VH-CNE was one of several aircraft which was flown from Bankstown to Rylstone for a "fly-in" day. During the day the student pilot, a resident of a nearby town, arranged to accompany the instructor on a flight to have acrobatics demonstrated to him for the first time. The two pilots were subsequently observed to board the aircraft and, in accordance with normal instructional practice, the student occupied the left seat and the instructor the right seat. The aircraft then took off in a north-westerly direction. Subsequently several witnesses situated some four miles east of the departure point observed an aircraft performing a series of acrobatic manoeuvres in that area. The aircraft progressively lost height as the Vnanoeuvres continued and it did not resume normal flight until it was at a height estimated to be only a few hundred feet above ground level. It was then observed to commence climbing and, at a height of about 1,000 feet, perform a loop type manoeuvre. Recovery from this manoeuvre appeared to progress to the stage of a steep dive and the aircraft then passed out of sight behind the crest of a hill. There was no further sighting of the aircraft in flight and, shortly after it passed out of sight, two of the witnesses heard a loud noise which they subsequently assumed to be the noise of the aircraft crashing. When VH-CNE did not return to the point of departure, and radio communication with it was not established, an air and ground search was commenced and the wreckage was subsequently located in timbered terrain on the following morning. Detailed examination of the wreckage indicated that initial impact had been with a tree and that the aircraft had been flying at a relatively high speed in a 20° nose down attitude. This is consistent with recovery from a loop type manoeuvre.