EXHIBIT 77.0(a)
WILLIAM BLAIR FUNDS
Rule 10f-3 Procedures
The Board of Trustees of William Blair Funds (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
(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 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 Trustees, 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 Trustees 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 Trustees.
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 FUNDS (the "Fund")
Small Cap Fund
Record of Securities Purchased
Under the Fund's Rule 10f-3 Procedures
Issuer: Neoforma.com, Inc.
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Date offering commenced: January 24, 2000
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Aggregate number and value of securities offered through underwriting or selling
syndicate:
7,000,000
Offering price at close of first day on which any sales were made: $52.375
------
Underwriting syndicate's members: Merrill Lynch; Bear, Stearns & Co.;
FleetBoston Robertson Stephens, Inc.; William Blair & Company; Barrington
Research Associates, Inc.; Dain Rauscher Inc.; E*OFFERING Corp.; Gruntal & Co.;
W.R. Hambrecht + Co.; Needham & Co. Inc.; U.s. Bancorp Piper Jaffray Inc.;
Wedbush Morgan Securities.
Date of purchase: January 24, 2000
--------------------------------------------
Number and value of securities purchased (specific as to each series if
applicable): 10,000 shares for $130,000 ----
Purchase price (net of fees and expenses): $130,000
-----------------------------
Maturity date and interest rate (if applicable): n/a
-----------------------------
Underwriter from whom purchased: Merrill Lynch
---------------------------------
Commission, spread or profit: 7.0% gross spread
---------------------------------
Comparative information regarding commission, spread or profit for similar
underwritings during the same period:
see attached summary
[OBJECT OMITTED]
Issuer Price Per Share Underwriting Discount Gross Spread
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Conditions Yes No
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(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_ ___
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(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_ ___
--------------------------------------------------------------------------------
Approved: Date:
-------------------------- ---------------------
Board of Trustees Review Date:
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EXHIBIT B
WILLIAM BLAIR FUNDS
Small Cap Growth Fund
Form of Quarterly Report on Rule 10f-3 Purchases
During the first quarter of 2000, William Blair Funds Small Cap Growth Fund (the
"Fund"), made the following Rule 10f-3 purchases:
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Issuer Date of Purchase Amount of Purchase Purchase Price Broker/Dealer
------------- ---------------- ------------------- -------------- --------------
Neoforma.Com 01/24/00 10,000 $13.00 Merrill Lynch
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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 trustees 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.
