LEGAL INVESTMENT CONSIDERATIONS Institutions whose investment activities are subject to legal investment laws and regula- tions or to review by certain regulatory authorities may be subject to restrictions on investment in the Securities. No representation is made about the proper characterization of any Class  for  legal  investment  or  other  purposes,  or  about  the  permissibility  of  the purchase  by  particular  investors  of  any  Class  under  applicable  legal  investment restrictions. Investors should consult their own legal advisors regarding applicable investment restrictions and the effect of any restrictions on the liquidity of the Securities prior to investing in the Securities. See "Legal Investment Considerations" in the Base Offering Circular. PLAN OF DISTRIBUTION Subject to the terms and conditions of the Sponsor Agreement, the Sponsor has agreed to purchase all of the Securities if any are sold and purchased. The Sponsor proposes to offer each Class to the public from time to time for sale in negotiated transactions at varying prices to be determined at the time of sale, plus accrued interest, if any, from (1) May 1, 2004 on the Fixed Rate Classes and Classes IW and IX and (2) May 16, 2004 on the Group 1, 5 and 6 Floating Rate and Inverse Floating Rate Classes. The Sponsor may effect these transactions by sales to or through certain securities dealers. These dealers may receive compensation in the form of discounts,  concessions  or  commissions  from  the  Sponsor  and/or  commissions  from  any purchasers for which they act as agents. Some of the Securities may be sold through dealers in relatively small sales. In the usual case, the commission charged on a relatively small sale of securities will be a higher percentage of the sales price than that charged on a large sale of securities. INCREASE IN SIZE Before the Closing Date, Ginnie Mae, the Trustee and the Sponsor may agree to increase the size of this offering. In that event, the Group 1, 2, 5 and 6 Securities will have the same characteristics as described in this Supplement, except that (1) the Original Class Principal Balance (or original Class Notional Balance), (2) the Original Component Principal Balance of each Component and (3) the Scheduled Principal Balances and Aggregate Scheduled Principal Balances of each Class receiving principal distributions or interest distributions based upon a notional balance from the same Trust Asset Group will increase by the same proportion. The Trust Agreement, the Final Data Statement, the Final Schedules and the Supplemental State- ment, if any, will reflect any increase in the size of the transaction. LEGAL MATTERS Certain legal matters will be passed upon for Ginnie Mae by Hunton & Williams LLP and Harrell  &  Chambliss  LLP,  Richmond,  Virginia,  for  the  Trust  by  Cleary,  Gottlieb,  Steen  & Hamilton and Marcell Solomon & Associates, P.C., and for the Trustee by Seward & Kissell. S-48