<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF
1934
(AMENDMENT NO. ___________)
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/X/ Preliminary proxy statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/ / Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
William Blair Mutual Funds, Inc. (File Nos. 33-17463 and 811-5344)
- - - --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- - - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
/ / $500 per each part to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- - - --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- - - --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
- - - --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- - - --------------------------------------------------------------------------------
(5) Total fee paid:
- - - --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount Previously Paid:
- - - --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- - - --------------------------------------------------------------------------------
(3) Filing Party:
- - - --------------------------------------------------------------------------------
(4) Date Filed:
- - - --------------------------------------------------------------------------------
<PAGE> 2
March 1, 1996
Dear Stockholders,
A meeting of the stockholders of William Blair Mutual Funds, Inc. (the "Fund")
will be held on Tuesday, April 23, 1996 at 9:00 a.m. CST at the offices of the
Fund, 32nd Floor, 222 West Adams Street, Chicago, Illinois, 60606. This
meeting has been called to consider and vote upon several issues which are
important to you as a stockholder.
You are being asked to consider and vote upon new agreements concerning the
management and administrative services provided to the Fund by William Blair &
Company, L.L.C. (the "Adviser") to amend the compensation that the Adviser
receives for those services. Even with the proposed increase, Growth Fund's
expense ratio (.87%) will continue to be lower than the average no-load growth
fund of comparable size (1.00%). The International Growth Fund, the Income
Fund and the Ready Reserves Fund fee agreements are being slightly modified to
obtain uniformity. Whenever investment advisory agreements change or new
agreements are created they must be approved by the Fund's independent
directors and its stockholders.
The Growth Fund's secondary objective of providing a moderate amount of income
increasing over time, if approved by stockholders, will be eliminated because
it conflicts with the practical selection of growth stocks. Stockholders are
being asked to approve a change to the Articles of Incorporation to permit the
dissolution of the Limited Term Tax-Free Fund because the portfolio has not
obtained the critical size necessary for it to compete successfully in the
marketplace. This change would also give the directors the ability in the
future to deal with other such situations without the costs associated with a
stockholders meeting. In addition, Fund stockholders are being asked to change
the Articles of Incorporation to provide the flexibility to create classes of
shares in the future, if the Board determines classes to be appropriate. The
Fund is also electing directors and seeking approval to retain Ernst & Young
LLP as the Fund's auditors. Your directors have unanimously approved the
proposals that you are being asked to vote upon.
Some stockholders will receive multiple proxies because of their ownership of
more than one fund or accounts within a fund. Your vote is important. To
ensure that your vote is counted it is necessary that you:
* Review the attached proposals;
* Complete and sign the enclosed proxy card(s); and
* Return the proxy card(s) in an enclosed postage-paid envelope as
soon as possible. Multiple proxies may be sent in one envelope.
Your prompt response will save your Fund the expense of additional
solicitations. It is our belief that the proposed changes are in the best
interest of stockholders and you are encouraged to vote favorably on all of
them.
Sincerely,
Rocky Barber
President
<PAGE> 3
WILLIAM BLAIR MUTUAL FUNDS, INC.
222 WEST ADAMS STREET, CHICAGO, ILLINOIS 60606
TELEPHONE (312) 364-8000
Notice of William Blair Mutual Funds, Inc.
Special Meeting of Stockholders
April 23, 1996
March 1, 1996
TO THE STOCKHOLDERS OF WILLIAM BLAIR MUTUAL FUNDS, INC.:
Notice is hereby given that a Special Meeting of Stockholders of William
Blair Mutual Funds, Inc. (the "Fund"), including each of the Fund's five
portfolios (Growth Fund, International Growth Fund, Income Fund, Limited Term
Tax-Free Fund and Ready Reserves Fund) (individually, a "Portfolio" and
collectively, the "Portfolios") will be held in the 32nd floor conference room
of William Blair & Company, L.L.C., 222 West Adams Street, Chicago, Illinois,
on Tuesday, April 23, 1996, at 9:30 a.m., Chicago time, for the following
purposes:
1. To elect seven (7) directors to serve for a term beginning May 1, 1996
to continue until their successors shall have been duly appointed or elected.
2. To approve or disapprove an amendment to the Fund's Articles of
Incorporation authorizing the establishment of separate sub-classes of shares.
3. To approve or disapprove an amendment to the Fund's Articles of
Incorporation to permit the redemption, by action of the Board of Directors, of
all or any part of any class, or of all classes, of shares of the Fund.
4. For stockholders of each Portfolio except the Limited Term Tax-Free
Fund, to approve or disapprove a new Management Agreement for the Fund.
5. For stockholders of the Growth Fund only, to approve or disapprove an
amendment to the Portfolio's investment objective in order to eliminate the
secondary investment objective of providing a moderate amount of income
increasing over time.
6. To ratify or reject the selection of Ernst & Young, LLP as independent
auditors for the fiscal year ending December 31, 1996.
7. To transact such other business as may properly come before the Special
Meeting.
Stockholders of record of the Fund at the close of business on February 29,
1996 are entitled to notice of and to vote at the Special Meeting.
IN ORDER TO AVOID DELAY AND ADDITIONAL EXPENSE FOR THE FUND, AND TO ASSURE
THAT YOUR SHARES ARE REPRESENTED, IF YOU DO NOT EXPECT TO BE PRESENT IN PERSON
AT THE SPECIAL MEETING, YOU ARE REQUESTED TO FILL IN, SIGN AND MAIL THE
ENCLOSED PROXY AS PROMPTLY AS POSSIBLE. NO POSTAGE IS REQUIRED IF MAILED IN
THE UNITED STATES.
James L. Barber, Jr.
President
<PAGE> 4
WILLIAM BLAIR MUTUAL FUNDS, INC.
222 WEST ADAMS STREET, CHICAGO, ILLINOIS 60606
TELEPHONE (312) 364-8000
Proxy Statement
March 1, 1996
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of the Fund of proxies to be voted at the Special
Meeting of Stockholders of the Fund to be held on April 23, 1996, and at any
and all adjournments thereof. The cost of preparing, printing and mailing the
enclosed proxy, accompanying notice and proxy statement, and all other costs in
connection with the solicitation of proxies, will be paid by the Fund.
Additional solicitation may be made by letter, telephone or facsimile by
officers of the Fund, by officers or employees of William Blair & Company,
L.L.C., or by dealers and their representatives. THE FUND WILL FURNISH,
WITHOUT CHARGE, A COPY OF ITS DECEMBER 31, 1995 ANNUAL REPORT UPON REQUEST.
WRITE TO THE FUND AT 222 WEST ADAMS STREET, CHICAGO, ILLINOIS 60606, OR CALL
1-800-742-7272.
Shareholder Communications Corporation ("SCC") may be retained to assist in
the solicitation of proxies. If retained, SCC will be paid approximately
$30,000 by the Fund and the Fund will reimburse SCC for its related expenses.
As the meeting date approaches, certain stockholders of the Fund may receive a
call from a representative of SCC if the Fund has not yet received their vote.
Authorization to permit SCC to execute proxies may be obtained by telephone or
electronically transmitted instructions from stockholders of the Fund. Proxies
that are obtained telephonically will be recorded in accordance with the
procedures set forth below. Management of the Fund believes that these
procedures are reasonably designed to ensure that the identity of the
stockholder casting the vote is accurately determined and that the voting
instructions of the stockholder are accurately determined.
SCC has received an opinion of Maryland counsel that addresses the
validity, under the applicable law of the State of Maryland, of authorization
to execute a proxy given orally. The opinion given by Maryland counsel
concludes that a Maryland court would find that there is no Maryland law or
public policy against the acceptance of proxies signed by an orally-authorized
agent, provided it adheres to the procedures set forth below.
In all cases where a telephonic proxy is solicited, the SCC representative
is required to ask the stockholder for such stockholder's full name, address,
social security or employer identification number, title (if the person giving
the proxy is authorized to act on behalf of an entity, such as a corporation),
the number of shares owned and to confirm that the stockholder has received the
Proxy Statement in the mail. If the information solicited agrees with the
information provided to SCC by the Fund, then the SCC representative has the
responsibility to explain the process, read the proposals listed on the proxy
card, and ask the stockholder's instructions on each proposal. The SCC
representative, although he or she is permitted to answer questions about the
process, is not permitted to recommend to the stockholder how to vote, other
than to read any recommendation set forth in the proxy statement. SCC will
record the stockholder's instructions on the card. Within 72 hours, SCC will
send the stockholder a
-1-
<PAGE> 5
letter or mailgram to confirm the shareholder's vote and asking the stockholder
to call SCC immediately if the stockholder's instructions are not correctly
reflected in the confirmation.
On the matters as to which a choice has been specified by the stockholders
on the proxy, the shares of the Fund will be voted accordingly. If no choice
is so specified, the shares of each Portfolio will be voted FOR the election of
the seven nominees for director to be elected by all shareholders as listed in
this Proxy Statement, FOR approval of an amendment to the Fund's Articles of
Incorporation authorizing the establishment of separate sub-classes of shares,
FOR approval of an amendment to the Fund's Articles of Incorporation to permit
the redemption of classes of shares, and FOR ratification of the selection of
Ernst & Young LLP as the Fund's independent auditors. If no choice is so
specified, the shares of each Portfolio except the Limited Term Tax-Free Fund
will be voted FOR approval of the new management agreement, and the shares of
the Growth Fund will be voted FOR approval of an amendment to the Portfolio's
investment objective. Stockholders of any Portfolio who give proxies, whether
in writing or by telephone, may revoke them at any time before they are voted
by filing with the Fund a written notice of revocation, by delivering a duly
executed proxy bearing a later date, or by attending the Special Meeting and
voting in person.
The following table indicates which stockholders are solicited with respect
to each matter:
<TABLE>
<CAPTION>
PORTFOLIO
--------------------------------------------------------------------------
INTERNATIONAL LIMITED TERM READY RESERVES
MATTER GROWTH FUND GROWTH FUND INCOME FUND TAX-FREE FUND FUND
------ ------------ -------------- ------------ --------------- ---------------
<S> <C> <C> <C> <C> <C>
ELECTION OF DIRECTORS X X X X X
AMENDMENT TO THE FUND'S ARTICLES X X X X X
OF INCORPORATION (SUB-CLASSES)
AMENDMENT TO THE FUND'S ARTICLES X X X X X
OF INCORPORATION (REDEMPTION OF
CLASSES)
APPROVAL OF A NEW MANAGEMENT X X X X
AGREEMENT FOR THE FUND
APPROVAL OF AN AMENDMENT TO THE X
GROWTH FUND'S INVESTMENT
OBJECTIVE
RATIFICATION OF SELECTION OF X X X X X
AUDITORS
</TABLE>
A quorum of stockholders is required to take action at the Fund's Special
Meeting. A majority of the shares issued and outstanding and entitled to vote
at the Special Meeting, represented in person or by proxy, will constitute a
quorum. Votes cast by proxy or in person will be tabulated by the inspector of
election, who will determine whether a quorum is present at the Special
Meeting. The inspector of election will treat abstentions and "broker
non-votes" (i.e., shares held by brokers or nominees, typically in "street
name," as to which (i) instructions have not been received from the beneficial
owners or persons entitled to vote and (ii) the broker or nominee does not have
discretionary voting power on a particular matter) as present for the purpose
of determining a quorum.
For purposes of determining the approval of the matters submitted for a
vote, abstentions and broker non-votes will be treated as shares voted against
the approval of such matters. The details of each proposal to be voted upon by
the stockholders of the Fund and the vote required for approval of each
proposal are set forth under the description of each proposal below.
-2-
<PAGE> 6
As of January 31, 1996, there were issued and outstanding shares of common
stock as follows: 31,507,465 of Growth Fund; 7,569,520 of International Growth
Fund; 14,445,204 of Income Fund; 1,909,493 of Limited Term Tax-Free Fund; and
680,159,520 of Ready Reserves Fund. Those persons who were stockholders of
record at the close of business on February 29, 1996 will be entitled to one
vote for each share held.
This Proxy Statement is first being mailed to stockholders of the Fund on
or about March 1, 1996.
1. ELECTION OF DIRECTORS
(ALL PORTFOLIOS)
At the Special Meeting, seven (7) directors are to be elected to serve for
a term beginning May 1, 1996 to continue until their successors shall have been
duly appointed or elected. The table below shows the nominees for election to
the Board, all of whom, other than Ann P. McDermott, currently serve as
directors of the Fund. The affirmative vote of a majority of the shares
present and entitled to vote will be required to elect the directors.
It is the intention of the person named in the enclosed proxy to vote the
shares represented thereby for the election of the nominees listed below unless
the proxy is marked otherwise. Each nominee has agreed to serve as a director
of the Fund if elected; however, should any nominee become unable or unwilling
to accept election, the proxies for the Fund will be voted for one or more
substitute nominees designated by the Fund's present Board of Directors.
The table below shows each nominee's age, principal occupations and other
business affiliations; the year in which each nominee was first elected or
appointed a director of the Fund; and the number of shares of each Portfolio of
the Fund that each nominee beneficially owned as of January 31, 1996. All the
nominees, other than Ann P. McDermott, were last elected to the Board at the
1991 special meeting of stockholders. Ms. McDermott will be standing for
election by the Fund's stockholders for the first time at the Special Meeting.
C. Mathews Dick, Jr., John H. Olwin, M.D., and John W. Straub, all of whom have
served as directors since 1991, will resign as directors effective May 1, 1996.
Edward M. Hoban, a director since 1991, resigned as a director on January 31,
1996. Messrs. Dick, Hoban, Olwin and Straub also served for many years as
directors of Growth Industry Shares, Inc., which merged into the Fund in 1991
and became the Growth Fund. Their service to the Fund, and their lengthy prior
service to Growth Industry Shares, Inc., is greatly appreciated.
-3-
<PAGE> 7
NOMINEES FOR DIRECTOR
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED JANUARY 31, 1996
-------------------------------------------------------------------
YEAR FIRST
NAME, AGE AND PRINCIPAL ELECTED OR READY
OCCUPATION OF NOMINEES AS APPOINTED A GROWTH INTERNATIONAL INCOME LIMITED TERM RESERVES
OF JANUARY 31, 1996 DIRECTOR FUND GROWTH FUND FUND TAX-FREE FUND FUND
---------------------------------- ------------ ------ ------------ -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
*Conrad Fischer (61) 1987 72,549 1,107 29,268 0 1,113,990
Chairman of the Board and
Director of the Fund;
Principal, William Blair &
Company, L.L.C.; Trustee
Emeritus, Chicago Child Care
Society
George Kelm (67) 1987 24,439 76,049 0 0 82,847
Director of the Fund; Retired
Chairman of the Board and
Director, Sahara Coal Company,
Inc. and Sahara Enterprises,
Inc.; Director, Rolf Jensen &
Associates, Inc.; Trustee,
Lawrence University, Newberry
Library, and McCormick
Theological Seminary; President
and Director, Woods Fund of
Chicago; and Member of the
Visiting Committee, University
of Chicago Graduate School of
Social Service Administration
*James M. McMullan (61) 1987 38,498 16,213 4,881 0 400,274
Director of the Fund;
Principal, William Blair &
Company, L.L.C.; Member, NASD
Listing Review Committee and
Director of Securities Industry
Association
Vernon Armour (68) 1987 66,147 11,056 0 0 277,693
Director of the Fund; Private
Investor; Trustee, Illinois
Institute of Technology and
Northwestern Memorial Hospital;
and Director and President,
OTHO S.A. Sprague Memorial
Institute
John B. Schwemm (61) 1990 5,348 0 0 0 30,892
Director of the Fund; Retired
Chairman and Chief Executive
Officer, R.R. Donnelley & Sons
Company, printer; and Director,
USG Corp., a building material
product company and Walgreen
Co., a diversified drug store chain
*W. James Truettner, Jr. (64) 1991 528,107 303,295 68,704 0 2,966,402
Director of the Fund; Senior
Vice President; Principal,
William Blair & Company,
L.L.C.; Director of
International Travel Services
and Roberts Industries, Inc.;
and Trustee, Shenandoah
University
</TABLE>
-4-
<PAGE> 8
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED JANUARY 31, 1996
-------------------------------------------------------------------
YEAR FIRST
NAME, AGE AND PRINCIPAL ELECTED OR READY
OCCUPATION OF NOMINEES AS APPOINTED A GROWTH INTERNATIONAL INCOME LIMITED TERM RESERVES
OF JANUARY 31, 1996 DIRECTOR FUND GROWTH FUND FUND TAX-FREE FUND FUND
---------------------------------- ------------ ------ ------------ -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Ann P. McDermott (56) _____ 0 6,172 0 0 114,392
Trustee, Rush Presbyterian St.
Luke's Medical Center;
Women's Board, Rush
Presbyterian St. Luke's Medical
Center; Honorary Director,
Visiting Nurse Association;
Director, Presbyterian Homes;
Northwestern University,
Women's Board; University of
Chicago, Women's Board;
Director, Washington State
University Foundation
</TABLE>
* "Interested person" as defined in the Investment Company Act of 1940, as
amended, by reason of being a principal of the Fund's investment adviser,
William Blair & Company, L.L.C.
THE FUND'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS
VOTE FOR THE ELECTION OF THE NOMINEES FOR DIRECTOR.
The directors affiliated with William Blair & Company, L.L.C. (the
"Adviser") serve without any compensation from the Fund. Directors who are not
affiliated with the Adviser receive a $4,000 annual retainer for serving as a
director of the Fund and a $2,000 fee plus expenses for attendance at each
Board meeting.
The table below shows, for each director who is not affiliated with the
Adviser, the aggregate compensation paid by the Fund for its fiscal year ended
December 31, 1995.
<TABLE>
<CAPTION>
PENSION OR
RETIREMENT
AGGREGATE BENEFITS RECEIVED ESTIMATED ANNUAL
COMPENSATION FROM AS PART OF FUND BENEFITS UPON TOTAL COMPENSATION
NAME OF DIRECTOR THE FUND* EXPENSES RETIREMENT
<S> <C> <C> <C> <C>
Vernon Armour $9,000 0 0 $9,000
C. Mathews Dick, Jr. $9,000 0 0 $9,000
George Kelm $9,000 0 0 $9,000
John H. Olwin, M.D. $8,500 0 0 $8,500
John B. Schwemm $9,000 0 0 $9,000
John W. Straub $9,000 0 0 $9,000
</TABLE>
* Prior to July 1995 the compensation for attendance at meetings was $500.
Each Fund's Board of Directors has an audit committee composed of Vernon
Armour, George Kelm and John B. Schwemm, directors who are not "interested
persons." The audit committee reviews the work and any recommendations of the
Fund's independent auditors. Based upon such review, it is authorized to make
recommendations to the Board of Directors.
-5-
<PAGE> 9
The audit committee of the Fund held one meeting during the fiscal year ended
December 31, 1995.
The Fund's Board of Directors held four meetings during the fiscal year
ended December 31, 1995. During the last fiscal year, each director attended
75% or more of the Fund's Board meetings, and the committee meetings if a
member thereof. The Fund currently does not have a nominating committee.
The following table sets forth information as of January 31, 1996 with
respect to each executive officer of the Fund, other than executive officers
who are directors and reflected above. Officers of the Fund receive no
compensation from the Fund. The officers of the Fund hold office until their
successors are chosen and qualified. The Fund's officers are elected,
generally on an annual basis, by the Board of Directors.
<TABLE>
<CAPTION>
NAME AGE POSTION AND OFFICES WITH FUND PRINCIPAL OCCUPATIONS
<S> <C> <C> <C>
James L. Barber, Jr. 44 President (since 1987) Principal, William Blair
& Company, L.L.C.
Mark A. Fuller, III 38 Senior Vice President (since 1993) Principal, William Blair
& Company, L.L.C.
Bentley M. Myer 49 Senior Vice President (since 1992) Principal, William Blair
& Company, L.L.C.
Norbert W. Truderung 43 Senior Vice President (since 1992) Principal, William Blair
& Company, L.L.C.
James S. Kaplan 35 Vice President (since 1995) Associate, William Blair
& Company, L.L.C.
John P. Kayser 46 Vice President (since 1994) Principal, William Blair
& Company, L.L.C.
Terence M. Sullivan 52 Vice President (since 1987) Associate, William Blair
& Company, L.L.C.
Walter Rucinski 51 Treasurer (since 1987) Controller, William Blair
& Company, L.L.C.
Janet V. Gassmann 29 Secretary (since 1996) Administrative Assistant, William
Blair & Company, L.L.C.
</TABLE>
On January 31, 1996, directors and executive officers of the Fund as a
group beneficially owned 987,628 shares of Growth Fund, 427,850 shares of
International Growth Fund, 173,016 shares of Income Fund, 5,442 shares of
Limited Term Tax-Free Fund, and 5,676,702 shares of Ready Reserves Fund. As of
January 31, 1996, no person is known to the Fund to have owned beneficially
more than five percent of the shares of any Portfolio of the Fund, except that
the persons indicated in the chart below owned such shares as follows:
-6-
<PAGE> 10
<TABLE>
<CAPTION>
NAME AND ADDRESS NUMBER OF SHARES PERCENT OF PORTFOLIO'S
OF RECORD OWNER OUTSTANDING COMMON STOCK
<S> <C> <C>
GROWTH FUND
William Blair Employees 4,205,284 13.3%
Profit Sharing Plan
222 West Adams Street
Chicago, Illinois 60606
INTERNATIONAL GROWTH FUND
1. Trustees of Purdue University 494,950 6.5%
1034 Freehafen Hall
West Lafayette, IN 47907
2. Purdue Research Foundation 397,591 5.3%
100 Hovde Hall
West Lafayette, IN 49707
LIMITED TERM TAX-FREE FUND
1. John Kaul Greene 111,403 5.8%
c/o William Blair & Co.
222 West Adams Street
Chicago, IL 60606
2. Nancy M. Baird 99,726 5.2%
636 Oak Street
Glen Ellyn, IL 60137
</TABLE>
Section 30(f) of the Investment Company Act of 1940, as amended (the "1940
Act"), and Section 16(a) of the Securities Exchange Act of 1934, as amended,
require the Fund's officers and directors, investment adviser, affiliated
persons of the investment adviser and persons who own more than ten percent of
a registered class of the Fund's equity securities to file forms reporting
their affiliation with the Fund and reports of ownership and changes in
ownership of the Fund's shares with the Securities and Exchange Commission (the
"SEC"). These persons and entities are required by SEC regulation to furnish
the Fund with copies of all Section 16(a) forms they file. Based upon a review
of these forms furnished to the Fund, the Fund believes that during the fiscal
year ended December 31, 1995, there was compliance with all Section 16(a)
filing requirements applicable to the Fund's officers and directors, investment
adviser, and affiliated persons of the investment adviser.
2. AMENDMENT OF ARTICLES OF INCORPORATION (SUB-CLASSES)
(ALL PORTFOLIOS)
William Blair & Company, L.L.C. (the "Adviser") has proposed an amendment
to the Fund's Articles of Incorporation that would allow the Fund to establish
a multiple sub-class structure (the "Sub-Class Structure"). The affirmative
vote of a majority of the outstanding shares entitled to vote at the Special
Meeting is required to approve the amendment to the Fund's Articles of
Incorporation. IF THE AMENDMENT IS APPROVED BY STOCKHOLDERS, THE FUND MAY
ADOPT A SUB-CLASS STRUCTURE AT SOME TIME IN THE FUTURE, ALTHOUGH THERE IS NO
CURRENT PROPOSAL TO DO SO. A Sub-Class Structure would give the Fund greater
flexibility in the
-7-
<PAGE> 11
distribution of Fund shares. Currently the Fund is distributed with no sales
charge and no distribution or service fees. With a Sub-Class Structure, the
Fund could be sold through new distribution channels that require the payment
of compensation or that couple the sale of fund shares with the provision of
certain other services. For example, sub-classes of shares may be created that
would allow investors to purchase such shares (i) with a distribution fee
pursuant to a Rule 12b-1 Plan or an administrative service fee; (ii) with a
conventional front-end sales load, or (iii) without a front-end sales load, but
subject to a contingent deferred sales charge ("CDSC") and a distribution fee
pursuant to a Rule 12b-1 Plan. In addition, the Fund may provide for the
conversion of one sub-class of shares to another sub-class of shares after a
certain period of time. For example, a sub-class of shares that is subject to
a CDSC and a distribution fee that remains outstanding for a certain period of
time may automatically convert to a sub-class of shares that is not subject to
a Rule 12b-1 Plan. On February 13, 1996, the Directors of the Fund considered
and approved, subject to stockholder approval, the amendment of the Fund's
Articles of Incorporation to permit multiple sub-classes of shares. In so
doing, the Directors determined that it is in the best interests of the Fund
and its stockholders to give the Fund the ability to implement a Sub-Class
Structure in order to (i) facilitate distribution of the Fund's shares; (ii)
help maintain the competitive position of the Fund in relation to other funds
that have implemented or are seeking to implement similar distribution
arrangements; (iii) enable investors paying a sales charge to choose the
purchasing option best suited to their individual situations, thereby
encouraging then current stockholders to make additional investments in the
Fund and attracting new investors and assets to the Fund to the benefit of the
Fund and its stockholders; and (iv) permit possible economies of scale through
increased Fund size. By asking stockholders to consider this amendment at this
time, when the Fund is already holding a Special Meeting of stockholders, the
Fund would save the costs of holding a special stockholders meeting at any
future time when a specific proposal may be deemed desirable.
If the Sub-Class Structure were implemented, each share of a sub-class of
the Fund would represent an identical legal interest in the Portfolio of the
Fund and have the same rights, except that each sub-class may bear certain
expenses specifically related to the distribution of its shares and each
sub-class may bear certain other expenses specifically allocated to that
sub-class such as transfer agency fees. Although the legal rights of the
sub-classes of shares would be identical, it is likely that the different
expenses borne by each sub-class would result in different net asset values and
dividends. For example, a sub-class of shares that is subject to a Rule 12b-1
Plan would bear the expenses of a distribution fee that would cause those
shares to have a higher expense ratio and to pay lower dividends than another
sub-class of shares. Each sub-class would have exclusive voting rights with
respect to any plan of distribution adopted for that sub-class pursuant to Rule
12b-1 under the 1940 Act. The sub-classes would also have different exchange
privileges. Upon any liquidation of the Fund or a Portfolio, holders of shares
subject to a Rule 12b-1 Plan might receive less than holders of another
sub-class of shares as a result of higher accumulated expenses from the
distribution fee.
IMPLEMENTATION OF THE SUB-CLASS STRUCTURE WOULD NOT ALTER THE RIGHTS AND
PRIVILEGES OF THE CURRENT STOCKHOLDERS OF THE FUND, NOR WILL IT AFFECT THE NET
ASSET VALUE OF A CURRENT STOCKHOLDER'S INVESTMENT IN THE FUND. By providing
investors with a broader choice as to the method of purchasing shares, the
Directors believe that the Sub-Class Structure, if implemented, may attract
more investment dollars to the Fund, which should benefit the holders of all
sub-classes of shares by facilitating the management of the Fund's Portfolios
and by reducing the operating expense ratios of the Fund.
-8-
<PAGE> 12
If the stockholders approve this proposal, the Articles of Incorporation
will be amended to allow for the creation of separate sub-classes of shares and
to define the effects of the creation of separate sub-classes. The principal
change is that Article V, Section 5.2, entitled "Capital Stock," would be
amended to provide, in part, that "the power of the Board of Directors to
classify or reclassify any of the shares of capital stock shall include,
without limitation, authority to classify or reclassify any such stock into one
or more classes of capital stock and to divide and classify shares of any class
into one or more sub-classes of such class..." By the amendment, stockholders
would be giving the Board of Directors authority, without further stockholder
approval, to create sub-classes of stock in the future with such preferences,
rights and privileges as the Board of Directors determines, subject to the
requirements of the 1940 Act. Specific sub-classes of shares may or may not be
available to any particular group or type of investor.
THE FUND'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS
VOTE FOR APPROVAL OF THE AMENDMENT TO THE FUND'S ARTICLES OF INCORPORATION.
3. AMENDMENT OF ARTICLES OF INCORPORATION (REDEMPTION OF CLASSES) (ALL
PORTFOLIOS)
The Fund's Articles of Incorporation currently permit the Fund to redeem
by Board action issued shares in only limited circumstances where the share
balance in the account falls below a particular minimum amount. In October,
1993, the Maryland legislature amended the Maryland General Corporation Law
(the "Maryland Law") to permit open-end investment companies, such as the Fund,
to redeem issued shares by Board action under a broader range of circumstances
if provided for by its charter (Maryland Law Section 2-310.1(b)). This
flexibility was inserted into the Maryland Law to permit mutual funds to
eliminate classes or sub-classes of shares that may be too small to remain
viable, or too costly to shareholders. The flexibility is given to the Board
to redeem such classes or sub-classes in order to avoid the unnecessary expense
of holding stockholder meetings to eliminate the class or sub-class or the
continual burden of carrying abandoned accounts.
The Board of Directors has approved, subject to the approval by
stockholders of this proposed amendment to the Fund's Articles of
Incorporation, the liquidation of the Limited Term Tax-Free Fund ("Tax-Free
Fund"). The directors believe that, with net assets of $19,320,000 at December
31, 1995, the Tax-Free Fund is too small to obtain efficiencies in investment
operations and a competitive expense ratio. In addition, the Adviser has been
subsidizing the Tax-Free Fund since its inception, and the Adviser has informed
the Board that in the future it will wish to discontinue such subsidies. For
the 1995 fiscal year, the Adviser reimbursed the Tax-Free Fund in the amount of
$214,000. Without such reimbursement, the yield of the Tax-Free Fund would be
lower. Stockholders of the Portfolio have the opportunity to exchange their
shares of the Tax-Free Fund for shares of other Portfolios at net asset value.
Stockholders who choose to exchange their shares for another Portfolio should
read the prospectus disclosure regarding that Portfolio before exchanging
shares. Subject to the approval by stockholders of the amendment to the
Articles of Incorporation, the shares of stockholders who choose not to
exchange or redeem their shares will be liquidated at the current net asset
value upon expiration of the time permitted for exchange, which is currently
set for April 24, 1996 or on such other date determined by the President of the
Fund.
-9-
<PAGE> 13
In the future, other classes of shares may prove too small or too costly,
and the Fund may want to eliminate these classes without the expense of a
stockholder meeting. However, the Adviser does not currently intend to
recommend elimination of any other class of shares. If the Fund were to
eliminate any other class of shares, it would provide notice to stockholders of
such shares.
The Board approved and authorized for submission to stockholders a
proposal to amend the Fund's Articles of Incorporation to provide the Fund with
the ability to redeem issued shares. If the proposal is approved, the
following sentence will be added as section 6.7 to Article VI:
6.7 The Corporation shall, to the extent permitted by applicable law, have
the right at any time to redeem all or any part of any class or
sub-class or of all classes or sub-classes, of shares of the
Corporation, subject to such terms and conditions as the Board of
Directors may from time to time approve.
Approval of this amendment to the Fund's Articles of Incorporation requires the
approval of a majority of the outstanding shares of the Fund.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR
APPROVAL OF THE AMENDMENT TO THE FUND'S ARTICLES OF INCORPORATION.
4. APPROVAL OF NEW MANAGEMENT AGREEMENT
(ALL PORTFOLIOS EXCEPT LIMITED TERM TAX-FREE FUND)
SUMMARY
William Blair & Company, L.L.C., 222 West Adams Street, Chicago, Illinois
60606 (the "Adviser"), has served as the Fund's investment manager and
principal underwriter since the Fund's inception in 1987. For the
International Growth Fund, the Adviser has, in turn, entered into a
sub-management agreement with Framlington Overseas Investment Management
Limited (the "Sub-Adviser") appointing the Sub-Adviser as sub-investment
manager and delegating to the Sub-Adviser the day-to-day management
responsibilities for the Portfolios. The Adviser continuously monitors and
evaluates the performance of the Sub-Adviser. No change would be made to the
sub-management agreement as a result of the new management agreement.
The current Management Agreement between the Fund and the Adviser dated
January 5, 1988 as amended on July 25, 1990, May 1, 1991, October 1, 1992 and
January 24, 1994 (the "Existing Management Agreement"), was first approved by
the Fund's sole stockholder on January 6, 1988. At a meeting held on February
13, 1996, the Board of Directors of the Fund, including all of the directors
who are not "interested persons" of the Fund or the Adviser, unanimously
approved a proposed management agreement between the Fund and the Adviser (the
"Proposed Management Agreement"), subject to approval by the stockholders of
each Portfolio other than the Tax-Free Fund. As discussed above, the Board of
Directors has approved the dissolution of the Tax-Free Fund subject to
stockholder approval of an amendment to the Fund's Articles of Incorporation
permitting the Fund to redeem shares by Board action. Therefore, given that
the Tax-Free Fund is expected to cease operations in the near future,
stockholders of the Tax-Free Fund are not being asked to approve the Proposed
Management Agreement. Under
-10-
<PAGE> 14
the Proposed Management Agreement, the form of which is attached to this Proxy
Statement as Exhibit A, there will be an increase in the management fees paid
by the Fund to the Adviser. Approval of the Proposed Management Agreement as
to any Portfolio requires the affirmative vote of a "majority of the
outstanding voting securities" of that Portfolio. The term "majority of the
outstanding voting securities" (as defined in the 1940 Act) of a Portfolio
means the affirmative vote of the lesser of (1) 67% of the voting securities of
the Portfolio present at the meeting if more than 50% of the outstanding shares
of the Portfolio are present in person or by proxy; or (2) more than 50% of the
outstanding voting securities of the Portfolio.
EXISTING MANAGEMENT AGREEMENT
Pursuant to the terms of the Existing Management Agreement, the Adviser
furnishes to the Portfolios of the Fund complete investment advice and
management and administrative services, as well as office space, personnel and
equipment appropriate and necessary to the Fund's investment, clerical,
bookkeeping and administrative operations, pays the salaries and expenses of
the Fund's executives, provides stockholder and information services, and
permits any of its principals or employees to serve without compensation as
directors or officers of the Fund if elected to such positions. The Fund pays
the expenses of its operations, including the fees and expenses of independent
auditors, counsel, custodian and transfer agent fees, costs of reports and
notices to stockholders, stationery, printing, postage, costs of calculating
net asset value, brokerage commissions or transactions costs, taxes,
registration fees, the fees and expenses of qualifying the Fund and its shares
for distribution under federal and state securities laws and membership dues in
the Investment Company Institute or any similar organization. The Adviser has
agreed to reimburse the Fund for any of a Portfolio's operating expenses
(including the management fee but excluding brokerage commissions or
transaction costs, interests, taxes and extraordinary expenses) that on an
annual basis exceed 1.5% of such Portfolio's average net assets up to
$30,000,000 and 1% of such assets above $30,000,000.
The Existing Management Agreement was most recently approved for
continuation by the Board of Directors on February 13, 1996, provided that the
Existing Management Agreement would be continued as to all Portfolios other
than the Tax-Free Fund only if the stockholders failed to approve the Proposed
Management Agreement. The Existing Management Agreement: (a) may be
terminated by vote of either the Board of Directors or a majority vote of the
outstanding voting shares of the applicable Portfolio (i) without penalty by
either party after 60 days' written notice, or (ii) at any time if the Adviser
is determined to have breached the agreement; and (b) is automatically
terminated in the event of assignment. The Existing Management Agreement may
continue from year to year as to each Portfolio if specifically approved at
least annually by a vote of a majority of the outstanding shares of the
Portfolio or the Board of Directors, including, in either event, the vote of a
majority of the directors who are not interested persons of any party to the
agreement except in their capacity as directors of the Fund, cast in person at
a meeting called for such purpose. Listed below are the management fees
payable under the Existing Management Agreement for each Portfolio.
-11-
<PAGE> 15
EXISTING MANAGEMENT FEE SCHEDULES
<TABLE>
<CAPTION>
ANNUAL NET ASSETS AT
MANAGEMENT 12/31/95
PORTFOLIO FEE RATE APPLICABLE ASSETS ($000)
--------- -------------- ----------------- --------------
<S> <C> <C> <C>
Growth Fund .625% 0 - $75 million 363,036
.50% over $75 million
International 1.10% 0 - $100 million 89,762
Growth Fund .95% over $100 million
Income Fund .25% 0 - $100 million 147,370
.20% $100 - $250 million
.15% over $250 million
(plus 5% of gross income
earned by the Portfolio)
Limited Term .25% 0 - $250 million 19,320
Tax-Free Fund .20% over $250 million
(plus 7% of gross income
earned by the Portfolio)
Ready Reserves Fund .625% 0 - $250 million 703,993
.600% $250 - $500 million
.550% $500 million - $1 billion
.500% $1 - $3 billion
.450% $3 - $5 billion
.400% over $5 billion
</TABLE>
The Existing Management Agreement provides that the Adviser shall not be
liable for any error of judgment or of law, or for any loss suffered by the
Fund in connection with the matters to which the agreement relates, except a
loss resulting from willful misfeasance, bad faith or gross negligence on the
part of the Adviser in the performance of its obligations and duties, or by
reason of its reckless disregard of its obligations and duties under the
agreement.
PROPOSED MANAGEMENT AGREEMENT
The terms of the Proposed Management Agreement differ materially from
those of the Existing Management Agreement only as to the management fees
payable to the Adviser. The table below shows the management fees that will
apply to the Portfolios if the Proposed Management Agreement is approved by
stockholders.
-12-
<PAGE> 16
PROPOSED MANAGEMENT FEE SCHEDULES
<TABLE>
<CAPTION>
ANNUAL
MANAGEMENT APPLICABLE
PORTFOLIO FEE RATE ASSETS
--------- ------------ ------------
<S> <C> <C>
Growth Fund .75% All
International 1.10% 0 - $250 million
Growth Fund 1.00% over $250 million
Income Fund .25% 0 - $250 million
.20% over $250 million
(plus 5% of the gross income earned
by the Portfolio)
Ready Reserves Fund .625% 0 - $250 million
.600% $250 - $500 million
.575% $500 million - $2.5 billion
.550%` over $2.5 billion
</TABLE>
If approved, the Proposed Management Agreement will become effective on
May 1, 1996 and will continue in effect until April 30, 1997, and thereafter
will continue from year to year, subject to annual approval by the Board of
Directors in the same manner as the Existing Management Agreement. The
Proposed Management Agreement terminates if assigned (as defined in the 1940
Act) and may be terminated without penalty, upon sixty (60) days' written
notice, by either party and the Fund may effect termination with respect to any
Portfolio by action of the Board of Directors or by vote of a majority of the
outstanding voting securities of such Portfolio. The description of the
Existing Management Agreement and the Proposed Management Agreement set forth
above are qualified in their entirety by reference to the form of Proposed
Management Agreement, attached hereto as Exhibit A.
EFFECT OF THE NEW MANAGEMENT FEE STRUCTURE
Set forth below is a chart showing the dollar amount of management fees
paid during the Fund's past fiscal year under the Existing Management Agreement
and the amount of fees that would have been paid under the Proposed Management
Agreement. The chart also shows the percentage differences of the fees that
would have been paid under the Proposed Management Agreement from the amounts
paid under the Existing Management Agreement. Also set forth below is a
comparative fee table showing the amount of fees and expenses paid by the Fund
under the Existing Management Agreement as a percentage of average net assets
and the amount of fees and expenses stockholders would have paid if the fees
under the Proposed Management Agreement had been in effect during the past
fiscal year. The information in the table is an estimate based upon actual
expenses for the fiscal year ended December 31, 1995.
-13-
<PAGE> 17
DOLLAR AMOUNT OF MANAGEMENT FEES PAID
(fiscal year ended December 31, 1995)
<TABLE>
<CAPTION>
INTERNATIONAL LIMITED TERM
GROWTH FUND GROWTH FUND INCOME FUND TAX-FREE FUND READY RESERVES FUND
------------------- ------------------- ------------------- -------------- ----------------
EXISTING PROPOSED EXISTING PROPOSED EXISTING PROPOSED EXISTING PROPOSED EXISTING PROPOSED
AGREEMENT AGREEMENT AGREEMENT AGREEMENT AGREEMENT AGREEMENT AGREEMENT AGREEMENT AGREEMENT AGREEMENT
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Amount of Fees Paid or
that Would Have Been
Paid. . . . . . . . . . . $1,561,478 2,213,451 886,557 886,557 868,277 892,572 $0 N/A 3,613,26 3,637,884
Percentage Difference from
Amount Paid under Existing
Management Agreement . . . N/A 41.7% N/A 0% N/A 2.8% N/A N/A N/A .7%
</TABLE>
<TABLE>
<CAPTION>
COMPARATIVE FEE TABLE
GROWTH FUND INCOME FUND READY RESERVES FUND
-------------------- -------------------- ------------------------
EXISTING PROPOSED EXISTING PROPOSED EXISTING PROPOSED
FEE FEE FEE FEE FEE FEE
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Annual Fund operating expenses
(as a percentage of average
daily net assets)
-Management advisory fee .529% .750% .584% .601% .602% .606%
-Other expenses .121 .121 .097 .097 .116 .116
-12b-1 fee None None None None None None
-Total Fund operating expenses .650% .871% .681% .698% .718% .722%
</TABLE>
<TABLE>
<CAPTION>
Example: PORTFOLIO 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
The example Growth Fund
illustrates the
expenses on a Exiting Fee $7 $21 $36 $81
$1,000 investment
under the existing Proposed Fee $9 $28 $48 $108
and proposed fees
and expenses stated Income Fund
above assuming (1)
a 5% annual return Existing Fee $7 $22 $38 $85
and (2) redemption
at the end of each
time period. Proposed Fee $7 $22 $39 $87
Ready Reserves Fund
Existing Fee $7 $23 $40 $90
Proposed Fee $7 $23 $40 $90
</TABLE>
The purpose of this example is to assist the shareholder in understanding
the various costs and expenses that an investor in a Portfolio may bear
directly or indirectly. THE EXAMPLE SHOULD NOT BE CONSIDERED TO BE A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR
LESS THAN THOSE SHOWN.
The International Growth Fund has not been included in the comparative fee
table, above, because the fee schedule for the International Growth Fund under
the Proposed Management Agreement, if adopted, would not result in an increased
management fee paid to the Adviser on behalf of the Portfolio based upon the
International Growth Fund's current level of net assets. The first tier
management fee rate of 1.10% under the Existing Management Agreement would not
increase under the Proposed Management Agreement, but the rate would be
applicable to the first $250 million average net assets; whereas, under the
Existing Management Agreement,
-14-
<PAGE> 18
the ratio is applicable to only the first $100 million of average net assets.
Given that the International Growth Fund has net assets of less than $100
million (currently $89 million), the increase in the asset breakpoint would
have no effect, currently, on the total management fee paid to the Adviser on
behalf of the Portfolio. However, the management fee rate under the Proposed
Management Agreement would be greater than that payable to the Adviser under
the Existing Management Agreement if the Portfolio's assets were to exceed $100
million.
The proposed fee for the Growth Fund represents both an increase in the
amount of fee and the elimination of any breakpoints in fee rate as the fund
grows larger. Given the mix of investments made by the Growth Fund, which
includes significant holdings in small capitalization companies, the Adviser
has told the Board that the costs of providing investment advice do not decline
appreciably as the size of the portfolio increases. Therefore, the Adviser
does not enjoy significant economies of scale that can be passed along to
stockholders through breakpoints in advisory fees. In addition, the Adviser
has stated that the investment advisory fee for the Growth Fund was established
at a time when there was less emphasis on small capitalization companies, and
that in order to support the more extensive research necessary to invest
successfully in a portfolio heavily weighted with small capitalization
companies, a greater advisory fee is necessary.
FACTORS CONSIDERED BY THE DIRECTORS
The directors, including a majority of the directors who are not
"interested persons" of the Fund or the Adviser, determined that the terms of
the Proposed Management Agreement are fair and reasonable and that approval of
the Proposed Management Agreement on behalf of each Portfolio is in the best
interests of the Fund. In considering the Proposed Management Agreement, the
Board of Directors was provided with and reviewed a variety of detailed
information, including that appearing in this Proxy Statement. Among other
matters that the Board considered were the following:
1. The services and personnel that the Adviser has provided.
2. Investment performance of the Fund's Portfolios, both in particular and
relative to competitive funds.
3. The investment management fees and expense ratios of the Fund and
competitive funds.
4. The effect of the proposed fee and anticipated economies on the Fund's
expense ratios.
5. The effect of the proposed fee levels on the Adviser's income.
6. The desirability of providing the Adviser with ongoing incentives to
strive for continuing improvement in services and to maintain its
competitive position in retaining and attracting high quality staff.
Based upon its evaluation of the materials presented, the Board of
Directors, including all the directors who are not "interested persons" of the
Fund or the Adviser, concluded that the Proposed Management Agreement was fair
and reasonable and in the best interests of the Fund's
-15-
<PAGE> 19
stockholders and unanimously approved, and voted to recommend to the
stockholders of the Fund that they approve, the proposal to adopt the Proposed
Management Agreement.
THE FUND'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE
FOR APPROVAL OF THE PROPOSED MANAGEMENT AGREEMENT.
5. AMENDMENT OF THE GROWTH FUND'S INVESTMENT OBJECTIVE
(GROWTH FUND ONLY)
Currently, the Growth Fund's principal investment objective is to provide
long-term appreciation of capital by investing in well-managed companies in
growing industries, and its secondary investment objective is to provide a
moderate amount of income increasing over time. On February 13, 1996, the
Board of Directors adopted, subject to approval by the Growth Fund's
stockholders, the Adviser's recommendation to amend the Growth Fund's
investment objective in order to delete the secondary investment objective of
providing a moderate amount of income increasing over time. Approval of the
amendment of the Portfolio's investment objective requires the affirmative vote
of a "majority of the outstanding voting securities" of the Portfolio. The
term "majority of the outstanding voting securities" (as defined in the 1940
Act) of the Portfolio means the affirmative vote of the lesser of (1) 67% of
the voting securities of the Portfolio present at the meeting if more than 50%
of the outstanding shares of the Portfolio are present in person or by proxy;
or (2) more than 50% of the outstanding voting securities of the Portfolio.
The Adviser believes that eliminating the Portfolio's secondary objective
of providing income is appropriate. Many investment opportunities, especially
in the small capitalization market, offer the potential for capital
appreciation, but are not likely to provide significant income, if any. By
eliminating income as a secondary objective, the Adviser would be able to
concentrate without limitation on the objective of long-term appreciation of
capital.
THE FUND'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE
FOR APPROVAL OF THE AMENDMENT OF THE GROWTH FUND'S INVESTMENT OBJECTIVE.
6. SELECTION OF INDEPENDENT AUDITORS
The members of the Fund's Board of Directors who are not "interested
persons" of the Fund have unanimously selected Ernst & Young LLP, independent
public accountants, as independent auditors, to audit the books and records of
the Fund for the fiscal year ending December 31, 1996. Ernst & Young LLP has
served the Fund in this capacity since the Fund was organized and has no direct
or indirect financial interest in the Fund except as independent auditors. The
selection of Ernst & Young LLP as independent auditors of each Fund is being
submitted to the shareholders for ratification, which requires the affirmative
vote of a majority of the shares of the Fund present and entitled to vote on
the matter. A representative of Ernst & Young LLP is expected to be present at
the Special Meeting and will be available to respond to any appropriate
questions raised at the Special Meeting and to make a statement if he or she
wishes.
THE FUND'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE
FOR THE RATIFICATION OF THE SELECTION OF INDEPENDENT AUDITORS.
-16-
<PAGE> 20
ADDITIONAL INFORMATION ABOUT THE FUND'S INVESTMENT ADVISER
The Adviser is a limited liability company, the affairs of which are
controlled by its principals, none of whom owns more than 25% of the firm. The
Chief Executive Officer of the Adviser is E. David Coolidge, III. The
Adviser's Executive Committee is comprised of Harvey H. Bundy, III, E. David
Coolidge, III, Conrad Fischer, Edgar D. Jannotta, John P. Kayser, Richard P.
Kiphart, Albert J. Lacher, James D. McKinney and James M. McMullan. The
address of each of the above-named principals is 222 West Adams Street,
Chicago, Illinois 60606.
Messrs. Fischer, McMullan and Truettner, current directors of the Fund, are
"interested persons" of the Adviser. The remaining directors of the Fund are
not "interested persons" of the Adviser. The officers of the Fund who are
officers, principals or employees of the Adviser are named on page 6 of this
proxy statement.
ALLOCATION OF PORTFOLIO TRANSACTIONS
Decisions on the Fund's portfolio transactions (including the decision to
buy or sell, the appropriate price, allocation of brokerage, use of a broker as
agent or dealer as principal, and negotiation of commissions) are normally made
by the Adviser except that decisions on portfolio transactions for the
International Growth Fund are made by the Sub-Adviser, subject to the
monitoring of the Adviser. In purchasing and selling portfolio securities, the
Fund seeks to obtain the most favorable overall result, taking into account the
net price, the method of execution and research services provided by the
broker. Such research services include economic forecasts and analytical,
narrative and statistical reports on industries and companies for consideration
by the Fund and the Adviser's or Sub-Adviser's other clients.
Selection of a broker for a particular portfolio transaction depends upon
many factors, some of which are subjective and which include the net price, the
confidentiality, reliability, integrity, the size and nature of the transaction
and the market in which it is to occur, and any research or other services that
the broker has provided. The Adviser or Sub-Adviser determines the overall
reasonableness of brokerage commissions, and of premiums and discounts on
principal transactions (which do not involve commissions), by review of
comparable trades for the Adviser's or Sub-Adviser's other clients and in the
market generally. If more than one broker is believed to be equally qualified
to effect a portfolio transaction, the Adviser or Sub-Adviser may assign the
transaction to a broker that has furnished research services; but the Adviser
and Sub-Adviser have no agreement, formula or policy as to allocation of
brokerage. The Fund does not ordinarily market its shares through brokers, and
any sales of the Fund's shares by a broker would be neither a qualifying nor
disqualifying factor in allocating brokerage.
The Fund may pay to brokers that provide research services to the Adviser
or Sub-Adviser a commission higher than another broker might have charged if it
is determined that the commission is reasonable in relation to the value of the
brokerage and research services that are provided, viewed in terms of either
the particular transaction or the Adviser's or Sub-Adviser's overall
responsibility to its advisory accounts. The extent to which such commissions
exceed commissions solely for execution cannot be determined; but such research
services, which are involved in portfolio transactions for the Fund and for the
Adviser's or Sub-Adviser's other advisory accounts, can be of benefit both to
the Fund and such other accounts. The value of research services that are
provided by brokers who handle portfolio transactions for the Fund
-17-
<PAGE> 21
cannot be precisely determined, and such services are supplemental to the
Adviser's or Sub-Adviser's own efforts, which are undiminished thereby. The
Adviser and Sub-Adviser do not believe that their expenses are reduced by
reason of such services. Transactions in over-the-counter securities are
generally executed as principal trades with primary market makers, except where
it is believed that a better combination of price and execution could otherwise
be obtained.
The investment decisions for the Fund are reached independently from those
for other accounts managed by the Adviser or Sub-Adviser. Such other accounts
also may make investments in the same type of instruments or securities as the
Fund at the same time as the Fund. When two or more accounts have funds
available for investment in similar instruments, available investments are
allocated as to amount in a manner considered equitable to each account. In
some cases this procedure may affect the size or price of the position
obtainable for the Fund. However, it is the opinion of the Board of Directors
that the benefits available because of the Adviser and Sub-Adviser
organizations outweigh any disadvantages that may arise from exposure to
simultaneous transactions.
No portfolio transactions are executed for the Fund with or through the
Adviser or Sub-Adviser or any affiliated broker-dealer of the Adviser or
Sub-Adviser. The Fund may purchase securities from other members of an
underwriting syndicate of which the Adviser or an affiliated broker-dealer is a
participant, but only under conditions set forth in applicable rules of the
Securities and Exchange Commission and in accordance with procedures adopted
and reviewed periodically by the Board of Directors.
STOCKHOLDER PROPOSALS
Since the Fund is not required to, nor does it intend to, hold regular
meetings of its stockholders, the anticipated date of the next special
stockholder meeting cannot be provided. Any stockholder who wishes to submit a
proposal for consideration at the next meeting of stockholders, when and if
such a meeting is called, should submit such proposal promptly to the Fund.
GENERAL
Management does not intend to present and does not have reason to believe
that any other items of business will be presented at the Fund's Special
Meeting. However, if other matters are properly presented to the Special
Meeting for a vote, the proxies will be voted upon such matters in accordance
with the judgment of the person acting under the proxies.
Failure of a quorum to be present at the Special Meeting will necessitate
adjournment and will subject the Fund to additional expense. The person named
in the enclosed proxy may also move for an adjournment of the Special Meeting
to permit further solicitation of proxies with
-18-
<PAGE> 22
respect to any of the proposals if he determines that adjournment and further
solicitation is reasonable and in the best interests of the stockholders.
IF YOU CANNOT BE PRESENT IN PERSON, YOU ARE REQUESTED TO FILL IN, SIGN AND
RETURN THE ENCLOSED PROXY PROMPTLY. NO POSTAGE IS REQUIRED IF MAILED IN THE
UNITED STATES.
James L. Barber, Jr.
President
-19-
<PAGE> 23
EXHIBIT A
MANAGEMENT AGREEMENT
AGREEMENT made as of this first day of May, 1996, by and between WILLIAM
BLAIR MUTUAL FUNDS, INC., a Maryland corporation (the "Fund"), and WILLIAM
BLAIR & COMPANY, L.L.C., an Illinois limited liability company (the "Manager").
WHEREAS, the Fund is an open-end, diversified management investment company
registered under the Investment Company Act of 1940, the shares of common
stock, $.001 per value per share ("Shares"), of which are registered or are to
be registered under the Securities Act of 1933; and
WHEREAS, the Fund is authorized to issue Shares in separate series with
each such series representing the interests in a separate portfolio of
securities and other assets; and
WHEREAS, the Fund currently offers Shares in four portfolios, designated
the Growth Fund, the International Growth Fund, the Income Fund and the Ready
Reserves Fund, herein referred to as the "Existing Portfolios", together with
any other Fund portfolios which may be established later and served by the
Manager hereunder, being herein referred to collectively as the "Portfolios"
and individually referred to as a "Portfolio"; and
WHEREAS, the Fund desires at this time to retain the Manager to render
investment advisory and management services to the Existing Portfolios, and the
Manager is willing to render such services;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
contained, it is hereby agreed by and between the parties hereto as follows:
1. Employment; Services. The Fund hereby employs the Manager to act as the
adviser for the Existing Portfolios and other Portfolios hereunder and to
manage the investment and reinvestment of the assets of such Portfolios in
accordance with applicable investment objectives, policies and restrictions,
and to administer its affairs to the extent requested by and subject to the
supervision of the Board of Directors of the Fund for the period and upon the
terms herein set forth. The investment of funds shall be subject to all
applicable restrictions of the Articles of Incorporation and By-Laws of the
Fund as may from time to time be in force.
The Manager accepts such employment and agrees during such period to render
such services, to furnish office facilities and equipment and clerical,
bookkeeping and administrative services for the Fund, to permit any of its
principals or employees to serve without compensation
A-1
<PAGE> 24
as directors or officers of the Fund if elected to such positions, and to
assume the obligations herein set forth for the compensation herein provided.
The Manager shall for all purposes herein provided be deemed to be an
independent contractor and, unless otherwise expressly provided or authorized,
shall have no authority to act for or represent the Fund in any way or
otherwise be deemed an agent of the Fund. It is understood and agreed that the
Manager, by separate agreements with the Fund, may also serve the Fund in other
capacities.
2. Additional Portfolios. In the event that the Fund establishes one or
more portfolios other than the Existing Portfolios with respect to which it
desires to engage the Manager to render investment advisory and management
services hereunder, it shall notify the Manager in writing. If the Manager is
willing to render such services and the Fund and the Manager agree upon the
management fee rates (including breakpoints) to be payable by such portfolio or
portfolios, the Manager shall notify the Fund in writing, whereupon such
portfolio or portfolios shall become a Portfolio or Portfolios hereunder.
3. Management Fee. For the services and facilities described in Section 1,
the Fund will pay to the Manager a management fee based upon an annual
percentage of the average daily net assets of each Portfolio, as follows:
a. For the Growth Fund:
.75% of average daily net assets.
b. For the International Growth Fund:
1.10% of the first $250 million of average daily net assets; plus
1.00% of average daily net assets over $250 million.
c. For the Income Fund:
.25% of the first $250 million of average daily net assets; plus
.20% of average daily net assets over $250 million; plus
5.0% of the gross income earned by the Portfolio.
d. For the Ready Reserves Fund:
.625% of the first $250 million of average daily net assets; plus
A-2
<PAGE> 25
.600% of the next $250 million of average daily net assets; plus
.575% of the next $2,000 million of average daily net assets; plus
.550% of average daily net assets over $2,500 million.
The fee payable under this Agreement shall be calculated and accrued for each
business day by applying the appropriate annual rates to the net assets of the
Portfolio as of the close of the preceding business day, and dividing the sum
so computed by the number of business days in the fiscal year. The fee for a
given month shall be paid on the first business day of the following month.
For the month and year in which this Agreement becomes effective or terminates,
there shall be an appropriate proration on the basis of the number of days that
the Agreement is in effect during the month and year, respectively. The
services of the Manager to the Fund under this Agreement are not to be deemed
exclusive, and the Manager shall be free to render similar services or other
services to others so long as its services hereunder are not impaired thereby.
4. Expenses. In addition to the fee of the Manager, the Fund shall assume
and pay expenses for services rendered by a custodian for the safekeeping of
the Fund's securities or other property, for keeping its books for account, for
any other charges of the custodian, and for calculating the net asset value of
the Fund as provided in the prospectus of the Fund. The Manager shall not be
required to pay and the Fund shall assume and pay the charges and expenses of
its operations, including but not limited to compensation of the directors
(other than those affiliated with the Manager), charges and expenses of
independent auditors, of legal counsel, of any transfer or dividend
disbursement agent, any registrar of the Fund, costs of acquiring and disposing
of portfolio securities, interest, if any, on obligations incurred by the Fund,
costs of share certificates and of reports, membership dues in the Investment
Company Institute or any similar organization, reports and notices to
shareholders, stationery, printing, postage, other like miscellaneous expenses
and all taxes and fees payable to federal, state or other government agencies
on account of the registration of securities issued by the Fund, filing of
corporate documents or otherwise. The Fund shall not pay or incur any
obligation for any expenses for which the Fund intends to seek reimbursement
from the Manager as herein provided without first obtaining the written
approval of the Manager. The Manager shall arrange, if desired by the Fund,
for principals or employees of the Manager to serve, without compensation from
the Fund, as directors, officers or agents of the Fund if duly elected or
appointed to such positions and subject to their individual consent and to any
limitations imposed by law.
If expenses borne by the Fund for any Portfolio which the Manager manages
in any fiscal year (including the Manager's fee, but excluding interest, taxes,
fees incurred in acquiring and disposing of portfolio securities and, to the
extent permitted, extraordinary expenses) exceed
A-3
<PAGE> 26
1.5% of the first $30,000,000 of average daily net assets of such Portfolio and
1% of average daily net assets of the Portfolio over $30,000,000, the Manager
will reduce its fee or reimburse the Portfolio for any excess. If for any
month the expenses of a Portfolio properly chargeable to the income account
shall exceed 1/12 of the percentage of average net assets allowable as
expenses, the payment to the Manager with respect to such Portfolio for that
month shall be reduced so that the total net expense will not exceed such
percentage. As of the end of the Fund's fiscal year, however, the foregoing
computations and payments shall be readjusted so that the aggregate
compensation payable to the Manager for the year is equal to the percentage set
forth in Section 3 hereof of the average net asset values as determined as
described herein throughout the fiscal year, diminished to the extent necessary
so that the total of the aforementioned expense items shall not exceed the
expense limitation. The aggregate of repayments, if any, by the Manager to the
Portfolio for the year shall be the amount necessary to limit the said net
expense to said percentage. Notwithstanding anything in the foregoing to the
contrary, the Manager shall not be obligated to reimburse the Portfolio in an
amount exceeding its advisory fee for the period received from such Portfolio.
The net asset value for each Portfolio shall be calculated in accordance
with the provisions of the Fund's prospectus or at such other time or times as
the directors may determine in accordance with the provisions of the Investment
Company Act of 1940. On each day when the net asset value is not calculated,
the net asset value of a share of a Portfolio shall be deemed to be the net
asset value of such a share as of the close of business on the last day on
which such calculation was made for the purpose of the foregoing computations.
5. Affiliations. Subject to applicable statutes and regulation, it is
understood that directors, officers or agents of the Fund are or may be
interested in the Manager as principals, agents or otherwise, and that the
principals and agents of the Manager may be interested in the Fund otherwise
than as a director, officer or agent.
6. Limitation of Liability of Manager. The Manager shall not be liable for
any error of judgment or of law or for any loss suffered by the Fund in
connection with the matters to which this Agreement relates, except loss
resulting from willful misfeasance, bad faith or gross negligence on the part
of the Manager in the performance of its obligations and duties or by reason of
its reckless disregard of its obligations and duties under this Agreement.
7. Term; Termination; Amendment. This Agreement shall become effective
with respect to the Existing Portfolios on the date hereof and shall remain in
full force until April 30, 1997, unless sooner terminated as hereinafter
provided. This Agreement shall continue in force from year to year thereafter
with respect to the Existing Portfolios and each other Portfolio to which the
Agreement shall have become applicable, but only so long as such continuance is
specifically approved for each Portfolio at least annually in the manner
required by the Investment Company Act of 1940 and the rules and regulations
thereunder; provided,
A-4
<PAGE> 27
however, that if the continuation of this Agreement is not approved for a
Portfolio, the Manager may continue to serve in such capacity for such
Portfolio in the manner and to the extent permitted by the Investment Company
Act of 1940 and the rules and regulations thereunder.
This Agreement shall automatically terminate in the event of its assignment
and may be terminated at any time without the payment of any penalty by the
Fund or by the Manager on sixty (60) days written notice to the other party.
The Fund may effect termination with respect to any Portfolio by action of the
Board of Directors or by vote of a majority of the outstanding voting
securities of such Portfolio.
This Agreement may also be terminated with respect to any Portfolio at any
time, without the payment of any penalty, by the Board of Directors or by vote
of a majority of the outstanding voting securities of such Portfolio, in the
event that it shall have been established by a court of competent jurisdiction
that the Manager or any officer or principal of the Manager has taken any
action which results in a breach of the covenants of the Manager set forth
herein.
The terms "assignment" and "vote of a majority of the outstanding voting
securities" shall have the meanings set forth in the Investment Company Act of
1940 and the rules and regulations thereunder.
Termination of this Agreement shall not affect the right of the Manager to
receive payments on any unpaid balance of the compensation described in Section
3 earned prior to such termination.
As to each Portfolio of the Fund, this Agreement may be amended only by an
instrument in writing signed by the party against which enforcement of the
amendment is sought. An amendment of this Agreement affecting a Portfolio
hereunder shall not be effective until approved by (i) vote of the holders of a
majority of the outstanding voting securities of the Portfolio; and (ii) a
majority of those Directors of the Fund who are not parties to this Agreement
or "interested persons" (as defined in the Investment Company Act of 1940) of
any party to this Agreement, cast in person at a meeting called for the purpose
of voting on such approval.
8. Severability. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder shall
not be thereby affected.
9. Notice. Any notice under this Agreement shall be in writing, addressed
and delivered or mailed, postage prepaid, to the other party at such address as
such other party may designate for the receipt of such notice.
A-5
<PAGE> 28
10. Applicable Law. This Agreement shall be construed in accordance
with applicable federal law and the laws of the State of Illinois.
IN WITNESS WHEREOF, the Fund and the Manager have caused this Agreement to
be executed as of the day and year first above written.
WILLIAM BLAIR MUTUAL FUNDS, INC.
By:______________________________
ATTEST:
_____________________________________
WILLIAM BLAIR & COMPANY, L.L.C.
By:______________________________
ATTEST:
_____________________________________
A-6
<PAGE> 29
PROXY BALLOT
WILLIAM BLAIR MUTUAL FUNDS, INC.
GROWTH FUND
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 23, 1996
The undersigned hereby appoints Conrad Fischer with full power of substitution,
Proxy for the undersigned to represent and vote the shares of common stock of
the undersigned at the Special Meeting of Stockholders of William Blair Mutual
Funds, Inc. to be held on April 23, 1996 or any adjournment thereof:
1. Election of Directors:
Nominees: Vernon Armour, Conrad Fischer, George Kelm, Ann P. McDermott,
James M. McMullan, John B. Schwemm and W. James Truettner, Jr.
2. Approval of an amendment to the Fund's Articles of Incorporation
authorizing the establishment of separate sub-classes of shares.
3. Approval of an amendment to the Fund's Articles of Incorporation to permit
the redemption, by Board action, of classes of shares.
4. Approval of Proposed Management Agreement.
5. Approval of an amendment to the Growth Fund's investment objective in
order to eliminate the secondary investment objective of providing a
moderate amount of income increasing over time.
6. Ratification of the selection of Ernst & Young LLP as independent
accountants for the fiscal year ending December 31, 1996.
7. In his discretion, the Proxy is authorized to vote upon such other
business as may properly come before the Special Meeting.
You are encouraged to specify your choices by marking the appropriate boxes
ON THE REVERSE SIDE. If you do not mark any boxes, your Proxy will be
voted in accordance with the Board of Directors' recommendations. Please
sign, date and return this Proxy card promptly using the enclosed envelope.
SEE REVERSE SIDE GF
<PAGE> 30
The Board of Directors recommends a vote FOR all nominees and proposals:
<TABLE>
<S> <C> <C> <C>
1. Election of Directors: [ ]FOR [ ]WITHHOLD authority [ ]WITHHOLD authority to vote
(See reverse for nominees) all nominees to vote for all nominees for nominees indicated below:
___________________________
</TABLE>
INSTRUCTIONS:
To grant authority to vote FOR ALL nominees, mark the box on the left above
OR do not mark any box above.
To WITHHOLD authority to vote FOR ALL nominees, mark the box in the middle
above.
To WITHHOLD authority to vote FOR ANY ONE OR MORE of the nominees, mark the
box on the right above AND write each nominee's name in the space provided.
<TABLE>
<S> <C> <C> <C>
2. Approval of an amendment to the Fund's Articles of Incorporation FOR AGAINST ABSTAIN
authorizing the establishment of separate sub-classes of shares. [ ] [ ] [ ]
3. Approval of an amendment to the Fund's Articles of Incorporation FOR AGAINST ABSTAIN
to permit the redemption, by Board action, of classes of shares. [ ] [ ] [ ]
4. Approval of Proposed Management Agreement. FOR AGAINST ABSTAIN
[ ] [ ] [ ]
5. Approval of an amendment to the Growth Fund's investment objective FOR AGAINST ABSTAIN
in order to eliminate the secondary investment objective of [ ] [ ] [ ]
providing a moderate amount of income increasing over time.
6. Ratification of the selection of Ernst & Young LLP as independent FOR AGAINST ABSTAIN
accountants for the fiscal year ending December 31, 1996. [ ] [ ] [ ]
7. In his discretion, the Proxy is authorized to vote upon such other
business as may properly come before the Special Meeting.
</TABLE>
The shares to which this Proxy relates will be voted as specified. If no
specification is made, such shares will be voted for the election of Directors
and for the proposals set forth on this Proxy.
Please be sure to sign and date this Proxy.
Stockholder sign here_______________ Date___________________
Co-owner sign here__________________ Date___________________
NOTE: Please sign exactly as your name appears on this
Proxy. If signing for estates, trusts or corporations, title
or capacity should be stated. If shares are held jointly,
each holder should sign.
GF
<PAGE> 31
PROXY BALLOT
WILLIAM BLAIR MUTUAL FUNDS, INC.
INTERNATIONAL GROWTH FUND
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 23, 1996
The undersigned hereby appoints Conrad Fischer with full power of substitution,
Proxy for the undersigned to represent and vote the shares of common stock of
the undersigned at the Special Meeting of Stockholders of William Blair Mutual
Funds, Inc. to be held on April 23, 1996 or any adjournment thereof:
1. Election of Directors:
Nominees: Vernon Armour, Conrad Fischer, George Kelm, Ann P. McDermott,
James M. McMullan, John B. Schwemm and W. James Truettner, Jr.
2. Approval of an amendment to the Fund's Articles of Incorporation
authorizing the establishment of separate sub-classes of shares.
3. Approval of an amendment to the Fund's Articles of Incorporation to
permit the redemption, by Board action, of classes of shares.
4. Approval of Proposed Management Agreement.
5. Ratification of the selection of Ernst & Young LLP as independent
accountants for the fiscal year ending December 31, 1996.
6. In his discretion, the Proxy is authorized to vote upon such other
business as may properly come before the Special Meeting.
You are encouraged to specify your choices by marking the appropriate boxes
ON THE REVERSE SIDE. If you do not mark any boxes, your Proxy will be
voted in accordance with the Board of Directors' recommendations. Please
sign, date and return this Proxy card promptly using the enclosed envelope.
SEE REVERSE SIDE IGF
<PAGE> 32
The Board of Directors recommends a vote FOR all nominees and proposals:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1. Election of Directors: [ ]FOR [ ]WITHHOLD authority [ ]WITHHOLD authority to vote
(See reverse for nominees) all nominees to vote for all nominees for nominees indicated below:
___________________________
</TABLE>
INSTRUCTIONS:
To grant authority to vote FOR ALL nominees, mark the box on the left above
OR do not mark any box above.
To WITHHOLD authority to vote FOR ALL nominees, mark the box in the middle
above.
To WITHHOLD authority to vote FOR ANY ONE OR MORE of the nominees, mark the
box on the right above AND write each nominee's name in the space provided.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
2. Approval of an amendment to the Fund's Articles of Incorporation FOR AGAINST ABSTAIN
authorizing the establishment of separate sub-classes of shares. [ ] [ ] [ ]
3. Approval of an amendment to the Fund's Articles of Incorporation FOR AGAINST ABSTAIN
to permit the redemption, by Board action, of classes of shares. [ ] [ ] [ ]
4. Approval of Proposed Management Agreement. FOR AGAINST ABSTAIN
[ ] [ ] [ ]
5. Ratification of the selection of Ernst & Young LLP as FOR AGAINST ABSTAIN
independent accountants for the fiscal year ending December 31, [ ] [ ] [ ]
1996.
6. In his discretion, the Proxy is authorized to vote upon such other
business as may properly come before the Special Meeting.
</TABLE>
The shares to which this Proxy relates will be voted as specified. If no
specification is made, such shares will be voted for the election of Directors
and for the proposals set forth on this Proxy.
Please be sure to sign and date this Proxy.
Stockholder sign here_____________________ Date___________________
Co-owner sign here________________________ Date___________________
NOTE: Please sign exactly as your name appears on this Proxy. If signing for
estates, trusts or corporations, title or capacity should be stated. If
shares are held jointly, each holder should sign.
IGF
<PAGE> 33
PROXY BALLOT
WILLIAM BLAIR MUTUAL FUNDS, INC.
INCOME FUND
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 23, 1996
The undersigned hereby appoints Conrad Fischer with full power of substitution,
Proxy for the undersigned to represent and vote the shares of common stock of
the undersigned at the Special Meeting of Stockholders of William Blair Mutual
Funds, Inc. to be held on April 23, 1996 or any adjournment thereof:
1. Election of Directors:
Nominees: Vernon Armour, Conrad Fischer, George Kelm, Ann P. McDermott,
James M. McMullan, John B. Schwemm and W. James Truettner, Jr.
2. Approval of an amendment to the Fund's Articles of Incorporation
authorizing the establishment of separate sub-classes of shares.
3. Approval of an amendment to the Fund's Articles of Incorporation to
permit the redemption, by Board action, of classes of shares.
4. Approval of Proposed Management Agreement.
5. Ratification of the selection of Ernst & Young LLP as independent
accountants for the fiscal year ending December 31, 1996.
6. In his discretion, the Proxy is authorized to vote upon such other
business as may properly come before the Special Meeting.
You are encouraged to specify your choices by marking the appropriate boxes
ON THE REVERSE SIDE. If you do not mark any boxes, your Proxy will be
voted in accordance with the Board of Directors' recommendations. Please
sign, date and return this Proxy card promptly using the enclosed envelope.
SEE REVERSE SIDE IF
<PAGE> 34
The Board of Directors recommends a vote FOR all nominees and proposals:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1. Election of Directors: [ ]FOR [ ]WITHHOLD authority [ ]WITHHOLD authority to vote
(See reverse for nominees) all nominees to vote for all nominees for nominees indicated below:
___________________________
</TABLE>
INSTRUCTIONS:
To grant authority to vote FOR ALL nominees, mark the box on the left
above OR do not mark any box above.
To WITHHOLD authority to vote FOR ALL nominees, mark the box in the
middle above.
To WITHHOLD authority to vote FOR ANY ONE OR MORE of the nominees, mark
the box on the right above AND write each nominee's name in the space
provided.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
2. Approval of an amendment to the Fund's Articles of Incorporation FOR AGAINST ABSTAIN
authorizing the establishment of separate sub-classes of shares. [ ] [ ] [ ]
3. Approval of an amendment to the Fund's Articles of Incorporation FOR AGAINST ABSTAIN
to permit the redemption, by Board action, of classes of shares. [ ] [ ] [ ]
4. Approval of Proposed Management Agreement. FOR AGAINST ABSTAIN
[ ] [ ] [ ]
5. Ratification of the selection of Ernst & Young LLP as FOR AGAINST ABSTAIN
independent accountants for the fiscal year ending December 31, [ ] [ ] [ ]
1996.
6. In his discretion, the Proxy is authorized to vote upon such
other business as may properly come before the Special Meeting.
</TABLE>
The shares to which this Proxy relates will be voted as specified. If no
specification is made, such shares will be voted for the election of Directors
and for the proposals set forth on this Proxy.
Please be sure to sign and date this Proxy.
Stockholder sign here_____________________ Date___________________
Co-owner sign here________________________ Date___________________
NOTE: Please sign exactly as your name appears on this Proxy. If signing for
estates, trusts or corporations, title or capacity should be stated. If
shares are held jointly, each holder should sign.
IF
<PAGE> 35
PROXY BALLOT
WILLIAM BLAIR MUTUAL FUNDS, INC.
LIMITED TERM TAX-FREE FUND
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 23, 1996
The undersigned hereby appoints Conrad Fischer with full power of substitution,
Proxy for the undersigned to represent and vote the shares of common stock of
the undersigned at the Special Meeting of Stockholders of William Blair Mutual
Funds, Inc. to be held on April 23, 1996 or any adjournment thereof:
1. Election of Directors:
Nominees: Vernon Armour, Conrad Fischer, George Kelm, Ann P. McDermott,
James M. McMullan, John B. Schwemm and W. James Truettner, Jr.
2. Approval of an amendment to the Fund's Articles of Incorporation
authorizing the establishment of separate sub-classes of shares.
3. Approval of an amendment to the Fund's Articles of Incorporation to permit
the redemption, by Board action, of classes of shares.
4. Ratification of the selection of Ernst & Young LLP as independent
accountants for the fiscal year ending December 31, 1996.
5. In his discretion, the Proxy is authorized to vote upon such other
business as may properly come before the Special Meeting.
You are encouraged to specify your choices by marking the appropriate boxes
ON THE REVERSE SIDE. If you do not mark any boxes, your Proxy will be
voted in accordance with the Board of Directors' recommendations. Please
sign, date and return this Proxy card promptly using the enclosed envelope.
SEE REVERSE SIDE LTF
<PAGE> 36
The Board of Directors recommends a vote FOR all nominees and proposals:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1. Election of Directors: [ ]FOR [ ]WITHHOLD authority [ ]WITHHOLD authority to vote
(See reverse for nominees) all nominees to vote for all nominees for nominees indicated below:
___________________________
</TABLE>
INSTRUCTIONS:
To grant authority to vote FOR ALL nominees, mark the box on the left
above OR do not mark any box above.
To WITHHOLD authority to vote FOR ALL nominees, mark the box in the
middle above.
To WITHHOLD authority to vote FOR ANY ONE OR MORE of the nominees, mark
the box on the right above AND write each nominee's name in the space
provided.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
2. Approval of an amendment to the Fund's Articles of Incorporation FOR AGAINST ABSTAIN
authorizing the establishment of separate sub-classes of shares. [ ] [ ] [ ]
3. Approval of an amendment to the Fund's Articles of Incorporation FOR AGAINST ABSTAIN
to permit the redemption, by Board action, of classes of shares. [ ] [ ] [ ]
4. Ratification of the selection of Ernst & Young LLP as independent FOR AGAINST ABSTAIN
accountants for the fiscal year ending December 31, 1996. [ ] [ ] [ ]
5. In his discretion, the Proxy is authorized to vote upon such other
business as may properly come before the Special Meeting.
</TABLE>
The shares to which this Proxy relates will be voted as specified. If no
specification is made, such shares will be voted for the election of Directors
and for the proposals set forth on this Proxy.
Please be sure to sign and date this Proxy.
Stockholder sign here______________ Date___________________
Co-owner sign here_________________ Date___________________
NOTE: Please sign exactly as your name appears on this Proxy. If signing
for estates, trusts or corporations, title or capacity should be stated. If
shares are held jointly, each holder should sign.
LTF
<PAGE> 37
PROXY BALLOT
WILLIAM BLAIR MUTUAL FUNDS, INC.
READY RESERVES FUND
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 23, 1996
The undersigned hereby appoints Conrad Fischer with full power of substitution,
Proxy for the undersigned to represent and vote the shares of common stock of
the undersigned at the Special Meeting of Stockholders of William Blair Mutual
Funds, Inc. to be held on April 23, 1996 or any adjournment thereof:
1. Election of Directors:
Nominees: Vernon Armour, Conrad Fischer, George Kelm, Ann P. McDermott,
James M. McMullan, John B. Schwemm and W. James Truettner, Jr.
2. Approval of an amendment to the Fund's Articles of Incorporation
authorizing the establishment of separate sub-classes of shares.
3. Approval of an amendment to the Fund's Articles of Incorporation to
permit the redemption, by Board action, of classes of shares.
4. Approval of Proposed Management Agreement.
5. Ratification of the selection of Ernst & Young LLP as independent
accountants for the fiscal year ending December 31, 1996.
6. In his discretion, the Proxy is authorized to vote upon such other
business as may properly come before the Special Meeting.
You are encouraged to specify your choices by marking the appropriate boxes
ON THE REVERSE SIDE. If you do not mark any boxes, your Proxy will be
voted in accordance with the Board of Directors' recommendations. Please
sign, date and return this Proxy card promptly using the enclosed envelope.
SEE REVERSE SIDE RRF
<PAGE> 38
The Board of Directors recommends a vote FOR all nominees and proposals:
<TABLE>
<CAPTION>
<S> <S> <C> <C> <C>
1. Election of Directors: [ ]FOR [ ]WITHHOLD authority [ ]WITHHOLD authority to vote
(See reverse for nominees) all nominees to vote for all nominees for nominees indicated below:
___________________________
</TABLE>
INSTRUCTIONS:
To grant authority to vote FOR ALL nominees, mark the box on the left above
OR do not mark any box above.
To WITHHOLD authority to vote FOR ALL nominees, mark the box in the middle
above.
To WITHHOLD authority to vote FOR ANY ONE OR MORE of the nominees, mark the
box on the right above AND write each nominee's name in the space provided.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
2. Approval of an amendment to the Fund's Articles of Incorporation FOR AGAINST ABSTAIN
authorizing the establishment of separate sub-classes of shares. [ ] [ ] [ ]
3. Approval of an amendment to the Fund's Articles of Incorporation FOR AGAINST ABSTAIN
to permit the redemption, by Board action, of classes of shares. [ ] [ ] [ ]
4. Approval of Proposed Management Agreement. FOR AGAINST ABSTAIN
[ ] [ ] [ ]
5. Ratification of the selection of Ernst & Young LLP as FOR AGAINST ABSTAIN
independent accountants for the fiscal year ending December 31, [ ] [ ] [ ]
1996.
6. In his discretion, the Proxy is authorized to vote upon such other
business as may properly come before the Special Meeting.
</TABLE>
The shares to which this Proxy relates will be voted as specified. If no
specification is made, such shares will be voted for the election of Directors
and for the proposals set forth on this Proxy.
Please be sure to sign and date this Proxy.
Stockholder sign here_____________________ Date___________________
Co-owner sign here________________________ Date___________________
NOTE: Please sign exactly as your name appears on this Proxy. If signing for
estates, trusts or corporations, title or capacity should be stated. If
shares are held jointly, each holder should sign.
RRF
