CODE OF ETHICS
FOR NON-ACCESS PERSONS OF
STRONG CAPITAL MANAGEMENT, INC.,
STRONG INVESTMENTS, INC.,
HERITAGE RESERVE DEVELOPMENT
CORPORATION, INC.
AND FLINT PRAIRIE, L. L. C.
[STRONG LOGO]
STRONG CAPITAL MANAGEMENT, INC.
October 22, 1999
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CODE OF ETHICS
For Non-Access Persons of
Strong Capital Management, Inc.,
Strong Investments, Inc.,
Heritage Reserve Development Corporation, Inc.
and Flint Prairie, L. L. C.
Dated October 22, 1999
TABLE OF CONTENTS
I. INTRODUCTION 1
A. Fiduciary Duty 1
1. Place the interests of clients first 1
2. Avoid taking inappropriate advantage of their position 1
3. Conduct all Personal Securities Transactions in full compliance with
this Code including reporting requirements 1
B. Appendices to the Code 1
1. Definitions 1
2. Acknowledgment of Receipt of Code of Ethics 1
3. Annual Code of Ethics Questionnaire 2
4. Gift Policy 2
5. Insider Trading Policy 2
II. TRADE REPORTING REQUIREMENTS 2
A. Reporting Requirements 2
B. Disclaimers 2
C. Availability of Reports 2
D. Record Retention 2
III. FIDUCIARY DUTIES 3
A. Confidentiality 3
B. Gifts 3
1. Accepting Gifts 3
2. Solicitation of Gifts 3
3. Giving Gifts 3
C. Payments to Advisory Clients or Shareholders 3
D. Corporate Opportunities 3
E. Service as a Director 3
F. Involvement in Criminal Matters or Investment-Related Civil Proceedings
3
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TABLE OF CONTENTS (CONTINUED)
IV. COMPLIANCE WITH THIS CODE OF ETHICS 4
A. Code of Ethics Review Committee 4
1. Membership, Voting, and Quorum 4
2. Investigating Violations of the Code 4
B. Remedies 4
1. Sanctions 4
2. Sole Authority 4
3. Review 4
C. Compliance Certification 5
D. Inquiries Regarding the Code 5
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CODE OF ETHICS
For Non-Access Persons of
Strong Capital Management, Inc.,
Strong Investments, Inc.,
Heritage Reserve Development Corporation, Inc.
and Flint Prairie, L. L. C.
Dated October 22, 1999
TABLE OF APPENDICES
Appendix 1 (Definitions) 6
Appendix 2 (Acknowledgment of Receipt of Code of Ethics) 8
Appendix 3 (Annual Code of Ethics Questionnaire) 9
Appendix 4 (Gift Policy) 13
Appendix 5 (Insider Trading Policy) 15
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CODE OF ETHICS
For Non-Access Persons of
Strong Capital Management, Inc.,
Strong Investments, Inc.,
Heritage Reserve Development Corporation, Inc.
and Flint Prairie, L. L. C.
Dated October 22, 1999
I. INTRODUCTION(1)
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"), Heritage Reserve
Development Corporation, Inc. ("HRDC"), Flint Prairie, L. L. C. ("Flint
Prairie") and such other affiliated entities of the foregoing that may from
time to time adopt this Code (each of which is individually referred to herein
as a "Company") have a fiduciary duty to place the interests of clients ahead
of their own. Associates must avoid activities, interests and relationships
that might interfere with making decisions in the best interests of each
Company and its clients.
As fiduciaries, associates must at all times:
1. PLACE THE INTERESTS OF CLIENTS FIRST. Associates must scrupulously
avoid serving their own personal interests ahead of the interests of the
clients of each Company. AN ASSOCIATE 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 CLIENT.
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 associate's independent judgment.
Associates 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 REPORTING REQUIREMENTS. Doubtful situations should be
resolved in favor of clients and each Company. 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 (Appendix 1),
[FN]
(1) Capitalized words are defined in Appendix 1.
</FN>
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2. ACKNOWLEDGMENT OF RECEIPT OF CODE OF ETHICS (Appendix 2),
3. ANNUAL CODE OF ETHICS QUESTIONNAIRE (Appendix 3),
4. GIFT POLICY (Appendix 4), and
5. INSIDER TRADING POLICY (Appendix 5).
II. TRADE REPORTING REQUIREMENTS
A. REPORTING REQUIREMENT. EVERY ASSOCIATE AND MEMBERS OF HIS OR HER
IMMEDIATE FAMILY 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 ASSOCIATE 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
brokerage firm based on the information provided by the Non-Access Person in
Appendix 2.
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 SECURITY, (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 ASSOCIATE'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.
B. 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.
C. 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 associate'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.
D. RECORD RETENTION. The Company shall keep and maintain for at least six
years records of the procedures it follows in connection with the reporting
requirements of this Code.
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III. FIDUCIARY DUTIES
A. CONFIDENTIALITY. Associates 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.
1. ACCEPTING GIFTS. On occasion, because of their position with the
Company and its affiliates, associates thereof may be offered, or may receive
without notice, gifts from clients, brokers, vendors or other persons not
affiliated with the Company. 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 the Company. 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 4) 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 may not solicit gifts or
gratuities.
3. GIVING GIFTS. Associates 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 Company. Please see the Gift Policy
(Appendix 4) for additional information.
C. PAYMENTS TO ADVISORY CLIENTS OR SHAREHOLDER. Associates may not
make any payments to Advisory Clients or Shareholders in order to resolve any
type of Advisory Client or Shareholder complaint. All such matters must be
handled by the Legal Department.
D. CORPORATE OPPORTUNITIES. Associates may not take personal advantage
of any opportunity properly belonging to any client or Company.
E. SERVICE AS A DIRECTOR. No associate may serve on the board of directors
of a publicly-held company not affiliated with the Company or the Strong Funds
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 associate be isolated through "Chinese Wall"
or other procedures from those making investment decisions related to the
issuer on whose board the associate sits.
F. INVOLVEMENT IN CRIMINAL MATTERS OR INVESTMENT-RELATED CIVIL
PROCEEDINGS. Each Non-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.
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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.
B. REMEDIES.
1. SANCTIONS. If the Code of Ethics Review Committee determines that
an associate 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 associate 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.
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
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 associate 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
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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. COMPLIANCE CERTIFICATION. At least annually, all associates will
be required to certify on the Annual Code of Ethics Questionnaire set forth in
Appendix 3, or on a document substantially in the form of Appendix 3, that they
have complied with the Code in all respects.
D. INQUIRIES REGARDING THE CODE. The Compliance Department will
answer any questions about this Code or any other compliance-related matters.
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Appendix 1
DEFINITIONS
"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 associate 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 associate 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.
"COMPANY" means "SCM", "the Distributor", "HRDC", "Flint Prairie" and such
other affiliated entities of the foregoing that may from time to time adopt
this Code.
"CODE" means this Code of Ethics.
"COMPLIANCE DEPARTMENT" means the designated persons in the Strong
Legal/Compliance Department.
"DISTRIBUTOR" means Strong Investments, Inc.
"HRDC" means Heritage Reserve Development Corporation, Inc.
"IMMEDIATE FAMILY" of an associate means any of the following persons who
reside in the same household as the associate:
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.
"LEGAL DEPARTMENT" means the SCM Legal/Compliance Department.
"SEC" means the Securities and Exchange Commission.
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"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 associate 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.
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Appendix 2
ACKNOWLEDGMENT OF RECEIPT OF CODE OF ETHICS
I acknowledge that I have received the Code of Ethics dated January 1,
1999, and represent that:
1. In accordance with Section II.A. 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 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 associate'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. I have circled the letter next to the statement(s) that apply to me:
a. I have a Beneficial Interest in Securities that are held in a brokerage
account(s) in my name and/or another name.
b. A member of my Immediate Family has a Beneficial Interest in Securities
that are held in a brokerage account(s).
c. I hold, or a member of my Immediate Family holds, securities in
certificate form.
d. I do not currently have a brokerage account, however, I will notify the
Legal Department prior to opening one.
If items (a) and/or (b) are circled, please provide the following information:
i. Name and Address of Brokerage Firm / Account Name / Account Number:
____________________________________________________
____________________________________________________
____________________________________________________
ii. Please note - The Compliance Department will arrange for duplicate
statements and confirmations for each account to be sent to Strong Capital
Management.
If item (c) is circled, please provide the following information:
i. Company Name / Quantity of Shares Held / Certificate Owner:
____________________________________________________
3. I will comply with the Code of Ethics in all other respects.
______________________________ ______________________________
Associate Signature Date
____________________________
Print Name
CONFIDENTIAL Appendix 3
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ANNUAL CODE OF ETHICS QUESTIONNAIRE(1)
For NON-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
Non-Access Persons(2) 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, 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 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(3), as well as reporting
securities held in certificate form. Circle "Yes", if there are no reportable
transactions.)
YES NO (CIRCLE ONE)
B. 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.)
YES NO (CIRCLE ONE)
C. 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(4) GIVEN OR RECEIVED FOR THE YEAR
SEPTEMBER 1, 1998, THROUGH AUGUST 31, 1999, NOTING THE MONTH, "COUNTERPARTY,"
GIFT DESCRIPTION AND VALUE.
III. Annual certification of compliance with Insider Trading Policy
[FN]
(1) All definitions used in this questionnaire have the same meaning as those in
the Code of Ethics.
(2) Access Persons and Independent Fund Directors of the Strong Funds must
complete a separate questionnaire.
(3) Please contact Kelly Zeroth (x3549) if you are uncertain as to what
confirmations and statements you have arranged for the Compliance Department to
receive.
(4) 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.
Entertainment - i.e., a meal or activity with the vendor present - does not
have to be reported.
</FN>
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A. 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(5)? (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.
_____________________________________________
Non-Access Person Signature
_____________________________________ __________________________________
Print Name Date
[FN]
(5) Per Section III.F. of the Code of Ethics, no associate, other than an
Independent Fund Director, may serve on the board of directors of a PUBLICLY
HELD company.
</FN>
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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 OF YOUR IMMEDIATE
FAMILY IS, A DIRECTOR (SECTION IV):
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
_________________________________
GIFTS FOR THE YEAR SEPTEMBER 1, 1998, THROUGH AUGUST 31, 1999:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
MONTH GIFT GIVER / RECEIVER GIFT DESCRIPTION ESTIMATED VALUE
----------------- --------------------- ----------------- -----------------
</TABLE>
1.
________________________________________________________________________________
2.
________________________________________________________________________________
3.
________________________________________________________________________________
4.
________________________________________________________________________________
5.
________________________________________________________________________________
6.
________________________________________________________________________________
7.
________________________________________________________________________________
8.
________________________________________________________________________________
9.
________________________________________________________________________________
10.
________________________________________________________________________________
(CONTINUE ON AN ADDITIONAL SHEET IF NECESSARY.)
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Appendix 4
GIFT POLICY
The gift policy of Strong Capital Management, Inc., Strong Investments, Inc.
and Flint Prairie, L. L. C., which 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.
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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
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
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Appendix 5
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
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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
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.
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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.
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
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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 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
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