WILLIAM BLAIR MUTUAL FUNDS INC, PRES14A, 1999-09-24

WILLIAM BLAIR MUTUAL FUNDS INC
PRES14A, 1999-09-24

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<PAGE> 1

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

INFORMATION REQUIRED IN PROXY STATEMENT
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
[ ] Definitive Proxy Statement RULE 14a-6(e)(2))

[ ] Definitive Additional Materials

[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12

WILLIAM BLAIR MUTUAL FUNDS, INC.
- --------------------------------------------------------------------------------
(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] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.

(1) Title of each class of securities to which transaction applies:

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(2) Aggregate number of securities to which transaction applies:

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(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):

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(4) Proposed maximum aggregate value of transaction:

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(5) Total fee paid:

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[ ] Fee paid previously with preliminary materials:

[ ] 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:

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(2) Form, Schedule or Registration Statement No.:

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(4) Date Filed:

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<PAGE> 2

WILLIAM BLAIR MUTUAL FUNDS, INC.

IMPORTANT INFORMATION
FOR SHAREHOLDERS
OF WILLIAM BLAIR READY RESERVES FUND -- CLASS N SHARES

William Blair Mutual Funds, Inc. (the "Company") will hold a special meeting of
shareholders on November 30, 1999. It is important for you to vote on the issues
described in this Proxy Statement. We recommend that you read the Proxy
Statement in its entirety; the explanations it includes will help you decide on
the issues.

TIME IS OF THE ESSENCE . . . YOUR PARTICIPATION IN THIS PROCESS IS IMPORTANT!
EVEN IF YOU WANT TO VOTE FOR ALL THE ITEMS, BE SURE TO COMPLETE AND RETURN YOUR
PROXY CARD PROMPTLY TO HELP THE COMPANY AVOID THE NECESSARY AND ADDITIONAL
EXPENSE OF SENDING FOLLOW-UP LETTERS TO ENSURE A QUORUM.

Not all issues contained in the Proxy Statement pertain to all shareholders. THE
Q&A BELOW SUMMARIZES THE ISSUES WHICH REQUIRE A VOTE BY THE SHAREHOLDERS OF THE
READY RESERVES FUND CLASS N SHARES. A different cover letter is being provided
to shareholders of other Funds or other share classes.

Q. WHY AM I BEING ASKED TO VOTE?

A: Mutual funds are required to obtain shareholders' votes for certain types
of changes, like those included in this Proxy Statement. You have a right
to vote on these changes.

Q. WHAT ISSUES AM I BEING ASKED TO VOTE ON?

A: The proposals include: (1) the reorganization of the Company from a
Maryland corporation into a Delaware business trust (including an
amendment to the Company's Articles of Incorporation to permit actions,
including the reorganization, to be approved by the affirmative vote of a
majority of the outstanding shares of the Company); (2) changes to the
investment objective of the Fund; (3) the approval of standardized
fundamental investment restrictions for the Fund; (4) approval of a Rule
12b-1 distribution plan for Class N shares; and (5) approval of an
amended management agreement. In addition, you will be asked to elect
directors of the Company and to ratify the selection of independent
auditors.

Q. WHY ARE THE COMPANY'S ARTICLES OF INCORPORATION BEING AMENDED?

A: Under Maryland law, certain actions, including a reorganization, require
approval of a "super-majority" of shareholders (i.e., a greater
proportion than a majority of the outstanding shares of the Company).
Maryland law, however, provides that a corporation's Articles of
Incorporation may provide for a lesser vote for such actions as long as
the vote is not lower than a majority of the corporation's outstanding
shares. The Company's current articles of incorporation do not have such
a provision. The amendment to the Articles of Incorporation will permit
certain actions, including the approval of the reorganization, to be
approved by a majority of the outstanding shares of the Company.

Q. WHY IS THE COMPANY BEING REORGANIZED INTO A DELAWARE BUSINESS TRUST?

A:Currently, the Company is organized as a Maryland corporation. As a
Delaware business trust, the Company will have a greater amount of
flexibility to conduct its business. Except for any changes approved by
shareholders at this meeting, the reorganization itself would not change
your Fund's investment objective or policies. The change to a Delaware
business trust will neither cause changes to the Company's directors,
officers, investment adviser, or auditors, nor the Company's current
contracts, including the Company's contract with its investment adviser.
<PAGE> 3

Q. HOW WOULD THE CHANGE IN THE FUND'S INVESTMENT OBJECTIVE AFFECT ME AS A FUND
SHAREHOLDER?

A:The proposed change to the investment objective of the Fund is not
intended to alter the way in which the Fund is managed. The purpose of the
proposed objectives is to clarify and more concisely describe the Fund's
goal.

Q. WHY ARE THE FUND'S "FUNDAMENTAL RESTRICTIONS" BEING CHANGED?

A:Every mutual fund has certain investment restrictions that can be changed
only with the approval of its shareholders. These are referred to as
"fundamental" investment restrictions. In the past, these restrictions
were adopted to reflect regulatory, business, or industry conditions that
no longer exist or are no longer necessary. Adopting a revised
standardized list of fundamental restrictions across all Funds will help
provide operational efficiencies and make it easier to monitor compliance
with these restrictions. In addition, converting the remaining fundamental
restrictions to nonfundamental restrictions will allow the Board to
analyze and approve changes to the Fund's investment restrictions without
additional shareholder approval, which will further the goal of
standardizing investment restrictions and will avoid costs associated with
future shareholder meetings.

Q. WHAT IS THE RULE 12B-1 DISTRIBUTION PLAN I AM BEING ASKED TO APPROVE?

A:Rule 12b-1 (the "Rule") under the Investment Company Act of 1940 provides
the conditions pursuant to which a mutual fund may bear the expenses of
distributing its shares. Under the Rule 12b-1 Distribution Plan (the
"Distribution Plan"), the Fund will be charged a distribution fee computed
at the annual rate of 0.35% of the average daily net assets attributable
to the Class N shares of the Fund. The Fund's Distributor, William Blair &
Company, L.L.C. will receive this fee and may use it to pay various broker
dealers for shareholder service and distribution expenses.

Q. WILL THE DISTRIBUTION PLAN RESULT IN AN INCREASE IN THE EXPENSE RATIO OF THE
READY RESERVES FUND?

A:No. To offset the new 0.35% annual distribution fee, the Fund's Adviser,
William Blair & Company, L.L.C., has agreed to lower the management fee
for the Ready Reserves Fund by a corresponding 0.35% annually, contingent
upon approval of the Distribution Plan. Thus, the combined effect of the
new distribution fee and the lower management fee will result in no change
in the overall fees being charged to the Fund. In other words, the
previous management fee of the Fund is being restructured into two
components, without affecting the overall fees being charged.

Q. WHY IS THE FUND RESTRUCTURING ITS FEES AND INTRODUCING A DISTRIBUTION PLAN?

A:Until now the William Blair Ready Reserves Fund has been sold primarily to
brokerage and investment management clients of William Blair & Company. In
the future, it is intended that the Fund would be sold by other broker
dealers as well. Such brokers require compensation for distributing the
Fund's shares and for providing shareholder services to their clients.
Since such payments may be made pursuant to a Rule 12b-1 Distribution
Plan, the Fund's fees are being restructured to conform to the Rule.

By enabling the Fund to be distributed more widely through other broker
dealers, current shareholders may benefit from the potential growth in
assets of the Fund, which may help achieve further scale economies and
lower the Fund's expenses. In addition, the creation of a new
Institutional Share Class ("I Shares") -- which is not subject to the
Distribution Plan -- is designed to enable the Fund to attract
institutional shareholders, thus further growing the Fund's assets to the
benefit of all shareholders.
<PAGE> 4

Q. WHY ARE READY RESERVES FUND SHAREHOLDERS BEING ASKED TO APPROVE AN AMENDED
MANAGEMENT AGREEMENT?

A:Contingent upon shareholder approval of the Distribution Plan,
shareholders are being asked to approve an amended Management Agreement
which reduces the management fees in the amount of 0.35% annually. This
decrease in management fees is intended to offset the imposition of the
shareholder/distribution services fee under the Distribution Plan.

Q. HOW DO I VOTE MY SHARES?

A:You may vote in person at the special meeting of shareholders or simply
sign and return the enclosed Proxy Card. You may also vote by telephone or
by facsimile as described below in the Proxy Statement. If we do not
receive your proxy card, an employee of William Blair & Company, L.L.C.,
the Company's adviser and distributor, or the Company's agent, D.F. King &
Co., Inc., may contact you to request that you cast your vote.

Q. WHOM DO I CALL IF I HAVE QUESTIONS ABOUT THE PROXY STATEMENT?

A:Call the Company's agent's toll-free number: 1-800-769-5414.

Q. I'M A SMALL INVESTOR. WHY SHOULD I BOTHER TO VOTE?

A:Your vote makes a difference. If numerous shareholders just like you fail
to vote their proxies, your Fund may not receive enough votes to go
forward with its meeting. If this happens, we'll need to mail proxies
again -- a costly proposition for your Fund!

Q. WHO GETS TO VOTE?

A:Any person who owned shares of a Fund on the "record date," which was
October 1, 1999, gets to vote -- even if the investor later sold the
shares. Shareholders are entitled to cast one vote for each Fund share
owned on the record date.

Q. HOW CAN I VOTE?

A:You can vote in any one of four ways:

- By telephone, with a toll-free call to the number listed on your proxy
card.

- By mail, with the enclosed ballot.

- In person at the meeting.

- By facsimile at (212) 269-2796.

Q. HOW DO THE MEMBERS OF THE BOARD OF DIRECTORS SUGGEST THAT I VOTE?

A:After careful consideration, the Board of Directors has unanimously
approved these proposals. The Board recommends that you read the enclosed
materials carefully and vote FOR all proposals.
<PAGE> 5

WILLIAM BLAIR MUTUAL FUNDS, INC.

IMPORTANT INFORMATION FOR SHAREHOLDERS
OF THE FOLLOWING WILLIAM BLAIR FUNDS:
GROWTH FUND -- CLASS N

Not all issues contained in the Proxy Statement pertain to all shareholders. THE
Q&A BELOW SUMMARIZES THE ISSUES WHICH REQUIRE A VOTE BY THE SHAREHOLDERS OF THE
CLASS N SHARES OF THE GROWTH FUND. A different cover letter is being provided to
shareholders of other Funds or other share classes.

Q. WHY AM I BEING ASKED TO VOTE?

A:Mutual funds are required to obtain shareholders' votes for certain types
of changes, like those included in this Proxy Statement. You have a right
to vote on these changes.

Q. WHAT ISSUES AM I BEING ASKED TO VOTE ON?

A:The proposals include: (1) the reorganization of the Company from a
Maryland corporation into a Delaware business trust (including an
amendment to the Company's Articles of Incorporation to permit actions,
including the reorganization, to be approved by the affirmative vote of a
majority of the outstanding shares of the Company); (2) changes to the
investment objective of the Fund; (3) the approval of standardized
fundamental investment restrictions for the Fund; and (4) approval of a
Rule 12b-1 distribution plan for Class N shares. In addition, you will be
asked to elect directors of the Company and to ratify the selection of
independent auditors.

Q. WHY ARE THE COMPANY'S ARTICLES OF INCORPORATION BEING AMENDED?

A:Under Maryland law, certain actions, including a reorganization, require
approval of a "super-majority" of shareholders (i.e., a greater proportion
than a majority of the outstanding shares of the Company). Maryland law,
however, provides that a corporation's Articles of Incorporation may
provide for a lesser vote for such actions as long as the vote is not
lower than a majority of the corporation's outstanding shares. The
Company's current articles of incorporation do not have such a provision.
The amendment to the Articles of Incorporation will permit certain
actions, including the approval of the reorganization, to be approved by a
majority of the outstanding shares of the Company.

Q. WHY IS THE COMPANY BEING REORGANIZED INTO A DELAWARE BUSINESS TRUST?

Q. HOW WOULD THE CHANGE IN THE FUND'S INVESTMENT OBJECTIVE AFFECT ME AS A FUND
SHAREHOLDER?

A:The proposed change to the investment objective of the Fund is not
intended to alter the way in which the Fund is managed. The purpose of the
proposed objective is to clarify and more concisely describe the Fund's
goal.

Q. WHY ARE THE FUND'S "FUNDAMENTAL RESTRICTIONS" BEING CHANGED?

Q. WHAT IS THE RULE 12B-1 DISTRIBUTION PLAN I AM BEING ASKED TO APPROVE?

A:Rule 12b-1 (the "Rule") under the Investment Company Act of 1940 provides
the conditions pursuant to which a mutual fund may bear the expenses of
distributing its shares. Under the Rule 12b-1 Distribution Plan (the
"Distribution Plan"), the Class N shares of the Growth Fund will be
charged a distribution fee computed at the annual rate of 0.25% of the
average daily net assets attributable to the Class N shares of the Fund.
The Fund's Distributor, William Blair & Company, L.L.C. will receive this
fee and may use it to pay various broker dealers for shareholder service
and distribution expenses.

Q. WHY IS THE FUND INTRODUCING A DISTRIBUTION PLAN FOR CLASS N SHARES?

A:Current Class N shareholders of the Fund have purchased shares through a
so-called "fund supermarket" or no-transaction-fee ("NTF") program through
a variety of broker dealers. These programs have become quite popular with
many investors, who can purchase funds from a wide variety of different
fund companies while enjoying the convenience of receiving a single
account statement and having a single point of contact. These supermarkets
generally also provide numerous value-added services to investors, such as
telephone assistance, websites, and newsletters.

These services are being provided to shareholders with "no transaction
fee." However, these broker dealers generally require a payment of up to
0.35% annually as compensation for their distribution, shareholder
services and accounting services--either from the fund itself, or from the
fund's distributor or adviser.

Most mutual funds that participate in these NTF programs charge all or a
portion of this fee to the mutual fund. The fee can be labeled in various
ways--e.g. as a shareholder services fee or as a sub-transfer agency fee.
Many times, this fee is not disclosed explicitly, but is lumped together
with a number of other expense categories under "other expenses." In
either case, the total expense ratio of the fund increases as a result of
these fees.

Instead of paying for the cost of NTF programs through "hidden fees", we
are introducing the Distribution Plan to partially pay for services which
are currently already being enjoyed by the shareholders of Class N
shares--namely, the convenience and other value-added services being
provided by supermarket NTF programs.
<PAGE> 7

Q. WILL THE EXPENSE RATIO OF THE CLASS N SHARES INCREASE BECAUSE OF THE
INTRODUCTION OF THE DISTRIBUTION PLAN?

A:Yes. The expense ratio will increase by 0.25% annually. We believe this is
a reasonable fee increase, given the level of services being provided to
Class N shareholders through the participation in NTF programs.

Q. WILL THE EXPENSE RATIO OF THE CLASS N SHARES STILL BE COMPETITIVE RELATIVE TO
OTHER SIMILAR MUTUAL FUNDS?

A:Yes. The Class N shares of the Growth Fund currently have an expense ratio
of 0.84%. After introducing the Distribution Plan, the Fund's expense
ratio will increase to 1.09%. [This compares to a median expense ratio of
1.15% for the 157 no-load Mid-Cap Growth Funds listed by Morningstar, Inc.
as of August 31, 1999.]

Q. HOW DO I VOTE MY SHARES?

Q. WHOM DO I CALL IF I HAVE QUESTIONS ABOUT THE PROXY STATEMENT?

A:Call the Company's agent's toll-free number: 1-800-769-5414.

Q. I'M A SMALL INVESTOR. WHY SHOULD I BOTHER TO VOTE?

Q. WHO GETS TO VOTE?

A:Any person who owned shares of a Fund on the "record date," which was
October 1, 1999, gets to vote--even if the investor later sold the shares.
Shareholders are entitled to cast one vote for each Fund share owned on
the record date.

Q. HOW CAN I VOTE?

A:You can vote in any one of four ways:

- By telephone, with a toll-free call to the number listed on your proxy
card.

- By mail, with the enclosed ballot.

- In person at the meeting.

- By facsimile at (212) 269-2796.

Q. HOW DO THE MEMBERS OF THE BOARD OF DIRECTORS SUGGEST THAT I VOTE?

WILLIAM BLAIR MUTUAL FUNDS, INC.

IMPORTANT INFORMATION FOR SHAREHOLDERS
OF THE FOLLOWING WILLIAM BLAIR FUNDS:
INCOME FUND -- CLASS N

Not all issues contained in the Proxy Statement pertain to all shareholders. THE
Q&A BELOW SUMMARIZES THE ISSUES WHICH REQUIRE A VOTE BY THE SHAREHOLDERS OF THE
CLASS N SHARES OF THE INCOME FUND. A different cover letter is being provided to
shareholders of other Funds or other share classes.

Q. WHY AM I BEING ASKED TO VOTE?

A: Mutual funds are required to obtain shareholders' votes for certain types
of changes, like those included in this Proxy Statement. You have a right
to vote on these changes.

Q. WHAT ISSUES AM I BEING ASKED TO VOTE ON?

A: The proposals include: (1) the reorganization of the Company from a
Maryland corporation into a Delaware business trust (including an
amendment to the Company's Articles of Incorporation to permit actions,
including the reorganization, to be approved by the affirmative vote of a
majority of the outstanding shares of the Company); (2) changes to the
investment objective of the Fund; (3) the approval of standardized
fundamental investment restrictions for the Fund; and (4) approval of a
Rule 12b-1 distribution plan for Class N shares. In addition, you will be
asked to elect directors of the Company and to ratify the selection of
independent auditors.

Q. WHY ARE THE COMPANY'S ARTICLES OF INCORPORATION BEING AMENDED?

Q. WHY IS THE COMPANY BEING REORGANIZED INTO A DELAWARE BUSINESS TRUST?

A: Currently, the Company is organized as a Maryland corporation. As a
Delaware business trust, the Company will have a greater amount of
flexibility to conduct its business. Except for any changes approved by
shareholders at this meeting, the reorganization itself would not change
your Fund's investment objective or policies. The change to a Delaware
business trust will neither cause changes to the Company's directors,
officers, investment adviser, or auditors, nor the Company's current
contracts, including the Company's contract with its investment adviser.
<PAGE> 9

Q: HOW WOULD THE CHANGE IN A FUND'S INVESTMENT OBJECTIVE AFFECT ME AS A FUND
SHAREHOLDER?

A: The proposed change to the investment objective of the Fund is not
intended to alter the way in which the Fund is managed. The purpose of
the proposed objective is to clarify and more concisely describe the
Fund's goal.

Q: WHY ARE THE FUND'S "FUNDAMENTAL RESTRICTIONS" BEING CHANGED?

A: Every mutual fund has certain investment restrictions that can be changed
only with the approval of its shareholders. These are referred to as
"fundamental" investment restrictions. In the past, these restrictions
were adopted to reflect regulatory, business, or industry conditions that
no longer exist or are no longer necessary. Adopting a revised
standardized list of fundamental restrictions across all Funds will help
provide operational efficiencies and make it easier to monitor compliance
with these restrictions. In addition, converting the remaining
fundamental restrictions to nonfundamental restrictions will allow the
Board to analyze and approve changes to the Fund's investment
restrictions without additional shareholder approval, which will further
the goal of standardizing investment restrictions and will avoid costs
associated with future shareholder meetings.

Q: WHAT IS THE RULE 12b-1 DISTRIBUTION PLAN I AM BEING ASKED TO APPROVE?

A: Rule 12b-1 (the "Rule") under the Investment Company Act of 1940 provides
the conditions pursuant to which a mutual fund may bear the expenses of
distributing its shares. Under the Rule 12b-1 Distribution Plan (the
"Distribution Plan"), the Class N shares of the Income Fund will be
charged a distribution fee computed at the annual rate of 0.15% of the
average daily net assets attributable to the Class N shares of the Fund.
The Fund's Distributor, William Blair & Company, L.L.C. will receive this
fee and may use it to pay various broker dealers for shareholder service
and distribution expenses.

Q: WHY IS THE FUND INTRODUCING A DISTRIBUTION PLAN FOR CLASS N SHARES?

A: Current Class N shareholders of the Fund have purchased shares through a
so-called "fund supermarket" or no-transaction-fee ("NTF") program
through a variety of broker dealers. These programs have become quite
popular with many investors, who can purchase funds from a wide variety
of different fund companies while enjoying the convenience of receiving a
single account statement and having a single point of contact. These
supermarkets generally also provide numerous value-added services to
investors, such as telephone assistance, websites, and newsletters.

Q: WILL THE EXPENSE RATIO OF THE CLASS N SHARES INCREASE BECAUSE OF THE
INTRODUCTION OF THE DISTRIBUTION PLAN?

A: Yes. The expense ratio of the Income Fund Class N shares will increase by
0.15% annually. We believe this is a reasonable fee increase, given the
level of services being provided to Class N shareholders through the
participation in NTF programs.

Q: HOW DO I VOTE MY SHARES?

A: You may vote in person at the special meeting of shareholders or simply
sign and return the enclosed Proxy Card. You may also vote by telephone
or by facsimile as described below in the Proxy Statement. If we do not
receive your proxy card, an employee of William Blair & Company, L.L.C.,
the Company's adviser and distributor, or the Company's agent, D.F. King
& Co., Inc., may contact you to request that you cast your vote.

Q: WHOM DO I CALL IF I HAVE QUESTIONS ABOUT THE PROXY STATEMENT?

A: Call the Company's agent's toll-free number: 1-800-769-5414.

Q: I'M A SMALL INVESTOR. WHY SHOULD I BOTHER TO VOTE?

A: Your vote makes a difference. If numerous shareholders just like you fail
to vote their proxies, your Fund may not receive enough votes to go
forward with its meeting. If this happens, we'll need to mail proxies
again--a costly proposition for your Fund!

Q: WHO GETS TO VOTE?

A: Any person who owned shares of a Fund on the "record date," which was
October 1, 1999, gets to vote--even if the investor later sold the
shares. Shareholders are entitled to cast one vote for each Fund share
owned on the record date.

Q: HOW CAN I VOTE?

A: You can vote in any one of four ways:

- By telephone, with a toll-free call to the number listed on your proxy
card.

- By mail, with the enclosed ballot.

- In person at the meeting.

- By facsimile at (212) 269-2796.

Q: HOW DO THE MEMBERS OF THE BOARD OF DIRECTORS SUGGEST THAT I VOTE?

A: After careful consideration, the Board of Directors has unanimously
approved these proposals. The Board recommends that you read the enclosed
materials carefully and vote FOR all proposals.
<PAGE> 11

WILLIAM BLAIR MUTUAL FUNDS, INC.

IMPORTANT INFORMATION FOR SHAREHOLDERS
OF THE FOLLOWING WILLIAM BLAIR FUNDS:
INTERNATIONAL GROWTH FUND -- CLASS N
EMERGING MARKETS GROWTH FUND -- CLASS N
VALUE DISCOVERY FUND -- CLASS N

TIME IS OF THE ESSENCE...YOUR PARTICIPATION IN THIS PROCESS IS IMPORTANT! EVEN
IF YOU WANT TO VOTE FOR ALL THE ITEMS, BE SURE TO COMPLETE AND RETURN YOUR PROXY
CARD PROMPTLY TO HELP THE COMPANY AVOID THE NECESSARY AND ADDITIONAL EXPENSE OF
SENDING FOLLOW-UP LETTERS TO ENSURE A QUORUM

Not all issues contained in the Proxy Statement pertain to all shareholders. THE
Q&A BELOW SUMMARIZES THE ISSUES WHICH REQUIRE A VOTE BY THE SHAREHOLDERS OF THE
CLASS N SHARES OF THE INTERNATIONAL GROWTH FUND, THE EMERGING MARKETS GROWTH
FUND, AND THE VALUE DISCOVERY FUND. A different cover letter is being provided
to shareholders of other Funds or other share classes.

Q. WHY AM I BEING ASKED TO VOTE?

A: Mutual funds are required to obtain shareholders' votes for certain types
of changes, like those included in this Proxy Statement. You have a right
to vote on these changes.

Q. WHAT ISSUES AM I BEING ASKED TO VOTE ON?

A: The proposals include: (1) the reorganization of the Company from a
Maryland corporation into a Delaware business trust (including an
amendment to the Company's Articles of Incorporation to permit actions,
including the reorganization, to be approved by the affirmative vote of a
majority of the outstanding shares of the Company); (2) changes to the
investment objectives of the International Growth Fund; (3) the approval
of standardized fundamental investment restrictions for each Fund; and
(4) approval of a Rule 12b-1 distribution plan for Class N shares. In
addition, you will be asked to elect directors of the Company and to
ratify the selection of independent auditors.

Q. WHY ARE THE COMPANY'S ARTICLES OF INCORPORATION BEING AMENDED?

Q. WHY IS THE COMPANY BEING REORGANIZED INTO A DELAWARE BUSINESS TRUST?

A: Currently, the Company is organized as a Maryland corporation. As a
Delaware business trust, the Company will have a greater amount of
flexibility to conduct its business. Except for any changes approved by
shareholders at this meeting, the reorganization itself would not change
your Fund's investment objective or policies. The change to a Delaware
business trust will neither cause changes to the Company's directors,
officers, investment adviser, or auditors, nor the Company's current
contracts, including the Company's contract with its investment adviser.
<PAGE> 12

Q. HOW WOULD THE CHANGE IN THE INTERNATIONAL GROWTH FUND'S INVESTMENT OBJECTIVE
AFFECT ME AS A FUND SHAREHOLDER?

A: The proposed change to the investment objective of the International
Growth Fund is not intended to alter the way in which the Fund is
managed. The purpose of the proposed objective is to clarify and more
concisely describe the Fund's goal.

Q. WHY ARE THE FUNDS' "FUNDAMENTAL RESTRICTIONS" BEING CHANGED?

A: Every mutual fund has certain investment restrictions that can be changed
only with the approval of its shareholders. These are referred to as
"fundamental" investment restrictions. In the past, these restrictions
were adopted to reflect regulatory, business, or industry conditions that
no longer exist or are no longer necessary. Adopting a revised
standardized list of fundamental restrictions across all Funds will help
provide operational efficiencies and make it easier to monitor compliance
with these restrictions. In addition, converting the remaining
fundamental restrictions to nonfundamental restrictions will allow the
Board to analyze and approve changes to each Fund's investment
restrictions without additional shareholder approval, which will further
the goal of standardizing investment restrictions and will avoid costs
associated with future shareholder meetings.

Q. WHAT IS THE RULE 12B-1 DISTRIBUTION PLAN I AM BEING ASKED TO APPROVE?

A: Rule 12b-1 (the "Rule") under the Investment Company Act of 1940 provides
the conditions pursuant to which a mutual fund may bear the expenses of
distributing its shares. Under the Rule 12b-1 Distribution Plan (the
"Distribution Plan"), the Class N shares of each Fund will be charged a
distribution fee computed at the annual rate of 0.25% of the average
daily net assets attributable to the Class N shares of the Fund. The
Fund's Distributor, William Blair & Company, L.L.C. will receive this fee
and may use it to pay various broker dealers for shareholder service and
distribution expenses.

Q. WHY IS THE FUND INTRODUCING A DISTRIBUTION PLAN FOR CLASS N SHARES?

A: Current Class N shareholders of the Fund have purchased shares through a
so-called "fund supermarket" or no-transaction-fee ("NTF") program
through a variety of broker dealers. These programs have become quite
popular with many investors, who can purchase funds from a wide variety
of different fund companies while enjoying the convenience of receiving a
single account statement and having a single point of contact. These
supermarkets generally also provide numerous value-added services to
investors, such as telephone assistance, websites, and newsletters.

Instead of paying for the cost of NTF programs through "hidden fees", we
are introducing the Distribution Plan to partially pay for services which
are currently already being enjoyed by the
<PAGE> 13

shareholders of Class N shares--namely, the convenience and other
value-added services being provided by supermarket NTF programs.

Q. WILL THE EXPENSE RATIO OF THE CLASS N SHARES INCREASE BECAUSE OF THE
INTRODUCTION OF THE DISTRIBUTION PLAN?

A: Yes. The expense ratio for each Fund will increase by 0.25% annually. We
believe this is a reasonable fee increase, given the level of services
being provided to Class N shareholders through the participation in NTF
programs.

Q. HOW DO I VOTE MY SHARES?

A: You may vote in person at the special meeting of shareholders or simply
sign and return the enclosed Proxy Card. You may also vote by telephone
or by facsimile as described below in the Proxy Statement. If we do not
receive your proxy card, an employee of William Blair & Company, L.L.C.,
the Company's adviser and distributor, or the Company's agent, D.F. King
& Co., Inc., may contact you to request that you cast your vote.

Q. WHOM DO I CALL IF I HAVE QUESTIONS ABOUT THE PROXY STATEMENT?

A: A: Call the Company's agent's toll-free number: 1-800-769-5414.

Q. I'M A SMALL INVESTOR. WHY SHOULD I BOTHER TO VOTE?

A: Your vote makes a difference. If numerous shareholders just like you fail
to vote their proxies, your Fund may not receive enough votes to go
forward with its meeting. If this happens, we'll need to mail proxies
again--a costly proposition for your Fund!

Q. WHO GETS TO VOTE?

A: Any person who owned shares of a Fund on the "record date," which was
October 1, 1999, gets to vote--even if the investor later sold the
shares. Shareholders are entitled to cast one vote for each Fund share
owned on the record date.

Q. HOW CAN I VOTE?

A: You can vote in any one of four ways:

- By telephone, with a toll-free call to the number listed on your proxy
card.

- By mail, with the enclosed ballot.

- In person at the meeting.

- By facsimile at (212) 269-2796.

Q. HOW DO THE MEMBERS OF THE BOARD OF DIRECTORS SUGGEST THAT I VOTE?

A: After careful consideration, the Board of Directors has unanimously
approved these proposals. The Board recommends that you read the enclosed
materials carefully and vote FOR all proposals.
<PAGE> 14

WILLIAM BLAIR MUTUAL FUNDS, INC.

IMPORTANT INFORMATION FOR SHAREHOLDERS
OF THE FOLLOWING WILLIAM BLAIR FUNDS:
GROWTH FUND -- CLASS I
INTERNATIONAL GROWTH FUND -- CLASS I
EMERGING MARKETS GROWTH FUND -- CLASS I
VALUE DISCOVERY FUND -- CLASS I
INCOME FUND -- CLASS I

TIME IS OF THE ESSENCE...YOUR PARTICIPATION IN THIS PROCESS IS IMPORTANT! EVEN
IF YOU WANT TO VOTE FOR ALL THE ITEMS, BE SURE TO COMPLETE AND RETURN YOUR PROXY
CARD PROMPTLY TO HELP THE COMPANY AVOID THE NECESSARY AND ADDITIONAL EXPENSE OF
SENDING FOLLOW-UP LETTERS TO ENSURE A QUORUM.

Not all issues contained in the Proxy Statement pertain to all shareholders. THE
Q&A BELOW SUMMARIZES THE ISSUES WHICH REQUIRE A VOTE BY THE SHAREHOLDERS OF THE
CLASS I SHARES OF THE WILLIAM BLAIR FUNDS. A different cover letter is being
provided to shareholders of other Funds or other share classes.

Q. WHY AM I BEING ASKED TO VOTE?

A:Mutual funds are required to obtain shareholders' votes for certain types
of changes, like those included in this Proxy Statement. You have a right
to vote on these changes.

Q. WHAT ISSUES AM I BEING ASKED TO VOTE ON?

A:The proposals include: (1) the reorganization of the Company from a
Maryland corporation into a Delaware business trust (including an
amendment to the Company's Articles of Incorporation to permit actions,
including the reorganization, to be approved by the affirmative vote of a
majority of the outstanding shares of the Company); (2) changes to the
investment objectives of certain Funds; and (3) the approval of
standardized fundamental investment restrictions for the Funds. In
addition, you will be asked to elect directors of the Company and to
ratify the selection of independent auditors.

Q. WHY ARE THE COMPANY'S ARTICLES OF INCORPORATION BEING AMENDED?

A:Under Maryland law, certain actions, including a reorganization, require
approval of a "super-majority" of shareholders (i.e., a greater proportion
than a majority of the outstanding shares of the Company). Maryland law,
however, provides that a corporation's Articles of Incorporation may
provide for a lesser vote for such actions as long as the vote is not
lower than a majority of the corporation's outstanding shares. The
Company's current articles of incorporation do not have such a provision.
The amendment to the Articles of Incorporation will permit certain
actions, including the approval of the reorganization, to be approved by a
majority of the outstanding shares of the Company.

Q. WHY IS THE COMPANY BEING REORGANIZED INTO A DELAWARE BUSINESS TRUST?

A: Currently, the Company is organized as a Maryland corporation. As a
Delaware business trust, the Company will have a greater amount of
flexibility to conduct its business. Except for any changes approved by
shareholders at this meeting, the reorganization itself would not change
your Fund's investment objective or policies. The change to a Delaware
business trust will neither cause changes to the Company's directors,
officers, investment adviser, or auditors, nor the Company's current
contracts, including the Company's contract with its investment adviser.
<PAGE> 15

Q. HOW WOULD THE CHANGE IN A FUND'S INVESTMENT OBJECTIVE AFFECT ME AS A FUND
SHAREHOLDER?

A: The proposed changes to the investment objectives of the William Blair
Growth Fund, the William Blair International Growth Fund and the William
Blair Income Fund is not intended to alter the way in which the Funds are
managed. The purpose of the proposed objectives is to clarify and more
concisely describe each Fund's goal.

Q. WHY ARE THE FUND'S "FUNDAMENTAL RESTRICTIONS" BEING CHANGED?

A: Every mutual fund has certain investment restrictions that can be changed
only with the approval of its shareholders. These are referred to as
"fundamental" investment restrictions. In the past, these restrictions
were adopted to reflect regulatory, business, or industry conditions that
no longer exist or are no longer necessary. Adopting a revised
standardized list of fundamental restrictions across all Funds will help
provide operational efficiencies and make it easier to monitor compliance
with these restrictions. In addition, converting the remaining
fundamental restrictions to nonfundamental restrictions will allow the
Board to analyze and approve changes to each Fund's investment
restrictions without additional shareholder approval, which will further
the goal of standardizing investment restrictions and will avoid costs
associated with future shareholder meetings.

Q. WHAT IS THE RULE 12B-1 DISTRIBUTION PLAN WHICH THE SHAREHOLDERS OF CLASS N
SHARES ARE BEING ASKED TO APPROVE? [NOTE: CLASS I SHAREHOLDERS ARE NOT
ENTITLED TO VOTE ON THIS ISSUE. THE SUMMARY BELOW IS PROVIDED FOR INFORMATION
PURPOSES ONLY.]

A: Rule 12b-1 (the "Rule") under the Investment Company Act of 1940 provides
the conditions pursuant to which a mutual fund may bear the expenses of
distributing its shares. Under the Rule 12b-1 Distribution Plan (the
"Distribution Plan"), the Class N shares of each Fund will be charged a
distribution fee computed at the annual rate of 0.25% (0.15% for the
Income Fund) of the average daily net assets attributable to the Class N
shares of the Fund. The Fund's Distributor, William Blair & Company,
L.L.C. will receive this fee and may use it to pay various broker dealers
for shareholder service and distribution expenses.

Q. WHY IS THE FUND INTRODUCING A DISTRIBUTION PLAN FOR CLASS N SHARES?

A: Current Class N shareholders of the Fund have purchased shares through a
so-called "fund supermarket" or no-transaction-fee ("NTF") program
through a variety of broker dealers. These broker dealers generally
require a payment of up to 0.35% annually as compensation for their
distribution, shareholder services and accounting services--either from
the fund itself, or from the fund's distributor or adviser.

Most mutual funds that participate in these NTF programs charge all or a
portion of this fee to the mutual fund, either in the form of a
shareholder services fee or through a sub-transfer agency fee. These fees
are often not disclosed separately, but instead are lumped together with
a number of other expense categories under "other expenses."

Instead of paying for the cost of NTF programs through "hidden fees", we
are introducing the Distribution Plan to partially pay for services which
are currently already being enjoyed by the shareholders of Class N
shares. Shareholders of Class I shares will not be charged any
Distribution Fee.

Q. WILL THE EXPENSE RATIO OF THE CLASS I SHARES BE AFFECTED BY THE INTRODUCTION
OF THE DISTRIBUTION PLAN FOR CLASS N SHARES?

A: No. The expense ratio of Class I shares will not be affected by the
Distribution Plan, which applies to Class N shares only.
<PAGE> 16

Q. HOW DO I VOTE MY SHARES?

A: You may vote in person at the special meeting of shareholders or simply
sign and return the enclosed Proxy Card. You may also vote by telephone
or by facsimile as described below in the Proxy Statement. If we do not
receive your proxy card, an employee of William Blair & Company, L.L.C.,
the Company's adviser and distributor, or the Company's agent, D.F. King
& Co., Inc., may contact you to request that you cast your vote.

Q. WHOM DO I CALL IF I HAVE QUESTIONS ABOUT THE PROXY STATEMENT?

A: Call the Company's agent's toll-free number: 1-800-769-5414.

Q. I'M A SMALL INVESTOR. WHY SHOULD I BOTHER TO VOTE?

A: Your vote makes a difference. If numerous shareholders just like you fail
to vote their proxies, your Fund may not receive enough votes to go
forward with its meeting. If this happens, we'll need to mail proxies
again--a costly proposition for your Fund!

Q. WHO GETS TO VOTE?

A: Any person who owned shares of a Fund on the "record date," which was
October 1, 1999, gets to vote--even if the investor later sold the
shares. Shareholders are entitled to cast one vote for each Fund share
owned on the record date.

Q. HOW CAN I VOTE?

A: You can vote in any one of four ways:

- By telephone, with a toll-free call to the number listed on your proxy
card.

- By mail, with the enclosed ballot.

- In person at the meeting.

- By facsimile at (212) 269-2796.

Q. HOW DO THE MEMBERS OF THE BOARD OF DIRECTORS SUGGEST THAT I VOTE?

A: After careful consideration, the Board of Directors has unanimously
approved these proposals. The Board recommends that you read the enclosed
materials carefully and vote FOR all proposals.
<PAGE> 17

PROXY STATEMENT

WILLIAM BLAIR MUTUAL FUNDS, INC.
WILLIAM BLAIR GROWTH FUND
WILLIAM BLAIR VALUE DISCOVERY FUND
WILLIAM BLAIR INTERNATIONAL GROWTH FUND
WILLIAM BLAIR EMERGING MARKETS GROWTH FUND
WILLIAM BLAIR INCOME FUND
WILLIAM BLAIR READY RESERVES FUND

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 30, 1999

October , 1999

To the Shareholders:

You are invited to attend a special meeting of the shareholders of William
Blair Mutual Funds, Inc. (the "Company") to be held in the 13th floor conference
room of William Blair & Company, L.L.C., 222 West Adams Street, Chicago,
Illinois, at 9:00 a.m. (Central time), on November 30, 1999, for the following
purposes and to transact such other business, if any, as may properly come
before the meeting:

(1) To elect six (6) Directors to the Board of the Company.

(2) To ratify the selection of Ernst & Young LLP as independent
auditors of the Company for the current fiscal year.

(3) To approve a proposal to reorganize the Company into a Delaware
business trust.

(a) To approve an amendment to the Articles of Incorporation of the
Company to permit actions, including the reorganization, to be approved
by the affirmative vote of a majority of the outstanding shares of the
Company.

(b) To approve an Agreement and Plan of Reorganization pursuant to
which the Company will be reorganized into a Delaware business trust.

(4) To approve new investment objectives for the William Blair Growth
Fund, the William Blair International Growth Fund, the William Blair Income
Fund, and the William Blair Ready Reserves Fund only.

(5) To approve standardized fundamental investment restrictions for
each of the William Blair Growth Fund, William Blair Value Discovery Fund,
William Blair International Growth Fund, William Blair Emerging Markets
Growth Fund, William Blair Income Fund, and William Blair Ready Reserves
Fund (each a "Fund", or collectively, the "Funds") and to reclassifying the
remaining fundamental restrictions as nonfundamental.

(a) To adopt a new fundamental investment restriction concerning
the concentration of the Fund's investments in the same industry.

(b) To adopt a new fundamental investment restriction concerning
borrowing money and issuing senior securities.

(d) To adopt a new fundamental investment restriction concerning
investments in real estate.

(e) To adopt a new fundamental investment restriction concerning
investments in commodities.

(f) To adopt a new fundamental investment restriction concerning
lending by the Fund.
<PAGE> 18

(g) To reclassify all remaining fundamental investment restrictions
as nonfundamental.

(6) To approve a Rule 12b-1 distribution plan with William Blair &
Company, L.L.C. for Class N shares of each Fund.

(7) To approve an Amended Management Agreement for the Ready Reserves
Fund only.

(8) To transact such other business as may properly come before the
meeting or any adjournment thereof.

The Board of Directors has fixed October 1, 1999 as the record date for
determination of shareholders entitled to vote at the meeting.

By Order of the Board of Directors

Marco Hanig
President

SIGN, DATE AND RETURN THE ENCLOSED PROXY PROMPTLY TO AVOID ADDITIONAL EXPENSE.

YOU CAN HELP THE COMPANY AVOID THE NECESSITY AND EXPENSE OF SENDING FOLLOW-UP
LETTERS TO ENSURE A QUORUM BY PROMPTLY RETURNING THE ENCLOSED PROXY. IF YOU ARE
UNABLE TO ATTEND THE MEETING, PLEASE MARK, SIGN, DATE, AND RETURN THE ENCLOSED
PROXY SO THAT THE NECESSARY QUORUM MAY BE REPRESENTED AT THE SPECIAL MEETING.
THE ENCLOSED ENVELOPE REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. Toll
free number 1-800-769-5414.

2
<PAGE> 19

DRAFT

PROXY STATEMENT

WILLIAM BLAIR MUTUAL FUNDS, INC.
222 WEST ADAMS STREET
CHICAGO, ILLINOIS 60606

OCTOBER , 1999

ABOUT THE PROXY SOLICITATION AND THE SPECIAL MEETING

The enclosed proxy is solicited on behalf of the Board of Directors of the
Company (the "Board" or "Directors"). The proxies will be voted at the special
meeting of shareholders of the Company to be held on November 30, 1999, in the
13th floor conference room of William Blair & Company, L.L.C., 222 West Adams
Street, Chicago, Illinois 60606 at 9:00 a.m. (Central time) (such special
meeting and any adjournment or postponement thereof are referred to as the
"Special Meeting").

Solicitation of proxies by personal interview, mail, telephone and
electronic mail may be made by officers and directors of the Company and
employees of William Blair & Company, L.L.C. (the "Adviser"), none of whom will
receive any additional compensation for such service, and third-party
solicitation agents. All costs incurred in connection with the Special Meeting
(including the cost of solicitation of proxies) will be paid by the Company. The
Company has engaged D.F. King to assist in the solicitation of proxies. It is
anticipated that the cost of the proxy solicitation services provided by D.F.
King will be $15,000, plus reimbursement of reasonable expenses. As the Meeting
date approaches, you may receive a call from a representative of D.F. King who
may ask you for authority, by telephone, to permit D.F. King to sign a proxy on
your behalf. D.F. King will record all instructions it receives from
shareholders by telephone, and the proxies it signs in accordance with those
instructions, in accordance with the procedures set forth above.

Shareholders may vote by filling out and signing the enclosed proxy card
and returning it in the postage paid envelope provided. Shareholders may also
vote by telephone or by facsimile. To vote by telephone, have the proxy card
ready and dial 1-800-769-5414. A representative of D.F. King will answer your
call. When receiving your instructions by telephone, the D.F. King
representative is required to ask you for your full name, address, social
security or employer identification number, title (if the person giving the
proxy is authorized to act for an entity, such as a corporation), the number of
shares of a Fund owned, and to confirm that you have received the proxy
statement in the mail. If the information you provide matches the information
provided to D.F. King by the Company, then the D.F. King representative will
explain the process. D.F. King is not permitted to recommend to you how to vote,
other than to read any recommendation included in the proxy statement. D.F. King
will record your instructions and transmit them to the official tabulator, and
within 72 hours, send you a letter or mailgram to confirm your vote. That letter
will also ask you to call D.F. King immediately if the confirmation does not
reflect your instructions correctly. Shareholders who communicate proxies by
telephone have the same power and authority to issue, revoke, or otherwise
change their voting instructions as currently exists for instructions
communicated in written form described below under "Additional
Information -- Quorum and Voting Requirements." Any telephonic voting will
follow procedures designed to ensure accuracy and prevent fraud, including
requiring identifying shareholder information, recording the shareholder's
instructions, and confirming to the shareholder after the fact. To vote by
facsimile, sign and date the proxy card and send it via facsimile to D.F. King
at (212) 269-2796.

At its meetings on July 20, 1999 and September 8, 1999, the Board, subject
to shareholder approval, (i) considered and approved a plan to reorganize the
Company into a Delaware business trust, including an amendment to the Company's
Articles of Incorporation, (ii) reviewed and approved changes to the investment
objectives of the William Blair Growth Fund, the William Blair International
Growth Fund, the William Blair Income Fund and the William Blair Ready Reserves
Fund, (iii) reviewed and approved changes to the investment policies of the
William Blair Growth Fund, the William Blair Value Discovery Fund, the William
Blair International Growth Fund, the William Blair Emerging Markets Growth Fund,
the William

3
<PAGE> 20

Blair Income Fund and the William Blair Ready Reserves Fund (individually, a
"Fund" or collectively, the "Funds"), and (iv) considered and approved a Rule
12b-1 distribution plan for Class N shares of each Fund. The Board also called
the Special Meeting for the other purposes set forth in the accompanying Notice.
The Directors know of no business other than that mentioned in the Notice that
will be presented for consideration at the Special Meeting. Should other
business properly be brought before the Special Meeting, proxies will be voted
in accordance with the best judgment of the persons named as proxies. This proxy
statement and the enclosed proxy card are expected to be mailed on or about
October , 1999, to shareholders of record at the close of business on October
1, 1999 (the "Record Date"). On the Record Date, the Company had
outstanding shares of which and were Class N and Class I
shares, respectively, of the William Blair Growth Fund, and
were Class N and Class I shares, respectively, of the William Blair Value
Discovery Fund, and were Class N and Class I shares,
respectively, of the William Blair International Growth Fund, and
were Class N and Class I shares, respectively, of the William Blair
Emerging Markets Growth Fund, and were Class N and Class I
shares, respectively, of the William Blair Income Fund, and and
were Class N and Class I shares, respectively, of the William Blair
Ready Reserves Fund.

Each share is entitled to one vote on each of the matters submitted to a
vote at the Meeting. The shares of all the Funds shall vote together as a single
class on all proposals, except on the proposals to approve new investment
objectives and to approve the proposed changes to the Funds' fundamental
policies on which each Fund will vote separately, and to approve the Rule 12b-1
distribution plan, on which only the Class N shares of each Fund will vote
separately. On the proposal to approve an amended management agreement, only
shareholders of the Ready Reserves Fund, voting together as a single class, are
entitled to vote.

The Company's principal executive offices are located at 222 West Adams
Street, Chicago, Illinois 60606. The Company's toll-free telephone number is
1-800-742-7272. The Company's Annual Report, which includes audited financial
statements for the fiscal year ended December 31, 1998, and Semi-annual Report
for the period ended June 30, 1999 were previously mailed to shareholders. ANY
SHAREHOLDER WISHING TO RECEIVE ANOTHER COPY OF THE ANNUAL REPORT AND SEMI-ANNUAL
REPORT WITHOUT CHARGE SHOULD CONTACT THE COMPANY AT 222 WEST ADAMS STREET,
CHICAGO, ILLINOIS 60606 OR CALL THE COMPANY'S TOLL-FREE TELEPHONE NUMBER:
1-800-742-7272.

The Company has six series: the William Blair Growth Fund, the William
Blair Value Discovery Fund, the William Blair International Growth Fund, the
William Blair Emerging Markets Growth Fund, the

4
<PAGE> 21

William Blair Income Fund and the William Blair Ready Reserves Fund. The
following table indicates by Fund which shareholders are solicited to vote with
respect to each item:

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
INTER- EMERGING
VALUE NATIONAL MARKETS READY
GROWTH DISCOVERY GROWTH GROWTH INCOME RESERVES
ITEM FUND FUND FUND FUND FUND FUND
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1. Election of Directors (all
Funds voting together as a single
class) X X X X X X
2. Ratification of auditors
(all Funds voting together as a
single class) X X X X X X
3. Reorganization into a
Delaware business trust (all
Funds voting together as a single
class) X X X X X X
4. Changes to investment
objectives (each Fund voting
separately as a class) X X X X
5. Changes to fundamental
investment policies (each Fund
voting separately as a class) X X X X X X
6. Approval of Rule 12b-1
distribution plan (Class N shares
of each Fund voting separately as X X X X X X
a class) (Class N) (Class N) (Class N) (Class N) (Class N) (Class N)
7. Approval of Amended
Management Agreement X
</TABLE>

ITEM 1.
ELECTION OF DIRECTORS TO THE BOARD

It is intended that the proxies will be voted for the election as Directors
of the nominees described below. Each Director so elected will serve as a
Director of the Company until the next meeting of shareholders, if any, called
for the purpose of electing Directors and until the election and qualification
of a successor or until such Director sooner dies, resigns, or is removed as
provided in the organizational documents of the Company. Under the Company's
By-laws, no Director will stand for reelection as a Director at any election
held after such Director shall have reached 70 years of age and after his
successor has been elected and qualified, such Director shall retire. Based upon
the Company's Bylaws, Mr. Vernon Armour is not eligible to stand for reelection.
Mr. James M. McMullan chose not to stand for re-election. The Board of Directors
and Fund Management wish to express their appreciation to Mr. Armour and Mr.
McMullan for their contributions to the Fund. All the nominees, except J. Grant
Beadle, Theodore A. Bosler and John P. Kayser, were last elected to the Board at
the April 23, 1996 meeting of the shareholders. Messrs. Beadle, Bosler and
Kayser were appointed to the Board on October 21, 1997. On , 1999,
the Board nominated the following to stand for election to the Board: Messrs.
Conrad Fischer, J. Grant Beadle, Theodore H. Bosler, John P. Kayser, John B.
Schwemm and Ms. Ann P. McDermott. Messrs. Beadle, Bosler and Kayser will be
standing for election by shareholders for the first time.

All the nominees listed below have consented to serve as Directors of the
Company, if elected. In case any nominee(s) shall be unable or shall fail to act
as a Director by virtue of an unexpected occurrence, the

5
<PAGE> 22

proxies may be voted for such other person(s) as shall be determined by the
persons acting under the proxies in their discretion.

NAME (DATE OF BIRTH), PRINCIPAL YEAR FIRST BECAME A COMMON SHARES BENEFICIALLY OWNED
OCCUPATION AND AFFILIATIONS DIRECTOR AS OF SEPTEMBER 15, 1999
<S> <C> <C>
Conrad Fischer (4/29/34)* 1987 Growth Fund - 80,291
Chairman of the Board and Director Value Discovery Fund - 11,187
of the Company; Principal, International Growth Fund - 6,264
William Blair & Company, L.L.C.; Emerging Markets Growth Fund - 5,000
Trustee Emeritus, Chicago Child Income Fund - 76,898
Care Society, a non-profit Ready Reserves Fund - 6,220,299
organization; Investment
Committee, Kalamazoo College
J. Grant Beadle (12/16/32)(1) 1997 Income Fund - 12,447
Director of the Company; Retired Ready Reserves Fund - 671,563
Chairman and Chief Executive
Officer, Union Special
Corporation, industrial sewing
machine manufacturer; Retired
Associate Director, Northwestern
University Institute for Learning
Sciences; Oliver Products
Company, Batts, Inc. and Woodward
Governor Company
Theodore A. Bosler (12/2/34)(1) 1997 Ready Reserves Fund - 216,766
Director of the Company; Retired
Principal and Vice President,
Lincoln Capital Management;
Director, Thresholds, a
psychiatric recovery center; and
Institute of Chartered Financial
Analysts
John P. Kayser (8/21/48)* 1999 Growth Fund - 37,365
Director of the Company; Principal, Value Discovery Fund - 52,301
William Blair & Company, L.L.C.; International Growth Fund - 40,537
Director, DuPage Children's Emerging Markets Growth Fund - 29,826
Museum Income Fund - 4,477
Ready Reserves Fund - 646,826
Ann P. McDermott (10/24/39)(1) 1996 Value Discovery Fund - 30,679
Director of the Company; Trustee, International Growth Fund - 9,614
Rush Presbyterian St. Luke's Ready Reserves Fund - 403,337
Medical Center; Member, Women's
Board, Rush Presbyterian St.
Luke's Medical Center; Honorary
Director, Visiting Nurse
Association; Director,
Presbyterian Homes; Member,
Northwestern University Women's
Board and University of Chicago
Women's Board; Director,
Washington State University
Foundation
</TABLE>

6
<PAGE> 23

NAME (DATE OF BIRTH), PRINCIPAL YEAR FIRST BECAME A COMMON SHARES BENEFICIALLY OWNED
OCCUPATION AND AFFILIATIONS DIRECTOR AS OF SEPTEMBER 15, 1999
<S> <C> <C>
John B. Schwemm (5/18/34)(1) 1990 Growth Fund - 6,380
Director of the Company; Retired Value Discovery Fund - 3,620
Chairman and Chief Executive International Growth Fund - 11,502
Officer, R.R Donnelley & Sons Emerging Markets Growth Fund - 5,000
Company, printer; Director, USG Ready Reserves Fund - 22,602
Corp., building material products
company, and Walgreen Co., drug
store chain
</TABLE>

- ---------------

* Interested person of the Company as defined in the Investment Company Act of
1940 ("1940 Act").

(1) Mr. Beadle, Mr. Bosler, Ms. McDermott and Mr. Schwemm employ the Adviser to
manage assets that they control.

The Board has an Audit Committee that is composed of Messrs. Armour,
Beadle, Bosler and Schwemm, and Ms. McDermott. The committee met one time during
its 1998 fiscal year (December 31, 1998). The committee makes recommendations
regarding the selection of independent auditors for the Company, confers with
the independent auditors regarding the Company's financial statements, the
results of audits and related matters, and performs such other tasks as the
Board assigns.

Effective February 1, 1998, Directors who are not affiliated with the
Adviser receive an annual fee of $8,000, plus $3,000 for each meeting attended
in person, plus expenses, $1,500 for each meeting attended by telephone, and
$3,000 for attendance at each committee meeting held on a different day from a
board meeting. Prior to February 1, 1998, each of the Directors and officers not
affiliated with the Adviser received an annual fee of $4,000, plus $2,000 for
each meeting attended in person plus expenses. The Directors and officers
affiliated with the Adviser received no compensation from the Company. The Board
of the Company met five times during its 1998 fiscal year. Each then-current
Director who is now standing for election attended 75% or more of the meetings
of the Board and any committee meeting (if then a member thereof) held during
its 1998 fiscal year.

The table shows, for each Director entitled to receive compensation from
the Company, the aggregate compensation paid or accrued during the Company's
1998 fiscal year.

<TABLE>
<CAPTION>
PENSION OR
RETIREMENT BENEFITS ESTIMATED ANNUAL
AGGREGATE ACCRUED AS PART OF BENEFITS UPON TOTAL
DIRECTOR COMPENSATION FUND EXPENSES RETIREMENT COMPENSATION
- -------- ------------ ------------------- ---------------- ------------
<S> <C> <C> <C> <C>
J. Grant Beadle.................... $23,000 0 0 $23,000
Theodore A. Bosler................. $23,000 0 0 $23,000
Ann P. McDermott................... $23,000 0 0 $23,000
John B. Schwemm.................... $21,500 0 0 $21,500
</TABLE>

COMPANY OFFICERS

Information about the executive officers of the Company, with their
respective dates of birth, terms as Company officers, and principal occupations
for the past five years, is set forth below.

Rocky Barber (10/20/51), Chief Executive Officer of the Company since 1999,
previously the President since 1987. Mr. Barber is a principal of the Adviser, a
vice president and Secretary of the LaRabida Hospital Foundation, and formerly
President of Stanford Associates.

Marco Hanig (1/10/58), President of the Company since 1999. Mr. Hanig is an
associate of the Adviser, and formerly Senior Vice President of First Chicago
NBD.

7
<PAGE> 24

Mark A. Fuller, III (3/11/57), Senior Vice President of the Company since 1993.
Mr. Fuller is a principal of the Adviser.

W. George Greig (10/2/52), Senior Vice President of the Company since 1996. Mr.
Greig is a principal of the Adviser, former Fund Manager of Provident Capital
Management; former Manager of Akamai, a partnership affiliated with Framlington
Investment Management Limited; and former Partner of Pilgrim, Baxter & Greig.

Glen Kleczka (10/19/62), Senior Vice President of the Company since 1997. Mr.
Kleczka is an associate of the Adviser, formerly Partner, Brinson Partners, and
formerly Fund Manager, CNA Financial Corp.

Bentley M. Myer (9/14/46), Senior Vice President of the Company since 1992. Mr.
Myer is a principal of the Adviser and director of the Delnor Community
Hospital.

James S. Kaplan (10/18/60), Vice President of the Company since 1995. Mr. Kaplan
is an associate of the Adviser and former Vice President of First Union Bank.

John P. Kayser (8/21/49), Vice President of the Company since 1994. Mr. Kayser
is a principal of the Adviser and director of the DuPage Children's Museum.

Terence M. Sullivan (1/22/44), Vice President and Treasurer of the Company since
1987. Mr. Sullivan is an Associate of the Adviser.

Jeffery A. Urbina (3/11/55), Vice President of the Company since 1998. Mr.
Urbina is an associate of the Adviser, former Director of Emerging Market
Research, and Fund Manager at Van Kampen American Capital.

Sheila M. Johnson (6/10/67), Secretary of the Company since 1999. Ms. Johnson is
an administrative assistant of the Adviser.

Janet V. Gassmann (1/20/67), Assistant Secretary of the Company since 1999. Ms.
Gassmann is an administrative assistant of the Adviser and formerly an
administrative assistant of Shearson Lehman Brothers, Inc.

The officers of the Company are elected by the Board of the Company on an annual
basis to serve until their successors are elected and qualified.

SHAREHOLDERS

As of September 15, 1999, the Directors and officers of the Company as a
group owned beneficially 9,913,382 shares, which is less than 1% of the
outstanding shares of the Company. As of September 15, 1999, no person is known
to the Company to have owned beneficially more than five percent of the shares
of the Company, except as shown in Exhibit A.

THE BOARD RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF THE NOMINEES NAMED BELOW.

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ITEM 2.
SELECTION OF INDEPENDENT AUDITORS

A majority of the Directors who are "noninterested" persons of the Company
has selected Ernst & Young LLP, independent auditors, to audit the books and
records of the Company for the current fiscal year. This firm has served the
Company in this capacity since the Company was organized, and has no direct or
indirect financial interest in the Company except as independent auditors. The
selection of Ernst & Young LLP as independent auditors of the Company is being
submitted to the shareholders for ratification. 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 may
make a statement.

THE BOARD RECOMMENDS THAT YOU VOTE FOR THE RATIFICATION OF ERNST & YOUNG LLP AS
INDEPENDENT AUDITORS FOR THE COMPANY.

ITEM 3.
REORGANIZATION INTO A DELAWARE BUSINESS TRUST

The Board of Directors has approved a plan to reorganize the Company into a
Delaware business trust. THE PURPOSES OF THE REORGANIZATION ARE TO PROVIDE THE
COMPANY WITH GREATER FLEXIBILITY TO CONDUCT ITS BUSINESS AND TO AVOID CERTAIN
STATE TAXES THAT YOUR FUND PAYS ANNUALLY. We need shareholder approval to
proceed with the reorganization plan. You will first be asked to approve an
amendment to the Company's Articles of Incorporation to lower the necessary
shareholder vote to approve certain actions, including the reorganization. Then
you will be asked to approve the Agreement and Plan of Reorganization under
which the Company will be reorganized into a Delaware business trust.

ITEM 3(A).
AMENDMENT TO THE ARTICLES OF INCORPORATION

Under Maryland law, certain actions require approval of a "super-majority"
of shareholders (i.e. a greater proportion than a majority of the outstanding
shares of the Company). Maryland law, however, provides that a corporation's
articles of incorporation may provide for a lesser vote for such actions as long
as the vote is not lower than a majority of the corporation's outstanding
shares. The Company's current articles of incorporation do not have such a
provision. As a result, under Maryland law and the Company's current Articles of
Incorporation, shareholder approval by two-thirds of the outstanding shares of
the Company is required to approve a reorganization of the Company.

At a meeting of the Board of Directors held on September 8, 1999, the
Company's directors approved and recommended shareholders adopt an amendment to
the Company's Articles of Incorporation, as follows, to permit approval of the
reorganization to be approved by the affirmative vote of a majority of the
outstanding shares of the Company:

The Articles of Incorporation of the Company are hereby amended by adding
the following provisions to Article V:

5.4. Notwithstanding any provision of law requiring action to be taken
or authorized by the affirmative vote of the holders of a designated
proportion greater than a majority of the outstanding shares of all classes
or of the outstanding shares of a particular class, classes, or
subclass(es), as the case may be, such action shall be valid and effective
if taken or authorized by the affirmative vote of the holders of a majority
of the total number of shares of such class, classes, or sub-class(es), as
the case may be, outstanding and entitled to vote thereupon pursuant to the
provisions of these Articles of Incorporation.

If Item 3(a) is approved, appropriate Articles of Amendment (incorporating
the Amendment set forth above) will immediately be filed with the State
Department of Assessment and Taxation of Maryland while the Special Meeting is
in progress, so that the amendment will be effective with respect to the Company
at such time as the reorganization is considered and voted upon. Thus, the
amendment will allow the
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<PAGE> 26

reorganization to be approved by the affirmative vote of a majority, rather than
two-thirds, of the outstanding shares of the Company.

Approval of the amendment is not contingent upon shareholder approval of
the Agreement and Plan of Reorganization. If shareholders approve the amendment,
but do not approve the reorganization plan, the amendment will become effective
upon the filing of Articles of Amendment with the State Department of Assessment
and Taxation of Maryland.

ITEM 3(B).
APPROVAL OF AGREEMENT AND PLAN OF REORGANIZATION

The next few pages of this proxy statement discuss important details of the
reorganization plan, including the following:

- Why we want to reorganize the Company.

- How we plan to accomplish the reorganization.

- How the reorganization will affect the Company.

- How a Delaware business trust compares to the Company's current legal
structure.

- How many shareholder votes we need to approve the reorganization.

WHY WE WANT TO REORGANIZE THE COMPANY

DELAWARE LAW IS FAVORABLE TO MUTUAL FUNDS. We have proposed to reorganize
the Company as a DELAWARE business trust because that state's business trust law
contains provisions that are well suited to mutual funds. The "move" to Delaware
will be largely on paper; your Fund will continue to operate out of Illinois,
just as it does now.

CERTAIN STATE TAXES WILL NO LONGER APPLY TO THE FUND AS A BUSINESS
TRUST. Your Fund currently pays foreign franchise taxes to the State of
Illinois. This tax applies to your Fund because it is headquartered in Illinois
and is a "foreign" corporation--that is, organized as a corporation under the
laws of a different state, Maryland. If your Fund were instead organized in the
form of a business trust (as many mutual funds are) it would be exempt from the
Illinois foreign franchise tax.

HOW WE PLAN TO ACCOMPLISH THE REORGANIZATION

AGREEMENT AND PLAN OF REORGANIZATION. The Board of Directors has approved a
written Agreement and Plan of Reorganization for the Company. This document
spells out the terms and conditions that will apply to the Company's
reorganization into a Delaware business trust. A copy of the Agreement and Plan
of Reorganization is attached as Exhibit B.

THREE STEPS TO REORGANIZE. In essence, the reorganization will be a
three-step process. The first step is already taken: We have established a
Delaware business trust especially for the Company. Prior to the reorganization,
this trust will issue a single share--to the Company. The Company, as sole
shareholder of the Delaware business trust, will then take certain actions
described below. Second, if this proposal is approved, the Company will transfer
all of its assets and liabilities to the trust. As part of this second step, the
trust will open an account for each Fund shareholder. The trust will then credit
each account with the exact number of full and fractional shares that each
shareholder owned in the Company on the reorganization date. And third, we will
dissolve the Company's Maryland corporate entity.

EFFECTIVE AS SOON AS PRACTICABLE. If approved by shareholders, the
reorganization will take place as soon as feasible after the Company receives
the necessary regulatory approvals and legal opinions. The reorganization is
expected to occur on December 15, 1999 or at such other date and time as may be
agreed upon by the parties. However, at any time prior to the reorganization,
the Board of Directors may decide that it is in the

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<PAGE> 27

best interest of the Company and its shareholders not to go forward with this
project. If that happens, the Company will continue to operate as it is
currently organized.

HOW THE REORGANIZATION WILL AFFECT THE COMPANY

THE COMPANY'S INVESTMENT OBJECTIVE, POLICIES, INVESTMENT ADVISERS, AND
FISCAL YEAR WILL STAY THE SAME (EXCEPT FOR ANY CHANGES APPROVED BY SHAREHOLDERS
UNDER ITEMS 4 AND 5). The reorganization will not change any of these. That
said, we are asking shareholders to waive temporarily any existing investment
restrictions that would otherwise prohibit the reorganization. (For instance,
several of the Funds are prohibited from acquiring control of any company. As
part of the reorganization, however, the Company would be acquiring control of
the newly formed trust.) Your vote in favor of the reorganization will operate
as a temporary waiver of any such restrictions.

THE REORGANIZATION WILL HAVE NO IMPACT ON THE COMPANY'S SHARE PRICE. On the
day of the reorganization, the newly formed trust's share price will be the same
as that of the Company. The reorganization will not cause the Company's share
price to go up or down, and you will own the same number of shares. Any declared
but undistributed dividends or capital gains for the Company will carry over in
the reorganization.

THE DIRECTORS ELECTED AT THIS MEETING BY SHAREHOLDERS WILL CONTINUE AS
TRUSTEES FOLLOWING THE REORGANIZATION. Federal securities laws require that at
least one-half of the Company's Directors be elected by shareholders. While the
Company meets this standard now, that technically will not be true once it
reorganizes as a trust. Rather than call another shareholder meeting to vote on
Trustees after the reorganization, we will treat shareholder approval of this
proposal as authorization to elect the Company's then-current Board members to
the same positions with the trust. This approach will avoid the considerable
expense of printing, mailing, and tabulating more proxies after the
reorganization.

THE COMPANY'S EXISTING INDEPENDENT AUDITORS WILL CONTINUE. Subject to
shareholder ratification of the Company's existing independent auditors in Item
2, Ernst & Young LLP will continue to audit and certify the Funds' financial
statements. Ernst & Young LLP will continue to review the Funds' Annual Reports
to Shareholders and their filings with the U.S. Securities and Exchange
Commission. Neither Ernst & Young LLP nor any of its partners have any direct or
material indirect financial interest in the Company or the trust.

THE TRUST WILL ENTER INTO A NEW MANAGEMENT AGREEMENT WITH THE FUNDS'
CURRENT ADVISER ON SUBSTANTIALLY THE SAME TERMS AS THE CURRENT MANAGEMENT
AGREEMENT WITH THE COMPANY, EXCEPT AS MAY BE AMENDED FOR THE READY RESERVES
FUND, AS DESCRIBED IN ITEM 7 BELOW. We will treat Shareholder approval of the
reorganization as authorization for the Company, as sole shareholder of the
trust, to approve a restated Management Agreement between the Company's current
investment adviser, William Blair & Company, L.L.C., and the new Delaware
business trust on substantially the same terms as the current Management
Agreement(s) with the Company including, if approved by shareholders of the
Ready Reserves Fund, the amendment to the Management Agreement for the Ready
Reserves Fund, as described in Item 7 below.

THE REORGANIZATION IS CONDITIONED ON TAX-FREE TREATMENT AT THE FEDERAL
LEVEL. We fully expect that the reorganization will have no federal income tax
consequences for you or the Company. We will not proceed with the reorganization
until this matter is confirmed by an opinion of counsel. Following the
reorganization, from a tax standpoint, the adjusted basis of your Fund shares
will be the same as before. We do not expect shareholders to incur any personal
state or local taxes as a result of the reorganization, but you should consult
your own tax adviser to be sure.

THE COMPANY GENERALLY WILL STOP ISSUING SHARE CERTIFICATES AND WILL CONVERT
OUTSTANDING SHARE CERTIFICATES TO RECORD ENTRY FORM. In today's financial world,
very few investors hold share certificates as physical evidence of their mutual
fund investments. Instead, investors' mutual fund holdings are maintained and
accounted for as "record entries" on the fund's computer system. The main
problems with share certificates are that:

- They present opportunities for theft, loss, and fraud--and therefore
offer less protection to shareholders, rather than more.

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<PAGE> 28

- They are especially inconvenient--you must return your certificates to
the fund before your shares can be redeemed or exchanged.

In light of these concerns and the minimal demand for share certificates,
the Company will stop issuing them after the reorganization. In addition, the
Company will convert any outstanding share certificates to record entry form.
This will not happen automatically; we will arrange conversion details
separately with the Company's certificate holders.

HOW THE PROPOSED DELAWARE BUSINESS TRUST COMPARES TO THE COMPANY'S CURRENT LEGAL
STRUCTURE

Federal securities laws have much to say about the way mutual funds
operate, but they do not cover every aspect of a fund's existence. State law and
each fund's governing documents fill in most of the gaps. The following
discussion compares the state law and documents currently governing the Company
with the state law and documents that will apply if it reorganizes as a Delaware
business trust. This discussion is not a comprehensive review of all technical
distinctions between the different legal structures, but it provides you with a
comparison in certain key areas of a Delaware business trust to a Maryland
corporation--the Company's present legal structure. We have attached the
proposed Declaration of Trust as Exhibit C for your information.

SHAREHOLDER LIABILITY. Absent unusual circumstances, shareholders of a fund
organized as a Maryland corporation have no personal liability for the Company's
obligations. The same is true for shareholders of a fund organized as a Delaware
business trust.

DIRECTOR/TRUSTEE LIABILITY AND INDEMNIFICATION. With a Maryland
corporation, Directors cannot be held liable for their activities in that role
so long as they perform their duties in good faith, prudently, and in the
Company's best interests. The same is generally true for Trustees of a Delaware
business trust, if so provided in the Company's governing documents, which your
Fund's documents will so provide. Under each legal structure, the Company can
indemnify its Directors/Trustees from claims and expenses arising out of their
service to the Company--unless, that is, a Director/Trustee has acted improperly
in a particular matter. In addition, any such indemnification shall be subject
to the requirements and limitations of sec. 17(h) of the Investment Company Act
of 1940, as amended.

SHAREHOLDER VOTING RIGHTS AND MEETINGS. Under a fund organized as a
Maryland corporation, shareholders' voting rights are based on the number of
shares they own. As a Delaware business trust, your fund will continue to
utilize a share-based voting rights system.

SHARE CERTIFICATES. If requested, Funds organized as Maryland corporations
will issue share certificates to their investors. Your Fund's past practice
generally has been not to issue share certificates. As a Delaware business
trust, a Fund is not required to issue share certificates.

TERMINATION OF THE COMPANY. As a Maryland corporation, the Company can be
terminated by the Trustees upon the affirmation of a majority of all shareholder
votes entitled to be cast. As a Delaware business trust, the Company can be
terminated by the Trustees at their discretion, with written notice to
shareholders.

THE BOARD RECOMMENDS THAT YOU VOTE FOR THE REORGANIZATION.

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ITEM 4.

TO APPROVE A CHANGE IN THE FUNDS' INVESTMENT OBJECTIVES
OF THE WILLIAM BLAIR GROWTH FUND, WILLIAM BLAIR INTERNATIONAL
GROWTH FUND, WILLIAM BLAIR INCOME FUND AND
WILLIAM BLAIR READY RESERVES FUND

The Directors unanimously recommend that shareholders of the William Blair
Growth Fund, William Blair International Growth Fund, William Blair Income Fund,
and the William Blair Ready Reserves Fund vote to replace each Fund's current
investment objective, as noted below. The purpose of the proposed objective is
to clarify and more concisely describe each Fund's goal. The proposed changes to
the Funds, investment objectives are not intended to alter the way in which the
Funds are managed. If shareholders do not vote to change a Fund's investment
objective, the Fund's current objective will remain in place.

The William Blair Growth Fund's current investment objective states: "The
William Blair Growth Fund seeks long-term appreciation of capital by investing
in well-managed companies in growing industries."

The proposed investment objective of the William Blair Growth Fund states:
"The William Blair Growth Fund seeks long-term capital appreciation."

The William Blair International Growth Fund's current investment objective
states: "The William Blair International Growth Fund seeks long-term
appreciation of capital through investment in well managed, quality growth
companies."

The proposed investment objective of the William Blair International Growth
Fund states: "The William Blair International Growth Fund seeks long-term
capital appreciation."

The William Blair Income Fund's current investment objective states: "The
William Blair Income Fund seeks to provide investors with as high a level of
current income as is consistent with the preservation of capital by investing
primarily in a diversified portfolio of high-grade, intermediate-term debt
securities."

The proposed investment objective of the William Blair Income Fund states:
"The William Blair Income Fund seeks a high level of current income relative to
stability of principal."

The William Blair Ready Reserves Fund's current investment objective
states: "The William Blair Ready Reserves Fund seeks to obtain the maximum
current income consistent with preservation of capital by investing exclusively
in high-quality money market instruments."

The proposed investment objective of the William Blair Ready Reserves Fund
states: "The William Blair Ready Reserves Fund seeks current income, a stable
share price and daily liquidity."

THE BOARD RECOMMENDS THAT YOU VOTE FOR THE CHANGE IN INVESTMENT OBJECTIVE OF THE
WILLIAM BLAIR GROWTH FUND, THE WILLIAM BLAIR INTERNATIONAL GROWTH FUND, THE
WILLIAM BLAIR INCOME FUND AND THE WILLIAM BLAIR READY RESERVES FUND.

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<PAGE> 30

ITEM 5.
TO APPROVE STANDARDIZED FUNDAMENTAL INVESTMENT
RESTRICTIONS FOR THE FUNDS
(THIS PROPOSAL INVOLVES SEPARATE VOTES
ON SUB-ITEMS 5(a) THROUGH 5(g))

Each Fund is subject to investment restrictions which establish percentage
and other limits that govern the Fund's investment activities. Under the 1940
Act, investment restrictions relating to certain activities are required to be
"fundamental," which means that any changes require shareholder approval. Funds
are permitted to deem other restrictions fundamental, and they may also adopt
"nonfundamental" restrictions, which can be changed by the Board of Directors
without shareholder approval. Of course, any change in a Fund's investment
restrictions, whether fundamental or not, would be approved by the Board and
reflected in the Fund's prospectus or other offering documents.

Unlike investment objectives and policies, which are often different for
each Fund, investment restrictions for Funds tend to be the same or similar,
because they are based on legal and regulatory requirements, or positions of the
staff of the SEC, that apply to all funds. Over the years, however, as new Funds
were created or added to the Company, investment restrictions relating to the
same activities were expressed in a variety of different ways. Many older Funds
are subject to investment restrictions that were adopted in response to
regulatory, business, or industry conditions that no longer exist. In addition,
a number of Funds adopted fundamental restrictions in response to state laws and
regulations that no longer apply because they were preempted by the National
Securities Markets Improvement Act of 1996. As a result, a number of fundamental
restrictions are no longer required to be fundamental, and some previously
required restrictions are no longer required at all.

The Directors, together with the Company's management and the Adviser, have
analyzed the current fundamental investment restrictions of each Fund, and have
concluded that six new standardized fundamental investment restrictions should
be adopted for each Fund. The proposed investment restrictions relate only to
activities that are required under the 1940 Act to be the subject of fundamental
policies and restrictions. The proposed investment restrictions are designed to
reflect all current regulatory requirements and to provide flexibility in
responding to future legal, regulatory, or market changes. Each Fund currently
has fundamental investment restrictions that govern the same activities covered
by the proposed fundamental investment restrictions, and a number of Funds
currently have other fundamental investment restrictions governing additional
activities. Management is recommending that the six new standardized fundamental
restrictions described below replace each Fund's current investment restrictions
relating to the same activities. At this time, Management is also recommending
that all of the other current fundamental investment restrictions of each Fund
be reclassified as nonfundamental. If these current fundamental restrictions are
made nonfundamental, the Directors would be able to modify or eliminate the
current restrictions without the costs or delays associated with a shareholder
vote.

The proposed changes will not affect any Fund's investment objective, which
will continue to remain a fundamental investment restriction of each Fund.
Management has advised the Board that the proposed changes are not currently
intended to change the way any Fund is being managed or operated. If, as
proposed, certain fundamental investment restrictions are reclassified as
nonfundamental, management intends in the future to recommend that the Board
approve certain modifications designed to result in a more modern and
standardized list of investment restrictions for the various Funds of the
Company. The recommendations by management will likely involve the modifications
or elimination of current restrictions. The Board of Directors will determine
separately, for each Fund, whether elimination or modifications of a common
investment restriction is appropriate for that Fund.

Management believes that a modern, standardized list of restrictions will
enhance the ability of the Funds to achieve their objectives because the Funds
will have greater investment management flexibility to respond to changes in
market, industry, or regulatory conditions. In addition, standardized
restrictions are expected to enable the Funds to operate more efficiently and to
more easily monitor compliance with investment restrictions.

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<PAGE> 31

The six new proposed fundamental investment restrictions are described
below within the relevant Sub-Items. In addition, Exhibit D contains a list of
the current fundamental investment restrictions for each Fund. The list
identifies which of the current fundamental investment restrictions are proposed
to be replaced and which are proposed to be reclassified as nonfundamental.
Unless all of the Sub-Items are approved by shareholders of a particular Fund,
none of the Sub-Items will be adopted for that Fund.

The Board has voted to adopt each of the proposed standardized fundamental
investment restrictions for the Funds, as well as to approve the
reclassification of the existing fundamental investment restrictions as
nonfundamental, and unanimously recommend that you vote for each of Sub-Items
5(a) through 5(g) for your Fund.
SUB-ITEM 5(a).
TO ADOPT A NEW FUNDAMENTAL INVESTMENT RESTRICTION
CONCERNING THE CONCENTRATION OF THE FUND'S INVESTMENTS
IN THE SAME INDUSTRY

Under the 1940 Act, a Fund's policy of concentrating its investments in
securities of companies in the same industry must be fundamental. A mutual fund
concentrates its investments, for purposes of the SEC, if it invests more than
25% of its "net" assets (exclusive of cash, U.S. government securities and
tax-exempt securities) in a particular industry or group of industries.

The Funds currently have fundamental investment restrictions prohibiting
them from concentrating their investments in the same industry. There are,
however, variations in the way that the investment restriction is described in
the Funds' offering documents.

The Board recommends that you approve the standardized fundamental
investment restriction set forth below. In approving the proposed investment
restriction and concluding that it would recommend the investment restriction to
Fund shareholders, the Directors considered that the proposed investment
restriction will standardize the concentration restriction for the Funds, and is
intended to provide flexibility for Funds to respond to changes in the SEC
staff's position on concentration of investments, or to other relevant legal,
regulatory, or market developments without the delay or expense of a shareholder
vote.

PROPOSED CONCENTRATION RESTRICTION: The Fund will not make investments that
will result in the concentration (as that term may be defined in the 1940
Act, any rule or order thereunder, or SEC staff interpretation thereof) of
its investments in the securities of issuers primarily engaged in the same
industry, provided that this restriction does not limit the Fund from
investing in obligations issued or guaranteed by the U.S. government, its
agencies or instrumentalities, or in tax-exempt securities or certificates
of deposit.

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<PAGE> 32

SUB-ITEM 5(b).
TO ADOPT A NEW FUNDAMENTAL INVESTMENT RESTRICTION
CONCERNING BORROWING MONEY AND ISSUING SENIOR SECURITIES

The 1940 Act imposes certain limits on investment companies with respect to
borrowing money and issuing senior securities. In general, the limitations are
designed for two purposes. For all mutual funds, the limitations are designed to
protect shareholders and their investments by restricting a fund's ability to
subject its assets to any claims of creditors or senior security holders who
would be entitled to dividends or rights on liquidation of the fund prior to the
rights of shareholders. In addition, the limitations are designed to ensure that
mutual funds have adequate resources available to meet redemption requests.
Under the 1940 Act, a mutual fund's investment restrictions relating to
borrowing and senior securities must be fundamental. Borrowing money and issuing
senior securities are related activities under the 1940 Act in that, if a mutual
fund fails to adhere to the restrictions applicable to borrowing, the fund will
be considered to have issued an impermissible senior security.

The current investment restrictions concerning borrowing and senior
securities vary considerably from Fund to Fund and are contained in two separate
restrictions. Shareholders of each Fund are being asked to approve a new
standardized fundamental restriction that covers both borrowing and senior
securities, and which is designed to reflect all current regulatory
requirements. The proposed restriction would permit the Funds to borrow or issue
senior securities within the limits established under the 1940 Act or under any
SEC rule, regulation, or staff interpretation thereof.

A "senior security" is defined as an obligation of a mutual fund with
respect to its earnings or assets that takes precedence over the claims of the
fund's shareholders with respect to the same earnings or assets. The 1940 Act
generally prohibits open-end funds from issuing senior securities in order to
limit the ability of investment companies to use leveraging. In general, a
mutual fund uses leveraging when it enters into securities transactions with
borrowed money, or money to which it has only a temporary entitlement.

SEC staff interpretations allow open-end funds to engage in a number of
types of transactions that might be considered to raise "senior securities" or
"leveraging" concerns, so long as the mutual funds meet certain collateral
requirements set by the SEC staff that are designed to protect shareholders. For
example, some of the transactions that may raise senior security concerns
include short sales, certain options and futures transactions, reverse
repurchase agreements, and securities transactions that obligate the Fund to pay
money at a future date (such as when-issued, forward commitment, or delayed
delivery transactions) (to be referred to collectively as "Leveraging-Type
Transactions"). Funds that engage in Leveraging-Type Transactions must set aside
money or securities or engage in certain offsetting securities transactions, to
meet the SEC staff's collateralization requirements.

Under the 1940 Act, an open-end fund is prohibited from issuing senior
securities, but is permitted to borrow up to 5% of its total assets for
temporary purposes from any person, so long as the borrowing is privately
arranged, and may also borrow from banks, provided that if such bank borrowings
exceed 5%, the fund must have assets totaling at least 300% of the borrowing
when the amount of the borrowing is added to the fund's other assets. The effect
of this latter provision is to allow an open-end fund to borrow from banks
amounts up to one-third (33 1/3%) of its total assets (including the amount
borrowed). Open-end funds typically borrow money to meet redemptions to avoid
being forced to sell portfolio securities before they would have otherwise been
sold. This technique allows open-end funds greater flexibility to buy and sell
portfolio securities for investment or tax considerations, rather than for cash
flow considerations.

Since the proposed investment restriction would provide greater flexibility
for some Funds to engage in borrowing and to engage in Leveraging-Type
Transactions, the Funds may be subject to additional costs and risks. For
example, the costs of borrowing can reduce a Fund's total return. Further, upon
engaging in Leveraging-Type Transactions, such Funds could experience increased
risks due to the effects of leveraging. The SEC staff's collateralization
requirements are designed to address such risks. However, adoption of the new
investment restriction will not affect the way the Funds currently are managed
or operated.

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<PAGE> 33

The Board recommends that shareholders approve the fundamental investment
restriction set forth below for each Fund. The proposed investment restriction
will establish a standardized borrowing and senior securities restriction that
is appropriate for the Funds and is written to provide flexibility for the Funds
to respond to changes in legal, regulatory, or market developments.

PROPOSED BORROWING AND SENIOR SECURITIES RESTRICTION: The Fund may not
borrow money or issue senior securities, except as the 1940 Act, any rule
or order thereunder, or SEC staff interpretation thereof may permit.

SUB-ITEM 5(c).
TO ADOPT A NEW FUNDAMENTAL INVESTMENT RESTRICTION
CONCERNING UNDERWRITING

Each Fund is currently subject to a fundamental investment restriction
prohibiting it from acting as an underwriter of the securities of other issuers.
Under the 1940 Act, a fund's policy or restriction relating to underwriting must
be fundamental. A person or company is generally considered an underwriter under
the federal securities laws if it participates in the public distribution of
securities of other issuers, usually by purchasing the securities from the
issuer and reselling the securities to the public. Underwriters are subject to
stringent regulatory requirements and often are exposed to substantial
liability. Thus, virtually all mutual funds operate in a manner that allows them
to avoid acting as underwriters.

From time to time, a mutual fund may purchase a security for investment
purposes, which it later sells or redistributes to institutional investors or
others under circumstances where the fund could possibly be considered to be an
underwriter under the technical definition of underwriter contained in the
securities laws. Management, consistent with SEC staff interpretations, believes
that the Funds legally would not be considered to be underwriters in these
circumstances.

The Board recommends that shareholders of the Funds approve the
standardized fundamental investment restriction regarding underwriting set forth
below. The new restriction is proposed for each Fund because it will help to
achieve the goal of standardization of the language of the investment
restrictions among all Funds.

PROPOSED UNDERWRITING RESTRICTION: The Fund may not underwrite the
securities of other issuers, except that the Fund may engage in
transactions involving the acquisition, disposition, or resale of its
portfolio securities, under circumstances where it may be considered to be
an underwriter under the Securities Act of 1933.

SUB-ITEM 5(d).
TO ADOPT A NEW FUNDAMENTAL INVESTMENT RESTRICTION
CONCERNING INVESTMENTS IN REAL ESTATE

Each Fund currently has a fundamental investment restriction prohibiting
the purchase or sale of real estate. Most Funds' restrictions specifically allow
the Funds to invest in companies that deal in real estate, or to invest in
securities that are secured by real estate. Under the 1940 Act, a fund's policy
or restrictions regarding investment in real estate must be fundamental.

The Board recommends that shareholders of each Fund approve the fundamental
investment restriction concerning real estate set forth below. The proposed
investment restriction is designed to standardize the language of the real
estate restriction among the various Funds. The proposed investment restriction
will permit Funds to purchase securities whose payments of interest or principal
are secured by mortgages or other rights to real estate in the event of default.
The investment restriction will also enable the Funds to invest in companies
within the real estate industry, provided such investments are consistent with
the Funds' investment objectives and policies. Adoption of the proposed
restriction will not affect the way the Funds are managed or operated because
the current restrictions will remain as nonfundamental policies unless and until
the Board of Directors modifies them in the future.

17
<PAGE> 34

PROPOSED REAL ESTATE RESTRICTION: The Fund may not purchase or sell real
estate unless the real estate is acquired as a result of ownership of
securities or other instruments, and provided that this restriction does
not prevent the Fund from investing in issuers that invest, deal, or
otherwise engage in transactions in real estate or interests therein, or
investing in securities that are secured by real estate or interests
therein.

SUB-ITEM 5(e).
TO ADOPT A NEW FUNDAMENTAL INVESTMENT RESTRICTION
CONCERNING INVESTMENTS IN COMMODITIES

The Funds currently are subject to fundamental restrictions prohibiting the
purchase or sale of commodities or commodity contracts. Under the 1940 Act,
policies and restrictions regarding commodities must be fundamental. The most
common types of commodities are physical commodities such as wheat, cotton,
rice, and corn. However, under federal law, futures contracts are considered to
be commodities, and, therefore, financial futures contracts, such as futures
contracts related to currencies, stock indices, or interest rates, are
considered to be commodities. If a fund buys a financial futures contract, it
obtains the right to receive (or, if the fund sells the contract, the Fund is
obligated to pay) the cash difference between the contract price for an
underlying asset or index and the future market price, if the market price is
higher. If the future price is lower, the fund is obligated to pay (or, if the
fund sold the contract, the fund is entitled to receive) the amount of the
decrease. Mutual funds often desire to invest in financial futures contracts and
options related to such contracts for hedging or other investment reasons.

The Board recommends that shareholders approve the fundamental investment
restriction concerning commodities set forth below for each Fund. The proposed
restriction would standardize the language of the restriction among the various
Funds and provide appropriate flexibility for the Funds to invest in financial
futures contracts and related options. As proposed, the restriction is broad
enough to permit investment in financial futures instruments for either
investment or hedging purposes, and, thus is broader than some Funds' current
restrictions. Most Funds' current restrictions permit such investments. Using
financial futures instruments can involve substantial risks, and will be
utilized only if the investment manager determines that such investments are
advisable and such practices are later affirmatively authorized by the Board.

PROPOSED COMMODITIES RESTRICTION: The Fund may not purchase or sell
physical commodities, unless acquired as a result of ownership of
securities or other instruments, and provided that this restriction does
not prevent the Fund from engaging in transactions involving futures
contracts and options thereon, or investing in securities that are secured
by physical commodities.

SUB-ITEM 5(f).
TO ADOPT A NEW FUNDAMENTAL INVESTMENT
RESTRICTION CONCERNING LENDING BY THE FUND

Each Fund is currently subject to a fundamental investment restriction
limiting its ability to make loans. In order to ensure that the Funds may invest
in certain debt securities or repurchase agreements, which could be
characterized as the making of loans, most current fundamental restrictions
specifically permit such investments. Securities lending is a practice that has
become common in the mutual fund industry, and involves the temporary loan of
portfolio securities to parties who use the securities for the settlement of
securities transactions. The collateral delivered to a Fund in connection with
such a transaction is then invested to provide the Fund with additional income.

The Board recommends that shareholders approve the standardized fundamental
investment restriction concerning lending described below for each Fund. The
proposed restriction prohibits loans by the Funds except in the circumstances
described below in the proposed new policy and, in some cases, would provide
more flexibility than the current lending restriction because of the authority
to engage in securities lending. Although securities lending involves certain
risks if the borrower fails to return the securities, management believes that
increased flexibility to engage in securities lending does not materially
increase the risk to which the Funds are currently subject.

18
<PAGE> 35

PROPOSED LENDING RESTRICTION: The Fund may not make loans, provided that
this restriction does not prevent the Fund from purchasing debt
obligations, entering into repurchase agreements, loaning its assets to
broker/dealers or institutional investors, and investing in loans,
including assignments and participation interests.

SUB-ITEM 5(g).
TO RECLASSIFY ALL OTHER CURRENT FUNDAMENTAL
INVESTMENT RESTRICTIONS AS NONFUNDAMENTAL

As described in the previous Sub-Items, each Fund has a fundamental
investment restrictions governing concentration, borrowing and senior
securities, underwriting, real estate, commodities, and lending. Many of the
Funds, especially the older Funds, have additional fundamental investment
restrictions governing activities that are no longer required to be subject to
fundamental investment restrictions. Exhibit D identifies those current
fundamental restrictions that are proposed to be reclassified as nonfundamental.
After these investment restrictions are made nonfundamental, Fund management and
the Directors will analyze and evaluate each Fund's nonfundamental investment
restrictions on an individual basis, while considering the particular investment
objective and policies of the Fund. Over time, the Funds' nonfundamental
investment restrictions may be standardized as appropriate. With the exception
of a Fund's classification as a diversified fund for purposes of the 1940 Act,
the proposed reclassification of the current investment restrictions as
nonfundamental will provide the Board with the authority and ability to make
such changes without being required to seek an additional shareholder vote.

The conversion of investment restrictions no longer required to be
fundamental will provide management of the Funds with the flexibility to respond
to industry changes.

THE BOARD RECOMMENDS THAT YOU VOTE FOR EACH FUNDAMENTAL INVESTMENT
RESTRICTION AND FOR RECLASSIFYING THE REMAINING RESTRICTIONS AS
NONFUNDAMENTAL.

ITEM 6.
TO APPROVE A RULE 12B-1 DISTRIBUTION PLAN (CLASS N SHARES ONLY)

On July 20, 1999 and September 8, 1999, the Board established a multiple
class structure for the Company, designating shares of each Fund into five
sub-classes: Class A, Class B, Class C, Class N and Class I shares (except Ready
Reserves Fund for which only Class N and Class I shares were designated). Each
Class of shares differs only with respect to sales loads and expenses. Upon
conversion to the multiple class structure, existing shareholders of each Fund
became Class N shareholders and, at a later date, certain Class N shareholders,
who met the eligibility requirements for Class I shares, were converted to Class
I shares. The conversion of your shares to Class N shares as a part of the
implementation of the multiple class structure did not result in the imposition
of any sales load or any additional expenses. Class N shares are currently no
load and are not subject to distribution or shareholder service fees.

You are being asked to approve a Rule 12b-1 distribution plan for Class N
shares. Rule 12b-1 under the 1940 Act (the "Rule") provides, among other things,
that a mutual fund may bear the expenses of distributing its shares only
pursuant to a plan adopted in accordance with the Rule. William Blair & Company,
L.L.C. (the "Distributor") acts as distributor for the Company's shares and
distributes each Fund's Class N shares.

The Board, including a majority of the "noninterested" Directors, voted to
approve the Distribution Plan under the Rule (the "Distribution Plan") for the
Class N shares of each Fund. The Board directed that the Distribution Plan be
submitted to the Class N shareholders of each Fund at the Special Meeting, along
with a recommendation that shareholders approve the Distribution Plan.

In approving the Distribution Plan, the Board considered the following: the
fact that certain Funds will be primarily dependent for sales of their shares on
broker-dealers, which cannot be expected to sell Fund shares without
compensation; the likelihood that the Plan will stimulate sales of shares of the
Company, and assist in
19
<PAGE> 36

increasing the asset base of the Funds in the face of competition from a variety
of financial products; the potential advantages to shareholders of the Company
of prompt and significant growth of the asset base of the Funds, including
greater liquidity, more investment flexibility and achievement of greater
economies of scale; the formula pursuant to which the payment of fees under the
Plan is determined; the reasonableness of the fees to be paid under the Plan in
view of the levels and types of services that the Distributor will provide; the
lack of reasonable alternative methods of distribution and payments therefor
which would be equally effective; and the fact that any significant increase in
the asset value of the Funds will benefit the investment adviser of the Company
by increasing the fees payable to it. Having considered the foregoing matters,
the Board determined that, on balance, there is reasonable likelihood that the
Distribution Plan will benefit the Funds and their respective shareholders.

A copy of the Distribution Plan for the Class N shares of each Fund is
attached as Exhibit E, and this summary is qualified in its entirety by
reference to that Exhibit.

Under the Distribution Plan, the Distributor receives a distribution fee,
payable as an expense of the Class N shares, which the Distributor uses to pay
for distribution-related services for Class N shares. Under the Distribution
Plan, the Funds will pay to the Distributor, at the end of each calendar month,
a shareholder/distribution services fee computed at the annual rate of 0.25% of
the average daily net assets attributable the Class N shares of each Fund,
except the Income Fund and the Ready Reserves Fund.

For the Income Fund, the shareholder/distribution services fee will be
computed at the annual rate of 0.15% of the average daily net assets
attributable to the Class N shares of the Income Fund. For the Ready Reserves
Fund, the shareholder/distribution services fee will be computed at the annual
rate of 0.35% of the average daily net assets attributable to the Class N shares
of the Ready Reserves Fund. For the Ready Reserves Fund only, the Adviser has
agreed to lower the management fees it receives under the Management Agreement
with the Company by 0.35%, contingent upon approval by shareholders of the Ready
Reserves Fund of the Distribution Plan. For the Ready Reserves Fund only,
approval of the Distribution Plan is contingent upon shareholder approval of the
Amended Management Agreement to lower the management fees as described in Item 7
below.

Exhibit F contains a table showing the current and pro-forma fees of each
Fund, reflecting the implementation of the proposed Distribution Plan.

Under the Distribution Plan, the Distributor bears all the expenses of
providing shareholder/distribution services, including the payment of any
commissions or distribution fees. The Distributor provides for
distribution-related services that are primarily intended to result in the sale
of the Fund, including but not limited to compensation to employees or
independent contractors of the Distributor; compensation to and expenses of the
Distributor and other selected dealers who engage in or support the distribution
of the Funds, including overhead and telephone and other communication expenses;
the printing of prospectuses, statements of additional information and reports
for other than existing shareholders, the preparation, printing and distribution
of sales literature and advertising materials, and other direct and indirect
distribution-related expenses. The Distributor may enter into related selling
group agreements with various financial services firms, including affiliates of
the Distributor, that provide distribution services to investors. The
Distributor may also provide some of the shareholder/distribution services.

The Distribution Plan will continue indefinitely, provided that its
continuance shall be approved at least annually by a vote of a majority of the
Board, including the vote of a majority of the "noninterested" directors, cast
in person at a meeting called for such purpose.

20
<PAGE> 37

Pursuant to the Distribution Plan, the Distributor will prepare reports to
the Board on a quarterly basis for the Fund's Class N shares, showing the
amounts paid to the various financial services firms and such other information
as from time to time the Board may reasonably request. The Rule requires the
Board to review such reports at least quarterly.

THE BOARD RECOMMENDS THAT YOU VOTE FOR THE RULE 12b-1 DISTRIBUTION PLAN.

ITEM 7.
TO APPROVE AN AMENDED MANAGEMENT AGREEMENT
FOR THE READY RESERVES FUND ONLY

The Directors recommend that the shareholders of the Company approve an
amendment to the Company's Management Agreement with the Adviser (the "Amended
Agreement"). The Amended Agreement modifies the management fee that the Adviser
receives from the Ready Reserves Fund to provide for lower fees to offset the
shareholder/distribution services fee under the Distribution Plan. Approval of
the Amended Agreement is contingent upon shareholder approval of the
Distribution Plan, as described in Item 6. THE AMENDED AGREEMENT WILL RESULT IN
A MANAGEMENT FEE FOR THE READY RESERVES FUND THAT IS LOWER THAN THE FEE PAYABLE
UNDER THE PRESENT MANAGEMENT AGREEMENT (THE "PRESENT AGREEMENT").

PROPOSED AMENDMENT TO THE PRESENT AGREEMENT

Except for the change of fee for the Ready Reserves Fund discussed below,
the Amended Agreement is substantially identical to the Present Agreement. The
duties and responsibilities of the Adviser to the Ready Reserves Fund would be
the same as under the Present Agreement.

The management fee is an annual percentage of the Ready Reserves Fund's
average daily net assets (the management fee rate), calculated and paid monthly.
The Amended Agreement lowers the fee schedule for the Ready Reserves Fund by
0.35%. Under the Present Agreement, the Ready Reserves Fund pays the Adviser as
follows:

.625% of the first $250 million of average daily net assets; plus

.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

Under the Amended Agreement, the Ready Reserves Fund would pay the Adviser as
follows:

.275% of the first $250 million of average daily net assets; plus

.250% of the next $250 million of average daily net assets; plus

.225% of the next $2,000 million of average daily net assets; plus

.200% of average daily net assets over $2,500 million

If approved by shareholders, the Amended Agreement would take effect on
January 1, 2000 and would continue in effect if approved at least annually by
(i) the vote, cast in person at a meeting called for the purpose, of a majority
of those Directors who are not "interested persons" of the Company or the
Adviser (the "Independent Directors") and (ii) the vote of either a majority of
the Directors or a majority of the outstanding shares of the Company. If the
Amended Agreement is not approved, the Present Agreement will continue in effect
as long as its continuance is approved at least annually by (i) the vote, cast
in person at a meeting called for the purpose, of a majority of the Independent
Directors, and (ii) the vote of either a majority of the Directors or a majority
of the outstanding shares of the Company.

21
<PAGE> 38

MATTERS CONSIDERED BY THE BOARD

The Amended Agreement was approved by the Board of Directors of the
Company, including all of the Independent Directors, on September 8, 1999. The
Board of Directors received materials relating to the Amended Agreement in
advance of the meeting at which the Amended Agreement was considered, and had
the opportunity to ask questions and request further information in connection
with such consideration. In considering the Amended Agreement, the Board of
Directors and the Independent Directors considered: (i) that the Adviser would
provide identical services under the Amended Agreement as it currently provides
under the Present Agreement and (ii) the lower management fee would offset a
shareholder/distribution services fee of 0.35% imposed in connection with the
proposed Distribution Plan. Based upon their evaluation of all material factors
and assisted by the advice of independent counsel, the Board concluded that the
proposed reduction to the management fees or the Ready Reserves Fund was in the
best interest of the Ready Reserves Fund shareholders. The Board of Directors,
including the Independent Directors, voted to approve the submission of the
Amended Agreement to shareholders of the Ready Reserves Fund and recommends that
shareholders vote FOR the Amended Agreement.

PRESENT AGREEMENT

The Present Agreement is dated May 1, 1996 and was last approved by the
Board on February 9, 1999 and by shareholders on April 23, 1996.

The Present Agreement may be terminated at any time by the Board of
Directors or by a vote of a majority of the outstanding shares of the Ready
Reserves Fund or by the Adviser on 60 days' written notice. The Board of
Directors or a majority of the outstanding voting securities of the Ready
Reserves Fund may terminate the Present Agreement, without payment of any
penalty, in the event that a court of competent jurisdiction has established
that the Adviser or any officer or principal of the Adviser has taken any action
which results in the breach of covenants of the Adviser set forth in the Present
Agreement. The Present Agreement also provides for its termination in the event
of an "assignment," as that term is defined in the 1940 Act.

The Amended Agreement does not differ in any material respect from the
Present Agreement, except with respect to the lower fees as described above.

INVESTMENT ADVISER

William Blair & Company, L.L.C. has served as the investment adviser and
manager for the Company and the Ready Reserves Fund since their inception in
1987. Pursuant to the Present Agreement, the Adviser acts as the Company's
adviser, manages its investments, administers its business affairs, furnishes
office facilities and equipment, provides clerical, bookkeeping and
administrative services, provides shareholder and information services and
permits any of its principals or employees to serve without compensation as
directors or officers of the Company if elected to such positions. In addition
to the management advisory fee, each Fund, including the Ready Reserves Fund,
pays the expenses of its operations, including a portion of the Company's
general administrative expenses, allocated on the basis of the Fund's net asset
value. Expenses that will be borne directly by the portfolios include, but are
not limited to, the following: the fees and expenses of independent auditors,
counsel, custodian and transfer agent, costs of reports and notices to
shareholders, stationery, printing, postage, costs of calculating net asset
value, brokerage commissions or transaction costs, taxes, registration fees, the
fees and expenses of qualifying the Company 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 also is the principal underwriter and distributor for shares of
the Fund, and acts as agent of the Fund in the sale of its shares (the
"Distributor"). In connection with the establishment of the multiple class
structure for the Company, the Distributor is paid up to 0.25% of the average
daily net assets attributable to each class of shares of each Fund, except the
Income Fund and the Ready Reserves Fund, which pays the Distributor up to 0.15%
and 0.35%, respectively, of the average daily net assets attributable to each
class of shares of these Funds.
22
<PAGE> 39

The Adviser/Distributor is a limited liability company, the affairs of
which are controlled by all its principals, none of whom owns more than 25% of
the firm. The Chief Executive Officer of the firm is E. David Coolidge III, and
the Executive Committee is comprised of Rocky Barber, E. David Coolidge III,
Richard D. Gottfred, Edgar D. Jannotta, John P. Kayser, Richard P. Kiphart,
Albert J. Lacher, Joseph F. LaManna and James D. McKinney. Messrs. Barber,
Fischer, Fuller, Greig, Hanig, Kaplan, Kayser, Kleczka, McMullan, Myer, Sullivan
and Urbina, Ms. Gassmann and Ms. Johnson, who are directors or officers of the
Company, are also principals or employees of the Adviser. The principal offices
of the Adviser/Distributor is located at 222 West Adams Street, Chicago,
Illinois 60606.

For the year ended December 31, 1998, the Ready Reserves Fund paid the
Adviser management fees of $6,215,491. Exhibit F contains a table showing the
amount and pro-forma fees of the Ready Reserves Fund, reflecting both the
shareholder/distribution services fee for Ready Reserves Fund under the
Distribution Plan and the lower management fee under the Amendment Management
Agreement.

THE BOARD RECOMMENDS THAT YOU VOTE "FOR" THE AMENDED MANAGEMENT AGREEMENT.

ADDITIONAL INFORMATION

QUORUM AND VOTING REQUIREMENTS

Items 1 and 2, Election of Directors and Ratification of Independent
Auditors, require the affirmative vote of a majority of the shares present in
person or represented by proxy at the Special Meeting. Item 3(a), the amendment
to the Articles of Incorporation, requires the affirmative vote of the holders
of a majority of the total number of shares outstanding and entitled to vote. If
Sub-Item 3(a) is approved, Sub-Item 3(b), the Reorganization of the Company into
a Delaware business trust also requires the affirmative vote of the holders of a
majority of the total number of shares outstanding and entitled to vote. If the
amendment is not approved, an affirmative vote of the holders of two-thirds of
the total number of shares outstanding and entitled to vote would be required
for approval of Sub-Item 3(b). Items 4, 5, 6 and 7, Changes to the Funds'
Investment Objectives, Standardization of the Funds' Fundamental Investment
Restrictions, Approval of the Distribution Plan, and Approval of an Amended
Management Agreement require the favorable vote of: (a) the holders of 67% or
more of the outstanding voting securities of the appropriate Fund present at the
meeting, if the holders of 50% or more of the outstanding voting securities of
the Fund are present or represented by proxy, or (b) the vote of the holders of
more than 50% of the outstanding voting securities of the appropriate Fund,
whichever is less.

Only shareholders of record on the Record Date will be entitled to vote at
the Special Meeting. Each share of the Company (or Fund, where appropriate) is
entitled to one vote. Fractional shares are entitled to proportionate shares of
one vote.

Any person giving a proxy has the power to revoke it any time prior to its
exercise by executing a superseding proxy or by submitting a written notice of
revocation to the Secretary of the Company. In addition, although mere
attendance at the Special Meeting will not revoke a proxy, a shareholder present
at the Special Meeting may withdraw his or her proxy and vote in person. All
properly executed and unrevoked proxies received in time for the Special Meeting
will be voted in accordance with the instructions contained in the proxies. If
no instruction is given in the proxy, the persons named as proxies will vote the
shares represented thereby in favor of the matters set forth in the attached
Notice.

In order to hold the Special Meeting, a "quorum" of shareholders must be
present. Holders of a majority of the total number of outstanding shares of the
Company, present in person or by proxy, shall be required to constitute a quorum
for the purpose of transacting business at the Special Meeting.

For purposes of determining a quorum for transacting business at the
Special Meeting, abstentions and broker "nonvotes" (that is, proxies from
brokers or nominees indicating that such persons have not received instructions
from the beneficial owner or other persons entitled to vote shares on a
particular matter, with

23
<PAGE> 40

respect to which the brokers or nominees do not have discretionary power) will
be treated as shares that are present but which have not been voted. For this
reason, abstentions and broker nonvotes will have the effect of a "no" vote for
purposes of obtaining the requisite approval of the proposals.

If a quorum is not present, the Special Meeting may be adjourned to a later
date by the affirmative vote of a majority of the shares of each Fund present or
represented by proxy. If a quorum is not present, the stockholders of a majority
of the shares of all Funds or an individual Fund or Funds, as the case may be,
present in person or by proxy and entitled to vote shall have the power to
adjourn the Special Meeting from time to time as to all Funds or as to such
individual Fund or Funds, as the case may be, without notice other than
announcement at the Special Meeting, until the requisite number of shares
entitled to vote at such Special Meeting shall be present. In the event that a
quorum is present at the Special Meeting, but sufficient votes to approve any of
the proposals are not received, the persons named as proxies may propose one or
more adjournments of the Meeting to permit further solicitation of proxies. Any
such adjournment will be approved if the votes cast in favor of such adjournment
exceed the votes cast opposing such adjournment. It is anticipated that the
persons named as proxies would vote in favor of adjournment. In tallying
stockholder votes, abstentions and broker nonvotes (i.e., shares held by brokers
or nominees 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) will be counted
for determining whether a quorum is present for purposes of convening the
Special Meeting and will be considered present at the Special Meeting.

PROPOSALS OF SHAREHOLDERS

Under Maryland law, the Company is not required to hold annual shareholder
meetings, but will hold special meetings as required or deemed desirable. Since
the Company does not hold regular meetings of shareholders, the anticipated date
of the next special shareholders meeting cannot be provided. Any shareholder who
wishes to submit a proposal for consideration at a meeting of shareholders
should send such proposal to the Company at 222 West Adams Street, Chicago,
Illinois 60606. To be considered for presentation at a shareholders meeting,
rules promulgated by the SEC require that, among other things, a shareholder's
proposal must be received at the offices of the Company at a reasonable time
before a solicitation is made. Timely submission of a proposal does not mean
that such proposal will be included.

DISCRETION OF ATTORNEYS NAMED IN THE PROXY

No business other than the matters described above is expected to come
before the Special Meeting, but should any other matter requiring a vote of
shareholders arise, including any question as to an adjournment or postponement
of the Special Meeting, the persons named on the enclosed proxy card will vote
on such matters according to their best judgment in the interests of the
Company.

SHAREHOLDERS ARE REQUESTED TO COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD
AND RETURN IT IN THE ENCLOSED ENVELOPE, WHICH NEEDS NO POSTAGE IF MAILED IN THE
UNITED STATES.

By Order of the Board of Directors

Marco Hanig
President

October , 1999

24
<PAGE> 41

EXHIBIT A

5% RECORD HOLDERS

The following table provides certain information at September 15, 1999 with
respect to persons known to the Fund to be record holders of 5% or more of the
shares of the following Funds:

<TABLE>
<CAPTION>
PERCENT OF FUND'S
NAME AND ADDRESS OUTSTANDING
OF RECORD OWNER COMMON STOCK NUMBER OF SHARES
- ---------------- ----------------- ----------------
<S> <C> <C>
GROWTH FUND 13.14 5,118,523
Charles Schwab & Co. Inc.
Attn: Mutual Funds Dept.
101 Montgomery Street
San Francisco, CA 94104-4122
NFSC 10.50 4,092,575
Benefit of Our Customers
Liberty Street
One World Financial Center
Attn: Mutual Funds Dept. 5th Fl.
New York, NY 10281
VALUE DISCOVERY FUND 5.98 204,261
William Blair & Co., L.L.C.
Ralph Gerald Portis B
222 West Adams Street
Chicago, IL 60606-5307
William Blair & Co., L.L.C. 5.58 204,261
Catlin Investment LP
222 West Adams Street
Chicago, IL 60606-5307
William Blair & Co., L.L.C. 5.58 204,261
Travis Investments LP
222 West Adams Street
Chicago, IL 60606-5307
Society National Bank 9.76 3,803,528
FBO William Blair Profit Sharing Plan
P.O. Box 94870
Cleveland, OH 44101-4870
INTERNATIONAL GROWTH FUND
Charles Schwab & Co., Inc. 6.24 687,658
Attn: Mutual Funds Dept.
101 Montgomery Street
San Francisco, CA 94104-4122
EMERGING MARKETS GROWTH FUND 9.92 50,000
William Blair & Co., L.L.C.
E. David Coolidge III
222 West Adams Street
Chicago, IL 60606-5307
INCOME FUND 6.44 1,164,115
Charles Schwab & Co., Inc.
Attn: Mutual Funds Dept.
101 Montgomery Street
San Francisco, CA 94104-4122
</TABLE>

A-1
<PAGE> 42

EXHIBIT B

AGREEMENT AND PLAN OF REORGANIZATION

WILLIAM BLAIR MUTUAL FUNDS, INC., a Maryland corporation (the "Company"),
for itself and on behalf of its series of shares designated as William Blair
Growth Fund, William Blair Value Discovery Fund, William Blair International
Growth Fund, William Blair Emerging Markets Growth Fund, William Blair Income
Fund and William Blair Ready Reserves Fund (each referred to herein as an
"Acquired Fund"), and WILLIAM BLAIR FUNDS, a Delaware business trust (the
"Trust"), for itself and on behalf of its series of shares designated as the
William Blair Growth Fund, William Blair Value Discovery Fund, William Blair
International Growth Fund, William Blair Emerging Markets Growth Fund, William
Blair Income Fund and William Blair Ready Reserves Fund (each an "Acquiring
Fund"), agree upon the following plan of reorganization (the "Plan") with regard
to each Fund:

1. Prior to the closing provided for in Section 4 below, the Company and
the Trust will execute and file articles of transfer with respect to the
transactions contemplated hereby with the Department of Assessments and Taxation
of the State of Maryland. The Company, on behalf of each of the Acquired Funds,
shall transfer to the corresponding Acquiring Fund all of the assets of the
Acquired Fund (including the share of the Acquiring Fund owned by the Acquired
Fund, which shall immediately thereafter be canceled), in exchange for which the
Acquiring Fund shall simultaneously assume all of the liabilities of the
Acquired Fund, and shall issue to the Company a number of Acquiring Fund Class
A, Class B, Class C, Class N and Class I shares equal in number and net asset
value to the number and net asset value of the corresponding Class A, Class B,
Class C, Class N and Class I shares (including fractional shares) of the
Acquired Fund then outstanding. The Company then will distribute to each
registered shareholder of the Acquiring Fund Class A, Class B, Class C, Class N
and Class I shares of the Acquiring Fund in a number and net asset value equal
to the number and net asset value of Class A, Class B, Class C, Class N and
Class I shares (including any fractional share) of the Acquired Fund then owned
by the shareholder, in liquidation of the Acquired Fund and in exchange for and
cancellation of the shareholder's shares of the Acquired Fund. The Company, on
behalf of each Acquired Fund, covenants that each Acquired Fund shall not sell
or otherwise dispose of any Acquiring Fund shares to be received in the
transactions contemplated herein, except in distribution to shareholders of the
Acquired Fund in accordance with the terms of this Agreement.

2. The distribution to the shareholders of each Acquired Fund shall be
accomplished by establishing an account on the share records of the Acquiring
Fund in the name of each registered shareholder of the Acquired Fund, and
crediting that account with a number of shares of the Acquiring Fund equal to
the number of Class A, Class B, Class C, Class N and Class I shares (including
any fractional share) of the Acquired Fund owned of record by the shareholder at
the time of the distribution. Outstanding certificates representing shares of
the Acquired Fund shall thereafter represent an equal number of shares of the
same class of the Acquiring Fund.

3. Promptly thereafter, the Company shall be liquidated and dissolved
pursuant to the Maryland General Corporation Law.

4. The transaction in Section 1 above shall occur at the close of business
on December 15, 1999, at the offices of the Trust, or at such other date, time
or place as may be agreed upon by the parties (the "Closing").

5. The obligations of each of the Company and the Trust to effect the
transactions contemplated hereunder shall be subject to the satisfaction of each
of the following conditions:

(a) All necessary filings shall have been made with the Securities and
Exchange Commission and state securities commissions and no order or
directive shall have been received that any other or further action is
required to permit the parties to carry out the transactions contemplated
by this Plan.

(b) The Company and the Trust shall have received an opinion from its
legal counsel substantially to the effect that for federal income tax
purposes: (i) no gain or loss will be recognized by any Acquired Fund upon
the transfer of its assets and liabilities to the corresponding Acquiring
Fund or upon the

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distribution to its shareholders of shares of the Acquiring Fund received
as a result of such transfer; (ii) the tax basis of the assets of the
Company in the hands of the corresponding Acquiring Fund will be the same
as the tax basis of such assets in the hands of the Acquired Fund
immediately prior to the transfer; (iii) the holding period of the assets
of the Acquired Fund transferred to the corresponding Acquiring Fund will
include the period during which such assets were held by the Acquired Fund;
(iv) no gain or loss will be recognized by the Acquiring Fund upon the
receipt of the assets of the Acquired Fund in exchange for shares of the
Acquiring Fund and the assumption by the Acquiring Fund of the liabilities
and obligations of the Acquired Fund; (v) no gain or loss will be
recognized by the shareholders of the Acquired Fund upon receipt of the
shares of the Acquiring Fund; (vi) the basis of the shares of the Acquiring
Fund received by the shareholders of the Acquired Fund will be the same as
the basis of the shares of the Acquired Fund exchanged therefor; and (vii)
the holding period of shares of the Acquiring Fund received by the
shareholders of the Acquired Fund will include the holding period of the
shares of the Acquired Fund exchanged therefor, provided that at the time
of the exchange the shares of the Acquired Fund were held as capital
assets; and as to such other matters as it may reasonably request.

(c) This Plan and the reorganization contemplated hereby shall have
been adopted and approved by the affirmative vote of the holders of the
requisite number of the outstanding shares of the Company and of each
Acquired Fund entitled to vote thereon as required by law at the time such
vote is taken.

(d) The Trustees of the Trust shall have authorized, and the Acquiring
Fund shall have issued, one share of the Acquiring Fund to the
corresponding Acquired Fund in consideration of the payment equal to the
net asset value of one share of the Acquired Fund on the day of the Closing
for the purpose of enabling the Company to approve as sole shareholder of
the Acquiring Fund the Management Agreement between the Trust and William
Blair & Company, L.L.C., for the Acquiring Fund; such approval shall have
taken place and the Acquiring Fund shall have become subject to said in
accordance with the terms thereof.

At any time prior to the Closing, any of the foregoing conditions may
be waived by the Company and the Trust if such a waiver will not have a
material adverse effect on the interests of the shareholders of the Company
or the Trust, as the case may be.

6. The Trust, on behalf of itself and the Acquiring Funds, represents and
warrants to the Company as follows:

(a) The Trust was duly created pursuant to its Agreement and
Declaration of Trust by the Trustees for the purpose of acting as a
management investment company under the 1940 Act and is validly existing
under the laws of the State of Delaware, and the Agreement and Declaration
of Trust directs the Trustees to manage the affairs of the Trust and grants
them all powers necessary or desirable to carry out such responsibility,
including administering Trust business as it is anticipated to be conducted
by the Trust and as described in the current prospectuses of the Company;
upon the closing described in Section 4, above, the Trust will succeed to
the registration of the Company with the SEC as an open-end management
investment company under the 1940 Act;

(b) All issued and outstanding shares of the Acquiring Funds class
will, as of the Closing Date, be duly authorized and validly issued and
outstanding, fully paid and non-assessable by the Trust and the Acquiring
Funds do not have outstanding any option, warrants or other rights to
subscribe for or purchase any of their shares nor is there outstanding any
security convertible into any of their shares;

(c) The execution, delivery, and performance of this Agreement on
behalf of the Acquiring Funds will have been duly authorized prior to the
Closing Date by all necessary action on the part of the Trust and the
Trustees, and this Agreement constitutes a valid and binding obligation of
the Trust and the Acquiring Funds enforceable in accordance with its terms,
subject as to enforcement, to bankruptcy, insolvency, reorganization,
arrangement, moratorium and other similar laws of general applicability
relating to or affecting creditors' rights and to general equity
principles;

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(d) The Acquiring Fund shares to be issued and delivered to the
corresponding Acquired Fund for the account of the Acquired Fund investors,
pursuant to the terms hereof, will have been duly authorized as of the
Closing Date and, when so issued and delivered, will be duly and validly
issued, fully paid and non-assessable, and the shares of the class of the
Acquiring Fund issued and outstanding prior to the Closing Date were
offered and sold in compliance with the applicable registration
requirements, or exemptions therefrom, of the 1933 Act, and the applicable
notice or filing requirements, or exemptions therefrom, of all applicable
state securities laws, and the regulations thereunder, and no shareholder
of the Acquiring Fund shall have any preemptive right of subscription or
purchase in respect thereto;

(e) No governmental consents, approvals, authorizations or filings are
required under the 1933 Act, the Securities Exchange Act of 1934, the 1940
Act or Delaware law for the execution of this Agreement by the Trust, for
itself and on behalf of the Acquiring Funds, or the performance of the
Agreement by the Trust, for itself and on behalf of the Acquiring Funds,
except for such consents, approvals, authorizations and filings as have
been made or received, and except for such consents, approvals,
authorizations and filings as may be required subsequent to the Closing
Date; and

(f) The Trust intends to qualify as a "regulated investment company"
under the Code, and will elect to qualify as a "regulated investment
company" under the Code, as of its first taxable year.

7. This Plan may be amended at any time, and may be terminated at any time
before the completion of the transaction in Section 1, regardless of whether or
not this Plan has been approved by the shareholders of the Company or any
Acquired Fund, by agreement of the Company and the Trust, provided that no
amendment shall have a material adverse effect upon the interests of
shareholders of the Company. In any case, this Plan may be terminated by either
the Company or the Trust, if the transaction in Section 1 has not occurred by
the close of business on February 15, 2000.

8. A copy of the Trust's Certificate of Trust is on file with the Secretary
of the State of Delaware, and notice is hereby given that this instrument is
executed on behalf of the Trustees of the Trust as the Trustees of the Trust and
not individually and that the obligations under this instrument are not binding
upon any of the Trustees, officers or shareholders of the Trust individually,
but binding only upon the assets and property of the Acquiring Fund.

9. At any time after the completion of the transaction in Section 1, the
Company acting through its officers, or if then dissolved through its last
officers, shall execute and deliver to the Trust, such additional instruments of
transfer or other written assurances as the Trust may reasonably request in
order to vest in the Trust, acting for the Acquiring Fund, title to the assets
transferred by the Acquired Funds under this Plan.

10. This Plan shall be construed in accordance with applicable federal law
and the laws of the State of Illinois, except as to the provisions of Section 8
hereof, which shall be construed in accordance with the laws of the State of
Delaware.

11. This Plan may be executed in any number of counterparts, each of which
shall be deemed an original.

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<PAGE> 45

12. No Acquired Fund shall have any liability for the obligations of any
other Acquired Fund hereunder, and no Acquired Fund shall have any liability for
the obligation of any other Acquiring Fund.

Dated: September 8, 1999

WILLIAM BLAIR MUTUAL FUNDS, INC.

By: /s/ MARCO HANIG
----------------------------------
President

WILLIAM BLAIR FUNDS

By: /s/ MARCO HANIG
----------------------------------
President

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EXHIBIT C

DECLARATION OF TRUST

WILLIAM BLAIR FUNDS

This DECLARATION OF TRUST OF WILLIAM BLAIR FUNDS is made on the 3rd day of
September, 1999 by the parties signatory hereto, as Trustees.

WHEREAS, the Trustees desire to form a business trust under the law of
Delaware for the investment and reinvestment of its assets; and

WHEREAS, it is proposed that the Trust assets be composed of cash,
securities and other assets contributed to the Trust by the Holders of Interests
in the Trust entitled to ownership rights in the Trust;

NOW, THEREFORE, the Trustees hereby declare that the Trustees will hold in
trust all cash, securities and other assets which they may from time to time
acquire in any manner as Trustees hereunder, and manage and dispose of the same
for the benefit of the Holders of Interests in the Trust, and subject to the
following terms and conditions.

ARTICLE I

The Trust

1.1 Name. The name of the Trust created hereby (the "Trust") shall be
"William Blair Funds," and so far as may be practicable the Trustees shall
conduct the Trust's activities, execute all documents and sue or be sued under
that name, which name (and the word "Trust" wherever hereinafter used) shall not
refer to the Trustees in their individual capacities or to the officers, agents,
employees or Holders of Interest in the Trust. However, should the Trustees
determine that the use of the name of the Trust is not advisable, they may
select such other name for the Trust as they deem proper and the Trust may hold
its property and conduct its activities under such other name. Any name change
shall become effective upon the execution by a majority of the then Trustees of
an instrument setting forth the new name and the filing of a certificate of
amendment pursuant to Section 3810(b) of the DBTA. Any such instrument shall not
require the approval of the Holders of Interests in the Trust, but shall have
the status of an amendment to this Declaration.

1.2 Trust Purpose. The purpose of the Trust is to conduct, operate and
carry on the business of an open-end management investment company registered
under the 1940 Act. In furtherance of the foregoing, it shall be the purpose of
the Trust to do everything necessary, suitable, convenient or proper for the
conduct, promotion and attainment of any businesses and purposes which at any
time may be incidental or may appear conducive or expedient for the
accomplishment of the business of an open-end management investment company
registered under the 1940 Act and which may be engaged in or carried on by a
trust organized under the DBTA, and in connection therewith, the Trust shall
have and may exercise all of the powers conferred by the laws of the State of
Delaware upon a Delaware business trust.

1.3 Definitions. As used in this Declaration, the following terms shall
have the following meanings:

(a) "1940 Act" shall mean the Investment Company Act of 1940, as
amended from time to time, and the rules and regulations thereunder, as
adopted or amended from time to time.

(b) "Affiliated Person," "Assignment" and "Interested Person" shall
have the meanings given such terms in the 1940 Act.

(c) "Administrator" shall mean any party furnishing services to the
Trust pursuant to any administrative services contract described in Section
4.1.

(d) "By-Laws" shall mean the By-Laws of the Trust as amended from time
to time.

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(e) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, and the rules and regulations thereunder, as adopted or
amended from time to time.

(f) "Commission" shall mean the Securities and Exchange Commission.

(g) "Declaration" shall mean this Declaration of Trust, as amended
from time to time. References in this Declaration to "Declaration,"
"hereof," "herein" and "hereunder" shall be deemed to refer to the
Declaration rather than the article or section in which such words appear.
This Declaration shall, together with the By-Laws, constitute the governing
instrument of the Trust under the DBTA.

(h) "DBTA" shall mean the Delaware Business Trust Act, Delaware Code
Annotated Title 12, Sections 3801, et seq., as amended from time to time.

(i) "Fiscal Year" shall mean an annual period as determined by the
Trustees unless otherwise provided by the Code or applicable regulations.

(j) "Holders" shall mean as of any particular time any or all holders
of record of Interests in the Trust or in Trust Property, as the case may
be, at such time.

(k) "Interest" shall mean a Holder's units of interest into which the
beneficial interest in the Trust and each series and class of the Trust
shall be divided from time to time.

(l) "Investment Adviser" shall mean any party furnishing services to
the Trust pursuant to any investment advisory contract described in Section
4.1 hereof.

(m) "Majority Interests Vote" shall mean the vote, at a meeting of the
Holders of Interests, of the lesser of (i) 67% or more of the Interests
present or represented at such meeting, provided the Holders of more than
50% of the Interests are present or represented by proxy or (ii) more than
50% of the Interests.

(n) "Person" shall mean and include an individual, corporation,
partnership, trust, foundation, plan, association, joint venture, estate
and other entity, whether or not a legal entity, and a government and
agencies and political subdivisions thereof, whether domestic or foreign.

(o) "Registration Statement" as of any particular time shall mean the
Registration Statement of the Trust which is effective at such time under
the 1940 Act.

(p) "Trust Property" shall mean as of any particular time any and all
property, real or personal, tangible or intangible, which at such time is
owned or held by or for the account of the Trust or the Trustees or any
series of the Trust established in accordance with Section 6.2.

(q) "Trustees" shall mean such persons who have signed this
Declaration, so long as they shall continue in office in accordance with
the terms of this Declaration, and all other persons who at the time in
question have been duly elected or appointed as trustees in accordance with
the provisions of this Declaration and are then in office, in their
capacity as trustees hereunder.

ARTICLE II

Trustees

2.1 Number and Qualification. The number of Trustees shall initially be
one and shall thereafter be fixed from time to time by written instrument
signed, or by resolution approved at a duly constituted meeting, by a majority
of the Trustees so fixed, then in office, provided, however, that the number of
Trustees shall in no event be less than one. A Trustee shall be an individual at
least 21 years of age who is not under a legal disability.

(a) Any vacancy created by an increase in Trustees shall be filled by
the appointment or election of an individual having the qualifications
described in this Article as provided in Section 2.4. Any such appointment
shall not become effective, however, until the individual appointed or
elected shall have accepted in writing such appointment or election and
agreed in writing to be bound by the terms of the

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Declaration. No reduction in the number of Trustees shall have the effect
of removing any Trustee from office.

(b) Whenever a vacancy in the number of Trustees shall occur, until
such vacancy is filled as provided in Section 2.4 hereof, the Trustees in
office, regardless of their number, shall have all the powers granted to
the Trustees and shall discharge all the duties imposed upon the Trustees
by this Declaration.

2.2 Term and Election. Each Trustee named herein, or elected or appointed
prior to the first meeting of the Holders, shall (except in the event of
resignations or removals or vacancies pursuant to Section 2.3 or 2.4 hereof)
hold office until his or her successor has been elected at such meeting and has
qualified to serve as Trustee. Beginning with the Trustees elected at the first
meeting of Holders, each Trustee shall hold office during the lifetime of this
Trust and until its termination as hereinafter provided unless such Trustee
resigns or is removed as provided in Section 2.3 below or his term expires
pursuant to Section 2.4 hereof.

2.3 Resignation and Removal. Any Trustee may resign (without need for
prior or subsequent accounting) by an instrument in writing signed by him or her
and delivered or mailed to the Chairperson, if any, the President or the
Secretary and such resignation shall be effective upon such delivery, or at a
later date according to the terms of the instrument.

(a) Any of the Trustees may be removed with or without cause by the
affirmative vote of the Holders of two-thirds (2/3) of the Interests or
(provided the aggregate number of Trustees, after such removal and after
giving effect to any appointment made to fill the vacancy created by such
removal, shall not be less than the number required by Section 2.1 hereof)
with cause, by the action of two-thirds (2/3) of the remaining Trustees, or
without cause, by the action of eighty percent (80%) of the remaining
Trustees. Removal with cause shall include, but not be limited to, the
removal of a Trustee due to physical or mental incapacity.

(b) Upon the resignation or removal of a Trustee, or his or her
otherwise ceasing to be a Trustee, he or she shall execute and deliver such
documents as the remaining Trustees shall require for the purpose of
conveying to the Trust or the remaining Trustees any Trust Property held in
the name of the resigning or removed Trustee. Upon the death of any Trustee
or upon removal or resignation due to any Trustee's incapacity to serve as
trustee, his or her legal representative shall execute and deliver on his
or her behalf such documents as the remaining Trustees shall require as
provided in the preceding sentence.

2.4 Vacancies. The term of office of a Trustee shall terminate and a
vacancy shall occur in the event of the earliest to occur of the following: the
Trustee's death, resignation, adjudicated incompetence or other incapacity to
perform the duties of the office, or the removal of the Trustee. A vacancy shall
also occur in the event of an increase in the number of Trustees as provided in
Section 2.1. No such vacancy shall operate to annul this Declaration or to
revoke any existing trust created pursuant to the terms of this Declaration. In
the case of a vacancy, the Holders of a plurality of the Interests entitled to
vote, acting at any meeting of the Holders held in accordance with Article VIII
hereof, or, to the extent permitted by the 1940 Act, a majority vote of the
Trustees continuing in office acting by written instrument or instruments, may
fill such vacancy, and any Trustee so elected by the Trustees or the Holders
shall hold office as provided in this Declaration. There shall be no cumulative
voting by the Holders in the election of Trustees.

2.5 Meetings. Meetings of the Trustees shall be held from time to time
within or without the State of Delaware upon the call of the Chairperson, if
any, the Chief Executive Officer, the President, the Secretary, an Assistant
Secretary or any two Trustees.

(a) Regular meetings of the Trustees may be held without call or
notice at a time and place fixed by the By-Laws or by resolution of the
Trustees. Notice of any other meeting shall be given not later than 72
hours preceding the meeting by United States mail or by electronic
transmission to each Trustee at his or her business address as set forth in
the records of the Trust or otherwise given personally not less than 24
hours before the meeting but may be waived in writing by any Trustee either
before or after such meeting. The attendance of a Trustee at a meeting
shall constitute a waiver of notice of such meeting except where a Trustee
attends a meeting for the express purpose of objecting to the transaction
of any business on the ground that the meeting has not been lawfully called
or convened.
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(b) A quorum for all meetings of the Trustees shall be one-third of
the total number of Trustees, but (except at such time as there is only one
Trustee) no less than two Trustees. Unless provided otherwise in this
Declaration, any action of the Trustees may be taken at a meeting by vote
of a majority of the Trustees present (a quorum being present) or without a
meeting by written consent of a majority of the Trustees, which written
consent shall be filed with the minutes of proceedings of the Trustees or
any such committee. If there be less than a quorum present at any meeting
of the Trustees, a majority of those present may adjourn the meeting until
a quorum shall have been obtained.

(c) Any committee of the Trustees, including an executive committee,
if any, may act with or without a meeting. A quorum for all meetings of any
such committee shall be two or more of the members thereof, unless the
Board shall provide otherwise. Unless provided otherwise in this
Declaration, any action of any such committee may be taken at a meeting by
vote of a majority of the members present (a quorum being present) or
without a meeting by written consent of a majority of the members, which
written consent shall be filed with the minutes of proceedings of the
Trustees or any such committee.

(d) With respect to actions of the Trustees and any committee of the
Trustees, Trustees who are Interested Persons of the Trust or are otherwise
interested in any action to be taken may be counted for quorum purposes
under this Section 2.5 and shall be entitled to vote to the extent
permitted by the 1940 Act.

(e) All or any one or more Trustees may participate in a meeting of
the Trustees or any committee thereof by means of a conference telephone or
similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a
meeting pursuant to such communications system shall constitute presence in
person at such meeting, unless the 1940 Act specifically requires the
Trustees to act "in person," in which case such term shall be construed
consistent with Commission or staff releases or interpretations.

2.6 Officers; Chairperson of the Board. The Trustees shall, from time to
time, elect officers of the Trust, including a Chief Executive Officer, a
President, a Secretary and a Treasurer. The Trustees shall elect or appoint,
from time to time, a Trustee to act as Chairperson of the Board who shall
preside at all meetings of the Trustees and carry out such other duties as the
Trustees shall designate. The Trustees may elect or appoint or authorize the
Chief Executive Officer and/or the President to appoint such other officers or
agents with such powers as the Trustees may deem to be advisable. The President,
Secretary and Treasurer may, but need not, be a Trustee. The Chairperson of the
Board and such officers of the Trust shall serve in such capacity for such time
and with such authority as the Trustees may, in their discretion, so designate
or as provided for in the By-Laws.

2.7 By-Laws. The Trustees may adopt and, from time to time, amend or
repeal the By-Laws for the conduct of the business of the Trust not inconsistent
with this Declaration, and such By-Laws are hereby incorporated in this
Declaration by reference thereto.

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ARTICLE III

Powers of Trustees

3.1 General. The Trustees shall have exclusive and absolute control over
management of the business and affairs of the Trust, but with such powers of
delegation as may be permitted by this Declaration and the DBTA. The Trustees
may perform such acts as in their sole discretion are proper for conducting the
business and affairs of the Trust. The enumeration of any specific power herein
shall not be construed as limiting the aforesaid power. Such powers of the
Trustee may be exercised without order of, or recourse to, any court.

3.2 Investments. The Trustees shall have power to:

(a) conduct, operate and carry on the business of an investment
company; and

(b) subscribe for, invest in, reinvest in, purchase or otherwise
acquire, hold, pledge, sell, assign, lend, transfer, exchange, distribute,
write or otherwise deal in or dispose of United States and foreign
currencies and related instruments including forward contracts, and
securities, including common and preferred stock, warrants, bonds,
debentures, time notes, bankers acceptances and all other evidences of
indebtedness, negotiable or non-negotiable instruments, obligations,
certificates of deposit or indebtedness, commercial paper, repurchase
agreements, reverse repurchase agreements, convertible securities, forward
contracts, options, futures contracts, and other securities, including,
without limitation, those issued, guaranteed or sponsored by any state,
territory or possession of the United States and the District of Columbia
and their political subdivisions, agencies and instrumentalities, or by the
United States Government, any foreign government, or any agency,
instrumentality or political subdivision of the United States Government or
any foreign government, or international instrumentalities, or by any bank,
savings institution, corporation or other business entity organized under
the laws of the United States or under foreign laws or in "when-issued"
contracts for such securities; and to exercise any and all rights, powers
and privileges of ownership or interest in respect of any and all such
investments of every kind and description, including, without limitation,
the right to consent and otherwise act with respect thereto, with power to
designate one or more persons, firms, associations, or corporations to
exercise any of said rights, powers and privileges in respect of any of
said instruments; and the Trustees shall be deemed to have the foregoing
powers with respect to any additional securities in which the Trustees may
determine to invest.

The Trustees shall not be limited to investing in obligations maturing
before the possible termination of the Trust, nor shall the Trustees be limited
by any law limiting the investments which may be made by fiduciaries.

3.3 Legal Title. Legal title to all the Trust Property shall be vested in
the Trust as a separate legal entity under the DBTA, except that the Trustees
shall have the power to cause legal title to any Trust Property to be held by or
in the name of one or more of the Trustees or in the name of any other Person on
behalf of the Trust on such terms as the Trustees may determine.

In the event that title to any part of the Trust Property is vested in one
or more Trustees, the right, title and interest of the Trustees in the Trust
Property shall vest automatically in each person who may hereafter become a
Trustee upon his or her due election and qualification. Upon the resignation,
removal or death of a Trustee he or she shall automatically cease to have any
right, title or interest in any of the Trust Property, and the right, title and
interest of such Trustee in the Trust Property shall vest automatically in the
remaining Trustees. To the extent permitted by law, such vesting and cessation
of title shall be effective whether or not conveyancing documents have been
executed and delivered.

3.4 Sale of Interests. Subject to the more detailed provisions set forth
in Article VII, the Trustees shall have the power to permit persons to purchase
Interests and to add or reduce, in whole or in part, their Interest in the
Trust.

3.5 Borrow Money. The Trustees shall have power to borrow money or
otherwise obtain credit and to secure the same by mortgaging, pledging or
otherwise subjecting as security the assets of the Trust, including

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the lending of portfolio securities, and to endorse, guarantee or undertake the
performance of any obligation, contract or engagement of any other person, firm,
association or corporation.

3.6 Delegation; Committee. The Trustees shall have the power, consistent
with their continuing exclusive authority over the management of the Trust and
the Trust Property, to delegate from time to time to such of their number or to
officers, employees or agents of the Trust the doing of such things and the
execution of such instruments, either in the name of the Trust or the names of
the Trustees or otherwise, as the Trustees may deem expedient.

3.7 Collection and Payment. The Trustees shall have the power to collect
all property due to the Trust; to pay all claims, including taxes, against the
Trust Property; to prosecute, defend, compromise or abandon any claims relating
to the Trust Property; to foreclose any security interest securing any
obligations, by virtue of which any property is owed to the Trust; and to enter
into releases, agreements and other instruments.

3.8 Expenses. The Trustees shall have the power to incur and pay any
expenses which in the opinion of the Trustees are necessary or incidental to
carry out any of the purposes of this Declaration, and to pay reasonable
compensation from the funds of the Trust to themselves as Trustees. The Trustees
shall fix the compensation of all officers, employees and Trustees. The Trustees
may pay themselves such compensation for special services, including legal and
brokerage services, as they in good faith may deem reasonable (subject to any
limitations in the 1940 Act), and reimbursement for expenses reasonably incurred
by themselves on behalf of the Trust. There shall be no retirement compensation
plan for the Trustees; provided, however, that the Trustees may adopt a deferred
compensation plan consistent with industry and regulatory standards.

3.9 Miscellaneous Powers. The Trustees shall have the power to: (a) employ
or contract with such Persons as the Trustees may deem desirable for the
transaction of the business of the Trust and terminate such employees or
contractual relationships as they consider appropriate; (b) enter into joint
ventures, partnerships and any other combinations or associations; (c) purchase,
and pay for out of Trust Property, insurance policies (including, but not
limited to, fidelity bonding and errors and omission policies) insuring the
Investment Adviser, Administrator, distributor, Holders, Trustees, officers,
employees, agents, or independent contractors of the Trust against all claims
arising by reason of holding any such position or by reason of any action taken
or omitted by any such Person in such capacity, whether or not the Trust would
have the power to indemnify such Person against liability; (d) establish
pension, profit-sharing and other retirement, incentive and benefit plans for
any officers, employees and agents of the Trust; (e) to the extent permitted by
law, indemnify any Person with whom the Trust has dealings, including the
Investment Adviser, Administrator, distributor, Holders, Trustees, officers,
employees, agents or independent contractors of the Trust, to such extent as the
Trustees shall determine; (f) guarantee indebtedness or contractual obligations
of others; (g) determine and change the Fiscal Year of the Trust and the method
by which its accounts shall be kept; and (h) adopt a seal for the Trust, but the
absence of such seal shall not impair the validity of any instrument executed on
behalf of the Trust.

3.10 Further Powers. The Trustees shall have power to conduct the business
of the Trust and carry on its operations in any and all of its branches and
maintain offices, whether within or without the State of Delaware, in any and
all states of the United States of America, in the District of Columbia, in any
foreign countries, and in any and all commonwealths, territories, dependencies,
colonies, possessions, agencies or instrumentalities of the United States of
America and of foreign countries, and to do all such other things and execute
all such instruments as they deem necessary, proper or desirable in order to
promote the interests of the Trust although such things are not herein
specifically mentioned. Any determination as to what is in the interests of the
Trust made by the Trustees in good faith shall be conclusive and shall be
binding upon the Trust and the Holders, past, present and future. In construing
the provisions of this Declaration, the presumption shall be in favor of a grant
of power to the Trustees. The Trustees shall not be required to obtain any court
order to deal with Trust Property.

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ARTICLE IV

Investment Advisory, Administrative, and Placement Agent Services

4.1 Investment Advisory and Other Services. The Trustees may in their
discretion, from time to time, enter into contracts or agreements for investment
advisory services, administrative services (including management, transfer and
dividend disbursing agency services), distribution services, fiduciary
(including custodian, subcustodian and depository) services, placement agent
services, Holder servicing and distribution services, or other services, whereby
the other party to such contract or agreement shall undertake to furnish the
Trustees such services as the Trustees shall, from time to time, consider
desirable and all upon such terms and conditions as the Trustees may in their
discretion determine. Notwithstanding any other provisions of this Declaration
to the contrary, the Trustees may authorize any Investment Adviser (subject to
such general or specific instructions as the Trustees may, from time to time,
adopt) to effect purchases, sales, loans or exchanges of Trust Property on
behalf of the Trustees or may authorize any officer, employee or Trustee to
effect such purchases, sales, loans or exchanges pursuant to recommendations of
any such Investment Adviser (all without further action by the Trustees). Any
such purchases, sales, loans or exchanges shall be binding upon the Trust.

4.2 Parties to Contract. Any contract or agreement of the character
described in Section 4.1 of this Article IV or in the By-Laws of the Trust may
be entered into with any Person, although one or more of the Trustees or
officers of the Trust or any Holder may be an officer, director, trustee,
shareholder, or member of such other party to the contract or agreement, and no
such contract or agreement shall be invalidated or rendered voidable by reason
of the existence of any such relationship, nor shall any person holding such
relationship be liable merely by reason of such relationship for any loss or
expense to the Trust under or by reason of such contract or agreement or held
accountable for any profit realized directly or indirectly therefrom, provided
that the contract or agreement when entered into was reasonable and fair and not
inconsistent with the provisions of this Article IV or the By-Laws. Any Trustee
or officer of the Trust or any Holder may be the other party to contracts or
agreements entered into pursuant to Section 4.1 hereof or the By-Laws of the
Trust, and any Trustee or officer of the Trust or any Holder may be financially
interested or otherwise affiliated with Persons who are parties to any or all of
the contracts or agreements mentioned in this Section 4.2.

ARTICLE V

Limitations of Liability

5.1 No Personal Liability of Trustees, Officers, Employees or Agents. No
Trustee, officer, employee or agent of the Trust when acting in such capacity
shall be subject to any personal liability whatsoever, in his or her individual
capacity, to any Person, other than the Trust or its Holders, in connection with
Trust Property or the affairs of the Trust; and all such Persons shall look
solely to the Trust Property for satisfaction of claims of any nature against a
Trustee, officer, employee or agent of the Trust arising in connection with the
affairs of the Trust. No Trustee, officer, employee or agent of the Trust shall
be liable to the Trust, Holders of Interests therein, or to any Trustee,
officer, employee, or agent thereof for any action or failure to act (including,
without limitation, the failure to compel in any way any former or acting
Trustee to redress any breach of trust), except for his or her own bad faith,
willful misfeasance, gross negligence or reckless disregard of his or her
duties.

5.2 Indemnification of Trustees, Officers, Employees and Agents. The Trust
shall indemnify each of its Trustees, officers, employees, and agents (including
Persons who serve at its request as directors, officers or trustees of another
organization in which it has any interest, as a shareholder, creditor or
otherwise) against all liabilities and expenses (including amounts paid in
satisfaction of judgments, in compromise, as fines and penalties, and as counsel
fees) reasonably incurred by him or her in connection with the defense or
disposition of any action, suit or other proceeding, whether civil or criminal,
in which he or she may be involved or with which he or she may be threatened,
while in office or thereafter, by reason of his or her being or having been such
a Trustee, officer, employee or agent, except with respect to any matter as to
which he or she shall have

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been adjudicated to have acted in bad faith, willful misfeasance, gross
negligence or reckless disregard of his or her duties; provided, however, that
as to any matter disposed of by a compromise payment by such Person, pursuant to
a consent decree or otherwise, no indemnification either for said payment or for
any other expenses shall be provided unless there has been a determination that
such Person did not engage in willful misfeasance, bad faith, gross negligence
or reckless disregard of the duties involved in the conduct of his or her office
by the court or other body approving the settlement or other disposition or by a
reasonable determination, based upon review of readily available facts (as
opposed to a full trial-type inquiry), that he or she did not engage in such
conduct or by a reasonable determination, based upon a review of the facts, that
such Person was not liable by reason of such conduct, by (a) the vote of a
majority of a quorum of Trustees who are neither "interested persons" of the
Trust as defined in Section 2(a)(19) of the 1940 Act nor parties to the
proceeding, or (b) a written opinion from independent legal counsel approved by
the Trustees. The rights accruing to any Person under these provisions shall not
exclude any other right to which he or she may be lawfully entitled; provided
that no Person may satisfy any right of indemnity or reimbursement granted
herein or in Section 5.1 or to which he or she may be otherwise entitled except
out of the Trust Property. The Trustees may make advance payments in connection
with indemnification under this Section 5.2, provided that the indemnified
Person shall have given a written undertaking to reimburse the Trust in the
event it is subsequently determined that he or she is not entitled to such
indemnification. All payments shall be made in compliance with Section 17(h) of
the 1940 Act.

5.3 Liability of Holders; Indemnification. The Trust shall indemnify and
hold each Holder harmless from and against any claim or liability to which such
Holder may become subject solely by reason of his or her being or having been a
Holder and not because of such Holder's acts or omissions or for some other
reason, and shall reimburse such Holder for all legal and other expenses
reasonably incurred by him or her in connection with any such claim or liability
(upon proper and timely request by the Holder); provided, however, that no
Holder shall be entitled to indemnification by any series established in
accordance with Section 8.8 unless such Holder is a Holder of Interests of such
series. The rights accruing to a Holder under this Section 5.3 shall not exclude
any other right to which such Holder may be lawfully entitled, nor shall
anything herein contained restrict the right of the Trust to indemnify or
reimburse a Holder in any appropriate situation even though not specifically
provided herein.

5.4 No Bond Required of Trustees. No Trustee shall, as such, be obligated
to give any bond or surety or other security for the performance of any of his
or her duties hereunder.

5.5 No Duty of Investigation; Notice in Trust Instruments, Etc. No
purchaser, lender, or other Person dealing with the Trustees or any officer,
employee or agent of the Trust shall be bound to make any inquiry concerning the
validity of any transaction purporting to be made by the Trustees or by said
officer, employee or agent or be liable for the application of money or property
paid, loaned, or delivered to or on the order of the Trustees or of said
officer, employee or agent. Every obligation, contract, instrument, certificate
or other interest or undertaking of the Trust, and every other act or thing
whatsoever executed in connection with the Trust, shall be conclusively relied
upon as having been executed or done by the executors thereof only in their
capacities as Trustees, officers, employees or agents of the Trust. Every
written obligation, contract, instrument, certificate or other interest or
undertaking of the Trust made by the Trustees or by any officer, employee or
agent of the Trust, in his or her capacity as such, shall contain an appropriate
recital to the effect that the Trustee, officer, employee or agent of the Trust
shall not personally be bound by or liable thereunder, nor shall resort be had
to their private property or the private property of the Holders for the
satisfaction of any obligation or claim thereunder, and appropriate references
shall be made therein to the Declaration, and may contain any further recital
which they may deem appropriate, but the omission of such recital shall not
operate to impose personal liability on any of the Trustees, officers, employees
or agents of the Trust. The Trustees may maintain insurance for the protection
of the Trust Property, Holders, Trustees, officers, employees and agents in such
amount as the Trustees shall deem advisable.

5.6 Reliance on Experts, Etc. Each Trustee and officer or employee of the
Trust shall, in the performance of his or her duties, be fully and completely
justified and protected with regard to any act or any failure to act resulting
from reliance in good faith upon the books of account or other records of the
Trust, upon an opinion of counsel, or upon reports made to the Trust by any of
its officers or employees or by any
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Investment Adviser, Administrator, accountant, appraiser or other experts or
consultants selected with reasonable care by the Trustees, officers or employees
of the Trust, regardless of whether such counsel or expert may also be a
Trustee.

5.7 Assent to Declaration. Every Holder, by virtue of having become a
Holder in accordance with the terms of this Declaration, shall be held to have
expressly assented and agreed to the terms hereof and to have become a party
hereto.

ARTICLE VI

Interests in the Trust

6.1 General Characteristics. (a) The Trustees shall have the power and
authority, without Holder approval, to issue Interests in one or more series
from time to time as they deem necessary or desirable. Each series shall be
separate from all other series in respect to the assets and liabilities
allocated to that series and shall represent a separate investment portfolio of
the Trust. The Trustees shall have exclusive power, without Holder approval, to
establish and designate such separate and distinct series, as set forth in
Section 6.2, and to fix and determine the relative rights and preferences as
between the Interests of the separate series as to right of redemption, special
and relative rights as to dividends and other distributions and on liquidation,
conversion rights, and conditions under which the series shall have separate
voting rights or no voting rights.

(b) The Trustees may, without Holder approval, divide Interests of any
series into two or more classes, Interests of each such class having such
preferences and special or relative rights and privileges (including conversion
rights, if any) as the Trustees may determine as provided in Section 6.3. The
fact that a series shall have been initially established and designated without
any specific establishment or designation of classes, shall not limit the
authority of the Trustees to divide a series and establish and designate
separate classes thereof.

(c) The number of Interests authorized shall be unlimited, and the
Interests so authorized may be represented in part by fractional Interests. From
time to time, the Trustees may divide or combine the Interests of any series or
class into a greater or lesser number without thereby changing the proportionate
beneficial interests in the series or class. The Trustees may issue Interests of
any series or class thereof for such consideration and on such terms as they may
determine (or for no consideration if pursuant to an Interest dividend or
split-up), all without action or approval of the Holders. All Interests when so
issued on the terms determined by the Trustees shall be fully paid and
non-assessable. The Trustees may classify or reclassify any unissued Interests
or any Interests previously issued and reacquired of any series or class thereof
into one or more series or classes thereof that may be established and
designated from time to time. The Trustees may hold as treasury Interests,
reissue for such consideration and on such terms as they may determine, or
cancel, at their discretion from time to time, any Interests of any series or
class thereof reacquired by the Trust.

6.2 Establishment of Series of Interests. (a) Without limiting the
authority of the Trustees set forth in Section 6.2(b) to establish and designate
any further series, the Trustees hereby establish and designate six series, as
follows:

William Blair Growth Fund
William Blair Value Discovery Fund
William Blair International Growth Fund
William Blair Emerging Markets Growth Fund
William Blair Income Fund
William Blair Ready Reserves Fund

The provisions of this Article VI shall be applicable to the above
designated series and any further series that may from time to time be
established and designated by the Trustees as provided in Section 6.2(b).

(b) The establishment and designation of any series of Interests other than
the one set forth above shall be effective upon the execution, by a majority of
the Trustees, of an instrument setting forth such

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establishment and designation and the relative rights and preferences of such
series, or as otherwise provided in such instrument. At any time that there are
no Interests outstanding of any particular series previously established and
designated, the Trustees may by an instrument executed by a majority of their
number abolish that series and the establishment and designation thereof. Each
instrument referred to in this paragraph shall have the status of an amendment
of this Declaration.

(c) Section 9.2 of this Declaration of Trust shall apply also with respect
to each such series as if such series were a separate trust.

6.3 Establishment of Classes. (a) Without limiting the authority of the
Trustees set forth in Section 6.3(b) to establish and designate any further
classes, the Trustees hereby establish five classes of each series (except the
Ready Reserves Fund) as follows:

Class A Shares
Class B Shares
Class C Shares
Class N Shares
Class I Shares

Without limiting the authority of the Trustees set forth in Section 6.3(b)
to establish and designate any further classes, the Trustees hereby establish
two classes of the Ready Reserves Fund as follows:

Class N Shares
Class I Shares

The provision of this Article VI shall be applicable to the above
designated classes and any further classes that may from time to time be
established and designated by the Trustees as provided in Section 6.3(b).

(b) The division of any series into two or more classes and the
establishment and designation of such classes shall be effective upon the
execution by a majority of the Trustees of an instrument setting forth such
division, and the establishment, designation, and relative rights and
preferences of such classes, or as otherwise provided in such instrument. The
relative rights and preferences of the classes of any series may differ in such
respects as the Trustees may determine to be appropriate, provided that such
differences are set forth in the aforementioned instrument. At any time that
there are no Interests outstanding of any particular class previously
established and designated, the Trustees may by an instrument executed by a
majority of their number abolish that class and the establishment and
designation thereof. Each instrument referred to in this paragraph shall have
the status of an amendment to this Declaration.

(c) Section 9.2 of this Declaration of Trust shall apply also with respect
to each such class as if such class were a separate trust.

6.4 Assets of Series. All consideration received by the Trust for the
issue or sale of Interests of a particular series together with all Trust
Property in which such consideration is invested or reinvested, all income,
earnings, profits, and proceeds thereof, including any proceeds derived from the
sale, exchange or liquidation of such assets, and any funds or payments derived
from any reinvestment of such proceeds in whatever form the same may be, shall
irrevocably belong to that series for all purposes, subject only to the rights
of creditors of such series and except as may otherwise be required by
applicable tax laws, and shall be so recorded upon the books of account of the
Trust. Separate and distinct records shall be maintained for each series and the
assets associated with a series shall be held and accounted for separately from
the other assets of the Trust, or any other series. In the event that there is
any Trust Property, or any income, earnings, profits, and proceeds thereof,
funds, or payments which are not readily identifiable as belonging to any
particular series, the Trustees shall allocate them among any one or more of the
series established and designated from time to time in such manner and on such
basis as they, in their sole discretion, deem fair and equitable. Each such
allocation by the Trustees shall be conclusive and binding upon the Holders of
all Interests for all purposes.

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6.5 Liabilities of Series. (a) The Trust Property belonging to each
particular series shall be charged with the liabilities of the Trust in respect
to that series and all expenses, costs, charges and reserves attributable to
that series, and any general liabilities, expenses, costs, charges or reserves
of the Trust which are not readily identifiable as belonging to any particular
series shall be allocated and charged by the Trustees to and among any one or
more of the series established and designated from time to time in such manner
and on such basis as the Trustees in their sole discretion deem fair and
equitable. Each allocation of liabilities, expenses, costs, charges and reserves
by the Trustees shall be conclusive and binding upon the Holders of all
Interests for all purposes. The Trustees shall have full discretion, to the
extent not inconsistent with the 1940 Act, to determine which items shall be
treated as income and which items as capital, and each such determination and
allocation shall be conclusive and binding upon the Holders.

(b) Without limitation of the foregoing provisions of this Section, but
subject to the right of the Trustees in their discretion to allocate general
liabilities, expenses, costs, charges or reserves as herein provided, the debts,
liabilities, obligations and expenses incurred, contracted for or otherwise
existing with respect to a particular series shall be enforceable against the
assets of such series only, and not against the assets of any other series.
Notice of this limitation on interseries liabilities shall be set forth in the
certificate of trust of the Trust (whether originally or by amendment) as filed
or to be filed in the Office of the Secretary of State of the State of Delaware
pursuant to the DBTA, and upon the giving of such notice in the certificate of
trust, the statutory provisions of Section 3804 of the DBTA relating to
limitations on interseries liabilities (and the statutory effect under Section
3804 of setting forth such notice in the certificate of trust) shall become
applicable to the Trust and each series. Every note, bond, contract or other
undertaking issued by or on behalf of a particular series shall include a
recitation limiting the obligation represented thereby to that series and its
assets.

6.6 Dividends and Distributions. (a) Dividends and distributions on
Interests of a particular series or any class thereof may be paid with such
frequency as the Trustees may determine, which may be daily or otherwise,
pursuant to a standing resolution or a resolution adopted only once or with such
frequency as the Trustees may determine, to the Holders of Interests in that
series or class, from such of the income and capital gains, accrued or realized,
from the Trust Property belonging to that series, or in the case of a class,
belonging to that series and allocable to that class, as the Trustees may
determine, after providing for actual and accrued liabilities belonging to that
series. All dividends and distributions on Interests in a particular series or
class thereof shall be distributed pro rata to the Holders of Interests in that
series or class in proportion to the total outstanding Interests in that series
or class held by such Holders at the date and time of record established for the
payment of such dividends or distribution, except to the extent otherwise
required or permitted by the preferences and special or relative rights and
privileges of any series or class. Such dividends and distributions may be made
in cash or Interests of that series or class or a combination thereof as
determined by the Trustees or pursuant to any program that the Trustees may have
in effect at the time for the election by each Holder of the mode of the paying
of such dividend or distribution to that Holder. Any such dividend or
distribution paid in Interests will be paid at the net asset value thereof as
determined in accordance with Section 7.4.

(b) The Interests in a series or a class of the Trust shall represent
beneficial interests in the Trust Property belonging to such series or in the
case of a class, belonging to such series and allocable to such class. Each
Holder of Interests in a series or a class shall be entitled to receive its pro
rata share of distributions of income and capital gains made with respect to
such series or such class. Upon reduction or withdrawal of its Interests or
indemnification for liabilities incurred by reason of being or having been a
Holder of Interests in a series or a class, such Holder shall be paid solely out
of the funds and property of such series or in the case of a class, the funds
and property of such series and allocable to such class of the Trust. Upon
liquidation or termination of a series or class of the Trust, Holders of
Interests in such series or class shall be entitled to receive a pro rata share
of the Trust Property belonging to such series or in the case of a class,
belonging to such series and allocable to such class.

6.7 Voting Rights. Notwithstanding any other provision hereof, on each
matter submitted to a vote of the Holders, each Holder shall be entitled to one
vote for each whole Interest standing in his name on the books of the Trust, and
each fractional Interest shall be entitled to a proportionate fractional vote,
irrespective of the series thereof or class thereof, and all Interests of all
series and classes thereof shall vote together as a
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single class; provided, however, that (a) as to any matter with respect to which
a separate vote of one or more series or classes thereof is permitted or
required by the 1940 Act or the provisions of the instrument establishing and
designating the series or class, such requirements as to a separate vote by such
series or class thereof shall apply in lieu of all Interests of all series and
classes thereof voting together; and (b) as to any matter which affects only the
interests of one or more particular series or classes thereof, only the Holders
of the one or more affected series or classes shall be entitled to vote, and
each such series or class shall vote as a separate series or class.

6.8 Record Dates. The Trustees may from time to time close the transfer
books or establish record dates and times for the purposes of determining the
Holders entitled to be treated as such, to the extent provided or referred to in
Section 8.6.

6.9 Transfer. All Interests of each particular series or class thereof
shall be transferable, but transfers of Interests of a particular series or
class thereof will be recorded on the Interest transfer records of the Trust
applicable to that series or class only at such times as Holders shall have the
right to require the Trust to redeem Interests of that series or class and at
such other times as may be permitted by the Trustees.

6.10 Equality. Except as provided herein or in the instrument designating
and establishing any class or series, all Interests of each particular series or
class thereof shall represent an equal proportionate interest in the assets
belonging to that series, or in the case of a class, belonging to that series
and allocable to that class, subject to the liabilities belonging to that
series, and each Interest of any particular series or class shall be equal to
each other Interest of that series or class; but the provisions of this sentence
shall not restrict any distinctions permissible under Section 6.6 that may exist
with respect to dividends and distributions on Interests of the same series or
class. The Trustees may from time to time divide or combine the Interests of any
particular series or class into a greater or lesser number of Interests of that
series or class without thereby changing the proportionate beneficial interest
in the assets belonging to that series or class or in any way affecting the
rights or Interests of any other series or class.

6.11 Fractions. Any fractional Interest of any series or class, if any
such fractional Interest is outstanding, shall carry proportionately all the
rights and obligations of a whole Interest of that series or class, including
rights and obligations with respect to voting, receipt of dividends and
distributions, redemption of Interests, and liquidation of the Trust.

6.12 Class Differences. Subject to Section 6.3, the relative rights and
preferences of the classes of any series may differ in such other respects as
the Trustees may determine to be appropriate in their sole discretion, provided
that such differences are set forth in the instrument establishing and
designating such classes and executed by a majority of the Trustees.

6.13 Conversion of Interests. Subject to compliance with the requirements
of the 1940 Act, the Trustees shall have the authority to provide that Holders
of Interests of any series shall have the right to convert said Interests into
one or more other series in accordance with such requirements and procedures as
may be established by the Trustees. The Trustees shall also have the authority
to provide that Holders of Interests of any class of a particular series shall
have the right to convert said Interests into one or more other classes of that
particular series or any other series in accordance with such requirements and
procedures as may be established by the Trustees.

6.14 Investments in the Trust. The Trustees may accept investments in the
Trust from such persons and on such terms and for such consideration, not
inconsistent with the provisions of the 1940 Act, as they from time to time
authorize. The Trustees may authorize any distributor, principal underwriter,
custodian, transfer agent or other person to accept orders for the purchase of
Interests that conform to such authorized terms and to reject any purchase
orders for Interests whether or not conforming to such authorized terms.

6.15 Trustees and Officers as Holders. Any Trustee, officer or other agent
of the Trust, and any organization in which any such person is interested, may
acquire, own, hold and dispose of Interests of the Trust to the same extent as
if such person were not a Trustee, officer or other agent of the Trust; and the
Trust may issue and sell or cause to be issued and sold and may purchase
Interests from any such person or any such

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organization subject only to the general limitations, restrictions or other
provisions applicable to the sale or purchase of Interests generally.

6.16 No Preemptive Rights; Derivative Suits. Holders shall have no
preemptive or other right to subscribe to any additional Interests or other
securities issued by the Trust. No action may be brought by a Holder on behalf
of the Trust unless Holders owning no less than 10% of the then outstanding
Interests, or series or class thereof, join in the bringing of such action. A
Holder of Interests in a particular series or a particular class of the Trust
shall not be entitled to participate in a derivative or class action lawsuit on
behalf of any other series or any other class or on behalf of the Holders of
Interests in any other series or any other class of the Trust.

6.17 No Appraisal Rights. Holders shall have no right to demand payment
for their Interests or to any other rights of dissenting Holders in the event
the Trust participates in any transaction which would give rise to appraisal or
dissenters' rights by a stockholder of a corporation organized under the General
Corporation Law of Delaware, or otherwise.

6.18 Status of Interests and Limitation of Personal Liability. Interests
shall be deemed to be personal property giving only the rights provided in this
Declaration of Trust. Every Holder by virtue of acquiring Interests shall be
held to have expressly assented and agreed to the terms hereof and to be bound
hereby. The death, incapacity, dissolution, termination or bankruptcy of a
Holder during the continuance of the Trust shall not operate to dissolve or
terminate the Trust or any series thereof nor entitle the representative of such
Holder to an accounting or to take any action in court or elsewhere against the
Trust or the Trustees, but shall entitle the representative of such Holder only
to the rights of such Holder under this Trust. Ownership of Interests shall not
entitle the Holder to any title in or to the whole or any part of the Trust
Property or right to call for a partition or division of the same or for an
accounting, nor shall the ownership of Interests constitute the Holders as
partners or joint venturers. Neither the Trust nor the Trustees, nor any
officer, employee or agent of the Trust, shall have any power to bind personally
any Holder, nor except as specifically provided herein to call upon any Holder
for the payment of any sum of money or assessment whatsoever other than such as
the Holder may at any time personally agree to pay.

6.19 Elimination of Series. Without limiting the authority of the Trustees
set forth in Section 9.2 of this Declaration of Trust, at any time that there
are no Interests outstanding of a series (or class), the Trustees may abolish
such series (or class).

ARTICLE VII

Purchases and Redemptions

7.1 Purchases. The Trustees, in their discretion, may, from time to time,
without a vote of the Holders, permit the purchase of Interests by such party or
parties (or increase in the Interests of a Holder), for such type of
consideration, including, without limitation, cash or property, at such time or
times (including, without limitation, each business day), and on such terms as
the Trustees may deem best, and may in such manner acquire other assets
(including, without limitation, the acquisition of assets subject to, and in
connection with the assumption of, liabilities) and businesses.

7.2 Redemption by Holder. Each Holder of Interests of the Trust or any
series or class thereof shall have the right at such times as may be permitted
by the Trust to require the Trust to redeem all or any part of his or her
Interests of the Trust, or series or class thereof, at a redemption price equal
to the net asset value per Interest of the Trust or series or class thereof,
next determined in accordance with Section 7.4 hereof after the Interests are
properly tendered for redemption, subject to any contingent deferred sales
charge or redemption charge in effect at the time of redemption. Payment of the
redemption price shall be in cash; provided, however, that if the Trustees
determine, which determination shall be conclusive, that conditions exist which
make payment wholly in cash unwise or undesirable, the Trust may, subject to the
requirements of the 1940 Act, make payment wholly or partly in securities or
other assets belonging to the Trust or series or class thereof of which the
Interests being redeemed are part of the value of such securities or assets used
in such determination of the net asset value.
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Notwithstanding the foregoing, the Trust may postpone payment of the
redemption price and may suspend the right of the Holders of Interests of the
Trust, or series or class thereof, to require the Trust to redeem Interests of
the Trust, or of any series or class thereof, during any period or at any time
when and to the extent permissible under the 1940 Act.

7.3 Redemption by Trust. Each Interest of the Trust, or series or class
thereof that has been established and designated is subject to redemption by the
Trust at the redemption price which would be applicable if such Interest was
then being redeemed by the Holder pursuant to Section 7.2 hereof: (a) at any
time, if the Trustees determine in their sole discretion and by majority vote
that it is in the best interest of the Trust, or any series or class thereof, to
so redeem, or (b) upon such other conditions as may from time to time be
determined by the Trustees and set forth in the then current Prospectus of the
Trust with respect to maintenance of Holder accounts of a minimum or maximum
amount or percentage. Upon such redemption the Holders of the Interests so
redeemed shall have no further right with respect thereto other than to receive
payment of such redemption price.

7.4 Net Asset Value. The net asset value per Interest of any series shall
be (a) in the case of a series whose Interests are not divided into classes, the
quotient obtained by dividing the value of the net assets of that series (being
the value of the assets belonging to that series less the liabilities belonging
to that series) by the total number of Interests of that series outstanding, and
(b) in the case of a class of Interests of a series whose Interests are divided
into classes, the quotient obtained by dividing the value of the net assets of
that series allocable to such class (being the value of the assets belonging to
that series allocable to such class less the liabilities belonging to such
class) by the total number of Interests of such class outstanding; all
determined in accordance with the methods and procedures, including without
limitation those with respect to rounding, established by the Trustees from time
to time.

The Trustees may determine to maintain the net asset value per Interest of
any series or any class at a designated constant dollar amount and in connection
therewith may adopt procedures consistent with the 1940 Act for continuing
declarations of income attributable to that series or that class as dividends
payable in additional Interests of that series at the designated constant dollar
amount and for the handling of any losses attributable to that series or that
class. Such procedures may provide that in the event of any loss each Holder
shall be deemed to have contributed to the capital of the Trust attributable to
that series his or her pro rata portion of the total number of Interests
required to be canceled in order to permit the net asset value per Interest of
that series or class to be maintained, after reflecting such loss, at the
designated constant dollar amount. Each Holder of the Trust shall be deemed to
have agreed, by his or her investment in any series or class with respect to
which the Trustees shall have adopted any such procedure, to make the
contribution referred to in the preceding sentence in the event of any such
loss.

ARTICLE VIII

Holders

8.1 Rights of Holders. The right to conduct any business hereinbefore
described is vested exclusively in the Trustees, and the Holders shall have no
rights under this Declaration or with respect to the Trust Property other than
the beneficial interest conferred by their Interests and the voting rights
accorded to them under this Declaration.

8.2 Register of Interests. A register shall be kept by the Trust under the
direction of the Trustees which shall contain the names and addresses of the
Holders and the number of Interests held by each Holder. Each such register
shall be conclusive as to the identity of the Holders of the Trust and the
Persons who shall be entitled to payments of distributions or otherwise to
exercise or enjoy the rights of Holders. No Holder shall be entitled to receive
payment of any distribution, nor to have notice given to it as herein provided,
until it has given its address to such officer or agent of the Trustees as shall
keep the said register for entry thereon. No certificates certifying the
ownership of interests need be issued except as the Trustees may otherwise
determine from time to time.

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8.3 Notices. Any and all notices to which any Holder hereunder may be
entitled and any and all communications shall be deemed duly served or given if
presented personally to a Holder, left at his or her residence or usual place of
business, or sent via United States mail or by electronic transmission to a
Holder at his or her address as it is registered with the Trust, as provided in
Section 8.2. If mailed, such notice shall be deemed to be given when deposited
in the United States mail addressed to the Holder at his or her address as it is
registered with the Trust, as provided in Section 8.2, with postage thereon
prepaid.

8.4 Meetings of Holders. Meetings of the Holders may be called at any time
by a majority of the Trustees and shall be called by any Trustee upon written
request of Holders holding, in the aggregate, not less than 10% of the Interests
(or series or class thereof), such request specifying the purpose or purposes
for which such meeting is to be called. Any such meeting shall be held within or
without the State of Delaware on such day and at such time as the Trustees shall
designate. Holders of one-third of the Interests in the Trust, present in person
or by proxy, shall constitute a quorum for the transaction of any business,
except as may otherwise be required by the 1940 Act or other applicable law or
by this Declaration or the By-Laws of the Trust. If a quorum is present at a
meeting, an affirmative vote by the Holders present, in person or by proxy,
holding more than 50% of the total Interests (or series or class thereof) of the
Holders present, either in person or by proxy, at such meeting constitutes the
action of the Holders, unless the 1940 Act, other applicable law, this
Declaration or the By-Laws of the Trust require a greater number of affirmative
votes. Notwithstanding the foregoing, the affirmative vote by the Holders
present, in person or by proxy, holding less than 50% of the Interests (or class
or series thereof) of the Holders present, in person or by proxy, at such
meeting shall be sufficient for adjournments. Any meeting of Holders, whether or
not a quorum is present, may be adjourned for any lawful purpose provided that
no meeting shall be adjourned for more than six months beyond the originally
scheduled meeting date. Any adjourned session or sessions may be held, within a
reasonable time after the date set for the original meeting without the
necessity of further notice.

8.5 Notice of Meetings. Written or printed notice of all meetings of the
Holders, stating the time, place and purposes of the meeting, shall be given as
provided in Section 8.3. At any such meeting, any business properly before the
meeting may be considered, whether or not stated in the notice of the meeting.
Any adjourned meeting held as provided in Section 8.4 shall not require the
giving of additional notice.

8.6 Record Date. For the purpose of determining the Holders who are
entitled to notice of any meeting, to vote at any meeting, to participate in any
distribution, or for the purpose of any other action, the Trustees may from time
to time fix a date, not more than 90 calendar days prior to the date of any
meeting of the Holders or payment of distributions or other action, as the case
may be, as a record date for the determination of the persons to be treated as
Holders of record for such purposes, and any Holder who was a Holder at the date
and time so fixed shall be entitled to vote at such meeting or to be treated as
a Holder of record for purposes of such other action, even though he or she has
since that date and time disposed of his or her Interests, and no Holder
becoming such after that date and time shall be so entitled to vote at such
meeting or to be treated as a Holder of record for purposes of such other
action. If the Trustees shall divide the Interests into two or more series in
accordance with Section 6.2 herein, nothing in this Section shall be construed
as precluding the Trustees from setting different record dates for different
series and if the Trustees shall divide any series into two or more classes in
accordance with Section 6.3 herein, nothing in this Section 8.6 shall be
construed as precluding the Trustees from setting different record dates for
different classes.

8.7 Proxies, Etc. At any meeting of Holders, any Holder entitled to vote
thereat may vote by proxy, provided that no proxy shall be voted at any meeting
unless it shall have been placed on file with the Secretary, or with such other
officer or agent of the Trust as the Secretary may direct, for verification
prior to the time at which such vote shall be taken.

(a) Pursuant to a resolution of a majority of the Trustees, proxies
may be solicited in the name of one or more Trustees or one or more of the
officers of the Trust. Only Holders of record shall be entitled to vote.
Each Holder shall be entitled to a vote proportionate to its Interest in
the Trust.

(b) When Interests are held jointly by several persons, any one of
them may vote at any meeting in person or by proxy in respect to such
Interest, but if more than one of them shall be present at such
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meeting in person or by proxy, and such joint owners or their proxies so
present disagree as to any vote to be cast, such vote shall not be received
in respect to such Interest.

(c) A proxy purporting to be executed by or on behalf of a Holder
shall be deemed valid unless challenged at or prior to its exercise, and
the burden of proving invalidity shall rest on the challenger. If the
Holder is a minor or a person of unsound mind, and subject to guardianship
or to the legal control of any other person regarding the charge or
management of his or her Interest, he or she may vote by his or her
guardian or such other person appointed or having such control, and such
vote may be given in person or by proxy.

8.8 Reports. The Trustees shall cause to be prepared, at least annually, a
report of operations containing a balance sheet and statement of income and
undistributed income of the Trust prepared in conformity with generally accepted
accounting principles and an opinion of an independent public accountant on such
financial statements. The Trustees shall, in addition, furnish to the Holders at
least semi-annually an interim report containing an unaudited balance sheet as
of the end of such period and an unaudited statement of income and surplus for
the period from the beginning of the current Fiscal Year to the end of such
period.

8.9 Inspection of Records. The records of the Trust shall be open to
inspection by Holders during normal business hours and for any purpose not
harmful to the Trust.

8.10 Voting Powers. (a) The Holders shall have power to vote only (i) for
the election or removal of Trustees as contemplated by Section 2.2 and 2.3
hereof, (ii) with respect to any investment advisory contract as contemplated by
Section 4.1 hereof, (iii) with respect to termination of the Trust as provided
in Section 9.2 hereof, (iv) with respect to amendments to the Declaration of
Trust as provided in Section 9.3 hereof, (v) with respect to any merger,
consolidation or sale of assets as provided in Section 9.4 hereof, (vi) with
respect to incorporation of the Trust to the extent and as provided in Section
9.5 hereof, and (vii) with respect to such additional matters relating to the
Trust as may be required by the 1940 Act, DBTA, or any other applicable law, the
Declaration, the By-Laws or any registration of the Trust with the Commission
(or any successor agency) or any state, or as and when the Trustees may consider
necessary or desirable.

(b) Each Holder shall be entitled to vote based on the ratio his or her
Interest bears to the Interests of all Holders entitled to vote. Until Interests
are issued, the Trustees may exercise all rights of Holders and may take any
action required by law, the Declaration or the By-Laws to be taken by Holders.
The By-Laws may include further provisions for Holders' votes and meetings and
related matters not inconsistent with this Declaration.

8.11 Holder Action by Written Consent. Any action which may be taken by
the Holders may be taken without notice and without a meeting if Holders holding
more than 50% of the total Interests entitled to vote (or such larger proportion
thereof as shall be required by any express provision of this Declaration) shall
consent to the action in writing and the written consents shall be filed with
the records of the meetings of Holders. Such consents shall be treated for all
purposes as votes taken at a meeting of the Holders.

8.12 Holder Communications. (a) Whenever ten or more Holders who have been
such for at least six months preceding the date of application, and who hold in
the aggregate at least 1% of the total Interests, shall apply to the Trustees in
writing, stating that they wish to communicate with other Holders with a view to
obtaining signatures for a request for a meeting of Holders and accompanied by a
form of communication and request which they wish to transmit, the Trustees
shall within five business days after receipt of such application either (i)
afford to such applicants access to a list of the names and addresses of all
Holders as recorded on the books of the Trust; or (ii) inform such applicants as
to the approximate number of Holders, and the approximate cost of transmitting
to them the proposed communication and form of request.

(b) If the Trustees elect to follow the course specified in clause (ii)
above, the Trustees, upon the written request of such applicants, accompanied by
a tender of the material to be transmitted and of the reasonable expenses of
transmission, shall, with reasonable promptness, transmit, by United States mail
or by electronic transmission, such material to all Holders at their addresses
as recorded on the books, unless within five business days after such tender the
Trustees shall transmit, by United States mail or by electronic transmission, to
such applicants and file with the Commission, together with a copy of the
material to be
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transmitted, a written statement signed by at least a majority of the Trustees
to the effect that in their opinion either such material contains untrue
statements of fact or omits to state facts necessary to make the statements
contained therein not misleading, or would be in violation of applicable law,
and specifying the basis of such opinion. The Trustees shall thereafter comply
with any order entered by the Commission and the requirements of the 1940 Act
and the Securities Exchange Act of 1934.

ARTICLE IX

Duration; Termination of Trust; Amendment; Mergers; Etc.

9.1 Duration. Subject to possible termination in accordance with the
provisions of Section 9.2, the Trust created hereby shall continue perpetually
pursuant to Section 3808 of DBTA.

9.2 Termination of Trust. (a) The Trust may be terminated (i) by the
affirmative vote of the Holders of not less than two-thirds of the Interests in
the Trust at any meeting of the Holders, or (ii) by an instrument in writing,
without a meeting, signed by a majority of the Trustees and consented to by the
Holders of not less than two-thirds of such Interests, or (iii) by the Trustees
by written notice to the Holders. Upon any such termination,

(i) The Trust shall carry on no business except for the purpose of
winding up its affairs.

(ii) The Trustees shall proceed to wind up the affairs of the Trust
and all of the powers of the Trustees under this Declaration shall
continue until the affairs of the Trust shall have been wound up,
including the power to fulfill or discharge the contracts of the Trust,
collect its assets, sell, convey, assign, exchange, or otherwise dispose
of all or any part of the remaining Trust Property to one or more
Persons at public or private sale for consideration which may consist in
whole or in part of cash, securities or other property of any kind,
discharge or pay its liabilities, and do all other acts appropriate to
liquidate its business; provided that any sale, conveyance, assignment,
exchange, or other disposition of all or substantially all of the Trust
Property shall require approval of the principal terms of the
transaction and the nature and amount of the consideration by the
Holders with a Majority Interests Vote.

(iii) After paying or adequately providing for the payment of all
liabilities, and upon receipt of such releases, indemnities and
refunding agreements, as they deem necessary for their protection, the
Trustees may distribute the remaining Trust Property, in cash or in kind
or partly each, among the Holders according to their respective rights.

(b) Upon termination of the Trust and distribution to the Holders as herein
provided, a majority of the Trustees shall execute and lodge among the records
of the Trust an instrument in writing setting forth the fact of such termination
and file a certificate of cancellation in accordance with Section 3810 of the
DBTA. Upon termination of the Trust, the Trustees shall thereon be discharged
from all further liabilities and duties hereunder, and the rights and interests
of all Holders shall thereupon cease.

9.3 Amendment Procedure.

(a) All rights granted to the Holders under this Declaration of Trust
are granted subject to the reservation of the right of the Trustees to
amend this Declaration of Trust as herein provided, except as set forth
herein to the contrary. Subject to the foregoing, the provisions of this
Declaration of Trust (whether or not related to the rights of Holders) may
be amended at any time, so long as such amendment is not in contravention
of applicable law, including the 1940 Act, by an instrument in writing
signed by a majority of the Trustees (or by an officer of the Trust
pursuant to the vote of a majority of such Trustees). Any such amendment
shall be effective as provided in the instrument containing the terms of
such amendment or, if there is no provision therein with respect to
effectiveness, upon the execution of such instrument and of a certificate
(which may be a part of such instrument) executed by a Trustee or officer
of the Trust to the effect that such amendment has been duly adopted.

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(b) No amendment may be made, under Section 9.3(a) above, which would
change any rights with respect to any Interest in the Trust by reducing the
amount payable thereon upon liquidation of the Trust, by repealing the
limitations on personal liability of any Holder or Trustee, or by
diminishing or eliminating any voting rights pertaining thereto, except
with a Majority Interests Vote.

(c) A certification signed by a majority of the Trustees setting forth
an amendment and reciting that it was duly adopted by the Holders or by the
Trustees as aforesaid or a copy of the Declaration, as amended, and
executed by a majority of the Trustees, shall be conclusive evidence of
such amendment when lodged among the records of the Trust.

(d) Notwithstanding any other provision hereof, until such time as
Interests are first sold, this Declaration may be terminated or amended in
any respect by the affirmative vote of a majority of the Trustees or by an
instrument signed by a majority of the Trustees.

9.4 Merger, Consolidation and Sale of Assets. The Trust may merge or
consolidate with any other corporation, association, trust or other organization
or may sell, lease or exchange all or substantially all of its property,
including its good will, upon such terms and conditions and for such
consideration when and as authorized by no less than a majority of the Trustees
and by a Majority Interests Vote of the Trust or by an instrument or instruments
in writing without a meeting, consented to by the Holders of not less than 50%
of the total Interests of the Trust or such series, as the case may be, and any
such merger, consolidation, sale, lease or exchange shall be deemed for all
purposes to have been accomplished under and pursuant to the statutes of the
State of Delaware. In accordance with Section 3815(f) of DBTA, an agreement of
merger or consolidation may effect any amendment to the Declaration or By-Laws
or effect the adoption of a new declaration of trust or by-laws of the Trust if
the Trust is the surviving or resulting business trust. A certificate of merger
or consolidation of the Trust shall be signed by a majority of the Trustees.

9.5 Incorporation. Upon a Majority Interests Vote, the Trustees may cause
to be organized or assist in organizing a corporation or corporations under the
laws of any jurisdiction or any other trust, partnership, association or other
organization to take over all of the Trust Property or to carry on any business
in which the Trust shall directly or indirectly have any interest, and to sell,
convey and transfer the Trust Property to any such corporation, trust,
association or organization in exchange for the equity interests thereof or
otherwise, and to lend money to, subscribe for the equity interests of, and
enter into any contracts with any such corporation, trust, partnership,
association or organization, or any corporation, partnership, trust, association
or organization in which the Trust holds or is about to acquire equity
interests. The Trustees may also cause a merger or consolidation between the
Trust or any successor thereto and any such corporation, trust, partnership,
association or other organization if and to the extent permitted by law, as
provided under the law then in effect. Nothing contained herein shall be
construed as requiring approval of the Holders for the Trustees to organize or
assist in organizing one or more corporations, trusts, partnerships,
associations or other organizations and selling, conveying or transferring a
portion of the Trust Property to such organizations or entities.

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ARTICLE X

Miscellaneous

10.1 Certificate of Designation; Agent for Service of Process. The Trust
shall file, in accordance with Section 3812 of DBTA, in the office of the
Secretary of State of Delaware, a certificate of trust, in the form and with
such information required by Section 3810 of DBTA and executed in the manner
specified in Section 3811 of DBTA. In the event the Trust does not have at least
one Trustee qualified under Section 3807(a) of DBTA, then the Trust shall comply
with Section 3807(b) of DBTA by having and maintaining a registered office in
Delaware and by designating a registered agent for service of process on the
Trust, which agent shall have the same business office as the Trust's registered
office. The failure to file any such certificate, to maintain a registered
office, to designate a registered agent for service of process, or to include
such other information shall not affect the validity of the establishment of the
Trust, the Declaration, the By-Laws or any action taken by the Trustees, the
Trust officers or any other Person with respect to the Trust except insofar as a
provision of the DBTA would have governed, in which case the Delaware common law
governs.

10.2 Governing Law. This Declaration is executed by all of the Trustees
and delivered with reference to DBTA and the laws of the State of Delaware, and
the rights of all parties and the validity and construction of every provision
hereof shall be subject to and construed according to DBTA and the laws of the
State of Delaware (unless and to the extent otherwise provided for and/or
preempted by the 1940 Act or other applicable federal securities laws);
provided, however, that there shall not be applicable to the Trust, the Trustees
or this Declaration (a) the provisions of Section 3540 of Title 12 of the
Delaware Code, or (b) any provisions of the laws (statutory or common) of the
State of Delaware (other than the DBTA) pertaining to trusts which are
inconsistent with the rights, duties, powers, limitations or liabilities of the
Trustees set forth or referenced in this Declaration.

10.3 Counterparts. This Declaration may be simultaneously executed in
several counterparts, each of which shall be deemed to be an original, and such
counterparts, together, shall constitute one and the same instrument, which
shall be sufficiently evidenced by any such original counterpart.

10.4 Reliance by Third Parties. The original or a copy of this instrument
and of each restatement and/or amendment hereto shall be kept at the office of
the Trust where it may be inspected by any Holder. Any certificate executed by
an individual who, according to the records of the Trust or of any recording
office in which this Declaration may be recorded, appears to be a Trustee
hereunder, certifying to (a) the number or identity of Trustees or Holders, (b)
the due authorization of the execution of any instrument or writing, (c) the
form of any vote passed at a meeting of Trustees or Holders, (d) the fact that
the number of Trustees or Holders present at any meeting or executing any
written instrument satisfies the requirements of this Declaration, (e) the form
of any By-Laws adopted by or the identity of any officers elected by the
Trustees, or (f) the existence of any fact or facts which in any manner relate
to the affairs of the Trust, shall be conclusive evidence as to the matters so
certified in favor of any person dealing with the Trustees and their successors.

10.5 Provisions in Conflict With Law or Regulations. (a) The provisions of
this Declaration are severable, and if the Trustees shall determine, with the
advice of counsel, that any of such provisions is in conflict with the 1940 Act,
the DBTA, or with other applicable laws and regulations, the conflicting
provisions shall be deemed never to have constituted a part of this Declaration;
provided, however, that such determination shall not affect any of the remaining
provisions of this Declaration or render invalid or improper any action taken or
omitted prior to such determination.

(b) If any provision of this Declaration shall be held invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
attach only to such provision in such jurisdiction and shall not in any manner
affect such provision in any other jurisdiction or any other provision of this
Declaration in any jurisdiction.

10.6 Trust Only. It is the intention of the Trustees to create only a
business trust under DBTA with the relationship of trustee and beneficiary
between the Trustees and each Holder from time to time. It is not the intention
of the Trustees to create a general partnership, limited partnership, joint
stock association,
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corporation, bailment, or any form of legal relationship other than a Delaware
business trust except to the extent such trust is deemed to constitute a
corporation under the Code and applicable state tax laws. Nothing in this
Declaration of Trust shall be construed to make the Holders, either by
themselves or with the Trustees, partners or members of a joint stock
association.

10.7 Withholding. Should any Holder be subject to withholding pursuant to
the Code or any other provision of law, the Trust shall withhold all amounts
otherwise distributable to such Holder as shall be required by law and any
amounts so withheld shall be deemed to have been distributed to such Holder
under this Declaration of Trust. If any sums are withheld pursuant to this
provision, the Trust shall remit the sums so withheld to and file the required
forms with the Internal Revenue Service, or other applicable government agency.

10.8 Headings and Construction. Headings are placed herein for convenience
of reference only and shall not be taken as a part hereof or control or affect
the meaning, construction or effect of this instrument. Whenever the singular
number is used herein, the same shall include the plural; and the neuter,
masculine and feminine genders shall include each other, as applicable.

IN WITNESS WHEREOF, the undersigned have caused these presents to be
executed as of the day and year first above written.

/s/ JAMES P. MCMULLAN
------------------------------------
Trustee

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EXHIBIT D

CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS

GROWTH FUND.

Restrictions proposed to be replaced with a new standardized fundamental
investment restriction:

The Growth Fund may not buy or sell real estate or real estate loans.

The Growth Fund may not underwrite the securities of other issuers.

The Growth Fund may not make loans to other persons.

The Growth Fund may not purchase or sell commodities or commodity contracts.

The Growth Fund may not issue senior securities.

The Growth Fund may not borrow money, except from banks for current obligations
of a minor character incurred in the ordinary course of business, nor borrow
amounts in excess of 10% of its gross assets. (The portfolio does not presently
intend to borrow any amount in excess of 5% of its gross assets.)

The Growth Fund may not make an investment if doing so would cause more than 25%
of its total assets to be invested in any one industry.

Restrictions proposed to be reclassified as nonfundamental:

The portfolio will operate as an open-end, diversified, management type
investment company, as defined in the 1940 Act.

The Growth Fund may not invest in any enterprise for the purpose of exercising
control or management thereof.

VALUE DISCOVERY FUND.

Restrictions proposed to be replaced with a new standardized fundamental
investment restriction:

The Value Discovery Fund may (i) borrow money from banks and (ii) make other
investments or engage in other transactions permissible under the 1940 Act which
may involve a borrowing, provided that the combination of (i) and (ii) shall not
exceed 33 1/3% of the value of the portfolio's total assets (including the
amount borrowed), less the portfolio's liabilities (other than borrowings), or
such other percentage permitted by law, except that the portfolio may borrow up
to an additional 5% of its total assets (not including the amount borrowed) from
a bank for temporary or emergency purposes (but not for leverage or the purchase
of investments).

Note: Presently, the Value Discovery Fund only intends to borrow from
banks for temporary or emergency purposes. However, the portfolio may
borrow money from banks and make other investments or engage in other
transactions permissible under the 1940 Act which may be considered a
borrowing (such as mortgage dollar rolls and reverse repurchase
agreements).

The Value Discovery Fund may not issue senior securities, except as permitted
under the 1940 Act.

The Value Discovery Fund may not act as an underwriter of another issuer's
securities, except to the extent that the portfolio may be deemed to be an
underwriter within the meaning of the Securities Act of 1933 in connection with
the purchase and sale of portfolio securities.

The Value Discovery Fund may not purchase or sell physical commodities unless
acquired as a result of ownership of securities or other instruments (but this
shall not prevent the portfolio from purchasing or selling options, futures
contracts, or other derivative instruments or from investing in securities or
other instruments backed by physical commodities).

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The Value Discovery Fund may not make loans if, as a result, more than 33 1/3%
of the portfolio's total assets would be lent to other persons, except through
(i) purchases of debt securities or other debt instruments or (ii) engaging in
repurchase agreements.

The Value Discovery Fund may not purchase the securities of any issuer if, as a
result, 25% or more of the portfolio's total assets would be invested in the
securities of issuers, the principal business activities of which are in the
same industry.

The Value Discovery Fund may not purchase or sell real estate unless acquired as
a result of ownership of securities or other instruments (but this shall not
prohibit the portfolio from purchasing or selling securities or other
instruments backed by real estate or of issuers engaged in real estate
activities).

Restriction proposed to be reclassified as nonfundamental:

The Value Discovery Fund may not with respect to 75% of its total assets,
purchase the securities of any issuer (except securities issued or guaranteed by
the U.S. government or its agencies or instrumentalities) if, as a result, (i)
more than 5% of the portfolio's total assets would be invested in the securities
of that issuer or (ii) the portfolio would hold more than 10% of the outstanding
voting securities of that issuer.

INTERNATIONAL GROWTH FUND.

Restrictions proposed to be replaced with a new standardized fundamental
investment restriction:

The International Growth Fund may not borrow money except as a temporary measure
for extraordinary or emergency purposes and then only in an amount up to 10% of
the value of its total assets (any such borrowing under this section will not be
collateralized). The portfolio will not borrow for leverage purposes.

The International Growth Fund may not make loans of money or portfolio
securities, except through the purchase of debt obligations and repurchase
agreements.

The International Growth Fund may not purchase any securities if, immediately
after such purchase, more than 25% of the value of the portfolio's total assets
would be invested in the securities of issuers in the same industry. There is no
limitation as to the portfolio's investments in obligations issued or guaranteed
by the U.S. government, its agencies or instrumentalities. For purposes of this
restriction, the obligations of each foreign government are deemed to constitute
an industry.

The International Growth Fund may not underwrite securities by others, except to
the extent the portfolio may be deemed to be an underwriter, under the Federal
securities laws, in connection with the disposition of portfolio securities.

The International Growth Fund may not purchase or sell commodities or commodity
contracts, except that the portfolio may enter into financial futures contracts,
options on futures contracts and forward foreign currency exchange contracts.

The International Growth Fund may not purchase or sell real estate (although it
may purchase securities of issuers that engage in real estate operations,
securities that are secured by interests in real estate or securities that
represent interests in real estate, including real estate investment trusts).

The International Growth Fund may not issue any "senior securities" as defined
in the 1940 Act (except for engaging in futures and options transactions and
except for borrowing subject to the restrictions set forth above).

Restrictions proposed to be reclassified as nonfundamental

The International Growth Fund may not pledge, mortgage or create a lien on its
assets.

The International Growth Fund may not invest more than 5% of the value of its
total assets in the securities of any one issuer or purchase more than 10% of
the outstanding voting securities, or any class of securities, of any one
issuer. For purposes of this restriction, all outstanding debt securities of an
issuer are considered as one

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class and all preferred stock of an issuer is considered as one class. (This
restriction does not apply to obligations issued or guaranteed by the U.S.
government, or its agencies or instrumentalities.)

The International Growth Fund may not purchase securities of other U.S. or
foreign investment companies, except that the portfolio may make such a purchase
(a) in the open market provided that immediately thereafter (i) not more than
10% of the portfolio's total assets would be invested in such securities; (ii)
not more than 5% of the portfolio's total assets would be invested in securities
of any one investment company; and (iii) not more than 3% of the total
outstanding voting stock of any one investment company would be owned by the
portfolio, or (b) as part of an offer of exchange, reorganization or as a
dividend.

The International Growth Fund may not make short sales of securities, or
purchase any securities on margin, or maintain a short position or participate
on a joint or a joint and several basis in any trading account in securities,
except that the portfolio may (i) obtain such short-term credits as may be
necessary for the clearance of purchases and sales of securities; (ii) purchase
or sell futures contracts; and (iii) deposit or pay initial or variation margin
in connection with financial futures contracts or related options transactions.

The International Growth Fund may not purchase or sell put options, call
options, or combinations thereof, except that the portfolio may engage in
financial futures contracts and related options transactions to seek to hedge
against either a decline in the value of securities included in the portfolio or
an increase in the price of securities which the portfolio plans to purchase in
the future.

The International Growth Fund may not invest in interests in oil, gas or other
mineral leases, rights or royalty contracts or exploration or development
programs, although it may invest in the securities of issuers which invest in or
sponsor such programs.

The International Growth Fund may not invest for the purposes of exercising
control or management of another issuer.

The International Growth Fund may not invest more than 5% of its total assets in
securities of issuers which with their predecessors have a record of less than
three years' continuous operation.

EMERGING MARKETS GROWTH FUND.

Restrictions proposed to be replaced with a new standardized fundamental
investment restriction:

The Emerging Markets Growth Fund may (i) borrow money from banks and (ii) make
other investments or engage in other transactions permissible under the 1940 Act
which may involve a borrowing, provided that the combination of (i) and (ii)
shall not exceed 33 1/3% of the value of the portfolio's total assets (including
the amount borrowed), less the portfolio's liabilities (other than borrowings),
or such other percentage permitted by law, except that the portfolio may borrow
up to an additional 5% of its total assets (not including the amount borrowed)
from a bank for temporary or emergency purposes (but not for leverage or the
purchase of investments).

Note: Presently, the Emerging Markets Growth Fund only intends to borrow
from banks for temporary or emergency purposes. However, the portfolio
may borrow money from banks and make other investments or engage in other
transactions permissible under the 1940 Act which may be considered a
borrowing (such as mortgage dollar rolls and reverse repurchase
agreements).

The Emerging Markets Growth Fund may not issue senior securities, except as
permitted under the 1940 Act.

The Emerging Markets Growth Fund may not act as an underwriter of another
issuer's securities, except to the extent that the portfolio may be deemed to be
an underwriter within the meaning of the Securities Act of 1933 in connection
with the purchase and sale of portfolio securities.

The Emerging Markets Growth Fund may not purchase or sell physical commodities
unless acquired as a result of ownership of securities or other instruments (but
this shall not prevent the portfolio from purchasing or selling options, futures
contracts, or other derivative instruments or from investing in securities or
other instruments backed by physical commodities).

D-3
<PAGE> 69

The Emerging Markets Growth Fund may not make loans if, as a result, more than
33 1/3% of the portfolio's total assets would be lent to other persons, except
through (i) purchases of debt securities or other debt instruments or (ii)
engaging in repurchase agreements.

The Emerging Markets Growth Fund may not purchase the securities of any issuer
if, as a result, 25% or more of the portfolio's total assets would be invested
in the securities of issuers, the principal business activities of which are in
the same industry.

The Emerging Markets Growth Fund may not purchase or sell real estate unless
acquired as a result of ownership of securities or other instruments (but this
shall not prohibit the portfolio from purchasing or selling securities or other
instruments backed by real estate or of issuers engaged in real estate
activities).

Restriction proposed to be reclassified as nonfundamental:

The Emerging Markets Growth Fund may not with respect to 75% of its total
assets, purchase the securities of any issuer (except securities issued or
guaranteed by the U.S. government or its agencies or instrumentalities) if, as a
result, (i) more than 5% of the portfolio's total assets would be invested in
the securities of that issuer or (ii) the portfolio would hold more than 10% of
the outstanding voting securities of that issuer.

INCOME FUND.

Restrictions proposed to be replaced with a new standardized fundamental
investment restriction:

The Income Fund may not invest in commodities or commodity futures contracts or
in real estate, although it may invest in securities which are secured by real
estate and securities of issuers which invest or deal in real estate.

The Income Fund may not underwrite securities issued by others except to the
extent the portfolio may be deemed to be an underwriter, under the Federal
securities laws, in connection with the disposition of portfolio securities.

The Income Fund may not issue senior securities as defined in the 1940 Act.

The Income Fund may not make loans to others, except through the purchase of
debt obligations or repurchase agreements or the loaning of portfolio securities
not exceeding 75% of the value of its total assets.

The Income Fund may not borrow money, except as a temporary measure and then
only in an amount up to 5% of the value of its total assets (any such borrowing
under this section will not be collateralized). The portfolio will not borrow
for leverage purposes.

The Income Fund may not concentrate more than 25% of the value of its total
assets in any one industry. This restriction does not apply to U.S. Government
securities or government agency securities, or to instruments, such as
repurchase agreements, secured by these instruments.

Restrictions proposed to be reclassified as nonfundamental:

The Income Fund may not purchase securities of any issuer (other than
obligations of, or guaranteed by, the United States Government, its agencies or
instrumentalities) if, as a result, more than 5% of the value of its total
assets would be invested in securities of that issuer.

The Income Fund may not purchase more than 10% of any class of securities of any
issuer, except that such restriction shall not apply to securities issued or
guaranteed by the United States Government, its agencies or instrumentalities.
All debt securities and all preferred stocks are each considered as one class.

The Income Fund may not invest more than 5% of its total assets in securities of
issuers which with their predecessors have a record of less than three years'
continuous operation.

The Income Fund may not make short sales of securities or purchase any
securities on margin except to obtain such short-term credits as may be
necessary for the clearance of transactions.

The Income Fund may not write, purchase or sell puts, calls or combinations
thereof.

D-4
<PAGE> 70

The Income Fund may not invest for the purpose of exercising control or
management of another issuer.

The Income Fund may not invest in interests in oil, gas or other mineral
exploration or development programs, although it may invest in the securities of
issuers which invest in or sponsor such programs.

The Income Fund may not purchase common stocks, preferred stocks, warrants or
other equity securities.

READY RESERVES FUND.

Restrictions proposed to be replaced with a new standardized fundamental
investment restriction:

The Ready Reserves Fund may not invest in commodities or commodity futures
contracts or in real estate, although it may invest in securities which are
secured by real estate and securities of issuers which invest or deal in real
estate.

The Ready Reserves Fund may not underwrite securities issued by others except to
the extent the portfolio may be deemed to be an underwriter, under the Federal
securities laws, in connection with the disposition of portfolio securities.

The Ready Reserves Fund may not issue senior securities as defined in the 1940
Act.

The Ready Reserves Fund may not make loans to others (except through the
purchase of debt obligations or repurchase agreements in accordance with its
investment objective and policies).

The Ready Reserves Fund may not borrow money except as a temporary measure for
extraordinary or emergency purposes and then only in an amount up to 5% of the
value of its total assets (any such borrowing under this section will not be
collateralized). The portfolio will not borrow for leverage purposes.

The Ready Reserves Fund may not concentrate more than 25% of the value of its
total assets in any one industry; provided, however, that the portfolio reserves
freedom of action to invest up to 100% of its total assets in certificates of
deposit, time deposits or bankers' acceptances or repurchase agreements with
domestic branches of domestic banks when management considers it to be in the
interests of the portfolio in attaining its investment objective.

Restrictions proposed to be reclassified as nonfundamental:

The Ready Reserves Fund may not purchase securities of any issuer (other than
obligations of, or guaranteed by, the United States Government, its agencies or
instrumentalities) if, as a result, more than 5% of the value of its total
assets would be invested in securities of that issuer.

The Ready Reserves Fund may not purchase more than 10% of any class of
securities of any issuer, except that such restriction shall not apply to
securities issued or guaranteed by the United States Government, its agencies or
instrumentalities. All debt securities and all preferred stocks are each
considered as one class.

The Ready Reserves Fund may not invest more than 5% of its total assets in
securities of issuers which with their predecessors have a record of less than
three years' continuous operation.

The Ready Reserves Fund may not make short sales of securities, or purchase any
securities on margin except to obtain such short-term credits as may be
necessary for the clearance of transactions.

The Ready Reserves Fund may not write, purchase or sell puts, calls or
combinations thereof.

The Ready Reserves Fund may not invest for the purpose of exercising control or
management of another issuer.

The Ready Reserves Fund may not invest in interests in oil, gas or other mineral
exploration or development programs, although it may invest in the securities of
issuers which invest in or sponsor such programs.

The Ready Reserves Fund may not invest in securities restricted as to
disposition under the Federal securities laws (except commercial paper issued
under Section 4(2) of the Securities Act of 1933).

The Ready Reserves Fund may not purchase securities of other investment
companies, except in connection with a merger, consolidation, reorganization or
acquisition of assets.

D-5
<PAGE> 71

EXHIBIT E

DISTRIBUTION PLAN
(AS AMENDED)
(CLASS N)

Pursuant to the provisions of Rule 12b-1 under the Investment Company Act
of 1940 (the "Act"), this Distribution Plan (the "Plan") has been adopted for
Class N shares of each series (each a "Fund") of the William Blair Funds (the
"Trust") by a majority of the members of the Trust's Board of Trustees (the
"Board"), including a majority of the Board members who are not "interested
persons" of the Trust as defined in the Act and who have no direct or indirect
financial interest in the operation of the Plan or in any agreements related to
the Plan (the "Independent Board Members") at a meeting called for the purpose
of voting on this Plan.

1. Compensation. The Trust will pay to William Blair & Company, L.L.C.
("William Blair") at the end of each calendar month a shareholder/distribution
services fee computed at the annual rate of 0.25% (0.15% for the Income Fund,
and 0.35% for the Ready Reserves Fund) of average daily net assets attributable
to the Class N shares of each Fund. William Blair may compensate various
financial service firms appointed by William Blair ("Firms") in accordance with
the provisions of the Trust's Distribution Agreement for Class N shares (the
"Distribution Agreement") for sales of shares at the fee levels provided in the
Trust's prospectus from time to time. William Blair may pay other commissions,
fees or concessions to Firms, and may pay them to others in its discretion, in
such amounts as William Blair shall determine from time to time. The fee shall
be based upon average daily net assets of a Fund attributable to such Class and
such fee shall be charged only to that Class. For the month and year in which
this Plan becomes effective or terminates, there shall be an appropriate
proration of the shareholder/distribution services fee set forth in Paragraph 1
hereof on the basis of the number of days that the Plan and any agreement
related to the Plan are in effect during the month and year, respectively.

2. Shareholder Approval. Implementation of the Plan is subject to
shareholder approval.

3. Periodic Reporting. William Blair shall prepare reports for the Board on
a quarterly basis for the Class N of each Fund showing amounts paid to the
various Firms and such other information as from time to time shall be
reasonably requested by the Board.

4. Continuance. This Plan shall continue in effect indefinitely, provided
that such continuance is approved at least annually by a vote of a majority of
the Board, and of the Independent Board Members, cast in person at a meeting
called for such purpose or by vote of at least a majority of the outstanding
voting securities of the Class N of each Fund.

5. Termination. This Plan may be terminated at any time without penalty by
vote of a majority of the Independent Board Members or by vote of the majority
of the outstanding voting securities of the Class N of any Fund.

6. Amendment. This Plan may not be amended to increase materially the
amount to be paid to William Blair by each Fund for shareholder/distribution
services with respect to the Class N without the vote of a majority of the
outstanding voting securities of that Class. All material amendments to this
Plan must in any event be approved by a vote of a majority of the Board, and of
the Independent Board Members, cast in person at a meeting called for such
purpose or in any other manner permitted by the Act.

7. Selection of Noninterested Board Members. So long as this Plan is in
effect, the selection and nomination of those Board members who are not
interested persons of the Trust will be committed to the discretion of Board
members who are not themselves interested persons.

8. Recordkeeping. The Trust will preserve copies of this Plan, the
Distribution Agreement, and all reports made pursuant to Paragraph 2 above for a
period of not less than six (6) years from the date of this Plan, the
Distribution Agreement, or any such report, as the case may be, the first two
(2) years in an easily accessible place.
E-1
<PAGE> 72

9. Limitation of Liability. Any obligation of the Trust hereunder shall be
binding only upon the assets of the Class N of each Fund and shall not be
binding on any Board member, officer, employee, agent, or shareholder of the
Trust. Neither the authorization of any action by the Board members or
shareholders of the Trust nor the adoption of the Plan on behalf of the Trust
shall impose any liability upon any Board member or upon any shareholder.

10. Definitions. The terms "interested person" and "vote of a majority of
the outstanding voting securities" shall have the meanings set forth in the Act
and the rules and regulations thereunder.

11. Severability; Separate Action. If any provision of this Plan shall be
held or made invalid by a court decision, rule or otherwise, the remainder of
this Plan shall not be affected thereby. Action shall be taken separately for
the Class N as the Act or the rules thereunder so require.

Dated: July 20, 1999, as amended September 8, 1999.

E-2
<PAGE> 73

EXHIBIT F

CURRENT AND PRO FORMA FEES

ANNUAL FUND OPERATING EXPENSES are paid out of each Fund's assets and include
fees for portfolio management, distribution services, maintenance of shareholder
accounts, shareholder servicing, accounting and other services. You do not pay
these fees directly but, as the example shows, these costs are borne indirectly
by shareholders. The table below show the fees currently paid by each Fund's
Class N shares and the pro forma fees reflecting the implementation of the
proposed Distribution Plan.

GROWTH FUND

<TABLE>
<CAPTION>
CLASS N (CURRENT) CLASS N (PRO-FORMA)(1)
----------------- ----------------------
<S> <C> <C>
Management Fee.................................. .75% .75%
Distribution (12b-1)............................ None .25%
Other Expenses.................................. .09% .09%
---- ----
Total Annual Fund Operating
Expenses............................ .84% 1.09%
</TABLE>

VALUE DISCOVERY FUND

<TABLE>
<CAPTION>
CLASS N (CURRENT) CLASS N (PRO-FORMA)(1)
----------------- ----------------------
<S> <C> <C>
Management Fee.................................. 1.15% 1.15%
Distribution (12b-1)............................ None .25%
Other Expenses.................................. .37% .37%
---- ----
Total Annual Fund Operating Expenses
(without waiver)(2)................. 1.52% 1.77%
Adviser's expense waiver........................ .13% .13%
---- ----
Total Annual Operating Expenses (with
waiver)............................. 1.39% 1.64%
</TABLE>

INTERNATIONAL GROWTH FUND

<TABLE>
<CAPTION>
CLASS N (CURRENT) CLASS N (PRO-FORMA)(1)
----------------- ----------------------
<S> <C> <C>
Management Fee.................................. 1.10% 1.10%
Distribution (12b-1)............................ None .25%
Other Expenses.................................. .26% .26%
---- ----
Total Annual Fund Operating
Expenses............................ 1.36% 1.61%
</TABLE>

EMERGING MARKETS GROWTH FUND

<TABLE>
<CAPTION>
CLASS N (CURRENT) CLASS N (PRO-FORMA)(1)
----------------- ----------------------
<S> <C> <C>
Management Fee.................................. 1.40% 1.40%
Distribution (12b-1)............................ None .25%
Other Expenses.................................. 4.95% 4.95%
---- ----
Total Annual Fund Operating Expenses
(without waiver)(2)................. 6.35% 6.60%
Adviser's expense waiver........................ 4.60% 4.85%
---- ----
Total Annual Operating Expenses (with
waiver)............................. 1.75% 2.00%
</TABLE>

F-1
<PAGE> 74

INCOME FUND

<TABLE>
<CAPTION>
CLASS N (CURRENT) CLASS N (PRO-FORMA)(1)
----------------- ----------------------
<S> <C> <C>
Management Fee.................................. .59% .59%
Distribution (12b-1)............................ None .15%
Other Expenses.................................. .12% .12%
---- ----
Total Annual Fund Operating
Expenses............................ .71% .86%
</TABLE>

READY RESERVES FUND

<TABLE>
<CAPTION>
CLASS N (CURRENT) CLASS N (PRO-FORMA)(1)
----------------- ----------------------
<S> <C> <C>
Management Fee.................................. .59% .24%
Distribution (12b-1)............................ None .35%
Other Expenses.................................. .10% .10%
---- ----
Total Annual Fund Operating
Expenses............................ .69% .69%
</TABLE>

- ---------------

(1) Reflects the shareholder/distribution services fee under the proposed
Distribution Plan.

(2) Due to the Adviser waiving fees and absorbing expenses, the Value Discovery
Fund's actual total expenses are 1.39% (annualized) and the Emerging Markets
Growth Fund's actual total expenses are 1.75% (annualized). The Adviser has
agreed to cap the expenses of Class N shares of the Value Discovery Fund and
the Emerging Markets Growth Fund at 1.64% and 2.00%, respectively, until
April 30, 2000.

(3) Reflects both the shareholder/distribution services fee under the proposed
Distribution Plan and the lower management fees under the Amended Management
Agreement.

EXAMPLE: This example is intended to help you compare the cost of investing in
the Funds with the cost of investing in other mutual funds. The example assumes
that you: invest $10,000 in a Fund, redeem all of your shares at the end of the
periods shown, earn a 5% return each year and incur the same operating expenses
as shown above.

GROWTH FUND

<TABLE>
<CAPTION>
CLASS N (CURRENT) CLASS N (PRO-FORMA)(1)
----------------- ----------------------
<S> <C> <C>
1 Year.......................................... $ 86 $ 112
3 Years......................................... 269 248
5 Years......................................... 468 604
10 Years........................................ 1,040 1,334
</TABLE>

VALUE DISCOVERY FUND*

<TABLE>
<CAPTION>
CLASS N (CURRENT) CLASS N (PRO-FORMA)(1)
----------------- ----------------------
<S> <C> <C>
1 Year.......................................... $ $
3 Years.........................................
5 Years.........................................
10 Years........................................
</TABLE>

F-2
<PAGE> 75

INTERNATIONAL GROWTH FUND

<TABLE>
<CAPTION>
CLASS N (CURRENT) CLASS N (PRO-FORMA)(1)
----------------- ----------------------
<S> <C> <C>
1 Year.......................................... $ 139 $ 165
3 Years......................................... 433 512
5 Years......................................... 749 882
10 Years........................................ 1,643 1,923
</TABLE>

EMERGING MARKETS GROWTH FUND*

INCOME FUND

<TABLE>
<CAPTION>
CLASS N (CURRENT) CLASS N (PRO-FORMA)(1)
----------------- ----------------------
<S> <C> <C>
1 Year.......................................... $ 73 $ 98
3 Years......................................... 228 307
5 Years......................................... 396 533
10 Years........................................ 885 1,182
</TABLE>

READY RESERVES FUND

<TABLE>
<CAPTION>
CLASS N (CURRENT) CLASS N (PRO-FORMA)(1)
----------------- ----------------------
<S> <C> <C>
1 Year.......................................... $ 71 $ 71
3 Years......................................... 221 221
5 Years......................................... 385 385
10 Years........................................ 861 861
</TABLE>

- ---------------

* The Adviser has agreed to cap the Value Discovery and the Emerging Markets
Growth Funds' Class N expenses at 1.64% and 2.00%, respectively, until at
least April 30, 2000.

(1) Reflects the shareholder/distribution services fee under the proposed
Distribution Plan.

(2) Reflects the shareholder/distribution services fee under the proposed
Distribution Plan and the lower management fees under the Amended Management
Agreement.

F-3
<PAGE> 76

[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE

- -----------------------------------------------------
<TABLE>
<S> <C> <C>
For All With- For All
1. INSTRUCTION: To withhold authority to vote for Nominees hold Except
any individual nominee(s), mark the "For All
Except" box and print the name(s) of the
WILLIAM BLAIR GROWTH FUND nominee(s) on the line provided. [ ] [ ] [ ]

- ----------------------------------------------------- ----------------------------------------------------------------------------
PLEASE REFER TO THE BOTTOM OF THIS CARD
FOR THE RESOLUTIONS TO BE VOTED AT THE MEETING For Against Abstain For Against Abstain
- -----------------------------------------------------
2. [ ] [ ] [ ] 5a. [ ] [ ] [ ]
CONTROL NUMBER:
RECORD DATE SHARES: 3a. [ ] [ ] [ ] 5b. [ ] [ ] [ ]

3b. [ ] [ ] [ ] 5c. [ ] [ ] [ ]

4. [ ] [ ] [ ] 5d. [ ] [ ] [ ]

For Against Abstain 5e. [ ] [ ] [ ]

5. [ ] [ ] [ ] 5f. [ ] [ ] [ ]

Instruction: Mark box 5 above to vote all
sub-items 5a-5g. To vote for each sub-
item separately, mark each corresponding
Date box listed 5a-5g. 5g. [ ] [ ] [ ]

Please be sure to sign and
date this Proxy. 6. [ ] [ ] [ ]
- -----------------------------------------------------
7. not applicable

8. To transact such other business as may properly come before the meeting
or any adjournment thereof.
- -----------------------------------------------------
Shareholder sign here Co-owner sign here
</TABLE>

DETACH CARD DETACH CARD

SPECIAL MEETING RESOLUTIONS

1. To elect 6 Directors to the Board of the Company. NOMINEES: (01) Conrad
Fischer, (02) J. Grant Beadle, (03) Theodore A. Bosler, (04) John P.
Kayser, (05) Ann P. McDermott and (06) John B. Schwemm.

2. To ratify the selection of Ernst & Young LLP as independent auditors of the
Company for the current fiscal year.

3. To approve a proposal to reorganize the Company into a Delaware business
trust.

a. To approve an amendment to the Articles of Incorporation of the Company
to permit actions, including the reorganization, to be approved by the
affirmative vote of a majority of the outstanding shares of the
Company.
b. To approve an Agreement and Plan of Reorganization pursuant to which
the Company will be reorganized into a Delaware business trust.

4. To approve a new investment objective.

5. To approve standardized fundamental investment restrictions and reclassify
the remaining fundamental restrictions as nonfundamental.

a. Concentration.
b. Borrowing money and issuing senior securities.
c. Underwriting securities.
d. Investments in real estate.
e. Investments in commodities.
f. Lending by the Fund.
g. To reclassify all remaining fundamental investment restrictions as
nonfundamental.

6. To approve a Rule 12b-1 distribution plan with William Blair & Company,
L.L.C. for Class N shares.

7. Not applicable.

8. To transact such other business as may properly come before the meeting or
any adjournment thereof.

<PAGE> 77

WILLIAM BLAIR GROWTH FUND

PROXY FOR SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 30, 1999

The undersigned shareholder of William Blair Growth Fund (the "Fund"), revoking
any and all previous proxies heretofore given for shares of the Fund held by the
undersigned, hereby constitutes and appoints Conrad Fischer, John B. Schwemm and
Marco Hanig and any and each of them, proxies and attorneys of the undersigned,
with power of substitution to each, for and in the name of the undersigned to
vote and act upon all matters (unless and except as expressly limited below) at
the Special Meeting of Shareholders of the Fund to be held on November 30, 1999
in the 13th floor conference room of William Blair & Company, L.L.C., 222 West
Adams Street, Chicago, Illinois, at 8:00 a.m., Central time, and at any and all
adjournments thereof, with respect to all shares of the Company for which the
undersigned would be entitled to provide instructions or with respect to which
the undersigned is entitled to provide instructions or act with all the powers
the undersigned would possess if personally present and to vote with respect to
specific matters as set forth below. All proxies heretofore given by the
undersigned with respect to said meeting are hereby revised.

YOU MAY VOTE BY TELEPHONE BY CALLING TOLL-FREE 1-877-779-8683 AND FOLLOWING THE
RECORDED INSTRUCTIONS. PROMPT VOTING BY SHAREHOLDERS WILL SAVE THE FUND AND
SHAREHOLDERS THE COSTS ASSOCIATED WITH FURTHER SOLICITATION.

THIS PROXY, IF PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER AS DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. UNLESS OTHERWISE SPECIFIED IN THE SQUARES
PROVIDED, THE UNDERSIGNED'S VOTE WILL BE CAST "FOR" EACH PROPOSAL. IF NO
DIRECTION IS MADE FOR ANY PROPOSALS, THIS PROXY WILL BE VOTED "FOR" ANY AND ALL
SUCH PROPOSALS.

<PAGE> 78

[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE

- -----------------------------------------------------
<TABLE>
<S> <C> <C>
For All With- For All
1. INSTRUCTION: To withhold authority to vote for Nominees hold Except
any individual nominee(s), mark the "For All
Except" box and print the name(s) of the
WILLIAM BLAIR VALUE DISCOVERY FUND nominee(s) on the line provided. [ ] [ ] [ ]

3b. [ ] [ ] [ ] 5c. [ ] [ ] [ ]

4. [ ] [ ] [ ] 5d. [ ] [ ] [ ]

For Against Abstain 5e. [ ] [ ] [ ]

5. [ ] [ ] [ ] 5f. [ ] [ ] [ ]

Instruction: Mark box 5 above to vote all
sub-items 5a-5g. To vote for each sub-
item separately, mark each corresponding
Date box listed 5a-5g. 5g. [ ] [ ] [ ]

Please be sure to sign and
date this Proxy. 6. [ ] [ ] [ ]
- -----------------------------------------------------
7. not applicable

DETACH CARD DETACH CARD

SPECIAL MEETING RESOLUTIONS

1. To elect 6 Directors to the Board of the Company. NOMINEES: (01) Conrad
Fischer, (02) J. Grant Beadle, (03) Theodore A. Bosler, (04) John P.
Kayser, (05) Ann P. McDermott and (06) John B. Schwemm.

2. To ratify the selection of Ernst & Young LLP as independent auditors of the
Company for the current fiscal year.

3. To approve a proposal to reorganize the Company into a Delaware business
trust.

4. To approve a new investment objective.

5. To approve standardized fundamental investment restrictions and reclassify
the remaining fundamental restrictions as nonfundamental.

6. To approve a Rule 12b-1 distribution plan with William Blair & Company,
L.L.C. for Class N shares.

7. Not applicable.

8. To transact such other business as may properly come before the meeting or
any adjournment thereof.

<PAGE> 79

WILLIAM BLAIR VALUE DISCOVERY FUND

PROXY FOR SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 30, 1999

The undersigned shareholder of William Blair Value Discovery Fund (the "Fund"),
revoking any and all previous proxies heretofore given for shares of the Fund
held by the undersigned, hereby constitutes and appoints Conrad Fischer, John B.
Schwemm and Marco Hanig and any and each of them, proxies and attorneys of the
undersigned, with power of substitution to each, for and in the name of the
undersigned to vote and act upon all matters (unless and except as expressly
limited below) at the Special Meeting of Shareholders of the Fund to be held on
November 30, 1999 in the 13th floor conference room of William Blair & Company,
L.L.C., 222 West Adams Street, Chicago, Illinois, at 8:00 a.m., Central time,
and at any and all adjournments thereof, with respect to all shares of the
Company for which the undersigned would be entitled to provide instructions or
with respect to which the undersigned is entitled to provide instructions or act
with all the powers the undersigned would possess if personally present and to
vote with respect to specific matters as set forth below. All proxies heretofore
given by the undersigned with respect to said meeting are hereby revised.

[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE

- -----------------------------------------------------
<TABLE>
<S> <C> <C>
For All With- For All
1. INSTRUCTION: To withhold authority to vote for Nominees hold Except
any individual nominee(s), mark the "For All
Except" box and print the name(s) of the
WILLIAM BLAIR INTERNATIONAL GROWTH FUND nominee(s) on the line provided. [ ] [ ] [ ]

3b. [ ] [ ] [ ] 5c. [ ] [ ] [ ]

4. [ ] [ ] [ ] 5d. [ ] [ ] [ ]

For Against Abstain 5e. [ ] [ ] [ ]

5. [ ] [ ] [ ] 5f. [ ] [ ] [ ]

Instruction: Mark box 5 above to vote all
sub-items 5a-5g. To vote for each sub-
item separately, mark each corresponding
Date box listed 5a-5g. 5g. [ ] [ ] [ ]

Please be sure to sign and
date this Proxy. 6. [ ] [ ] [ ]
- -----------------------------------------------------
7. not applicable

DETACH CARD DETACH CARD

SPECIAL MEETING RESOLUTIONS

1. To elect 6 Directors to the Board of the Company. NOMINEES: (01) Conrad
Fischer, (02) J. Grant Beadle, (03) Theodore A. Bosler, (04) John P.
Kayser, (05) Ann P. McDermott and (06) John B. Schwemm.

2. To ratify the selection of Ernst & Young LLP as independent auditors of the
Company for the current fiscal year.

3. To approve a proposal to reorganize the Company into a Delaware business
trust.

4. To approve a new investment objective.

5. To approve standardized fundamental investment restrictions and reclassify
the remaining fundamental restrictions as nonfundamental.

6. To approve a Rule 12b-1 distribution plan with William Blair & Company,
L.L.C. for Class N shares.

7. Not applicable.

8. To transact such other business as may properly come before the meeting or
any adjournment thereof.

<PAGE> 81

WILLIAM BLAIR INTERNATIONAL GROWTH FUND

PROXY FOR SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 30, 1999

The undersigned shareholder of William Blair International Growth Fund (the
"Fund"), revoking any and all previous proxies heretofore given for shares of
the Fund held by the undersigned, hereby constitutes and appoints Conrad
Fischer, John B. Schwemm and Marco Hanig and any and each of them, proxies and
attorneys of the undersigned, with power of substitution to each, for and in the
name of the undersigned to vote and act upon all matters (unless and except as
expressly limited below) at the Special Meeting of Shareholders of the Fund to
be held on November 30, 1999 in the 13th floor conference room of William Blair
& Company, L.L.C., 222 West Adams Street, Chicago, Illinois, at 8:00 a.m.,
Central time, and at any and all adjournments thereof, with respect to all
shares of the Company for which the undersigned would be entitled to provide
instructions or with respect to which the undersigned is entitled to provide
instructions or act with all the powers the undersigned would possess if
personally present and to vote with respect to specific matters as set forth
below. All proxies heretofore given by the undersigned with respect to said
meeting are hereby revised.

<PAGE> 82

[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE

- -----------------------------------------------------
<TABLE>
<S> <C> <C>
For All With- For All
1. INSTRUCTION: To withhold authority to vote for Nominees hold Except
any individual nominee(s), mark the "For All
Except" box and print the name(s) of the
WILLIAM BLAIR EMERGING MARKETS GROWTH FUND nominee(s) on the line provided. [ ] [ ] [ ]

3b. [ ] [ ] [ ] 5c. [ ] [ ] [ ]

4. [ ] [ ] [ ] 5d. [ ] [ ] [ ]

For Against Abstain 5e. [ ] [ ] [ ]

5. [ ] [ ] [ ] 5f. [ ] [ ] [ ]

Instruction: Mark box 5 above to vote all
sub-items 5a-5g. To vote for each sub-
item separately, mark each corresponding
Date box listed 5a-5g. 5g. [ ] [ ] [ ]

Please be sure to sign and
date this Proxy. 6. [ ] [ ] [ ]
- -----------------------------------------------------
7. not applicable

DETACH CARD DETACH CARD

SPECIAL MEETING RESOLUTIONS

1. To elect 6 Directors to the Board of the Company. NOMINEES: (01) Conrad
Fischer, (02) J. Grant Beadle, (03) Theodore A. Bosler, (04) John P.
Kayser, (05) Ann P. McDermott and (06) John B. Schwemm.

2. To ratify the selection of Ernst & Young LLP as independent auditors of the
Company for the current fiscal year.

3. To approve a proposal to reorganize the Company into a Delaware business
trust.

4. To approve a new investment objective.

5. To approve standardized fundamental investment restrictions and reclassify
the remaining fundamental restrictions as nonfundamental.

6. To approve a Rule 12b-1 distribution plan with William Blair & Company,
L.L.C. for Class N shares.

7. Not applicable.

8. To transact such other business as may properly come before the meeting or
any adjournment thereof.
<PAGE> 83

WILLIAM BLAIR EMERGING MARKETS GROWTH FUND

PROXY FOR SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 30, 1999

The undersigned shareholder of William Blair Emerging Markets Growth Fund (the
"Fund"), revoking any and all previous proxies heretofore given for shares of
the Fund held by the undersigned, hereby constitutes and appoints Conrad
Fischer, John B. Schwemm and Marco Hanig and any and each of them, proxies and
attorneys of the undersigned, with power of substitution to each, for and in the
name of the undersigned to vote and act upon all matters (unless and except as
expressly limited below) at the Special Meeting of Shareholders of the Fund to
be held on November 30, 1999 in the 13th floor conference room of William Blair
& Company, L.L.C., 222 West Adams Street, Chicago, Illinois, at 8:00 a.m.,
Central time, and at any and all adjournments thereof, with respect to all
shares of the Company for which the undersigned would be entitled to provide
instructions or with respect to which the undersigned is entitled to provide
instructions or act with all the powers the undersigned would possess if
personally present and to vote with respect to specific matters as set forth
below. All proxies heretofore given by the undersigned with respect to said
meeting are hereby revised.

<PAGE> 84

[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE

- -----------------------------------------------------

<TABLE>
<S> <C> <C>
For All With- For All
1. INSTRUCTION: To withhold authority to vote for Nominees hold Except
any individual nominee(s), mark the "For All
Except" box and print the name(s) of the
WILLIAM BLAIR INCOME FUND nominee(s) on the line provided. [ ] [ ] [ ]

3b. [ ] [ ] [ ] 5c. [ ] [ ] [ ]

4. [ ] [ ] [ ] 5d. [ ] [ ] [ ]

For Against Abstain 5e. [ ] [ ] [ ]

5. [ ] [ ] [ ] 5f. [ ] [ ] [ ]

Instruction: Mark box 5 above to vote all
sub-items 5a-5g. To vote for each sub-
item separately, mark each corresponding
Date box listed 5a-5g. 5g. [ ] [ ] [ ]

Please be sure to sign and
date this Proxy. 6. [ ] [ ] [ ]
- -----------------------------------------------------
7. not applicable

DETACH CARD DETACH CARD

SPECIAL MEETING RESOLUTIONS

1. To elect 6 Directors to the Board of the Company. NOMINEES: (01) Conrad
Fischer, (02) J. Grant Beadle, (03) Theodore A. Bosler, (04) John P.
Kayser, (05) Ann P. McDermott and (06) John B. Schwemm.

2. To ratify the selection of Ernst & Young LLP as independent auditors of the
Company for the current fiscal year.

3. To approve a proposal to reorganize the Company into a Delaware business
trust.

4. To approve a new investment objective.

5. To approve standardized fundamental investment restrictions and reclassify
the remaining fundamental restrictions as nonfundamental.

6. To approve a Rule 12b-1 distribution plan with William Blair & Company,
L.L.C. for Class N shares.

7. Not applicable.

8. To transact such other business as may properly come before the meeting or
any adjournment thereof.

<PAGE> 85

WILLIAM BLAIR INCOME FUND

PROXY FOR SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 30, 1999

The undersigned shareholder of William Income Fund (the "Fund"), revoking any
and all previous proxies heretofore given for shares of the Fund held by the
undersigned, hereby constitutes and appoints Conrad Fischer, John B. Schwemm and
Marco Hanig and any and each of them, proxies and attorneys of the undersigned,
with power of substitution to each, for and in the name of the undersigned to
vote and act upon all matters (unless and except as expressly limited below) at
the Special Meeting of Shareholders of the Fund to be held on November 30, 1999
in the 13th floor conference room of William Blair & Company, L.L.C., 222 West
Adams Street, Chicago, Illinois, at 8:00 a.m., Central time, and at any and all
adjournments thereof, with respect to all shares of the Company for which the
undersigned would be entitled to provide instructions or with respect to which
the undersigned is entitled to provide instructions or act with all the powers
the undersigned would possess if personally present and to vote with respect to
specific matters as set forth below. All proxies heretofore given by the
undersigned with respect to said meeting are hereby revised.

<PAGE> 86

[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE

- -----------------------------------------------------

<TABLE>
<S> <C> <C>
For All With- For All
1. INSTRUCTION: To withhold authority to vote for Nominees hold Except
any individual nominee(s), mark the "For All
Except" box and print the name(s) of the
WILLIAM BLAIR READY RESERVES FUND nominee(s) on the line provided. [ ] [ ] [ ]

3b. [ ] [ ] [ ] 5c. [ ] [ ] [ ]

4. [ ] [ ] [ ] 5d. [ ] [ ] [ ]

For Against Abstain 5e. [ ] [ ] [ ]

5. [ ] [ ] [ ] 5f. [ ] [ ] [ ]

Instruction: Mark box 5 above to vote all
sub-items 5a-5g. To vote for each sub-
item separately, mark each corresponding
Date box listed 5a-5g. 5g. [ ] [ ] [ ]

Please be sure to sign and
date this Proxy. 6. [ ] [ ] [ ]
- -----------------------------------------------------
7. not applicable

DETACH CARD DETACH CARD

SPECIAL MEETING RESOLUTIONS

1. To elect 6 Directors to the Board of the Company. NOMINEES: (01) Conrad
Fischer, (02) J. Grant Beadle, (03) Theodore A. Bosler, (04) John P.
Kayser, (05) Ann P. McDermott and (06) John B. Schwemm.

2. To ratify the selection of Ernst & Young LLP as independent auditors of the
Company for the current fiscal year.

3. To approve a proposal to reorganize the Company into a Delaware business
trust.

4. To approve a new investment objective.

5. To approve standardized fundamental investment restrictions and reclassify
the remaining fundamental restrictions as nonfundamental.

6. To approve a Rule 12b-1 distribution plan with William Blair & Company,
L.L.C. for Class N shares.

7. Not applicable.

8. To transact such other business as may properly come before the meeting or
any adjournment thereof.

<PAGE> 87

WILLIAM BLAIR READY RESERVES FUND

PROXY FOR SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 30, 1999

The undersigned shareholder of William Blair Ready Reserves Fund (the "Fund"),
revoking any and all previous proxies heretofore given for shares of the Fund
held by the undersigned, hereby constitutes and appoints Conrad Fischer, John B.
Schwemm and Marco Hanig and any and each of them, proxies and attorneys of the
undersigned, with power of substitution to each, for and in the name of the
undersigned to vote and act upon all matters (unless and except as expressly
limited below) at the Special Meeting of Shareholders of the Fund to be held on
November 30, 1999 in the 13th floor conference room of William Blair & Company,
L.L.C., 222 West Adams Street, Chicago, Illinois, at 8:00 a.m., Central time,
and at any and all adjournments thereof, with respect to all shares of the
Company for which the undersigned would be entitled to provide instructions or
with respect to which the undersigned is entitled to provide instructions or act
with all the powers the undersigned would possess if personally present and to
vote with respect to specific matters as set forth below. All proxies heretofore
given by the undersigned with respect to said meeting are hereby revised.