IEM PROSPECTUS: REFORM00
2000 Reform Party National Convention - Presidential Nomination
Winner-Takes-All Market

At noon, C.S.T., on Wednesday, January 5, 2000 the Iowa Electronic Market (IEM) will open trading in a market based on the presidential nomination process of the 2000 Reform Party National Convention. This document describes that market and should be viewed as a supplement to the 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.

Contract liquidation values in this nomination market will be determined by the outcome of the 2000 Reform Party National Convention. The initial listing includes 5 contracts in this market, each representing a unique outcome and together representing the full set of possible outcomes. The liquidation value of the contract which represents the actual outcome of the 2000 Reform Party National Convention will be $1.00. All other contracts will have a value of $ 0.00.


CONTRACTS

The financial contracts initially listed in this market are as follows:

Code Contract Description
BUCHANAN $1.00 if Patrick J. Buchanan wins the nomination; $0.00 otherwise
PEROT $1.00 if Ross Perot wins the nomination; $0.00 otherwise
TRUMP $1.00 if Donald Trump wins the nomination; $0.00 otherwise
VENTURA $1.00 if Jesse Ventura wins the nomination; $0.00 otherwise
ReformROF $1.00 if another candidate wins the nomination; $0.00 otherwise

ReformROF stands for "Reform Party Rest of Field" and represents all candidates and all outcomes not separately listed in this market. Other contracts are candidate-specific and are associated with the possible nomination of the named candidate.

As the 2000 presidential campaign progresses, new contracts may be introduced as spinoffs of the ReformROF contract as described below. However, once a contract is listed it will remain active until after the convention when all contracts in the market are liquidated.


DETERMINATION OF LIQUIDATION VALUES

This is a Winner-Takes-All market. The contract that denotes the actual outcome of the 2000 Reform Party Convention will have a liquidation value of $1.00; all others will have values of $0.00.

Specifically, the contract BUCHANAN will be liquidated for $1.00 after the 2000 Reform Party National Convention if Patrick J. Buchanan is selected through the Reform Party nomination process as the official party nominee for the 2000 presidential election. If Buchanan is not named as the Reform Party candidate, the liquidation value of the BUCHANAN contract will be $0.00. Similarly the contracts PEROT, TRUMP, VENTURA and any candidate-specific contract created through spinoffs of the ReformROF contract will be liquidated for $1.00 or $0.00 depending upon, respectively, whether or not the associated candidate becomes the Reform Party presidential nominee. The contract ReformROF will have a liquidation value of $1 if no individual identified by a candidate-specific contract in this market becomes the Reform Party nominee as of the close of the Reform Party convention; its liquidation value will be $0.00 if one of the listed candidates is the nominee.

The New York Times will be the official source for nomination results.

Liquidation formulas can be viewed while you are logged into the IEM trading system by clicking on the market name, REFORM00, at the upper right hand corner of the market window.

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


CONTRACT SPIN-OFFS

The Directors of the IEM reserve the right to introduce new contracts to the market as spin-offs of existing contracts. When a contract spin-off occurs, an original contract will be replaced by two or more new contracts which subdivide the payoff space of the original contract. No holder of the pre-spinoff contracts will be adversely affected. Traders will receive the same number of each 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 which would have been earned by the original in the absence of a spin-off.

Only the contract ReformROF is subject to spin-offs. Typically. a spin-off will involve replacing each ReformROF contract with two contracts, one identified with a new candidate and the other a revised ReformROF contract.

Outstanding limit orders to buy or sell the contract which is to be spun-off will be canceled just prior to the spin-off.

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 notification will appear as an Announcement on the WebEx login screen.


MARKET CLOSING

This market will close at 12:00 noon, C.S.T. the day after the final presidential nomination ballot at the 2000 Reform Party National Convention. At that time, or as soon thereafter as results are available, liquidation values will be declared and funds will be credited to the cash accounts of market participants. (The convention is currently scheduled for August 10-13, 2000.)


CONTRACT BUNDLES

Bundles 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 each bundle is $1.00. Because exactly one of the outcomes denoted by the contracts in this market will result from the election, the total payoff from holding a bundle consisting of one of each contract until the market closes is $1.00.

To buy or sell bundles from the IEM exchange, use the "Market Orders" option from the Trading Console and select the REFORM00 bundle.


MARKET ACCESS

All current and newly enrolled IEM traders with US dollar denominated accounts will automatically be given access rights to the 2000 Reform Party National Convention Market. Access to this market is achieved by logging into the IEM and choosing REFORM00 from the Navigation Bar.

Funds in a trader's cash account are fungible across all markets so new investment deposits are not required. Additional investments up to the maximum of $500 can be made at any time. Requests to withdraw funds may be submitted at any time by sending email to the IEM Office (iem@uiowa.edu).