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<PAGE> PAGE 21
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008 A000501 WILLIAM BLAIR & COMPANY
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<PAGE> PAGE 22
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<PAGE> PAGE 23
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<PAGE> PAGE 24
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<PAGE> PAGE 25
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<PAGE> PAGE 26
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<PAGE> PAGE 27
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<PAGE> PAGE 28
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<PAGE> PAGE 29
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SIGNATURE TERENCE M. SULLIVAN
TITLE VICE PRESIDENT
<PAGE>
WILLIAM BLAIR MUTUAL FUNDS, INC.
RULE 10f-3 PROCEDURES
The Board of Directors of William Blair Mutual Funds, Inc. (the "Fund")
has approved the following procedures to permit the Portfolios of the Fund to
purchase securities from underwriting and selling syndicates in which William
Blair & Company, L.L.C. (the "Adviser") participates as a syndicate member in
compliance with the provisions of Rule 10f-3 under the Investment Company Act of
1940, as amended (the "1940 Act"). The Adviser is directed to comply with these
procedures in effecting any such purchase of securities for the Fund.
DEFINITIONS
For the purpose of these procedures and the attached Form 10f-3, the
following definitions shall apply:
Domestic Issuer means any issuer other than a foreign government, a
national of any foreign country, or a corporation or other organization
incorporated or organized under the laws of any foreign country.
Eligible Foreign Offering means a public offering of securities,
conducted under the laws of a country other than the United States, that meets
the following conditions:
(i) The offering is subject to regulation by a "foreign
financial regulatory authority," as defined in Section 2(a)(50) of the
1940 Act, in such country;
(ii) The securities are offered at a fixed price to all
purchasers in the offering (except for any rights to purchase
securities that are required by law to be granted to existing security
holders of the issuer);
(iii) Financial statements, prepared and audited in accordance
with standards required or permitted by the appropriate foreign
financial regulatory authority in such country, for the two years prior
to the offering, are made available to the public and prospective
purchasers in connection with the offering; and
(iv) If the issuer is a Domestic Issuer, it meets the
following conditions:
(A) It has a class of securities registered
pursuant to Section 12(b) or 12(g) of the Securities
Exchange Act of 1934 (the "1934 Act") or is required
to file reports pursuant to Section 15(d) or the 1934
Act; and
<PAGE>
(B) It has filed all the material required
to be filed pursuant to Section 13(a) or 15(d) of the
1934 Act for a period of at least 12 months immediately
preceding the sale of securities made in reliance upon
Rule 10f-3 (or for such shorter period that the issuer
was required to file such material).
Eligible Municipal Securities means "municipal securities," as defined
in Section 3(a)(29) of the 1934 Act, that have received an investment grade
rating from at least one nationally recognized statistical rating organization
("NRSRO"); provided, that if the issuer of the municipal securities, or the
entity supplying the revenues or other payments from which the issue is to be
paid, has been in continuous operation for less than three years, including the
operation of any predecessors, the securities shall have received one of the
three highest ratings from a NRSRO.
Eligible Rule 144A Offering means an offering of securities that meets
the following conditions:
(i) The securities are offered or sold in transactions
exempt from registration under Section 4(2) of the Securities Act of
1933, Rule 144A under Section 4(2) or Rules 501-508 under Section 4(2);
(ii) The securities are sold to persons that the seller and
any person acting on behalf of the seller reasonably believe to include
"qualified institutional buyers," as defined in Rule 144A(a)(1)
("QIBs"); and
(iii) The seller and any person acting on behalf of the seller
reasonably believe that the securities are eligible for resale to other
QIBs pursuant to Rule 144A.
NRSRO has the same meaning as that set forth in Rule 2a-7(a)(14) under
the 1940 Act.
CONDITIONS
Before making a purchase for a Portfolio of securities from an
underwriting or selling syndicate, the Adviser shall determine whether it is a
manager or participant in the underwriting or selling syndicate, and, if it is,
the Adviser may purchase securities for the Portfolios provided that all the
conditions set forth below (the "Rule 10f-3 Procedures") are met:
1. The securities to be purchased (i) are part of an issue registered
under the Securities Act of 1933 that is being offered to the public;
(ii) Eligible Municipal Securities; (iii) securities sold in an
Eligible Foreign Offering; or (iv) securities sold in an Eligible Rule
144A Offering.
2. The securities are purchased prior to the end of the first day on which
any sales are made, if not offered for subscription upon exercise of
rights, or are purchased on or before the
-2-
<PAGE>
fourth day preceding the day on which the rights offering terminates at
a price that is not more than the price paid by each other purchaser of
securities in that offering or in any concurrent offering of the
securities (except, in the case of an Eligible Foreign Offering, for
any rights to purchase that are required by law to be granted to
existing security holders of the issuer). For purposes of determining
whether the securities are being sold in an Eligible Rule 144A Offering
and of determining compliance with this Paragraph 2, the Fund may
reasonably rely upon written statements made by the issuer or a
syndicate manager, or by an underwriter or seller of the securities
through which the Portfolios purchase the securities.
3. With respect to an issue registered under the Securities Act of 1933
that is offered to the public or are purchased pursuant to an Eligible
Foreign Offering or an Eligible Rule 144A Offering, the issuer of the
securities to be purchased shall have been in continuous operation for
not less than three years, including the operations of any
predecessors.
4. The securities are offered in a firm commitment underwriting pursuant
to an underwriting or similar agreement under which the underwriters
are committed to purchase all of the securities being offered, except
those purchased by others pursuant to a rights offering, if the
underwriters purchase any of the securities.
5. The commission, spread or profit received or to be received by the
principal underwriters is reasonable and fair compared to the
commission, spread or profit received by other such persons in
connection with the underwriting of similar securities being sold
during a comparable period of time.
6. The amount of securities of any class of such issue to be purchased by
a Portfolio or by, in the aggregate, any two or more investment
companies managed by the Adviser, shall not exceed (i) 25% of the
principal amount of the offering of such class if purchased in an
offering other than an Eligible Rule 144A Offering; or (ii) if
purchased in an Eligible Rule 144A Offering, 25% of the total of (A)
the principal amount of the offering of such class sold by underwriters
or members of the selling syndicate to qualified institutional buyers,
plus (B) the principal amount of the offering of such class in any
concurrent public offering.
7. No Portfolio purchases securities offered directly or indirectly from
an officer, director, member of an advisory board, the Adviser, an
employee of such Portfolio or from a person of which any such officer,
director, member of an advisory board, the Adviser or employee is an
affiliated person; provided that a purchase from a syndicate manager
shall not be deemed to be a purchase from a specific underwriter if (i)
such underwriter does not benefit directly or indirectly from the
transaction; or (ii) in respect to the purchase of Eligible Municipal
Securities, such purchase is not designated as a group sale or
otherwise allocated to the account of any person from whom this section
prohibits purchase.
-3-
<PAGE>
8. The Adviser shall (i) maintain a record of each purchase effected
pursuant to the Fund's Rule 10f-3 Procedures on a Form 10f-3 in the
form attached hereto as Exhibit A and (ii) shall present a written
report to the Board of Directors, in the form attached hereto as
Exhibit B, no less frequently than quarterly, summarizing such
information for each purchase during the preceding quarter and
attaching to such report all copies of Form 10f-3 completed during the
quarter.
9. All such transactions shall be reported on the Portfolios' semi-annual
reports on Form N-SAR and a written record of each such transaction,
setting forth (1) from whom the securities were acquired, (2) the
identity of the underwriting syndicate's members, (3) the terms of the
transaction and (4) the information or materials upon which the Board
of Directors based its quarterly determination that all purchases made
during the preceding quarter were effected in compliance with the
Fund's Rule 10f-3 Procedures shall be attached as an exhibit to Form
N-SAR. The information regarding the terms of the transaction shall
include the date of purchase, the maturity date and interest rate of
the securities purchased, the number and value of securities purchased
(specific as to each series if applicable) and the aggregate number and
value of securities offered through the underwriting or selling
syndicate.
10. The Adviser shall maintain and preserve on behalf of the Portfolios
written records in accordance with the provisions of Rule 10f-3(b)(11),
which records shall contain a copy of the Fund's Rule 10f-3 Procedures,
as they may be modified from time to time, and all copies of Form l0f-3
reviewed by the Board of Directors.
11. On an annual basis, the Adviser shall provide a report to the Board
regarding the securities purchased pursuant to these Rule 10f-3
Procedures analyzing the performance of such securities.
Date: October 21, 1997
-4-
<PAGE>
EXHIBIT A
FORM 10F-3
WILLIAM BLAIR MUTUAL FUNDS, INC.:
William Blair International Growth Fund (WBIGX)
Record of Securities Purchased
Under the Fund's Rule 10f-3 Procedures
Issuer: Ritchie Bros. Auctionneers Inc.
------------------------------------------
Date offering commenced: 06/16/99
--------------
Aggregate number and value of securities offered through underwriting or selling
syndicate:
1,188,000 common shares for a value of $42,768,000
- --------------------------------------------------------------------------------
Offering price at close of first day on which any sales were made: $38.125
-------------
Underwriting syndicate's members: ING Barings Furman Selz, Credit Suisse First
-----------------------------------------------
Boston, William Blair & Company, LLC.
- --------------------------------------------------------------------------------
Date of purchase: 06/30/99
--------------------------------------------------------------
Number and value of securities purchased (specific as to each series if
applicable): 50,000 Shares
-----------------------------------------------------------------
For value of $1,800,000
-------------------------------------------------------------------
Purchase price (net of fees and expenses): $36 per share
-------------------------------------
Maturity date and interest rate (if applicable): N/A
-------------------------------
Underwriter from whom purchased: ING Barings Furman Selz
----------------------------------------------
Commission, spread or profit: Price $36, Spread $1.80, Profit 5.0%
--------------------------------------------------
Comparative information regarding commission, spread or profit for similar
underwritings during the same period:
<TABLE>
<CAPTION>
Issuer Price Per Share Underwriting Discount Gross Spread
- ------ --------------- --------------------- ------------
<S> <C> <C> <C>
Gildan Activeware $12.375 $.7425 6%
</TABLE>
-5-
<PAGE>
CONDITIONS
YES NO
(1) The securities are either (i) part of an issue registered
under the Securities Act of 1933 that is being offered to
the public or (ii) Eligible Municipal Securities, (iii)
securities sold in an Eligible Foreign Offering or (iv) X
securities sold in an Eligible Rule 144A Offering. --- ---
(2) The purchase price paid did not exceed the price paid by
each other purchaser of securities in that offering or in
any concurrent offering of the securities at the close of
the first day on which any sales are made (except, in the
case of an Eligible Foreign Offering, for any rights to
purchase that are required by law to be granted to existing
security holders of the issuer), or, if a rights offering,
the securities were purchased on or before the fourth day X
preceding the day on which the offering terminated. --- ---
(3) In respect of securities other than Eligible Municipal
Securities, the issuer of the securities has been in
continuous operation for not less than three years, X
including the operations of any predecessors. --- ---
(4) The underwriting was a firm commitment underwriting. X
--- ---
(5) The commission, spread or profit was reasonable and fair
in relation to that being received by others for X
underwriting similar securities during the same period. --- ---
(6) The amount of such securities purchased by all of the
investment companies managed by the Adviser did not
exceed 25 of the principal amount of an offering other
than an Eligible Rule 144A Offering, or, in an Eligible
Rule 144A Offering, 25 of the total of (1) the principal
amount of the offering sold by underwriters or members of
the selling syndicate to QIBs, plus (2) the principal amount X
in any concurrent public offering. --- ---
(7) The Adviser was not a direct or indirect participant in the X
sales --- ---
Approved: /s/ Gregory B. Campbell Date: 6/30/99
------------------------ --------------------
Board of Directors Review Date: 7/20/99
-------------------------
<PAGE>
EXHIBIT B
FORM OF QUARTERLY REPORT ON RULE 10F-3 PURCHASES
During the Second quarter of 1999, William Blair Mutual Funds, Inc., William
Blair International Growth Fund (the "Fund"), made the following Rule 10f-3
purchases:
- ------------------------ --------------------- -------------------------
ISSUER DATE OF PURCHASE AMOUNT OF PURCHASE
- ------------------------ --------------------- -------------------------
Ritchie Bros 06/30/99 50,000 shares
Auctionneers ($1,800,000 value)
- ------------------------ --------------------- -------------------------
- ------------------------ --------------------- -------------------------
- ------------------------ --------------------- -------------------------
- ------------------------ --------------------- -------------------------
- ------------------------ ---------------------
PURCHASER PRICE BROKER/DEALER
- ------------------------ ---------------------
$36 ING Barings Furman
Selz
- ------------------------ ---------------------
- ------------------------ ---------------------
- ------------------------ ---------------------
- ------------------------ ---------------------
The above purchase [purchases] was [were] made from an underwriting syndicate of
which William Blair & Company, a broker-dealer, was a participating member. The
Fund did not purchase the shares directly or indirectly from William Blair &
Company. All shares were acquired from an outside firm and no credit was
received by William Blair & Company. According to Rule 10f-3, all purchases of
securities made pursuant to the rule must be reported to the appropriate and
required parties. Accordingly, we are advising the directors of the Fund of this
[these] purchase [purchases] with this statement and the following disclosure:
1. The securities are either (i) part of an issue registered under the
Securities Act of 1933 that is being offered to the public or (ii)
Eligible Municipal Securities, (iii) securities sold in an Eligible
Foreign Offering or (iv) securities sold in an Eligible Rule 144A
Offering.
2. The purchase price paid did not exceed the price paid by each other
purchaser of securities in that offering or in any concurrent offering
of the securities at the close of the first day on which any sales are
made (except, in the case of an Eligible Foreign Offering, for any
rights to purchase that are required by law to be granted to existing
security holders of the issuer), or, if a rights offering, the
securities were purchased on or before the fourth day preceding the day
on which the offering terminated.
3. In respect of securities other than Eligible Municipal Securities, the
issuer of the securities has been in continuous operation for not less
than three years, including the operations of any predecessors.
4. The underwriting was a firm commitment underwriting.
5. The commission, spread or profit was reasonable and fair in relation to
that being received by others for underwriting similar securities
during the same period.
6. The amount of such securities purchased by all of the investment
companies managed by the Adviser did not exceed 25% of the principal
amount of an offering other than an Eligible Rule 144A Offering, or, in
an Eligible Rule 144A Offering, 25% of the total of (1) the principal
amount of the offering sold by underwriters or members of the selling
syndicate to QIBs, plus (2) the principal amount in any concurrent
public offering.
-3-
<PAGE>
WILLIAM BLAIR MUTUAL FUNDS, INC.
RULE 10F-3 PROCEDURES
The Board of Directors of William Blair Mutual Funds, Inc. (the "Fund") has
approved the following procedures to permit the Portfolios of the Fund to
purchase securities from underwriting and selling syndicates in which William
Blair & Company, L.L.C. (the "Adviser") participates as a syndicate member in
compliance with the provisions of Rule 10f-3 under the Investment Company Act of
1940, as amended (the "1940 Act"). The Adviser is directed to comply with these
procedures in effecting any such purchase of securities for the Fund.
DEFINITIONS
For the purpose of these procedures and the attached Form 10f-3, the
following definitions shall apply:
Domestic Issuer means any issuer other than a foreign government, a
national of any foreign country, or a corporation or other organization
incorporated or organized under the laws of any foreign country.
Eligible Foreign Offering means a public offering of securities, conducted
under the laws of a country other than the United States, that meets the
following conditions:
(i) The offering is subject to regulation by a "foreign financial
regulatory authority," as defined in Section 2(a)(50) of the 1940 Act, in
such country;
(ii) The securities are offered at a fixed price to all purchasers in
the offering (except for any rights to purchase securities that are
required by law to be granted to existing security holders of the issuer);
(iii) Financial statements, prepared and audited in accordance with
standards required or permitted by the appropriate foreign financial
regulatory authority in such country, for the two years prior to the
offering, are made available to the public and prospective purchasers in
connection with the offering; and
(iv) If the issuer is a Domestic Issuer, it meets the following
conditions:
(A) It has a class of securities registered pursuant
to Section 12(b) or 12(g) of the Securities Exchange Act of 1934
(the "1934 Act") or is required to file reports pursuant to
Section 15(d) or the 1934 Act; and
<PAGE>
(B) It has filed all the material required to be
filed pursuant to Section 13(a) or 15(d) of the 1934 Act for a
period of at least 12 months immediately preceding the sale of
securities made in reliance upon Rule 10f-3 (or for such shorter
period that the issuer was required to file such material).
Eligible Municipal Securities means "municipal securities," as defined in
Section 3(a)(29) of the 1934 Act, that have received an investment grade rating
from at least one nationally recognized statistical rating organization
("NRSRO"); provided, that if the issuer of the municipal securities, or the
entity supplying the revenues or other payments from which the issue is to be
paid, has been in continuous operation for less than three years, including the
operation of any predecessors, the securities shall have received one of the
three highest ratings from a NRSRO.
Eligible Rule 144A Offering means an offering of securities that meets the
following conditions:
(i) The securities are offered or sold in transactions exempt from
registration under Section 4(2) of the Securities Act of 1933, Rule 144A
under Section 4(2) or Rules 501-508 under Section 4(2);
(ii) The securities are sold to persons that the seller and any
person acting on behalf of the seller reasonably believe to include
"qualified institutional buyers," as defined in Rule 144A(a)(1) ("QIBs");
and
(iii) The seller and any person acting on behalf of the seller
reasonably believe that the securities are eligible for resale to other
QIBs pursuant to Rule 144A.
NRSRO has the same meaning as that set forth in Rule 2a-7(a)(14) under
the 1940 Act.
CONDITIONS
Before making a purchase for a Portfolio of securities from an underwriting
or selling syndicate, the Adviser shall determine whether it is a manager or
participant in the underwriting or selling syndicate, and, if it is, the Adviser
may purchase securities for the Portfolios provided that all the conditions set
forth below (the "Rule 10f-3 Procedures") are met:
1. The securities to be purchased (i) are part of an issue registered under
the Securities Act of 1933 that is being offered to the public; (ii)
Eligible Municipal Securities; (iii) securities sold in an Eligible Foreign
Offering; or (iv) securities sold in an Eligible Rule 144A Offering.
2. The securities are purchased prior to the end of the first day on which any
sales are made, if not offered for subscription upon exercise of rights, or
are purchased on or before the
-2-
<PAGE>
fourth day preceding the day on which the rights offering terminates at a
price that is not more than the price paid by each other purchaser of
securities in that offering or in any concurrent offering of the securities
(except, in the case of an Eligible Foreign Offering, for any rights to
purchase that are required by law to be granted to existing security
holders of the issuer). For purposes of determining whether the securities
are being sold in an Eligible Rule 144A Offering and of determining
compliance with this Paragraph 2, the Fund may reasonably rely upon written
statements made by the issuer or a syndicate manager, or by an underwriter
or seller of the securities through which the Portfolios purchase the
securities.
3. With respect to an issue registered under the Securities Act of 1933 that
is offered to the public or are purchased pursuant to an Eligible Foreign
Offering or an Eligible Rule 144A Offering, the issuer of the securities to
be purchased shall have been in continuous operation for not less than
three years, including the operations of any predecessors.
4. The securities are offered in a firm commitment underwriting pursuant to an
underwriting or similar agreement under which the underwriters are
committed to purchase all of the securities being offered, except those
purchased by others pursuant to a rights offering, if the underwriters
purchase any of the securities.
5. The commission, spread or profit received or to be received by the
principal underwriters is reasonable and fair compared to the commission,
spread or profit received by other such persons in connection with the
underwriting of similar securities being sold during a comparable period of
time.
6. The amount of securities of any class of such issue to be purchased by a
Portfolio or by, in the aggregate, any two or more investment companies
managed by the Adviser, shall not exceed (i) 25% of the principal amount of
the offering of such class if purchased in an offering other than an
Eligible Rule 144A Offering; or (ii) if purchased in an Eligible Rule 144A
Offering, 25% of the total of (A) the principal amount of the offering of
such class sold by underwriters or members of the selling syndicate to
qualified institutional buyers, plus (B) the principal amount of the
offering of such class in any concurrent public offering.
7. No Portfolio purchases securities offered directly or indirectly from an
officer, director, member of an advisory board, the Adviser, an employee of
such Portfolio or from a person of which any such officer, director, member
of an advisory board, the Adviser or employee is an affiliated person;
provided that a purchase from a syndicate manager shall not be deemed to be
a purchase from a specific underwriter if (i) such underwriter does not
benefit directly or indirectly from the transaction; or (ii) in respect to
the purchase of Eligible Municipal Securities, such purchase is not
designated as a group sale or otherwise allocated to the account of any
person from whom this section prohibits purchase.
-3-
<PAGE>
8. The Adviser shall (i) maintain a record of each purchase effected pursuant
to the Fund's Rule 10f-3 Procedures on a Form 10f-3 in the form attached
hereto as Exhibit A and (ii) shall present a written report to the Board of
Directors, in the form attached hereto as Exhibit B, no less frequently
than quarterly, summarizing such information for each purchase during the
preceding quarter and attaching to such report all copies of Form 10f-3
completed during the quarter.
9. All such transactions shall be reported on the Portfolios' semi-annual
reports on Form N-SAR and a written record of each such transaction,
setting forth (1) from whom the securities were acquired, (2) the identity
of the underwriting syndicate's members, (3) the terms of the transaction
and (4) the information or materials upon which the Board of Directors
based its quarterly determination that all purchases made during the
preceding quarter were effected in compliance with the Fund's Rule 10f-3
Procedures shall be attached as an exhibit to Form N-SAR. The information
regarding the terms of the transaction shall include the date of purchase,
the maturity date and interest rate of the securities purchased, the number
and value of securities purchased (specific as to each series if
applicable) and the aggregate number and value of securities offered
through the underwriting or selling syndicate.
10. The Adviser shall maintain and preserve on behalf of the Portfolios written
records in accordance with the provisions of Rule 10f-3(b)(11), which
records shall contain a copy of the Fund's Rule 10f-3 Procedures, as they
may be modified from time to time, and all copies of Form l0f-3 reviewed by
the Board of Directors.
11. On an annual basis, the Adviser shall provide a report to the Board
regarding the securities purchased pursuant to these Rule 10f-3 Procedures
analyzing the performance of such securities.
Date: October 21, 1997
-4-
<PAGE>
EXHIBIT A
FORM 10F-3
WILLIAM BLAIR MUTUAL FUNDS, INC.:
William Blair International Growth Fund (WBIGX)
Record of Securities Purchased
Under the Fund's Rule 10f-3 Procedures
Issuer: Steiner Leisure Limited
-------------------------------------
Date offering commenced: 03/05/99
--------------------------------
Aggregate number and value of securities offered through underwriting or selling
syndicate:
1,500,000 Shares for total value of $42,000,000
- -------------------------------------------------------------------------------
Offering price at close of first day on which any sales were made: $28.375
-------------
Underwriting syndicate's members: ING Baring Furman Selz L.L.C., Raymond James
---------------------------------------------
& Assoc. Inc., and William Blair & Company, LLC.
- -------------------------------------------------------------------------------
Date of purchase: 03/23/99
--------------------------------------------------------------
Number and value of securities purchased (specific as to each series if
applicable): 21,000 Shares
---------------------------------------
For value of $588,000
- --------------------------------------------------------------------------------
Purchase price (net of fees and expenses): $28 per share
-------------------------------------
Maturity date and interest rate (if applicable): N/A
-------------------------------
Underwriter from whom purchased: ING Baring Furman Selz, L.L.C.
-----------------------------------------------
Commission, spread or profit: Price $28, Discount $1.54, Spread 5.5%
-------------------------------------------------
Comparative information regarding commission, spread or profit for similar
underwritings during the same period:
Issuer Price Per Share Underwriting Discount Gross Spread
- ------ --------------- --------------------- ------------
Pervasive Software $17.25 $1.035 6%
CONDITIONS
- ----------
YES NO
--- ---
(1) The securities are either (i) part of an issue
registered under the Securities Act of 1933 that
is being
5
<PAGE>
<TABLE>
<CAPTION>
CONDITIONS
- ----------
YES NO
--- --
<S> <C> <C>
offered to the public or (ii) Eligible Municipal
Securities, (iii) securities sold in an Eligible Foreign
Offering or (iv) securities sold in an Eligible Rule 144A
Offering. X
(2) The purchase price paid did not exceed the price paid by each
other purchaser of securities in that offering or in any
concurrent offering of the securities at the close of the
first day on which any sales are made (except, in the case
of an Eligible Foreign Offering, for any rights to purchase
that are required by law to be granted to existing security
holders of the issuer), or, if a rights offering, the
securities were purchased on or before the fourth day
preceding the day on which the offering terminated. X
(3) In respect of securities other than Eligible Municipal
Securities, the issuer of the securities has been in
continuous operation for not less than three years,
including the operations of any predecessors. X
(4) The underwriting was a firm commitment underwriting. X
(5) The commission, spread or profit was reasonable and fair
in relation to that being received by others for
underwriting similar securities during the same period. X
(6) The amount of such securities purchased by all of the
investment companies managed by the Adviser did not exceed
25% of the principal amount of an offering other than an
Eligible Rule 144A Offering, or, in an Eligible Rule 144A
Offering, 25% of the total of (1) the principal amount of
the offering sold by underwriters or members of the selling
syndicate to QIBs, plus (2) the principal amount in any
concurrent public offering. X
(7) The Adviser was not a direct or indirect participant in
the sale. X
</TABLE>
Approved: /s/ Gregory B. Campbell Date: 3/23/99
------------------------------- -------------------
Board of Directors Review Date: 4/20/99
-----------------------------------
<PAGE>
EXHIBIT B
FORM OF QUARTERLY REPORT ON RULE 10F-3
PURCHASES
During the First quarter of 1999, William Blair Mutual Funds, Inc., William
Blair International Growth Fund (the "Fund"), made the following Rule 10f-3
purchases:
<TABLE>
<CAPTION>
- ------------------------ --------------------- -------------------------
ISSUER DATE OF PURCHASE AMOUNT OF PURCHASE
- ------------------------ --------------------- -------------------------
<S> <C> <C>
Steiner Leisure Ltd 03/23/99 21,000 shares (value of
$588,000)
- ------------------------ --------------------- -------------------------
- ------------------------ --------------------- -------------------------
- ------------------------ --------------------- -------------------------
- ------------------------ --------------------- -------------------------
- -------------------- ----------------------
PURCHASE PRICE BROKER/DEALER
- -------------------- ----------------------
<S> <C>
$28 per share ING Baring Furman
Selz
- -------------------- ----------------------
- -------------------- ----------------------
- -------------------- ----------------------
- -------------------- ----------------------
</TABLE>
The above purchase [purchases] was [were] made from an underwriting syndicate of
which William Blair & Company, a broker-dealer, was a participating member. The
Fund did not purchase the shares directly or indirectly from William Blair &
Company. All shares were acquired from an outside firm and no credit was
received by William Blair & Company. According to Rule 10f-3, all purchases of
securities made pursuant to the rule must be reported to the appropriate and
required parties. Accordingly, we are advising the directors of the Fund of this
[these] purchase [purchases] with this statement and the following disclosure:
1. The securities are either (i) part of an issue registered under the
Securities Act of 1933 that is being offered to the public or (ii) Eligible
Municipal Securities, (iii) securities sold in an Eligible Foreign Offering
or (iv) securities sold in an Eligible Rule 144A Offering.
2. The purchase price paid did not exceed the price paid by each other
purchaser of securities in that offering or in any concurrent offering of
the securities at the close of the first day on which any sales are made
(except, in the case of an Eligible Foreign Offering, for any rights to
purchase that are required by law to be granted to existing security
holders of the issuer), or, if a rights offering, the securities were
purchased on or before the fourth day preceding the day on which the
offering terminated.
3. In respect of securities other than Eligible Municipal Securities, the
issuer of the securities has been in continuous operation for not less than
three years, including the operations of any predecessors.
4. The underwriting was a firm commitment underwriting.
5. The commission, spread or profit was reasonable and fair in relation to
that being received by others for underwriting similar securities during
the same period.
-4-
<PAGE>
6. The amount of such securities purchased by all of the investment companies
managed by the Adviser did not exceed 25% of the principal amount of an
offering other than an Eligible Rule 144A Offering, or, in an Eligible Rule
144A Offering, 25% of the total of (1) the principal amount of the offering
sold by underwriters or members of the selling syndicate to QIBs, plus (2)
the principal amount in any concurrent public offering.
-5-
<PAGE>
WILLIAM BLAIR MUTUAL FUNDS, INC.
RULE 10F-3 PROCEDURES
The Board of Directors of William Blair Mutual Funds, Inc. (the "Fund")
has approved the following procedures to permit the Portfolios of the Fund to
purchase securities from underwriting and selling syndicates in which William
Blair & Company, L.L.C. (the "Adviser") participates as a syndicate member in
compliance with the provisions of Rule 10f-3 under the Investment Company Act of
1940, as amended (the "1940 Act"). The Adviser is directed to comply with these
procedures in effecting any such purchase of securities for the Fund.
DEFINITIONS
For the purpose of these procedures and the attached Form 10f-3, the
following definitions shall apply:
Domestic Issuer means any issuer other than a foreign government, a
national of any foreign country, or a corporation or other organization
incorporated or organized under the laws of any foreign country.
Eligible Foreign Offering means a public offering of securities,
conducted under the laws of a country other than the United States, that meets
the following conditions:
(i) The offering is subject to regulation by a "foreign
financial regulatory authority," as defined in Section 2(a)(50) of the
1940 Act, in such country;
(ii) The securities are offered at a fixed price to all
purchasers in the offering (except for any rights to purchase
securities that are required by law to be granted to existing security
holders of the issuer);
(iii) Financial statements, prepared and audited in
accordance with standards required or permitted by the appropriate
foreign financial regulatory authority in such country, for the two
years prior to the offering, are made available to the public and
prospective purchasers in connection with the offering; and
(iv) If the issuer is a Domestic Issuer, it meets the
following conditions:
(A) It has a class of securities registered
pursuant to Section 12(b) or 12(g) of the Securities
Exchange Act of 1934 (the "1934 Act") or is required
to file reports pursuant to Section 15(d) or the 1934
Act; and
<PAGE>
(B) It has filed all the material required
to be filed pursuant to Section 13(a) or 15(d) of the
1934 Act for a period of at least 12 months
immediately preceding the sale of securities made in
reliance upon Rule 10f-3 (or for such shorter period
that the issuer was required to file such material).
Eligible Municipal Securities means "municipal securities," as defined
in Section 3(a)(29) of the 1934 Act, that have received an investment grade
rating from at least one nationally recognized statistical rating organization
("NRSRO"); provided, that if the issuer of the municipal securities, or the
entity supplying the revenues or other payments from which the issue is to be
paid, has been in continuous operation for less than three years, including the
operation of any predecessors, the securities shall have received one of the
three highest ratings from a NRSRO.
Eligible Rule 144A Offering means an offering of securities that meets
the following conditions:
(i) The securities are offered or sold in transactions
exempt from registration under Section 4(2) of the Securities Act of
1933, Rule 144A under Section 4(2) or Rules 501-508 under Section 4(2);
(ii) The securities are sold to persons that the seller and
any person acting on behalf of the seller reasonably believe to include
"qualified institutional buyers," as defined in Rule 144A(a)(1)
("QIBs"); and
(iii) The seller and any person acting on behalf of the
seller reasonably believe that the securities are eligible for resale
to other QIBs pursuant to Rule 144A.
NRSRO has the same meaning as that set forth in Rule 2a-7(a)(14) under
the 1940 Act.
CONDITIONS
Before making a purchase for a Portfolio of securities from an
underwriting or selling syndicate, the Adviser shall determine whether it is a
manager or participant in the underwriting or selling syndicate, and, if it is,
the Adviser may purchase securities for the Portfolios provided that all the
conditions set forth below (the "Rule 10f-3 Procedures") are met:
1. The securities to be purchased (i) are part of an issue registered
under the Securities Act of 1933 that is being offered to the public;
(ii) Eligible Municipal Securities; (iii) securities sold in an
Eligible Foreign Offering; or (iv) securities sold in an Eligible Rule
144A Offering.
2. The securities are purchased prior to the end of the first day on which
any sales are made, if not offered for subscription upon exercise of
rights, or are purchased on or
<PAGE>
before the fourth day preceding the day on which the rights offering
terminates at a price that is not more than the price paid by each
other purchaser of securities in that offering or in any concurrent
offering of the securities (except, in the case of an Eligible Foreign
Offering, for any rights to purchase that are required by law to be
granted to existing security holders of the issuer). For purposes of
determining whether the securities are being sold in an Eligible Rule
144A Offering and of determining compliance with this Paragraph 2, the
Fund may reasonably rely upon written statements made by the issuer or
a syndicate manager, or by an underwriter or seller of the securities
through which the Portfolios purchase the securities.
3. With respect to an issue registered under the Securities Act of 1933
that is offered to the public or are purchased pursuant to an Eligible
Foreign Offering or an Eligible Rule 144A Offering, the issuer of the
securities to be purchased shall have been in continuous operation for
not less than three years, including the operations of any
predecessors.
4. The securities are offered in a firm commitment underwriting pursuant
to an underwriting or similar agreement under which the underwriters
are committed to purchase all of the securities being offered, except
those purchased by others pursuant to a rights offering, if the
underwriters purchase any of the securities.
5. The commission, spread or profit received or to be received by the
principal underwriters is reasonable and fair compared to the
commission, spread or profit received by other such persons in
connection with the underwriting of similar securities being sold
during a comparable period of time.
6. The amount of securities of any class of such issue to be purchased by
a Portfolio or by, in the aggregate, any two or more investment
companies managed by the Adviser, shall not exceed (i) 25% of the
principal amount of the offering of such class if purchased in an
offering other than an Eligible Rule 144A Offering; or (ii) if
purchased in an Eligible Rule 144A Offering, 25% of the total of (A)
the principal amount of the offering of such class sold by underwriters
or members of the selling syndicate to qualified institutional buyers,
plus (B) the principal amount of the offering of such class in any
concurrent public offering.
7. No Portfolio purchases securities offered directly or indirectly from
an officer, director, member of an advisory board, the Adviser, an
employee of such Portfolio or from a person of which any such officer,
director, member of an advisory board, the Adviser or employee is an
affiliated person; provided that a purchase from a syndicate manager
shall not be deemed to be a purchase from a specific underwriter if (i)
such underwriter does not benefit directly or indirectly from the
transaction; or (ii) in respect to the purchase of Eligible Municipal
Securities, such purchase is not designated as a group sale or
otherwise allocated to the account of any person from whom this section
prohibits purchase.
<PAGE>
8. The Adviser shall (i) maintain a record of each purchase effected
pursuant to the Fund's Rule 10f-3 Procedures on a Form 10f-3 in the
form attached hereto as Exhibit A and (ii) shall present a written
report to the Board of Directors, in the form attached hereto as
Exhibit B, no less frequently than quarterly, summarizing such
information for each purchase during the preceding quarter and
attaching to such report all copies of Form 10f-3 completed during the
quarter.
9. All such transactions shall be reported on the Portfolios' semi-annual
reports on Form N-SAR and a written record of each such transaction,
setting forth (1) from whom the securities were acquired, (2) the
identity of the underwriting syndicate's members, (3) the terms of the
transaction and (4) the information or materials upon which the Board
of Directors based its quarterly determination that all purchases made
during the preceding quarter were effected in compliance with the
Fund's Rule 10f-3 Procedures shall be attached as an exhibit to Form
N-SAR. The information regarding the terms of the transaction shall
include the date of purchase, the maturity date and interest rate of
the securities purchased, the number and value of securities purchased
(specific as to each series if applicable) and the aggregate number and
value of securities offered through the underwriting or selling
syndicate.
10. The Adviser shall maintain and preserve on behalf of the Portfolios
written records in accordance with the provisions of Rule 10f-3(b)(11),
which records shall contain a copy of the Fund's Rule 10f-3 Procedures,
as they may be modified from time to time, and all copies of Form l0f-3
reviewed by the Board of Directors.
11. On an annual basis, the Adviser shall provide a report to the Board
regarding the securities purchased pursuant to these Rule 10f-3
Procedures analyzing the performance of such securities.
Date: October 21, 1997
<PAGE>
EXHIBIT A
FORM 10f-3
WILLIAM BLAIR MUTUAL FUNDS, INC.
William Blair Growth Fund
Record of Securities Purchased
Under the Fund's Rule 10f-3 Procedures
Issuer: GOLDMAN SACHS GROUP
-------------------------------------------------------------------------
Date offering commenced: 5/3/99
Aggregate number and value of securities offered through underwriting or selling
syndicate:
69,000,000 SHARES PRICED AT 53.
- --------------------------------------------------------------------------------
Offering price at close of first day on which any sales were made: 70 3/8
Underwriting syndicate's members: BEAR STEARRNS, CS FIRST BOSTON, DLJ, LEHMAN
BROS, MERRILL LYNCH, JP MORGAN, MSDW, PAINE WEBBER, PRUDENTIAL, SAL SMITH
BARNEY, SC BERNSTEIN, SCHRODER & CO., WILLIAM BLAIR & COMPANY
Date of purchase: 5/3/99
Number and value of securities purchased (specific as to each series
if applicable):
--------------------
22,700 PURCHASED AT 53
Purchase price (net of fees and expenses): 53
Maturity date and interest rate (if applicable): N/A
---------------------------
Underwriter from whom purchased: GOLDMAN SACHS
----------------------------------
Commission, spread or profit: $2.25 GROSS SPREAD
--------------------------------
Comparative information regarding commission, spread or profit for similar
underwritings during the same period:
<TABLE>
<CAPTION>
Issuer Price Per Share Underwriting Discount Gross Spread
- ------ --------------- --------------------- ------------
<S> <C> <C> <C>
Morgan Stanley 23 4% (.91)
CONDITIONS YES NO
- ---------- --- --
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONDITIONS YES NO
- ---------- --- --
<S> <C> <C>
(1) The securities are either (i) part of an issue registered
under the Securities Act of 1933 that is being offered
to the public or (ii) Eligible Municipal Securities,
(iii) securities sold in an Eligible Foreign Offering or
(iv) securities sold in an Eligible Rule 144A Offering. X --
(2) The purchase price paid did not exceed the price paid by
each other purchaser of securities in that offering or in
any concurrent offering of the securities at the close of
the first day on which any sales are made (except, in the
case of an Eligible Foreign Offering, for any rights to
purchase that are required by law to be granted to
existing security holders of the issuer), or, if a rights
offering, the securities were purchased on or before the
fourth day preceding the day on which the offering
terminated. X --
(3) In respect of securities other than Eligible Municipal
Securities, the issuer of the securities has been in
continuous operation for not less than three years,
including the operations of any predecessors. X --
(4) The underwriting was a firm commitment underwriting. X --
(5) The commission, spread or profit was reasonable and fair in
relation to that being received by others for underwriting
similar securities during the same period. X --
(6) The amount of such securities purchased by all of the
investment companies managed by the Adviser did not
exceed 25% of the principal amount of an offering other
than an Eligible Rule 144A Offering, or, in an Eligible
Rule 144A Offering, 25% of the total of (1) the principal
amount of the offering sold by underwriters or members of
the selling syndicate to QIBs, plus (2) the principal
amount in any concurrent public offering. X --
(7) The Adviser was not a direct or indirect participant in
the sale. X --
</TABLE>
Approved: /S/ Gregory B. Campbell Date: 5/3/99
----------------------- ------
Board of Directors Review Date: 7/20/99
<PAGE>
EXHIBIT B
WILLIAM BLAIR MUTUAL FUNDS, INC.
FORM OF QUARTERLY REPORT ON RULE 10F-3
PURCHASES
During the 2nd quarter of 1999, William Blair Mutual Funds, Inc., The William
Blair Growth Fund (the "Fund"), made the following Rule 10f-3 purchases:
<TABLE>
<CAPTION>
- ------------------------ --------------------- -------------------------
ISSUER DATE OF PURCHASE AMOUNT OF PURCHASE
- ------------------------ --------------------- -------------------------
<S> <C> <C>
Goldman Sachs 5/3/99 22,700
- ------------------------ --------------------- -------------------------
- ------------------------ --------------------- -------------------------
- ------------------------ --------------------- -------------------------
- ------------------------ --------------------- -------------------------
- -------------------- ----------------------
PURCHASE PRICE BROKER/DEALER
- -------------------- ----------------------
<S> <C>
53 Goldman Sachs
- -------------------- ----------------------
- -------------------- ----------------------
- -------------------- ----------------------
- -------------------- ----------------------
</TABLE>
The above purchase was made from an underwriting syndicate of which William
Blair & Company, a broker-dealer, was a participating member. The Fund did not
purchase the shares directly or indirectly from William Blair & Company. All
shares were acquired from an outside firm and no credit was received by William
Blair & Company. According to Rule 10f-3, all purchases of securities made
pursuant to the rule must be reported to the appropriate and required parties.
Accordingly, we are advising the directors of the Fund of this [these] purchase
[purchases] with this statement and the following disclosure:
1. The securities are either (i) part of an issue registered under the
Securities Act of 1933 that is being offered to the public or (ii)
Eligible Municipal Securities, (iii) securities sold in an Eligible
Foreign Offering or (iv) securities sold in an Eligible Rule 144A
Offering.
2. The purchase price paid did not exceed the price paid by each other
purchaser of securities in that offering or in any concurrent offering
of the securities at the close of the first day on which any sales are
made (except, in the case of an Eligible Foreign Offering, for any
rights to purchase that are required by law to be granted to existing
security holders of the issuer), or, if a rights offering, the
securities were purchased on or before the fourth day preceding the day
on which the offering terminated.
