<PAGE> 1
Exhibit p(19)
CODE OF ETHICS
For Access Persons of
The Strong Family of Mutual Funds,
Strong Capital Management, Inc.,
Strong Investments, Inc.,
and Flint Prairie, L. L. C.
Strong Capital Management, Inc.
October 22, 1999
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CODE OF ETHICS
For Access Persons of
The Strong Family of Mutual Funds,
Strong Capital Management, Inc.,
Strong Investments, Inc.,
and Flint Prairie, L. L. C.
Dated October 22, 1999
<TABLE>
<CAPTION>
Table of Contents
<S> <C>
I. INTRODUCTION 1
A. Fiduciary Duty 1
Place the interests of Advisory Clients first 1
Avoid taking inappropriate advantage of their position 1
Conduct all Personal Securities Transactions in full compliance with this Code
including both the preclearance and reporting requirements 1
B. Appendices to the Code 1
Definitions 2
Contact Persons 2
Disclosure of Personal Holdings in Securities 2
Acknowledgment of Receipt of Code of Ethics and Limited Power of Attorney 2
Preclearance Request for Access Persons 2
Annual Code of Ethics Questionnaire 2
List of Broad-Based Indices 2
Gift Policy 2
Insider Trading Policy 2
Electronic Trading Authorization Form 2
Social Security Number/Tax Identification Form 2
C. Application of the Code to Independent Fund Directors 2
Application of the Code to Funds Subadvised by SCM 2
II. PERSONAL SECURITIES TRANSACTIONS 2
A. Annual Disclosure of Personal Holdings by Access Persons 2
B. Preclearance Requirements for Access Persons 3
General Requirement 3
Transactions Exempt from Preclearance Requirements 3
Mutual Funds 3
No Knowledge 3
Certain Corporate Actions 3
Rights 3
Application to Commodities, Futures, Options on Futures and Options on Broad-Based Indices 3
Miscellaneous 4
</TABLE>
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Table of Contents (continued)
C. Preclearance Requests 4
Trade Authorization Request Forms 4
Review of Form 4
Access Person Designees 4
D. Prohibited Transactions 5
1. Prohibited Securities Transactions 5
Initial Public Offerings 5
Pending Buy or Sell Orders 5
Seven Day Blackout 5
Intention to Buy or Sell for Advisory Client 6
60-Day Blackout 6
2. Always Prohibited Securities Transactions 6
Inside Information 6
Market Manipulation 6
Large Positions in Registered Investment Companies 6
Others 6
3. Private Placements 6
4. No Explanation Required for Refusals 7
E. Execution of Personal Securities Transactions 7
F. Length of Trade Authorization Approval 7
G. Trade Reporting Requirements 7
Reporting Requirement 7
Disclaimers 8
Quarterly Review 8
Availability of Reports 8
III. FIDUCIARY DUTIES 9
A. Confidentiality 9
B. Gifts 9
Accepting Gifts 9
Solicitation of Gifts 9
Giving Gifts 9
C. Payments to Advisory Clients 9
D. Corporate Opportunities 9
E. Undue Influence 10
F. Service as a Director 10
Involvement in Criminal Matters or Investment-Related Civil Proceedings 10
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Table of Contents (continued)
IV. COMPLIANCE WITH THIS CODE OF ETHICS 10
A. Code of Ethics Review Committee 10
Membership, Voting, and Quorum 10
Investigating Violations of the Code 10
Annual Reports 11
B. Remedies 11
Sanctions 11
Sole Authority 11
Review 11
C. Exceptions to the Code 12
Compliance Certification 12
Record Retention 12
Code of Ethics 12
Violations 12
Required Reports 12
Access Person List 12
F. Inquiries Regarding the Code 12
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CODE OF ETHICS
For Access Persons of
The Strong Family of Mutual Funds,
Strong Capital Management, Inc.,
Strong Investments, Inc.,
and Flint Prairie, L. L. C.
Dated October 22, 1999
Table of Appendices
Appendix 1 (Definitions) 13
Appendix 2 (Contact Persons) 16
Appendix 3 (Disclosure of Personal Holdings in Securities) 17
Appendix 4 (Acknowledgment of Receipt of Code of Ethics and
Limited Power of Attorney) 18
Appendix 5 (Preclearance Request for Access Persons) 19
Appendix 6 (Annual Code of Ethics Questionnaire) 20
Appendix 7 (List of Broad-Based Indices) 23
Appendix 8 (Gift Policy) 24
Appendix 9 (Insider Trading Policy) 26
Appendix 10 (Electronic Trading Authorization Form) 30
Appendix 11 (Social Security Number/Tax Identification Form) 31
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CODE OF ETHICS
For Access Persons of
The Strong Family of Mutual Funds,
Strong Capital Management, Inc.,
Strong Investments, Inc.,
and Flint Prairie, L. L. C.
Dated October 22, 1999
I. INTRODUCTION_
A. Fiduciary Duty. This Code of Ethics is based upon the principle that
directors, officers and associates of Strong Capital Management, Inc. ("SCM"),
Strong Investments, Inc. ("the Distributor"), the Strong Family of Mutual Funds
("the Strong Funds") and Flint Prairie, L. L. C. ("Flint Prairie") have a
fiduciary duty to place the interests of clients ahead of their own. The Code
applies to all Access Persons and focuses principally on preclearance and
reporting of personal transactions in securities. Access Persons must avoid
activities, interests and relationships that might interfere with making
decisions in the best interests of the Advisory Clients of SCM.
As fiduciaries, Access Persons must at all times:
1. Place the interests of Advisory Clients first. Access Persons must
scrupulously avoid serving their own personal interests ahead of the interests
of the Advisory Clients of SCM. An Access Person may not induce or cause an
Advisory Client to take action, or not to take action, for personal benefit
rather than for the benefit of the Advisory Client. For example, an Access
Person would violate this Code by causing an Advisory Client to purchase a
Security he or she owned for the purpose of increasing the price of that
Security.
2. Avoid taking inappropriate advantage of their position. The receipt of
investment opportunities, perquisites or gifts from persons seeking business
with the Strong Funds, SCM, the Distributor, Flint Prairie or their clients
could call into question the exercise of an Access Person's independent
judgment. Access persons may not, for example, use their knowledge of portfolio
transactions to profit by the market effect of such transactions.
3. Conduct all Personal Securities Transactions in full compliance with
this Code including both the preclearance and reporting requirements. Doubtful
situations should be resolved in favor of Advisory Clients. Technical compliance
with the Code's procedures will not automatically insulate from scrutiny any
trades that may indicate an abuse of fiduciary duties.
B. Appendices to the Code. The appendices to this Code are attached hereto,
are a part of the Code and include the following:
1. Definitions--capitalized words as defined in the Code (Appendix 1),
2. Contact Persons, including the Preclearance Officer designees and the Code of
Ethics Review Committee (Appendix 2),
3. Disclosure of Personal Holdings in Securities (Appendix 3),
4. Acknowledgment of Receipt of Code of Ethics and Limited Power of Attorney
(Appendix 4),
5. Preclearance Request for Access Persons (Appendix 5),
6. Annual Code of Ethics Questionnaire (Appendix 6),
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7. List of Broad-Based Indices (Appendix 7),
8. Gift Policy (Appendix 8),
9. Insider Trading Policy (Appendix 9)
Electronic Trading Authorization Form (Appendix 10), and
11. Social Security Number/Tax Identification Form (Appendix 11).
C. Application of the Code to Independent Fund Directors. This Code applies
to Independent Fund Directors and requires Independent Fund Directors and their
Immediate Families to report Securities Transactions to the Compliance
Department in accordance with the trade reporting requirements (Section II.G.).
However, provisions of the Code relating to the disclosure of personal holdings
(Section II.A.), preclearance of trades (Section II.B.), prohibited transactions
(II.D.1.), large positions in registered investment companies (Section
II.D.2.c.), private placements (Section II.D.3.), restrictions on serving as a
director of a publicly-traded company (Section III.F.) and receipt of gifts
(Section III.B.) do not apply to Independent Fund Directors.
D. Application of the Code to Funds Subadvised by SCM. This Code does not
apply to the directors, officers and general partners of Funds for which SCM
serves as a subadviser.
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II. PERSONAL SECURITIES TRANSACTIONS
A. Annual Disclosure of Personal Holdings by Access Persons. Upon designation as
an Access Person, and thereafter on an annual basis, all Access Persons must
report on the Disclosure of Personal Holdings In Securities Form (Appendix 3)
(or a substantially similar form) all Securities, including securities held in
certificate form, in which they have a Beneficial Interest and all Securities in
non-client accounts for which they make investment decisions (previously
reported holdings, as well as those specifically excluded from the definition of
Security, need not be reported). This provision does not apply to Independent
Fund Directors.
B. Preclearance Requirements for Access Persons.
1. General Requirement. Except for the transactions set forth in Section
II.B.2., all Securities Transactions in which an Access Person or a member of
his or her Immediate Family has a Beneficial Interest must be precleared with
the Preclearance Officer or his designee. This provision does not apply to
transactions of Independent Fund Directors and their Immediate Families.
2. Transactions Exempt from Preclearance Requirements. The following
Securities Transactions are exempt from the preclearance requirements set forth
in Section II.B.1. of this Code:
a. Mutual Funds. Securities issued by any registered open-end investment
companies (including but not limited to the Strong Funds);
b. No Knowledge. Securities Transactions where neither SCM, the Access
Person nor an Immediate Family member knows of the transaction before it is
completed (for example, Securities Transactions effected for an Access Person by
a trustee of a blind trust or discretionary trades involving an investment
partnership or investment club in which the Access Person is neither consulted
nor advised of the trade before it is executed);
c. Certain Corporate Actions. Any acquisition or disposition of Securities
through stock dividends, dividend reinvestments, stock splits, reverse stock
splits, mergers, consolidations, spin-offs or other similar corporate
reorganizations or distributions generally applicable to all holders of the same
class of Securities. Odd-lot tender offers are also exempt from the preclearance
requirements; however, all other tender offers must be precleared;
d. Rights. Any acquisition or disposition of Securities through the
exercise of rights, options, convertible bonds or other instruments acquired in
compliance with this Code;
e. Application to Commodities, Futures, Options on Futures and Options on
Broad-Based Indices. Commodities, futures (including currency futures and
futures on securities comprising part of a broad-based, publicly traded market
based index of stocks), options on futures, options on currencies and options on
certain indices designated by the Compliance Department as broad-based are not
subject to preclearance or the seven day black out, 60-day profit disgorgement
and other prohibited transaction provisions of Section II.D.1. of the Code but
are subject to transaction reporting requirements (Section II.G.). The options
on indices designated by the Compliance Department as broad-based may be changed
from time to time and are listed in Appendix 7.
The options on indices that are not designated as broad-based are subject to the
preclearance, seven-day blackout, 60-day profit disgorgement, prohibited
transaction and reporting provisions of the Code.
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f. Miscellaneous. Any transaction in the following: (1) bankers
acceptances; (2) bank certificates of deposit ("CDs"); (3) commercial paper; (4)
repurchase agreements (when backed by exempt securities); (5) U.S. Government
Securities; (6) the acquisition of equity securities in dividend reinvestment
plans ("DRIPs"), when the acquisition is directly through the issuer or its
non-broker agent; (7) Securities of the employer of a member of the Access
Person's Immediate Family if such securities are beneficially owned through
participation by the Immediate Family member in a Profit Sharing plan, 401(k)
plan, ESOP or other similar plan; and (8) other Securities as may from time to
time be designated in writing by the Code of Ethics Review Committee on the
grounds that the risk of abuse is minimal or non-existent.
C. Preclearance Requests.
1. Trade Authorization Request Forms. Prior to entering an order for a
Securities Transaction that requires preclearance, the Access Person must
complete, in writing, a Preclearance Request For Access Persons Form (Appendix
5) and submit the completed form to the Preclearance Officer (or his or her
designee). The Preclearance Request For Access Persons Form requires Access
Persons to provide certain information and to make certain representations.
Proposed Securities Transactions of the Preclearance Officer that require
preclearance must be submitted to his designee.
2. Review of Form. After receiving the completed Preclearance Request For
Access Persons Form, the Preclearance Officer (or his or her designee) will (a)
review the information set forth in the form, (b) independently confirm whether
the Securities are held by any Funds or other accounts managed by SCM and
whether there are any unexecuted orders to purchase or sell the Securities by
any Fund or accounts managed by SCM and (c) as soon as reasonably practicable,
determine whether to clear the proposed Securities Transaction. The
authorization, date, and time of the authorization must be reflected on the
Preclearance Request For Access Persons Form. The Preclearance Officer (or his
or her designee) will keep one copy of the completed form for the Compliance
Department, send one copy to the Access Person seeking authorization and send
the third copy to the Trading Department, which will cause the transaction to be
executed. If the brokerage account is an Electronic Trading Account and the
Access Person has completed the Electronic Trading Authorization Form (Appendix
10), the Access Person will execute the transaction on his or her own behalf and
will provide Compliance with a copy of the electronic confirmation by the end of
the next business day.
No order for a securities transaction for which preclearance authorization is
sought may be placed prior to the receipt of written authorization of the
transaction by the preclearance officer (or his or her designee). Verbal
approvals are not permitted.
3. Access Person Designees. If an Access Person is unable to personally
effect a personal Securities Transaction, such Access Person may designate an
individual at SCM to complete and submit for preclearance on his or her behalf a
Preclearance Request For Access Persons Form provided the following requirements
are satisfied:
a. The Access Person communicates the details of the trade and affirms the
accuracy of the representations and warranties contained on the Form directly to
such designated person; and
b. The designated person completes the Preclearance Request For Access
Persons Form on behalf of the Access Person in accordance with the requirements
of the Code and then executes the Access Person Designee Certification contained
in the Form. The Access Person does not need to sign the Form so long as the
foregoing certification is provided.
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D. Prohibited Transactions.
1. Prohibited Securities Transactions. The following Securities
Transactions for accounts in which an Access Person or a member of his or her
Immediate Family have a Beneficial Interest, to the extent they require
preclearance under Section II.B. above, are prohibited and will not be
authorized by the Preclearance Officer (or his or her designee) absent
exceptional circumstances:
a. Initial Public Offerings. Any purchase of Securities in an initial
public offering (other than a new offering of a registered open-end investment
company);
b. Pending Buy or Sell Orders. Any purchase or sale of Securities on any
day during which any Advisory Client has a pending "buy" or "sell" order in the
same Security (or Equivalent Security) until that order is executed or
withdrawn, unless the purchase or sale is a Program Trade;
c. Seven Day Blackout. Purchases or sales of Securities by a Portfolio
Manager within seven calendar days of a purchase or sale of the same Securities
(or Equivalent Securities) by an Advisory Client managed by that Portfolio
Manager, unless the purchase or sale is a Program Trade. For example, if a Fund
trades in a Security on day one, day eight is the first day the Portfolio
Manager may trade that Security for an account in which he or she has a
beneficial interest;
d. Intention to Buy or Sell for Advisory Client. Purchases or sales of
Securities at a time when that Access Person intends, or knows of another's
intention, to purchase or sell that Security (or an Equivalent Security) on
behalf of an Advisory Client. This prohibition applies whether the Securities
Transaction is in the same (e.g., two purchases) or the opposite (a purchase and
sale) direction of the transaction of the Advisory Client, unless the purchase
or sale is a Program Trade; and
e. 60-Day Blackout. (1) Sales of a Security within 60 days of the purchase
of the Security (or an Equivalent Security) in which the Access Person has a
Beneficial Interest and (2) purchases of a Security within 60 days of the sale
of the Security (or an Equivalent Security) in which the Access Person had a
Beneficial Interest, unless in each case, the Access Person agrees to give up
all profits on the transaction to a charitable organization as specified by
remedies involving sanctions (Section IV.B.1.).
2. Always Prohibited Securities Transactions. The following Securities
Transactions are prohibited and will not be authorized under any circumstances:
a. Inside Information. Any transaction in a Security while in possession of
material nonpublic information regarding the Security or the issuer of the
Security (see Insider Trading Policy, Appendix 9);
b. Market Manipulation. Transactions intended to raise, lower, or maintain
the price of any Security or to create a false appearance of active trading;
c. Large Positions in Registered Investment Companies. Transactions in a
registered investment company, including Strong Funds, which result in the
Access Person owning five percent or more of any class of securities in such
investment company (this prohibition does not apply to Independent Fund
Directors); and
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d. Others. Any other transactions deemed by the Preclearance Officer (or
his designee) to involve a conflict of interest, possible diversion of corporate
opportunity or an appearance of impropriety.
3. Private Placements. Acquisitions of Beneficial Interests in Securities
in a private placement by an Access Person is strongly discouraged. The
Preclearance Officer (or his or her designee) will give permission only after
considering, among other facts, whether the investment opportunity should be
reserved for Advisory Clients and whether the opportunity is being offered to an
Access Person by virtue of his or her position as an Access Person. Access
Persons who have been authorized to acquire and have acquired securities in a
private placement are required to disclose that investment to the Compliance
Department when they play a part in any subsequent consideration of an
investment in the issuer by an Advisory Client. In such circumstances, the
decision to purchase securities of the issuer by an Advisory Client must be
independently authorized by a Portfolio Manager with no personal interest in the
issuer. This provision does not apply to Independent Fund Directors.
4. No Explanation Required for Refusals. In some cases, the Preclearance
Officer (or his or her designee) may refuse to authorize a Securities
Transaction for a reason that is confidential. The Preclearance Officer is not
required to give an explanation for refusing to authorize any Securities
Transaction.
E. Execution of Personal Securities Transactions. Unless an exception is
provided in writing by the Compliance Department, all transactions in Securities
subject to the preclearance requirements for which an Access Person or a member
of his or her Immediate Family has a Beneficial Interest shall be executed by
the Trading Department. However, if the Access Person's brokerage account is an
Electronic Trading Account, the transaction may be placed by the Access Person.
IN ALL INSTANCES, THE TRADING DEPARTMENT MUST GIVE PRIORITY TO CLIENT TRADES
OVER ACCESS PERSON TRADES.
F. Length of Trade Authorization Approval. The authorization provided by
the Preclearance Officer (or his or her designee) is effective until the earlier
of (1) its revocation; (2) the close of business on the second trading day after
the authorization is granted for transactions placed by the Trading Department
(for example, if authorization is provided on a Monday, it is effective until
the close of business on Wednesday); (3) the close of business of the same
trading day that the authorization is granted for transactions placed through an
Electronic Trading Account; or (4) the Access Person learns that the information
in the Trade Authorization Request Form is not accurate. If the order for the
Securities Transaction is not placed within that period, a new advance
authorization must be obtained before the Securities Transaction is placed. For
Securities Transactions placed by the Trading Deparment that have not been
executed within two trading days after the day the authorization is granted (for
example, in the case of a limit order or a Not Held Order), no new authorization
is necessary unless the person placing the original order for the Securities
Transaction amends it in any way.
G. Trade Reporting Requirements.
1. Reporting Requirement. Every Access Person and members of his or her
Immediate Family (including Independent Fund Directors and their Immediate
Families) must arrange for the Compliance Department to receive directly from
any broker, dealer or bank that effects any Securities Transaction, duplicate
copies of each confirmation for each such transaction and periodic statements
for each brokerage account in which such Access Person has a Beneficial
Interest. Additionally, securities held in certificate form that are not
included in the periodic statements, must also be reported. To assist in making
these arrangements, the Compliance Department will send a letter to each
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brokerage firm based on the information provided by the Access Person in
Appendix 3.
The foregoing does not apply to transactions and holdings in (1) open-end
investment companies including but not limited to the Strong Funds, (2) bankers
acceptances, (3) bank certificates of deposit ("CDs"), (4) commercial paper, (5)
repurchase agreements when backed by exempt securities, (6) U. S. Government
Securities, (7) the acquisition of equity securities in dividend reinvestment
plans ("DRIPs"), when the acquisition is directly through the issuer or its
non-broker agent; or (8) securities of the employer of a member of the Access
Person's Immediate Family if such securities are beneficially owned through
participation by the Immediate Family member in a Profit Sharing plan, 401(k)
plan, ESOP or other similar plan.
2. Disclaimers. Any report of a Securities Transaction for the benefit of a
person other than the individual in whose account the transaction is placed may
contain a statement that the report should not be construed as an admission by
the person making the report that he or she has any direct or indirect
beneficial ownership in the Security to which the report relates.
3. Quarterly Review. At least quarterly, for Securities Transactions
requiring preclearance under this Code, the Preclearance Officer (or his or her
designee) shall compare the confirmations and periodic statements provided
pursuant to the trade reporting requirements (Section II.G.1.) to the approved
Trade Authorization Request Forms. Such review shall include:
Whether the Securities Transaction complied with this Code;
b. Whether the Securities Transaction was authorized in advance of its
placement;
c. Whether the Securities Transaction was executed within two full trading
days of when it was authorized;
d. Whether any Fund or accounts managed by SCM owned the Securities at the
time of the Securities Transaction, and;
e. Whether any Fund or separate accounts managed by SCM purchased or sold
the Securities in the Securities Transaction within at least 10 days of the
Securities Transaction.
4. Availability of Reports. All information supplied pursuant to this Code
will be available for inspection by the Boards of Directors of SCM and SFDI; the
Board of Directors of each Strong Fund; the Code of Ethics Review Committee; the
Compliance Department; the Access Person's department manager (or designee); any
party to which any investigation is referred by any of the foregoing, the SEC,
any self-regulatory organization of which the Strong Funds, SCM, the Distributor
or Flint Prairie is a member, and any state securities commission; as well as
any attorney or agent of the foregoing, the Strong Funds, SCM, the Distributor
or Flint Prairie.
III. FIDUCIARY DUTIES
A. Confidentiality. Access Persons are prohibited from revealing
information relating to the investment intentions, activities or portfolios of
Advisory Clients except to persons whose responsibilities require knowledge of
the information.
B. Gifts. The following provisions on gifts apply only to associates of
SCM, the Distributor and Flint Prairie.
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1. Accepting Gifts. On occasion, because of their position with SCM, the
Distributor, the Strong Funds or Flint Prairie, associates may be offered, or
may receive without notice, gifts from clients, brokers, vendors or other
persons not affiliated with such entities. Acceptance of extraordinary or
extravagant gifts is not permissible. Any such gifts must be declined or
returned in order to protect the reputation and integrity of SCM, the
Distributor, the Strong Funds and Flint Prairie. Gifts of a nominal value (i.e.,
gifts whose reasonable value is no more than $100 a year), customary business
meals, entertainment (e.g., sporting events) and promotional items (e.g., pens,
mugs, T-shirts) may be accepted. Please see the Gift Policy (Appendix 8) for
additional information.
If an associate receives any gift that might be prohibited under
this Code, the associate must inform the Compliance Department.
2. Solicitation of Gifts. Associates of SCM, the Distributor or Flint
Prairie may not solicit gifts or gratuities.
3. Giving Gifts. Associates of SCM, the Distributor or Flint Prairie may
not give any gift with a value in excess of $100 per year to persons associated
with securities or financial organizations, including exchanges, other member
organizations, commodity firms, news media or clients of the firm. Please see
the Gift Policy (Appendix 9) for additional information.
C. Payments to Advisory Clients. Access Persons may not make any payments
to Advisory Clients in order to resolve any type of Advisory Client complaint.
All such matters must be handled by the Legal Department.
D. Corporate Opportunities. Access Persons may not take personal
advantage of any opportunity properly belonging to any Advisory Client, SCM, the
Distributor or Flint Prairie. This includes, but is not limited to, acquiring
Securities for one's own account that would otherwise be acquired for an
Advisory Client.
E. Undue Influence. Access Persons may not cause or attempt to cause
any Advisory Client to purchase, sell or hold any Security in a manner
calculated to create any personal benefit to the Access Person. If an Access
Person or Immediate Family Member stands to materially benefit from an
investment decision for an Advisory Client that the Access Person is
recommending or participating in, the Access Person must disclose to those
persons with authority to make investment decisions for the Advisory Client, any
Beneficial Interest that the Access Person (or Immediate Family) has in that
Security or an Equivalent Security, or in the issuer thereof, where the decision
could create a material benefit to the Access Person (or Immediate Family) or
the appearance of impropriety. If the Access Person in question is a person with
authority to make investment decisions for the Advisory Client, disclosure must
also be made to the Compliance Department. The person to whom the Access Person
reports the interest, in consultation with the Compliance Department, must
determine whether the Access Person will be restricted in making investment
decisions.
F. Service as a Director. No Access Person, other than an Independent
Fund Director, may serve on the board of directors of a publicly-held company
not affiliated with SCM, the Distributor, the Strong Funds or Flint Prairie
absent prior written authorization by the Code of Ethics Review Committee. This
authorization will rarely, if ever, be granted and, if granted, will normally
require that the affected Access Person be isolated through "Chinese Wall" or
other procedures from those making investment decisions related to the issuer on
whose board the Access Person sits.
<PAGE> 14
G. Involvement in Criminal Matters or Investment-Related Civil
Proceedings. Each Access Person must notify the Compliance Department, as soon
as reasonably practical, if arrested, arraigned, indicted or pleads no contest
to any criminal offense (other than minor traffic violations) or if named as a
defendant in any Investment-Related civil proceedings or any administrative or
disciplinary action.
IV. COMPLIANCE WITH THIS CODE OF ETHICS
A. Code of Ethics Review Committee.
1. Membership, Voting, and Quorum. The Code of Ethics Review Committee
shall consist of Senior Officers of SCM. The Committee shall vote by majority
vote with two members serving as a quorum. Vacancies may be filled; and in the
case of extended absences or periods of unavailability, alternates may be
selected by the majority vote of the remaining members of the Committee.
However, in the event that the General Counsel or Deputy General Counsel is
unavailable, at least one member of the Committee shall also be a member of the
Compliance Department.
2. Investigating Violations of the Code. The General Counsel, or his or her
designee, is responsible for investigating any suspected violation of the Code
and shall report the results of each investigation to the Code of Ethics Review
Committee. The Code of Ethics Review Committee is responsible for reviewing the
results of any investigation of any reported or suspected violation of the Code.
Any material violation of the Code by an associate of SCM, the Distributor or
Flint Prairie for which significant remedial action was taken will be reported
to the Boards of Directors of the Strong Funds at the next regularly scheduled
quarterly Board meeting.
3. Annual Reports. The Code of Ethics Review Committee will review the Code
at least once a year, in light of legal and business developments and experience
in implementing the Code and will prepare an annual report to the Boards of
Directors of SCM, the Distributor and each Strong Fund that:
a. Summarizes existing procedures concerning personal investing and any
changes in the procedures made during the past year;
b. Identifies any violation requiring significant remedial action during
the past year; and
c. Identifies any recommended changes in existing restrictions or
procedures based on its experience under the Code, evolving industry practices
or developments in applicable laws or regulations.
B. Remedies.
1. Sanctions. If the Code of Ethics Review Committee determines that an
Access Person has committed a violation of the Code, the Committee may impose
sanctions and take other actions as it deems appropriate, including a letter of
caution or warning, suspension of personal trading rights, suspension of
employment (with or without compensation), fine, civil referral to the SEC,
criminal referral and termination of employment for cause. The Code of Ethics
Review Committee may also require the Access Person to reverse the trade(s) in
question and forfeit any profit or absorb any loss derived therefrom. The amount
of profit shall be calculated by the Code of Ethics Review Committee and shall
be forwarded to a charitable organization. No member of the Code of Ethics
Review Committee may review his or her own transaction.
2. Sole Authority. The Code of Ethics Review Committee has sole authority,
subject to the review set forth in Section IV.B.3. below, to
<PAGE> 15
determine the remedy for any violation of the Code, including appropriate
disposition of any moneys forfeited pursuant to this provision. Failure to
promptly abide by a directive to reverse a trade or forfeit profits may result
in the imposition of additional sanctions.
3. Review. Whenever the Code of Ethics Review Committee determines that an
Access Person has committed a violation of this Code that merits significant
remedial action, it will report promptly to the Boards of Directors of SCM
and/or the Distributor (as appropriate), and no less frequently than the
quarterly meeting to the Boards of Directors of the applicable Strong Funds,
information relating to the investigation of the violation, including any
sanctions imposed. The Boards of Directors of SCM, the Distributor and the
Strong Funds may modify such sanctions as they deem appropriate. Such Boards may
have access to all information considered by the Code of Ethics Review Committee
in relation to the case. The Code of Ethics Review Committee may determine
whether to delay the imposition of any sanctions pending review by the
applicable Boards of Directors.
C. Exceptions to the Code. Although exceptions to the Code will rarely, if
ever, be granted, the General Counsel of SCM may grant exceptions to the
requirements of the Code on a case-by-case basis if he finds that the proposed
conduct involves negligible opportunity for abuse. All Material exceptions must
be in writing and must be reported as soon as practicable to the Code of Ethics
Review Committee and to the Boards of Directors of the SCM Funds at their next
regularly scheduled meeting after the exception is granted. Refer to Appendix 1
for the definition of "Material."
D. Compliance Certification. At least annually, all Access Persons will be
required to certify on the Annual Code of Ethics Questionnaire set forth in
Appendix 6, or on a document substantially in the form of Appendix 6, that they
have complied with the Code in all respects.
E. Record Retention. SCM will, at its principal place of business, maintain the
following records in an easily accessible place, for at least six years and will
make records available to the SEC or any representative thereof at any time:
1. Code of Ethics. A copy of the Code of Ethics which is, or at any time
has been, in effect.
2. Violations. A record of any violation of such Code of Ethics and any
action taken as a result of such violation.
3. Required Reports. A copy of each report made by an Access Person
pursuant to the Code of Ethics shall include records of the procedures followed
in connection with the preclearance and reporting requirements of this Code and
information relied on by the Preclearance Officer in authorizing the Securities
Transaction and in making the post-Securities Transaction determination.
4. Access Person List. A list of all persons who are, or have been,
required to make reports pursuant to the Code of Ethics.
F. Inquiries Regarding the Code. The Compliance Department will answer any
questions about this Code or any other compliance-related matters.
<PAGE> 16
Appendix 1
DEFINITIONS
"Access Person" means (1) every director, officer, and general partner of
SCM, the Distributor, the Strong Funds and Flint Prairie; (2) every associate of
SCM, the Distributor and Flint Prairie who, in connection with his or her
regular functions, makes, participates in, or obtains information regarding the
purchase or sale of a security by an Advisory Client's account; (3) every
associate of SCM, the Distributor and Flint Prairie who is involved in making
purchase or sale recommendations for an Advisory Client's account; (4) every
associate of SCM, the Distributor and Flint Prairie who obtains information
concerning such recommendations prior to their dissemination; and (5) such
agents of SCM, the Distributor, the Funds or Flint Prairie as the Compliance
Department shall designate who may be deemed an Access Person if they were an
associate of the foregoing. Any uncertainty as to whether an individual is an
Access Person should be brought to the attention of the Compliance Department.
Such questions will be resolved in accordance with, and this definition shall be
subject to, the definition of "Access Person" found in Rule 17j-1(e)(1)
promulgated under the Investment Company Act of 1940.
"Advisory Client" means any client (including both investment companies and
managed accounts) for which SCM serves as an investment adviser or subadviser,
renders investment advice, makes investment decisions or places orders through
its Trading Department.
"Beneficial Interest" means the opportunity, directly or indirectly,
through any contract, arrangement, understanding, relationship or otherwise, to
profit or share in any profit derived from a transaction in the subject
Securities. An Access Person is deemed to have a Beneficial Interest in
Securities owned by members of his or her Immediate Family. Common examples of
Beneficial Interest include joint accounts, spousal accounts, UTMA accounts,
partnerships, trusts and controlling interests in corporations. Any uncertainty
as to whether an Access Person has a Beneficial Interest in a Security should be
brought to the attention of the Compliance Department. Such questions will be
resolved by reference to the principles set forth in the definition of
"beneficial owner" found in Rules 16a-1(a)(2) and (5) promulgated under the
Securities Exchange Act of 1934.
"Code" means this Code of Ethics.
"Compliance Department" means the designated persons listed on Appendix 2,
as such Appendix shall be amended from time to time.
"The Distributor" means Strong Investments, Inc.
"Electronic Trading Account" means a brokerage account held by an Access
Person where Securities Transactions are placed either electronically via the
Internet or the telephone. All such Securities Transactions must be precleared
by the Compliance Department.
"Equivalent Security" means any Security issued by the same entity as the
issuer of a subject Security that is convertible into the equity Security of the
issuer. Examples include options but are not limited to rights, stock
appreciation rights, warrants and convertible bonds.
"Fund" means an investment company registered under the Investment Company
Act of 1940 (or a portfolio or series thereof) for which SCM serves as an
adviser or subadviser.
"Immediate Family" of an Access Person means any of the following persons
who reside in the same household as the Access Person:
<PAGE> 17
child grandparent son-in-law
stepchild spouse daughter-in-law
grandchild sibling brother-in-law
parent mother-in-law sister-in-law
stepparent father-in-law
Immediate Family includes adoptive relationships and any other relationship
(whether or not recognized by law) which the General Counsel determines could
lead to the possible conflicts of interest, diversions of corporate opportunity,
or appearances of impropriety which this Code is intended to prevent.
"Independent Fund Director" means an independent director of an investment
company for which SCM serves as the advisor.
"Legal Department" means the SCM Legal/Compliance Department.
"Material" for purposes of this reporting requirement, shall mean the
following:
Number of Shares - Any transaction for more than 1,000 shares shall be deemed
material and subject to reporting. Whether a transaction of 1,000 shares or less
is material shall be determined on a case-by-case basis; in particular, the less
liquid a security is, the lower the threshold that should be used for the
materiality determination.
Dollar Value of Transaction - Any transaction with a dollar value in excess of
$25,000 shall be deemed material and subject to reporting. Whether a transaction
of $25,000 or less is material shall be determined on a case-by-case basis.
Number of Transactions in a Year - The General Counsel may grant no more than
two exceptions per associate per year that are not subject to reporting. For
example, if the General Counsel has granted two exceptions to an associate, any
exception granted thereafter shall be deemed material and subject to reporting
(irrespective of the number of shares or other circumstances of the
transaction).
Consultation with Independent Counsel - In any case where the General Counsel
believes there is an issue of whether a proposed exception is material and
subject to reporting, he shall consult with counsel to the independent directors
for the Strong Funds.
"Not Held Order" means an order placed with a broker and ultimately
executed at the discretion of the broker.
"Portfolio Manager" means a person who has or shares principal day-to-day
responsibility for managing the portfolio of an Advisory Client.
"Preclearance Officer" means the person designated as the Preclearance
Officer in Appendix 2 hereof.
"Program Trade" is where a Portfolio Manager directs a trader to do trades
in either an index-type account or portion of account or, at a minimum, 25-30%
of the Securities in a non-index account. Program Trades for non-index type
accounts generally arise in any of three situations: (1) cash or other assets
are being added to an account and the Portfolio Manager instructs the trader
that new securities are to be bought in a manner that maintains the account's
existing allocations; (2) cash is being withdrawn from an account and the
Portfolio Manager instructs the trader that securities are to be sold in a
manner that maintains the account's current securities allocations; and (3) a
new account is established and the Portfolio Manager instructs the trader to buy
specific securities in the same allocation percentages as are held by other
client accounts.
<PAGE> 18
"SEC" means the Securities and Exchange Commission.
"Security" includes stock; notes, bonds, debentures and other evidences of
indebtedness (including loan participations and assignments); limited
partnership interests; investment contracts; all derivative instruments of the
foregoing, such as options and warrants; and other items mentioned in Section
2(a)(36) of the 1940 Act, not specifically exempted by Rule 17j-1. Items
excluded from the definition of "Security" by Rule 17j-1 are U. S. Government
Securities, bankers acceptances, bank certificates of deposit, commercial paper
and shares of open-end investment companies. In addition, security does not
include futures, commodities, currencies or options on the aforementioned, but
the purchase and sale of such instruments are nevertheless subject to the
reporting requirements of the Code.
"Securities Transaction" means a purchase or sale of Securities in which an
Access Person or a members of his or her Immediate Family has or acquires a
Beneficial Interest.
"SCM" means Strong Capital Management, Inc.
"Strong Funds" means the investment companies comprising the Strong Family
of Mutual Funds.
"U. S. Government Security" means any security issued or guaranteed as to
principal or interest by the United States or by a person controlled or
supervised by and acting as an instrumentality of the Government of the United
States pursuant to authority granted by the Congress of the United States or any
certificate of deposit for any of the foregoing.
<PAGE> 19
Appendix 2
CONTACT PERSONS
Preclearance Officer
Stephen J. Shenkenberg, Deputy General Counsel and Chief Compliance Officer
of SCM
Designees of Preclearance Officer
Thomas A. Hooker
Linda E. Meints
John S. Weitzer
Kelly M. Zeroth
Compliance Department
1. Stephen J. Shenkenberg
2. Thomas A. Hooker
Kathleen A. Flanagan
Linda E. Meints
Kelly M. Zeroth
Code of Ethics Review Committee
1. Stephen J. Shenkenberg, Deputy General Counsel and Chief Compliance Officer
of SCM
2. Thomas A. Hooker, Director of Compliance
<PAGE> 20
Appendix 3
PERSONAL HOLDINGS IN SECURITIES
In accordance with Section II.A. of the Code of Ethics, please provide a list of
all Securities (other than those specifically excluded from the definition of
Security), including physical certificates held, in which each Access Person has
a Beneficial Interest, including those in accounts of the Immediate Family of
the Access Person and all Securities in non-client accounts for which the Access
Person makes investment decisions.
(1) Name of Access Person:
(2) If different than (1), name of the person in whose name the account is
held:
(3) Relationship of (2) to (1):
(4) Broker at which Account is maintained:
(5) Account Number:
(6) Contact person at Broker and phone number
(7) For each account, attach the most recent account statement listing
Securities in that account. If the Access Person owns Beneficial Interests in
Securities that are not listed in an attached account statement, or holds the
physical certificate, list them below:
Name of Security Quantity Value Custodian
1.
2.
3.
4.
5.
6.
(Attach separate sheet if necessary.)
I certify that this form and the attached statements (if any) constitute
all of the Securities in which I have a Beneficial Interest, including those for
which I hold physical certificates, as well as those held in accounts of my
Immediate Family.
Access Person Signature
Dated:
Print Name
<PAGE> 21
Appendix 4
ACKNOWLEDGMENT OF RECEIPT OF CODE OF ETHICS
AND LIMITED POWER OF ATTORNEY
I acknowledge that I have received the Code of Ethics dated October 22,
1999, and represent that:
1. In accordance with Section II.A. of the Code of Ethics, I will fully
disclose the Securities holdings in which I have, or a member of my Immediate
Family has, a Beneficial Interest.*
2. In accordance with Section II.B.1. of the Code of Ethics, I will obtain
prior authorization for all Securities Transactions in which I have, or a member
of my Immediate Family has, a Beneficial Interest except for transactions exempt
from preclearance under Section II.B. 2. of the Code of Ethics.*
3. In accordance with Section II.G.1. of the Code of Ethics, I will report
all Securities Transactions in which I have, or a member of my Immediate Family
has, a Beneficial Interest, except for transactions exempt from reporting under
Section II.G.1. of the Code of Ethics.
4. I will comply with the Code of Ethics in all other respects.
5. I agree to disgorge and forfeit any profits on prohibited transactions
in accordance with the requirements of the Code.*
I hereby appoint Strong Capital Management, Inc. as my attorney-in-fact for
the purpose of placing orders for and on my behalf to buy, sell, tender,
exchange, convert, and otherwise effectuate transactions in any and all stocks,
bonds, options, and other securities. I agree that Strong Capital Management,
Inc. shall not be liable for the consequences of any errors made by the
executing brokers in connection with such transactions.*
Access Person Signature
Print Name
Dated:
* Representations (1), (2) and (5) and the Limited Power of Attorney do not
apply to Independent Fund Directors.
<PAGE> 22
Appendix 5
Ctrl. No:_________________________ Associate ID
#_________________________________
STRONG CAPITAL MANAGEMENT, INC.
PRECLEARANCE REQUEST FOR ACCESS PERSONS
1. Name of Access Person (and trading entity, if different):
2. Name and symbol of Security:
3. Maximum quantity to be purchased or sold:
4. Name, account # & phone # of broker to effect transaction:
5. Check if applicable: Purchase ____ Market Order ____
Sale ____ Limit Order ____ (Limit Order Price: ___________)
Not Held Order ____
6. In connection with the foregoing transaction, I hereby make the following
representations and warranties:
(a) I do not possess any material nonpublic information regarding the Security
or the issuer of the Security.
(b) To my knowledge:
(1) The Securities or "equivalent" securities (i.e., securities issued by the
same issuer) [ are / are not ] (circle one) held by any investment companies or
other accounts managed by SCM;
(2) There are no outstanding purchase or sell orders for this Security (or
any equivalent security) by any investment companies or other accounts managed
by SCM; and
(3) None of the Securities (or equivalent securities) are actively being
considered for purchase or sale by any investment companies or other accounts
managed by SCM.
(c) The Securities are not being acquired in an initial public offering.
(d) The Securities are not being acquired in a private placement or, if they
are, I have reviewed Section II.D.3. of the Code and have attached hereto a
written explanation of such transaction.
(e) If I am a Portfolio Manager, none of the accounts I manage purchased or sold
these Securities (or equivalent securities) within the past seven calendar days
and I do not expect any such client accounts to purchase or sell these
Securities (or equivalent securities) within seven calendar days of my purchase
or sale.
(f) If I am purchasing these Securities, I have not directly or indirectly
(through any member of my Immediate Family, any account in which I have a
Beneficial Interest or otherwise) sold these Securities (or equivalent
securities) in the prior 60 days.
(g) If I am selling these Securities, I have not directly or indirectly (through
any member of my Immediate Family, any account in which I have a Beneficial
Interest or otherwise) purchased these Securities (or equivalent securities) in
the prior 60 days.
(h) I have read the SCM Code of Ethics within the prior 12 months and believe
that the proposed trade fully complies with the requirements of the Code.
Access Person Print Name
CERTIFICATION OF ACCESS PERSON DESIGNEE
The undersigned hereby certifies that the above Access Person (a) directly
instructed me to complete this form on his or her behalf, (b) to the best of my
<PAGE> 23
knowledge, was out of the office at the time of such instruction and has not
returned, and (c) confirmed to me that the representations and warranties
contained in this form are accurate.
Access Person Designee Print Name
AUTHORIZATION
Authorized By:______________________________________
Date:___________________ Time:_____________________________
PLACEMENT
Trader:_________________________ Date:________________ Time:________________
Qty:_________________
EXECUTION
Trader:_________________________ Date:________________ Time:________________
Qty:_________________ Price:_______________
(Original copy to Compliance Department, Yellow copy to Trading Department, Pink
copy to Access Person)
revised 7/98
<PAGE> 24
Confidential Appendix
6
ANNUAL CODE OF ETHICS QUESTIONNAIRE_
For Access Persons of
The Strong Family of Mutual Funds,
Strong Capital Management, Inc.,
Strong Investments, Inc.
and Flint Prairie, L. L. C.
September 14, 1999
Associate: ____________________________(please print name)
I. Introduction
Access Persons_ are required to answer the following questions for the
year September 1, 1998, through August 31, 1999. Answers of "No" to any of the
questions in Sections II and III must be explained on the "Attachment" on page
3. Upon completion, please sign and return the questionnaire by Monday,
September 20th, to Kelly Zeroth in the Compliance Department. All information
provided is kept confidential to the maximum extent possible. If you have any
questions, please contact Kelly at extension 3549.
II. Annual certification of compliance with the Code of Ethics
A. Have you obtained preclearance for all Securities_ Transactions in which you
have, or a member of your Immediate Family has, a Beneficial Interest, except
for transactions exempt from preclearance under the Code of Ethics? (Circle
"Yes" if there have been no Securities Transactions.)
Yes No (circle one)
B. Have you reported all Securities Transactions in which you have, or a member
of your Immediate Family has, a Beneficial Interest, except for transactions
exempt from reporting under the Code of Ethics? (Reporting requirements include
arranging for the Compliance Department to receive, directly from your broker,
duplicate transaction confirmations and duplicate periodic statements for each
brokerage account in which you have, or a member of your Immediate Family has, a
Beneficial Interest, as well as reporting securities held in certificate form_.
Circle "Yes" if there are no reportable transactions.)
Yes No (circle one)
C. Do you understand that you are prohibited from owning five percent or more of
any class of security of a registered investment company, and have you so
complied?
Yes No (circle one)
D. Have you notified the Compliance Department if you have been arrested,
arraigned, indicted, or have plead no contest to any criminal offense, or been
named as a defendant in any Investment-Related civil proceedings, or
administrative or disciplinary action? (Circle "Yes" if you have not been
arrested, arraigned, etc.)
<PAGE> 25
Yes No (circle one)
E. Have you complied with the Code of Ethics in all other respects, including
the gift policy?
Yes No (circle one)
List on the Attachment all reportable gifts_ given or received for the year
September 1, 1998, through August 31, 1999, noting the month, "counterparty,"
gift description, and estimated value.
III. Have you complied in all respects with the Insider Trading Policy
dated January 1, 1999?
Yes No (circle one)
Answers of "No" to any of the questions in Sections II and III must be explained
on the "Attachment" on page 3.
IV. Disclosure of directorships statement
A. Are you, or is any member of your Immediate Family, a director of any
for-profit, privately held companies_? (If "Yes," please list on the Attachment
each company for which you are, or a member of your Immediate Family is, a
director.)
Yes No (circle one)
B. If the response to IV.A. is "Yes," do you have knowledge that any of the
companies for which you are, or a member of your Immediate Family is, a director
will go public or be acquired within the next 12 months? (If the answer is
"Yes," please be prepared to discuss this matter with a member of the Compliance
Department in the near future.)
Yes No (circle one)
I hereby represent that, to the best of my knowledge, the foregoing responses
are true and complete. I understand that any untrue or incomplete response may
be subject to disciplinary action by the firm.
-------------------------------------------
Access Person Signature
-------------------------------------------
-------------------------------------------
Print Name Date
<PAGE> 26
ATTACHMENT TO
ANNUAL CODE OF ETHICS QUESTIONNAIRE
Please explain all "No" responses to questions in Sections II and III:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Please list each company for which you are, or a member or your Immediate Family
is, a director (Section IV):
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
GIFTS for the year September 1, 1998, through August 31, 1999:
Month_Gift Giver / Receiver_Gift Description_Estimated Value__1.
-------------------------------------------------------------------------------
-------------
2.
-------------------------------------------------------------------------------
-------------
3.
-------------------------------------------------------------------------------
-------------
4.
-------------------------------------------------------------------------------
-------------
5.
-------------------------------------------------------------------------------
-------------
6.
-------------------------------------------------------------------------------
-------------
7.
-------------------------------------------------------------------------------
-------------
8.
-------------------------------------------------------------------------------
-------------
9.
-------------------------------------------------------------------------------
-------------
10.
-------------------------------------------------------------------------------
-------------
(Continue on an additional sheet if necessary.)
<PAGE> 27
Appendix 7
LIST OF BROAD-BASED INDICES
Listed below are the broad-based indices as designated by the Compliance
Department. See Section II.B.2.e. for additional information.
DESCRIPTION OF OPTION_SYMBOL_EXCHANGE__Computer Technology_XCI_AMEX__Eurotop
100_ERT_AMEX__Biotechnology Index_BTK_AMEX__Gold / Silver Index *_AUX_PHLX__Hong
Kong Option Index_HKO_AMEX__Inter@ctive Wk. Internet Index_INX_CBOE__Japan
Index_JPN_AMEX__Major Market Index *_XMI_AMEX__Morgan Stanley High Tech
Index_MSH_AMEX__NASDAQ-100_NDX_CBOE__Oil Service Sector Index_OSX_PHLX__Pacific
High Tech Index_XPI_PSE__Russell 2000 *_RUT_CBOE__Semiconductor
Sector_SOX_PHLX__S & P 100 *_OEX_CBOE__S & P 400 Midcap Index *_MID_CBOE__S & P
500 *_SPX_CBOE__Technology Index_TXX_CBOE__Value Line Index *_VLE_PHLX__Wilshire
Small Cap Index_WSX_PSE__* Includes LEAPs____
<PAGE> 28
Appendix 8
GIFT POLICY
The gift policy of Strong Capital Management, Inc., Strong Investments, Inc. and
Flint Prairie, L. L. C. covers both giving gifts to and accepting gifts from
clients, brokers, persons with whom we do business or others (collectively,
"vendors"). It is based on the applicable requirements of the Rules of Fair
Practice of the National Association of Securities Dealers, Inc. ("NASD") and is
included as part of the firm's Codes of Ethics.
Under our policy, associates may not give gifts to or accept gifts
from vendors with a value in excess of $100 per person per year and must report
to the firm annually if they accept certain types of gifts. The NASD defines a
"gift" to include any kind of gratuity. Since giving or receiving any gifts in a
business setting may give rise to an appearance of impropriety or may raise a
potential conflict of interest, we are relying on your professional attitude and
good judgment to ensure that our policy is observed to the fullest extent
possible. The discussion below is designed to assist you in this regard.
Questions regarding the appropriateness of any gift should be directed
to the Legal/Compliance Department.
1. Gifts Given By Associates
Under applicable NASD rules, an associate may not give any gift with a
value in excess of $100 per year to any person associated with a securities or
financial organization, including exchanges, broker-dealers, commodity firms,
the news media, or clients of the firm. Please note, however, that the firm may
not take a tax deduction for any gift with a value exceeding $25.
This memorandum is not intended to authorize any associate to give a
gift to a vendor -- appropriate supervisory approval must be obtained before
giving any gifts.
2. Gifts Accepted By Associates
On occasion, because of their position within the firm, associates may
be offered, or may receive without notice, gifts from vendors. Associates may
not accept any gift or form of entertainment from vendors (e.g., tickets to the
theater or a sporting event where the vendor does not accompany the associate)
other than gifts of nominal value, which the NASD defines as under $100 in total
from any vendor in any year (managers may, if they deem it appropriate for their
department, adopt a lower dollar ceiling). Any gift accepted by an associate
must be reported to the firm, subject to certain exceptions (see heading 4
below). In addition, note that our gift policy does not apply to normal and
customary business entertainment or to personal gifts (see heading 3 below).
Associates may not accept a gift of cash or a cash equivalent (e.g.,
gift certificates) in any amount, and under no circumstances may an associate
solicit a gift from a vendor.
Associates may wish to have gifts from vendors donated to charity,
particularly where it might be awkward or impolite for an associate to decline a
gift not permitted by our policy. In such case, the gift should be forwarded to
Legal, who will arrange for it to be donated to charity. Similarly, associates
may wish to suggest to vendors that, in lieu of an annual gift, the vendors make
a donation to charity. In either situation discussed in this paragraph, an
associate would not need to report the gift to the firm (see heading 4 below).
3. Exclusion for Business Entertainment/Personal Gifts
<PAGE> 29
Our gift policy does not apply to normal and customary business meals
and entertainment with vendors. For example, if an associate has a business meal
and attends a sporting event or show with a vendor, that activity would not be
subject to our gift policy, provided the vendor is present. If, on the other
hand, a vendor gives an associate tickets to a sporting event and the associate
attends the event without the vendor also being present, the tickets would be
subject to the dollar limitation and reporting requirements of our gift policy.
Under no circumstances may associates accept business entertainment that is
extraordinary or extravagant in nature.
In addition, our gift policy does not apply to usual and customary
gifts given to or received from vendors based on a personal relationship (e.g.,
gifts between an associate and a vendor where the vendor is a family member or
personal friend).
4. Reporting
The NASD requires gifts to be reported to the firm. Except as noted
below, associates must report annually all gifts given to or accepted from
vendors (Legal will distribute the appropriate reporting form to associates).
Associates are not required to report the following: (i) usual and
customary promotional items given to or received from vendors (e.g., hats, pens,
T-shirts, and similar items marked with a firm's logo), (ii) items donated to
charity through Legal, or (iii) food items consumed on the firm's premises
(e.g., candy, popcorn, etc.).
January 1, 1999
<PAGE> 30
Appendix 9
INSIDER TRADING POLICY AND PROCEDURES
DESIGNED TO DETECT AND PREVENT INSIDER TRADING
A. Policy Statement.
1. Introduction. Strong Capital Management, Inc., Strong Investments,
Inc., Heritage Reserve Development Corporation, Flint Prairie, L. L. C. and such
other companies which adopt these Policies and Procedures (all of the foregoing
entities are collectively referred to herein as "Strong") seek to foster a
reputation for integrity and professionalism. That reputation is a vital
business asset. The confidence and trust placed in Strong by clients is
something we should value and endeavor to protect. To further that goal, the
Policy Statement implements procedures to deter the misuse of material,
nonpublic information in securities transactions.
2. Prohibitions. Accordingly, associates are prohibited from trading,
either personally or on behalf of others (including advisory clients), on
material, nonpublic information or communicating material, nonpublic information
to others in violation of the law. This conduct is frequently referred to as
"insider trading." This policy applies to every associate and extends to
activities within and outside their duties at Strong. Any questions regarding
this policy should be referred to the Compliance Department.
3. General Sanctions. Trading securities while in possession of
material, nonpublic information or improperly communicating that information to
others may expose you to stringent penalties. Criminal sanctions may include a
fine of up to $1,000,000 and/or ten years imprisonment. The SEC can recover the
profits gained or losses avoided through the violative trading, a penalty of up
to three times the illicit windfall and an order permanently barring you from
the securities industry. Finally, you may be sued by investors seeking to
recover damages for insider trading violations.
4. Insider Trading Defined. The term "insider trading" is not defined
in the federal securities laws, but generally is used to refer to the use of
material, nonpublic information to trade in securities (whether or not one is an
"insider") or to communications of material, nonpublic information to others.
While the law concerning insider trading is not static, it is currently
understood that the law generally prohibits:
a. trading by an insider, while in possession of material, nonpublic
information;
b. trading by a non-insider, while in possession of material,
nonpublic information, where the information either was disclosed to the
non-insider in violation of an insider's duty to keep it confidential or was
misappropriated;
c. recommending the purchase or sale of securities on the basis of
material, nonpublic information;
d. communicating material, nonpublic information to others; or
e. providing substantial assistance to someone who is engaged in any
of the above activities.
The elements of insider trading and the penalties for such unlawful
conduct are described below. Any associate who, after reviewing these Policies
and Procedures has any question regarding insider trading should consult with
<PAGE> 31
the Compliance Department. Often, a single question can forestall disciplinary
action or complex legal problems.
5. Tender Offers. Tender offers represent a particular concern in the
law of insider trading for two reasons. First, tender offer activity often
produces extraordinary gyrations in the price of the target company's
securities. Trading during this time period is more likely to attract regulatory
attention (and produces a disproportionate percentage of insider trading cases).
Second, the SEC has adopted a rule which expressly forbids trading and "tipping"
while in possession of material, nonpublic information regarding a tender offer
received from the tender offeror, the target company or anyone acting on behalf
of either. Associates should exercise particular caution any time they become
aware of nonpublic information relating to a tender offer.
6. Contact the Compliance Department. To protect yourself, our
clients, and Strong, you should contact the Compliance Department immediately if
you believe that you may have received material, nonpublic information.
B. Procedures Designed to Detect and Prevent Insider Trading. The following
procedures have been established to aid Strong and all associates in avoiding
insider trading, and to aid Strong in preventing, detecting, and imposing
sanctions against insider trading. Every associate must follow these procedures
or risk serious sanctions, including dismissal, substantial personal liability
and criminal penalties. Any questions about these procedures should be directed
to the Compliance Department.
1. Initial Questions. Before trading in the Securities of a company
about which an associate may have potential inside information, an associate,
whether trading for himself or herself or others, should ask himself or herself
the following questions:
a. Is the Information Material? Is this information that an investor
would consider important in making his or her investment decisions? Is this
information that would substantially affect the market price of the securities
if generally disclosed?
b. Is the Information Nonpublic? To whom has this information been
provided? Has the information been effectively communicated to the market place
by being published in Reuters, The Wall Street Journal or other publications of
general circulation?
2. Material and Nonpublic Information. If, after consideration of the
above, any associate believes that the information is material and nonpublic, or
if an associate has questions as to whether the information is material and
nonpublic, he or she should take the following steps:
a. Report the matter immediately to the Compliance Department.
b. Do not purchase or sell the Securities either on the associate's
own behalf or on the behalf of others.
c. Do not communicate the information to anyone, other than to the
Compliance Department.
d. After the Compliance Department has reviewed the issue, the
associate will be instructed to continue the prohibitions against trading and
communication, or he or she will be allowed to trade and communicate the
information.
<PAGE> 32
3. Confidentiality. Information in an associate's possession that is
identified as material and nonpublic may not be communicated to anyone, include
persons within Strong, except as otherwise provided herein. In addition, care
should be taken so that such information is secure. For example, files
containing material, nonpublic information should be sealed, access to computer
files containing material, nonpublic information should be restricted and
conversations containing such information, if appropriate at all, should be
conducted in private (for example, not by cellular telephone to avoid potential
interception).
4. Assistance of the Compliance Department. If, after consideration of
the items set forth in Section B.2., doubt remains as to whether information is
material or nonpublic, or if there is any unresolved question as to the
applicability or interpretation of the foregoing procedures, or as to the
propriety of any action, it must be discussed with the Compliance Department
before trading or communicating the information to anyone.
5. Reporting Requirement. In accordance with Strong's Code of Ethics,
every associate must arrange for the Compliance Department to receive directly
from the broker, dealer, or bank in question, duplicate copies of each
confirmation for each Securities Transaction and periodic statement for each
brokerage account in which such associate has a beneficial interest.
C. Insider Trading Explanations.
1. Who is an Insider? The concept of "insider" is broad. It includes
officers, directors and associates of a company. In addition, a person can be a
"temporary insider" if he or she enters into a special confidential relationship
in the conduct of a company's affairs and as a result is given access to
information solely for the company's purposes. A temporary insider can include,
among others, a company's attorneys, accountants, consultants, bank lending
officers and the associates of such organizations. In addition, Strong may
become a temporary insider. According to the United States Supreme Court, the
company must expect the outsider to keep the disclosed nonpublic information
confidential, and the relationship must at least imply such a duty before the
outsider will be considered an insider.
2. What is Material Information? Trading on inside information is not
a basis for liability unless the information is material. "Material information"
generally is defined as information for which there is a substantial likelihood
that a reasonable investor would consider it important in making his or her
investment decisions, or information that is reasonably certain to have a
substantial effect on the price of a company's securities. It need not be
important that it would have changed the investor's decision to buy or sell. No
simple "bright line" test exists to determine when information is material;
assessments of materiality involve a highly fact-specific inquiry. For this
reason, you should direct any question about whether information is material to
the Compliance Department.
Material information often relates to a company's results and
operations including, for example, dividend changes, earnings results, changes
in previously released earnings estimates, significant merger or acquisition
proposals or agreements, major litigation, liquidation problems and
extraordinary management developments.
Material information also may relate to the market for a company's
securities. Information about a significant order to purchase or sell securities
may, in some contexts, be deemed material.
Material information does not have to relate to a company's business.
For example, in Carpenter v. U.S., 108 U.S. 316 (1987), the United
<PAGE> 33
States Supreme Court considered as material certain information about the
contents of a forthcoming newspaper column that was expected to affect the
market price of a security. In that case, a Wall Street Journal reporter was
found criminally liable for disclosing to others the dates that reports on
various companies would appear in The Wall Street Journal and whether those
reports would be favorable or unfavorable.
3. What is Nonpublic Information? Information is nonpublic until it
has been effectively disseminated broadly to investors in the market place. One
must be able to point to some fact to show that the information is generally
public. For example, information found in a report filed with the SEC, or
appearing in Dow Jones, Reuters Economic Services, The Wall Street Journal, or
other publications of general circulation would be considered public.
4. What are the Penalties for Insider Trading? Penalties for trading
on or communicating material, nonpublic information are severe, both for
individuals involved in such unlawful conduct and their employers. A person can
be subject to some or all of the penalties below even if he or she does not
personally benefit from the violation. Penalties include: (a) civil injunctions;
(b) treble damages; (c) disgorgement of profits; (d) jail sentences; (e) fines
for the person who committed the violation of up to three times the profit
gained or loss avoided, whether or not the person actually benefited; and (f)
fines for the employer or other controlling person of up to the greater of
$1,000,000 or three times the amount of the profit gained or loss avoided.
In addition to the foregoing, any violation of this Policy with
Respect to Insider Trading can be expected to result in serious sanctions,
including dismissal of the person or persons involved.
January 1, 1999
<PAGE> 34
Appendix 10
ELECTRONIC TRADING AUTHORIZATION FORM
Authorization has been granted to _____________________________________________
("Access Person") to open an Electronic Trading Account_ at____________________
("Brokerage Firm").
As a condition of approval, the Access Person agrees to the following
requirements, relating to all Securities Transactions: All Securities
Transactions as defined in the Code of Ethics, except those specifically exempt,
must be precleared by the Compliance Department; All Securities Transactions
will be placed and executed by the close of the same trading day that the
authorization is granted, otherwise the authorization will expire. This includes
Limit Orders. There will be no open "until filled" orders;
The Access Person will provide the Compliance Department with documentation from
the Internet Site that shows when the order was placed and executed. The Access
Person will arrange for the Compliance Department to receive directly from the
Electronic Trading Firm, duplicate copies of each confirmation for each
Securities Transaction and periodic statements for each brokerage account in
which the Access Person has a Beneficial Interest. The Access Person may not
place trades on his or her own behalf until these arrangements have been made.
The Access Person will comply with the Code of Ethics in all other respects.
I hereby agree to the terms and conditions stated above. Any abuse of this
privilege may result in disciplinary action by the firm.
----------------------------------------------- --------------------------
Access Person Date
-
AUTHORIZATION
----------------------------------------------- --------------------------
Director of Compliance (or designee) Date
<PAGE> 35
Appendix 11
TO: ALL ACCESS PERSONS
FROM: Director of Compliance
Subject: Social Security Number/Tax ID Information
Strong's Code of Ethics requires the Compliance Department to monitor the
personal investing activity of Access Persons, including investments in mutual
funds. To assist in this, we ask that you please provide your Social Security
Number, as well as the SSN of each member of your "Immediate Family". In
addition, please list all accounts in which you may have a "Beneficial
Interest".
(Please refer to your copy of the Code of Ethics for a definition of the
underlined words.)
Please complete this form return it to the Director of Compliance at your
earliest convenience. Thank you for your cooperation.
------------------------------------------------------------------------
(Print Name) (SSN/TIN)
------------------------------------------------------------------------
(Print Name) (SSN/TIN)
------------------------------------------------------------------------
(Print Name) (SSN/TIN)
------------------------------------------------------------------------
(Print Name) (SSN/TIN)
------------------------------------------------------------------------
(Print Name) (SSN/TIN)
------------------------------------------------------------------------
(Print Name) (SSN/TIN)
_ Capitalized words are defined in Appendix 1.
_ All definitions used in this questionnaire have the same meaning as those in
the Code of Ethics.
_ Non-Access Persons and Independent Fund Directors of the Strong Funds must
complete a separate questionnaire.
_ Security, as defined, does not include open-end investment companies,
including the Strong Funds.
_ Please contact Kelly Zeroth if you are uncertain as to what confirmations and
statements you have arranged for the Compliance Department to receive.
_ Associates are not required to report the following: (i) usual and customary
promotional items given to or received from vendors, (ii) items donated to
charity (through Legal), or (iii) food items consumed on the premises.
<PAGE> 36
Entertainment - i.e., a meal or activity with the vendor present - does not have
to be reported.
_ Per Section III.F. of the Code of Ethics, no Access Person, other than an
Independent Fund Director, may serve on the board of directors of a publicly
held company.
_ Electronic Trading Account includes brokerage accounts where Securities
Transactions are placed electronically via the Internet or the telephone.
