IEM PROSPECTUS: MX_VS
2000 Presidential Election in Mexico
Vote Share Market

In Español

At noon CDT on Tuesday, May 2, 2000 the Iowa Electronic Market (IEM) will open trading in a market based on the vote shares won by candidates in the 2000 Presidential Election in Mexico scheduled for July 2, 2000.

Initially, four contracts will trade in this market, three representing specific candidates and the fourth representing all candidates for the election except for these three. The liquidation values of each contract will be determined as $1.00 times the share of the vote won by the candidate or the set of candidates represented by that contract.

This document describes that market and should be viewed as a supplement to the IEM Trader's Manual. Except as specified in this prospectus, trading rules for this market are the same as those specified in the Trader's Manual for the Iowa Electronic Market.


CONTRACTS

The initial financial contracts traded in this market are as follows:

     Symbol          Contract Name
     PAN_VS          1$ x Vote share of Partido Accion Nacional
                          candidate Vicente Fox
     PRD_VS          1$ x Vote share of Partido de la Revolucion
                          Democratica candidate Cuauhtemoc Cardenas
     PRI_VS          1$ x Vote share of Partido Revolucionario
                          Institutional candidate Francisco Labastida
     MXrof_VS        $1 x Vote share of all qualified candidates
                          not separately listed
      

The contracts PAN_VS, PRD_VS and PRI_VS are associated with the nominees of the respective political parties. If any of those candidates withdraw from the campaign and are replaced by other nominees from the parties, all rights and interests in the contracts will transfer to the new candidates.

The contract MXrof_VS represents all duly registered and qualified candidates for the election who are not separately identified by individual contracts as of the close of the market.

The IEM reserves the right to spin off new contracts from the MXrof_VS contract at any time. If a new candidate should emerge with sufficient viability, then a new contract will be created to represent this new candidate and it will be introduced as a spin-off of the MXrof_VS contract. Specifically, each share held in an original MXrof_VS contract will be replaced by two shares, one in the new, candidate-specific contract and one in a continuing but revised MXrof_VS contract. No holder of the pre-spinoff contracts will be adversely affected. Traders will receive the same number of the new contracts as they held in the original, and the sum of the liquidation values of the new contracts will equal the liquidation value of the original. Decisions to spin-off a contract will be announced at least two days in advance of the spin-off. The new contract names, the specifications regarding liquidation values and the timing of the spin-off will be included in the announcement. This announcement will appear as a News Bulletin on your WebEx login screen. All limit orders to buy or to sell MXrof_VS will be canceled just prior to the spinoff.


DETERMINATION OF LIQUIDATION VALUES

This is a vote-share market. Each contract will earn a post-election liquidation value of $1.00 times the share of the nation-wide vote won by the candidate (or candidates) represented by that contract.

Vote shares will be computed as the ratio of the votes credited to that contract divided by the total number of votes cast in the election. Votes credited to the contracts of separately listed candidates (PAN_VS, PRD_VS and PRI_VS plus any contracts introduced as spinnoffs) will be the total number of votes reported as cast for the respective candidate. Votes credited to the MXrof_VS contract will be computed as the total number of votes cast in the election minus those votes cast for separately listed candidates. Note that blank and invalid ballots included in the total number of votes will thus be credited to the MXrof_VS contract.

The Instituto Federal Electoral (IFE) will be the official source for election results. It is the intention of the Institute to have the vote count substantially completed by Wednesday, July 5 and to make that count public on that day. The last vote count reported by the IFE in their official announcements on Wedenesday will be taken as the official and final vote count for determination of liquidation values. Recounts, revisions and more complete results appearing subsequent to that Wednesday announcement will have no bearing on liquidation values.

The judgment of the IEM Governors and Directors will be final in resolving questions of ambiguity or typographical or clerical errors.


MARKET CLOSING

This market will close at 11:59 pm CDT on Saturday, July 1, 2000 in anticipation of the election in Mexico the next day. Contract liquidations will be made on or about July 6, after the official election results (as described above) become known. Proceeds from these liquidations will be credited to the cash accounts of market participants. Traders may then use those funds for participation in other IEM markets, or they may withdraw those funds and close their accounts. Consult the IEM home page or the market home page for information on withdrawals.


UNIT PORTFOLIOS

Bundles, or unit portfolios, consisting of one share of each of the contracts in this market can be purchased from or sold to the IEM system at any time. The price of such bundles is $1.00. Since contract liquidation values are determined as $1.00 times the vote shares of the represented candidate, and since those vote shares will necessarily sum to one, the total of the liquidation values earned by all the contracts in a bundle will be exactly $1.00, the same as the original price of the bundle. Thus, the IEM system with neither make nor lose money on the sale or repurchase of these bundles.

To buy or sell unit portfolios from the system, use the "Market Orders" option from the Trading Console and select the MX_VS bundle.


MARKET ACCESS

Current and newly enrolled IEM traders will automatically be given rights to trade in the MX_VS market. Access to this market is achieved by logging into the IEM and choosing "MX_VS" from the Navigation Bar. Funds in a trader's cash account are fungible across all markets so new investment deposits by existing traders are not required. New traders can open accounts on the IEM OnLine Account Application page, https://iemweb.biz.uiowa.edu/signup/ . There is a one-time account registration fee of $5.00, and investments are limited to the range of $5.00 and $500. Additions to your investment account, up to the $500 limit, can be made at any time. Requests to withdraw funds may be submitted at any time by completing the IEM's Online Withdrawal Request or by completing and mailing the paper version of the request form. Additional information about requesting withdrawals is available at tippie.uiowa.edu/accounts/withdrawals.html.