IEM PROSPECTUS: TAIWAN_W
2000 Presidential Election in Taiwan
Winner Market

At noon Iowa time on Tuesday, February 15, 2000 (2:00 am on 02/16/00 in Taiwan) the Iowa Electronic Market (IEM) in cooperation with the Center for Chinese Electoral Studies, Duke University, will open trading in a market based on the outcome of the 2000 Presidential Election in Taiwan scheduled for March 18.

Contract liquidation values in this Presidential Election Winner market will be determined by who wins a plurality of the votes cast in the election. 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 for the contract representing the election winner, and $0.00 for all other contracts.

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

     ChenWins          $1 if Chen Shui-bian is the plurality winner,
                          $0 otherwise
     LienWins          $1 if Lien Chan is the plurality winner,
                          $0 otherwise
     SoongWins         $1 if James Soong is the plurality winner,
                          $0 otherwise
     TWrofWins         $1 a non-listed candidate is the plurality winner,
                          $0 otherwise
      

The contract ChenWins represents the candidate of the Democratic Progressive Party. As of the opening of this market, the DPP candidate was Chen Shui-bian, and for ease of identification the contract name refers to Mr. Chen. If Mr. Chen should withdraw from the campaign and be replaced by another candidate for the Democratic Progressive Party, all rights in the contract will transfer to the new candidate, and the symbol and name for the contract will be changed to reflect that change.

Likewise, the contract LienWins represents the candidate of the Kuomintang Party, with the name referring to the Kuomintang candidate Lien Chan. Should Mr. Lien withdraw, interest in this contract will transfer to the candidate chosen by the party to replace him, and the symbol and name of the contract will change to reflect that new candidate.

The contract SoongWins represents James Soong, an independent candidate for the presidency. Should Mr. Soong fail to win the election as an independent candidate for whatever reason (including but not restricted to losing to another candidate, failing to qualify for candidacy, withdrawing from the race for other reasons, and adoption as a candidate for another party) then shares held in this contract will be declared worthless after the market closes and those shares will earn a liquidation value of $0.00.

The contract TWrofWins represents all candidates for the election who are not separately identified by individual contracts as of the close of the market.

The IEM and the Center for Chinese Electoral Studies reserve the right to spin off new contracts from the TWrofWins contract at any time. If a new candidate should emerge with sufficient viability (as judged by the Center), then a new contract will be created to represent this new candidate and it will be introduced as a spin-off of the TWrofWins contract. Specifically, each share held in an original TWrofWins contract will be replaced by two shares, one in the new, candidate-specific contract and one in a continuing but revised TWrofWins contract. Accordingly, no holder of the pre-spinoff contracts will be adversely affected. 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 TWrofWins will be canceled just prior to the spinoff.


DETERMINATION OF LIQUIDATION VALUES

This is an Election Winner market. A contract will earn a post-election liquidation value of $1.00 if a candidate represented by that contract wins a plurality of votes in the nationwide election; if no candidate associated with that contract wins a plurality, the value of the contract will be $0.00. "Plurality" here means a greater number of votes than any other one candidate.

The United Daily News and the China Times will be the official sources for election results. Specifically, final vote counts reported by these newspapers within 2 days after the election will be taken as the official vote count for determination of the plurality winner. Should there be a difference in the plurality winner as reported by the two newspapers, liquidations will be delayed until that difference is resolved and one candidate is declared the winner.


MARKET CLOSING

This market will close at 10:00 am Iowa time on Friday, March 17, 2000 (midnight in Taiwan) in anticipation of the election in Taiwan the next day. Contract liquidations will be made on or about March 22, after the official election results (as described above) become known. Proceeds from these liquidations will be credited to the cash accounts of market participants, and checks for the resulting balance in those accounts will be issued and mailed as soon as possible thereafter. Taiwanese election laws allow for the postponement of the election under certain conditions, the death of a qualified candidate, for example. If the election is postponed, the market will continue with such modifications as become necessary. Any changes in the specifications of the market (contract names or the closing date of the market, for example) will be made under the authority of the market organizers (The IEM and the Center for Chinese Electoral Studies at Duke University) and will conform as closely as possible to the original intent and design of the market.


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 for the contract representing the winner and $0.00 for all other contracts, 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 will 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 TAIWAN_W bundle.


MARKET ACCESS

Access to the TAIWAN_W market is restricted to IEM traders who specifically register for the Taiwan 2000 Markets. Investment deposits are in U.S. dollars, but those funds are kept separate from funds invested in other US$ denominated IEM markets, so separate registration is required. To register, go to the 2000 Taiwan Election Markets signups page. 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. Withdrawals are not permitted until after the market closes in March, 2000.