<PAGE>
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 November 9, 2000
Table of Contents
-----------------
<TABLE>
<S> <C>
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
</TABLE>
i
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Table of Contents (continued)
-----------------------------
<TABLE>
<S> <C>
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
</TABLE>
ii
<PAGE>
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 November 9, 2000
Table of Appendices
-------------------
<TABLE>
<S> <C> <C>
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
</TABLE>
iii
<PAGE>
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 November 9, 2000
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. ("SII"), and 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, SII, 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.
a. Associates are prohibited from purchasing any Securities in
an initial public offering (IPO).
b. Associates are prohibited from any transactions in a
Security while in possession of material non-public
information regarding the Security or the issuer of the
Security (see Insider Trading Policy, Appendix 5).
________________________
/1/ Capitalized words are defined in Appendix 1.
1
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c. Associates are prohibited from transactions intended to
raise, lower, or maintain the price of any Security or to
create a false appearance of active trading.
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),
-----------
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
2
<PAGE>
any of the foregoing, the SEC, any self-regulatory organization of which the
Strong Funds, SCM, SII 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, SII 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.
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.
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, SII 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.
3
<PAGE>
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.
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, SII 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, SII 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;
4
<PAGE>
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 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), impose a 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 monies 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 SII (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, SII 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. 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.
5
<PAGE>
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", "SII", "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.
"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.
---
"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
6
<PAGE>
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.
7
<PAGE>
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
8
<PAGE>
Confidential Appendix 3
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 27, 2000
Associate: ____________________________ (please print name)
I. Introduction
Non-Access Persons/2/ are required to answer the following questions for
the year September 1, 1999, through August 31, 2000. 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 Friday, October 6th, to Jane Lisheron in the Compliance
Department. All information provided is kept confidential to the maximum
extent possible. If you have any questions, please contact Jane at
extension 7126.
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/will you notify the Compliance Department if you have been
arrested, arraigned, indicted, convicted or have plead no contest to any
criminal offense (misdemeanor and/or felony) or been named as a
defendant in any Investment or Non-Investment Related proceeding, or
administrative or disciplinary action in a domestic, foreign or military
court? (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, 1999, through August 31, 2000, noting the month,
"counterparty," gift description and value.
__________________
/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 Jane Lisheron (x7126) 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.
9
<PAGE>
III. Annual certification of compliance with Insider Trading Policy
A. Have you complied in all respects with the Insider Trading Policy dated
October 22, 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
publicly 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 you, or any member of your Immediate Family, is a director of any for
profit, privately held companies, do you have knowledge that any of
these companies 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
____________
/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.
10
<PAGE>
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, 1999, through August 31, 2000:
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.)
11
<PAGE>
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.
12
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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
13
<PAGE>
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,
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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
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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
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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;
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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 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
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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
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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
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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
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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
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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:
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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.
3. Confidentiality. Information in an associate's possession that is
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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
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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,
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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.
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1. Who is an Insider? The concept of "insider" is broad. It includes
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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
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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 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
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favorable or unfavorable.
3. What is Nonpublic Information? Information is nonpublic until it
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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
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other publications of general circulation would be considered public.
4. What are the Penalties for Insider Trading? Penalties for trading
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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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