Issue ProspectusIMPORTANT

If prospective investors are in any doubt about this Issue Prospectus, they should consult their stockbroker, bank manager, solicitor, professional accountantor other professional adviser.

This Issue Prospectus has been prepared for the purpose of giving information in respect of the issue by Victoria Peak International Finance Limited (the“Issuer”) of the notes described herein pursuant to its Retail Note Programme (the “Programme”). The offering of the Notes is made pursuant to this IssueProspectus and the programme prospectus dated 30 August 2004 (the “Programme Prospectus”). Prospective investors should read the ProgrammeProspectus, which includes important information about the Issuer and the Programme, together with this Issue Prospectus before making an investmentdecision.

Octave Notes Series 1US Dollar Callable Credit-Linked Fixed Rate Notes due 2009 (“Tranche A Notes”)

US Dollar Callable Credit-Linked Range Accrual Notes due 2009 (“Tranche B Notes”)HK Dollar Callable Credit-Linked Fixed Rate Notes due 2009 (“Tranche C Notes”)

HK Dollar Callable Credit-Linked Range Accrual Notes due 2009 (“Tranche D Notes”)(each a “Tranche” and the notes of any or all Tranches, the “Notes”)

issued byVictoria Peak International Finance Limited

(incorporated with limited liability in the Cayman Islands)

pursuant to itsRetail Note Programme

Offer Period: From 9.00 a.m. on 31 August 2004 to 4.30 p.m. on 15 September 2004 or such earlier or later date as may be determinedby the Arranger in its absolute discretion.

Issue Price: 100 per cent.

Issue Size: In order to maintain flexibility with respect to the aggregate principal amount of the Notes to be issued, the actualaggregate principal amount of each Tranche of Notes to be issued shall be determined by Morgan Stanley & Co.International Limited (in such capacity, the “Arranger”) in its absolute discretion on the Fixing Date in light of generalmarket interest following distribution of this Issue Prospectus.

Please note that the Issuer after consultation with the Arranger may decide to issue one or more Tranche(s) or maydecide not to issue any or all of the Tranches on the Fixing Date in light of general market interest in the Notes.

Interest Rate: Tranche A Notes:3.90 per cent. per annum.Tranche B Notes:Year 1: 4.25 per cent. per annum.Year 2: 4.25 per cent. per annum.Year 3: 4.50 per cent. per annum.Year 4: 5.00 per cent. per annum.Year 5: 6.00 per cent. per annum.Provided that interest will only accrue on each calendar day in an Interest Period on which 3-month USD LIBOR is(or, as the case may be, is deemed to be) within the relevant LIBOR Accrual Range (as further described in “InterestRate” in the section headed “Information About the Notes”).Tranche C Notes:3.70 per cent. per annum.Tranche D Notes:Year 1: 4.00 per cent. per annum.Year 2: 4.00 per cent. per annum.Year 3: 4.25 per cent. per annum.Year 4: 4.75 per cent. per annum.Year 5: 5.75 per cent. per annum.Provided that interest will only accrue on each calendar day in an Interest Period on which 3-month USD LIBOR is(or, as the case may be, is deemed to be) within the relevant LIBOR Accrual Range (as further described in “InterestRate” in the section headed “Information About the Notes”).

Interest on all Tranches will be payable semi-annually in arrear on 30 March and 30 September in each year. If aCompany Credit Event occurs in respect of Hutchison Whampoa Limited and its Successors (as defined in AppendixB — “Technical Definitions” to this Issue Prospectus), the Notes will cease to bear any interest from the InterestPayment Date immediately preceding the occurrence of such Company Credit Event or, if the Company Credit Eventoccurs prior to the first Interest Payment Date, no interest will be payable on the Notes.

Denomination/PrincipalAmount per Note:

Tranche A Notes and Tranche B Notes: US$5,000Tranche C Notes and Tranche D Notes: HK$40,000

Fixing Date: Expected to be 17 September 2004, on which the Issue Size will be determined.

Issue Date: Expected to be 30 September 2004, but will not be later than 14 October 2004.

Maturity Date: 30 September 2009 (subject to early redemption as described herein).

Payment on Maturity Date: 100 per cent. of the principal amount of the Notes, subject as provided herein. However, the Notes will be redeemedprior to the Maturity Date at an amount which may be substantially less than their principal amount upon the occurrenceof certain events, such as a Company Credit Event in respect of the Company.

Issuer’s Call Option: The Issuer may exercise its call option under the Notes on any Interest Payment Date which falls on or after the firstanniversary of the Issue Date.

Security: (i) The Issuer will invest on the Issue Date using the proceeds received from the issuance of the Notes in USDdenominated securities rated “AA-” or above (or with equivalent ratings) (and which is not subject to a negativeoutlook) (the “Underlying Securities” or “Securities”); and (ii) the Issuer will enter into swap arrangements with theSwap Counterparty and the Forward Agreement with the Forward Counterparty referred to herein.

Listing: The Notes will not be listed on any exchange.

The Notes are not principal protected investments and the Issuer will not seek to have the Notes rated by any credit rating agency. Prospective investorsshould note there are many different types of retail notes and bonds in the Hong Kong market place, many of which will have unique and/or distinctivefeatures, and not all retail notes or bonds are capital protected. Prospective investors should ensure they understand the nature of the Notes and the risksinvolved, and are advised to read carefully the contents of this Issue Prospectus and the Programme Prospectus and in particular (but not limited to) thesections headed “Risk Factors” in these documents and the section headed “Application Procedures” in this Issue Prospectus and consult professionaladvisers as to the suitability of the Notes as an investment for their individual circumstances, before they invest in the Notes.

Prospective investors should contact one of the Distributors whose contact telephone numbers are listed on the following page if they wish to invest in theNotes.

A copy of this Issue Prospectus has been registered by the Registrar of Companies in Hong Kong as required by Section 342C of the Companies Ordinance (Cap.32) of Hong Kong (the “Companies Ordinance”). The Registrar of Companies in Hong Kong and the Securities and Futures Commission (the “SFC”) take noresponsibility as to the contents of this Issue Prospectus.

Arranger

Morgan Stanley & Co. International Limited

DistributorsBelgian Bank The Bank of East Asia, LimitedCITIC Ka Wah Bank Limited International Bank of Asia LimitedICEA Securities Limited Industrial and Commercial Bank of China (Asia) LimitedLiu Chong Hing Bank Limited Shanghai Commercial Bank Ltd.Wing Hang Bank, Ltd. Wing Lung Bank Limited

The date of this Issue Prospectus is 30 August 2004.

THE DISTRIBUTORS

During the Offer Period, prospective investors may only purchase Notes from an appointedDistributor. Prospective investors should telephone one of the appointed Distributors if they wish tofind out how to purchase Notes and/or obtain a list of distributing locations from where copies of theEnglish and Chinese language versions of the Programme Prospectus and this Issue Prospectus maybe obtained.

Additional distributors may be appointed by the Arranger after the date of this Issue Prospectus.The identities and “hotlines” of any such additional distributors will be made available to prospectiveinvestors upon request during normal business hours on any weekday (Saturdays, Sundays and publicholidays excepted) from the offices of the Arranger specified on page 31 of this Issue Prospectus.Reference herein to “Distributor(s)” shall be deemed to include any such additional distributor(s)appointed after the date of this Issue Prospectus.

Prior to an investment in the Notes, prospective investors must have received and read, or beengiven the opportunity to receive and read, the English or the Chinese language versions of theProgramme Prospectus and this Issue Prospectus. If prospective investors have not received a copy ofeither of these documents in their preferred language prior to making a decision to invest in the Notes,they must immediately contact their Distributor and obtain a copy of the missing documents in theirpreferred language.

The following are the Distributors which have been appointed as at the date of this IssueProspectus, and their respective “hotline” telephone numbers:

Distributors “Hotline”

Belgian Bank ............................... 3122 1668

The Bank of East Asia, Limited ... 2211 1311

CITIC Ka Wah Bank Limited ....... 2287 6788

International Bank of AsiaLimited..................................... 2566 8181

ICEA Securities Limited .............. 3102 5606

Distributors “Hotline”

Industrial and Commercial Bankof China (Asia) Limited............ 2887 0349

Liu Chong Hing Bank Limited ..... 2161 6888

Shanghai Commercial Bank Ltd. .. 2818 0282

Wing Hang Bank, Ltd. ................. 3199 9182

Wing Lung Bank Limited ............. 2526 5555

The Distributors have been (and any additional distributor(s) will be) appointed for the Notespursuant to one or more distributor appointment agreements entered into among such Distributors, theInitial Subscriber, the Co-ordinating Distributor and the Arranger (the “Distributor AppointmentAgreements”).

The Distributor Appointment Agreements set out amongst other things the need for theDistributors to comply fully with the selling restrictions set out in the section headed “Subscriptionand Sale — Selling Restrictions” in the Programme Prospectus and with all relevant laws, regulationsand guidelines or codes issued by the relevant regulatory authority, including but not limited to theCode of Conduct for Persons Licensed by or Registered with the SFC (the “SFC Code of Conduct”).In particular, the following undertakings have been given by each of them:

● Copies of the Programme Prospectus and this Issue Prospectus (each in separate Englishand Chinese language versions) will be made available and distributed to prospectiveinvestors in the manner described in the Programme Prospectus and this Issue Prospectusand only at the locations (the “Relevant Locations”) notified in writing by the Distributorsto the Arranger as being the distribution points of the Programme Prospectus and this IssueProspectus and no application for Notes may be accepted from a prospective investor whohas not had the opportunity to receive and read a copy of both these documents in hispreferred language (photocopies of any of these documents may not be substituted for theoriginal printed version).

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● Each Distributor must not sell Notes at any of its designated branches unless copies of the

Programme Prospectus and this Issue Prospectus in both the English and Chinese language

versions are available for distribution to prospective investors. If either the English or the

Chinese language version of either the Programme Prospectus or this Issue Prospectus runs

out or ceases to be available for distribution at any Relevant Location during the Offer

Period, then none of the Programme Prospectus and this Issue Prospectus should be madeavailable or distributed at that Relevant Location until such time as both the English andthe Chinese language versions of both of the Programme Prospectus and this IssueProspectus are again made available for distribution to the public at such RelevantLocation.

● Notes will not be sold on the basis of any information that is inconsistent with theProgramme Prospectus and this Issue Prospectus.

● Each Distributor will inform prospective investors that copies of the documents listed inparagraph 8 of the section headed “General Information” in the Programme Prospectus andunder “Display Documents” on page 47 of this Issue Prospectus are available for inspectionat the offices of the Arranger’s agent specified on page 31 of this Issue Prospectus.

● Each prospective investor will be required to confirm that he has read and understood theconfirmations set out on pages 33 to 35 of this Issue Prospectus (and if he is not able toso confirm the Distributor will give him an opportunity to read and/or give him assistanceto understand the confirmations).

● Any notices received from the Arranger during the Offer Period (including but not limitedto a notice of an extension or early close of the Offer Period) will immediately be relayedto prospective investors.

● Each Distributor will describe to each prospective investor the operating procedures forpayment and/or refund in respect of an application for Notes and shall provide details ofall charges levied by it for opening and maintaining a cash account and an investmentaccount for the Notes.

Under the SFC Code of Conduct, the Distributors as entities licensed by or registered withthe SFC are required to ensure that the suitability of the Notes to a prospective investor isreasonable in all circumstances when making a recommendation with respect to the Notes to thatprospective investor and to ensure that the prospective investor understands the nature and risksof investing in the Notes.

Following the end of the Offer Period of the Notes, any person who wishes to buy or sellNotes should contact either his Distributor or another broker to request a price from the MarketAgent (see the section headed “Market Making Arrangements” in this Issue Prospectus).

Advertising or promotional materials in respect of the Notes (the “marketing materials”)may be issued and/or distributed by parties other than the Issuer. Any such marketing materialsmust be issued in full compliance with all relevant laws, regulations, guidelines and/or codes(among other things, the law requires that any marketing materials must be true, accurate andnot misleading or deceptive) and should state clearly who takes full responsibility for the issueand content of such marketing materials. The Issuer makes no representation whatsoever thatthe contents of any such marketing materials are complete, not misleading, accurate and/or trueand no responsibility whatsoever is accepted in relation to any such marketing materials by anyperson who is responsible for the Programme Prospectus and/or this Issue Prospectus.

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References to websites

All references to websites in this Issue Prospectus are intended to assist prospectiveinvestors to access further information relating to the subject matter indicated. Prospectiveinvestors should conduct their own web searches to ensure that they are viewing the mostup-to-date information. Information appearing on such websites does not form part of theProgramme Prospectus and/or this Issue Prospectus. The Issuer accepts no responsibilitywhatsoever that such information, if available, is accurate and/or up-to-date, and noresponsibility is accepted in relation to any such information by any person responsible for theProgramme Prospectus and/or this Issue Prospectus.

The offer of the Notes by the Issuer is made solely on the basis of the information containedin the Programme Prospectus and this Issue Prospectus and prospective investors should exercisean appropriate degree of caution when assessing the value of other information which mayappear on such websites and/or marketing materials.

References to Noteholders

Prospective investors should be aware that where each Tranche of Notes is represented bya Global Certificate and registered in the name of a nominee for the common depositary forEuroclear and Clearstream International, the term “Noteholders” herein shall mean theregistered nominee for the common depositary for Euroclear and Clearstream International asthe legal holder of the relevant Tranche of Notes. Individual retail investors in the Notes are not“Noteholders” in this context. The terms “you”, “investors” or “prospective investors” have beenused herein to describe the individual retail investors purchasing the Notes from a Distributor.

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THE PROGRAMME PROSPECTUS AND THE ISSUE PROSPECTUS

Prospective investors are recommended to read the Programme Prospectus together with this

Issue Prospectus before deciding whether to invest in the Notes. The Programme Prospectus contains

important information about:

● the Issuer of the Notes;

● Morgan Stanley, as guarantor in respect of the payments made pursuant to swap

arrangements and the obligations of the Forward Counterparty pursuant to the Forward

Agreement as described herein;

● the Swap Agreement and Swap Guarantee relevant to the swap arrangements described

herein;

● investment risk factors;

● taxation implications relating to the purchase, holding and sale of the Notes;

● custody, clearing and settlement arrangements;

● market making arrangements; and

● the contractually binding master terms and conditions of the Notes (the “MasterConditions”), including the security arrangements for the Notes.

Hard copies of the Programme Prospectus (together with any addendum or supplement) and this

Issue Prospectus (all available in separate English and Chinese language versions) may be obtained,

free of charge, during normal business hours on any weekday (Saturdays, Sundays and public holidays

excepted) as follows:

● During the Offer Period: from each of the Distributors described above and from the

offices of the Arranger’s agent specified on page 31 of this Issue Prospectus.

● After the end of the Offer Period and for so long as any Notes remain outstanding: upon

request, from the offices of the Arranger’s agent specified on page 31 of this Issue

Prospectus.

If in doubt as to where to obtain the Programme Prospectus and/or this Issue Prospectus,

prospective investors should contact one of the Distributors.

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TABLE OF CONTENTS

Page

SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

INFORMATION ABOUT HUTCHISON WHAMPOA LIMITED . . . . . . . . . . . . . . . . . . . . . 13

INFORMATION ABOUT THE NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

APPLICATION PROCEDURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

MARKET MAKING ARRANGEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

INFORMATION ABOUT THE UNDERLYING SECURITIES . . . . . . . . . . . . . . . . . . . . . . . 41

INFORMATION ABOUT THE SWAP ARRANGEMENTS FOR THE NOTES . . . . . . . . . . 42

INFORMATION ABOUT THE FORWARD COUNTERPARTYAND THE FORWARD AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

ADDITIONAL INFORMATION ABOUT THE OFFERING . . . . . . . . . . . . . . . . . . . . . . . . . 45

APPENDIX A — INFORMATION ON 3-MONTH USD LIBOR . . . . . . . . . . . . . . . . . . . . . 51

APPENDIX B — TECHNICAL DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

APPENDIX C — CREDIT RATING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62

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SUMMARY

The information set out in this section is a summary of the principal features of the Notes. Thissummary should be read in conjunction with, and is qualified in its entirety by reference to the detailedinformation appearing elsewhere in this Issue Prospectus and the Programme Prospectus. Capitalisedterms used in this Issue Prospectus but not defined herein shall have the meanings given to them inthe Programme Prospectus. Capitalised terms used in this section shall have the meanings given tothem in the section headed “Information about the Notes” and Appendix B — “Technical Definitions”in this Issue Prospectus.

Structure and Outline

The Issuer is incorporated with limited liability in the Cayman Islands. It is a special purposecompany which will issue the Notes under its Retail Note Programme on a limited recourse basisbacked by cashflows from certain assets held by it (comprising, amongst other things, the UnderlyingSecurities and its rights under a Swap Agreement and a Forward Agreement entered into in connectionwith the issue of the Notes).

The essence of the transaction lies in the Issuer:

(i) issuing the Notes under the Programme on the Issue Date to raise funds to purchase an equalaggregate principal amount of the Underlying Securities;

(ii) pursuant to the Swap Agreement, swapping the payments of interest receivable in respectof the Underlying Securities into amounts equal to the interest (calculated as describedbelow) due to be paid by the Issuer on the Notes;

(iii) receiving cashflows from the Underlying Securities and using them to pay interest andprincipal due to the Noteholders (where necessary entering into interest rate and currencyswap agreements to ensure interest and currency payment amounts match);

(iv) if a Company Credit Event occurs during the life of the Notes, the Issuer will, pursuant tothe Forward Agreement, deliver to the Forward Counterparty the Underlying Securities andin return receive a cash amount equal to the par value of the Underlying Securities. TheIssuer will pay to the Swap Counterparty the cash amount it receives from the ForwardCounterparty and the Swap Counterparty will pay to the Issuer the cash equivalents (lessany costs and expenses associated with the holding and/or handling and/or valuation of theDeliverable Obligations and after making certain adjustments in relation to, amongst otherthings, the interest rate swap and/or cross currency swap, as further described in the lasttwo bullet points on page 9 below) of the Deliverable Obligations. The holders of theTranche C Notes and the Tranche D Notes will receive their pro-rata share of such cashequivalents of the Deliverable Obligations in Hong Kong dollars converted at theUSD/HKD exchange rate prevailing on or about the Company Credit Event RedemptionDate, as determined by the Determination Agent. If a Company Credit Event occurs, theNotes will be redeemed on the Company Credit Event Redemption Date at the CompanyCredit Event Redemption Amount, being an amount which may be substantially less thanthe principal amount of the Notes; and

(v) if no Company Credit Event, Underlying Securities Default Event or other EarlyRedemption Event or Issuer’s Event of Default occurs during the life of the Notes (and theIssuer has not exercised the Issuer’s Call Option (as further described in the section headed“Information about the Notes” in this Issue Prospectus)), then the Issuer will apply theredemption monies receivable in respect of the Underlying Securities (and, wherenecessary, using the swap arrangements to ensure interest and currency payments match) inrepayment of the Notes. In such circumstances, the Notes will be redeemed at par on theMaturity Date.

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The obligations of the Issuer under the Notes will be secured principally by security created over

its rights in respect of the Underlying Securities, the Swap Agreement and the Forward Agreement.

A prior security interest will be given to, among others, the Swap Counterparty, securing the Issuer’s

obligations under the Swap Agreement (see the section headed “Description of the Security

Arrangements in respect of the Notes” in the Programme Prospectus).

Company Credit Event

The Notes are credit linked to (but are not obligations of) Hutchison Whampoa Limited and its

Successors (referred to in this Issue Prospectus as the “Company”). If no Company Credit Event,

Underlying Securities Default Event or other Early Redemption Event or Issuer’s Event of Default

occurs during the life of the Notes (and the Issuer has not exercised the Issuer’s Call Option), each

Note will be redeemed at par on the Maturity Date. However, if a Company Credit Event occurs in

respect of the Company at any time prior to the Maturity Date, the Notes will be redeemed on the

Company Credit Event Redemption Date at the Company Credit Event Redemption Amount, which

may be substantially less than the principal amount of the Notes.

In addition, the Notes will cease to bear any interest from the Interest Payment Date immediately

preceding the occurrence of a Company Credit Event (or, if the Company Credit Event occurs prior

to the first Interest Payment Date, no interest will be payable on the Notes).

A “Company Credit Event” includes any of the following events, if they occur with respect to

the Company:

● “Bankruptcy”, as fully defined in Appendix B — “Technical Definitions” to this Issue

Prospectus, includes eight defined circumstances which relate to the corporate dissolution,

bankruptcy or insolvency of the Company or certain defined steps being taken which may

lead to the corporate dissolution, bankruptcy or insolvency of the Company.

● “Failure to Pay”, as fully defined in Appendix B — “Technical Definitions” to this Issue

Prospectus, includes the failure by the Company to make payment (in an amount of not less

than US$1 million) under one or more defined types of borrowing obligations when such

payments fall due.

● “Restructuring”, as fully defined in Appendix B — “Technical Definitions” to this Issue

Prospectus, may occur if (with a number of defined exceptions) the Company or a defined

governmental authority agrees with the holders of one or more defined types of borrowing

obligations in an amount of not less than US$10 million:

— a reduction in interest payable

— a reduction in principal payable

— postponement of scheduled interest or principal payment date

— subordination of the borrowing obligation

— change in currency or other composition of interest or principal payment

unless the agreed restructuring does not, amongst other things, result from a deterioration in the

creditworthiness or financial condition of the Company.

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Each of the above Company Credit Events is fully defined in Appendix B — “TechnicalDefinitions” to this Issue Prospectus in a way which reflects technical definitions current in theprofessional credit derivative market. The above description is a summary intended to convey thegeneral nature of the Company Credit Events as defined and prospective investors should rememberthat the actual occurrence of a Company Credit Event would be determined on a strict application ofthe technical definitions.

Upon the occurrence of a Company Credit Event, Noteholders will be entitled to the CompanyCredit Event Redemption Amount but will no longer be entitled to receive any further payments ofinterest (including any interest accrued since the last payment of interest was made before theoccurrence of the Company Credit Event or, if no interest has yet been paid, since the Issue Date) andwill no longer be entitled to receive repayment of the principal amount of the Notes on the MaturityDate.

Prospective investors should note that upon the occurrence of a Company Credit Event (andassuming that no Underlying Securities Default Event or other Early Redemption Event or Issuer’sEvent of Default has occurred), the Notes will be subject to early redemption and the Noteholders willbe entitled to receive the “Company Credit Event Redemption Amount” which will be determined andpaid, in summary, in the following manner:

● The Issuer notifies the Trustee and the Noteholders (via the clearing systems) that theCompany has suffered a Company Credit Event on the Company Credit EventDetermination Date and that the Notes will cease to bear interest and will be redeemed onthe Company Credit Event Redemption Date at the Company Credit Event RedemptionAmount.

● Within 30 calendar days after the Company Credit Event Determination Date, the SwapCounterparty may identify at its sole and absolute discretion certain borrowing obligationsof the Company which are “Bonds” or “Loans” which meet the criteria for DeliverableObligations, provided that the Swap Counterparty may at its discretion on or prior to theValuation Date (as defined below) change one or more of the “Bonds” or “Loans” it hasidentified. In practice, the Swap Counterparty will identify the same Bonds or Loans asDeliverable Obligations as are identified under the provisions of the Swap Agreement.

● The principal amount of Bonds or Loans so identified will be equal to the principal amountof the Notes outstanding on the Company Credit Event Determination Date.

● The holders of the Tranche A Notes and the Tranche B Notes will receive their pro-ratashare of the Company Credit Event Redemption Amount plus or minus, as the case may be,(i) the settlement amount on termination of the interest rate swap in relation to the TrancheA Notes and the Tranche B Notes, plus or minus, as the case may be, (ii) their pro-rata shareof any appreciation or depreciation, as the case may be, in the market value of theUnderlying Securities, as determined by the Determination Agent on or prior to theCompany Credit Event Redemption Date.

● The holders of the Tranche C Notes and the Tranche D Notes will receive the sum of thefollowing amount, after conversion into Hong Kong dollars at the USD/HKD exchange rateprevailing on or about the Company Credit Event Redemption Date, as determined by theDetermination Agent: (i) their pro-rata share of the Company Credit Event RedemptionAmount, plus or minus, as the case may be, (ii) the settlement amount on termination of thecross currency and interest rate swap in relation to the Tranche C Notes and the Tranche DNotes, plus or minus, as the case may be, (iii) their pro-rata share of any appreciation ordepreciation, as the case may be, in the market value of the Underlying Securities, asdetermined by the Determination Agent on or prior to the Company Credit EventRedemption Date.

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● On any date (the “Valuation Date”) falling on or after the 52nd Business Day to andincluding the 125th Business Day following the Company Credit Event Determination Date,as selected by the Swap Counterparty at its sole and absolute discretion, the SwapCounterparty will obtain firm bid prices for the purchase of the Deliverable Obligationsidentified as described above from five unaffiliated Dealers as selected by theDetermination Agent. If bid prices from five unaffiliated Dealers cannot be obtained, theSwap Counterparty will determine such bid price for the purchase of the DeliverableObligations at its sole and absolute discretion, following which the Swap Counterparty willalso determine the Company Credit Event Redemption Amount (after allowing foradjustments in respect of the Swap Settlement Amount).

● The Issuer will use the cashflow received from the Swap Counterparty pursuant to the SwapAgreement to redeem the outstanding principal amount of the Notes and pay to theNoteholders an amount equal to the highest firm bid price offered by the Dealers or suchamount as determined by the Swap Counterparty (as the case may be) for the DeliverableObligations less any costs and expenses (including costs and expenses which would beincurred if the Deliverable Obligations were realised) and after making certain adjustmentsin relation to, amongst other things, the interest rate swap and/or cross currency swap, asfurther described in the last two bullet points on page 9 above on the Company Credit EventRedemption Date.

● In any event, the market value of the Deliverable Obligations used to determine theCompany Credit Event Redemption Amount as described above may be subject to certaindeductions relating to the costs associated with the holding and/or handling and/or saleand/or valuation of the Bonds or Loans and will be paid net of any required withholding anddeductions (such amount is referred to in this Issue Prospectus as the “net cash equivalentsof the Deliverable Obligations”). The pro-rata share of such net cash equivalents of theDeliverable Obligations will be paid to holders of the Tranche C Notes and the Tranche DNotes in Hong Kong dollars converted at the USD/HKD exchange rate prevailing on orabout the Company Credit Event Redemption Date, as determined by the DeterminationAgent, and after making certain adjustments as described in the last two bullet points onpage 9 above.

Prospective investors should note that, after the occurrence of a Company Credit Event, themarket value of the Bonds or Loans of the Company are likely to be substantially less than theprincipal amount of those Bonds or Loans (and may be as low as zero). Accordingly, the CompanyCredit Event Redemption Amount payable to investors in the Notes following the occurrence of aCompany Credit Event is likely to be substantially less than the principal amount of the Notes.

In addition, investors in the Tranche C Notes and/or the Tranche D Notes should also note thatthe pro-rata share of the Company Credit Event Redemption Amount used to redeem their Notes willbe converted into Hong Kong dollars at the USD/HKD exchange rate prevailing on or about theCompany Credit Event Redemption Date, as determined by the Determination Agent. Therefore,investors in the Tranche C Notes and/or the Tranche D Notes may be exposed to an additionalexchange conversion risk which, depending on the prevailing exchange rate, may or may not have anadverse impact on the return of the investment in their Notes.

Underlying Securities Default Event

If there is a payment default in respect of the Underlying Securities (without regard to any graceperiod applicable with respect to such payments), or if the Underlying Securities become repayable,in whole or in part, prior to their scheduled maturity date for certain reasons, or if the outstandingprincipal amount of the Underlying Securities is reduced in accordance with their terms (as furtherdescribed in “Early Redemption” in the section headed “Information about the Notes” in this IssueProspectus), the Notes will be redeemed early on a pro-rata basis on the Early Redemption Date atthe Underlying Securities Default Redemption Amount (as described below).

The “Underlying Securities Default Redemption Amount” means the sale proceeds and/oramounts received as a direct result of the reduction in the principal amount of and/or any proceeds

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received in respect of the Underlying Securities on or prior to the relevant Early Redemption Date plus(if such payment is owed to the Issuer) or minus (if such payment is owed by the Issuer) a terminationpayment payable by the Swap Counterparty or the Issuer (as the case may be) due to the earlytermination of the Swap Agreement. Such proceeds will be subject to certain deductions relating to thecosts associated with the sale of the Underlying Securities. The events of default under the UnderlyingSecurities are set out in their terms and conditions which are available for inspection in accordancewith the section headed “Additional Information About the Offering — Display Documents” in thisIssue Prospectus.

In the context of an Underlying Securities Default Event, it is likely that the proceeds of sale willbe substantially less than the principal amount of the Underlying Securities sold. In addition, investorsin the Tranche C Notes and the Tranche D Notes may be exposed to an additional exchange conversionrisk arising from the conversion of the sale proceeds and/or amounts received in respect of theUnderlying Securities into Hong Kong dollars at the USD/HKD exchange rate prevailing on or aboutthe relevant Early Redempton Date, as determined by the Determination Agent. There is no assurancethat the Underlying Securities Default Redemption Amount will be sufficient to repay the principalamount due to be paid in respect of the Notes.

If an Underlying Securities Default Event occurs after the occurrence of a Company CreditEvent, the Noteholders will be entitled to receive the Underlying Securities Default RedemptionAmount as described above instead of the Company Credit Event Redemption Amount.

Do the Notes Suit You?

The Notes are designed for investors who are:

● in respect of Tranche B Notes and Tranche D Notes, looking for fixed rate semi-annualinterest income and expect that 3-month USD LIBOR will remain within the relevantLIBOR Accrual Range (as specified in the section headed “Information about the Notes”)during the tenor of the Notes;

● in respect of Tranche A Notes and Tranche C Notes, looking for fixed rate semi-annualinterest income at a relatively high yield in the current low interest rate environment;

● in respect of the Tranche C Notes and the Tranche D Notes, confident about the stabilityin the exchange rate of USD/HKD;

● confident that the Company will not be affected by a major corporate default, bankruptcyor adverse debt restructuring in the next five years and accept the risk that the principalamount of the Notes may not be repaid in such event;

● willing to accept early redemption of the Notes following a Company Credit Event, anUnderlying Securities Default Event or other Early Redemption Event, and accept that theamount available to the Issuer for payment to Noteholders under such circumstances, afterdeducting any costs and expenses arising out of an early termination of the Swap Agreementand paying any other amounts owed by the Issuer to other parties in priority to theNoteholders, may be substantially less than the principal amount of the Notes; and

● willing to accept early repayment of the principal amount of the Notes at the Issuer’s CallOption on any Interest Payment Date on or after the first anniversary of the Issue Date.

Prospective investors should read this Issue Prospectus and the Programme Prospectuscarefully to determine if the Notes are a suitable investment for them and should not invest inthe Notes if they do not fully understand all the features of the Notes. Prospective investors inNotes should therefore consult their own legal, tax, accountancy or other professional advisers toassist them to determine the suitability of the Notes for them as an investment.

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A diagrammatic representation of the cashflow structure following the occurrence of a Company

Credit Event is set out below:

IssuerSwap Counterparty

Underlying

Securities

Forward

Counterparty

Noteholders

Cashamount in USD equal to par value

of Underlying Securiti

es

Delivery of Underlying Securiti

es

Company Credit Event*Redemption Amount

Company Credit Event*Redemption Amount

Cash amount in USD equal to parvalue of Underlying Securities

5

6

4

3

2

1

* The pro-rata share of the Company Credit Event Redemption Amount payable to holders of the Tranche C Notes and the

Tranche D Notes will be converted into Hong Kong dollars at the USD/HKD exchange rate prevailing on or about the

Company Credit Event Redemption Date, as determined by the Determination Agent.

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INFORMATION ABOUT HUTCHISON WHAMPOA LIMITED

Hutchison Whampoa Limited

Prospective investors must have sufficient knowledge, experience and professional advice tomake their own legal, tax, accounting and financial evaluation of the merits and risks of investmentin the Notes. Prospective investors must not rely on the Issuer, the Arranger, the Initial Subscriber, theTrustee, the Agents or any of their affiliates to provide them with any information relating to, or tokeep under review on their behalf, the business, financial conditions, prospects, creditworthiness,status or affairs of Hutchison Whampoa Limited or conduct any investigation or due diligence withrespect to Hutchison Whampoa Limited.

Information in relation to Hutchison Whampoa Limited and its operations and financial conditioncan be viewed on the website operated by it, which can be accessed as follows: www.hutchison-whampoa.com. Additional information can also be found by viewing the website of The StockExchange of Hong Kong Limited (the “SEHK”) on www.hkex.com.hk under the section headed“Investor — Investment Service Centre”.

As Hutchison Whampoa Limited is listed on the SEHK, it is required under the ListingAgreement entered into between Hutchison Whampoa Limited and the SEHK to continuously disclosematerial information relating to it and its subsidiaries, including for example, information whichwould enable the public to appraise the position of Hutchison Whampoa Limited and its subsidiaries,information which is necessary to avoid the establishment of a false market in its securities andinformation which might reasonably be expected to materially affect market activity in and the priceof its securities.

The most recently available annual report of Hutchison Whampoa Limited may also be viewedon its website referred to above.

None of the Issuer, the Arranger, the Initial Subscriber, the Trustee nor the Agents will keep theNoteholders and/or investors informed of developments relating to Hutchison Whampoa Limitedalthough the Issuer will inform the Trustee and the Noteholders if a Company Credit Event occurs asdescribed in “Company Credit Event” in the section headed “Summary” in this Issue Prospectus.

As at the date of this Issue Prospectus, Hutchison Whampoa Limited has the credit ratings setout in the following table for its long-term unsecured indebtedness:

Moody’s Investors Service, Inc. (“Moody’s”) A3 (with negative outlook)Standard & Poor’s (a division of The McGraw-Hill A- (with negative outlook)

Companies Inc. (“S&P”))

Please see Appendix C — “Credit Ratings” to this Issue Prospectus for an explanation of eachrating category.

There can be no assurance that any stated credit rating will remain in effect for any given periodor that any such rating will not be revised by the relevant rating agency in the future if, in the relevantcredit rating agency’s judgment, circumstances so warrant. A downward revision of a credit ratingdoes not of itself constitute a Company Credit Event.

Up-to-date information on the ratings of Hutchison Whampoa Limited can be obtained from thewebsite of S&P at www.standardandpoors.com under the section headed “Credit Ratings — CreditRatings Search” and the website of Moody’s at www.moodys.com.

None of the Issuer, its directors, the Arranger, the Initial Subscriber, the Market Agent or theTrustee gives any representation as to the accuracy or reliability of the credit ratings, save that theIssuer and its directors have taken reasonable care to correctly extract and/or reproduce suchinformation from the relevant source of publicly available information.

Please refer to the section headed “References to websites” on page 4 of this document for awarning statement and a disclaimer relating to the usage of information contained in websitesreferred to above.

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INFORMATION ABOUT THE NOTES

The following summary of certain important terms of the Notes is qualified by reference to the

full text of the Master Conditions applicable to the Notes set out in the Programme Prospectus and

the Global Certificates (incorporating the provisions of the Pricing Supplements) which will represent

the Notes. See “Master Conditions” below for a description of the relationship between the Master

Conditions, the Pricing Supplements and the Global Certificates. Capitalised terms used in this Issue

Prospectus but not defined in this Issue Prospectus shall have the meanings given to them in the

Programme Prospectus. The Notes (in global and definitive form) and related terms and conditions

thereof, as described in this Issue Prospectus, will be issued in the English language.

Please refer to the section headed “References to Noteholders” on page 4 for a discussion

relating to the usage of the terms “Noteholders”, “you”, “investors” and “prospective investors” in

this Issue Prospectus.

Issuer: Victoria Peak International Finance Limited, a thinlycapitalised special purpose company incorporated in theCayman Islands with limited liability, the shares of which arelegally owned by the Share Trustee and held on behalf ofcertain qualified charities.

Issue Size: The total principal amount of Notes of a Tranche to be issuedwill be determined by the Arranger in its absolute discretionon the Fixing Date in light of market interest in the Notes. TheIssue Size will be notified to investors as soon as practicableafter the Issue Date in the manner provided under “Notices”below. In respect of any Tranche, the Issuer after consultationwith the Arranger may exercise its absolute discretion not toissue the Notes in the event it deems that there is insufficientinterest in the Notes during the Offer Period.

Please note that the Issuer, after consultation with theArranger, may decide to issue certain Tranche(s) but notthe other Tranche(s), or may decide not to issue any or allof the Tranches on the Fixing Date, in the circumstancesdescribed above.

If the Issuer, after consultation with the Arranger, decides notto issue one or more Tranches, monies paid by applicants inrespect of the affected Tranche or Tranches will be returnedby the Distributors within 10 Hong Kong Business Days afterthe Fixing Date. (See “Cancellation of the issue of anyTranche of Notes” and “Refund of Application Monies” onpage 33 of this document).

Issue Price: 100 per cent. (the “Issue Price”).

Offer Period: The Offer Period begins at 9:00 a.m. on 31 August 2004 andends at 4:30 p.m. on 15 September 2004 or at the time on suchearlier date on which the Arranger announces (without priornotice) that the offering of the Notes has closed.

However, the Arranger reserves the right to extend the OfferPeriod in its absolute discretion. Any extension will beannounced by the Arranger on or before 15 September 2004.

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The Offer Period in respect of a Tranche may be shortened orextended as described above without triggering a similareffect on the other Tranches and therefore it is possible thatthe Offer Period of each Tranche will close at different times.

Issue Date: The Issue Date is expected to be 30 September 2004, and willbe no later than 14 October 2004.

Interest Rate: Tranche A Notes:

3.90 per cent. per annum.

Tranche B Notes:

Year 1: 4.25 per cent. per annumYear 2: 4.25 per cent. per annumYear 3: 4.50 per cent. per annumYear 4: 5.00 per cent. per annumYear 5: 6.00 per cent. per annum

Provided that interest will only accrue on each calendar dayin an Interest Period on which the 3-month USD LIBOR is(or, as the case may be, is deemed to be) within the relevantLIBOR Accrual Range specified below.

Tranche C Notes:

3.70 per cent. per annum.

Tranche D Notes:

Year 1: 4.00 per cent. per annumYear 2: 4.00 per cent. per annumYear 3: 4.25 per cent. per annumYear 4: 4.75 per cent. per annumYear 5: 5.75 per cent. per annum

Provided that interest will only accrue on each calendar dayin an Interest Period on which the 3-month USD LIBOR is(or, as the case may be, is deemed to be) within the relevantLIBOR Accrual Range specified below.

LIBOR Accrual Range in respect of the Tranche B Notes andthe Tranche D Notes (both rates inclusive):

Year 1: 0% to 4.00% per annumYear 2: 0% to 4.50% per annumYear 3: 0% to 5.00% per annumYear 4: 0% to 5.50% per annumYear 5: 0% to 6.00% per annum

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Subject as provided below, the rate of 3-month USD LIBORwill be determined by the Calculation Agent (at its solediscretion) on each calendar day in an Interest Period byreference to the rate for deposits in US dollars for a 3-monthperiod as displayed on the Telerate Page “3750” (or such otherpage as may replace that page on that service, or such otherservice as may be nominated by the information vendor, forthe purpose of displaying comparable rates) as at 11.00 a.m.(London time) on each such day, subject to the MasterConditions. (See the section headed “Master Terms andConditions of the Notes” in the Programme Prospectus). Forinformation on the 5-year historical performance of the3-month USD LIBOR, please refer to Appendix A —“Information on 3-month USD LIBOR” in this IssueProspectus.

If, on any calendar day in an Interest Period in respect of theTranche B Notes and the Tranche D Notes, the rate of 3-monthUSD LIBOR does not appear on the Telerate Page describedabove or is not available for whatever reason, the rate of3-month USD LIBOR for such day will be deemed to be thesame as the 3-month USD LIBOR determined by theCalculation Agent on the immediately preceding calendar day.

The rate of 3-month USD LIBOR will only be determined asdescribed above for each calendar day in an Interest Period upto and including the 5th Business Day (the “DeterminationDate”) prior to each Interest Payment Date in respect of theTranche B Notes and the Tranche D Notes. If 3-month USDLIBOR is within the relevant LIBOR Accrual Range on theDetermination Date, interest will accrue for each calendar dayfollowing such Determination Date in that Interest Period. Ifthe 3-month USD LIBOR falls outside the relevant LIBORAccrual Range on the Determination Date, interest will notaccrue for each calendar day following such DeterminationDate in that Interest Period.

Investors will not be separately notified of the applicableinterest amount payable in respect of the Tranche B Notes andTranche D Notes on each relevant Interest Payment Date. Ifinvestors wish to find out how the applicable interest amountpayable in respect of the Tranche B Notes and Tranche DNotes on any Interest Payment Date is calculated, investorsshould consult their Distributors. Please see the sectionheaded “Risk Factors — Changes in 3-month USD LIBOR”.

Interest Amount: In respect of the Tranche B Notes and Tranche D Notes, theInterest Amount payable on each Note will be calculated asfollows:

Interest Amount = Note Denomination xN

M

— 16 —

where:

“N” is the total number of calendar days in an Interest Periodon which 3-month USD LIBOR is (or, as the case may be, isdeemed to be) within the relevant LIBOR Accrual Range asspecified in “Interest Rate” above; and

“M” is the total number of calendar days in an Interest Period.

Interest in respect of the Tranche B Notes and Tranche DNotes will not accrue on any day in an Interest Period where3-month USD LIBOR falls (or, as the case may be, is deemedto fall) outside the relevant LIBOR Accrual Range asspecified in “Interest Rate” above.

For the avoidance of doubt, interest in respect of the TrancheA Notes and the Tranche C Notes will be fixed and will accrueat the rates specified in “Interest Rate” above regardless ofthe fluctuation of 3-month USD LIBOR.

Interest is calculated on the basis that there are 30 days ineach month and 360 days in a year.

Interest Payment Dates: Interest will be payable semi-annually in arrear on 30 Marchand 30 September in each year (subject to postponement asdescribed in “Business Days” below).

Maturity Date: 30 September 2009 (subject to the occurrence of a CompanyCredit Event, an Early Redemption Event or the Issuer’sexercise of the Issuer’s Call Option as described below).

Redemption Amount onthe Maturity Date:

Principal Amount. If an Early Redemption Event hasoccurred, the Notes will be redeemed at the applicable EarlyRedemption Amount on the Early Redemption Date (see“Early Redemption” below). If a Company Credit Event hasoccurred, the Company Credit Event Redemption Amount willbe paid on the Company Credit Event Redemption Date (see“Company Credit Event” and “Company Credit EventRedemption Amount” below).

Business Days: If 30 March or 30 September in any year is a Saturday or aSunday or otherwise is not a day on which commercial banksopen for business and foreign exchange markets settlepayments in US dollars or generally in New York City,London and Hong Kong (a “Business Day”) then payment ofthe interest or principal due on that day will be made on thenext following such Business Day. No adjustment will bemade to the amount of interest or principal payable in theevent of such a postponed payment.

Note Denomination/PrincipalAmount per Note:

Tranche A Notes and Tranche B Notes : US$5,000

Tranche C Notes and Tranche D Notes : HK$40,000

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Form: The Notes will be in registered global form. Interest paymentsand redemption payments of the Notes will be made in USdollars in respect of Tranche A Notes and Tranche B Notesand in HK dollars in respect of Tranche C Notes and TrancheD Notes. Each investor who has been allocated the Notes mustmake arrangements to receive payments in respect of theNotes by credit to a US dollar account in respect of TrancheA Notes and Tranche B Notes and to a HK dollar account inrespect of Tranche C Notes and Tranche D Notes. DefinitiveNotes, or certificates representing the Notes, will not beissued to individual investors (except in very limitedcircumstances). The total Principal Amount of the Notes ofeach Tranche will initially be represented by interests in aGlobal Certificate, which will be registered in the name ofChase Nominees Limited as nominee for, and shall bedeposited on its Issue Date with a common depositary onbehalf of, Euroclear and Clearstream International.Accordingly, investors who have been allocated the Notesmust make arrangements for their Notes to be held in custodywith an accountholder (or an indirect accountholder) ofEuroclear or Clearstream International (which initially mustbe one of the Distributors). No arrangements have been madeto enable the Notes to be admitted to either CCASS or to theCMU Service for deposit, clearance or settlement.

For a description of how investors will hold the Notes, pleasesee “Custody Arrangements with Distributors” on page 19 ofthe Programme Prospectus.

Status: The Notes are secured and limited recourse obligations of theIssuer, as described below.

Swap Agreement/SwapGuarantee:

The Issuer will enter into a Swap Agreement (the “SwapAgreement”) with Morgan Stanley Capital Services Inc. (the“Swap Counterparty”) in connection with the issue of theNotes. The obligations of the Swap Counterparty will beguaranteed by Morgan Stanley (the “Swap Guarantor”). Seethe section headed “Information about the SwapArrangements for the Notes” in this Issue Prospectus for asummary of such arrangements, which will enable the Issuerto meet its payment and other obligations under the Notes.The Notes will not be obligations of and will not beguaranteed by either the Swap Counterparty or the SwapGuarantor. The Swap Guarantee comprises a guaranteeonly in respect of the Swap Counterparty’s payment of allamounts due and payable to the Issuer under the SwapAgreement.

— 18 —

Early Termination of theSwap Agreement:

Upon an early termination of the Swap Agreement (in wholeor in part), except for an early termination of the SwapAgreement in part following the exercise by Morgan Stanley& Co. International Limited of the Morgan Stanley ExchangeOption and/or exercise by the Issuer of the Issuer’s CallOption as described below, the Notes will become repayableand the Issuer or the Swap Counterparty may be liable tomake a termination payment to the other (regardless, ifapplicable, of which of such parties may have caused suchtermination). Sale proceeds and/or amounts received as adirect result of the reduction in the principal amount of and/orany proceeds received in respect of the Underlying Securitieson or prior to the relevant Early Redemption Date plus orminus (as the case may be) the amount payable by the SwapCounterparty or the Issuer, (as the case may be), due to thetermination of the Swap Agreement shall be paid to theNoteholders on a pro-rata basis on the relevant EarlyRedemption Date. The amount due in respect of thetermination of the Swap Agreement will be determined inaccordance with the provisions of the Swap Agreement. Seethe section headed “Information about the SwapArrangements for the Notes” in this Issue Prospectus forfurther details.

There is no assurance that any redemption amount payable toNoteholders following an early termination of the SwapAgreement will be sufficient to repay the principal amountdue to be paid in respect of the Notes.

Forward Agreement/ForwardGuarantee:

The Issuer will enter into a Forward Agreement (the“Forward Agreement”) with MS Remora Ltd. (the “ForwardCounterparty”) in connection with the issue of the Notes.The obligations of the Forward Counterparty will beguaranteed by the Swap Guarantor pursuant to a swapguarantee to be executed by Morgan Stanley in connectionwith the issue of the Notes (the “Forward Guarantee”) insubstantially the same form as the form of the SwapGuarantee set out in Appendix B to the ProgrammeProspectus.

If a Company Credit Event occurs during the life of the Notes,the Issuer will, pursuant to the Forward Agreement, deliver tothe Forward Counterparty the Underlying Securities and inreturn, receive a cash amount equal to the par value of theUnderlying Securities. The Issuer will pay to the SwapCounterparty such cash amount it receives from the ForwardCounterparty, and the Swap Counterparty will pay to theIssuer the Company Credit Event Redemption Amount toenable the Issuer to meet its obligations under the Notes. Seethe section headed “Information about the ForwardCounterparty and the Forward Agreement” in this IssueProspectus for further details.

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Security: The Issuer will, pursuant to the provisions of (i) a trust deeddated 30 August 2004 and entered into between the Issuer andJ.P. Morgan Corporate Trustee Services Limited (in suchcapacity, the “Trustee”) in relation to the Programme (the“Principal Trust Deed”), and (ii) a supplemental trust deedto be dated the Issue Date and to be entered into between theIssuer, the Custodian, the Swap Counterparty, the SwapGuarantor, the Forward Counterparty and the Trustee inrespect of the issue of the Notes (the “First SupplementalTrust Deed” and, together with the Principal Trust Deed, the“Trust Deed”), grant the security described below to theTrustee as continuing security for (i) the payment of all sumsdue under the Trust Deed and the Notes and (ii) theperformance of its obligations under the Swap Agreement.The Trustee shall hold such security on behalf of itself, theNoteholders, the Swap Counterparty, JPMorgan Chase Bankin its capacity as Principal Paying Agent and as Custodian inrespect of the Notes (the “Agent” and the “Custodian”,respectively).

The following is a summary of the security (the “MortgagedProperty”) which will be granted by the Issuer in respect ofthe Notes pursuant to the Trust Deed:

● a first fixed charge of its rights attaching to or relatingto the Underlying Securities and all sums derivedtherefrom (see the section headed “Description of theSecurity Arrangements in respect of the Notes” in theProgramme Prospectus as to the security being taken inrespect of such Underlying Securities for so long as theyare held in a clearing system);

● an assignment of all its rights, title and interest underthe Swap Agreement and the Swap Guarantee, theAgency Agreement (as defined in the MasterConditions), the Forward Agreement and the ForwardGuarantee, including all its rights against the Custodian,to the extent they relate to the Underlying Securities,including all rights to the delivery of such UnderlyingSecurities against the Custodian or any applicableclearing system or the operator thereof or against anybank, broker or other intermediary and including allsums and other rights derived from such UnderlyingSecurities; and

● a first fixed charge of all sums (i) received under theSwap Agreement, the Swap Guarantee, the ForwardAgreement and the Forward Guarantee and (ii) held bythe Agent, the Custodian or the Registrar (as definedbelow) to meet payments due in respect of the Notes.

— 20 —

The claims of the Trustee, the Custodian, the Principal PayingAgent and the Swap Counterparty against the Issuer shall rankprior to the claims of the Noteholders under the Notes in theapplication of all moneys received in connection with therealisation or enforcement of the security. In realising thesecurity, in certain circumstances the Trustee is obliged to actin accordance with the directions of the Swap Counterparty(provided that sums are due to the Swap Counterparty).

Limited Recourse: Claims against the Issuer by the Trustee, the Noteholders, theSwap Counterparty, the Principal Paying Agent and theCustodian will be limited to the Mortgaged Property (asdescribed above). If the net proceeds of the enforcement orrealisation of the security constituting the MortgagedProperty are not sufficient to make all payments due inrespect of the Notes, no other assets of the Issuer will beavailable to meet such shortfall and all claims in respect ofsuch shortfall shall be extinguished. See “Security” above fora description of how the claims of the secured parties,including the Noteholders, would rank in the case of any suchshortfall.

Underlying Securities: The Issuer, using the proceeds received from the issue of theNotes, will on the Issue Date invest in an aggregate principalamount equal to the total principal amount of the Notes ofUSD denominated securities that satisfy the criteria set out inthe section headed “Information about the UnderlyingSecurities” in this Issue Prospectus.

Information about which Underlying Securities are to bepurchased will not be available at the time investors decide topurchase the Notes. However, the Issuer will, as soon aspracticable after the Issue Date, notify the Noteholders (viathe clearing systems) details (including the issuer andrating(s)) of the Underlying Securities. Information about theissuer and the rating(s) of the Underlying Securities will alsobe made available for inspection in accordance with thesection headed “Additional Information About the Offering —Display Documents” from the Issue Date. See the sectionheaded “Risk Factors — Discretion of the Issuer to invest inthe Underlying Securities” in this Issue Prospectus.

The International Securities Identification Numbers (“ISIN”)for the Underlying Securities and the Common Codes for theUnderlying Securities will be available after the Issue Dateupon request to the Distributors.

The Underlying Securities will be deposited by the Issuerwith the Custodian on or about the Issue Date pursuant to theprovisions of (i) the Agency Agreement and (ii) the FirstSupplemental Trust Deed.

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Early Redemption: The Notes shall be subject to early redemption by the Issuerupon the occurrence of any of the following events (each, an“Early Redemption Event”):

(i) if there has been a payment default in respect of theUnderlying Securities (without regard to any graceperiod applicable with respect to such payments), or ifthe Underlying Securities become repayable, in whole orin part, prior to their scheduled maturity date for anyreason whatsoever (other than as described in (iii) and(v) below), or if the outstanding principal amount of theUnderlying Securities is reduced in accordance withtheir terms (each an “Underlying Securities DefaultEvent”); or

(ii) if the Issuer:

(A) on the occasion of the next payment due in respectof the Notes would be required by law to withholdor account for tax or would suffer tax in respect ofits income (including but not limited to its incomein respect of the Underlying Securities) orpayments made to it under the Swap Agreementand/or Forward Agreement or would receive net oftax any payments in respect of the UnderlyingSecurities or payments made to it under the SwapAgreement and/or Forward Agreement, so that itwould be unable to make payment of the fullamount due on the Notes (and it is unable toarrange for the substitution of a companyincorporated in another jurisdiction which wouldnot impose such requirement as the principalobligor in respect of the Notes); or

(B) any exchange controls or other currency exchangeor transfer restrictions are imposed on the Issuer orany payments to be made to or by the Issuer or forany reason the cost to the Issuer of complying withits obligations under or in connection with theNotes or the Trust Deed would (in the sole opinionof the Issuer) be materially increased, and theIssuer, having used its best endeavours, is unableto arrange for the substitution of a companyincorporated in another jurisdiction in which therelevant exchange control or currency exchange ortransfer restrictions do not apply before the nextpayment is due in respect of the Notes

(where each of (A) and (B) is a “Tax Event”); or

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(iii) if the Underlying Securities are redeemed early by theissuer(s) of the Underlying Securities on the basis thatthe issuer(s) of the Underlying Securities determine(s)that, as a result of any change in the laws, regulations orrulings of the country in which the issuer(s) of theUnderlying Securities is (are) organised affectingtaxation, the issuer(s) of the Underlying Securitieswould become obligated to pay additional amounts onthe Underlying Securities (an “Underlying SecuritiesTax Event Redemption”); or

(iv) if the Swap Agreement and/or Forward Agreement is/areterminated (in whole or in part) for any reason (otherthan following an exercise by the Issuer of the Issuer’sCall Option and/or an exercise by Morgan Stanley & Co.International Limited of the Morgan Stanley ExchangeOption) and is not replaced on or prior to suchtermination (see the section headed “Description of theSwap Agreement and the Swap Guarantee” in theProgramme Prospectus and the section headed“Information about the Forward Counterparty and theForward Agreement” in this Issue Prospectus for furtherdetails); or

(v) if the Underlying Securities are redeemed pursuant tothe exercise of an option to redeem such UnderlyingSecurities (other than pursuant to the UnderlyingSecurities Tax Event Redemption as described above)(an “Underlying Issuer Redemption Event”); or

(vi) if the terms and conditions of the Underlying Securitiesare amended such that the issuer(s) of the UnderlyingSecurities shall no longer be obliged to pay the sameamounts on the same days as contemplated in the termsand conditions of the Underlying Securities as of theIssue Date of the Notes (a “Restructuring ofUnderlying Securities Event”).

The Issuer shall notify the Trustee and the Noteholders (viathe clearing systems) of the Early Redemption Eventpromptly after the date on which the Determination Agentdetermines in its sole and absolute discretion acting in goodfaith that an Early Redemption Event has occurred and theIssuer will redeem the Notes by payment of the applicableEarly Redemption Amount (as described below) on or prior tothe 10th Business Day after the relevant date on which theUnderlying Securities have been sold or realised (the “EarlyRedemption Date”). The pro-rata share of the applicableEarly Redemption Amount payable to holders of the TrancheC Notes and the Tranche D Notes will be converted into HongKong dollars at the USD/HKD exchange rate prevailing on orabout the relevant Early Redemption Date, as determined bythe Determination Agent.

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The Notes so redeemed shall cease to bear interest and nofurther payment will be made in respect of interest accruedfrom the preceding Interest Payment Date (or if no interesthas yet been paid, since the Issue Date).

All amounts received in respect of the Underlying Securitiesby the Issuer, after deduction of costs and expenses andadjusted for the Swap Settlement Amount (if any) payable toor by the Issuer under the Swap Agreement, will be paid to theNoteholders pro-rata to their holdings of Notes. Followingapplication of such net sale proceeds together with thetermination payment (if any) under the Swap Agreement, nofurther amounts will be available to meet any remainingclaims of the Noteholders and any such claims will beextinguished.

Morgan Stanley ExchangeOption:

Morgan Stanley & Co. International Limited has a right underthe Morgan Stanley Exchange Option to exchange any or allof the Notes beneficially owned by it for a pro-rata amount ofthe Underlying Securities from the Issuer (see “Summary —Morgan Stanley Exchange Option” in the ProgrammeProspectus for further details).

Issuer’s Call Option: The Issuer has the right, but not the obligation, to redeem theNotes of any Tranche in whole but not in part, at the PrincipalAmount plus accrued interest on any Interest Payment Datefalling on or after the first anniversary of the Issue Date bygiving five Business Days’ prior written notice toNoteholders.

Company Credit Event: A Company Credit Event means the occurrence of one of thefollowing events with respect to the Company:

(i) Bankruptcy

(ii) Failure to Pay

(iii) Restructuring

Each of the above Company Credit Events is fully definedin Appendix B — “Technical Definitions” to this IssueProspectus in a way which reflects technical definitionscurrent in the professional credit derivative market.Summaries of the Company Credit Events are set outunder “Summary — Structure and Outline” above butprospective investors should remember that the actualoccurrence of a Company Credit Event would bedetermined by the Determination Agent on a strictapplication of the technical definitions set out in AppendixB — “Technical Definitions” to this Issue Prospectus.

Upon the occurrence of a Company Credit Event, the Noteswill be redeemed by the Issuer on the Company Credit EventRedemption Date by payment of the Company Credit EventRedemption Amount.

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In the event that Hutchison Whampoa Limited is subject to aSuccession Event (as defined in Appendix B — “TechnicalDefinitions” to this Issue Prospectus), the Issuer shall notifythe Trustee and the Noteholders (via the clearing systems) ofsuch Succession Event and the identities and a briefdescription of the relevant Successors.

Company Credit EventRedemption Amountfollowing a CompanyCredit Event:

The Company Credit Event Redemption Amount of each Notemeans, initially, each Note’s pro-rata share of the marketvalue (as determined by the Swap Counterparty by referenceto firm bid prices quoted by certain unaffiliated Dealers or, ifsuch firm bid prices cannot be obtained from the Dealers,such bid price for the purchase of the Deliverable Obligationsas determined by the Swap Counterparty at its sole andabsolute discretion, as further described in “Structure andOutline” in the section headed “Summary” in this IssueProspectus) of certain borrowing obligations (“Bonds” or“Loans” each as defined in and meeting the criteria for“Deliverable Obligations” set out in Appendix B —“Technical Definitions” to this Issue Prospectus) of theCompany identified by the Swap Counterparty on or prior tothe 30th calendar day after the Company Credit EventDetermination Date (provided that the Swap Counterpartymay at its sole and absolute discretion on or prior to theValuation Date change one or more of the “Bonds” or “Loans”it has identified).

The Company Credit Event Redemption Amount shall beadjusted to take account of the Swap Settlement Amount (asdefined in Appendix B — “Technical Definitions” to thisIssue Prospectus) and the appreciation or depreciation (if any)in the market value of the Underlying Securities (as describedin “Company Credit Event” in the section headed “Summary”in this Issue Prospectus).

On the Valuation Date, the Company Credit EventRedemption Amount (before making adjustments in respect ofthe Swap Settlement Amount and any appreciation ordepreciation in the market value of the Underlying Securities)will be determined by the Swap Counterparty on the basis ofthe highest firm bid price for the Deliverable Obligations inrespect of the outstanding principal amount of Notes as at theCompany Credit Event Determination Date, solicited fromfive unaffiliated Dealers or, if such firm bid prices cannot beobtained from five unaffiliated Dealers, such bid price asdetermined by the Swap Counterparty at its sole and absolutediscretion.

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The pro-rata share of the Company Credit Event RedemptionAmount payable to holders of the Tranche C Notes and theTranche D Notes will be converted into Hong Kong dollars atthe USD/HKD exchange rate prevailing on or about theCompany Credit Event Redemption Date, as determined bythe Determination Agent.

Upon the occurrence of a Company Credit Event, Noteholderswill be entitled to the Company Credit Event RedemptionAmount but will no longer be entitled to receive any furtherpayments of interest (including any interest accrued since thelast payment of interest was made before the occurrence ofthe Company Credit Event or, if no interest has yet been paid,since the Issue Date) and will no longer be entitled to receiverepayment of the principal amount of the Notes on theMaturity Date.

Underlying Securities DefaultRedemption Amount followingan Underlying SecuritiesDefault Event:

The Underlying Securities Default Redemption Amountmeans the sale proceeds and/or amounts received as a directresult of the reduction in the principal amount of and/or anyproceeds received in respect of the Underlying Securities onor prior to the Early Redemption Date plus or minus (as thecase may be) the amount payable by the Swap Counterparty orthe Issuer (as the case may be) due to the termination of theSwap Agreement. Such proceeds will be subject to certaindeductions relating to the costs associated with the sale of theUnderlying Securities.

Early Redemption Amountfollowing a Tax Event:

The Early Redemption Amount means the LiquidationProceeds of the Underlying Securities plus or minus (as thecase may be) the amount payable by the Swap Counterparty orthe Issuer (as the case may be) on the termination of the SwapAgreement. Such proceeds will be subject to certaindeductions relating to the costs associated with the sale of theUnderlying Securities.

Early Redemption Amountfollowing an UnderlyingSecurities Tax EventRedemption or an UnderlyingIssuer Redemption Event:

The Early Redemption Amount means the redemptionproceeds received by the Issuer in respect of the UnderlyingSecurities, plus or minus (as the case may be) the amountpayable by the Swap Counterparty or the Issuer (as the casemay be) on the termination of the Swap Agreement plusinterest accrued from the last preceding Interest PaymentDate or, if none, the Issue Date.

Early Redemption Amountfollowing a Restructuring ofUnderlying Securities Event:

The Early Redemption Amount means the LiquidationProceeds of the Underlying Securities plus or minus (as thecase may be) the amount payable by the Swap Counterparty orthe Issuer (as the case may be) on the termination of the SwapAgreement. Such proceeds will be subject to certaindeductions relating to the costs associated with the sale of theUnderlying Securities.

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Early Redemption Amountfollowing termination ofthe Swap Agreement and/orForward Agreement:

The Early Redemption Amount means the LiquidationProceeds of the Underlying Securities in a principal amountequal to the Principal Amount of the Notes, plus or minus (asthe case may be) the amount payable by the SwapCounterparty or the Issuer (as the case may be) on thetermination of the Swap Agreement. Such proceeds will besubject to certain deductions relating to the costs associatedwith the sale of the Underlying Securities.

Negative Pledge/Restrictions: So long as any of the Notes remains outstanding, the Issuerwill not, without the consent of the Trustee, incur any otherindebtedness for borrowed moneys or engage in any business(other than transactions contemplated by or outstanding onthe establishment of the Programme), declare any dividends,have any subsidiaries or employees, purchase, own, lease orotherwise acquire any real property, consolidate or mergewith any other person, convey or transfer its properties orassets substantially as an entity to any person or issue anyshares other than those which were in issue at the date of theProgramme Prospectus or make any distribution to itsshareholders. However, the Issuer may incur non-recourseindebtedness having substantially similar terms as tolimitation of recourse as the Notes, including further Series ofNotes issued under the Programme.

Cross Default: None.

Withholding Tax: All payments of principal and interest by the Issuer in respectof the Notes will be made subject to any withholding ordeduction for, or on account of, any Cayman Islands andJersey taxation. However, under Cayman Islands law andJersey law existing as at the date of this Issue Prospectus,payments in respect of the Notes will not be subject totaxation in the Cayman Islands and Jersey and no withholdingwill be required on such payments to any holder of a Note.See “The Cayman Islands” and “Jersey” in the section headed“Taxation” in the Programme Prospectus.

In the event of the imposition of any such taxes, the Issuerwill, subject to the approval of the Trustee, use its bestendeavours to arrange for the substitution of its obligations bya company incorporated in another jurisdiction, failing whichit shall redeem the Notes, subject to certain exceptions.

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Issuer’s Events of Default: The Trustee at its discretion may, and if so requested inwriting by the holders of at least one-fifth in principal amountof the outstanding Notes, or if so directed by an ExtraordinaryResolution of such holders, shall (subject in each case tobeing indemnified to its satisfaction) give notice to the Issuerthat such Notes are, and they shall accordingly forthwithbecome, immediately due and repayable at their principalamount, together with accrued interest (if any) in any of thefollowing events (each an “Issuer’s Event of Default”):

(a) default is made by the Issuer for a period of 14 days ormore in the case of interest payments or 7 days or morein the case of principal payment due in respect of theNotes or any of them; or

(b) the Issuer fails to perform or observe any of its otherobligations under the Notes or the Trust Deed and(unless such failure is, in the opinion of the Trustee,incapable of being remedied in which case no suchnotice as is referred to in this paragraph shall berequired) such failure continues for a period of 30 days(or such longer period as the Trustee may permit)following the service by the Trustee on the Issuer ofnotice requiring the same to be remedied; or

(c) any order shall be made by any competent court or anyresolution passed for the winding-up or dissolution ofthe Issuer or an order is made for the Issuer’s bankruptcy(or any analogous proceedings) save for the purposes ofamalgamation, merger, consolidation, reorganisation orother similar arrangement on terms previously approvedin writing by the Trustee; or

(d) if (i) any other proceedings are initiated against theIssuer under any applicable liquidation, bankruptcy,insolvency, composition, reorganisation, readjustmentor other similar laws (but excluding the presentation ofany application for an administration order) and suchproceedings are not being disputed in good faith, or (ii)an administrative receiver or other receiver,administrator or other similar official (not being anadministrative receiver or other receiver or managerappointed by the Trustee pursuant to the Principal TrustDeed) is appointed in relation to the Issuer or in relationto the whole or any substantial part (in the opinion of theTrustee) of the undertaking or assets of the Issuer or (iii)an encumbrancer (not being the Trustee or any receiveror manager appointed by the Trustee) shall takepossession of the whole or any substantial part (in theopinion of the Trustee) of the undertaking or assets ofthe Issuer or (iv) a distress or execution or other processshall be levied or enforced upon or sued out against thewhole or any substantial part (in the opinion of theTrustee) of the undertaking or assets of the Issuer (other

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than, in any such case, by the Trustee) and in any of theforegoing cases (other than in relation to thecircumstances described in (ii) where no grace periodshall apply) such order, appointment, possession orprocess (as the case may be) is not discharged or stayedor does not cease to apply within 14 days; or

(e) if the Issuer initiates or consents to judicial proceedingsrelating to itself (except in accordance with the provisoin paragraph (c) above) under any applicableliquidation, bankruptcy, insolvency, composition,reorganisation, readjustment or other similar laws ormakes a conveyance or assignment for the benefit of itscreditors generally; or

(f) if the Issuer becomes insolvent or is adjudicated orfound bankrupt.

Notices: So long as the Notes are represented by the GlobalCertificates which are held on behalf of Euroclear andClearstream International, notices required to be given toNoteholders may be given by their being delivered to thePaying Agents and the relevant clearing system forcommunication to entitled accountholders. The Distributorswill be the accountholders for the purpose of delivery ofnotices to the Noteholders through the clearing systems, andinvestors will therefore need to rely on their Distributors tocommunicate such notices to them. A copy of each noticegiven by the Issuer in respect of the Notes will be madeavailable for inspection as set out under the paragraph headed“Display Documents” under the section headed “AdditionalInformation about the Offering” in this Issue Prospectus.

Listing of the Notes: The Notes will not be listed on any stock exchange.

Rating of the Notes: The Notes will not be rated by any rating agency.

Rating of the UnderlyingSecurities:

The Underlying Securities or the programme under which theUnderlying Securities are issued will be rated by at least onerating agency as of the Issue Date. The Underlying Securitiesor the programme under which the Underlying Securities areissued, will on the Issue Date be rated Aa3 or above byMoody’s and/or AA- or above by S&P (and which is notsubject to a negative outlook). The Issuer will, as soon aspracticable after the Issue Date, notify the Noteholders (viathe clearing systems) details (including the issuer andrating(s)) of the Underlying Securities. Information about theUnderlying Securities (including the issuer and rating(s) ofthe Underlying Securities) will also be made available forinspection by the investors as set out under the paragraphheaded “Display Documents” under the section headed“Additional Information about the Offering” in this IssueProspectus.

Governing law of the Notes: English law.

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Selling Restrictions: See the section headed “Subscription and Sale — SellingRestrictions” in the Programme Prospectus for a discussion ofcertain restrictions on the offering of the Notes and thedistribution of offering materials in various jurisdictions.

Master Conditions: The description of the terms and conditions of the Notes setout in this Issue Prospectus is a summary only. The full termsand conditions of the Notes can be reviewed by readingtogether the following:

(i) the Master Conditions, which comprise the basis of allNotes to be issued under the Programme, and which areset out in full in the Programme Prospectus; and

(ii) the Pricing Supplement for each Tranche of the Notes tobe issued on the Issue Date of the Notes, which appliesand/or disapplies and/or supplements or amends theMaster Conditions in the manner required to reflect theparticular terms and conditions applicable only to therelevant Tranche of Notes described in this IssueProspectus. The Pricing Supplements will be availablefor inspection as described under the paragraph headed“Display Documents” under the section headed“Additional Information about the Offering” in thisIssue Prospectus.

For so long as the Notes are held through Euroclear and/or Clearstream International, forthe purposes of delivery of payments and notices required to be made by the Issuer toNoteholders, such payments and notices will be given by the Issuer to the Paying Agents and therelevant clearing system for communication and delivery to entitled accountholders. For thepurposes of delivery of any payments or notices required to be made by the Noteholders to theIssuer, such payments or notices will be given by accountholders to the clearing system forcommunication and delivery by it to the Issuer. The Distributors (as direct or indirectparticipants in the clearing system) will be the accountholders for the purposes of delivery ofsuch payments and notices to the Issuer or the Noteholders. Accordingly, investors will have torely on their Distributor, to credit their respective accounts with payments credited to it and/orto distribute to them notices which it receives through the clearing system from the Issuer.Similarly investors will have to rely on their Distributor, to pass on any payment or notices tobe given by them to the Issuer to the clearing system. See also the following sections in theProgramme Prospectus: “Custody Arrangements with Distributors” and “Settlement, Clearanceand Custody”.

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Other parties involved in the offering of the Notes:

Arranger, Initial Subscriberand Market Agent:

Morgan Stanley & Co. International Limited, 25 CabotSquare, Canary Wharf, London E14 4QFA, United Kingdom.

Arranger’s agent: Morgan Stanley Dean Witter Asia Limited, 30th Floor, ThreeExchange Square, Central, Hong Kong.

Co-ordinating Distributor: ICEA Capital Limited, 42nd Floor, Jardine House, 1Connaught Place, Hong Kong.

Trustee: J.P. Morgan Corporate Trustee Services Limited, TrinityTower, 9 Thomas More Street, London E1W 1YT, UnitedKingdom.

Principal Paying Agent,Registrar, Calculation Agentand Custodian:

JPMorgan Chase Bank, Trinity Tower, 9 Thomas More Street,London E1W 1YT, United Kingdom.

Determination Agent: Morgan Stanley & Co. International Limited, 25 CabotSquare, Canary Wharf, London E14 4QFA, United Kingdom.

Legal advisers to the Issuer asto Cayman Islands law:

Maples and Calder Asia, 1504 One International FinanceCentre, 1 Harbour View Street, Hong Kong.

Legal advisers to the Arrangeras to English and Hong Konglaw:

Linklaters, 10th Floor, Alexandra House, Chater Road, HongKong.

Legal advisers to the Trustee asto English law:

Linklaters, One Silk Street, London EC2Y 8HQ, UnitedKingdom.

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APPLICATION PROCEDURES

Procedural Information

The following paragraphs summarise certain matters relating to the purchase by prospectiveinvestors of the Notes as part of their initial issue. Prospective investors should contact one of theDistributors (whose details are set out in the section headed “The Distributors” in this IssueProspectus) if they require any further information.

Offer Period

From 9.00 a.m. on 31 August 2004 to 4:30 p.m. on 15 September 2004 or such earlier date onwhich the Arranger announces (without prior notice) that the offering of the Notes has closed.However the Arranger reserves the right to extend the Offer Period in its absolute discretion. Anyextension will be announced on or before 15 September 2004 in a manner to be determined by theArranger.

The Offer Period in respect of a Tranche may be shortened or extended as described abovewithout triggering a similar effect on the other Tranches and therefore it is possible that the OfferPeriod of each Tranche will close at different times.

Issue Price

100 per cent. of the principal amount of the Notes to be purchased (the “Issue Price”). Inconnection with the on-sale of the Notes to prospective investors, the Distributors have agreed (or, ifnot yet appointed, will be required to agree) that all Notes to be on-sold by them will be on-sold at100 per cent. of their aggregate principal amount, and will not be subject to any selling or othercommissions in connection with such sale, provided however that such agreement is without prejudiceto the right of each Distributor to charge fees to investors for custody services in respect of the Notesheld by the Distributor on behalf of the relevant investor. See “Handling Fees” below for details ofhandling fees which may be levied by the Distributors in connection with the purchase of Notesand the section headed “Settlement, Clearance and Custody” in the Programme Prospectus fora description of other charges which may be levied by the Distributors in connection with theirprovision to investors of their custodial, transfer and clearing services.

Minimum Investment

US$5,000 for Tranche A Notes or Tranche B Notes. HK$40,000 for Tranche C Notes or TrancheD Notes.

Method and Timing of Payment of Issue Price

The Issue Price for the Notes to be purchased by a prospective investor will be payable to theDistributor in the manner and/or to the account as separately designated by the Distributor toprospective investors in accordance with its normal operational procedures. Prospective investors willonly be required to pay for Notes which have been allocated to them by the Distributors after theDistributors have been allocated such Notes by the Arranger on or about the Fixing Date. Such moneysshall be payable by the prospective investor no earlier than the time of allocation to it of Notes inaccordance with the foregoing and by no later than the Issue Date. Each Distributor will be requiredto undertake to provide each prospective investor with details relating to the payment of the IssuePrice for the Notes.

Payment Procedures

Payments should be made to the Distributors in US dollars for Tranche A Notes and Tranche BNotes or in HK dollars for Tranche C Notes and Tranche D Notes.

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Handling Fees

If prospective investors wish to purchase any Notes from a Distributor, they may be chargeda handling fee by the Distributor in connection with such purchase. Prospective investors areadvised to contact one of the Distributors for further details of any such handling fee which maybe levied by that Distributor. The handling fees payable to one Distributor may differ from thosepayable to another Distributor. In addition, see the section headed “Settlement, Clearance andCustody” in the Programme Prospectus for a description of other charges which may be leviedby the Distributors in connection with their provision to investors of their custodial, transfer andclearing services.

Cancellation of the issue of any Tranche of Notes

In relation to each Tranche of Notes, the Issuer may determine on the Fixing Date in its absolute

discretion after consultation with the Arranger that the Notes should not in fact be issued. Such

determination that the Notes should not be issued may be made for any reason and following any such

determination the issue of the Notes shall be cancelled. In such event, the Arranger shall so notify the

Distributors and any purchase monies held in an account with a Distributor shall no longer be held for

the purposes of the purchase of Notes of the relevant Tranche and the Distributors shall return such

purchase monies paid by the applicants in accordance with “Refund of Application Monies” below.

For the avoidance of doubt, the cancellation of one Tranche will not trigger a similar effect on

the other Tranches.

Refund of Application Monies

If any application monies are to be refunded in any of the circumstances described in this Issue

Prospectus, payment will be made by the Distributors to the applicants in accordance with the relevant

Distributor’s normal operating procedures without interest and at the risk of the applicants. Such

payment will be made in the currency in which the Notes are denominated by bank transfer or by

cheque, unless otherwise agreed between the relevant applicant and his Distributor. Repayments shall

be made as soon as practicable following a decision by the Issuer not to issue the Notes of any Tranche

and within 10 Hong Kong Business Days after the Fixing Date in accordance with this Issue

Prospectus.

Confirmations to be given by investors:

Except as set out above, the detailed procedures for allocation to and purchase by prospective

investors of Notes from the Distributors will be as separately imposed by each Distributor, and

prospective investors are therefore advised to contact one of the Distributors for information relating

to such arrangements. However, by giving application instructions to any Distributor for the purchase

of any Notes, prospective investors will be deemed to confirm to the Distributor, the Arranger and the

Issuer that, amongst other things, they:

● undertake and agree to accept the Notes applied for, or any lesser number (provided such

number is not less than a Note of US$5,000 for Tranche A Notes and Tranche B Notes and

a Note of HK$40,000 for Tranche C Notes and Tranche D Notes) allocated to them;

● understand that in respect of Tranche B Notes and Tranche D Notes, the coupon on the

Notes will be dependent on the prevailing 3-month USD LIBOR (as determined under the

terms and conditions of the Notes);

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● understand that in respect of the Tranche C Notes and the Tranche D Notes, the applicableEarly Redemption Amount payable to Noteholders on the occurrence of an EarlyRedemption Event and the Company Credit Event Redemption Amount payable toNoteholders on the occurrence of a Company Credit Event, as the case may be, will besubject to an exchange conversion risk arising from the conversion of such redemptionamounts into Hong Kong dollars at the prevailing USD/HKD exchange rate as determinedby the Determination Agent;

● undertake and agree to pay in full the Issue Price of the Notes allocated to them;

● authorise the Distributor to which they give their application instructions to credit anyNotes allocated to them to their investment account with it and understand that nocertificates of title will be available for their Notes and their interest in their Notes will bein book-entry form only;

● understand that the Notes will be held through a clearing system which means that theywill have to rely on the Distributor selected by them to credit or debit their account withthat Distributor with payments credited to it or to be made by them to the Issuer throughthe clearing system and to distribute notices received by it or to be made by them to theIssuer through the clearing system;

● have read the terms and conditions and application procedures set out in the ProgrammeProspectus and this Issue Prospectus and agree to be bound by them;

● have either received a copy of this Issue Prospectus and the Programme Prospectus (in theirpreferred language version of English or Chinese) or have been afforded sufficientopportunity to obtain a copy of each of this Issue Prospectus and the Programme Prospectus(in their preferred language version of English or Chinese) prior to submitting anapplication for the Notes;

● understand that the Notes will not be principal protected or guaranteed by the Issuer or anyother party and accept the risk that (i) (subject to the terms and conditions of the Notes)the principal of the Notes will only be payable in respect of those Notes which are held untilthe Maturity Date or when the Issuer exercises the Call Option in respect of the Notes, (ii)interest will only be payable in respect of the Notes in issue on the relevant InterestPayment Dates, and (iii) the redemption amounts payable to them following the occurrenceof a Company Credit Event or an Early Redemption Event (as the case may be) is likely tobe substantially less than the principal amount of their Notes;

● understand that they are buying the Notes from the Distributors and that no contractualrelationship with respect to the purchase contract for the Notes will arise between them andthe Issuer or the Initial Subscriber at the time of application;

● understand and accept that neither the Issuer nor the Arranger accepts any responsibilityfor the provision of bank services and custody services by the Distributors or for anyconsequences of, or arising from the use of, the cash account and investment account orcustody services of any of the Distributors;

● agree that none of the Distributors, the Arranger or the Issuer, or their respective directors,officers, agents and nominees will be liable to any persons in any way for any loss whichmay be suffered as a result of the sale by the Distributors of their Notes in accordance withthe terms and conditions of the operation of their cash account/investment account withthem;

● confirm that they are not located within the United States and are not a US Person withinthe meaning of Regulation S under the Securities Act (which includes any person residentin the United States and any partnership or corporation organised or incorporated under thelaws of the United States);

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● understand, are familiar with, and accept the terms and conditions applying to the use of

investment services provided by their Distributor;

● understand that they are deemed to have notice of the terms of the contractual

documentation for the Programme and in respect of the Notes, including the Trust Deed, the

Agency Agreement, the Master Conditions and the relevant Pricing Supplement which

supplements, amends or replaces the Master Conditions applicable to this Series of Notes,

the Swap Agreement, Swap Guarantee, the Forward Agreement and the Forward Guarantee,

copies of which are/will be available for inspection as set out under “Display Documents”

in the section headed “Additional Information About the Offering” in this Issue Prospectus;

and

● understand that under the SFC Code of Conduct, the Distributors are required to ensure

that the Notes are a suitable investment for them and that they understand the nature and

risks of investing in the Notes.

Prospective investors will be required to confirm that they have read and understood theseconfirmations at the time of applying to a Distributor for the Notes. If prospective investors donot understand the meaning or the reasons why they are being asked to give these confirmations,they should seek assistance from their Distributor.

Prospective investors are advised that arrangements for the purchase of any Notes from theDistributors during the Offer Period (including, without limitation, arrangements regarding thetime and method of payment of the purchase monies for the Notes, the amount of any chargesto be levied by the Distributors, the opening and closing period (if any) for placing an order forthe Notes and the arrangements for any refunds or payment of additional sums (if any)) will beas separately agreed between the prospective investors and the Distributors and will be subjectto the relevant Distributor’s terms and conditions relating to such arrangements. EachDistributor may impose different arrangements and levy different charges relating to thepurchase of the Notes and prospective investors in the Notes should contact the Distributors forinformation relating to such arrangements and charges. It is important that prospectiveinvestors should familiarise themselves with, and ensure they understand and accept, the termsand conditions of operation of the investment account before making an application to open aninvestment account. See the section headed “Custody Arrangements with Distributors” in theProgramme Prospectus.

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RISK FACTORS

Prior to making an investment decision, prospective investors should carefully consider thecontents of this Issue Prospectus, in particular the following matters. Prospective investors are alsoadvised that this Issue Prospectus should be read in conjunction with the Programme Prospectus,which contains important information in respect of the Programme and the Notes issued under theProgramme. In particular, prospective investors should carefully study the matters set out in thesection headed “Risk Factors” in the Programme Prospectus. Structured securities such as the Notesare sophisticated instruments and can involve a high degree of risk.

Prospective investors however should be aware that this Issue Prospectus, together with theProgramme Prospectus, can only disclose the most relevant risks and cannot disclose all the risks ofthe Notes. The information set out herein is included for the purpose of enabling prospective investorsto make an informed assessment of the terms of the Notes, general risks of investing in the Notes andthe capacity of the Issuer to fulfil its obligations under the Notes. No person should purchase or dealin the Notes unless they understand the nature of the transaction and the extent of their exposure topotential loss. Prospective investors in the Notes should therefore consult their own legal, tax,accountancy and other professional advisers to assist them to determine the suitability of the Notesfor them as an investment.

Notwithstanding its ability to understand and make independent decisions regarding investing inthe Notes, by purchasing Notes, an investor in the Notes shall be treated by the Issuer as implicitlyrepresenting and warranting that he has assumed, and is willing to assume, the complexity and risksinherent in the Notes, regardless of whether or not he has disclosed the same to the Issuer.

Under the SFC Code of Conduct, the Distributors as entities licensed by or registered with theSFC are required to ensure that the suitability of the Notes to a prospective investor is reasonable inall circumstances when making a recommendation with respect to the Notes to that prospectiveinvestor and to ensure that the prospective investor understands the nature and risks of investing inthe Notes.

Suitability of the Notes

The purchase of the Notes involves certain risks including market risk, credit risk and liquidityrisk. Investors should ensure that they understand the nature of all these risks before making a decisionto invest in the Notes. There is no guarantee from any entity to Noteholders that they will recover anyamounts payable under the Notes. In addition, on the occurrence of a Company Credit Event orUnderlying Securities Default Event or other Early Redemption Events, investors could lose all or asubstantial part of their investment in the Notes. This Issue Prospectus and the Programme Prospectusare not and do not purport to be investment advice. Prospective investors should conduct suchadditional independent investigation and analysis as they deem appropriate to evaluate the merits andrisks of any investments in the Notes. Prospective investors should consider carefully whether theNotes are suitable for them in light of their experience, objectives, financial position and otherrelevant circumstances. Prospective investors should make an investment only after they havedetermined that such investment is suitable for their financial investment objectives.

Transferability of the Notes

There are no restrictions on the transferability of the Notes after their issue and as such investorsmay sell their Notes to an interested party at such price as they may agree with that party. However,no party is under any obligation to facilitate secondary market trading of the Notes, and investors aretherefore advised that the circumstances in which they may be able to realise their investment may belimited. There may be no market making arrangements in place in respect of the Notes. As theNotes will not be listed on any stock exchange and any dealings in them are off-exchange transactions,investors will not be covered by any investor compensation fund established to provide compensationin respect of listed securities in the event of intermediary default.

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Consequence of the Notes being in global form

For so long as the Notes are represented by the Global Certificates, the Notes will be held andtraded through Euroclear and Clearstream International. For the purposes of payments required to bemade by the Issuer to Noteholders and delivery of notices to Noteholders, the Issuer shall be deemedto have complied with its obligations to make such payments or deliver such notices, if such paymentsare made to, or notices delivered to, the Paying Agent and the relevant clearing systems for creditand/or delivery to the Distributors (as direct or indirect participants in the clearing systems) inaccordance with the entitlement of each Distributor as shown in the records of the clearing system asa holder of a particular nominal amount of the Notes. Therefore, investors will have to rely on theirrights against their Distributor to credit their accounts with payments credited to it through theclearing system and to distribute to them notices which it receives through the clearing system fromthe Issuer. The Issuer assumes no responsibility towards them in the event of any failure or delay bya Distributor to fulfil its obligations correctly.

Exposure to the Company and the Underlying Securities

The Notes differ from ordinary debt securities in that the amount of principal payable by theIssuer is dependent on whether a Company Credit Event, an Underlying Securities Default Eventand/or other Early Redemption Event has occurred. Payments upon redemption (whether at maturityor earlier) will depend upon, among other things, the credit performance of Hutchison WhampoaLimited and its Successors (as defined in Appendix B — “Technical Definitions” to this IssueProspectus). Investors should note that a Succession Event (as defined in Appendix B — “TechnicalDefinitions” to this Issue Prospectus) may or may not occur during the life of the Notes and theidentities of the Successors (if any) to Hutchison Whampoa Limited and information about suchSuccessors (if any) will not be available at the time investors decide to purchase the Notes.Accordingly, investors may be exposed to the additional risk that the Successors (if any) may suffera Company Credit Event during the life of the Notes, which may or may not have an adverse impacton the return of their investment in the Notes.

Investors should also note that upon the occurrence of a Company Credit Event, an UnderlyingSecurities Default Event and/or other Early Redemption Event, they could lose a substantial portionor all of their investment in the Notes. In addition, the creditworthiness and/or performance ofHutchison Whampoa Limited and its Successors may be dependent upon economic, political, financialand social events both locally and globally. There can be no assurance that such factors will notadversely affect Hutchison Whampoa Limited’s or its Successors’ creditworthiness and/orperformance and, in turn, the performance of the Notes.

Determination of a Company Credit Event

When and whether to declare a Company Credit Event is in the sole and absolute discretion ofthe Determination Agent. Upon the occurrence of a Company Credit Event, investors will be entitledto receive the Company Credit Event Redemption Amount on the Company Credit Event RedemptionDate. The Company Credit Event Redemption Date will fall on any day between the 54th Business Dayto and including the 127th Business Day following the Company Credit Event Determination Date andsuch date may fall after the Maturity Date. Investors should be aware that there will be a time delaybetween the Determination Agent’s declaration of a Company Credit Event and the payment (asappropriate) of the relevant amount due to investors.

The Determination Agent is only obliged to deliver a Company Credit Event Notice when itbecomes aware of the occurrence of any Company Credit Event. The Determination Agent will not beliable for any delay or failure to declare a Company Credit Event in the absence of becoming awareof such an event.

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Deliverable Obligations

Following the declaration of a Company Credit Event, the value of the Notes is linked to thevalue of the Deliverable Obligations and, in the case of the Tranche C Notes and the Tranche D Notes,the USD/HKD exchange rate prevailing on or about the Company Credit Event Redemption Date, asdetermined by the Determination Agent. In lieu of making the full repayment on the Notes on theMaturity Date, the Issuer will pay to investors the Company Credit Event Redemption Amount on theCompany Credit Event Redemption Date, which date may fall after the Maturity Date. Although theCompany may or may not have defaulted on any of its payment or other obligations under the relevantDeliverable Obligations at that time, the value of such Deliverable Obligations is likely to besubstantially less than the principal amount of the relevant Deliverable Obligations. Furthermore, theSwap Counterparty is able to exercise its sole and absolute discretion in choosing (i) whichDeliverable Obligations to select and (ii) which Dealers it will approach to obtain quotations for themarket valuation of the Deliverable Obligations. See the definition “Deliverable Obligations” in thesub-section headed “Company Credit Event Redemption Amount” in Appendix B — “TechnicalDefinitions” to this Issue Prospectus for further details.

Discretion of the Determination Agent and Calculation Agent

For the purposes of the Notes, the Determination Agent has the sole and absolute discretion todetermine (amongst others) whether a Company Credit Event, an Underlying Securities Default Eventor other Early Redemption Event has occurred and the Calculation Agent has the sole and absolutediscretion to determine the rate of 3-month USD LIBOR and in making calculations as described inthis Issue Prospectus and the Pricing Supplement. Although each of the Calculation Agent and theDetermination Agent has a general duty to act in good faith, the Master Conditions do not impose anyexpress contractual duty on the Calculation Agent and the Determination Agent to do so andprospective investors should be aware that any decision made by the Calculation Agent and/or theDetermination Agent may have an unforeseen adverse impact on the financial return of the Notes. Anysuch discretion exercised by, or any calculation or determination made by, the Calculation Agentand/or the Determination Agent (in the absence of manifest error) shall be binding on the Issuer andall investors.

Discretion of the Issuer to invest in the Underlying Securities

The Issuer will use the proceeds received from the issue of the Notes to invest in securities whichsatisfy the criteria set out in the section headed “Information about the Underlying Securities” in thisIssue Prospectus. The Issuer has the sole and absolute discretion to determine which securities willbe invested in so long as the criteria are met. Information about which Underlying Securities are tobe purchased will not be available at the time investors decide to purchase the Notes and accordinglyinvestors must be prepared to purchase the Notes on the terms only that the Underlying Securities willmeet the specified criteria.

Credit Rating, Liquidity and Valuation of the Underlying Securities

The Underlying Securities, or the programme under which the Underlying Securities are issued,will be rated Aa3 or above by Moody’s and/or “AA-” or above by S & P (and which is not subject toa negative outlook) on the Issue Date. Investors should note that the Underlying Securities’ creditrating(s) may change after the Issue Date.

Upon the occurrence of a Company Credit Event, the Issuer will, pursuant to the ForwardAgreement, deliver to the Forward Counterparty the Underlying Securities and in return receive a cashamount equal to the par value of the Underlying Securities. The Issuer will pay to the SwapCounterparty the cash amount it receives from the Forward Counterparty and the Swap Counterpartywill pay to the Issuer the net cash equivalents of the Deliverable Obligations on or before the CompanyCredit Event Redemption Date. The principal amount of the Deliverable Obligations identified by theSwap Counterparty will be equal to the principal amount of the Notes outstanding on the Company

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Credit Event Determination Date, adjusted (amongst other things) for any appreciation or depreciation

in the market value of the Underlying Securities as determined by the Swap Counterparty on the

Company Credit Event Determination Date. Investors should note that the market value of the

Underlying Securities will depend on their liquidity. No assurance can be given by any of the Issuer,

the Trustee or the Arranger as to whether the market value of the Underlying Securities will be above

or below par.

Investors should also note that following the occurrence of an Early Redemption Event, the value

of the Notes is linked to the value of the Underlying Securities and, in the case of the Tranche C Notes

and the Tranche D Notes, the USD/HKD exchange rate prevailing on or about the relevant Early

Redemption Date, as determined by the Determination Agent. In lieu of making the full repayment on

the Notes on the Maturity Date, the Issuer will pay to investors the applicable Early Redemption

Amount on the relevant Early Redemption Date, which date may fall after the Maturity Date. In the

context of an Underlying Securities Default Event, it is likely that the proceeds of sale will be

substantially less than the principal amount of the Underlying Securities sold. Furthermore, the Swap

Counterparty is able to exercise its sole and absolute discretion in selecting which Dealers it will

approach to obtain quotations for the sale of the Underlying Securities.

Changes of 3-month USD LIBOR

The interest amount payable on the Tranche B Notes and Tranche D Notes is calculated by

reference to the number of days in an Interest Period on which 3-month USD LIBOR falls or, as the

case may be, is deemed to fall within the relevant LIBOR Accrual Range as specified in the section

headed “Information About the Notes” . Prospective investors should be aware that the rate of 3-month

USD LIBOR may fluctuate as a result of market conditions and economic factors and may fall below

or rise above the relevant LIBOR Accrual Range, which may have a corresponding adverse impact on

the financial return of the Notes. There can be no assurance that the 3-month USD LIBOR at any given

time will be at a level which will result in a financial return that investors may otherwise receive from

securities with a fixed rate of interest with no range accrual feature.

Exchange Rate Risks

On the Issue Date, the Issuer shall invest the proceeds received from the issue of the Notes in

the purchase or subscription of a principal amount of securities denominated in US dollars equal to

the total principal amount of the Notes. The Underlying Securities may consist of one or more series

of different types of securities and may consist of, or include, asset-backed securities or other

structured or collateralised debt obligations.

If there is an Early Redemption Event or a Company Credit Event, the redemption amount

payable to the Noteholders will depend on the market valuation and/or sale proceeds of the Underlying

Securities or the Deliverable Obligations (as the case may be), subject to adjustment in respect of the

Swap Settlement Amount. The applicable Early Redemption Amount payable following an Early

Redemption Event and the Company Credit Event Redemption Amount payable following a Company

Credit Event (as the case may be) will be paid to the Noteholders on a pro-rata basis on the relevant

Early Redemption Date or the Company Credit Event Redemption Date (as the case may be). Such

redemption amount payable in respect of the Tranche C Notes and Tranche D Notes will be made in

Hong Kong dollars by reference to the prevailing USD/HKD exchange rate as determined by the

Determination Agent. Prospective investors for the Tranche C Notes and/or the Tranche D Notes

should note that they may be exposed to an exchange conversion risk in these circumstances. Such

risk, depending on the conversion rate determined by the Determination Agent, may or may not have

an adverse impact on the return of their investment in the Notes.

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MARKET MAKING ARRANGEMENTS

Morgan Stanley & Co. International Limited in its capacity as Market Agent intends, but is underno obligation, through its agent, Morgan Stanley Dean Witter Asia Limited, to make a market in theNotes. In this capacity it intends to quote to the Distributors on a once-weekly (expected to be Friday)best efforts basis an indicative price (a “bid” price) at which it would be willing to purchase the Notesfrom the Distributors. Such market-making activities by the Market Agent are expected to commencewith effect from the date falling three months following the Issue Date. Depending on the availableinventory of Notes held by the Market Agent and its affiliates, the Market Agent also intends to quotefrom time to time, upon request from a Distributor, a price at which it would be willing to sell theNotes (an “offer” price) to that Distributor. The prices quoted will be by reference to theDenomination of the Notes or an integral multiple thereof and will be expressed as a percentage ofthe principal amount of the Notes.

Prices quoted by the Market Agent will be determined by the Market Agent (or its agent) in itsabsolute discretion. Such prices, and the trading value of the Notes, may be equal to, higher or lowerthan the Issue Price of the Notes, and will vary depending on many factors, including (withoutlimitation) prevailing interest rates, prevailing interest rates expectation, general market conditions,the financial conditions of the issuer and the guarantor (if applicable) of the Underlying Securities,the liquidity of the Underlying Securities and the market (if any) for any securities of a naturecomparable to that of the Notes.

The bid prices and (depending on the available inventory of Notes held) the offer prices for theNotes will only be quoted to the Distributors upon request. The Market Agent will not provide a bidor offer price directly to any investor in the Notes under any circumstances. All bid or offer prices soprovided shall be for indicative purposes only which may be different among the Distributors and nosuch price shall in any way be regarded as the prices at which the Issuer, the Market Agent or its agentor any other person will pay or an investor will receive on any sale or transfer of a Note.

The bid prices and offer prices for the Notes which may be quoted by a Distributor to anyperson wishing to sell or purchase the Notes, respectively, may be different to the correspondingprices quoted by the Market Agent to that Distributor, and may be different to the bid prices andoffer prices quoted by another Distributor. Furthermore, if investors have purchased the Notesfrom a Distributor but wish to sell such Notes, or purchase further Notes, either to or from (asappropriate) a different Distributor, they will need to have, or open, an investment account withsuch other Distributor before they are able to do so.

Therefore, if investors would like to know the bid price of the Notes from time to time and/orif they would like to sell any Notes prior to their maturity and have not been able to locate a potentialpurchaser, they should contact one of the Distributors. Investors should note that the Market Agentwill not provide either a bid price or an offer price to them directly.

These market making arrangements are limited and do not assure an active trading marketfor the Notes. There can be no assurance that the Market Agent will make a market in the Notes,or if it does so, that it will continue to do so. Accordingly, there can be no assurance that investorsor members of the public will have access to a firm bid price or a firm offer price for the Notesin a principal amount which they may wish to purchase or sell.

As long as they are in global form, Notes must be held with an accountholder of Euroclearor Clearstream International. Although the Market Agent will only quote bid or offer prices toa Distributor, most banks and securities dealers in Hong Kong maintain, or have access to, anaccount with Euroclear and/or Clearstream International through which the Notes may be heldor transferred following issue. If investors wish to trade the Notes via these banks or securitiesdealers in Hong Kong, they should ensure that their broker has or will have access to such anaccount. Investors should check if any expenses will arise on any transfer of their interest in theNotes to an investment account with a new broker. Furthermore, since the Market Agent will notquote bid/offer prices to any broker that is not a Distributor on any purchase or sale of Noteson behalf of an investor, the new broker may not have access to bid/offer prices on the same termsas investors whose interest in the Notes is held through a Distributor.

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INFORMATION ABOUT THE UNDERLYING SECURITIES

On the Issue Date, the Issuer shall invest the proceeds received from the issue of the Notes in

the purchase or subscription of a principal amount of securities denominated in US dollars equal to

the total principal amount of the Notes. Such securities shall be the Underlying Securities and shall

meet the following criteria at the Issue Date:

(a) be rated Aa3 or above by Moody’s and/or AA- or above by S&P;

(b) not be subject to any negative CreditWatch of S&P or on review for possible downgrade on

Moody’s Watchlist;

(c) have a maximum maturity not later than the Maturity Date; and

(d) be acceptable to the Swap Counterparty and the Forward Counterparty as a funding source

for the obligations of the Issuer under the Swap Agreement.

The Underlying Securities may consist of one or more series of different types of securities and

may consist of, or include, asset-backed securities or other structured or collateralised debt

obligations.

The Issuer will, as soon as practicable after the Issue Date, notify the Noteholders (via the

clearing systems) details (including the issuer and rating(s)) of the Underlying Securities. Information

about the Underlying Securities will also be made available for inspection as set out in the paragraph

headed “Display Documents” in the section headed “Additional Information about the Offering” in

this Issue Prospectus. Such information will include (a) evidence of the ratings assigned to the

Underlying Securities or the programme under which the Underlying Securities are issued as at the

Issue Date; (b) the terms and conditions of the Underlying Securities; and (c) information

memorandum or other offering document relating to the Underlying Securities (if one has been

prepared).

If there is a payment default in respect of the Underlying Securities (without regard to any grace

period applicable with respect to such payments), or if the Underlying Securities become repayable,

in whole or in part, prior to their scheduled maturity date for any reason whatsoever (other than as

described in “Underlying Securities Tax Event Redemption” and “Underlying Issuer Redemption

Event” on page 23 of this Issue Prospectus), or if the outstanding principal amount of the Underlying

Securities is reduced in accordance with their terms, that event will be an “Underlying Securities

Default Event” which will lead to an early redemption of the Notes.

If the Underlying Securities mature before the Notes, the redemption monies received will be

paid into the account of the Issuer and will be used by the Issuer for direct repayment of the Notes

on the Maturity Date if no Company Credit Event, Early Redemption Event or Issuer’s Event of

Default occurs during the life of the Notes (and the Issuer has not exercised the Issuer’s Call Option).

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INFORMATION ABOUT THE SWAP ARRANGEMENTS FOR THE NOTES

The following description is a summary only of the Swap Agreement and is subject in all respects

to the terms of the Swap Agreement. Prospective investors are advised to review the provisions of the

Programme Prospectus, in particular the section headed “Description of the Swap Agreement and the

Swap Guarantee”, Appendix A “Derivatives” and Appendix B “Form of Swap Guarantee” in the

Programme Prospectus, for further information. A copy of the Swap Agreement and the Swap

Guarantee is available for inspection as set out under the section headed “Additional Information

about the Offering” in this Issue Prospectus.

The Issuer has entered into a swap Master Agreement with Morgan Stanley Capital Services Inc.as Swap Counterparty in connection with the establishment of the Programme. In connection with theissue of the Notes, the Issuer will execute a Confirmation to the Master Agreement, the effective dateof which will be the Issue Date of the Notes. The Confirmation, together with the Master Agreement,is referred to in this Issue Prospectus as the “Swap Agreement”. The obligations of the SwapCounterparty under the Swap Agreement will be guaranteed by Morgan Stanley as Swap Guarantorpursuant to the provisions of the Swap Guarantee.

For further information in respect of the Swap Counterparty and/or the Swap Guarantor, see thesections headed “Description of Morgan Stanley Capital Services Inc.” and “Description of MorganStanley”, respectively, in the Programme Prospectus.

Prospective investors are advised that the Notes will not be obligations of and will not beguaranteed by either the Swap Counterparty or the Swap Guarantor. The Swap Guaranteecomprises a guarantee only in respect of the Swap Counterparty’s payment of all amounts dueand payable to the Issuer under the Swap Agreement. Neither the Swap Counterparty nor theSwap Guarantor is obliged to make any payment under the Swap Agreement if there has been anUnderlying Securities Default Event, unless the Swap Agreement is terminated at the election ofthe non-defaulting party, in which case either party may be liable to make a termination paymentto the other, as described below.

The arrangements contemplated by the Swap Agreement will enable the Issuer to meet itspayment and other obligations under the Notes. The following is a summary of the respectiveobligations of the Issuer and the Swap Counterparty under the Swap Agreement:

(i) on each interest payment date in respect of the Underlying Securities, the Issuer will payto the Swap Counterparty a sum in US dollars equal to the interest receivable by it inrespect of the Underlying Securities;

(ii) on each interest payment date in respect of the Notes, the Swap Counterparty will pay tothe Issuer a sum in US dollars or (for Tranche C Notes and Tranche D Notes) HK dollarsequal to the interest due to be paid by the Issuer on the Notes; and

(iii) upon the occurrence of a Company Credit Event, the Issuer will, pursuant to the ForwardAgreement, deliver to the Forward Counterparty the Underlying Securities and in returnreceive a cash amount equal to the par value of the Underlying Securities. The Issuer willpay to the Swap Counterparty the cash amount it receives from the Forward Counterpartyand the Swap Counterparty will pay to the Issuer the net cash equivalents of the DeliverableObligations (after converting the pro-rata share of such net cash equivalents of theDeliverable Obligations payable to holders of the Tranche C Notes and the Tranche D Notesinto Hong Kong dollars at the USD/HKD exchange rate prevailing on or about the CompanyCredit Event Redemption Date, as determined by the Determination Agent.

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If no Company Credit Event, Underlying Securities Default Event or other Early Redemption

Event or Issuer’s Event of Default has occurred during the life of the Notes (and the Issuer has not

exercised the Issuer’s Call Option), the Issuer will apply the redemption monies receivable by it in

respect of the Underlying Securities (where necessary, using the swap arrangements to ensure interest

and currency payments match) in repayment of the Notes. In such circumstances, the Notes will be

redeemed at their principal amount in US dollars or HK dollars (as the case may be) on the Maturity

Date.

Morgan Stanley & Co. International Limited shall, in connection with the issue of the Notes, be

granted the Morgan Stanley Exchange Option by the Issuer, pursuant to which it will be granted the

right, with respect to the Notes that it beneficially owns, to exchange any or all of such Notes for a

pro-rata amount of the relevant Underlying Securities from the Issuer (see “Summary — Morgan

Stanley Exchange Option” in the Programme Prospectus for further details). If Morgan Stanley & Co.

International Limited exercises the Morgan Stanley Exchange Option, a pro-rata amount of the Swap

Agreement corresponding to that proportion of the Notes to be exchanged will be terminated without

any termination payment being due from the Issuer or the Swap Counterparty.

The Programme Prospectus contains a summary of the circumstances in which the Swap

Agreement may be terminated prior to the Maturity Date. Upon an early termination of the Swap

Agreement (in whole or in part (except for termination in part following the exercise by Morgan

Stanley & Co. International Limited of the Morgan Stanley Exchange Option)), the Notes will become

repayable. Furthermore, except for early termination in part following exercise by Morgan Stanley &

Co. International Limited of the Morgan Stanley Exchange Option, upon an early termination (in

whole or in part) of the Swap Agreement, the Issuer or the Swap Counterparty may be liable to make

a termination payment (determined in accordance with the Swap Agreement and as described below)

to the other (regardless, if applicable, of which of such parties may have caused such termination).

There is no assurance that the proceeds from the sale of the Underlying Securities plus (if such

payment is owed to the Issuer) or minus (if such payment is owed by the Issuer) such termination

payment will be sufficient to repay the principal amount due to be paid in respect of the Notes. The

claims of the Swap Counterparty against the Issuer under the Swap Agreement shall rank prior to the

claims of the Noteholders under the Notes in the application of all moneys received in connection with

the realisation or enforcement of the security in respect of the Notes.

The termination payment following an early termination of the Swap Agreement (in whole or in

part) as described in the paragraph above will be calculated and made in US dollars. The amount of

any such termination payment will be based on the market value of the terminated Swap Agreement

based on market quotations of the cost of entering into a swap transaction with the same terms and

conditions that would have the effect of preserving the economic equivalent of the respective full

payment obligations of the parties. Any such termination payment could, depending on fluctuations in

exchange rates and/or the interest rate environment, be substantial.

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INFORMATION ABOUT THE FORWARD COUNTERPARTY AND THE FORWARD AGREEMENT

The following description is a summary only of the Forward Agreement and is subject in all

respects to the terms of the Forward Agreement. A copy of the Forward Agreement and the Forward

Guarantee will be available for inspection as set out under the section headed “Additional

Information about the Offering” in this Issue Prospectus.

The Issuer will enter into a Forward Agreement with MS Remora Ltd. as Forward Counterparty

in connection with the issue of the Notes. The Forward Counterparty was incorporated in the Cayman

Islands on 20 November 2002 and has its registered office at M&C Corporate Services Limited,

Ugland House, P.O. Box 309, George Town, Grand Cayman, Cayman Islands, British West Indies. The

Forward Counterparty is a wholly owned subsidiary of Morgan Stanley. The primary business of the

Forward Counterparty is entering into contingent forward transactions.

The arrangements contemplated by the Forward Agreement will enable the Issuer to liquidate the

Underlying Securities and meet its payment and other obligations under the Swap Agreement upon the

occurrence of a Company Credit Event. The following is a summary of the respective obligations of

the Issuer and the Forward Counterparty under the Forward Agreement:

(i) upon the occurrence of a Company Credit Event, the Issuer will, pursuant to the Forward

Agreement, deliver to the Forward Counterparty the Underlying Securities; and

(ii) the Forward Counterparty will pay to the Issuer an amount in cash equal to the par value

of the Underlying Securities and the Issuer will pay to the Swap Counterparty the cash

amount it receives from the Forward Counterparty. The Swap Counterparty will then pay to

the Issuer the net cash equivalents of the Deliverable Obligations, after converting the

pro-rata share of such net cash equivalents of the Deliverable Obligations payable to

holders of the Tranche C Notes and Tranche D Notes into Hong Kong dollars at the

USD/HKD exchange rate prevailing on or about the Company Credit Event Redemption

Date, as determined by the Determination Agent.

The obligations of the Forward Counterparty will be guaranteed by the Swap Guarantor.However, prospective investors are advised that the Notes will not be obligations of, and will notbe guaranteed by the Forward Counterparty or the Swap Guarantor.

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ADDITIONAL INFORMATION ABOUT THE OFFERING

Who is responsible for this Issue Prospectus

The information contained in the Programme Prospectus, amended as set out in this IssueProspectus, is deemed to be repeated on the date of publication of this Issue Prospectus. In the caseof any discrepancy between the Programme Prospectus and this Issue Prospectus, this Issue Prospectusshall prevail.

The directors of the Issuer collectively and individually accept full responsibility for theaccuracy of the information contained in this Issue Prospectus and in the Programme Prospectus andconfirm, having made all reasonable enquiries, that to the best of their knowledge and belief, there areno other facts the omission of which would make any statement herein (when read together with theProgramme Prospectus), misleading in any material respect.

Each of Morgan Stanley, Morgan Stanley & Co. International Limited, Morgan Stanley CapitalServices Inc. and MS Remora Ltd. accepts full responsibility for the accuracy of the informationrelating to it contained in this Issue Prospectus and in the Programme Prospectus and confirms, havingmade all reasonable enquiries, that to the best of its knowledge and belief there are no other facts theomission of which would make any statement herein relating to it (when read together with theProgramme Prospectus) misleading in any material respect.

No person has been authorised to give any information or to make any representation notcontained in or not consistent with this Issue Prospectus or the Programme Prospectus. None of theArranger, the Market Agent or the Trustee has independently verified the information contained in thisIssue Prospectus or the Programme Prospectus and none of them accept any responsibility for theaccuracy or completeness thereof.

The delivery of this Issue Prospectus does not at any time imply that the information containedin it and in the Programme Prospectus is correct at any time subsequent to the date of this IssueProspectus.

The Programme Prospectus, this Issue Prospectus and any other information which may besupplied by the Issuer, the Arranger, the Initial Subscriber, the Market Agent or the Trustee inconnection with the Notes should not be considered as a recommendation by any of them that anyrecipient of the Programme Prospectus, this Issue Prospectus or any other information supplied inconnection with the Notes, should invest in any of the Notes. Each investor contemplating investingin or holding any of the Notes should make its own independent analysis of the terms and conditionsof the Notes, the financial condition and affairs, and its own appraisal of the creditworthiness, of theIssuer, Morgan Stanley, Morgan Stanley & Co. International Limited, Morgan Stanley Capital ServicesInc., MS Remora Ltd. and the Company so as to evaluate the merits, the suitability of the Notes andrisks of any investment in or the holding of or dealing in the Notes. Information in the ProgrammeProspectus and this Issue Prospectus relating to each of Morgan Stanley, Morgan Stanley & Co.International Limited, Morgan Stanley Capital Services Inc. and MS Remora Ltd. has been suppliedby the relevant entity. Information on the Company has been extracted from public sources. The Issuerand its directors have taken reasonable care to correctly extract and/or reproduce such informationfrom the relevant source of publicly available information.

Neither the delivery of this Issue Prospectus nor any sale made in connection herewith shall,under any circumstances, create any implication that there has been no change in the affairs of theIssuer since the date hereof or that there has been no adverse change in the financial position of theIssuer since the date hereof or that any other information supplied in connection with the Notes iscorrect as of any time subsequent to the date on which it is supplied or, if different, the date indicatedin the document containing the same.

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The Arranger has not separately verified the information contained herein and accordingly theArranger makes no representation, recommendation, undertaking or warranty, express or implied,regarding the accuracy, adequacy, reasonableness or completeness of the information contained hereinor in any further information, notice or other document which may at any time be supplied inconnection with the Notes or their distribution and does not accept any responsibility or liabilitytherefor. The Arranger does not (i) undertake to review the financial condition or affairs of the Issuer,issuer or guarantor (if any) of the Underlying Securities or the Company during the life of thearrangements contemplated by this Issue Prospectus; nor (ii) intend to advise any investor or potentialinvestor in the Notes of any information coming to the attention of the Arranger.

No undertaking is given by the Issuer or the Arranger in respect of the Notes to informNoteholders of any matters and/or relay any information it may possess or have access to relating tothe Company, this being the case irrespective of whether or not such matters and/or information mayaffect or impact upon the Company.

Return on an investment in the Notes will be affected by charges incurred by investors

Prospective investors should note that their total return on an investment in the Notes will beaffected by charges levied by their Distributor or the Issuer, or otherwise. Charges may be imposedby the Issuer upon an early redemption of the Notes except in the case where the Issuer’s Call Optionis exercised. Fees may be charged by their Distributor for a range of services including the openingand operation of an investment account, transfers of Notes, custody services and on payments ofinterest and principal and on the proceeds arising from any early redemption of the Notes. Prospectiveinvestors are therefore advised to consult with their Distributor to ascertain the basis on which feeswill be charged by their Distributor on their Notes.

Authorisations

The issue of this Series of Notes was authorised and approved by resolutions of the Board ofDirectors of the Issuer passed on 27 August 2004.

Use of Proceeds

The Issuer is issuing the Notes in the course of its ordinary business with the intention ofproviding investors with the opportunity to invest in a structured financial product that providesinvestors with an exposure to the Company, the Underlying Securities and 3-month USD LIBOR.Morgan Stanley does not consider this transaction to amount to a fund-raising exercise for MorganStanley or its subsidiaries. The proceeds of issue of the Notes will be used to purchase the UnderlyingSecurities.

Taxation

Prospective investors are advised to read the section headed “Taxation” in the ProgrammeProspectus which contains a summary of certain taxation provisions under Hong Kong, CaymanIslands and Jersey law. Prospective investors are also advised that no Hong Kong stamp duty will bepayable on the issue or subsequent transfer of any of the Notes. The provisions in the section headed“Taxation” in the Programme Prospectus are accurate as at the date of this Issue Prospectus.

No Material Adverse Change — Issuer

There has been no material change in the financial position or operations of the Issuer and nomaterial adverse change in the prospects of the Issuer, in each case since its date of incorporation on29 June 2004. The Notes described in this Issue Prospectus are being issued as Series 1 under theProgramme. As at the date of this Issue Prospectus, the Issuer does not have any material borrowingsor indebtedness in the nature of borrowings.

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No Material Adverse Change — Morgan Stanley

There has been no material change in the financial position or operations of Morgan Stanley and

its subsidiaries since 31 May 2004, and no material adverse change in the prospects of Morgan Stanley

and its subsidiaries, since 30 November 2003.

Display Documents

For so long as any Notes remain outstanding and with effect from the dates set out in the

following paragraph, the following documents will be available during usual business hours on any

weekday (Saturdays, Sundays and public holidays excepted), for inspection (requests for photocopies

will be subject to a reasonable fee which reflects the cost of making a copy) at the offices of the

Arranger’s agent specified on page 31 of this Issue Prospectus:

(i) the Memorandum and Articles of Association of the Issuer;

(ii) the Declaration of Trust (as defined in the section headed “Description of the Issuer” in the

Programme Prospectus);

(iii) a copy of the Programme Prospectus and (with effect from the date thereof) any addenda

thereto (as at the date of this Issue Prospectus, no addendum has been published in respect

of the Programme Prospectus);

(iv) a copy of this Issue Prospectus and (with effect from the date thereof) any supplements

hereto;

(v) Principal Trust Deed relating to the Programme and the First Supplemental Trust Deed

relating to the issue of the Notes (each document as described in the section headed

“Information About the Notes” in this Issue Prospectus);

(vi) Agency Agreement relating to the Programme which sets out the obligations of the Agents

and the Custodian in respect of the Notes;

(vii) Forward Agreement and Forward Guarantee (both as defined in the section headed

“Information About the Notes” in this Issue Prospectus);

(viii) Programme Agreement and the First Supplemental Programme Agreement (as defined in the

Pricing Supplements) which together set out the arrangements agreed between the Issuer

and the Arranger in relation to the sale of the Notes;

(ix) Pricing Supplements which supplement the Master Conditions to form the terms and

conditions of the Notes;

(x) Global Certificates;

(xi) Annual Reports on Forms 10-K of Morgan Stanley for the two fiscal years ended November

30, 2002 and November 30, 2003 and the unaudited Quarterly Reports on Forms 10-Q of

Morgan Stanley for the fiscal quarters ended February 29, 2004 and May 31, 2004;

(xii) Agreement letter of the Auditors;

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(xiii) information relating to the Underlying Securities including the ratings, the terms andconditions, the information memorandum (if one has been prepared) and regarding whereinvestors could obtain information relating to the performance of the issuer of theUnderlying Securities on an on-going basis together with any further information which isavailable to, and may be disclosed by, the Arranger; and

(xiv) a copy of any notice given by the Issuer or the Arranger in respect of the Notes pursuantto the Programme or as otherwise provided for in this Issue Prospectus.

Copies of the documents referred to in (i), (ii), (iii), (iv), (xi) and (xii), together with copies ofthe Principal Trust Deed, the Agency Agreement and the Programme Agreement, will be available forinspection as aforesaid with effect from the date of this Issue Prospectus. Copies of the FirstSupplemental Trust Deed, the First Supplemental Programme Agreement, the Forward Agreement andthe Forward Guarantee together with copies of the documents referred to in (ix), (x) and (xiii), willbe available for inspection as aforesaid with effect from the Issue Date. Copies of any addendumand/or supplement to the Programme Prospectus and this Issue Prospectus and of any notices referredto in (xiv) will be available for inspection as aforesaid with effect from the respective dates ofpublication thereof.

International Securities Identification Number and Common Code

Prospective investors should contact their Distributor if they wish to find out the InternationalSecurities Identification Number (the “ISIN”) and Common Code for the Notes or the UnderlyingSecurities. The ISIN and the Common Code are the securities codes which identify securities for thepurposes of their clearance and settlement through the international clearing systems Euroclear andClearstream International.

Trustee’s Mandate

J.P. Morgan Corporate Trustee Services Limited, whose principal office is at Trinity Tower, 9Thomas More Street, London, E1W 1YT, United Kingdom, has been, and has agreed to its being,appointed as Trustee pursuant to the Principal Trust Deed, and details of the scope of its mandate asTrustee and the conditions under which it may be replaced as such may be found in that Principal TrustDeed.

Information relating to the Issuer and Morgan Stanley

The Issuer will undertake in the First Supplemental Trust Deed to keep the Noteholders informedas soon as reasonably practicable of any information relating to the Issuer and/or (to the extent itbecomes aware of such information) Morgan Stanley which is necessary to avoid the establishment ofa false market in the Notes and/or which might reasonably be expected significantly to affect theability of the Issuer to meet its commitments under the Notes. Such information will be given bynotice to Noteholders to be given in accordance with the Master Conditions.

Additional Information on Morgan Stanley

Up-to-date information, including financial information or any major development on MorganStanley, can also be obtained from its statutory filings under the U.S. Securities and ExchangeCommission’s website, www.sec.gov under “Filings and Forms (EDGAR) search for Company filings”.

Please refer to the section headed “References to websites” on page 4 of this document fora warning statement and a disclaimer relating to the usage of information contained in websitesreferred to above.

— 48 —

Applicability of Certain Statutory Provisions

No application form or purchase order form will be issued for the Notes. However, persons who,

on the faith of this Issue Prospectus and the Programme Prospectus, purchase Notes from a Distributor

will be treated by the Issuer and the Initial Subscriber as persons who subscribe for the Notes for the

purposes of Section 40 of the Companies Ordinance (to the extent that Section 40 applies to this Issue

Prospectus and the Programme Prospectus by virtue of Section 342E of the Companies Ordinance).

Section 40 of the Companies Ordinance imposes liability on certain persons, including the directors

of a company and other persons who authorise the issue of a prospectus, to pay compensation to

persons who subscribe for shares or debentures of a company on the faith of a prospectus for loss or

damage sustained by reason of an untrue statement in the prospectus.

This Issue Prospectus and the Programme Prospectus shall have the effect, if a purchase of Notes

is made pursuant to them, of rendering all persons concerned bound by all the provisions (other than

the penal provisions) of sections 44A (except section 44A(2) in respect of which the SFC has granted

an exemption under section 342A(1)) and 44B of the Companies Ordinance, so far as applicable.

SFC Certificate of Exemption

Section 342 of the Companies Ordinance prescribes the information required to be contained in

a prospectus. Each of this Issue Prospectus and the Programme Prospectus must contain such required

information unless the provision of such information is not applicable or exempted.

A certificate of exemption relating to this Issue Prospectus has been issued by the SFC subject

to certain conditions under section 342A(1) of the Companies Ordinance in respect of (i) sections

342(1)(a)(i) and 342(1)(a)(ii) of the Companies Ordinance on the grounds that the inclusion of such

information would be irrelevant to prospective investors and would not impact on a prospective

investor’s decision to purchase the Notes in the context of the Issuer being a special purpose vehicle;

(ii) section 342(1)(b) of the Companies Ordinance (in relation to the requirement for this Issue

Prospectus to contain a Chinese translation) on the ground that such requirement is irrelevant as a

separate Chinese language version of this Issue Prospectus has been prepared and on the condition that

both the English and Chinese language versions of this Issue Prospectus are registered with the

Registrar of Companies and both language versions must be made available to the public at all

distribution points; (iii) paragraphs 27 and 31 of the Third Schedule to the Companies Ordinance

(“Third Schedule”) on the grounds that it would be unduly burdensome for the Issuer to provide such

information since the Issuer is not required to produce any financial statements or auditor’s report

under the laws of Cayman Islands. Furthermore, the inclusion of such financial statements or auditor’s

report would be irrelevant in the context of the Issuer as a special purpose company and would not

impact on a prospective investor’s decision to purchase the Notes; and (iv) section 44A(2) of the

Companies Ordinance on the ground that this provision is unduly burdensome as the Issuer has the

option to extend the Offer Period which may result in the Issue Date being later than 30 days after the

date of this Issue Prospectus. In addition, a certificate of exemption relating to this Issue Prospectus

has been issued by the SFC under section 342A(1) of the Companies Ordinance in respect of the

following provisions of the Companies Ordinance: (i) section 342(1)(a)(iv) and (v) and paragraphs 1,

2, 6 (in respect of the business addresses of the directors of the Issuer), 10, 11, 21, 24 and 30 of the

Third Schedule, on the basis that inclusion of the information required under these provisions in this

Issue Prospectus is irrelevant as such information has been provided in the Programme Prospectus;

and (ii) paragraphs 3 and 26(a) of the Third Schedule, on the basis that inclusion of the information

required under these paragraphs in this Issue Prospectus is irrelevant as such paragraphs have been

satisfied by reading together this Issue Prospectus and the Programme Prospectus.

— 49 —

The certificate of exemption is issued subject to the conditions that (i) this Issue Prospectus must

be distributed together with the Programme Prospectus. If either this Issue Prospectus or the

Programme Prospectus runs out at a particular location, distribution should cease at that location until

both the Programme Prospectus and this Issue Prospectus are available; (ii) both the English and

Chinese language versions of this Issue Prospectus are duly certified and registered with the Registrar

of Companies and both language versions must be made available to the public at all distribution

points. If either language version runs out or ceases to be available at any distribution point, then

distribution of this Issue Prospectus at such distribution point should cease and should not resume

until such time as both language versions of this Issue Prospectus are again available; and (iii) the

Issuer shall require the Distributors to ensure that the application procedures for the Notes have

safeguards designed to assure that prospective investors will not be able to make an application

without confirming that they have had access to or read the Programme Prospectus together with this

Issue Prospectus.

In addition, pursuant to Sections 8(2) and 8(3) of the Companies Ordinance (Exemption of

Companies and Prospectuses from Compliance with Provisions) Notice (Cap. 32L), compliance with

respect to paragraphs 4, 5, 6 (in relation to the residential addresses of the directors of the Issuer),

12(1)(a), 12(1)(b), 13, 14, 15, 16, 19, 22, 26(b) and 45 of the Third Schedule is exempted in respect

of this Issue Prospectus.

A certificate of exemption relating to the Programme Prospectus was issued, subject to certain

conditions, by the SFC under section 342A(1) of the Companies Ordinance in respect of (i) section

44A(2) on the ground that this provision is irrelevant as Notes will not be issued pursuant to the

Programme Prospectus, but will only be issued pursuant to the relevant Issue Prospectus read in

conjunction with the Programme Prospectus; (ii) sections 342(1)(a)(i) and 342(1)(a)(ii) of the

Companies Ordinance on the grounds that the inclusion of such information would be irrelevant to

prospective investors and would not impact on a prospective investor’s decision to purchase the Notes

in the context of the Issuer being a special purpose vehicle; (iii) section 342(1)(b) of the Companies

Ordinance (in relation to the requirement for the Programme Prospectus to contain a Chinese

translation) on the ground that such requirement is irrelevant as a separate Chinese language version

of the Programme Prospectus has been prepared and on the condition that both the English and

Chinese language versions of the Programme Prospectus are registered with the Registrar of

Companies and both language versions must be made available to the public at all distribution points;

(iv) paragraphs 27 and 31 of the Third Schedule on the basis that it would be unduly burdensome for

the Issuer to provide such information since the Issuer is not required to publish any financial

statements or auditor’s report under the laws of Cayman Islands. Furthermore the inclusion of the

required information is irrelevant in the context of the Issuer as it is a special purpose vehicle and

would not impact on a prospective investor’s decision to invest in the Notes; and (v) paragraphs 3 and

26(a) of the Third Schedule on the basis that such paragraphs are irrelevant as they would have been

satisfied by reading together the Programme Prospectus with the relevant Issue Prospectus.

The certificate of exemption in respect of the Programme Prospectus contains similar conditions

to those contained in the certificate of exemption for this Issue Prospectus. Particulars of these

conditions are detailed in the Programme Prospectus.

This Issue Prospectus and the Programme Prospectus together satisfy (subject to the exemptions

granted by the SFC as aforesaid) the requirements of the Companies Ordinance for such offers.

Moreover, such documents together contain sufficient particulars and information to enable a

reasonable person to form, as a result thereof, a valid and justifiable opinion of the Notes and the

financial condition and profitability of the Issuer as at the date of this Issue Prospectus.

— 50 —

APPENDIX AINFORMATION ON 3-MONTH USD LIBOR

The following information on 3-month USD LIBOR is extracted from publicly availableinformation and none of the Issuer, the Arranger and/or the Distributors or their respective directorsgives any representation whatsoever as to the truthfulness, accuracy, completeness, adequacy orreasonableness of any of the information whether as at the date of this Issue Prospectus or any othertime, save that the Issuer and its directors have taken reasonable care to correctly extract and/orreproduce such information.

The interest amount payable on each of the Tranche B Notes and Tranche D Notes is calculatedby reference to the number of calendar days in an Interest Period on which 3-month USD LIBOR fallsor, as the case may be, is deemed to fall within the relevant LIBOR Accrual Range as specified in“Interest Rate” in the section headed “Information About the Notes”. The rate of 3-month USD LIBORis the rate of interest at which banks borrow funds from other banks, in marketable size, in the Londoninter-bank market. 3-month USD LIBOR will be determined by the Calculation Agent (at its solediscretion) on the basis of the 3-month USD London inter-bank offered rate fixed by the BritishBankers’ Association as displayed on the Telerate Page “3750” as of 11:00 am (London time) on eachcalendar day in an Interest Period (for further details see “Interest Rate” in the section headed“Information About the Notes” in this Issue Prospectus). The 5 year historical rates for 3-month USDLIBOR are set out below for reference purposes only and do not constitute any indication orrepresentation of the level of future rates of 3-month USD LIBOR, which may fluctuate as a result ofmarket conditions and economic factors and may go up or down. For information purposes only, therate of 3-month USD LIBOR as at 26 August 2004 is 1.78125%. Prospective investors should contacttheir Distributors if they want to obtain further and more up-to-date information relating to the levelof 3-month USD LIBOR.

5 Year Historical Rates for 3-Month USD LIBOR

0

1

2

3

4

5

6

7

8US0003M Index PX_LAST

LIB

OR

(in

per

cent

.)

Jun-99A

ug-99O

ct-99

Feb-00

Jun-00A

ug-00

Dec-00

Apr-01

Aug-01

Jan-02

May-02

Jul-02

Nov-02

Mar-03

May-03

Sep-03N

ov-03

Apr-04

Jun-04

Dec-99

Apr-00

Oct-00

Feb-01

Jun-01

Nov-01

Mar-02

Sep-02

Jan-03

Jul-03

Jan-04

Aug-04

(Source: Bloomberg L.P.)

Further information on 3-month USD LIBOR can also be obtained by viewing the website of theBritish Bankers’ Association at www.bba.org.uk.

Please refer to the section headed “References to websites” on page 4 of this document fora warning statement and a disclaimer relating to the usage of information contained in thewebsite referred to above.

— 51 —

APPENDIX BTECHNICAL DEFINITIONS

Company Credit Events

Definition of Company Credit Event

“Company Credit Event” means the Determination Agent in its sole and absolute discretionacting in good faith having the right (but not the obligation) to declare the occurrence of a CompanyCredit Event upon the occurrence of one or more of the following events or conditions with respectto the Company or Obligations of the Company, which event or condition occurs on or after the IssueDate:

(i) Bankruptcy

(ii) Failure to Pay

(iii) Restructuring

If an occurrence would otherwise constitute a Company Credit Event, such occurrence willconstitute a Company Credit Event whether or not such occurrence arises directly or indirectly from,or is subject to a defence based upon: (a) any lack or alleged lack of authority or capacity of theCompany to enter into any Obligation, or as applicable, an Underlying Obligor to enter into anyUnderlying Obligation, (b) any actual or alleged unenforceability, illegality, impossibility orinvalidity with respect to any Obligation or, as applicable, any Underlying Obligation howeverdescribed, (c) any applicable law, order, regulation, decree or notice, however described, or thepromulgation of, or any change in, the interpretation by any court, tribunal, regulatory authority orsimilar administrative or judicial body with competent or apparent jurisdiction of any applicable law,order, regulation, decree or notice, however described, or (d) the imposition of, or any change in, anyexchange controls, capital restrictions or any other similar restrictions imposed by any monetary orother authority, however described.

For these purposes:

“Bankruptcy” means the Company (a) is dissolved (other than pursuant to a consolidation,amalgamation or merger); (b) becomes insolvent or is unable to pay its debts or fails or admitsin writing in a judicial, regulatory or administrative proceeding or filing its inability generallyto pay its debts as they become due; (c) makes a general assignment, arrangement or compositionwith or for the benefit of its creditors; (d) institutes or has instituted against it a proceedingseeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy orinsolvency law or other similar law affecting creditors’ rights, or a petition is presented for itswinding up or liquidation, and, in the case of any such proceeding or petition instituted orpresented against it, such proceeding or petition (i) results in a judgment of insolvency orbankruptcy or the entry of an order for relief or the making of an order for its winding up orliquidation or (ii) is not dismissed, discharged, stayed or restrained in each case within thirtycalendar days of the institution or presentation thereof; (e) has a resolution passed for its windingup, official management or liquidation (other than pursuant to a consolidation, amalgamation ormerger); (f) seeks or becomes subject to the appointment of an administrator, provisionalliquidator, conservator, receiver, trustee, custodian or other similar official for it or for all orsubstantially all its assets; (g) has a secured party take possession of all or substantially all itsassets or has a distress, execution, attachment, sequestration or other legal process levied,enforced or sued on or against all or substantially all its assets and such secured party maintainspossession, or any such process is not dismissed, discharged, stayed or restrained, in each casewithin thirty calendar days thereafter; or (h) causes or is subject to any event with respect to itwhich, under the applicable laws of any jurisdiction, has an analogous effect to any of the eventsspecified in clauses (a) to (g) (inclusive).

— 52 —

“Failure to Pay” means after the expiration of any applicable Grace Period (after thesatisfaction of any conditions precedent to the commencement of such Grace Period), the failureby the Company to make, when and where due, any payments in an aggregate amount of not lessthan US$1,000,000 (or its equivalent in the relevant currency or currencies in which anObligation is denominated), as of the occurrence of the relevant Failure to Pay, under one ormore Obligations, in accordance with the terms of such Obligations at the time of such failure.

“Restructuring” (a) means that, with respect to one or more Obligations and in relation toan aggregate amount of not less than US$10,000,000 (or its equivalent in the relevant currencyor currencies in which an Obligation is denominated), any one or more of the following eventsoccurs in a form that binds all holders of such Obligation, is agreed between the Company or aGovernmental Authority and a sufficient number of holders of such Obligation to bind all holdersof the Obligation or is announced (or otherwise decreed) by the Company or a GovernmentalAuthority in a form that binds all holders of such Obligation, and such event is not expresslyprovided for under the terms of such Obligation in effect as of the later of the Issue Date andthe date as of which such Obligation is issued or incurred:

(i) a reduction in the rate or amount of interest payable or the amount of scheduledinterest accruals;

(ii) a reduction in the amount of principal or premium payable at maturity or at scheduledredemption dates;

(iii) a postponement or other deferral of a date or dates for either (A) the payment oraccrual of interest or (B) the payment of principal or premium;

(iv) a change in the ranking in priority of payment of any Obligation, causing theSubordination of such Obligation to any other Obligation; or

(v) any change in the currency or composition of any payment of interest or principal toany currency which is not a Permitted Currency.

“Permitted Currency” means (i) the legal tender of any Group of 7 country (or any countrythat becomes a member of the Group of 7 if such Group of 7 expands its membership); or (ii)the legal tender of any country which, as of the date of such change, is a member of theOrganization for Economic Cooperation and Development and has a local currency long-termdebt rating of either AAA or higher assigned to it by Standard & Poor’s, a division of TheMcGraw-Hill Companies, Inc. or any successor to the rating business thereof, Aaa or higherassigned to it by Moody’s Investors Service, Inc. or any successor to the rating business thereofor AAA or higher assigned to it by Fitch Ratings or any successor to the rating business thereof.

(b) Notwithstanding the provisions of (a) above, none of the following shall constitute aRestructuring:

(i) the payment in euros of interest or principal in relation to an Obligation denominatedin a currency of a Member State of the European Union that adopts or has adopted thesingle currency in accordance with the Treaty establishing the European Community,as amended by the Treaty on European Union;

(ii) the occurrence of, agreement to or announcement of any of the events described in(a)(i) to (v) above due to an administrative adjustment, accounting adjustment or taxadjustment or other technical adjustment occurring in the ordinary course of business;and

— 53 —

(iii) the occurrence of, agreement to or announcement of any of the events described in

(a)(i) to (v) above in circumstances where such event does not directly or indirectly

result from a deterioration in the creditworthiness or financial condition of the

Company.

(c) For purposes of paragraphs (a) and (b) above, the term “Obligation” shall be deemed to

include Underlying Obligations for which the Company is acting as provider of a Qualifying

Affiliate Guarantee or, if “All Guarantees” is specified as applicable, as provider of any

Qualifying Guarantee. In the case of a Qualifying Guarantee and an Underlying Obligation,

references to the Company in paragraph (a) of this definition shall be deemed to refer to the

Underlying Obligor and the reference to the Company in paragraph (b) of this definition shall

continue to refer to the Company.

Occurrence of a Company Credit Event

Upon the occurrence of a Company Credit Event (i) the Issuer shall notify the Trustee and the

Noteholders via Euroclear or Clearstream International of the Company Credit Event (including

reasonable details of the Publicly Available Information confirming such Company Credit Event)

promptly after the Company Credit Event Determination Date; (ii) the Notes shall cease to bear

interest and no further payment will be made in respect of interest accrued from the preceding Interest

Payment Date (or the Issue Date, if none); (iii) the Deliverable Obligations shall be identified by the

Swap Counterparty in the Initial Principal Amount; and (iv) the Issuer will redeem the Notes by

payment of the Company Credit Event Redemption Amount on the Company Credit Event Redemption

Date.

All amounts received by the Issuer in respect of the Deliverable Obligations identified by the

Swap Counterparty will be paid to the Noteholders pro-rata to their holdings in partial redemption of

the principal amount of the Notes outstanding.

The notice setting out the occurrence of a Company Credit Event shall include a brief description

of the relevant event and the Public Source of such information and an explanation of how it fits the

definition of a Company Credit Event.

For these purposes:

“Publicly Available Information” means (a) information that reasonably confirms any of

the facts relevant to the determination that the Company Credit Event has occurred and which

(i) has been published in or on not less than the number of Public Sources specified in the Swap

Agreement (as defined herein) (or, if a number is not so specified, two), regardless of whether

the reader or user thereof pays a fee to obtain such information; provided that, if any of the Swap

Counterparty, the Forward Counterparty or its Affiliates is cited as the sole source of such

information, then such information shall not be deemed to be Publicly Available Information

unless the Swap Counterparty, the Forward Counterparty or its Affiliate is acting in its capacity

as trustee, fiscal agent, administrative agent, clearing agent or paying agent for an Obligation;

(ii) is information received from or published by a trustee, fiscal agent, administrative agent,

clearing agent or paying agent for an Obligation, (iii) is information contained in any petition

or filing instituting a proceeding described in paragraph (d) in the definition of “Bankruptcy”

above against or by the Company or (iv) is information contained in any order, decree, notice or

filing, however described, of or filed with a court, tribunal, exchange, regulatory authority or

similar administrative, regulatory or judicial body.

— 54 —

(b) In relation to any information of the type described in paragraphs (a)(ii), (iii) and (iv)

above, the party receiving such information may assume that such information has been disclosed

to it without violating any law, agreement or understanding regarding the confidentiality of such

information and that the party delivering such information has not taken any action or entered

into any agreement or understanding with the Company or any Affiliate of the Company that

would be breached by, or would prevent, the disclosure of such information to third parties.

(c) Publicly Available Information need not state that such occurrence (A) has met the

requirement of being an aggregate amount of not less than US$1,000,000 (or its equivalent in the

relevant currency or currencies in which an Obligation is denominated) in the case of a “Failure

to Pay” or US$10,000,000 (or its equivalent in the relevant currency or currencies in which an

Obligation is denominated) in the case of a “Restructuring”, (B) is the result of exceeding any

applicable Grace Period or (C) has met the subjective criteria specified in certain Company

Credit Events.

“Public Source” means each of Bloomberg Service, Dow Jones Telerate Service, Reuter

Monitor Money Rates Services, Dow Jones News Wire, Wall Street Journal, New York Times,

Nihon Keizai Shinbun, Asahi Shinbun, Yomiuri Shinbun, Financial Times, La Tribune, Les Echos

and the Australian Financial Review (and successor publications), the main source(s) of business

news in the country in which the Company is organised and any other internationally recognised

published or electronically displayed news sources.

Company Credit Event Redemption Amount

The “Company Credit Event Redemption Amount” shall be the Liquidation Proceeds of the

Deliverable Obligations as determined by the Swap Counterparty. The pro-rata share of the Company

Credit Event Redemption Amount payable to holders of the Tranche C Notes and the Tranche D Notes

will be converted into Hong Kong dollars at the USD/HKD exchange rate prevailing on or about the

Company Credit Event Redemption Date, as determined by the Determination Agent.

For these purposes:

“Initial Principal Amount” means a principal or nominal amount of Deliverable

Obligations identified by the Swap Counterparty after the Company Credit Event Determination

Date equal to the Principal Amount of the Notes outstanding on the Company Credit Event

Determination Date.

“Swap Settlement Amount” means the amount (as determined by the Swap Counterparty)

of any early termination amount or close out payment receivable or payable (expressed as a

negative amount) under the Swap Agreement and which Swap Agreement terminated early or

otherwise closed out in connection with the occurrence of a Company Credit Event and/or an

Early Redemption Event.

“Liquidation Proceeds” means the US dollar amount calculated by reference to the market

valuation of the Deliverable Obligations or realisable upon the sale of the Underlying Securities,

at the highest clean firm bid price, obtained by the Swap Counterparty on the Valuation Date in

the case of a Company Credit Event or the relevant date on which the Underlying Securities have

been sold or realised in the case of an Early Redemption Event, upon the solicitation of five

unaffiliated Dealers selected by the Swap Counterparty, less the costs and expenses, as

determined by the Swap Counterparty, of effecting the relevant market valuation and/or sale.

— 55 —

“Dealers” means dealers in Bonds or Loans of the Company from which quotations on themarket value of the Bonds or Loans are to be obtained or dealers in the Underlying Securities.

“Deliverable Obligations” means any Bond or Loan of the Company (as defined herein).

“Deliverable Obligation Characteristics” means any one or more of Not Subordinated,Specified Currency, Not Sovereign Lender, Not Domestic Law, Not Contingent, Not DomesticIssuance, Assignable Loan, Transferable, Maximum Maturity and Not Bearer, and:

“Not Subordinated” means an obligation that is not Subordinated to the outstandingsenior, unsecured or secured obligations of the Company in priority of payment.

“Specified Currency” meaning an obligation that is payable in any of the lawful currenciesof Canada, Japan, Switzerland, Hong Kong, Singapore, United Kingdom and the United Statesof America and the euro (and any successor currency to any of the aforementioned currencies,which currencies may be referred to collectively as the “Specified Currencies”).

“Maximum Maturity” means an obligation that has a remaining maturity from theCompany Credit Event Redemption Date of not greater than 30 years.

“Not Contingent” means any obligation having as of the Company Credit EventRedemption Date and all times thereafter an outstanding principal balance that pursuant to theterms of such obligation may not be reduced as a result of the occurrence or nonoccurrence ofan event or circumstance (other than payment).

“Transferable” means an obligation that is transferable to institutional investors withoutany contractual, statutory or regulatory restriction, provided that none of the following shall beconsidered contractual, statutory or regulatory restrictions:

(A) contractual, statutory or regulatory restrictions that provide for eligibility for resalepursuant to Rule 144A or Regulation S promulgated under the United States SecuritiesAct of 1933, as amended (and any contractual, statutory or regulatory restrictionspromulgated under the laws of any jurisdiction having a similar effect in relation tothe eligibility for resale of an obligation); or

(B) restrictions on permitted investments such as statutory or regulatory investmentrestrictions on insurance companies and pension funds.

“Not Bearer” means any obligation that is not a bearer instrument unless interests withrespect to such bearer instrument are cleared via the Euroclear system, Clearstream Internationalor any other internationally recognized clearing system.

“Assignable Loan” means a Loan that is capable of being assigned or novated to, at aminimum, commercial banks or financial institutions (irrespective of their jurisdiction oforganization) that are not then a lender or a member of the relevant lending syndicate, withoutthe consent of the Company or the guarantor, if any, of such Loan (or the consent of theapplicable borrower if the Company is guaranteeing such Loan) or any agent.

“Not Sovereign Lender” means any obligation that is not primarily owed to a Sovereignor Supranational Organisation, including, without limitation, obligations generally referred to as“Paris Club debt”;

“Not Domestic Law” means any obligation that is not governed by the laws of thejurisdiction of organization of the Company; and

— 56 —

“Not Domestic Issuance” means any obligation other than an obligation that was, at the

time the relevant obligation was issued (or reissued, as the case may be) or incurred, intended

to be offered for sale primarily in the domestic market of the Company. Any obligation that is

registered or qualified for sale outside the domestic market of the Company (regardless of

whether such obligation is also registered or qualified for sale within the domestic market of the

Company) shall be deemed not to be intended for sale primarily in the domestic market of the

Company.

Definitions

The following other definitions are used in relation to the determination of a Company Credit

Event:

“Affiliate” means, in relation to any person, any entity controlled, directly or indirectly, by

the person, any entity that controls, directly or indirectly, the person or any entity directly or

indirectly under common control with the person. For this purpose, “control” of any entity or

person means ownership of a majority of the voting power of the entity or person.

“Best Available Information” means the unconsolidated, pro forma financial information

which assumes that the relevant Succession Event has occurred or which provides such

information to its shareholders, creditors or other persons whose approval of the Succession

Event is required and, if provided subsequently to the provision of unconsolidated, pro forma

financial information but before the Calculation Agent makes its determination for the purposes

of the definition of “Successor”, other relevant information that is contained in any written

communication provided by the Company to its primary securities regulator, primary stock

exchange, shareholders, creditors or other persons whose approval of the Succession Event is

required. Information which is made available more than fourteen calendar days after the legally

effective date of the Succession Event shall not constitute Best Available Information.

“Bond” means Borrowed Money that is in the form of, or represented by, a bond, note

(other than notes delivered pursuant to Loans), certified debt security or other debt security and

shall not include any other type of Borrowed Money.

“Borrowed Money” means, any obligation (excluding an obligation under a revolving

credit arrangement for which there are no outstanding, unpaid drawings in respect of principal)

for the payment or repayment of borrowed money (which term shall include, without limitation,

deposits and reimbursement obligations arising from drawings pursuant to letters of credit).

“Company” means Hutchison Whampoa Limited and its Successors provided that in the

event that Hutchison Whampoa Limited is subject to a Succession Event and more than one

Successor to Hutchison Whampoa Limited is identified, the Notes shall be deemed to be divided

into the same number of components as there are Successors. Each such Successor to Hutchison

Whampoa Limited shall be deemed to be the Company for one of the resulting components. In

the event that a Company Credit Event occurs subsequent to a Succession Event and the deemed

division of the Notes as aforesaid, the relevant component(s) shall be determined, and the Notes

shall be settled accordingly, as described in “Occurrence of a Company Credit Event” above.

“Company Credit Event Determination Date” means any date on which the

Determination Agent determines in its sole and absolute discretion acting in good faith that a

Company Credit Event has occurred.

— 57 —

“Company Credit Event Redemption Date” means the day which is 2 Business Days afterthe Valuation Date.

“Domestic Currency” means the currency specified as such in the Swap Agreement andany successor currency. If no currency is so specified, the Domestic Currency shall be the lawfulcurrency and any successor currency of the jurisdiction in which the Company is organised. Inno event shall Domestic Currency include any successor currency if such successor currency isthe lawful currency of any of Canada, Japan, Switzerland, the United Kingdom or the UnitedStates of America or the euro (or any successor currency to any such currency).

“Governmental Authority” means any de facto or de jure government (or any agency,instrumentality, ministry or department thereof), court, tribunal, administrative or othergovernmental authority or any other entity (private or public) charged with the regulation of thefinancial markets (including the central bank) of the Company or of the jurisdiction oforganization of the Company.

“Grace Period” means the applicable grace period with respect to payments under therelevant Obligation under the terms of such Obligation in effect as of the later of the Issue Dateand the date as of which such Obligation is issued or incurred. Any Obligation with no graceperiod specified or a grace period of less than 3 Grace Period Business Days shall be deemed tohave a grace period of 3 Grace Period Business Days provided that the deemed Grace Periodshall expire no later than the second Business Day prior to the Maturity Date.

“Grace Period Business Day” means a day on which commercial banks and foreignexchange markets are generally open to settle payments in the place or places and on the daysspecified for that purpose in the relevant Obligation and if a place or places are not so specified,in the jurisdiction of the currency or currencies in which an Obligation is denominated.

“Loan” means any Borrowed Money that is documented by a term loan agreement,revolving loan agreement or other similar credit agreement and shall not include any other typeof Borrowed Money.

“Obligation” means any Bond or Loan.

“Obligation Characteristics” means any one or more of Not Subordinated, Not SovereignLender, Not Domestic Currency, Not Domestic Law and Not Domestic Issuance, and:

“Not Subordinated” means an obligation that is not Subordinated to the outstandingsenior, unsecured or secured obligations of the Company in priority of payment;

“Not Sovereign Lender” means any obligation that is not primarily owed to a Sovereignor Supranational Organisation, including, without limitation, obligations generally referred to as“Paris Club debt”;

“Not Domestic Currency” means any obligation that is payable in any currency other thanthe Domestic Currency;

“Not Domestic Law” means any obligation that is not governed by the laws of thejurisdiction of organization of the Company; and

“Not Domestic Issuance” means any obligation other than an obligation that was, at thetime the relevant obligation was issued (or reissued, as the case may be) or incurred, intendedto be offered for sale primarily in the domestic market of the Company. Any obligation that is

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registered or qualified for sale outside the domestic market of the Company (regardless ofwhether such obligation is also registered or qualified for sale within the domestic market of theCompany) shall be deemed not to be intended for sale primarily in the domestic market of theCompany.

“Qualifying Guarantee” means an arrangement evidenced by a written instrumentpursuant to which the Company irrevocably agrees (by guarantee of payment or equivalent legalarrangement) to pay all amounts due under an obligation (the “Underlying Obligation”) forwhich another party is the obligor (the “Underlying Obligor”). Qualifying Guarantees shallexclude any arrangement (i) structured as a surety bond, financial guarantee insurance policy,letter of credit or equivalent legal arrangement; or (ii) pursuant to the terms of which thepayment obligations of the Company can be discharged, reduced, assigned or otherwise altered(other than by operation of law) as a result of the occurrence or non-occurrence of an event orcircumstance (other than payment). The benefit of a Qualifying Guarantee must be capable ofbeing delivered together with the Delivery of the Underlying Obligation.

“Qualifying Affiliate Guarantee” means a Qualifying Guarantee provided by the Companyin respect of an Underlying Obligation of a Downstream Affiliate.

“Downstream Affiliate” means an entity whose outstanding Voting Shares were, at the dateof issuance of the Qualifying Guarantee, more than 50 percent owned, directly or indirectly, bythe Company.

“Voting Shares” shall mean those shares or other interests that have the power to elect theboard of directors or similar governing body of an entity.

“Relevant Obligation” means the Obligation constituting any Bond or Loan of theCompany outstanding immediately prior to the effective date of the Succession Event, excludingany debt obligations outstanding between the Company and any of its Affiliates, as determinedby the Determination Agent. The Determination Agent will determine the entity which succeedsto such Relevant Obligations on the basis of the Best Available Information. If the date on whichthe Best Available Information becomes available or is filed precedes the legally effective dateof the relevant Succession Event, any assumptions as to the allocation of obligations between oramong entities contained in the Best Available Information will be deemed to have been fulfilledas of the legally effective date of the Succession Event, whether or not this is in fact the case.

“Sovereign” means any state, political subdivision or government, or any agency,instrumentality, ministry, department or other authority (including, without limiting theforegoing, the central bank) thereof.

“Sovereign Agency” means any agency, instrumentality, ministry, department or otherauthority (including, without limiting the foregoing, the central bank) of a Sovereign.

“Subordination” means, with respect to an obligation (the “Subordinated Obligation”)and another obligation of the Company to which such obligation is being compared (the “SeniorObligation”), a contractual, trust or similar arrangement providing that (i) upon the liquidation,dissolution, reorganization or winding up of the Company, claims of the holders of the SeniorObligation will be satisfied prior to the claims of the holders of the Subordinated Obligation or(ii) the holders of the Subordinated Obligation will not be entitled to receive or retain paymentsin respect of their claims against the Company at any time that the Company is in paymentarrears or is otherwise in default under the Senior Obligation. “Subordinated” will be construedaccordingly. For purposes of determining whether Subordination exists or whether an obligationis Subordinated with respect to another obligation to which it is being compared, the existenceof preferred creditors arising by operation of law or of collateral, credit support or other creditenhancement arrangements shall not be taken into account.

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“Succession Event” means an event such as a merger, consolidation, amalgamation,transfer of assets or liabilities, demerger, spin-off or other similar event in which one entitysucceeds to the obligations of another entity, whether by operation of law or pursuant to anyagreement. Notwithstanding the foregoing, “Succession Event” shall not include an event inwhich the holders of obligations of the Company exchange such obligations for the obligationsof another entity, unless such exchange occurs in connection with a merger, consolidation,amalgamation, transfer of assets or liabilities, demerger, spin-off or other similar event.

“Successor” means in relation to Hutchison Whampoa Limited, the entity or entities, if any,determined as set forth below:

(a) If an entity directly or indirectly succeeds to 75 per cent. or more of the DeliverableObligations of Hutchison Whampoa Limited by way of a Succession Event, that entitywill be the sole Successor.

(b) If one entity directly or indirectly succeeds to more than 25 per cent. (but less than75 per cent.) of the Deliverable Obligations of Hutchison Whampoa Limited by wayof a Succession Event and not more than 25 per cent. of the Deliverable Obligationsof Hutchison Whampoa Limited remains with Hutchison Whampoa Limited, the entitythat succeeds to more than 25 per cent. of the Deliverable Obligations will be the soleSuccessor.

(c) If more than one entity each directly or indirectly succeed to more than 25 per cent.of the Deliverable Obligations of Hutchison Whampoa Limited by way of aSuccession Event, and not more than 25 per cent. of the Deliverable Obligations ofHutchison Whampoa Limited remains with Hutchison Whampoa Limited, the entitiesthat succeed to more than 25 per cent. of the Deliverable Obligations will beSuccessors.

(d) If one or more entities each directly or indirectly succeed to more than 25 per cent.of the Deliverable Obligations of Hutchison Whampoa Limited by way of aSuccession Event and more than 25 per cent. of the Deliverable Obligations ofHutchison Whampoa Limited remains with Hutchison Whampoa Limited, each suchentity and Hutchison Whampoa Limited will be Successors.

(e) If one or more entities directly or indirectly succeed to a part of the Bonds and Loansof Hutchison Whampoa Limited by way of a Succession Event, but no entity succeedsto more than 25 per cent. of the Deliverable Obligations of Hutchison WhampoaLimited and Hutchison Whampoa Limited continues to exist, there will be noSuccessor.

(f) If one or more entities directly or indirectly succeed to a part of the Bonds and Loansof Hutchison Whampoa Limited by way of a Succession Event, but no entity succeedsto more than 25 per cent. of the Deliverable Obligations of Hutchison WhampoaLimited and Hutchison Whampoa Limited ceases to exist, the entity which succeedsto the greatest percentage of Bonds and Loans (or, if two or more entities succeed toan equal percentage of Bonds and Loans, the entity from among those entities whichsucceeds to the greatest percentage of obligations) of Hutchison Whampoa Limitedwill be the sole Successor.

The Determination Agent will be responsible for determining as soon as reasonablypracticable after it becomes aware of the relevant Succession Event (but no earlier than 14 daysafter the legally effective date of the Succession Event) and with effect from the legally effectivedate of the Succession Event whether the relevant thresholds set forth above have been met, orwhich entity qualifies under (f) above, as applicable. In calculating the percentages used to

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determine whether the relevant thresholds set forth above have been met, or which entityqualifies under (f) above, as applicable, the Determination Agent shall use in respect of eachRelevant Obligation included in such calculation, the amount of the liability in respect of suchRelevant Obligation listed in the Best Available Information.

For the purposes of this definition of “Successor”, “succeed” means, with respect toHutchison Whampoa Limited and its Deliverable Obligations (or, as applicable, obligations), thata party other than Hutchison Whampoa Limited (a) assumes or becomes liable for suchDeliverable Obligations (or, as applicable, obligations) whether by operation of law or pursuantto any agreement or (b) issues Bonds that are exchanged for Deliverable Obligations (or, asapplicable, obligations), and in either case Hutchison Whampoa Limited is no longer an obligor(primarily or secondarily) or guarantor with respect to such Deliverable Obligations (or, asapplicable, obligations). The determinations required pursuant to the above shall be made, in thecase of an exchange offer, on the basis of the outstanding principal balance of DeliverableObligations tendered and accepted in the exchange and not on the basis of the outstandingprincipal balance of Bonds for which Deliverable Obligations have been exchanged.

“Supranational Organisation” means any entity or organisation established by treaty orother arrangement between two or more Sovereigns or the Sovereign Agencies of two or moreSovereigns and includes, without limiting the foregoing, the International Monetary Fund,European Central Bank, International Bank for Reconstruction and Development and EuropeanBank for Reconstruction and Development.

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APPENDIX CCREDIT RATING

A credit rating is a current assessment by a credit rating agency of a company’s overall financialcapacity (its creditworthiness) to pay its financial obligations (ie. its debts). This assessment focuseson the company’s capacity to meet its financial commitments as they become due. It does not applyto any specific financial obligation.

There can be no assurance that any stated credit rating will remain in effect for any given periodor that any such rating will not be revised by the relevant rating agency in the future if, in the relevantcredit rating agency’s judgment, circumstances so warrant. A downward revision of a credit ratingdoes not of itself constitute a Company Credit Event.

It should be noted that a credit rating is not a recommendation to purchase, sell, or hold afinancial obligation issued by an obligor (a company), as the rating agencies do not comment onmarket price or suitability for a particular investor.

Investors should note that a downgrade in respect of the Company does not of itself equate to,or result in, the occurrence of a Company Credit Event.

The following are guidelines issued by S&P and Moody’s on what each of their ratings means:

S&P Long-Term Issuer Credit Ratings

Long-Term Issuer Credit Ratings

AAA

An obligor rated ‘AAA’ has extremely strong capacity to meet its financial commitments. ‘AAA’is the highest Issuer Credit Rating assigned by S&P.

AA

An obligor rated ‘AA’ has very strong capacity to meet its financial commitments. It differs fromthe highest rated obligors only in a small degree.

A

An obligor rated ‘A’ has strong capacity to meet its financial commitments but is somewhat moresusceptible to the adverse effects of changes in circumstances and economic conditions than obligorsin higher-rated categories.

BBB

An obligor rated ‘BBB’ has adequate capacity to meet its financial commitments. However,adverse economic conditions or changing circumstances are more likely to lead to a weakenedcapacity of the obligor to meet its financial commitments.

BB

An obligor rated ‘BB’ is less vulnerable in the near term than other lower-rated obligors.However, it faces major ongoing uncertainties and exposure to adverse business, financial, oreconomic conditions which could lead to the obligor’s inadequate capacity to meet its financialcommitments.

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B

An obligation rated ‘B’ is more vulnerable to nonpayment than obligations rated ‘BB’, but theobligor currently has the capacity to meet its financial commitment on the obligation. Adversebusiness, financial, or economic conditions will likely impair the obligor’s capacity or willingness tomeet its financial commitment on the obligation.

CCC

An obligor rated ‘CCC’ is currently vulnerable, and is dependent upon favorable business,financial, and economic conditions to meet its financial commitments.

The ratings from ‘AA’ to ‘CCC’ may be modified by the addition of a plus (+) or minus (-) signto show relative standing within the major rating categories.

CC

An obligor rated ‘CC’ is currently highly-vulnerable.

C

A subordinated debt or preferred stock obligation rated ‘C’ is currently highly-vulnerable tononpayment. The ‘C’ rating may be used to cover a situation where a bankruptcy petition has beenfiled or similar action taken, but payments on this obligation are being continued. A ‘C’ also will beassigned to a preferred stock issue in arrears on dividends or sinking fund payments, but that iscurrently paying.

CreditWatch

CreditWatch highlights the potential direction of a short- or long-term rating. It focuses onidentifiable events and short-term trends that cause ratings to be placed under special surveillance byS&P’s analytical staff. These may include mergers, recapitalizations, voter referendums, regulatoryaction, or anticipated operating developments. Ratings appear on CreditWatch when such an event ora deviation from an expected trend occurs and additional information is necessary to evaluate thecurrent rating. A listing, however, does not mean a rating change is inevitable, and whenever possible,a range of alternative ratings will be shown. CreditWatch is not intended to include all ratings underreview, and rating changes may occur without the ratings having first appeared on CreditWatch. The“positive” designation means that a rating may be raised; “negative” means a rating may be lowered;and “developing” means that a rating may be raised, lowered, or affirmed.

Moody’s Debt Ratings

Aaa

Bonds which are rated Aaa are judged to be of the best quality. They carry the smallest degreeof investment risk and are generally referred to as “gilt edged”. Interest payments are protected by alarge or by an exceptionally stable margin and principal is secure. While the various protectiveelements are likely to change, such changes as can be visualized are most unlikely to impair thefundamentally strong position of such issues.

Aa

Bonds which are rated Aa are judged to be of high quality by all standards. Together with the Aaagroup they comprise what are generally known as high-grade bonds. They are rated lower than the bestbonds because margins of protection may not be as large as in Aaa securities or fluctuation ofprotective elements may be of greater amplitude or there may be other elements present which makethe long-term risk in Aa-rated bonds appear somewhat larger than those securities rated Aaa.

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A

Bonds which are rated A possess many favorable investment attributes and are to be considered

as upper-medium-grade obligations. Factors giving security to principal and interest are considered

adequate, but elements may be present which suggest a susceptibility to impairment some time in the

future.

Baa

Bonds which are rated Baa are considered as medium-grade obligations (i.e., they are neither

highly protected nor poorly secured). Interest payments and principal security appear adequate for the

present but certain protective elements may be lacking or may be characteristically unreliable over any

great length of time. Such bonds lack outstanding investment characteristics and in fact have

speculative characteristics as well.

Ba

Bonds which are rated Ba are judged to have speculative elements: their future cannot be

considered as well-assured. Often the protection of interest and principal payments may be very

moderate, and thereby not well safeguarded during both good and bad times over the future.

Uncertainty of position characterizes bonds in this class.

B

Bonds which are rated B generally lack characteristics of the desirable investment. Assurance of

interest and principal payments or of maintenance of other terms of the contract over any long period

of time may be small.

Caa

Bonds which are rated Caa are of poor standing. Such issues may be in default or there may be

present elements of danger with respect to principal or interest.

Ca

Bonds which are rated Ca represent obligations which are speculative in a high degree. Such

issues are often in default or have other marked shortcomings.

C

Bonds which are rated C are the lowest rated class of bonds, and issues so rated can be regarded

as having extremely poor prospects of ever attaining any real investment standing.

Watchlists

Watchlists list the names of credits whose Moody’s ratings have a likelihood of changing. Thesenames are actively under review because of developing trends or events which, in Moody’s opinion,warrant a more extensive examination. Inclusion on this Watchlist is made solely at the discretion ofMoody’s, and not all borrowers with ratings presently under review for possible downgrade or upgradeare included on any one Watchlist. In certain cases, names may be removed from the Watchlist withouta change in rating.

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Performance of Credit Ratings

S&P regularly produces a default study which calculates the incidence of defaults across all

rating classes over varying periods.

The S&P default events are similar (but not identical) to the Company Credit Events applicable

in respect of the Notes as set out in Appendix B — “Technical Definitions” to this Issue Prospectus.

S&P records a default:

● on the first occurrence of a payment default on any financial obligation of a company; or

● when holders of a company’s debt accept substitute instruments with reduced interest,

longer maturities or any other diminished financial term.

The table below (extracted from the S&P’s 2002 Rating Performance Study) shows the

cumulative default history for the 4 investment grade rating categories (AAA, AA, A and BBB) from

1 to 5 years. The study is global and covers the period from 1981 to 2002.

For example, if a bond has a S&P’s A rating, the statistical likelihood of default of such bond

based on the cumulative historical default history of such bonds between 1981 and 2002 is 0.05 per

cent. in the first year following issue, 0.15 per cent. in the second year, 0.28 per cent. in the third year,

and so on. The significance of these historical default rates is that there has been a correlation between

S&P’s ratings and the incidence of default. That is, the higher the rating the lower the incidence of

default.

Investment grade default history

Rating Year 1 Year 2 Year 3 Year 4 Year 5

(in per cent.)

AAA ............................................ 0.00 0.00 0.03 0.06 0.10

AA............................................... 0.01 0.03 0.08 0.16 0.27

A ................................................. 0.05 0.15 0.28 0.44 0.62

BBB ............................................ 0.37 0.94 1.52 2.34 3.20

Source: S&P

These historical default rates provide a measure of the historical accuracy of S&P’s ratings.

However, they are not necessarily, or at all, indicative of the likelihood of a Company Credit Event

occurring to the Company.

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