A$1 each. The issued shares are held by Permanent Trustee Company Limited (PTCL).

        On August 14, 2002, the Directors of PTCL and the Trust Company of Australia Limited (TCAL) made a joint announcement to the Australian Stock Exchange of their agreement to merge the two companies. The merger was finalized on December 6, 2002 and resulted in TCAL shareholders and PTCL shareholders each accounting for 50 percent of the issued share capital of the merged group. PCL is a wholly owned subsidiary of PTCL, which itself is now a wholly owned subsidiary of TCAL. TCAL is a limited liability public company incorporated in 1885 whose major business activity is to act as trustee, custodian, executor and attorney. It is listed on the Australian Stock Exchange Limited.

        The principal activities of PCL are the provision of trustee services in relation to custodial trusts and securitization trusts. There is no intention to accumulate surpluses in PCL.

Directors

        The directors of PCL are as follows:

The Trust Manager

        Australian Securitisation Management Pty Limited was incorporated on February 24, 2003, and continues to exist and operate as a limited liability company under the Corporations Act 2001 of Australia. The Australian Business Number of Australian Securitisation Management Pty Limited is 32 103 852 428 and its registered office is Level 6, 12 Castlereagh Street, Sydney, New South Wales 2000, Australia and the telephone and facsimile numbers for its registered office are (612) 8236 8800 and (612) 9216 3800 respectively.

31

        Australian Securitisation Management Pty Limited has 1 share on issue with a paid amount of A$1.00. The share is held by Australian Mortgage Securities Ltd (ABN 89 003 072 446).

Directors

        The directors of Australian Securitisation Management Pty Limited are as follows:

The Servicer

        Australian Mortgage Securities Ltd (AMS) was incorporated on March 19, 1986 as, and continues to operate as, a limited liability public company under the Corporations Act 2001 of Australia. The Australian Business Number of AMS is 89 003 072 446 and its registered office is Level 6, 12 Castlereagh Street, Sydney, New South Wales, Australia. The significant business activities of AMS are to provide servicing and trust manager services to securitization programs.

        AMS is a wholly-owned subsidiary of Australian Financial Investments Group Limited (ABN 73 106 361 102) (AFIG).

32

        AFIG, in turn, is controlled by four shareholders or shareholder groups, each with a 25 percent ownership interest, being:

•

ABN AMRO Bank N.V., the largest banking group based in The Netherlands with total consolidated assets of Euro 556.0 billion as at December 31, 2002, and branches in more than 60 countries and territories;



•

Deutsche Asset Management (Australia) Limited, as trustee/manager for various institutional investors, being STC (a New South Wales State Government employee statutory fund), CSS/PSS (Australian Federal Government employee statutory funds), and the Deutsche Bank Private Equity Fund. Deutsche Asset Management (Australia) Limited is one of Australia's foremost private equity investors and managers;



•

Publishing and Broadcasting Limited (PBL), which is listed on the Australian Stock Exchange Limited. PBL and its associates form part of Australia's largest media and entertainment group; and



•

the State Capital Corporation group, a private family fund controlled by the original founder and current chairman of AFIG, Mark Bouris.

        AMS is currently ranked as a "Strong" residential loan servicer in Australia by S&P.

        Under a guarantee (the Guarantee) dated January 25, 1991 as amended on November 16, 1995, Algemene Bank Nederland NV (ABN) and Amsterdam-Rotterdam Bank N.V. (AMRO) guaranteed to Perpetual Trustee Company Limited (ACN 000 001 007) for the benefit of creditors of certain subsidiaries (the Subsidiaries), the due and punctual payment and performance by the Subsidiaries of all moneys which were at the date of the Guarantee then due or thereafter may become due, owing or payable by the Subsidiaries and obligations of the Subsidiaries to any creditor whether actual or contingent, present or future (the Obligations).

33

        ABN AMRO Bank N.V. (ABN AMRO) is the result of a merger, effective September 22, 1991, between ABN and AMRO. As a consequence of this merger, the liabilities originally incurred by ABN and AMRO under the Guarantee are now liabilities of ABN AMRO.

        On March 2, 1998, AMS became a Subsidiary for the purposes of the Guarantee. On March 20, 2002, the Guarantee terminated in accordance with its terms, in respect of AMS. Accordingly, the obligations of AMS incurred after March 2, 1998 and before March 20, 2002 are guaranteed, subject to the terms of the Guarantee, by ABN AMRO. For practical purposes, the effect is that, subject to various exclusions, the representations and warranties given by AMS to the issuer trustee under the master origination and servicing agreement in respect of mortgages comprised in the housing loan pool which were originated prior to March 20, 2002 are guaranteed; and that the other obligations of AMS under the transaction documents are not guaranteed. The representations and warranties given by AMS in the master origination and servicing agreement are extensive and relate principally to the origination of the mortgages compromised in the housing loan pool, their compliance with the eligibility criteria and compliance with the agreed procedures.

Directors

        The directors of AMS are the same as the directors of Australian Securitisation Management Pty Limited. See "The Issuer Trustee, the Trust Manager and the Servicer—The Trust Manager—Directors" above.

34

DESCRIPTION OF THE FUND

ARMS II Securitization Program

        The ARMS II securitization program was established pursuant to a master trust deed dated March 7, 1995 among Permanent Custodians Limited and Australian Mortgage Securities Ltd, as amended and restated from time to time for the purpose of enabling Permanent Custodians Limited, as trustee of each trust known as a "fund" established pursuant to the ARMS II securitization program, to invest in pools of housing loans originated from time to time by the servicer. The master trust deed provides for the creation of an unlimited number of funds. Under the ARMS II securitization program, approximately A$16.2 billion (or equivalent) of mortgage-backed securities have been issued into the Australian domestic market, Euro markets and global market through 14 Australian domestic securitization transactions, 5 Euro market and 2 global securitization transactions. The aggregate outstanding principal amount of housing loans under management in the ARMS II securitization program is currently approximately A$13.4 billion. The master trust deed establishes the general framework under which funds may be established from time to time. It does not actually establish any funds. ARMS II Global Fund 3 is an Australian trust and is a separate and distinct trust from any other fund established under the master trust deed. The assets of ARMS II Global Fund 3 are not available to meet the liabilities of any other fund and the assets of any other fund are not available to meet the liabilities of ARMS II Global Fund 3.

ARMS II Global Fund 3

        The detailed terms of ARMS II Global Fund 3 will be as set out in the master trust deed and the supplementary bond terms. To establish the Fund, the trust manager will execute a fund creation notice and settle A$20 on the issuer trustee, as the initial assets of the Fund. Except for the transactions described herein relating to the issuance of the bonds as of the date of this prospectus, the Fund has not engaged in any other business and no financial statements relating to the Fund have been prepared. The Fund is governed by the laws of New South Wales, Australia.

        The supplementary bond terms, which supplement the general framework under the master trust deed with respect to the Fund, do, among other things, the following:

•

specify the details of the bonds;



•

establish the cash flow allocation; and



•

amend the master trust deed to the extent necessary to give effect to the specific aspects of the Fund and the issue of the bonds.

35

DESCRIPTION OF THE ASSETS OF THE FUND

Assets of the Fund

        The assets of the Fund will include the following:

•

the pool of housing loans, including all of the issuer trustee's interest in and title to principal and interest payments paid or payable on the housing loans at any time from and after the initial issue date; and



•

rights under the:



•

mortgage insurance policies issued by, or transferred to GE Capital Mortgage Insurance Corporation (Australia) Pty Ltd, PMI Mortgage Insurance Ltd and the Commonwealth of Australia (as managed by GE Mortgage Insurance Pty Limited);



•

the individual property insurance policies covering the mortgaged properties relating to the housing loans;



•

amounts on deposit in the accounts established in connection with the creation of the Fund and the issuance of the bonds, including the collection account and any instruments in which these amounts are invested; and



•

the issuer trustee's rights under the transaction documents.

The Housing Loans

        The housing loans are secured by registered first ranking mortgages on properties located in Australia. The housing loans have been originated in the name of Permanent Custodians Limited directly by Australian Mortgage Securities Ltd through an Australia-wide network of mortgage originators and introducers, including specialist mortgage origination companies and financial intermediaries. On the initial issue date, in accordance with the master trust deed, Permanent Custodians Limited will cease to hold the pool of housing loans for the relevant warehouse funds and will instead hold them for the Fund. Each housing loan was funded by Permanent Custodians Limited in its capacity as trustee of a warehouse fund and so Permanent Custodians Limited is the legal owner of all relevant housing loans. Each housing loan will be one of the types of products described in "ARMS II Residential Loan Program—Features of the Housing Loans". The housing loans bear either a fixed rate of interest or a variable rate of interest, or a combination of both. The mortgaged properties consist of owner-occupied properties and non-owner occupied properties, but do not include mobile homes which are not permanently affixed to the ground, commercial properties or unimproved land.

Transfer and Assignment of the Housing Loans

        On the initial issue date, the housing loans acquired by the Fund will be specified in an issue notice from the trust manager to the issuer trustee.

        Upon receipt of the issue proceeds in respect of the bonds, in accordance with the master trust deed, PCL will:

•

cease to hold the housing loans specified in the issue notice, together with the mortgages securing those housing loans, the mortgage insurance policies and the insurance policies on the mortgaged properties relating to those housing loans, in its capacity as trustee of each relevant warehouse fund and will hold them as trustee of the Fund; and



•

hold the issue proceeds in its capacity as trustee of each relevant warehouse fund.

36

        Both before and after the assignment, PCL will hold legal title to the housing loans and the ancillary rights specified in the issue notice. Before the assignment, PCL will hold each of the housing loans and ancillary rights in its capacity as trustee of a warehouse fund. After the assignment, it will hold the housing loans and ancillary rights in its capacity as trustee of ARMS II Global Fund 3.

Representations and Warranties

        Australian Mortgage Securities Ltd, as the servicer, will make various representations and warranties to the issuer trustee with respect to each mortgage securing the housing loans being acquired by the Fund as of the date of origination of those housing loans and the date not earlier than one day prior to the initial issue date, including that:

•

an approved solicitor was instructed in accordance with the agreed procedures to act for the issuer trustee in relation to that mortgage;



•

before or at the time of origination of that mortgage, the approved solicitor instructed in relation to that mortgage gave a solicitor's certificate which complied with the agreed procedures;



•

that mortgage is and will at all times be, in all material respects, in the form required by the agreed procedures, and the servicer will not agree to any amendment, variation or waiver except as specifically permitted by and in accordance with the master origination and servicing agreement or the agreed procedures;



•

the property secured by that mortgage is insured in accordance with the requirements of the mortgage;



•

the housing loan application is substantially in the form required by the agreed procedures, has been fully investigated by the servicer in accordance with the agreed procedures, and the servicer is satisfied that all statements and information contained in it are correct in all material respects; and



•

the servicer is not aware of any circumstances relating to the mortgage, the property secured by that mortgage, the borrower or any guarantor which could reasonably be expected to cause a prudent investor to: regard the mortgage as an unacceptable investment; expect the borrower to default under the mortgage; or diminish the value or marketability of the property secured by that mortgage from that stated in the valuation.

        In addition, the servicer has certified to the issuer trustee with respect to each mortgage comprised in the housing loan pool that each housing loan secured by the mortgage meets the following criteria:

•

the housing loan must be advanced and repayable in Australian dollars;



•

the housing loan is secured by a mortgage which is a first ranking mortgage;



•

the housing loan is secured by a mortgage over land which is residential property;



•

the housing loan had a loan to value ratio not exceeding 97 percent, determined at or about the time of its settlement—see "ARMS II Residential Loan Program—Credit Policy and Procedures—Loan to Value Ratios" for a description of the original loan to value ratio of a housing loan;



•

the housing loan has a total principal amount outstanding of at least A$10,000 and no more than:



•

in the case of a housing loan other than a line of credit loan or a Fastdoc loan A$2,000,000 (at the time of origination);

37

•

in the case of a Fastdoc80 loan A$750,000 (at the time of origination); and



•

in the case of a stand-alone line of credit loan, a Fastdoc76 loan or a Fastdoc65 loan A$500,000 (at the time of origination);



•

the housing loan is secured by a mortgage which is covered by a mortgage insurance policy providing:



•

100 percent coverage for principal and interest losses; and



•

timely payment coverage for interest and principal for a maximum aggregate amount of at least 24 months;



•

except as disclosed to the issuer trustee in writing and approved or waived by it on or prior to the origination or acquisition of the relevant mortgage, each mortgage has been originated in the issuer trustee's name in accordance with the master origination and servicing agreement and the agreed procedures;



•

the housing loan is not secured by a mortgage over land where such land is not zoned by the relevant government body to contain a residential building;



•

the housing loan is not secured by a mortgage over vacant land or residential properties under construction;



•

the housing loan and/or mortgage (as applicable) has been or will be stamped, or has been taken by the relevant stamp duties authorities to be stamped, with applicable duty;



•

the housing loan will fully amortize over its term; and



•

the housing loan is to mature at least one year before the maturity date of the bonds.

Breach of Representations and Warranties

        The servicer must indemnify the issuer trustee on demand for all liabilities, damages, claims, losses, costs and expenses which the issuer trustee may incur as a result, directly or indirectly, of any breach by the servicer of any representation and warranty in relation to a housing loan.

Details of the Housing Loan Pool

        The information in the following tables set out various details relating to the housing loans to be sold to the Fund on the initial issue date. The information is provided as of the close of business on December 28, 2003. All amounts have been rounded to the nearest Australian dollar. The sum in any column may not equal the total indicated due to rounding.

        Note that these details may not reflect the housing loan pool as of the initial issue date because the trust manager may substitute loans proposed for sale with other eligible housing loans or add additional eligible housing loans. The trust manager may do this if, for example, the loans originally selected are repaid early.

        The trust manager will not add, remove or substitute any housing loans prior to the initial issue date if this would result in a change of more than 5% in any of the characteristics of the pool of housing loans described in the table on page 12 other than a change in the Housing Loan Pool Size, Total Number of Housing Loans or Total Valuation of the Properties where the change is due to adding or removing loans due to a fluctuation in the US$/A$ exchange rate or to a fluctuation in the €/A$ exchange rate, unless a revised prospectus is delivered to prospective investors.

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HOUSING LOAN INFORMATION

SUMMARY STATISTICS*

*

There are no Fastdoc loans in the housing loan pool.

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Housing Loans by Current LVR (Loan to Value Ratio)