UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

Investment Company Act File Number 811-5344

William Blair Funds

(Exact name of registrant as specified in charter)

222 West Adams Street, Chicago, IL	60606
(Address of principal executive offices)	(Zip Code)

Michelle R. Seitz
William Blair Funds
222 West Adams Street, Chicago, IL 60606
(Name and address of agent for service)

Registrant’s telephone number, including area code: 312-236-1600

Date of fiscal year end: December 31

Date of reporting period: December 31, 2015

Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.

A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A Registrant is not required to respond to the collection of information contained in Form N-CSR unless the form displays a currently valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimates and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. (ss) 3507.

Item 1. February 25, 2016 Annual Reports transmitted to shareholders.

	December 31, 2015
William Blair Funds Annual Report

Table of Contents

U.S. Growth Market Review and Outlook	6
U.S. Value Market Review and Outlook	7
Growth Fund
An Overview from the Portfolio Managers	8
Portfolio of Investments	10
Large Cap Growth Fund
An Overview from the Portfolio Managers	11
Portfolio of Investments	13
Large Cap Value Fund
An Overview from the Portfolio Manager	14
Portfolio of Investments	16
Mid Cap Growth Fund
An Overview from the Portfolio Managers	17
Portfolio of Investments	19
Mid Cap Value Fund
An Overview from the Portfolio Managers	20
Portfolio of Investments	22
Small-Mid Cap Growth Fund
An Overview from the Portfolio Managers	23
Portfolio of Investments	25
Small-Mid Cap Value Fund
An Overview from the Portfolio Managers	27
Portfolio of Investments	29
Small Cap Growth Fund
An Overview from the Portfolio Managers	31
Portfolio of Investments	33
Small Cap Value Fund
An Overview from the Portfolio Managers	35
Portfolio of Investments	37
Global Markets Review and Outlook	39
Global Leaders Fund
An Overview from the Portfolio Managers	41
Portfolio of Investments	43
Global Small Cap Growth Fund (In Liquidation)
An Overview from the Portfolio Managers	45
Portfolio of Investments	47
International Leaders Fund
An Overview from the Portfolio Managers	50
Portfolio of Investments	52
International Equity Fund
An Overview from the Portfolio Managers	54
Portfolio of Investments	56
Institutional International Equity Fund
An Overview from the Portfolio Managers	58
Portfolio of Investments	60

December 31, 2015 William Blair Funds 1

International Growth Fund
An Overview from the Portfolio Managers	62
Portfolio of Investments	64
Institutional International Growth Fund
An Overview from the Portfolio Managers	69
Portfolio of Investments	71
International Small Cap Growth Fund
An Overview from the Portfolio Managers	76
Portfolio of Investments	78
Emerging Markets Leaders Fund
An Overview from the Portfolio Managers	82
Portfolio of Investments	84
Emerging Markets Growth Fund
An Overview from the Portfolio Managers	87
Portfolio of Investments	89
Emerging Markets Small Cap Growth Fund
An Overview from the Portfolio Managers	93
Portfolio of Investments	95
Fixed Income Market Review and Outlook	99
Bond Fund
An Overview from the Portfolio Managers	101
Portfolio of Investments	103
Income Fund
An Overview from the Portfolio Manager	107
Portfolio of Investments	109
Low Duration Fund
An Overview from the Portfolio Managers	111
Portfolio of Investments	113
Macro Allocation Fund
An Overview from the Portfolio Managers	116
Portfolio of Investments	118
Financial Statements	122
Notes to Financial Statements	140
Financial Highlights	164
Report of Independent Registered Public Accounting Firm	197
Board of Trustees and Officers	198
Fund Expenses	204

The views expressed in the commentary for each Fund reflect those of the portfolio management team only through the end of the period of the report as stated on the cover. The portfolio management team’s views are subject to change at any time based on market and other conditions and should not be construed as a recommendation. Statements involving predictions, assessments, analyses, or outlook for individual securities, industries, market sectors, and/or markets involve risks and uncertainties, and there is no guarantee they will come to pass.

This report is submitted for the general information of the shareholders of William Blair Funds. It is not authorized for distribution to prospective investors unless accompanied or preceded by a prospectus of William Blair Funds. Please carefully consider the Funds’ investment objectives, risks, charges, and expenses before investing. This and other information is contained in the Funds’ prospectus, which you may obtain by calling 1-800-742-7272. Read it carefully before you invest or send money.

2 Annual Report December 31, 2015

Performance as of December 31, 2015—Class N Shares (Unaudited)

					10 yr		Overall
					(or since	Inception	Morningstar
	1 yr		3 yr	5 yr	inception)	Date	Rating
Growth Fund
Class N	5.31		14.86	11.44	8.01	3/20/1946	****
Morningstar Large Growth	3.60		15.27	11.70	7.33		Among 1,542
Russell 3000® Growth Index	5.09		16.62	13.30	8.49		Large Growth Funds
S&P 500® Index	1.38		15.13	12.57	7.31
Large Cap Growth Fund
Class N	7.04		17.62	13.15	7.43	12/27/1999	****
Morningstar Large Growth	3.60		15.27	11.70	7.33		Among 1,542
Russell 1000® Growth Index	5.67		16.83	13.53	8.53		Large Growth Funds
Large Cap Value Fund
Class N	(5.70	)	10.83	—	11.68	10/24/2011	***
Morningstar Large Value	(4.05	)	11.63	—	—		Among 1,190
Russell 1000® Value Index	(3.83	)	13.08	—	13.94		Large Value Funds
Mid Cap Growth Fund
Class N	(0.20	)	11.39	9.27	7.55	2/1/2006	***
Morningstar Mid-Cap Growth	(0.95	)	12.82	9.59	—		Among 644
Russell Midcap® Growth Index	(0.20	)	14.88	11.54	7.59		Mid-Cap Growth Funds
Mid Cap Value Fund
Class N	(2.13	)	12.55	10.04	10.35	5/3/2010	****
Morningstar Mid-Cap Value	(5.41	)	11.50	9.06	—		Among 407
Russell Midcap® Value Index	(4.78	)	13.40	11.25	11.21		Mid-Cap Value Funds
Small-Mid Cap Growth Fund
Class N	4.47		16.99	12.37	9.27	12/29/2003	****
Morningstar Mid-Cap Growth	(0.95	)	12.82	9.59	7.16		Among 644
Russell 2500TM Growth Index	(0.19	)	14.54	11.43	8.49		Mid-Cap Growth Funds
Small-Mid Cap Value Fund
Class N	(3.13	)	11.38	—	12.60	12/15/2011	***
Morningstar Small Blend	(5.38	)	10.34	—	—		Among 638
Russell 2500® Value Index	(5.49	)	10.51	—	13.62		Small Blend Funds
Small Cap Growth Fund
Class N	(4.44	)	14.42	8.94	6.01	12/27/1999	***
Morningstar Small Growth	(2.41	)	12.20	9.40	7.14		Among 660
Russell 2000® Growth Index	(1.38	)	14.28	10.67	7.95		Small Growth Funds
Small Cap Value Fund
Class N	(5.77	)	11.00	7.44	7.28	12/23/1996	***
Morningstar Small Blend	(5.38	)	10.34	8.22	6.27		Among 638
Russell 2000® Value Index	(7.47	)	9.06	7.67	5.57		Small Blend Funds
Global Leaders Fund
Class N	2.49		8.72	7.78	2.55	10/15/2007	****
Morningstar World Stock	(1.69	)	8.26	6.51	—		Among 984
MSCI ACW IMI (net)	(2.19	)	7.86	6.11	1.78		World Stock Funds

December 31, 2015 William Blair Funds 3

Performance as of December 31, 2015—Class N Shares (Unaudited)—continued

							10 yr			Overall
							(or since		Inception	Morningstar
	1 yr		3 yr		5 yr		inception)		Date	Rating
Global Small Cap Growth Fund
Class N	9.07		—		—		13.94		4/10/2013	Not rated.
Morningstar World Stock	(1.69	)	—		—		—
MSCI ACW Small Cap Index (net)	(1.04	)	—		—		6.43
International Leaders Fund
Class N	6.01		7.01		—		8.69		8/16/2012	****
Morningstar Foreign Large Growth	0.95		4.94		—		—			Among 323
MSCI ACW Ex-U.S. IMI (net)	(4.60	)	2.02		—		4.36			Foreign Large Growth Funds
International Equity Fund
Class N	1.54		5.54		3.79		2.52		5/24/2004	***
Morningstar Foreign Large Growth	0.95		4.94		3.80		3.95			Among 323
MSCI World Ex-U.S. Index (net)	(3.04	)	3.93		2.79		2.92			Foreign Large Growth Funds
International Growth Fund
Class N	(0.27	)	4.61		3.89		3.66		10/1/1992	***
Morningstar Foreign Large Growth	0.95		4.94		3.80		3.95			Among 323
MSCI ACW Ex-U.S. IMI (net)	(4.60	)	2.02		1.27		3.18			Foreign Large Growth Funds
International Small Cap Growth Fund
Class N	9.67		8.11		6.02		5.67		11/1/2005	***
Morningstar Foreign Small/Mid Growth	7.05		8.85		6.24		5.65			Among 136
MSCI ACW Small Cap Ex-U.S. Index (net)	2.60		5.64		2.63		4.97			Foreign Small/Mid Growth Funds
Emerging Markets Leaders Fund
Class N	(14.56	)	(4.67	)	(3.45	)	(0.11	)	5/3/2010	****
Morningstar Diversified Emerging Markets	(13.79	)	(5.69	)	(4.45	)	—			Among 578 Diversified Emerging Markets Funds
MSCI Emerging Markets Index (net)	(14.92	)	(6.76	)	(4.81	)	(1.71	)
Emerging Markets Growth Fund
Class N	(15.03	)	(3.89	)	(2.38	)	3.30		6/6/2005	****
Morningstar Diversified Emerging Markets	(13.79	)	(5.69	)	(4.45	)	3.19			Among 578 Diversified Emerging Markets Funds
MSCI Emerging Markets IMI (net)	(13.86	)	(6.12	)	(4.59	)	3.94
Emerging Markets Small Cap Growth Fund
Class N	(6.40	)	7.63		—		12.34		10/24/2011	*****
Morningstar Diversified Emerging Markets	(13.79	)	(5.69	)	—		—			Among 578 Diversified Emerging Markets Funds
MSCI Emerging Markets Small Cap Index (net)	(6.85	)	(1.67	)	—		2.05
Bond Fund
Class N	(0.23	)	1.13		3.77		4.91		5/1/2007	****
Morningstar Intermediate-Term Bond	(0.26	)	1.16		3.22		—			Among 947
Barclays U.S. Aggregate Bond Index	0.55		1.44		3.25		4.47			Intermediate-Term Bond Funds

4 Annual Report December 31, 2015

Performance as of December 31, 2015—Class N Shares (Unaudited)—continued

					10 yr		Overall
					(or since	Inception	Morningstar
	1 yr		3 yr	5 yr	inception)	Date	Rating
Income Fund
Class N	0.39		0.60	2.57	3.12	10/1/1990	****
Morningstar Short-Term Bond	0.19		0.54	1.49	2.86		Among 493
Barclays Intermediate Government/Credit Bond Index	1.07		1.10	2.58	4.04		Short-Term Bond Funds
Low Duration Fund
Class N	0.01		0.19	1.01	1.04	12/1/2009	***
Morningstar Ultra Short Bond	0.17		0.34	0.70	—		Among 124
Bank of America Merrill Lynch 1-Year U.S. Treasury Note Index	0.15		0.20	0.28	0.34		Ultrashort Bond Funds
Macro Allocation Fund
Class N	(6.24	)	2.86	—	6.12	11/29/2011	****
Morningstar Multialternative	(2.58	)	1.66	—	—		Among 240
Bank of America Merrill Lynch 3-Month U.S. Treasury Bill Index	0.05		0.05	—	0.07		Multialternative Funds
Long-Term Comparative Index	(0.27	)	3.00	—	3.89

Performance cited represents past performance. Past performance does not guarantee future results and current performance may be lower or higher than the data quoted. Results shown are average annual total returns, which assume reinvestment of dividends and capital gains. Investment returns and principal will fluctuate and you may have a gain or a loss when you sell shares. For the most current month-end performance information, please call 1-800-742-7272, or visit our Web site at www.williamblairfunds.com. From time to time, the investment adviser may waive fees or reimburse expenses for the Fund. Without these waivers, performance would be lower. Investing in smaller companies involves special risks, including higher volatility and lower liquidity. International and emerging markets investing involves special risk considerations, including currency fluctuations, lower liquidity, economic and political risk. As interest rates rise, bond prices will fall and bond funds may become more volatile. Class N shares are available to the general public without a sales load.

Morningstar Ratings^TM are as of 12/31/2015 and are subject to change every month. The ratings are based on a risk-adjusted return measure that accounts for variation in a fund’s monthly performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of funds in each Category receive 5 stars, the next 22.5% receive 4 stars, the middle 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a fund is derived from a weighted-average of the performance figures associated with its three-, five- and ten-year (if applicable) Morningstar Rating metrics. The 3/5/10 year Morningstar ratings were as follows: Growth Fund ***/***/**** and Large Cap Growth Fund ****/****/***, out of 1,542/1,326/933 large growth funds; Large Cap Value Fund ***/NA/NA, out of 1,190/NA/NA large value funds; Mid Cap Growth Fund ***/***/NA and Small-Mid Cap Growth Fund *****/****/**** out of 644/577/431 mid-cap growth funds; Mid Cap Value Fund ****/****/NA, out of 407/343/NA mid-cap value funds; Small Cap Growth Fund ****/***/**, out of 660/588/423 small growth funds; Small-Mid Cap Value Fund ***/NA /NA and Small Cap Value Fund ***/**/**** out of 638/564/366 small blend funds; Global Leaders Fund ***/****/NA out of 984/781/NA world stock funds; International Equity Fund ****/***/**, International Growth Fund ***/***/***, and International Leaders Fund ****/NA/NA out of 323/288/189 foreign large growth funds; International Small Cap Growth Fund ***/***/*** out of 136/115/77 foreign small/mid growth funds; Emerging Markets Leaders Fund ****/****/NA, Emerging Markets Growth Fund ****/****/***, and Emerging Markets Small Cap Growth *****/NA/NA out of 578/386/172 diversified emerging markets funds; Bond Fund ***/****/NA out of 947/829/NA intermediate-term bond funds; Income Fund ***/*****/*** out of 493/406/278 short-term bond funds; Low Duration Fund **/****/NA out of 124/80/NA ultrashort bond funds; and Macro Allocation Fund ****/NA/NA out of 240/NA/NA multialternative funds.

Please carefully consider the Funds’ investment objectives, risks, charges, and expenses before investing. This and other information is contained in the Funds’ prospectus, which you may obtain by calling 1-800-742-7272. Read it carefully before you invest or send money.

December 31, 2015 William Blair Funds 5

U.S. Growth Market Review and Outlook

Broadly, the domestic equity market modestly advanced over the first half of 2015 as strong consumer confidence, improving labor market health, and solid housing data suggested continued health of the U.S. economy. In addition, the equity market was supported by strong mergers and acquisitions (“M&A”) activity driven by healthy corporate balance sheets, the continued availability of cheap debt financing and a generally favorable market response to deal announcements. However, market volatility spiked late in the summer and downdrafts in August and September, driven by concerns of slowing growth in China and potential spillover effects for global economic growth, weighed significantly on market returns.

Volatility continued in the fourth quarter. Following third quarter weakness, the market rebounded strongly in October as investor fears were eased by the combination of better data out of China and continued solid U.S. economic data. In the U.S., steady improvement in employment, signs of acceleration in wage growth, low gas prices, and solid housing data bolstered consumer confidence. However, challenges in the manufacturing segment of the economy, in part due to weakness in energy and commodity-driven industries and exacerbated by weak exports related to a strong dollar, remained a concern. In December, Brent Crude Oil fell below $40 a barrel for the first time since the 2008 financial crisis. Moreover, credit spreads in both high yield and investment grade bonds widened over the course of the year, suggesting growing concerns over either a slowing economy or rising default risk, or both. While much of this was tied to highly indebted companies with exposure to global commodities, high yield spreads nevertheless bear monitoring.

After speculation through much of 2015 as to when the Federal Reserve (the “Fed”) would begin to raise interest rates, the Fed raised rates by 25 basis points in December, the first rate increase in nine years. While the move was largely anticipated by the market, there was an uptick in volatility surrounding the announcement as investors digested the dovish commentary that accompanied the rate hike and reiterated the Fed’s data-dependent stance on the trajectory of future monetary policy implementation. The Fed’s first move toward policy re-normalization along with the aforementioned pockets of weakness in the economy caused investors to question the durability of U.S. growth, especially given more challenged growth prospects abroad. These factors contributed to weaker equity markets in the final month of the year.

With the Fed’s first rate hike behind us, investor conversation has shifted to speculation around the pace at which the Fed will pursue monetary policy re-normalization. While policy mistakes on this front could pose a risk to economic growth, we also acknowledge that we remain in an environment of near-zero rates and accommodative fiscal policy in the U.S., as well as generally stimulative policies abroad. The Fed has set expectations for a gradual path of rising rates as it looks for progress toward its inflation target of 2%. We believe interest rates are likely to stay lower for longer due to economic risks abroad and the excess capacity currently present in many parts of the global economy today, both of which are likely to limit inflationary pressures relative to past cycles.

Among these risks, China remains notable. While the country tries to engineer a soft landing, structural headwinds remain as China faces a difficult transition from an industrial to a consumer-led economy. China’s trajectory on this front will have important implications for other emerging markets, particularly commodity-driven economies reliant on Chinese demand. With respect to energy and commodity markets in general, there could be further fallout in the space if the current supply and demand imbalances persist.

In terms of the market, we expect that the increased volatility observed in the second half of 2015 will continue into 2016, supported by the Fed’s data-dependent policy stance, China’s uncertain economic trajectory, the U.S. presidential election, and a more challenging backdrop for corporate earnings growth. Nearly seven years into an economic recovery and with profit margins near peak levels, we believe fundamentally driven earnings growth will be harder to achieve going-forward. That being said, the balance sheets of U.S. corporations generally remain healthy and the translation impact of foreign exchange headwinds appears to be largely behind them. Given our bias toward companies with durable long-term growth opportunities that trade at attractive valuations relative to those characteristics, we believe our style of investing is likely to be rewarded in this type of market environment.

6 Annual Report December 31, 2015

U.S. Value Market Review and Outlook

Broadly, the domestic equity markets modestly advanced over the first half of 2015 as strong consumer confidence, improving labor market health and solid business data helped overcome early economic disappointments and suggested continued health of the U.S. economy. In addition, the equity markets were supported by strong mergers and acquisitions (“M&A”) activity driven by healthy corporate balance sheets, the continued availability of cheap debt financing and a generally favorable market response to deal announcements. However, market volatility spiked late in the summer and market declines in August and September, driven by continued weak commodity prices and concerns of slowing growth in China, including potential spillover effects for global economic growth, weighed significantly on market returns for the year.

After most value benchmark indices posted consecutive quarters of negative returns, the domestic equity markets traded higher in the fourth quarter. October and November returns were driven by continued solid U.S. economic data as news of a lowering unemployment rate, signs of acceleration in wage growth, low gas prices, and solid housing data bolstered consumer confidence. While domestic economic data broadly continued to improve, dovish commentary early in the fourth quarter from the Federal Reserve (the “Fed”) helped propel domestic equity markets higher. In addition, improved economic data out of China, which many hope signals economic stabilization, helped support market gains early in the fourth quarter.

December returns were negatively impacted by continued weakness in commodities, highlighted by oil prices that fell below $40 per barrel for the first time since the 2008 financial crisis. While U.S. consumers continue to drive domestic economic expansion, disappointing industrial data contributed to market declines in December. Moreover, credit spreads in both high yield and investment grade bonds widened over the course of the year, suggesting rising concerns over either a slowing economy or rising default risk, or both. While much of the widening in credit spreads was tied to highly indebted companies with significant exposure to global commodities, high yield spreads nevertheless bear monitoring.

After much speculation in 2015 as to when the Fed would begin to raise interest rates, the Fed raised rates by 25 basis points in December, the first increase in nine years. While the move was largely anticipated by the market, there was an uptick in volatility surrounding the announcement as investors digested the dovish commentary that accompanied the rate hike and reiterated the Fed’s data-dependent stance on the trajectory of future monetary policy implementation. The Fed’s first move toward policy re-normalization, along with the aforementioned pockets of weakness in the economy, caused investors to question the durability of U.S. growth—especially given more challenged growth prospects abroad. These factors contributed to weaker equity markets in the final month of the year.

We continue to be constructive on the domestic equity markets and, absent a major global economic disruption, we expect U.S. economic expansion to continue at a slow and steady pace. With that said, we anticipate continued volatility in 2016 due to geopolitical tensions, concerns over a slowdown in China, the potential for further commodity weakness, the upcoming U.S. presidential election, and a more challenging backdrop for corporate earnings growth. Higher-quality companies typically outperform lower-quality companies when volatility rises, which should benefit our Funds given our higher-quality bias.

We believe that the Fed is less likely to raise rates into an uncertain U.S. and global economic growth backdrop, and temporary economic hiccups are likely to materialize that may delay future Fed rate increases. As the U.S. moves toward monetary policy normalization and many global central banks are following an accommodative policy, this policy divergence may amplify the strength of the U.S. dollar. Further strengthening of the dollar could offset accommodative policy measures in emerging and global markets. This scenario could stress global economic growth and ultimately disrupt the trajectory of the U.S. recovery. While we do not attempt to predict the timing or trajectory of future Fed rate increases, we believe rates will remain lower for longer than they otherwise would have due to economic risks abroad and the excess capacity that exists in many parts of the global economy today, both of which are likely to limit inflationary pressures.

Among these risks for the global economy, China remains important. While the country tries to engineer a soft landing, evident in its recent currency devaluation and supply side reforms, structural headwinds remain. China has been overly dependent on fixed asset investment in real estate, manufacturing capacity, and infrastructure to drive economic growth and faces a difficult transition from an industrial economy to a consumer-led economy. China’s trajectory on this front will have important implications for other emerging markets, particularly commodity-driven economies reliant on Chinese demand. With respect to energy and commodity markets risk, there could be further fallout in the space if the current supply and demand imbalances persist.

While we are cognizant of these macroeconomic variables, our focus remains on identifying attractive risk/reward opportunities based on individual company fundamentals. From our bottom-up perspective, we remain constructive on corporate earnings, albeit against a backdrop of lower revenue growth and increasing margin pressure from higher wages. As always, our focus remains on identifying quality companies at discount prices and corporate transformation opportunities, and we continue to find good ideas across sectors. Given our investment approach, we believe the Funds are well-suited to withstand a variety of market scenarios and add value over the long-term.

December 31, 2015 William Blair Funds 7

	Growth Fund
	The Growth Fund seeks long-term capital appreciation.
	AN OVERVIEW FROM THE PORTFOLIO MANAGERS
David C. Fording John F. Jostrand	The William Blair Growth Fund (Class N shares) posted a 5.31% increase, net of fees, for the twelve months ended December 31, 2015. By comparison, the Fund’s benchmark index, the Russell 3000® Growth Index (the “Index”), increased 5.09%. The Fund’s outperformance relative to the Index for 2015 was driven by stock selection as style factors were mostly offsetting. Strong stock selection in Information Technology was a standout positive during the year. While we held many good performers, positions in Alphabet (formerly Google Inc.) and Vantiv were the top contributors to return within the sector. Amazon.com (Consumer Discretionary) was our largest individual contributor to return during the period while positions in Equifax (Industrials) and Bristol-Myers Squibb (Health Care) also added value. Alphabet outperformed on strong growth in both its core search business and in YouTube while Amazon.com outperformed on strong growth out of both its core e-commerce business and its rapidly growing AWS segment. Conversely, stock selection within Consumer Staples, including positions in Keurig Green Mountain and Mead Johnson Nutrition, detracted from 2015 relative performance. Keurig Green Mountain underperformed on disappointing business results for its hot platform and investor skepticism of the company’s launch strategy for the Keurig Kold platform. Other notable underperformers included Precision Castparts (Industrials), Encore Capital Group (Financials) and Borg Warner (Consumer Discretionary). Precision Castparts underperformed due to a reduction of inventory destocking by a major customer and a drop in orders following the collapse of oil prices. From a style perspective, increasing investor concerns about the sustainability of economic growth, given that we have likely moved past the mid-point of the current economic cycle, contributed to a gravitation toward more consistent growers and less sensitivity to valuation. As such, the Fund’s overweight to higher valuation stocks, an exposure driven by our typical bias toward less cyclical and more sustainable growers, was a modest tailwind during the period. At the same time, the Fund’s typical smaller-size profile relative to the Index worked against the Fund as large- and mega-cap stocks outperformed their small- and mid-cap counterparts by a considerable margin during the year. During 2015, the Fund participated in one initial public offering for Square Inc., which had a modest positive impact on performance. Please refer to the U.S. Growth Market Review and Outlook relating to the Fund on page 6.

8 Annual Report December 31, 2015

Growth Fund

Performance Highlights (Unaudited)

Average Annual Total Return at 12/31/2015
	1 Year			3 Year			5 Year			10 Year
Class N		5.31	%		14.86	%		11.44	%		8.01	%
Class I		5.69			15.25			11.82			8.36
Russell 3000® Growth Index		5.09			16.62			13.30			8.49
S&P 500® Index		1.38			15.13			12.57			7.31

Performance cited represents past performance. Past performance does not guarantee future results and current performance may be lower or higher than the data quoted. Results shown are average annual returns, which assume reinvestment of dividends and capital gains. Investment returns and principal will fluctuate and you may have a gain or loss when you sell shares. For the most current month-end performance information, please call 1-800-742-7272, or visit our Web site at www.williamblairfunds.com. Class N shares are available to the general public without a sales load. Class I shares are available to certain institutional investors and advisory clients of William Blair Investment Management, LLC and William Blair & Company, L.L.C., without a sales load or distribution (12b-1) or service fees.

The performance highlights and graph presented above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

The Russell 3000^® Growth Index consists of large, medium, and small capitalization companies with above average price-to-book ratios and forecasted growth rates. The index is weighted by market capitalization and large/medium/small companies make up approximately 80%/15%/5% of the index.

The S&P 500^® Index indicates broad larger capitalization equity market performance.

This report identifies the Fund’s investments on December 31, 2015. These holdings are subject to change. Not all stocks in the Fund performed the same, nor is there any guarantee that these stocks will perform as well in the future. Market forecasts provided in this report may not necessarily come to pass.

Sector Diversification (Unaudited)

 

The sector diversification shown is based on the total long-term securities.

December 31, 2015 William Blair Funds 9

Growth Fund

Portfolio of Investments, December 31, 2015 (all dollar amounts in thousands)

	Issuer	Shares		Value
	Common Stocks
	Information Technology—32.9%
*	Adobe Systems, Inc.		144,300	$	13,556
*	Akamai Technologies, Inc.		103,999		5,473
*	Alphabet, Inc. Class “C”		44,738		33,951
*	Alphabet, Inc. Class “A”		43,180		33,595
*	CoStar Group, Inc.		50,357		10,408
*	Facebook, Inc.		226,900		23,747
*	Guidewire Software, Inc.		151,000		9,084
	Mastercard, Inc.		399,300		38,876
	Microsoft Corporation		372,900		20,689
*	NeuStar, Inc.		362,678		8,693
*	Pandora Media, Inc.		649,783		8,714
*	Red Hat, Inc.		233,306		19,320
*	ServiceNow, Inc.		80,900		7,003
*	Square, Inc.		397,255		5,200
	Texas Instruments, Inc.		349,500		19,156
*	Vantiv, Inc.		316,600		15,013
*	Workday, Inc.		77,200		6,151
					278,629
	Consumer Discretionary—21.0%
*	Amazon.com, Inc.		52,900		35,755
	BorgWarner, Inc.		343,700		14,858
	Dollar General Corporation		342,000		24,580
	Lowe’s Cos., Inc.		420,600		31,982
	Newell Rubbermaid, Inc.		387,400		17,077
*	Sally Beauty Holdings, Inc.		470,400		13,119
*	Steven Madden, Ltd.		196,100		5,926
*	The Priceline Group, Inc.		10,885		13,878
	VF Corporation		229,900		14,311
	Williams-Sonoma, Inc.		100,600		5,876
					177,362
	Health Care—16.0%
*	Align Technology, Inc.		176,800		11,642
*	Biogen, Inc.		53,500		16,390
*	BioMarin Pharmaceutical, Inc.		84,000		8,800
	Bristol-Myers Squibb Co.		450,100		30,962
*	Cerner Corporation		313,600		18,869
*	Exact Sciences Corporation		190,000		1,754
	Gilead Sciences, Inc.		230,570		23,331
*	Medivation, Inc.		108,244		5,233
	Perrigo Co. plc†		54,900		7,944
	Shire plc-ADR		49,100		10,066
					134,991
	Industrials—14.9%
	AMETEK, Inc.		331,900		17,787
	Danaher Corporation		196,800		18,279
	Equifax, Inc.		122,204		13,610
	Rockwell Collins, Inc.		137,200		12,664
*	RPX Corporation		140,677		1,547
	Towers Watson & Co.		113,400		14,567
*	TransDigm Group, Inc.		69,780		15,941
	Union Pacific Corporation		274,300		21,450

		Shares or
		Principal
	Issuer	Amount		Value
	Common Stocks—(continued)
	Industrials—(continued)
*	Verisk Analytics, Inc.		131,020	$	10,073
					125,918
	Financials—9.5%
*	Affiliated Managers Group, Inc.		79,200		12,653
*	Encore Capital Group, Inc.		258,021		7,503
	Intercontinental Exchange, Inc.		75,800		19,425
*	Markit, Ltd.†		441,063		13,307
	Moody’s Corporation		171,000		17,158
*	Signature Bank		69,800		10,705
					80,751
	Energy—2.4%
	Schlumberger, Ltd.†		184,200		12,848
	Suncor Energy, Inc.†		296,300		7,644
					20,492
	Consumer Staples—2.0%
	Costco Wholesale Corporation		106,000		17,119
	Total Common Stocks—98.7% (cost $664,436)				835,262
	Repurchase Agreement
	Fixed Income Clearing Corporation, 0.030% dated 12/31/15, due 1/4/16, repurchase price $7,796, collateralized by U.S. Treasury Note, 2.375%, due 8/15/24		$7,795		7,795
	Total Repurchase Agreement—0.9% (cost $7,795)				7,795
	Total Investments—99.6% (cost $672,231)				843,057
	Cash and other assets, less liabilities—0.4%				3,441
	Net assets—100.0%			$	846,498

  ADR = American Depository Receipt

  * Non-income producing securities

  † = U.S. listed foreign security                

See accompanying Notes to Financial Statements.

10 Annual Report December 31, 2015

	Large Cap Growth Fund
	The Large Cap Growth Fund seeks long-term capital appreciation.
	AN OVERVIEW FROM THE PORTFOLIO MANAGERS
James S. Golan David P. Ricci	The William Blair Large Cap Growth Fund (Class N shares) posted a 7.04% increase, net of fees, for the twelve months ended December 31, 2015. By comparison, the Fund’s benchmark index, the Russell 1000® Growth Index (the “Index”), increased 5.67%. The Fund’s outperformance during 2015 was driven by stock selection. Good stock selection within Consumer Discretionary and Information Technology contributed significantly to returns. Within Consumer Discretionary, top performers included Amazon.com, Home Depot, and O’Reilly Automotive, while within Information Technology, Alphabet (formerly Google Inc.) was a notable contributor. Alphabet outperformed on strong growth in both its core search business and in YouTube while Amazon.com outperformed on strong growth out of both its core e-commerce business and its rapidly growing AWS segment. In addition, the Fund benefited from strong performance from its position in Equifax (Industrials). Conversely, stock selection within Consumer Staples, including the Fund’s positions in Keurig Green Mountain and Mead Johnson Nutrition, detracted from 2015 performance. Keurig Green Mountain underperformed on disappointing business results for its hot platform and investor skepticism of the company’s launch strategy for the Keurig Kold platform. Other notable underperformers included Affiliated Managers Group (Financials), Union Pacific Corporation (Industrials), and Cerner Corporation (Health Care). Union Pacific Corporation underperformed due to lower coal and crude-by-rail volumes being transported over its railroad network. From a style perspective, increasing investor concerns about the sustainability of economic growth, given that we have likely moved past the mid-point of the current economic cycle, contributed to a gravitation toward more consistent growers and less sensitivity to valuation. As such, the Fund’s overweight to higher-valuation stocks, an exposure driven by our typical bias toward less cyclical and more sustainable growers, was a modest tailwind during the year. Please refer to the U.S. Growth Market Review and Outlook relating to the Fund on page 6.

December 31, 2015 William Blair Funds 11

Large Cap Growth Fund

Performance Highlights (Unaudited)

Average Annual Total Return at 12/31/2015
	1 Year			3 Year			5 Year			10 Year
Class N		7.04	%		17.62	%		13.15	%		7.43	%
Class I		7.26			17.89			13.42			7.67
Russell 1000® Growth Index		5.67			16.83			13.53			8.53

Performance cited represents past performance. Past performance does not guarantee future results and current performance may be lower or higher than the data quoted. Results shown are average annual total returns, which assume reinvestment of dividends and capital gains. Investment returns and principal will fluctuate and you may have a gain or loss when you sell shares. For the most current month-end performance information, please call 1-800-742-7272, or visit our Web site at www.williamblairfunds.com. From time to time, the investment adviser may waive fees or reimburse expenses for the Fund. Without these waivers/reimbursements, performance would be lower. Class N shares are available to the general public without a sales load. Class I shares are available to certain institutional investors and advisory clients of William Blair Investment Management, LLC and William Blair & Company, L.L.C., without a sales load or distribution (12b-1) or service fees.

The performance highlights and graph presented above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

The Russell 1000^® Growth Index consists of large capitalization companies with above average price-to-book ratios and forecasted growth rates.

This report identifies the Fund’s investments on December 31, 2015. These holdings are subject to change. Not all stocks in the Fund performed the same, nor is there any guarantee that these stocks will perform as well in the future. Market forecasts provided in this report may not necessarily come to pass.

Sector Diversification (Unaudited)

 

The sector diversification shown is based on the total long-term securities.

12 Annual Report December 31, 2015

Large Cap Growth Fund

Portfolio of Investments, December 31, 2015 (all dollar amounts in thousands)

	Issuer	Shares		Value
	Common Stocks
	Information Technology—29.8%
*	Adobe Systems, Inc.		19,950	$	1,874
*	Alphabet, Inc. Class “C”		2,606		1,978
*	Alphabet, Inc. Class “A”		3,850		2,995
	Apple, Inc.		46,305		4,874
*	Facebook, Inc.		20,430		2,138
	Mastercard, Inc.		23,280		2,267
*	Red Hat, Inc.		28,170		2,333
	Texas Instruments, Inc.		41,530		2,276
					20,735
	Consumer Discretionary—24.3%
*	Amazon.com, Inc.		4,480		3,028
	BorgWarner, Inc.		34,270		1,482
	Dollar General Corporation		39,290		2,824
*	O’Reilly Automotive, Inc.		7,920		2,007
	Starbucks Corporation		17,510		1,051
*	Tesla Motors, Inc.		3,170		761
	The Home Depot, Inc.		27,590		3,649
*	The Priceline Group, Inc.		738		941
	VF Corporation		18,320		1,140
					16,883
	Health Care—17.0%
*	Biogen, Inc.		6,190		1,896
	Bristol-Myers Squibb Co.		32,640		2,245
*	Cerner Corporation		36,300		2,184
*	IDEXX Laboratories, Inc.		24,430		1,782
	UnitedHealth Group, Inc.		16,900		1,988
	Zoetis, Inc.		35,560		1,704
					11,799
	Industrials—8.5%
	Danaher Corporation		9,460		879
*	TransDigm Group, Inc.		6,840		1,562
	Union Pacific Corporation		27,530		2,153
*	Verisk Analytics, Inc.		16,900		1,299
					5,893
	Financials—7.8%
*	Affiliated Managers Group, Inc.		11,810		1,887
	Citigroup, Inc.		40,990		2,121
	Moody’s Corporation		14,280		1,433
					5,441
	Consumer Staples—6.7%
*	Monster Beverage Corporation		8,280		1,233
	The Estee Lauder Cos., Inc.		16,970		1,494
	The Kroger Co.		46,580		1,949
					4,676
	Energy—1.8%
	Schlumberger, Ltd.†		17,820		1,243

		Shares or
		Principal
	Issuer	Amount		Value
	Common Stocks—(continued)
	Telecommunication Services—1.4%
*	SBA Communications Corporation		9,120	$	958
	Materials—1.0%
	PPG Industries, Inc.		6,640		656
	Total Common Stocks—98.3% (cost $55,465)				68,284
	Repurchase Agreement
	Fixed Income Clearing Corporation, 0.030% dated 12/31/15, due 1/4/16, repurchase price $740, collateralized by U.S. Treasury Note 2.375%, due 8/15/24		$740		740
	Total Repurchase Agreement—1.0% (cost $740)				740
	Total Investments—99.3% (cost $56,205)				69,024
	Cash and other assets, less liabilities—0.7%				457
	Net assets—100.0%			$	69,481

  * Non-income producing securities

  † = U.S. listed foreign security                

See accompanying Notes to Financial Statements.

December 31, 2015 William Blair Funds 13

	Large Cap Value Fund
	The Large Cap Value Fund seeks long-term capital appreciation.
	AN OVERVIEW FROM THE PORTFOLIO MANAGER
David F. Hone	The William Blair Large Cap Value Fund (Class N shares) posted a 5.70% decrease, net of fees, for the twelve months ended December 31, 2015. By comparison, the Fund’s benchmark index, the Russell 1000® Value Index (the “Index”), decreased 3.83%. The Fund’s underperformance relative to the Index during 2015 was driven by stock selection. Performance within Industrials, the largest sector detractor from relative performance, was driven by a lack of exposure to Industrial Conglomerates and stock selection within Machinery, Road & Rail, and Aerospace & Defense within the sector. Energy was another meaningful sector detractor from relative performance as stock selection within Exploration & Production, coupled with an overweight to an underperforming segment, drove the underperformance within the sector. A lack of exposure to Storage & Transportation, the largest contributor at the sub-industry level, helped offset some of the negative relative returns within the sector. Consumer Staples was the largest sector contributor to relative performance as an overweight in Beverages and Tobacco, combined with positive stock selection within Food & Staples Retailing, drove sector returns. Looking specifically at stock selection, the Fund’s largest detractor from relative performance was Anadarko Petroleum (Energy). Anadarko is an independent exploration and production company. The underperformance was primarily due to continued weakness in the oil and gas markets. Other notable detractors included Devon Energy (Energy) and Kansas City Southern (Industrials). Offsetting these detractors were the Fund’s investments in Boston Scientific (Health Care), Molson Coors Brewing Company (Consumer Staples), and T-Mobile US (Telecommunications). T-Mobile US offers voice, messaging, and data services. The outperformance was due to continued strong new subscriber growth and speculation regarding the possible acquisition of the company. Please refer to the U.S. Value Market Review and Outlook relating to the Fund on page 7.

14 Annual Report December 31, 2015

Large Cap Value Fund

Performance Highlights (Unaudited)

Average Annual Total Return at 12/31/2015
	1 Year		3 Year		Since Inception(a)
Class N	(5.70	)%	10.83	%	11.68	%
Class I	(5.58	)	11.04		11.92
Russell 1000® Value Index	(3.83	)	13.08		13.94

(a) For the period from October 24, 2011 (Commencement of Operations) to December 31, 2015.

Performance cited represents past performance. Past performance does not guarantee future results and current performance may be lower or higher than the data quoted. Results shown are average annual total returns, which assume reinvestment of dividends and capital gains. Investment returns and principal will fluctuate and you may have a gain or loss when you sell shares. For the most current month-end performance information, please call 1-800-742-7272, or visit our Web site at www.williamblairfunds.com. From time to time, the investment adviser may waive fees or reimburse expenses for the Fund. Without these waivers/reimbursements, performance would be lower. Class N shares are available to the general public without a sales load. Class I shares are available to certain institutional investors and advisory clients of William Blair Investment Management, LLC and William Blair & Company, L.L.C., without a sales load or distribution (12b-1) or service fees.

The performance highlights and graph presented above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

The Russell 1000^® Value Index consists of large capitalization companies with above average price-to-book ratios and forecasted growth rates.

This report identifies the Fund’s investments on December 31, 2015. These holdings are subject to change. Not all stocks in the Fund performed the same, nor is there any guarantee that these stocks will perform as well in the future. Market forecasts provided in this report may not necessarily come to pass.

Sector Diversification (Unaudited)

 

The sector diversification shown is based on the total long-term securities.

December 31, 2015 William Blair Funds 15

Large Cap Value Fund

Portfolio of Investments, December 31, 2015 (all dollar amounts in thousands)

	Issuer	Shares		Value
	Common Stocks
	Financials—31.1%
	American International Group, Inc.		1,185	$	73
	American Tower Corporation		556		54
	Bank of America Corporation		6,450		109
*	CBRE Group, Inc.		1,064		37
	Citigroup, Inc.		2,077		108
	Citizens Financial Group, Inc.		2,336		61
	CNA Financial Corporation		877		31
	Discover Financial Services		597		32
	JPMorgan Chase & Co.		1,831		121
	Lincoln National Corporation		989		50
	Morgan Stanley		1,177		37
	Regions Financial Corporation		5,976		57
	SunTrust Banks, Inc.		1,563		67
*	Synchrony Financial		1,788		54
	The Charles Schwab Corporation		1,788		59
	Zions Bancorporation		1,392		38
					988
	Information Technology—13.6%
	Belden, Inc.		627		30
	Broadcom Corporation		654		38
	Cisco Systems, Inc.		3,345		91
*	Citrix Systems, Inc.		464		35
	Corning, Inc.		1,807		33
	HP, Inc.		1,907		22
	Microsoft Corporation		1,926		107
	QUALCOMM, Inc.		973		49
*	VeriFone Systems, Inc.		990		28
					433
	Health Care—11.1%
	Baxalta, Inc.		664		26
*	Boston Scientific Corporation		2,687		49
	Cardinal Health, Inc.		478		43
*	Express Scripts Holding Co.		531		46
	Merck & Co., Inc.		1,641		87
	PerkinElmer, Inc.		818		44
	Zimmer Biomet Holdings, Inc.		545		56
					351
	Energy—10.3%
	Anadarko Petroleum Corporation		853		42
	Baker Hughes, Inc.		1,155		53
	Chevron Corporation		794		71
	Devon Energy Corporation		944		30
	Diamond Offshore Drilling, Inc.		556		12
	Exxon Mobil Corporation		1,039		81
	Hess Corporation		786		38
					327

	Issuer	Shares		Value
	Common Stocks—(continued)
	Industrials—9.3%
	FedEx Corporation		215	$	32
	Ingersoll-Rand plc†		507		28
	Kansas City Southern		363		27
*	SPX FLOW, Inc.		591		16
	Textron, Inc.		1,615		68
	The Boeing Co.		275		40
	Union Pacific Corporation		331		26
	United Technologies Corporation		595		57
					294
	Consumer Staples—7.2%
	General Mills, Inc.		606		35
	Molson Coors Brewing Co.		450		42
	Philip Morris International, Inc.		1,056		93
	Walgreens Boots Alliance, Inc.		703		60
					230
	Consumer Discretionary—5.5%
	Big Lots, Inc.		583		22
	Brunswick Corporation		692		35
*	Burlington Stores, Inc.		515		22
	CBS Corporation		657		31
	Delphi Automotive plc†		419		36
*	MGM Resorts International		1,228		28
					174
	Materials—5.0%
	Alcoa, Inc.		3,186		31
	EI du Pont de Nemours & Co.		550		37
*	Owens-Illinois, Inc.		2,496		44
	Valspar Corporation		571		47
					159
	Utilities—3.6%
	NextEra Energy, Inc.		681		71
	WEC Energy Group, Inc.		858		44
					115
	Telecommunication Services—2.5%
*	T-Mobile US, Inc.		1,499		58
	Verizon Communications, Inc.		449		21
					79
	Total Common Stocks—99.2% (cost $2,776)				3,150
	Total Investments—99.2% (cost $2,776)				3,150
	Cash and other assets, less liabilities—0.8%				26
	Net assets—100.0%			$	3,176

* Non-income producing securities

  † = U.S. listed foreign security                

See accompanying Notes to Financial Statements.

16 Annual Report December 31, 2015

	Mid Cap Growth Fund
	The Mid Cap Growth Fund seeks long-term capital appreciation.
	AN OVERVIEW FROM THE PORTFOLIO MANAGERS
Robert C. Lanphier, IV David P. Ricci Daniel Crowe	The William Blair Mid Cap Growth Fund (Class N shares) posted a 0.20% decrease, net of fees, for the twelve months ended December 31, 2015. By comparison, the Fund’s benchmark index, the Russell Midcap® Growth Index (the “Index”), decreased 0.20%. The Fund performed in line with the Index during 2015, with results driven by stock selection and a modest style benefit. From a stock selection standpoint, Information Technology and Industrials were areas of strength. Within Information Technology, Vantiv and Genpact were top contributors to relative performance and within Industrials, Equifax and the Fund’s typical bias toward business services companies drove strong results. Vantiv operates in the payment processing industry as a merchant acquirer and benefited from strong business results in 2015, with particularly strong growth in areas such as e-commerce and integrated payments. Other notable contributors included Airgas (Materials) and BioMarin Pharmaceutical (Health Care). Airgas is a leader in the industrial gas industry and its agreement to be acquired for a significant premium during the fourth quarter drove outperformance. In terms of negatives, Polaris Industries (Consumer Discretionary), Affiliated Managers Group (Financials), Old Dominion Freight Line (Industrials), and Michael Kors Holdings (Consumer Discretionary) were among the Fund’s top detractors. Polaris Industries underperformed due to increasing competitive threats in the off road vehicle market and weaker demand in regions heavily impacted by the collapse of U.S. energy and agricultural markets. Consumer Staples was also an area of weakness, in part due to the Fund’s position in Keurig Green Mountain. Keurig Green Mountain underperformed on disappointing business results for its hot platform and investor skepticism of the company’s launch strategy for the Keurig Kold platform. From a style perspective, increasing investor concerns about the sustainability of economic growth, given that we have likely moved past the mid-point of the current economic cycle, contributed to a gravitation toward more consistent growers and underperformance from the lowest P/E stocks in the Index. As such, the Fund’s overweight to higher valuation stocks, an exposure driven by our typical bias toward less cyclical and more sustainable growers, was a modest tailwind during the year. Please refer to the U.S. Growth Market Review and Outlook relating to the Fund on page 6.

December 31, 2015 William Blair Funds 17

Mid Cap Growth Fund

Performance Highlights (Unaudited)

Average Annual Total Return at 12/31/2015
	1 Year		3 Year		5 Year		Since Inception(a)
Class N	(0.20	)%	11.39	%	9.27	%	7.55	%
Class I	0.00		11.66		9.55		7.84
Russell Midcap® Growth
Index	(0.20	)	14.88		11.54		7.59

(a) For the period from February 1, 2006 (Commencement of Operations) to December 31, 2015.

Performance cited represents past performance. Past performance does not guarantee future results and current performance may be lower or higher than the data quoted. Results shown are average annual total returns, which assume reinvestment of dividends and capital gains. Investment returns and principal will fluctuate and you may have a gain or loss when you sell shares. For the most current month-end performance information, please call 1-800-742-7272, or visit our Web site at www.williamblairfunds.com. Investing in medium capitalization companies involves special risks, including higher volatility and lower liquidity. Medium capitalization stocks are also more sensitive to purchase/sale transactions and changes in the issuer’s financial condition. From time to time, the investment adviser may waive fees or reimburse expenses for the Fund. Without these waivers/reimbursements, performance would be lower. Class N shares are available to the general public without a sales load. Class I shares are available to certain institutional investors and advisory clients of William Blair Investment Management, LLC and William Blair & Company, L.L.C., without a sales load or distribution (12b-1) or service fees.

The performance highlights and graph presented above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

The Russell Midcap^® Growth Index is an index that is constructed to provide a comprehensive and unbiased barometer of the mid-cap growth market.

This report identifies the Fund’s investments on December 31, 2015. These holdings are subject to change. Not all stocks in the Fund performed the same, nor is there any guarantee that these stocks will perform as well in the future. Market forecasts provided in this report may not necessarily come to pass.

Sector Diversification (Unaudited)

The sector diversification shown is based on the total long-term securities.

18 Annual Report December 31, 2015

Mid Cap Growth Fund

Portfolio of Investments, December 31, 2015 (all dollar amounts in thousands)

	Issuer	Shares		Value
	Common Stocks
	Consumer Discretionary—25.0%
	BorgWarner, Inc.		144,943	$	6,266
	Brunswick Corporation		78,900		3,985
	*Chipotle Mexican Grill, Inc.		3,325		1,595
	Dollar General Corporation		97,565		7,012
	Hanesbrands, Inc.		168,600		4,962
	L Brands, Inc.		28,100		2,693
	Newell Rubbermaid, Inc.		101,600		4,479
*	O’Reilly Automotive, Inc.		13,634		3,455
	Polaris Industries, Inc.		45,730		3,930
	Ross Stores, Inc.		87,100		4,687
*	Sally Beauty Holdings, Inc.		74,901		2,089
	Six Flags Entertainment Corporation		53,680		2,949
	Williams-Sonoma, Inc.		32,127		1,877
					49,979
	Industrials—19.1%
	AMETEK, Inc.		72,958		3,910
	Carlisle Cos., Inc.		39,800		3,530
	Equifax, Inc.		36,000		4,009
*	Old Dominion Freight Line, Inc.		118,886		7,023
	Rockwell Collins, Inc.		59,070		5,452
*	The Middleby Corporation		24,970		2,693
	Towers Watson & Co.		30,490		3,917
*	TransDigm Group, Inc.		13,200		3,016
*	Verisk Analytics, Inc.		60,980		4,688
					38,238
	Information Technology—18.3%
*	Akamai Technologies, Inc.		30,179		1,588
	Booz Allen Hamilton Holding Corporation		73,100		2,255
*	CoStar Group, Inc.		22,577		4,667
*	Genpact, Ltd.†		217,252		5,427
*	Guidewire Software, Inc.		64,620		3,888
*	IPG Photonics Corporation		18,724		1,669
	MAXIMUS, Inc.		46,117		2,594
*	Pandora Media, Inc.		173,404		2,325
*	Red Hat, Inc.		69,730		5,774
*	Trimble Navigation, Ltd.		91,700		1,967
*	Vantiv, Inc.		92,424		4,383
					36,537
	Health Care—17.8%
*	Align Technology, Inc.		53,680		3,535
*	BioMarin Pharmaceutical, Inc.		25,542		2,676
*	Centene Corporation		24,848		1,635
*	Cerner Corporation		87,600		5,271
*	IDEXX Laboratories, Inc.		44,340		3,233
*	Medivation, Inc.		53,848		2,603
*	Mednax, Inc.		79,260		5,680
*	Mettler-Toledo International, Inc.		11,120		3,771
	Perrigo Co. plc†		20,800		3,010
*	Sirona Dental Systems, Inc.		37,010		4,055
					35,469

	Issuer	Shares		Value
	Common Stocks—(continued)
	Financials—12.4%
*	Affiliated Managers Group, Inc.		35,655	$	5,696
	Intercontinental Exchange, Inc.		24,100		6,176
	LPL Financial Holdings, Inc.		62,091		2,648
	Moody’s Corporation		51,900		5,208
*	Signature Bank		33,120		5,079
					24,807
	Telecommunication Services—2.3%
*	SBA Communications Corporation		43,750		4,597
	Materials—2.2%
	Vulcan Materials Co.		47,000		4,464
	Consumer Staples—1.4%
*	Monster Beverage Corporation		18,210		2,712
	Energy—0.8%
*	Concho Resources, Inc.		16,820		1,562
	Total Common Stocks—99.3% (cost $185,222)				198,365
	Total Investments—99.3% (cost $185,222)				198,365
	Cash and other assets, less liabilities—0.7%				1,357
	Net assets—100.0%			$	199,722

*	Non-income producing securities
†	= U.S. listed foreign security

See accompanying Notes to Financial Statements.

December 31, 2015 William Blair Funds 19

Mid Cap Value Fund

The Mid Cap Value Fund seeks long-term capital appreciation.

AN OVERVIEW FROM THE PORTFOLIO MANAGERS

  Chad M. Kilmer     Mark T. Leslie     David S. Mitchell The William Blair Mid Cap Value Fund (Class N shares) posted a 2.13% decrease, net of fees, for the twelve months ended December 31, 2015. By comparison, the Fund’s benchmark index, the Russell Midcap^® Value Index (the “Index”), decreased 4.78%.   The Fund’s outperformance relative to the Index during 2015 was driven by strong stock selection across all sectors. Broadly speaking, from a style perspective, an underweight to slower-growth companies and a higher-quality bias provided tailwinds for the Fund’s relative outperformance. Energy, which was the worst performing sector of the market for the year, was the largest contributor to relative returns for the Fund due to stock selection. Within the sector, the acquisition of Cameron International, an Oilfield Services company, and the lack of exposure to the Storage & Transportation and Coal & Consumables each contributed to relative returns. Within Utilities, relative outperformance was driven by strong stock selection within the sector and a lack of exposure to Independent Power Producers. Consumer Staples and Health Care, the best two performing sectors of the market, were notable contributors to performance driven by stock selection within Food Retail and Health Care Services. Looking specifically at stock selection, the Fund’s largest contributor to relative performance was Kroger (Consumer Staples). Kroger operates retail food and drug stores throughout the United States, along with its convenience stores, supermarket fuel centers, and processing plants used to make private-label goods. The company continues to report solid earnings and margin improvement that beat estimates and increased forward guidance. Other notable contributors to relative performance included Cigna Corp (Health Care) and Omnicare (Health Care). Offsetting these contributors were the Fund’s investments in Belden (Technology), Whiting Petroleum (Energy), and Carpenter Technology Corporation (Materials). Whiting Petroleum is an independent oil and gas company engaged in acquisition, development, production and exploration activities primarily in the Permian Basin, Rocky Mountains, Mid-Continent, Gulf Coast and Michigan regions of the United States. The stock traded lower with other Energy stocks given the underlying weakness in oil prices.   Please refer to the U.S. Value Market Review and Outlook relating to the Fund on page 7.

20 Annual Report December 31, 2015

Mid Cap Value Fund

Performance Highlights (Unaudited)

Average Annual Total Return at 12/31/2015
	1 Year			3 Year			5 Year			Since Inception(a)
Class N		(2.13	)%		12.55	%		10.04	%		10.35	%
Class I		(1.73	)		12.88			10.30			10.63
Russell Midcap® Value Index		(4.78	)		13.40			11.25			11.21

(a) For the period from May 3, 2010 (Commencement of Operations) to December 31, 2015.

Performance cited represents past performance. Past performance does not guarantee future results and current performance may be lower or higher than the data quoted. Results shown are average annual total returns, which assume reinvestment of dividends and capital gains. Investment returns and principal will fluctuate and you may have a gain or loss when you sell shares. For the most current month-end performance information, please call 1-800-742-7272, or visit our Web site at www.williamblairfunds.com. Investing in smaller and medium capitalization companies involves special risks, including higher volatility and lower liquidity. Medium capitalization stocks are also more sensitive to purchase/sale transactions and changes in the issuer’s financial condition. From time to time, the investment adviser may waive fees or reimburse expenses for the Fund. Without these waivers/reimbursements, performance would be lower. Class N shares are available to the general public without a sales load. Class I shares are available to certain institutional investors and advisory clients of William Blair Investment Management, LLC and William Blair & Company, L.L.C., without a sales load or distribution (12b-1) or service fees.

The performance highlights and graph presented above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

The Russell Midcap^® Value Index consists of midcap-capitalization companies with below average price-to-book ratios and forecasted growth rates.

This report identifies the Fund’s investments on December 31, 2015. These holdings are subject to change. Not all stocks in the Fund performed the same, nor is there any guarantee that these stocks will perform as well in the future. Market forecasts provided in this report may not necessarily come to pass.

Sector Diversification (Unaudited)

The sector diversification shown is based on the total long-term securities.

December 31, 2015 William Blair Funds 21

Mid Cap Value Fund

Portfolio of Investments, December 31, 2015(all dollar amounts in thousands)

	Issuer	Shares		Value
	Common Stocks
	Financials—35.4%
	Allied World Assurance Co. Holdings, Ltd.†		819	$	30
	American Campus Communities, Inc.		923		38
	Ameriprise Financial, Inc.		232		25
*	Arch Capital Group, Ltd.†		462		32
	Assured Guaranty, Ltd.†		923		24
	Camden Property Trust		452		35
	DDR Corporation		1,716		29
	Douglas Emmett, Inc.		1,240		39
*	E*TRADE Financial Corporation		928		28
	East West Bancorp, Inc.		962		40
*	Equity Commonwealth		508		14
	Essex Property Trust, Inc.		153		37
	FNF Group		804		28
*	Forest City Enterprises, Inc.		1,389		30
	General Growth Properties, Inc.		1,187		32
	Hanover Insurance Group, Inc.		441		36
	Hartford Financial Services Group, Inc.		891		39
	Host Hotels & Resorts, Inc.		1,174		18
	Jones Lang LaSalle, Inc.		265		42
	Northern Trust Corporation		612		44
	PacWest Bancorp		810		35
	Pebblebrook Hotel Trust		546		15
	Principal Financial Group, Inc.		689		31
	Prologis, Inc.		647		28
*	Signature Bank		163		25
	SL Green Realty Corporation		407		46
	SunTrust Banks, Inc.		1,240		53
	Taubman Centers, Inc.		311		24
	Ventas, Inc.		518		29
	Zions Bancorporation		679		19
					945
	Utilities—12.2%
	American Water Works Co., Inc.		688		41
	Atmos Energy Corporation		559		35
	CMS Energy Corporation		1,062		39
	Eversource Energy		690		35
	FirstEnergy Corporation		842		27
	Pinnacle West Capital Corporation		468		30
	Sempra Energy		375		35
	WEC Energy Group, Inc.		850		44
	Xcel Energy, Inc.		1,142		41
					327
	Industrials—9.7%
	Carlisle Cos., Inc.		309		27
	Flowserve Corporation		301		13
	Fortune Brands Home & Security, Inc.		475		26
	Hubbell, Inc.		335		34
	Ingersoll-Rand plc†		608		34
	Kansas City Southern		297		22
	KAR Auction Services, Inc.		910		34
	The Toro Co.		508		37
	Wabtec Corporation		454		32
					259
	Information Technology—9.6%
	Belden, Inc.		823		39
*	Cadence Design Systems, Inc.		2,306		48
*	CommScope Holding Co., Inc.		1,159		30

	Issuer	Shares		Value
	Common Stocks—(continued)
	Information Technology—(continued)
*	Genpact, Ltd.†		1,493	$	37
	Juniper Networks, Inc.		1,359		37
	TE Connectivity, Ltd.†		540		35
*	Trimble Navigation, Ltd.		1,335		29
					255
	Energy—8.4%
*	Cameron International Corporation		540		34
	Cimarex Energy Co.		255		23
*	Gulfport Energy Corporation		760		18
	Hess Corporation		380		18
*	Memorial Resource Development Corporation		1,829		29
	Noble Energy, Inc.		874		29
	Patterson-UTI Energy, Inc.		1,646		25
	Pioneer Natural Resources Co.		205		26
	Rowan Cos. plc†		810		14
*	Whiting Petroleum Corporation		819		8
					224
	Consumer Discretionary—7.7%
	Autoliv, Inc.		239		30
	Brunswick Corporation		287		14
	Darden Restaurants, Inc.		469		30
	Foot Locker, Inc.		217		14
	Lennar Corporation		612		30
	Newell Rubbermaid, Inc.		723		32
*	The Michaels Cos., Inc.		1,109		24
	VF Corporation		494		31
					205
	Health Care—7.3%
	CIGNA Corporation		174		26
*	Hologic, Inc.		881		34
*	Mednax, Inc.		598		43
*	Mettler-Toledo International, Inc.		134		45
	Zimmer Biomet Holdings, Inc.		466		48
					196
	Consumer Staples—5.2%
	ConAgra Foods, Inc.		810		34
	Ingredion, Inc.		462		45
	The Kroger Co.		1,441		60
					139
	Materials—4.5%
	Carpenter Technology Corporation		800		24
	Eastman Chemical Co.		530		36
	FMC Corporation		627		25
	Steel Dynamics, Inc.		1,929		34
					119
	Total Common Stocks—100.0% (cost $2,261)				2,669
	Total Investments—100.0% (cost $2,261)				2,669
	Liabilities, plus cash and other assets—0.0%				(1	)
	Net assets—100.0%			$	2,668

†	= U.S. listed foreign security
*	Non-income producing securities

See accompanying Notes to Financial Statements.

22 Annual Report December 31, 2015

Small-Mid Cap Growth Fund

The Small-Mid Cap Growth Fund seeks long-term capital appreciation.

AN OVERVIEW FROM THE PORTFOLIO MANAGERS

  Karl W. Brewer     Robert C. Lanphier, IV     Daniel Crowe The William Blair Small-Mid Cap Growth Fund (Class N shares) posted a 4.47% increase, net of fees, for the twelve months ended December 31, 2015. By comparison, the Fund’s benchmark index, the Russell 2500^TM Growth Index (the “Index”), decreased 0.19%.   The Fund’s outperformance during 2015 was driven by stock selection and a favorable style tailwind. From a style perspective, the Fund’s overweight exposure to less volatile stocks positively contributed to the Fund’s relative performance. The Fund typically gravitates toward companies with more consistent business models, whose stocks generally held up better amid the volatility and modestly negative market returns that characterized 2015. Related to this, our typical bias toward companies with larger market capitalizations within the small-mid cap universe provided a tailwind as larger-cap stocks outperformed in the year. From a stock selection standpoint, Information Technology, and Consumer Discretionary were areas of strength. j2 Global was a top contributor within Information Technology and Six Flags Entertainment was a standout within Consumer Discretionary. Our top performing individual holdings for the year were Ligand Pharmaceuticals (Health Care), ABIOMED (Health Care) and FirstService Corp (Financials). Ligand Pharmaceuticals outperformed both the market and other Biotechnology stocks due to strong results for its current royalty-generating assets and in anticipation of several upcoming clinical milestones that could be further catalysts for growth. ABIOMED’s strong business results and accelerating revenue growth suggest the clinical adoption of the company’s Impella products is gaining momentum, which has driven outperformance of the stock. Conversely, our top detractors for the year included FXCM Inc. (Financials), Exact Sciences Corporation (Health Care), Polaris Industries (Consumer Discretionary), Encore Capital Group (Financials) and First Cash Financial Services (Financials). FXCM, an online foreign exchange trading solution provider, meaningfully underperformed after a historically unprecedented move in the Swiss Franc impaired client positions and forced the company into a dilutive financing arrangement. Exact Sciences’ underperformance was largely due to the US Preventative Services Task Force’s decision to not grant a rating for the company’s Cologuard test that would have eased the way for broad-based reimbursement coverage by commercial managed care companies.   Please refer to the U.S. Growth Market Review and Outlook relating to the Fund on page 6.

December 31, 2015 William Blair Funds 23

Small-Mid Cap Growth Fund

Performance Highlights (Unaudited)

Average Annual Total Return at 12/31/2015
	1 Year		3 Year		5 Year		10 Year
Class N	4.47	%	16.99	%	12.37	%	9.27	%
Class I	4.74		17.30		12.65		9.55
Russell 2500TM Growth Index	(0.19	)	14.54		11.43		8.49

Performance cited represents past performance. Past performance does not guarantee future results and current performance may be lower or higher than the data quoted. Results shown are average annual total returns, which assume reinvestment of dividends and capital gains. Investment returns and principal will fluctuate and you may have a gain or loss when you sell shares. For the most current month-end performance information, please call 1-800-742-7272, or visit our Web site at www.williamblairfunds.com. Investing in smaller and medium capitalization companies involves special risks, including higher volatility and lower liquidity. Smaller and medium capitalization stocks are also more sensitive to purchase/sale transactions and changes in the issuer’s financial condition. From time to time, the investment adviser may waive fees or reimburse expenses for the Fund. Without these waivers/reimbursements, performance would be lower. Class N shares are available to the general public without a sales load. Class I shares are available to certain institutional investors and advisory clients of William Blair Investment Management, LLC and William Blair & Company, L.L.C., without a sales load or distribution (12b-1) or service fees.

The performance highlights and graph presented above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

The Russell 2500^TM Growth Index measures the performance of those Russell 2500 companies with above average price-to-book ratios and forecasted growth rates.

This report identifies the Fund’s investments on December 31, 2015. These holdings are subject to change. Not all stocks in the Fund performed the same, nor is there any guarantee that these stocks will perform as well in the future. Market forecasts provided in this report may not necessarily come to pass.

Sector Diversification (Unaudited)

The sector diversification shown is based on the total long-term securities.

24 Annual Report December 31, 2015

Small-Mid Cap Growth Fund

Portfolio of Investments, December 31, 2015 (all dollar amounts in thousands)

	Issuer	Shares		Value
	Common Stocks
	Information Technology—21.5%
*	ANSYS, Inc.		234,300	$	21,673
	Booz Allen Hamilton Holding Corporation		695,668		21,461
*	CoStar Group, Inc.		109,810		22,697
*	Cvent, Inc.		432,600		15,102
*	Gartner, Inc.		224,300		20,344
*	Guidewire Software, Inc.		537,334		32,326
	j2 Global, Inc.		327,185		26,934
	MAXIMUS, Inc.		316,706		17,815
*	NeuStar, Inc.		739,521		17,726
*	Pandora Media, Inc.		573,573		7,691
*	Tyler Technologies, Inc.		110,000		19,175
*	Vantiv, Inc.		445,430		21,122
*	WNS Holdings, Ltd.-ADR		374,020		11,666
					255,732
	Health Care—20.7%
*	ABIOMED, Inc.		150,938		13,627
*	Align Technology, Inc.		317,703		20,921
*	Cambrex Corporation		363,800		17,131
*	Centene Corporation		183,810		12,096
*	Exact Sciences Corporation		1,067,177		9,850
*	ExamWorks Group, Inc.		291,200		7,746
	HealthSouth Corporation		590,484		20,555
*	IDEXX Laboratories, Inc.		200,422		14,615
*	Ligand Pharmaceuticals, Inc.		231,159		25,062
*	Medivation, Inc.		285,304		13,792
*	Mednax, Inc.		347,200		24,880
*	Mettler-Toledo International, Inc.		74,900		25,401
*	Quintiles Transnational Holdings, Inc.		290,700		19,959
*	Sirona Dental Systems, Inc.		184,253		20,189
					245,824
	Consumer Discretionary—16.6%
*	2U, Inc.		448,755		12,556
	Brunswick Corporation		220,432		11,134
	Choice Hotels International, Inc.		342,036		17,242
	Drew Industries, Inc.		240,000		14,614
*	Jarden Corporation		405,675		23,172
	Polaris Industries, Inc.		170,300		14,637
*	Sally Beauty Holdings, Inc.		532,600		14,854
*	ServiceMaster Global Holdings, Inc.		373,608		14,660
	Six Flags Entertainment Corporation		511,386		28,096
	Tractor Supply Co.		178,300		15,245
*	Ulta Salon Cosmetics & Fragrance, Inc.		116,700		21,589
	Williams-Sonoma, Inc.		170,700		9,971
					197,770
	Financials—16.0%
*	Affiliated Managers Group, Inc.		145,709		23,278
	CBOE Holdings, Inc.		369,500		23,981
*	Colliers International Group, Inc.†		290,393		12,937
*	Encore Capital Group, Inc.		386,171		11,230
	FactSet Research Systems, Inc.		91,544		14,882
*	First Cash Financial Services, Inc.		278,065		10,408

	Issuer	Shares		Value
	Common Stocks—(continued)
	Financials—(continued)
*	FirstService Corporation†		537,797	$	21,743
	Jones Lang LaSalle, Inc.		108,541		17,351
	Lazard, Ltd.†		369,200		16,618
	OM Asset Management plc†		619,738		9,501
*	Signature Bank		123,300		18,911
	Virtu Financial, Inc.		405,702		9,185
					190,025
	Industrials—13.1%
	CEB, Inc.		268,328		16,473
	Healthcare Services Group, Inc.		416,932		14,538
	Hexcel Corporation		345,300		16,039
*	Huron Consulting Group, Inc.		207,409		12,320
	Manpowergroup, Inc.		184,050		15,514
*	Old Dominion Freight Line, Inc.		382,971		22,622
*	Stericycle, Inc.		98,370		11,863
*	The Middleby Corporation		151,872		16,383
	The Toro Co.		185,400		13,547
	Towers Watson & Co.		12,804		1,645
*	TransDigm Group, Inc.		64,675		14,775
					155,719
	Materials—4.6%
	Ball Corporation		165,349		12,026
	Celanese Corporation		305,900		20,596
	International Flavors & Fragrances, Inc.		187,800		22,468
					55,090
	Consumer Staples—2.5%
	Nu Skin Enterprises, Inc.		370,652		14,044
	WD-40 Co.		163,200		16,100
					30,144
	Telecommunication Services—1.8%
*	SBA Communications Corporation		202,000		21,224
	Energy—1.6%
*	Carrizo Oil & Gas, Inc.		230,500		6,818
*	Diamondback Energy, Inc.		176,400		11,801
					18,619
	Total Common Stocks—98.4% (cost $1,022,480)				1,170,147

See accompanying Notes to Financial Statements.

December 31, 2015 William Blair Funds 25

Small-Mid Cap Growth Fund

Portfolio of Investments, December 31, 2015 (all dollar amounts in thousands)

Issuer	Principal Amount		Value
Repurchase Agreement
Fixed Income Clearing Corporation, 0.030% dated 12/31/15, due 1/4/16, repurchase price $22,916, collateralized by U.S. Treasury Note 2.375%, due 8/15/24		$22,916	$	22,916
Total Repurchase Agreement—1.9% (cost $22,916)				22,916
Total Investments—100.3% (cost $1,045,396)				1,193,063
Liabilities, plus cash and other assets—(0.3)%				(3,924	)
Net assets—100.0%			$	1,189,139

ADR = American Depository Receipt

* Non-income producing securities

† = U.S. listed foreign security

See accompanying Notes to Financial Statements.

26 Annual Report December 31, 2015

	Small-Mid Cap Value Fund
	The Small-Mid Cap Value Fund seeks long-term capital appreciation.
	AN OVERVIEW FROM THE PORTFOLIO MANAGERS
Chad M. Kilmer Mark T. Leslie	The William Blair Small-Mid Cap Value Fund (Class N shares) posted a 3.13% decrease, net of fees, for the twelve months ended December 31, 2015. By comparison, the Fund’s benchmark index, the Russell 2500TM Value Index (the “Index”), decreased 5.49%. The Fund’s higher-quality bias and underweight to slower-growth companies contributed to its outperformance relative to the Index during 2015. Strong stock selection across nearly every sector contributed to the relative outperformance for the year with the largest contributions coming from Financials and Technology. Within Financials, stock selection within Regional Banks, Capital Markets, and REITS all contributed to the outperformance within the sector. The outperformance in Technology was a result of strong stock selection, particularly within IT Services and Internet Software & Services. The only sector that detracted from relative performance for the year was Consumer Discretionary, as stock selection within Footwear was the most significant drag on performance. Looking specifically at stock selection, the Fund’s largest contributor to relative performance was Inphi (Technology). Inphi is a fabless semiconductor company that provides high-speed analog semiconductor solutions for the communications and computing markets. The company is seeing strong momentum with new products and the company is aligned with high priority spending trends. Other contributors included j2 Global (Technology) and Bank of the Ozarks (Financials). Offsetting these contributors were the Fund’s investments in Helix Energy Solutions (Energy), Belden (Technology), and GasLog (Energy). Helix is an energy service company providing deepwater contracting services to the energy market. The stock underperformed as operating results continue to be pressured by utilization declines in its major business segments, primarily, Well Intervention. Please refer to the U.S. Value Market Review and Outlook relating to the Fund on page 7.
David S. Mitchell

December 31, 2015 William Blair Funds 27

Small-Mid Cap Value Fund

Performance Highlights (Unaudited)

Average Annual Total Return at 12/31/2015
							Since
	1 Year			3 Year			Inception(a)
Class N		(3.13	)%		11.38	%		12.60	%
Class I		(2.86	)		11.70			12.91
Russell 2500TM Value Index		(5.49	)		10.51			13.62

(a) For the period from December 15, 2011 (Commencement of Operations) to December 31, 2015.

Performance cited represents past performance. Past performance does not guarantee future results and current performance may be lower or higher than the data quoted. Results shown are average annual total returns, which assume reinvestment of dividends and capital gains. Investment returns and principal will fluctuate and you may have a gain or loss when you sell shares. For the most current month-end performance information, please call 1-800-742-7272, or visit our Web site at www.williamblairfunds.com. Investing in smaller and medium capitalization companies involves special risks, including higher volatility and lower liquidity. Smaller and medium capitalization stocks are also more sensitive to purchase/sale transactions and changes in the issuer’s financial condition. From time to time, the investment adviser may waive fees or reimburse expenses for the Fund. Without these waivers/reimbursements, performance would be lower. Class N shares are available to the general public without a sales load. Class I shares are available to certain institutional investors and advisory clients of William Blair Investment Management, LLC and William Blair & Company, L.L.C., without a sales load or distribution (12b-1) or service fees.

The performance highlights and graph presented above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

Russell 2500^TM Value Index consists of midcap-capitalization companies with below average price-to-book ratios and forecasted growth rates.

This report identifies the Fund’s investments on December 31, 2015. These holdings are subject to change. Not all stocks in the Fund performed the same, nor is there any guarantee that these stocks will perform as well in the future. Market forecasts provided in this report may not necessarily come to pass.

Sector Diversification (Unaudited)

 

The sector diversification shown is based on the total long-term securities.

28 Annual Report December 31, 2015

Small-Mid Cap Value Fund

Portfolio of Investments, December 31, 2015 (all dollar amounts in thousands)

	Issuer	Shares		Value
	Common Stocks
	Financials—38.7%
	Acadia Realty Trust		1,040	$	34
	Allied World Assurance Co. Holdings, Ltd.†		1,179		44
	American Assets Trust, Inc.		979		38
	American Campus Communities, Inc.		909		38
*	Arch Capital Group, Ltd.†		765		53
	Assured Guaranty, Ltd.†		1,411		37
	Bank of the Ozarks, Inc.		624		31
	Boston Private Financial Holdings, Inc.		1,302		15
	Camden Property Trust		671		52
	CNO Financial Group, Inc.		1,737		33
	DDR Corporation		1,914		32
	Douglas Emmett, Inc.		1,531		48
*	E*TRADE Financial Corporation		1,814		54
*	Eagle Bancorp, Inc.		604		30
	East West Bancorp, Inc.		1,248		52
	EastGroup Properties, Inc.		591		33
	Education Realty Trust, Inc.		907		34
	EPR Properties		541		32
*	Equity Commonwealth		767		21
	First American Financial Corporation		1,110		40
	FirstMerit Corporation		1,245		23
*	Forest City Enterprises, Inc.		1,589		35
	Glacier Bancorp, Inc.		1,515		40
	Hanover Insurance Group, Inc.		606		49
	Highwoods Properties, Inc.		738		32
	Home BancShares, Inc.		730		30
	Iberiabank Corporation		592		33
	Jones Lang LaSalle, Inc.		329		53
	LaSalle Hotel Properties		1,047		26
	PacWest Bancorp		1,015		44
	Pebblebrook Hotel Trust		995		28
	Prosperity Bancshares, Inc.		465		22
	Radian Group, Inc.		2,422		32
	Renasant Corporation		848		29
	Selective Insurance Group, Inc.		1,206		40
*	Signature Bank		264		40
	SL Green Realty Corporation		355		40
	Sunstone Hotel Investors, Inc.		2,198		27
	Taubman Centers, Inc.		528		41
	Umpqua Holdings Corporation		1,449		23
*	Western Alliance Bancorp		881		32
	WSFS Financial Corporation		1,627		53
	Yadkin Financial Corporation		994		25
	Zions Bancorporation		1,031		28
					1,576
	Industrials—13.2%
	Barnes Group, Inc.		797		28
	Carlisle Cos., Inc.		420		37
	CIRCOR International, Inc.		453		19
	Curtiss-Wright Corporation		449		31
	EMCOR Group, Inc.		790		38
	Flowserve Corporation		441		19
	Fortune Brands Home & Security, Inc.		632		35
*	FTI Consulting, Inc.		659		23

	Issuer	Shares		Value
	Common Stocks—(continued)
	Industrials—(continued)
	G&K Services, Inc.		519	$	33
	Hubbell, Inc.		394		40
	Interface, Inc.		1,747		33
	KAR Auction Services, Inc.		1,119		41
*	Lydall, Inc.		686		24
	Matson, Inc.		857		37
	Standex International Corporation		292		24
	The Toro Co.		562		41
	Wabtec Corporation		502		36
					539
	Information Technology—10.1%
*	Acxiom Corporation		3,346		70
	Belden, Inc.		1,027		49
	Booz Allen Hamilton Holding Corporation		1,150		36
*	Cadence Design Systems, Inc.		2,993		62
*	Genpact, Ltd.†		2,266		57
*	Inphi Corporation		1,787		48
	j2 Global, Inc.		769		63
	Littelfuse, Inc.		238		25
					410
	Consumer Discretionary—9.7%
	Autoliv, Inc.		304		38
	Brunswick Corporation		426		21
	CalAtlantic Group, Inc.		523		20
	Children’s Place, Inc.		547		30
	Dana Holding Corporation		1,159		16
	Ethan Allen Interiors, Inc.		759		21
*	Express, Inc.		2,028		35
*	Genesco, Inc.		408		23
*	Krispy Kreme Doughnuts, Inc.		2,718		41
	Lennar Corporation		688		34
	Meredith Corporation		687		30
*	The Michaels Cos., Inc.		977		22
	Vail Resorts, Inc.		348		45
	Wolverine World Wide, Inc.		1,105		18
					394
	Utilities—8.7%
	ALLETE, Inc.		418		21
	American Water Works Co., Inc.		752		45
	Atmos Energy Corporation		760		48
	CMS Energy Corporation		1,324		48
	IDACORP, Inc.		607		41
	Pinnacle West Capital Corporation		558		36
	PNM Resources, Inc.		1,032		32
	Portland General Electric Co.		729		27
	Southwest Gas Corporation		571		31
	The Laclede Group, Inc.		469		28
					357
	Health Care—5.7%
	CONMED Corporation		518		23
*	Greatbatch, Inc.		646		34
	HealthSouth Corporation		954		33

See accompanying Notes to Financial Statements.

December 31, 2015 William Blair Funds 29

Small-Mid Cap Value Fund

Portfolio of Investments, December 31, 2015 (all dollar amounts in thousands)

	Issuer	Shares		Value
	Common Stocks—(continued)
	Health Care—(continued)
*	Hologic, Inc.		655	$	25
*	Magellan Health, Inc.		356		22
*	Mednax, Inc.		664		48
*	Mettler-Toledo International, Inc.		135		46
					231
	Energy—5.1%
	Archrock, Inc.		1,126		9
*	Exterran Corporation		567		9
	GasLog, Ltd.†		1,964		16
*	Gulfport Energy Corporation		952		23
*	Helix Energy Solutions Group, Inc.		2,813		15
*	Memorial Resource Development Corporation		2,749		44
	Patterson-UTI Energy, Inc.		1,591		24
*	PDC Energy, Inc.		558		30
*	TETRA Technologies, Inc.		4,111		31
*	Whiting Petroleum Corporation		929		9
					210
	Materials—4.8%
	Carpenter Technology Corporation		664		20
	FMC Corporation		521		20
	Minerals Technologies, Inc.		633		29
	PolyOne Corporation		1,310		42
	Sensient Technologies Corporation		511		32
	Silgan Holdings, Inc.		446		24
	Steel Dynamics, Inc.		1,509		27
					194
	Consumer Staples—2.5%
*	Darling Ingredients, Inc.		1,313		14
	Ingredion, Inc.		568		54
	J&J Snack Foods Corporation		292		34
					102
	Total Common Stocks—98.5% (cost $3,671)				4,013
	Total Investments—98.5% (cost $3,671)				4,013
	Cash and other assets, less liabilities—1.5%				62
	Net assets—100.0%			$	4,075

† = U.S. listed foreign security

* Non-income producing securities

See accompanying Notes to Financial Statements.

30 Annual Report December 31, 2015

	Small Cap Growth Fund
	The Small Cap Growth Fund seeks long-term capital appreciation.
	AN OVERVIEW FROM THE PORTFOLIO MANAGERS
Michael P. Balkin Karl W. Brewer	The William Blair Small Cap Growth Fund (Class N shares) posted a 4.44% decrease, net of fees, for the twelve months ended December 31, 2015. By comparison, the Fund’s benchmark index, the Russell 2000® Growth Index (the “Index”), decreased 1.38%. The Fund’s underperformance relative to the Index during 2015 was driven by stock selection and headwinds to its investment style. From a style perspective, our typical contrarian bias worked against the Fund as the market favored momentum-oriented stocks during most of the year. Additionally, our typical underweight exposure to Biotechnology, given the highly speculative nature of many companies within the industry, was a headwind due to the strong performance of the industry. From a stock specific standpoint, Health Care stock selection was disappointing, in part due to its position in Spectranetics. The Fund’s top individual detractors for the year included FXCM Inc. (Financials), CAI International (Industrials), Tuesday Morning Corporation (Consumer Discretionary), and Acacia Research Corporation (Industrials). FXCM, an online foreign exchange trading solution provider, meaningfully underperformed after a historically unprecedented move in the Swiss Franc impaired client positions and forced the company into a dilutive financing arrangement. CAI International provides intermodal freight container leasing services and underperformed due to lower lease utilization rates and pricing pressure in the resale market for used containers. The Fund’s top individual contributors to relative performance were Ligand Pharmaceuticals (Health Care) and ABIOMED (Health Care). Ligand Pharmaceuticals outperformed both the market and other Biotechnology stocks due to strong results for its current royalty-generating assets and in anticipation of several upcoming clinical milestones that could be further catalysts for growth. ABIOMED’s strong business results and accelerating revenue growth suggest the clinical adoption of the company’s Impella products is gaining momentum, which has driven outperformance of the stock. Other significant contributors to relative performance included MaxLinear (Information Technology), FirstService Corp (Financials), and Six Flags Entertainment (Consumer Discretionary). Please refer to the U.S. Growth Market Review and Outlook relating to the Fund on page 6.

December 31, 2015 William Blair Funds 31

Small Cap Growth Fund

Performance Highlights (Unaudited)

 

Average Annual Total Return at 12/31/2015
	1 Year			3 Year			5 Year			10 Year
Class N		(4.44	)%		14.42	%		8.94	%		6.01	%
Class I		(4.20	)		14.70			9.20			6.30
Russell 2000® Growth Index		(1.38	)		14.28			10.67			7.95

Performance cited represents past performance. Past performance does not guarantee future results and current performance may be lower or higher than the data quoted. Results shown are average annual total returns, which assume reinvestment of dividends and capital gains. Investment returns and principal will fluctuate and you may have a gain or loss when you sell shares. For the most current month-end performance information, please call 1-800-742-7272, or visit our Web site at www.williamblairfunds.com. Investing in smaller companies involves special risks, including higher volatility and lower liquidity. Smaller capitalization stocks are also more sensitive to purchase/sale transactions and changes in the issuer’s financial condition. From time to time, the investment adviser may waive fees or reimburse expenses for the Fund. Without these waivers/reimbursements, performance would be lower. Class N shares are available to the general public without a sales load. Class I shares are available to certain institutional investors and advisory clients of William Blair Investment Management, LLC and William Blair & Company, L.L.C., without a sales load or distribution (12b-1) or service fees.

The performance highlights and graph presented above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

The Russell 2000^® Growth Index is an unmanaged composite of the smallest 2000 stocks of the Russell 3000^® Growth Index.

This report identifies the Fund’s investments on December 31, 2015. These holdings are subject to change. Not all stocks in the Fund performed the same, nor is there any guarantee that these stocks will perform as well in the future. Market forecasts provided in this report may not necessarily come to pass.

Sector Diversification (Unaudited)

 

The sector diversification shown is based on the total long-term securities.

32 Annual Report December 31, 2015

Small Cap Growth Fund

Portfolio of Investments, December 31, 2015 (all dollar amounts in thousands)

	Issuer	Shares		Value
	Common Stocks
	Information Technology—25.3%
*	Acxiom Corporation		210,860	$	4,411
*	Callidus Software, Inc.		445,567		8,274
*	Fleetmatics Group plc†		53,410		2,713
*	Guidewire Software, Inc.		124,346		7,481
*	Hortonworks, Inc.		236,930		5,189
*	Inphi Corporation		91,960		2,485
	j2 Global, Inc.		132,051		10,870
	MAXIMUS, Inc.		23,281		1,310
*	MaxLinear, Inc.		484,741		7,140
*	NeuStar, Inc.		380,428		9,119
*	OSI Systems, Inc.		60,834		5,394
*	Pandora Media, Inc.		250,700		3,362
*	Q2 Holdings, Inc.		103,140		2,720
*	Quotient Technology, Inc.		348,704		2,378
	TeleTech Holdings, Inc.		109,948		3,069
*	Tyler Technologies, Inc.		16,730		2,916
*	Ultimate Software Group, Inc.		22,602		4,419
*	USA Technologies, Inc.		1,193,580		3,676
*	WNS Holdings, Ltd.-ADR		161,864		5,048
*	Xactly Corporation		288,651		2,462
					94,436
	Health Care—22.0%
*	ABIOMED, Inc.		74,090		6,689
*	Accelerate Diagnostics, Inc.		182,489		3,922
*	Air Methods Corporation		186,700		7,828
*	Akorn, Inc.		167,400		6,246
*	AtriCure, Inc.		207,543		4,657
*	Cambrex Corporation		95,175		4,482
*	Connecture, Inc.		149,866		541
*	Exact Sciences Corporation		126,060		1,164
*	ExamWorks Group, Inc.		278,544		7,409
	HealthSouth Corporation		214,695		7,473
	LeMaitre Vascular, Inc.		228,195		3,936
*	Ligand Pharmaceuticals, Inc.		58,810		6,376
*	Novadaq Technologies, Inc.†		277,600		3,537
*	NxStage Medical, Inc.		280,456		6,145
*	Repligen Corporation		88,260		2,497
	Trinity Biotech plc-ADR		414,060		4,869
*	Zeltiq Aesthetics, Inc.		153,180		4,370
					82,141
	Industrials—13.9%
*	CAI International, Inc.		422,207		4,256
	CEB, Inc.		41,970		2,577
*	Franklin Covey Co.		285,489		4,779
*	GP Strategies Corporation		187,750		4,714
	Healthcare Services Group, Inc.		232,230		8,098
	Hexcel Corporation		127,620		5,928
*	Hudson Technologies, Inc.		1,681,784		4,995
*	Huron Consulting Group, Inc.		81,739		4,855
*	ICF International, Inc.		161,341		5,737
	John Bean Technologies Corporation		80,895		4,031
*	RPX Corporation		185,027		2,035
					52,005

	Issuer	Shares		Value
	Common Stocks—(continued)
	Consumer Discretionary—13.7%
*	2U, Inc.		73,820	$	2,066
	Choice Hotels International, Inc.		132,530		6,681
*	Five Below, Inc.		86,350		2,772
*	IMAX Corporation†		185,911		6,607
	Interval Leisure Group, Inc.		185,999		2,903
	Monro Muffler Brake, Inc.		29,421		1,948
	Six Flags Entertainment Corporation		223,832		12,297
*	Steven Madden, Ltd.		107,960		3,263
*	U.S. Auto Parts Network, Inc.		1,647,409		4,843
*	Universal Electronics, Inc.		150,162		7,711
					51,091
	Financials—12.0%
*	BofI Holding, Inc.		188,040		3,958
*	Colliers International Group, Inc.†		118,673		5,287
*	Cowen Group, Inc.		839,914		3,217
*	Encore Capital Group, Inc.		106,916		3,109
*	First Cash Financial Services, Inc.		146,936		5,500
*	FirstService Corporation†		210,373		8,506
	OM Asset Management plc†		436,290		6,688
	Pinnacle Financial Partners, Inc.		50,990		2,619
	Virtu Financial, Inc.		252,622		5,719
					44,603
	Consumer Staples—4.5%
*	Herbalife, Ltd.†		49,800		2,670
	Nu Skin Enterprises, Inc.		162,185		6,145
	WD-40 Co.		81,631		8,053
					16,868
	Materials—2.0%
*	Headwaters, Inc.		211,612		3,570
*	Stillwater Mining Co.		441,276		3,782
					7,352
	Telecommunication Services—1.7%
*	ORBCOMM, Inc.		865,982		6,270
	Energy—1.6%
*	Carrizo Oil & Gas, Inc.		72,553		2,146
*	Gulfport Energy Corporation		60,507		1,487
*	Hornbeck Offshore Services, Inc.		107,810		1,072
	SM Energy Co.		67,260		1,322
					6,027
	Total Common Stocks—96.7% (cost $317,893)				360,793
	Exchange-Traded Fund
	iShares Russell 2000 Growth Index Fund		15,600		2,175
	Total Exchange-Traded Fund—0.6% (cost $2,164)				2,175

See accompanying Notes to Financial Statements.

December 31, 2015 William Blair Funds 33

Small Cap Growth Fund

Portfolio of Investments, December 31, 2015 (all dollar amounts in thousands)

	Principal
Issuer	Amount		Value
Repurchase Agreement
Fixed Income Clearing Corporation, 0.030% dated 12/31/15, due 1/4/16, repurchase price $9,567, collateralized by FNMA, 2.625%, due 9/6/24		$9,567	$	9,567
Total Repurchase Agreement—2.5% (cost $9,567)				9,567
Total Investments—99.8% (cost $329,624)				372,535
Cash and other assets, less liabilities—0.2%				678
Net assets—100.0%			$	373,213

ADR = American Depository Receipt

* Non-income producing securities

† = U.S. listed foreign security

If a fund’s portfolio holdings represent ownership of 5% or more of the voting securities of a company, the company is deemed to be an affiliate as defined in the Investment Company Act of 1940, as amended. The Fund had the following transactions during the year ended December 31, 2015 with companies deemed affiliated during the year or at December 31, 2015.

	Share Activity								Year Ended December 31, 2015
Security Name	Balance 12/31/2014		Purchases		Sales		Balance 12/31/2015		Value			Dividend Income			Net realized gain (loss)				Change in net unrealized appreciation (depreciation)
ᴫHudson Technologies, Inc.		1,711,704		361,811		391,731		1,681,784		$	4,995		$	—		$	(330	)		$	(1,163	)
										$	4,995		$	—		$	(330	)		$	(1,163	)

ᴫ = Affiliated company at December 31, 2015. The Fund’s total value in companies deemed to be affiliated at December 31, 2015 was $4,995.

See accompanying Notes to Financial Statements.

34 Annual Report December 31, 2015

	Small Cap Value Fund
	The Small Cap Value Fund seeks long-term capital appreciation.
	AN OVERVIEW FROM THE PORTFOLIO MANAGERS
Chad M. Kilmer   Mark T. Leslie	The William Blair Small Cap Value Fund (Class N shares) posted a 5.77% decrease, net of fees, for the twelve months ended December 31, 2015. By comparison, the Fund’s benchmark index, the Russell 2000® Value Index (the “Index”), decreased 7.47%. The Fund’s outperformance relative to the Index during 2015 was driven by strong stock selection across most sectors. Broadly speaking, from a style perspective, the Fund’s higher-quality bias, larger market cap, and higher-growth profile relative to the Index provided tailwinds during the period. At the sector level, Financials and Materials were the most significant contributors to relative performance. Strong stock selection within Regional Banks, Insurance, and REITs drove relative outperformance within Financials. Outperformance within Materials was due to the Fund’s acquisition of RTI International Metals early in the year and a lack of exposure to more commodity exposed companies, mainly steel. The Fund’s lack of exposure to Biotechnology and Pharmaceuticals resulted in relative underperformance within Health Care, the only positive performing sector for the year. Looking specifically at stock selection, the Fund’s largest contributor to relative performance was Inphi (Technology). Inphi is a fabless semiconductor company that provides high-speed analog semiconductor solutions for the communications and computing markets. Outperformance for the year was due to solid earnings driven by strong momentum with new products that are aligned with high priority spending trends. Other notable contributors included Bank of the Ozarks (Financials) and Western Alliance Bancorp (Financials). Offsetting these contributors were the Fund’s investments in FXCM (Financials), Helix Energy Solutions (Energy), and Northwest Pipe (Industrials). Helix Energy Solutions is an energy service company providing deepwater contracting services to the energy market. The stock underperformed as operating results continue to be pressured by utilization declines in its major business segments, primarily, Well Intervention. Please refer to the U.S. Value Market Review and Outlook relating to the Fund on page 7.
David S. Mitchell

December 31, 2015 William Blair Funds 35

Small Cap Value Fund

Performance Highlights (Unaudited)

Average Annual Total Return at 12/31/2015
	1 Year			3 Year			5 Year			10 Year
Class N		(5.77	)%		11.00	%		7.44	%		7.28	%
Class I		(5.47	)		11.31			7.73			7.53
Russell 2000® Value Index		(7.47	)		9.06			7.67			5.57

Performance cited represents past performance. Past performance does not guarantee future results and current performance may be lower or higher than the data quoted. Results shown are average annual total returns, which assume reinvestment of dividends and capital gains. Investment returns and principal will fluctuate and you may have a gain or loss when you sell shares. For the most current month-end performance information, please call 1-800-742-7272, or visit our Web site at www.williamblairfunds.com. Investing in smaller companies involves special risks, including higher volatility and lower liquidity. Smaller capitalization stocks are also more sensitive to purchase/sale transactions and changes in the issuer’s financial condition. From time to time, the investment adviser may waive fees or reimburse expenses for the Fund. Without these waivers/reimbursements, performance would be lower. Class N shares are available to the general public without a sales load. Class I shares are available to certain institutional investors and advisory clients of William Blair Investment Management, LLC and William Blair & Company, L.L.C., without a sales load or distribution (12b-1) or service fees.

The performance highlights and graph presented above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

The Russell 2000^® Value Index consists of small-capitalization companies with below average price-to-book ratios and forecasted growth rates.

This report identifies the Fund’s investments on December 31, 2015. These holdings are subject to change. Not all stocks in the Fund performed the same, nor is there any guarantee that these stocks will perform as well in the future. Market forecasts provided in this report may not necessarily come to pass.

Sector Diversification (Unaudited)

 

The sector diversification shown is based on the total long-term securities.

36 Annual Report December 31, 2015

Small Cap Value Fund

Portfolio of Investments, December 31, 2015 (all dollar amounts in thousands)

	Issuer	Shares		Value
	Common Stocks
	Financials—40.5%
	Acadia Realty Trust		266,530	$	8,835
	American Assets Trust, Inc.		191,990		7,363
	American Campus Communities, Inc.		195,435		8,079
	Bank of the Ozarks, Inc.		129,975		6,429
	Berkshire Hills Bancorp, Inc.		188,230		5,479
	Boston Private Financial Holdings, Inc.		308,290		3,496
*	Cascade Bancorp		726,305		4,409
	CNO Financial Group, Inc.		489,530		9,345
	CoBiz Financial, Inc.		602,029		8,079
	Douglas Emmett, Inc.		271,750		8,473
*	Eagle Bancorp, Inc.		156,225		7,885
	EastGroup Properties, Inc.		88,844		4,941
	Education Realty Trust, Inc.		215,541		8,165
	EPR Properties		124,235		7,262
*	Equity Commonwealth		115,885		3,213
	First American Financial Corporation		195,955		7,035
	FirstMerit Corporation		313,825		5,853
*	Forest City Enterprises, Inc.		251,395		5,513
	Glacier Bancorp, Inc.		312,780		8,298
	Hanover Insurance Group, Inc.		99,490		8,093
	Highwoods Properties, Inc.		166,935		7,278
	Home BancShares, Inc.		165,890		6,722
	Iberiabank Corporation		125,800		6,928
	LaSalle Hotel Properties		218,090		5,487
	National Bank Holdings Corporation		186,250		3,980
	PacWest Bancorp		196,143		8,454
	Pebblebrook Hotel Trust		221,429		6,204
	Prosperity Bancshares, Inc.		119,225		5,706
	Radian Group, Inc.		493,285		6,605
	Renasant Corporation		228,635		7,867
*	Safeguard Scientifics, Inc.		298,791		4,335
	Selective Insurance Group, Inc.		227,275		7,632
	Sunstone Hotel Investors, Inc.		425,425		5,314
	Umpqua Holdings Corporation		365,605		5,813
*	Western Alliance Bancorp		208,380		7,473
	WSFS Financial Corporation		284,490		9,206
	Yadkin Financial Corporation		275,925		6,945
					248,194
	Industrials—12.7%
	Barnes Group, Inc.		166,880		5,906
	CIRCOR International, Inc.		106,280		4,480
	Curtiss-Wright Corporation		95,402		6,535
	EMCOR Group, Inc.		159,816		7,678
*	FTI Consulting, Inc.		113,065		3,919
	G&K Services, Inc.		145,951		9,180
	Interface, Inc.		375,964		7,196
	Kadant, Inc.		129,018		5,239
*	Lydall, Inc.		134,821		4,783
	Matson, Inc.		151,900		6,475
*	Northwest Pipe Co.		253,960		2,842
	Standex International Corporation		71,095		5,912
	The Toro Co.		103,355		7,552
					77,697

	Issuer	Shares		Value
	Common Stocks—(continued)
	Information Technology—10.5%
*	Acxiom Corporation		566,137	$	11,844
	Belden, Inc.		155,345		7,407
	Booz Allen Hamilton Holding Corporation		219,992		6,787
*	Cadence Design Systems, Inc.		455,600		9,481
*	Inphi Corporation		291,170		7,867
*	Intralinks Holdings, Inc.		512,119		4,645
	j2 Global, Inc.		116,720		9,608
	Littelfuse, Inc.		61,784		6,611
					64,250
	Consumer Discretionary—9.9%
	Brunswick Corporation		64,415		3,254
	CalAtlantic Group, Inc.		117,017		4,437
*	Cavco Industries, Inc.		36,590		3,048
	Children’s Place, Inc.		110,870		6,120
	Dana Holding Corporation		285,325		3,937
	Ethan Allen Interiors, Inc.		147,704		4,109
*	Express, Inc.		340,135		5,878
*	Genesco, Inc.		72,765		4,135
*	Krispy Kreme Doughnuts, Inc.		536,945		8,092
	Meredith Corporation		120,270		5,202
	Vail Resorts, Inc.		68,695		8,792
	Wolverine World Wide, Inc.		223,935		3,742
					60,746
	Utilities—7.5%
	ALLETE, Inc.		122,980		6,251
	Chesapeake Utilities Corporation		69,050		3,919
	IDACORP, Inc.		116,069		7,893
	PNM Resources, Inc.		259,581		7,935
	Portland General Electric Co.		190,425		6,926
	Southwest Gas Corporation		131,440		7,250
	The Laclede Group, Inc.		97,720		5,805
					45,979
	Energy—4.8%
	Archrock, Inc.		234,900		1,767
*	Exterran Corporation		197,000		3,162
	GasLog, Ltd.†		322,905		2,680
*	Helix Energy Solutions Group, Inc.		518,135		2,725
*	Memorial Resource Development Corporation		414,350		6,692
*	PDC Energy, Inc.		95,840		5,116
*	Ring Energy, Inc.		359,196		2,532
*	TETRA Technologies, Inc.		615,955		4,632
					29,306
	Health Care—4.2%
	CONMED Corporation		150,335		6,622
*	Greatbatch, Inc.		173,405		9,104
	HealthSouth Corporation		159,105		5,538
*	Magellan Health, Inc.		70,575		4,352
					25,616

See accompanying Notes to Financial Statements.

December 31, 2015 William Blair Funds 37

Small Cap Value Fund

Portfolio of Investments, December 31, 2015 (all dollar amounts in thousands)

		Shares or
		Principal
	Issuer	Amount		Value
	Common Stocks-—(continued)
	Materials—4.0%
	Minerals Technologies, Inc.		114,110	$	5,233
	PolyOne Corporation		206,084		6,545
	Sensient Technologies Corporation		107,220		6,736
	Silgan Holdings, Inc.		111,330		5,981
					24,495
	Consumer Staples—2.9%
*	Darling Ingredients, Inc.		352,345		3,706
	J&J Snack Foods Corporation		72,142		8,417
	SpartanNash Co.		256,594		5,553
					17,676
	Total Common Stocks—97.0% (cost $529,543)				593,959
	Repurchase Agreement
	Fixed Income Clearing Corporation, 0.030% dated 12/31/15, due 1/4/16, repurchase price $16,367, collateralized by U.S. Treasury Note, 2.375%, due 8/15/24		$16,367		16,367
	Total Repurchase Agreement—2.7% (cost $16,367)				16,367
	Total Investments—99.7% (cost $545,910)				610,326
	Cash and other assets, less liabilities—0.3%				2,035
	Net assets—100.0%			$	612,361

* Non-income producing securities

† = U.S. listed foreign security

See accompanying Notes to Financial Statements.

38 Annual Report December 31, 2015

Global Markets Review and Outlook

Global investors are unlikely to look back fondly on 2015, having been whipsawed by periods of significant volatility throughout the year. The list of concerns was seemingly endless and well documented by the financial press: anemic global growth, U.S. monetary policy normalization, geopolitical risks, U.S. dollar strength, emerging markets fragility, commodity price weakness, China’s fluctuations, and policy uncertainty. In this volatile environment, the MSCI ACWI IMI (net) ended the year down 2.19% in U.S. dollar-denominated terms. In local currency terms, the MSCI ACWI IMI (net) Index was in positive territory (+1.39%), highlighting the impact of dollar strength. U.S. equities outpaced non-U.S. developed and emerging markets equities. Despite oscillating between record highs and steep downturns, the U.S. market ended the year relatively unchanged (MSCI U.S. IMI Index +0.03%). The flat performance was reflective of the subdued corporate earnings environment to a large extent, with weaker profit growth resulting from dollar appreciation and falling oil prices. European equity performance stood in sharp contrast to the U.S. equity market, benefiting from currency depreciation and cheap oil, in addition to central bank policy stimulus. The MSCI Europe ex-U.K. IMI advanced 9.81% in local terms, but only 0.66% in USD terms for 2015. Within Japan (MSCI Japan IMI Index +10.52% USD), corporate earnings were also supported by a favorable policy backdrop and expectations for continued currency weakness, bolstering exports. While Japan’s lackluster economic performance led many market observers to question the effectiveness of stimulus measures, progress at the micro level in the form of improved corporate governance and shareholder return generation was encouraging.

Emerging markets equities were buffeted by record capital outflows and currency weakness amid ongoing concerns about slowing growth, geopolitical risks, commodity demand, U.S. interest rates, and debt sustainability. Increased tensions in the Middle East and the spiraling political scandal in Brazil compounded investor anxiety. The MSCI EM IMI (net) fell 13.86% in USD terms for the year. Latin America was the worst performing emerging markets (“EM”) region, hampered by Brazil’s 41.94% decline. The Brazilian real bore the brunt of EM risk aversion in 2015, losing nearly two-thirds of its value against the U.S. dollar amid a toxic mix of recession, double-digit inflation, rising interest rates, and political scandal. The EMEA (Europe, the Middle East and Africa) region fared marginally better, supported by a rebound in Russia equities (+4.64%), although South Africa (-25.91%), Turkey (-31.36%), and broad Middle East weakness were significant offsets. Emerging Asia held up the best among the three EM regions (Latin America, EMEA, and Emerging Asia), due to more modest losses for India (-4.69%) and Korea (-3.94%). The MSCI China IMI (net), which excludes domestic A-share listings, fell 6.42% for the year. In contrast, the MSCI China A Index (net) posted a 12-month gain of 7.08%, despite falling 30.61% in the third quarter. Needless to say, it was an eventful year for China equity market participants, who endured a violent correction, unconventional policy intervention measures, and the largest currency devaluation in 20 years.

From a global sector perspective, Healthcare, Consumer Staples, Consumer Discretionary, and Information Technology were the top performers in 2015, reflecting relatively favorable earnings trends in the weaker growth environment. The resources sectors—Energy, Materials, and Utilities—were the worst performing sectors in 2015, hindered by oversupply conditions and waning Chinese demand. From a size perspective, small-cap stocks outside of the U.S. significantly outpaced their mid/large-cap counterparts in 2015. Small cap leadership was particularly pronounced in Europe, the U.K., Japan, and Emerging Asia during the year.

Our outlook for the year cannot help but be influenced by the market volatility we have experienced in the early weeks of 2016. Many of the concerns that depressed market returns in 2015 have been exacerbated in the first week of the year, particularly those related to Chinese growth and policy, unsettling not just the Chinese stock market but currency and stock markets around the world.

One area of our focus is the strength of the U.S. dollar and related implications of the reversal of the Federal Reserve’s extraordinary monetary stimulus. We believe the period of rapid U.S. dollar appreciation is behind us and we anticipate greater currency stabilization, with a strong but no longer strengthening dollar. It is also likely that we will see inflation pick up in the U.S. at some point as the decline in energy prices subsides. These are likely to have implications within U.S. sector leadership, as well as stem further pressure on many emerging markets.

We have long argued that emerging markets should be increasingly viewed as a heterogeneous group of countries, containing a heterogeneous group of companies. We believe more opportunities will be apparent during the coming year, and a cyclical emerging market recovery is not unrealistic despite the prevailing negative sentiment. Mexico and Taiwan look particularly interesting.

We also believe that demand prospects around the world may pick up, particularly in Europe-albeit off of a low base. Thus, global GDP growth of +3% does not appear altogether unrealistic. European markets have favored a defensive tilt, and this could reverse as we see stronger domestic activity. The high return, highly-valued defensive areas of the European markets

December 31, 2015 William Blair Funds 39

Global Markets Review and Outlook

could be vulnerable to profit taking. Elsewhere, we are focused on continued improvement of Japanese corporate performance driving profit growth and earnings revisions ahead of most major regions. Japan was the strongest performing major market in 2015 (in U.S. dollar terms) and may continue to perform well given the potential for profit growth and reasonable valuations. It should be noted that further Japanese corporate success is not predicated on additional Yen weakening from year-end levels.

In conclusion, we continue to employ a fundamental research-driven investment process that seeks to identify high quality, growth-oriented companies with strong operating performance. We believe that strong corporate performance is the foundation of superior long-term investment returns.

40 Annual Report December 31, 2015

	Global Leaders Fund
	The Global Leaders Fund seeks long-term capital appreciation.
	AN OVERVIEW FROM THE PORTFOLIO MANAGERS
Kenneth J. McAtamney Andrew G. Flynn	The William Blair Global Leaders Fund (Class N shares) posted a 2.49% increase, net of fees, for the twelve months ended December 31, 2015. By comparison, the Fund’s benchmark index, the MSCI All Country World IMI Index (net) (the “Index”), decreased 2.19%. The Fund’s performance during 2015 benefited from favorable style tailwinds, as higher-quality, growth-oriented companies with relatively strong earnings trends and price momentum generally outperformed on a global basis. Stock selection was strong across most sectors and regions during the year. From a sector perspective, Information Technology (“IT”) stock selection was the leading contributor. The overweightings to Consumer Discretionary, Healthcare, and IT versus the Index, and underweightings to Energy, Materials, and Utilities versus the Index were also positive contributors. Within IT, the emphasis on internet software & services and IT services companies was beneficial. Technology services company Capgemini (France) performed strongly during the year, bolstered by improvement in North America and its European outsourcing business, and the earnings accretive acquisition of U.S.-based iGate. These positive effects were partially mitigated by the Fund’s underweighting to Consumer Staples and the modest overweighting to Industrials. From a regional perspective, Europe ex-U.K. stock selection was the leading contributor to 2015 performance, benefiting from relative strength in European Consumer Discretionary, Healthcare, Financials and IT holdings. In contrast, stock selection in Latin America detracted from performance, but the impact was mitigated by the large underweight position. Within Latin America, Panama-based airline Copa Holdings and Brazilian education company Kroton Educacional suffered deteriorating business trends and were liquidated earlier in the year. Please refer to the Global Markets Review and Outlook relating to the Fund on page 39.

December 31, 2015 William Blair Funds 41

Global Leaders Fund

Performance Highlights (Unaudited)

Average Annual Total Return at 12/31/2015
	1 Year		3 Year		5 Year		Since Inception
Class N(a)	2.49	%	8.72	%	7.78	%	2.55	%
Class I(a)	2.77		9.00		8.06		2.83
MSCI ACW IMI (net)(a)	(2.19	)	7.86		6.11		1.78
Institutional Class(b)	2.85		9.13		—		8.91
MSCI ACW IMI (net)(b)	(2.19	)	7.86		—		7.65

(a)	Since inception is for the period from October 15, 2007 (Commencement of Operations) to December 31, 2015.
(b)	Since inception is for the period from December 19, 2012 (Commencement of Operations) to December 31, 2015.

Performance cited represents past performance. Past performance does not guarantee future results and current performance may be lower or higher than the data quoted. Results shown are average annual total returns, which assume reinvestment of dividends and capital gains. Investment returns and principal will fluctuate and you may have a gain or loss when you sell shares. For the most current month-end performance information, please call 1-800-742-7272, or visit our Web site at www.williamblairfunds.com. Investing in smaller and medium capitalization companies involves special risks, including higher volatility and lower liquidity. Smaller and medium capitalization stocks are also more sensitive to purchase/sale transactions and changes in the issuer’s financial condition. International investing involves special risk considerations, including currency fluctuations, lower liquidity, economic and political risk. From time to time, the investment adviser may waive fees or reimburse expenses for the Fund. Without these waivers/reimbursements, performance would be lower. Class N shares are available to the general public without a sales load. Class I shares are available to certain institutional investors and advisory clients of William Blair Investment Management, LLC and William Blair & Company, L.L.C., without a sales load or distribution fees (12b-1). Institutional Class shares are available to institutional investors without a sales load or distribution (12b-1) or service fees.

The performance highlights and graph presented above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

The Morgan Stanley Capital International (MSCI) All Country World (ACW) Investable Market Index (IMI) (net) is a free float-adjusted market capitalization weighted index that is designed to measure the equity market of developed and emerging markets. This series approximates the minimum possible dividend reinvestment.

This report identifies the Fund’s investments on December 31, 2015. These holdings are subject to change. Not all stocks in the Fund performed the same, nor is there any guarantee that these stocks will perform as well in the future. Market forecasts provided in this report may not necessarily come to pass.

Sector Diversification (Unaudited)

The sector diversification shown is based on the total long-term securities.

42 Annual Report December 31, 2015

Global Leaders Fund

Portfolio of Investments, December 31, 2015 (all dollar amounts in thousands)

	Issuer	Shares		Value
	Common Stocks
	Western Hemisphere—47.9%
	Canada—5.2%
	Alimentation Couche Tard, Inc. Class “B” (Food & staples retailing)		63,515	$	2,796
	Brookfield Asset Management, Inc. Class “A” (Real estate management & development)†		72,610		2,289
	Intact Financial Corporation (Insurance)		31,861		2,042
	Suncor Energy, Inc. (Oil, gas & consumable fuels)		104,816		2,706
					9,833
	United States—42.7%
*	Affiliated Managers Group, Inc. (Capital markets)		15,111		2,414
*	Align Technology, Inc. (Health care equipment & supplies)		33,841		2,229
*	Alphabet, Inc. Class “A” (Internet software & services)		5,778		4,495
*	ANSYS, Inc. (Software)		21,485		1,987
	Bristol-Myers Squibb Co. (Pharmaceuticals)		51,607		3,550
	Brunswick Corporation (Leisure products)		53,177		2,686
*	Centene Corporation (Health care providers & services)		49,753		3,274
*	CoStar Group, Inc. (Internet software & services)		5,888		1,217
	Costco Wholesale Corporation (Food & staples retailing)		14,768		2,385
	Danaher Corporation (Industrial conglomerates)		28,735		2,669
	EOG Resources, Inc. (Oil, gas & consumable fuels)		19,988		1,415
*	Facebook, Inc. (Internet software & services)		23,691		2,480
	General Electric Co. (Industrial conglomerates)		114,212		3,558
	Gilead Sciences, Inc. (Biotechnology)		37,236		3,768
	Intercontinental Exchange, Inc. (Diversified financial services)		9,928		2,544
	Jones Lang LaSalle, Inc. (Real estate management & development)		20,194		3,228
	Lazard, Ltd. (Capital markets)†		62,558		2,816
	Mastercard, Inc. (IT services)		36,071		3,512
	Moody’s Corporation (Diversified financial services)		24,258		2,434
*	O’Reilly Automotive, Inc. (Specialty retail)		6,907		1,750
*	Old Dominion Freight Line, Inc. (Road & rail)		25,925		1,531
	Pioneer Natural Resources Co. (Oil, gas & consumable fuels)		8,118		1,018
	PPG Industries, Inc. (Chemicals)		30,830		3,047
*	PRA Group, Inc. (Consumer finance)		36,054		1,251
*	Red Hat, Inc. (Software)		25,820		2,138
	Schlumberger, Ltd. (Energy equipment & services)†		35,754		2,494
	The Home Depot, Inc. (Specialty retail)		44,100		5,832
*	The Middleby Corporation (Machinery)		9,296		1,003

	Issuer	Shares		Value
	Common Stocks—(continued)
	Western Hemisphere—(continued)
	United States—(continued)
	The Sherwin-Williams Co. (Chemicals)		8,972	$	2,329
	The Walt Disney Co. (Media)		24,157		2,538
	VF Corporation (Textiles, apparel & luxury goods)		25,480		1,586
	Williams-Sonoma, Inc. (Specialty retail)		25,936		1,515
					80,693
	Europe, Mid-East—19.1%
	Denmark—1.5%
	Novo Nordisk A/S Class “B” (Pharmaceuticals)		49,844		2,903
	France—3.9%
	Cap Gemini S.A. (IT services)		50,907		4,736
	Valeo S.A. (Auto components)		16,772		2,598
					7,334
	Germany—2.7%
	Bayerische Motoren Werke AG (Automobiles)		24,129		2,560
	Continental AG (Auto components)		10,158		2,479
					5,039
	Ireland—1.6%
	Shire plc (Pharmaceuticals)		43,489		3,012
	Israel—2.4%
	Teva Pharmaceutical Industries, Ltd.-ADR (Pharmaceuticals)		68,948		4,526
	Netherlands—3.2%
*	NXP Semiconductor N.V. (Semiconductors & semiconductor equipment)†		37,906		3,193
	Royal Dutch Shell plc Class “A” (Oil, gas & consumable fuels)		119,344		2,736
					5,929
	Sweden—2.5%
	Assa Abloy AB Class “B” (Building products)		98,167		2,070
	Atlas Copco AB Class “A” (Machinery)		108,597		2,681
					4,751
	Switzerland—1.3%
	Partners Group Holding AG (Capital markets)		6,894		2,486
	Japan—10.0%
	Daikin Industries, Ltd. (Building products)		36,500		2,703
	Fuji Heavy Industries, Ltd. (Automobiles)		101,500		4,245
	Hoya Corporation (Health care equipment & supplies)		67,200		2,785
	Kao Corporation (Personal products)		48,200		2,508
	Keyence Corporation (Electronic equipment, instruments & components)		2,800		1,563
	ORIX Corporation (Diversified financial services)		194,300		2,773
	Shimano, Inc. (Leisure products)		15,100		2,344
					18,921

See accompanying Notes to Financial Statements.

December 31, 2015 William Blair Funds 43

Global Leaders Fund

Portfolio of Investments, December 31, 2015 (all dollar amounts in thousands)

	Issuer	Shares		Value
	Common Stocks—(continued)
	United Kingdom—9.0%
	ARM Holdings plc (Semiconductors & semiconductor equipment)		59,644	$	913
	Compass Group plc (Hotels, restaurants & leisure)		196,022		3,395
	easyJet plc (Airlines)		120,992		3,104
	Prudential plc (Insurance)		148,725		3,357
	Reckitt Benckiser Group plc (Household products)		32,077		2,970
	WPP plc (Media)		144,374		3,327
					17,066
	Emerging Asia—7.9%
	China—4.2%
*	Baidu, Inc.-ADR (Internet software & services)		14,002		2,647
	China Overseas Land & Investment, Ltd. (Real estate management & development)		806,000		2,818
	Tencent Holdings, Ltd. (Internet software & services)		124,800		2,459
					7,924
	India—1.6%
	HDFC Bank, Ltd.-ADR (Banks)		47,378		2,919
	Taiwan—2.1%
	Taiwan Semiconductor Manufacturing Co., Ltd.-ADR (Semiconductors & semiconductor equipment)		177,700		4,043
	Asia—3.4%
	Australia—1.8%
	Macquarie Group, Ltd. (Capital markets)		57,212		3,451
	Hong Kong—1.6%
	AIA Group, Ltd. (Insurance)		480,800		2,891
	Emerging Europe, Mid-East, Africa—0.4%
	South Africa—0.4%
	Bidvest Group, Ltd. (Industrial conglomerates)		39,057		829
	Total Common Stocks—97.7% (cost $166,875)				184,550

Issuer	Principal Amount		Value
Repurchase Agreement
Fixed Income Clearing Corporation, 0.030% dated 12/31/15, due 1/4/16, repurchase price $2,827, collateralized by FNMA, 2.625%, due 9/6/24		$2,827	$	2,827
Total Repurchase Agreement—1.5% (cost $2,827)				2,827
Total Investments—99.2% (cost $169,702)				187,377
Cash and other assets, less liabilities—0.8%				1,591
Net assets—100.0%			$	188,968

ADR = American Depository Receipt

† = U.S. listed foreign security

* Non-income producing securities

For securities primarily traded on exchanges or markets that close before the close of regular trading on the New York Stock Exchange, the Fund may use an independent pricing service to fair value price the securities pursuant to Valuation Procedures approved by the Board of Trustees.

At December 31, 2015, the Fund’s Portfolio of Investments includes the following industry categories (as a percentage of long-term investments):

Financials	21.5	%
Consumer Discretionary	20.0	%
Information Technology	19.2	%
Health Care	14.1	%
Industrials	10.9	%
Consumer Staples	5.8	%
Energy	5.6	%
Materials	2.9	%
Total	100.0	%

At December 31, 2015, the Fund’s Portfolio of Investments includes the following currency categories (as a percentage of long-term investments):

U.S. Dollar	54.4	%
British Pound Sterling	10.9	%
Japanese Yen	10.2	%
Euro	8.2	%
Hong Kong Dollar	4.4	%
Canadian Dollar	4.1	%
Swedish Krona	2.6	%
Australian Dollar	1.9	%
Danish Krone	1.6	%
Swiss Franc	1.3	%
All Other Currencies	0.4	%
Total	100.0	%

See accompanying Notes to Financial Statements.

44 Annual Report December 31, 2015

	Global Small Cap Growth Fund (In Liquidation)
	The Global Small Cap Growth Fund seeks long-term capital appreciation.
	AN OVERVIEW FROM THE PORTFOLIO MANAGERS
Andrew G. Flynn	The William Blair Global Small Cap Growth Fund (Class N shares) posted a 9.07% increase, net of fees, for the twelve months ended December 31, 2015. By comparison, the Fund’s benchmark index, the MSCI All Country World (ACW) Small Cap Index (net) (the “Index”), decreased 1.04%. The Fund’s outperformance relative to the Index was supported by favorable stock selection across most sectors, combined with positive sector allocation effects. The Fund’s overweighting to, and stock selection in, Consumer Discretionary were notable contributors, with particular strength in U.S. holdings. Notable contributors in the sector were Wayfair Inc., Vail Resorts Inc., and 2U Inc. These positive effects were, however, moderated by allocation and stock selection within Consumer Staples. From a stock selection perspective notable detractors were Sprouts Farmers Market (United States) and Avi Ltd. (South Africa). Another notable detractor was Kose Corporation (Japan), which performed strongly after the Fund exited the holding earlier in the year. Please refer to the Global Markets Review and Outlook relating to the Fund on page 39. As disclosed in Note 1(a) in the Notes to Financial Statements, the Fund was terminated on January 15, 2016, at which time all outstanding shares of the Fund were redeemed.

December 31, 2015 William Blair Funds 45

Global Small Cap Growth Fund (In Liquidation)

Performance Highlights (Unaudited)

Average Annual Total Return at 12/31/2015
	1 Year			Since Inception(a)
Class N		9.07	%		13.94	%
Class I		9.48			14.31
MSCI ACW Small Cap Index (net)		(1.04	)		6.43

(a) For the period from April 10, 2013 (Commencement of Operations) to December 31, 2015.

Performance cited represents past performance. Past performance does not guarantee future results and current performance may be lower or higher than the data quoted. Results shown are average annual total returns, which assume reinvestment of dividends and capital gains. Investment returns and principal will fluctuate and you may have a gain or loss when you sell shares. For the most current month-end performance information, please call 1-800-742-7272, or visit our Web site at www.williamblairfunds.com. Investing in smaller and medium capitalization companies involves special risks, including higher volatility and lower liquidity. Smaller and medium capitalization stocks are also more sensitive to purchase/sale transactions and changes in the issuer’s financial condition. International investing involves special risk considerations, including currency fluctuations, lower liquidity, economic and political risk. From time to time, the investment adviser may waive fees or reimburse expenses to the Fund. Without these waivers/reimbursements, performance would be lower. Class N shares are available to the general public without a sales load. Class I shares are available to certain institutional investors and advisory clients of William Blair Investment Management, LLC and William Blair & Company, L.L.C., without a sales load or distribution (12b-1) fees.

The performance highlights and graph presented above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

The Morgan Stanley Capital International (MSCI) All Country World (ACW) Small Cap Index (net) is a free float-adjusted market capitalization index designed to measure global developed and emerging market small capitalization equity performance. The Index is unmanaged, does not incur fees or expenses, and cannot be invested in directly.

This report identifies the Fund’s investments on December 31, 2015. These holdings are subject to change. Not all stocks in the Fund performed the same, nor is there any guarantee that these stocks will perform as well in the future. Market forecasts provided in this report may not necessarily come to pass.

Sector Diversification (Unaudited)

The sector diversification shown is based on the total long-term securities.

46 Annual Report December 31, 2015

Global Small Cap Growth Fund (In Liquidation)

Portfolio of Investments, December 31, 2015 (all dollar amounts in thousands)

	Issuer	Shares		Value
	Common Stocks
	Western Hemisphere—42.4%
	Canada—1.6%
	Linamar Corporation (Auto components)		1,902	$	103
*	Raging River Exploration, Inc. (Oil, gas & consumable fuels)		16,451		99
	WestJet Airlines, Ltd. (Airlines)		6,458		95
					297
	United States—40.8%
*	2U, Inc. (Diversified consumer services)		5,361		150
*	ABIOMED, Inc. (Health care equipment & supplies)		1,430		129
*	Align Technology, Inc. (Health care equipment & supplies)		1,949		128
*	AMN Healthcare Services, Inc. (Health care providers & services)		4,415		137
	Booz Allen Hamilton Holding Corporation (IT services)		7,172		221
	Brunswick Corporation (Leisure products)		4,622		233
*	Cambrex Corporation (Life sciences tools & services)		3,902		184
*	Carrizo Oil & Gas, Inc. (Oil, gas & consumable fuels)		3,017		89
	CEB, Inc. (Professional services)		3,299		203
	Choice Hotels International, Inc. (Hotels, restaurants & leisure)		5,304		267
*	Cvent, Inc. (Internet software & services)		6,705		234
*	Demandware, Inc. (Internet software & services)		2,111		114
*	Diamondback Energy, Inc. (Oil, gas & consumable fuels)		1,613		108
	Drew Industries, Inc. (Auto components)		4,409		268
*	Encore Capital Group, Inc. (Consumer finance)		2,536		74
	Gentex Corporation (Auto components)		7,553		121
*	Gentherm, Inc. (Auto components)		2,598		123
	HealthSouth Corporation (Health care providers & services)		5,632		196
	Hexcel Corporation (Aerospace & defense)		2,703		126
*	Hortonworks, Inc. (Internet software & services)		6,964		152
*	Huron Consulting Group, Inc. (Professional services)		2,924		174
	j2 Global, Inc. (Internet software & services)		3,336		275
*	Manhattan Associates, Inc. (Software)		2,058		136
	MarketAxess Holdings, Inc. (Diversified financial services)		2,281		255
	MAXIMUS, Inc. (IT services)		4,369		246
*	Oil States International, Inc. (Energy equipment & services)		4,090		111
*	Repligen Corporation (Biotechnology)		3,838		109
*	ServiceMaster Global Holdings, Inc. (Diversified consumer services)		5,203		204
*	Sirona Dental Systems, Inc. (Health care equipment & supplies)		2,004		220

	Issuer	Shares		Value
	Common Stocks—(continued)
	Western Hemisphere—(continued)
	United States—(continued)
	Six Flags Entertainment Corporation (Hotels, restaurants & leisure)		2,479	$	136
*	Team Health Holdings, Inc. (Health care providers & services)		3,337		146
	Texas Roadhouse, Inc. (Hotels, restaurants & leisure)		4,056		145
	The Toro Co. (Machinery)		3,150		230
*	Tyler Technologies, Inc. (Software)		1,274		222
	UniFirst Corporation (Commercial services & supplies)		2,005		209
	Vail Resorts, Inc. (Hotels, restaurants & leisure)		2,532		324
	Virtu Financial, Inc. Class “A” (Capital markets)		7,678		174
	Watsco, Inc. (Trading companies & distributors)		1,416		166
*	Wayfair, Inc. Class “A” (Internet & catalog retail)		4,820		230
	WD-40 Co. (Household products)		1,827		180
	West Pharmaceutical Services, Inc. (Health care equipment & supplies)		2,286		138
*	Zeltiq Aesthetics, Inc. (Health care equipment & supplies)		4,040		115
*	Zoe’s Kitchen, Inc. (Hotels, restaurants & leisure)		4,158		116
					7,518
	Europe, Mid-East—24.8%
	Belgium—0.6%
	Melexis N.V. (Semiconductors & semiconductor equipment)		2,064		112
	Denmark—1.0%
	Royal Unibrew A/S (Beverages)		4,506		184
	Finland—0.7%
	Huhtamaki Oyj (Containers & packaging)		3,413		124
	France—3.0%
	Ipsen S.A. (Pharmaceuticals)		2,664		177
	Metropole Television S.A. (Media)		6,973		120
*	UBISOFT Entertainment (Software)		8,986		260
					557
	Germany—4.1%
	Aareal Bank AG (Thrifts & mortgage finance)		3,727		118
	Aurelius AG (Capital markets)		3,346		175
	CTS Eventim AG & Co KGaA (Media)		3,650		146
	GRENKELEASING AG (Diversified financial services)		973		195
	Norma Group SE (Machinery)		2,172		121
					755
	Ireland—2.3%
	Beazley plc (Insurance)		36,319		209
	Paddy Power plc (Hotels, restaurants & leisure)		1,592		213
					422

See accompanying Notes to Financial Statements.

December 31, 2015 William Blair Funds 47

Global Small Cap Growth Fund (In Liquidation)

Portfolio of Investments, December 31, 2015 (all dollar amounts in thousands)

	Issuer	Shares		Value
	Common Stocks—(continued)
	Europe, Mid-East—(continued)
	Israel—1.0%
	Elbit Systems, Ltd. (Aerospace & defense)		2,095	$	185
	Italy—7.1%
	Anima Holding SpA-144A (Capital markets)		14,064		123
	Banca IFIS SpA (Diversified financial services)		6,687		210
	Brembo SpA (Auto components)		3,007		146
	De’Longhi SpA (Household durables)		5,236		157
	DiaSorin SpA (Health care equipment & supplies)		2,725		143
	FinecoBank Banca Fineco SpA (Banks)		18,353		152
	Moncler SpA (Textiles, apparel & luxury goods)		7,395		104
	Recordati SpA (Pharmaceuticals)		5,267		138
	Salvatore Ferragamo Italia SpA (Textiles, apparel & luxury goods)		5,281		125
					1,298
	Luxembourg—1.1%
	Grand City Properties S.A. (Real estate management & development)		9,001		209
	Sweden—3.1%
	Hexpol AB (Chemicals)		11,538		124
*	NetEnt AB (Internet software & services)		3,305		194
	Nolato AB Class “B” (Industrial conglomerates)		8,335		254
					572
	Switzerland—0.8%
	VZ Holding AG (Capital markets)		504		149
	United Kingdom—12.8%
	Close Brothers Group plc (Capital markets)		6,855		135
	Domino’s Pizza Group plc (Hotels, restaurants & leisure)		9,506		147
	Essentra plc (Chemicals)		8,254		101
	Halma plc (Electronic equipment, instruments & components)		18,271		233
	Hays plc (Professional services)		60,725		131
	Howden Joinery Group plc (Specialty retail)		25,787		200
	IG Group Holdings plc (Diversified financial services)		10,025		119
	Inchcape plc (Distributors)		10,395		120
	Jupiter Fund Management plc (Capital markets)		19,159		128
	M&C Saatchi plc (Media)		22,737		109
	Moneysupermarket.com Group plc (Internet software & services)		28,704		155
	OM Asset Management plc (Capital markets)†		9,748		149
	Scapa Group plc (Chemicals)		48,014		152
	Spirax-Sarco Engineering plc (Machinery)		2,243		109
	Ted Baker plc (Textiles, apparel & luxury goods)		2,917		129

Issuer	Shares		Value
Common Stocks—(continued)
United Kingdom—(continued)
Victrex plc (Chemicals)		4,301	$	114
Workspace Group plc (Real estate investment trusts (REITs))		9,024		128
				2,359
Japan—8.0%
Hoshizaki Electric Co., Ltd. (Machinery)		1,800		113
Meitec Corporation (Professional services)		6,500		225
Nihon Kohden Corporation (Health care equipment & supplies)		4,600		112
Nihon M&A Center, Inc. (Professional services)		3,400		166
Nissan Chemical Industries, Ltd. (Chemicals)		8,100		186
Relo Holdings, Inc. (Real estate management & development)		1,200		147
Resorttrust, Inc. (Hotels, restaurants & leisure)		4,900		131
Sato Holdings Corporation (Commercial services & supplies)		7,700		154
Tsubakimoto Chain Co. (Machinery)		16,000		125
Zenkoku Hosho Co., Ltd. (Diversified financial services)		3,300		110
				1,469
Asia—3.9%
Australia—2.5%
DuluxGroup, Ltd. (Chemicals)		29,340		142
Magellan Financial Group, Ltd. (Capital markets)		9,837		195
The Star Entertainment Grp, Ltd. (Hotels, restaurants & leisure)		33,701		125
				462
Singapore—1.4%
ComfortDelGro Corporation, Ltd. (Road & rail)		59,000		127
SATS, Ltd. (Transportation infrastructure)		52,000		141
				268
Emerging Asia—3.2%
China—0.9%
Hollysys Automation Technologies, Ltd. (Electronic equipment, instruments & components)†		7,784		173
Philippines—1.3%
Megaworld Corporation (Real estate management & development)		1,246,000		112
Security Bank Corporation (Banks)		43,670		132
				244
Taiwan—1.0%
Voltronic Power Technology Corporation (Electrical equipment)		12,000		179

See accompanying Notes to Financial Statements.

48 Annual Report December 31, 2015

Global Small Cap Growth Fund (In Liquidation)

Portfolio of Investments, December 31, 2015 (all dollar amounts in thousands)

	Issuer	Shares		Value
	Common Stocks—(continued)
	Emerging Latin America—2.3%
	Mexico—2.3%
*	Credito Real S.A.B. de C.V. (Consumer finance)		65,195	$	165
	Gentera S.A.B. de C.V. (Consumer finance)		70,600		136
*	Grupo Aeroportuario del Centro Norte S.A.B. de C.V. (Transportation infrastructure)		25,900		126
					427
	Emerging Europe, Mid-East, Africa—0.6%
	Turkey—0.6%
	Turkiye Sinai Kalkinma Bankasi A.S. (Banks)		210,224		110
	Total Common Stocks—98.0% (cost $16,083)				18,073

Issuer	Principal Amount		Value
Repurchase Agreement
Fixed Income Clearing Corporation, 0.030% dated 12/31/15, due 1/4/16, repurchase price $393, collateralized by FNMA, 2.625%, due 9/6/24		$393	$	393
Total Repurchase Agreement—2.1% (cost $393)				393
Total Investments—100.1% (cost $16,476)				18,466
Liabilities, plus cash and other assets—(0.1)%				(22	)
Net assets—100.0%			$	18,444

* Non-income producing securities

† = U.S. listed foreign security

For securities primarily traded on exchanges or markets that close before the close of regular trading on the New York Stock Exchange, the Fund may use an independent pricing service to fair value price the securities pursuant to Valuation Procedures approved by the Board of Trustees.

At December 31, 2015, the Fund’s Portfolio of Investments includes the following industry categories (as a percentage of long-term investments):

Consumer Discretionary	24.2	%
Financials	21.1	%
Industrials	18.6	%
Information Technology	15.1	%
Health Care	11.5	%
Materials	5.2	%
Energy	2.3	%
Consumer Staples	2.0	%
Total	100.0	%

At December 31, 2015, the Fund’s Portfolio of Investments includes the following currency categories (as a percentage of long-term investments):

U.S. Dollar	43.4	%
Euro	18.1	%
British Pound Sterling	13.4	%
Japanese Yen	8.1	%
Swedish Krona	3.2	%
Australian Dollar	2.6	%
Mexican Peso	2.4	%
Canadian Dollar	1.6	%
Singapore Dollar	1.5	%
Philippine Peso	1.3	%
Israeli Shekel	1.0	%
Danish Krone	1.0	%
All Other Currencies	2.4	%
Total	100.0	%

See accompanying Notes to Financial Statements.

December 31, 2015 William Blair Funds 49

	International Leaders Fund
	The International Leaders Fund seeks long-term capital appreciation.
	AN OVERVIEW FROM THE PORTFOLIO MANAGERS
Kenneth J. McAtamney   Simon Fennell	The William Blair International Leaders Fund (Class N shares) posted a 6.01% increase, net of fees, for the twelve months ended December 31, 2015. By comparison, the Fund’s benchmark index, the MSCI All Country World ex-U.S. IMI Index (net) (the “Index”), decreased 4.60%. The Fund’s performance relative to the Index during 2015 benefited from favorable style tailwinds, as higher-quality, growth-oriented companies with relatively strong earnings trends and price momentum generally outperformed on a global basis. Stock selection was strong across most sectors and regions during the year. From a sector perspective, Financials stock selection was the leading contributor. The Fund’s overweightings to Consumer Discretionary, Healthcare, and Information Technology (“IT”), and underweightings to Energy, Materials, and Telecommunication Services (“Telecom”) were also positive. Within Financials, stock selection was most beneficial within banks and capital markets. Although the Fund’s underweighting to banks in favor of insurance was favorable amid the low interest rate environment. HDFC Bank (India) was a leading contributor, benefiting from strong growth in retail loans and digital initiatives that drove higher market share. These positive effects were partially mitigated by the Fund’s Consumer Staples underweighting and Telecom stock selection. Within Telecom, Telenor (Norway) detracted from performance as it derives significant revenue from several emerging markets-based countries and its share price was adversely impacted by handset subsidies in Thailand and broader emerging markets earnings weakness. From a regional perspective, Europe ex-U.K. stock selection was the leading contributor to 2015 performance, benefiting from relative strength in European Consumer Discretionary, Healthcare, Financials and IT holdings. In contrast, stock selection in Latin America detracted from relative performance, but the impact was mitigated by the large underweight position. The Fund’s underweightings to the Developed Asia ex-Japan and Emerging Asia regions also detracted. Please refer to the Global Markets Review and Outlook relating to the Fund on page 39.

50 Annual Report December 31, 2015

International Leaders Fund

Performance Highlights (Unaudited)

Average Annual Total Return at 12/31/2015

	1 Year			3 Year			Since Inception
Class N(a)		6.01	%		7.01	%		8.69	%
Class I(a)		6.18			7.25			8.94
MSCI ACW Ex-U.S. IMI (net)(a)		(4.60	)		2.02			4.36
Institutional Class(b)		6.33			7.43			8.91
MSCI ACW Ex-U.S. IMI (net)(b)		(4.60	)		2.02			3.42

(a)	Since inception is for the period from August 16, 2012 (Commencement of Operations) to December 31, 2015.
(b)	Since inception is for the period from November 2, 2012 (Commencement of Operations) to December 31, 2015.

Performance cited represents past performance. Past performance does not guarantee future results and current performance may be lower or higher than the data quoted. Results shown are average annual returns, which assume reinvestment of dividends and capital gains. Investment returns and principal will fluctuate and you may have a gain or loss when you sell shares. For the most current month-end performance information, please call 1-800-742-7272, or visit our Web site at www.williamblairfunds.com. From time to time the investment adviser may waive fees or reimburse expenses for the Fund. Without these waivers/reimbursements, performance would be lower. International investing involves special risk considerations, including currency fluctuations, lower liquidity, economic and political risk. Class N shares are available to the general public without a sales load. Class I shares are available to certain institutional investors and advisory clients of William Blair Investment Management, LLC and William Blair & Company, L.L.C., without a sales load or distribution (12b-1) fees. Institutional Class shares are available to institutional investors without a sales load or distribution (12b-1) or service fees.

The performance highlights presented above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

The Morgan Stanley Capital International (MSCI) All Country World (ACW) Ex-U.S. Investable Market Index (IMI) (net) is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets, excluding the United States. This series approximates the minimum possible dividend reinvestment.

This report identifies the Fund’s investments on December 31, 2015. These holdings are subject to change. Not all stocks in the Fund performed the same, nor is there any guarantee that these stocks will perform as well in the future. Market forecasts provided in this report may not necessarily come to pass.

Sector Diversification (Unaudited)

 

The sector diversification shown is based on the total long-term securities.

December 31, 2015 William Blair Funds 51

International Leaders Fund

Portfolio of Investments, December 31, 2015 (all dollar amounts in thousands)

	Issuer	Shares		Value
	Common Stocks
	Europe, Mid-East—33.4%
	Denmark—1.8%
	Novo Nordisk A/S Class “B” (Pharmaceuticals)		36,407	$	2,120
	Finland—1.8%
	Sampo Oyj Class “A” (Insurance)		40,955		2,092
	France—7.9%
	Cap Gemini S.A. (IT services)		30,537		2,841
	JCDecaux S.A. (Media)		39,312		1,508
	Safran S.A. (Aerospace & defense)		22,497		1,550
	Total S.A. (Oil, gas & consumable fuels)		32,541		1,459
	Valeo S.A. (Auto components)		11,427		1,770
					9,128
	Germany—4.2%
	Bayerische Motoren Werke AG (Automobiles)		16,156		1,714
	Continental AG (Auto components)		9,286		2,266
	Rational AG (Machinery)		1,863		850
					4,830
	Ireland—2.2%
	Ryanair Holdings plc-ADR (Airlines)		29,205		2,525
	Israel—2.8%
	Teva Pharmaceutical Industries, Ltd.-ADR (Pharmaceuticals)		49,664		3,260
	Italy—2.2%
	Intesa Sanpaolo SpA (Banks)		768,593		2,579
	Netherlands—2.9%
*	NXP Semiconductor N.V. (Semiconductors & semiconductor equipment)†		27,091		2,282
	Royal Dutch Shell plc Class “A” (Oil, gas & consumable fuels)		46,142		1,058
					3,340
	Spain—1.4%
	Amadeus IT Holding S.A. Class “A” (IT services)		37,637		1,664
	Sweden—2.4%
	Atlas Copco AB Class “A” (Machinery)		53,956		1,332
	Hexagon AB Class “B” (Electronic equipment, instruments & components)		39,810		1,485
					2,817
	Switzerland—3.8%
*	Actelion, Ltd. (Biotechnology)		17,106		2,384
	Partners Group Holding AG (Capital markets)		5,551		2,002
					4,386
	Japan—20.8%
	Astellas Pharma, Inc. (Pharmaceuticals)		125,300		1,805
	Daikin Industries, Ltd. (Building products)		25,600		1,896
	FANUC Corporation (Machinery)		9,100		1,596
	Fuji Heavy Industries, Ltd. (Automobiles)		58,959		2,466

	Issuer	Shares		Value
	Common Stocks—(continued)
	Japan—(continued)
	Hoya Corporation (Health care equipment & supplies)		44,300	$	1,836
	Kao Corporation (Personal products)		33,800		1,759
	Keyence Corporation (Electronic equipment, instruments & components)		3,100		1,730
	Makita Corporation (Machinery)		24,900		1,456
	Murata Manufacturing Co., Ltd. (Electronic equipment, instruments & components)		11,400		1,666
	Nitori Holdings Co., Ltd. (Specialty retail)		16,200		1,379
	ORIX Corporation (Diversified financial services)		139,300		1,988
	Shimano, Inc. (Leisure products)		11,700		1,816
	SMC Corporation (Machinery)		3,600		952
	Sumitomo Mitsui Financial Group, Inc. (Banks)		47,600		1,824
					24,169
	United Kingdom—16.3%
	ARM Holdings plc (Semiconductors & semiconductor equipment)		49,477		758
	Compass Group plc (Hotels, restaurants & leisure)		165,636		2,869
	IG Group Holdings plc (Diversified financial services)		115,051		1,361
	InterContinental Hotels Group plc (Hotels,restaurants & leisure)		39,734		1,557
	Prudential plc (Insurance)		85,868		1,938
	Reckitt Benckiser Group plc (Household products)		21,946		2,032
	RELX plc (Media)		130,730		2,307
	St James’s Place plc (Insurance)		100,144		1,488
	Wolseley plc (Trading companies & distributors)		38,195		2,079
	WPP plc (Media)		109,850		2,531
					18,920
	Emerging Asia—14.7%
	China—6.9%
*	Baidu, Inc.-ADR (Internet software & services)		6,828		1,291
	China Overseas Land & Investment, Ltd. (Real estate management & development)		574,000		2,007
	Lenovo Group, Ltd. (Technology hardware, storage & peripherals)		1,192,000		1,211
	NetEase, Inc.-ADR (Internet software & services)		10,982		1,990
	Tencent Holdings, Ltd. (Internet software & services)		79,700		1,570
					8,069
	India—3.8%
	Hero MotoCorp, Ltd. (Automobiles)		41,600		1,690
	Housing Development Finance Corporation, Ltd. (Thrifts & mortgage finance)		78,275		1,495
*	Tata Motors, Ltd.-ADR (Automobiles)		43,593		1,285
					4,470

See accompanying Notes to Financial Statements.

52 Annual Report December 31, 2015

International Leaders Fund

Portfolio of Investments, December 31, 2015(all dollar amounts in thousands)

Issuer	Shares		Value
Common Stocks—(continued)
Emerging Asia—(continued)
South Korea—1.7%
Samsung Electronics Co., Ltd. (Technology hardware, storage & peripherals)		1,806	$	1,941
Taiwan—2.3%
Taiwan Semiconductor Manufacturing Co., Ltd. (Semiconductors & semiconductor equipment)		606,000		2,638
Canada—5.1%
Alimentation Couche Tard, Inc. Class “B” (Food & staples retailing)		50,107		2,206
Brookfield Asset Management, Inc. Class “A” (Real estate management & development)†		77,947		2,458
Suncor Energy, Inc. (Oil, gas & consumable fuels)		49,607		1,280
				5,944
Asia—4.0%
Australia—2.1%
Macquarie Group, Ltd. (Capital markets)		41,196		2,485
Hong Kong—1.9%
AIA Group, Ltd. (Insurance)		356,800		2,145
Emerging Europe, Mid-East, Africa—1.5%
South Africa—1.5%
Bidvest Group, Ltd. (Industrial conglomerates)		52,334		1,111
Discovery, Ltd. (Insurance)		67,113		577
				1,688
Total Common Stocks—95.8% (cost $100,734)				111,210

	Principal
Issuer	Amount		Value
Repurchase Agreement
Fixed Income Clearing Corporation, 0.030% dated 12/31/15, due 1/4/16, repurchase price $4,150, collateralized by U.S Treasury Note, 2.375%, due 8/15/24		$4,150	$	4,150
Total Repurchase Agreement—3.6% (cost $4,150)				4,150
Total Investments—99.4% (cost $104,884)				115,360
Cash and other assets, less liabilities—0.6%				718
Net assets—100.0%			$	116,078

ADR = American Depository Receipt

* Non-income producing securities

† = U.S. listed foreign security

For securities primarily traded on exchanges or markets that close before the close of regular trading on the New York Stock Exchange, the Fund may use an independent pricing service to fair value price the securities pursuant to Valuation Procedures approved by the Board of Trustees.

At December 31, 2015, the Fund’s Portfolio of Investments includes the following industry categories (as a percentage of long-term investments):

Financials	23.8	%
Consumer Discretionary	22.6	%
Information Technology	20.7	%
Industrials	13.8	%
Health Care	10.3	%
Consumer Staples	5.4	%
Energy	3.4	%
Total	100.0	%

At December 31, 2015, the Fund’s Portfolio of Investments includes the following currency categories (as a percentage of long-term investments):

Japanese Yen	21.7	%
Euro	19.2	%
British Pound Sterling	17.0	%
U.S. Dollar	13.6	%
Hong Kong Dollar	6.2	%
Swiss Franc	4.0	%
Canadian Dollar	3.1	%
Indian Rupee	2.9	%
Swedish Krona	2.5	%
New Taiwan Dollar	2.4	%
Australian Dollar	2.2	%
Danish Krone	1.9	%
South Korean Won	1.8	%
South African Rand	1.5	%
Total	100.0	%

See accompanying Notes to Financial Statements.

December 31, 2015 William Blair Funds 53

	International Equity Fund
	The International Equity Fund seeks long-term capital appreciation.
	AN OVERVIEW FROM THE PORTFOLIO MANAGERS
David Merjan John C. Murphy	The William Blair International Equity Fund (Class N shares) posted a 1.54% increase, net of fees, for the twelve months ended December 31, 2015. By comparison, the Fund’s benchmark index, the MSCI World ex-U.S. Index (net) (the “Index”), decreased 3.04%. The Fund’s performance during 2015 was broadly supported by our emphasis on higher-quality, growth-oriented companies. From a sector perspective, Financials stock selection was the leading contributor for the year, bolstered by bank, diversified financial services, and insurance holdings. HDFC Bank (India) was a leading contributor, benefiting from strong growth in retail loans and digital initiatives that drove higher market share. Insurance company AIA Group (Hong Kong) was another notable contributor, benefiting from favorable new business trends despite a volatile macroeconomic environment in Emerging Asia. Consumer Discretionary, Consumer Staples, Industrials, and Information Technology (“IT”) stock selection were also primary contributors to the Fund’s performance. Overall sector positioning was also beneficial—primarily the Fund’s overweightings to Industrials and IT versus the Index, and underweightings to Materials and Energy versus the Index. These positive effects helped to offset poor stock selection in Energy and Materials. Canadian exploration & production companies Enerplus and Canadian Natural Resources were key detractors, hampered by lower oil and gas selling prices. Within Materials, mining company Rio Tinto (U.K.) was hurt by declines in the iron ore price. Swiss-based agricultural chemical company Syngenta suffered from weaker sales and management’s rejection of a takeover offer from U.S.-based seed company Monsanto. From a regional perspective, stock selection was strongest in Europe ex-U.K. and Developed Asia, partially offset by the underweightings to both regions. The overweighting to Canada also detracted from relative performance. Please refer to the Global Markets Review and Outlook relating to the Fund on page 39.

54 Annual Report December 31, 2015

International Equity Fund

Performance Highlights (Unaudited)

 

Average Annual Total Return at 12/31/2015
	1 Year			3 Year			5 Year			10 Year
Class N		1.54	%		5.54	%		3.79	%		2.52	%
Class I		1.80			5.81			4.05			2.77
MSCI World Ex-U.S. Index (net)		(3.04	)		3.93			2.79			2.92

Performance cited represents past performance. Past performance does not guarantee future results and current performance may be lower or higher than the data quoted. Results shown are average annual returns, which assume reinvestment of dividends and capital gains. Investment returns and principal will fluctuate and you may have a gain or loss when you sell shares. For the most current month-end performance information, please call 1-800-742-7272, or visit our Web site at www.williamblairfunds.com. From time to time the investment adviser may waive fees or reimburse expenses for the Fund. Without these waivers/reimbursements, performance would be lower. International investing involves special risk considerations, including currency fluctuations, lower liquidity, economic and political risk. Class N shares are available to the general public without a sales load. Class I shares are available to certain institutional investors and advisory clients of William Blair Investment Management, LLC and William Blair & Company, L.L.C., without a sales load or distribution (12b-1) or service fees.

The performance highlights and graph presented above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

The Morgan Stanley Capital International (MSCI) World Ex-U.S. Index (net) is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets, excluding the United States. This series approximates the minimum possible dividend reinvestment.

This report identifies the Fund’s investments on December 31, 2015. These holdings are subject to change. Not all stocks in the Fund performed the same, nor is there any guarantee that these stocks will perform as well in the future. Market forecasts provided in this report may not necessarily come to pass.

Sector Diversification (Unaudited)

 

The sector diversification shown is based on the total long-term securities.

December 31, 2015 William Blair Funds 55

International Equity Fund

Portfolio of Investments, December 31, 2015 (all dollar amounts in thousands)

	Issuer	Shares		Value
	Common Stocks
	Europe—33.4%
	Belgium—2.9%
	Anheuser-Busch InBev N.V. (Beverages)		8,086	$	1,005
	UCB S.A. (Pharmaceuticals)		9,519		861
					1,866
	Denmark—1.1%
	Novo Nordisk A/S Class “B” (Pharmaceuticals)		12,475		726
	Finland—1.0%
	Kone Oyj Class “B” (Machinery)		15,149		645
	France—7.6%
	AXA S.A. (Insurance)		27,713		760
	BNP Paribas S.A. (Banks)		16,490		936
	Cap Gemini S.A. (IT services)		6,798		632
	Essilor International S.A. (Health care equipment & supplies)		4,895		612
	Total S.A. (Oil, gas & consumable fuels)		22,257		998
	Veolia Environnement S.A. (Multi-utilities)		39,631		942
					4,880
	Germany—5.6%
	BASF SE (Chemicals)		7,234		556
	Bayerische Motoren Werke AG (Automobiles)		5,594		594
	Continental AG (Auto components)		3,817		932
	Fresenius SE & Co. KGaA (Health care providers & services)		10,616		761
	Infineon Technologies AG (Semiconductors & semiconductor equipment)		49,566		727
					3,570
	Italy—1.2%
	Intesa Sanpaolo SpA (Banks)		220,018		738
	Netherlands—6.1%
*	NXP Semiconductor N.V. (Semiconductors & semiconductor equipment)†		7,412		625
	Royal Dutch Shell plc Class “A” (Oil, gas & consumable fuels)		42,796		981
*	Sensata Technologies Holding N.V. (Electrical equipment)†		16,398		755
	Unilever N.V. (Personal products)		35,110		1,530
					3,891
	Spain—1.3%
	Industria de Diseno Textil S.A. (Specialty retail)		24,614		848
	Sweden—2.5%
	Assa Abloy AB Class “B” (Building products)		38,574		814
	Atlas Copco AB Class “A” (Machinery)		32,014		790
					1,604
	Switzerland—4.1%
	Cie Financiere Richemont S.A. (Textiles, apparel & luxury goods)		9,610		692
	Nestle S.A. (Food products)		6,368		474

Issuer	Shares		Value
Common Stocks—(continued)
Europe—(continued)
Switzerland—(continued)
Novartis AG (Pharmaceuticals)		11,363	$	985
Roche Holding AG (Pharmaceuticals)		1,654		456
				2,607
United Kingdom—30.3%
Ashtead Group plc (Trading companies & distributors)		44,586		735
Babcock International Group plc (Commercial services & supplies)		55,752		835
Bunzl plc (Trading companies & distributors)		18,013		501
Capita plc (Professional services)		44,920		800
Compass Group plc (Hotels, restaurants & leisure)		97,633		1,691
Diageo plc (Beverages)		33,719		923
easyJet plc (Airlines)		21,355		548
Experian plc (Professional services)		54,105		958
InterContinental Hotels Group plc (Hotels, restaurants & leisure)		15,954		625
Legal & General Group plc (Insurance)		264,647		1,045
Lloyds Banking Group plc (Banks)		774,444		834
Next plc (Multiline retail)		4,306		463
Prudential plc (Insurance)		41,786		943
Reckitt Benckiser Group plc (Household products)		15,437		1,429
Regus plc (Commercial services & supplies)		125,137		615
RELX plc (Media)		66,762		1,178
Rio Tinto plc (Metals & mining)		39,985		1,167
Schroders plc (Capital markets)		21,895		961
Travis Perkins plc (Trading companies & distributors)		23,780		692
UBM plc (Media)		56,843		441
Wolseley plc (Trading companies & distributors)		18,309		996
WPP plc (Media)		43,058		992
				19,372
Japan—19.7%
Astellas Pharma, Inc. (Pharmaceuticals)		38,400		553
Daikin Industries, Ltd. (Building products)		6,418		475
FANUC Corporation (Machinery)		4,361		765
Fuji Heavy Industries, Ltd. (Automobiles)		22,072		923
Hitachi Capital Corporation (Consumer finance)		19,500		531
Hoya Corporation (Health care equipment & supplies)		17,364		720
Japan Exchange Group, Inc. (Diversified financial services)		43,800		696
Kao Corporation (Personal products)		14,589		759
Keyence Corporation (Electronic equipment, instruments & components)		1,205		673
Mitsubishi UFJ Financial Group, Inc. (Banks)		149,200		940

See accompanying Notes to Financial Statements.

56 Annual Report December 31, 2015

International Equity Fund

Portfolio of Investments, December 31, 2015 (all dollar amounts in thousands)

Issuer	Shares		Value
Common Stocks—(continued)
Japan—(continued)
Murata Manufacturing Co., Ltd. (Electronic equipment, instruments & components)		4,100	$	599
Nihon M&A Center, Inc. (Professional services)		8,470		413
Nippon Prologis REIT, Inc. (Real estate investment trusts (REITs))		253		460
Obic Co., Ltd. (IT services)		8,174		438
ORIX Corporation (Diversified financial services)		57,829		825
SCSK Corporation (IT services)		20,963		852
Seino Holdings Co., Ltd. (Road & rail)		33,383		352
Shimano, Inc. (Leisure products)		3,700		574
Sumitomo Mitsui Financial Group, Inc. (Banks)		17,800		682
Suruga Bank, Ltd. (Banks)		17,394		364
				12,594
Canada—8.6%
Alimentation Couche Tard, Inc. Class “B” (Food & staples retailing)		18,625		820
Brookfield Asset Management, Inc. Class “A” (Real estate management & development)†		20,398		643
Canadian National Railway Co. (Road & rail)†		14,890		832
Canadian Natural Resources, Ltd. (Oil, gas & consumable fuels)		39,374		860
CI Financial Corporation (Capital markets)		20,769		459
Enerplus Corporation (Oil, gas & consumable fuels)		139,946		480
Intact Financial Corporation (Insurance)		7,065		453
The Toronto-Dominion Bank (Banks)†		23,910		937
				5,484
Emerging Asia—4.2%
China—0.6%
China Everbright International, Ltd. (Commercial services & supplies)		305,765		393
India—1.2%
HDFC Bank, Ltd.-ADR (Banks)		12,628		778
Taiwan—2.4%
Largan Precision Co., Ltd. (Electronic equipment, instruments & components)		6,000		415
MediaTek, Inc. (Semiconductors & semiconductor equipment)		56,000		426
Taiwan Semiconductor Manufacturing Co., Ltd.-ADR (Semiconductors & semiconductor equipment)		28,938		658
				1,499
Asia—1.8%
Hong Kong—1.8%
AIA Group, Ltd. (Insurance)		186,186		1,119
Total Common Stocks—98.0% (cost $57,430)				62,614

	Principal
Issuer	Amount		Value
Repurchase Agreement
Fixed Income Clearing Corporation, 0.030% dated 12/31/15, due 1/4/16, repurchase price $953, collateralized by U.S. Treasury Note, 2.375%, due 8/15/24		$953	$	953
Total Repurchase Agreement—1.5% (cost $953)				953
Total Investments—99.5% (cost $58,383)				63,567
Cash and other assets, less liabilities—0.5%				339
Net assets—100.0%			$	63,906

ADR = American Depository Receipt

* Non-income producing securities

† = U.S. listed foreign security

For securities primarily traded on exchanges or markets that close before the close of regular trading on the New York Stock Exchange, the Fund may use an independent pricing service to fair value price the securities pursuant to Valuation Procedures approved by the Board of Trustees.

At December 31, 2015, the Fund’s Portfolio of Investments includes the following industry categories (as a percentage of long-term investments):

Financials	24.1	%
Industrials	20.6	%
Consumer Discretionary	15.9	%
Consumer Staples	11.1	%
Information Technology	9.7	%
Health Care	9.1	%
Energy	5.3	%
Materials	2.7	%
Utilities	1.5	%
Total	100.0	%

At December 31, 2015, the Fund’s Portfolio of Investments includes the following currency categories (as a percentage of long-term investments):

British Pound Sterling	30.9	%
Euro	24.0	%
Japanese Yen	20.1	%
U.S. Dollar	8.4	%
Canadian Dollar	4.9	%
Swiss Franc	4.2	%
Swedish Krona	2.6	%
Hong Kong Dollar	2.4	%
New Taiwan Dollar	1.3	%
Danish Krone	1.2	%
Total	100.0	%

See accompanying Notes to Financial Statements.

December 31, 2015 William Blair Funds 57

	Institutional International Equity Fund
	The Institutional International Equity Fund seeks long-term capital appreciation.
	AN OVERVIEW FROM THE PORTFOLIO MANAGERS
David Merjan John C. Murphy	The William Blair Institutional International Equity Fund posted a 1.91% increase, net of fees, for the twelve months ended December 31, 2015. By comparison, the Fund’s benchmark index, the MSCI World ex-U.S. Index (net) (the “Index”), decreased 3.04%. The Fund’s performance during 2015 was broadly supported by our emphasis on higher-quality, growth-oriented companies. From a sector perspective, Financials stock selection was the leading contributor for the year, bolstered by bank, diversified financial services, and insurance holdings. HDFC Bank (India) was a leading contributor, benefiting from strong growth in retail loans and digital initiatives that drove higher market share. Insurance company AIA Group (Hong Kong) was another notable contributor, benefiting from favorable new business trends despite a volatile macroeconomic environment in Emerging Asia. Consumer Discretionary, Consumer Staples, Industrials, and Information Technology (“IT”) stock selection were also significant contributors to the Fund’s performance. Overall sector positioning was also beneficial—primarily the Fund’s overweightings to Industrials and IT versus the Index, and underweightings to Materials and Energy versus the Index. These positive effects helped to offset poor stock selection in Energy and Materials. Canadian exploration & production companies Enerplus and Canadian Natural Resources were key detractors, hampered by lower oil and gas selling prices. Within Materials, mining company Rio Tinto (U.K.) was hurt by declines in the iron ore price. Swiss-based agricultural chemical company Syngenta suffered from weaker sales and management’s rejection of a takeover offer from U.S.-based seed company Monsanto. From a regional perspective, stock selection was strongest in Europe ex-U.K. and Developed Asia, partially offset by the underweightings to both regions. The overweighting to Canada also detracted from relative performance. Please refer to the Global Markets Review and Outlook relating to the Fund on page 39.

58 Annual Report December 31, 2015

Institutional International Equity Fund

Performance Highlights (Unaudited)

Average Annual Total Return at 12/31/2015
	1 Year			3 Year			5 Year			10 Year
Institutional Class		1.91	%		5.61	%		4.14	%		2.67	%
MSCI World Ex-U.S. Index (net)		(3.04	)		3.93			2.79			2.92

Performance cited represents past performance. Past performance does not guarantee future results and current performance may be lower or higher than the data quoted. Results shown are average annual returns, which assume reinvestment of dividends and capital gains. Investment returns and principal will fluctuate and you may have a gain or loss when you sell shares. For the most current month end performance information, please call 1-800-742-7272, or visit our Web site at www.williamblairfunds.com. From time to time, the investment adviser may waive fees or reimburse expenses for the Fund. Without these waivers/reimbursements, performance would be lower. International investing involves special risk considerations, including currency fluctuations, lower liquidity, economic and political risk. Shares of the Fund are available without a sales load or distribution (12b-1) or service fees.

The performance highlights and graph presented above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

The Morgan Stanley Capital International (MSCI) World Ex-U.S. Index (net) is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets, excluding the United States. This series approximates the minimum possible dividend reinvestment.

This report identifies the Fund’s investments on December 31, 2015. These holdings are subject to change. Not all stocks in the Fund performed the same, nor is there any guarantee that these stocks will perform as well in the future. Market forecasts provided in this report may not necessarily come to pass.

Sector Diversification (Unaudited)

 

The sector diversification shown is based on the total long-term securities.

December 31, 2015 William Blair Funds 59

Institutional International Equity Fund

Portfolio of Investments, December 31, 2015 (all dollar amounts in thousands)

	Issuer	Shares		Value
	Common Stocks
	Europe—34.3%
	Belgium—3.0%
	Anheuser-Busch InBev N.V. (Beverages)		2,046	$	254
	UCB S.A. (Pharmaceuticals)		2,408		218
					472
	Denmark—1.2%
	Novo Nordisk A/S Class “B” (Pharmaceuticals)		3,204		187
	Finland—1.0%
	Kone Oyj Class ’‘B’’ (Machinery)		3,904		166
	France—7.7%
	AXA S.A. (Insurance)		7,010		192
	BNP Paribas S.A. (Banks)		4,171		237
	Cap Gemini S.A. (IT services)		1,721		160
	Essilor International S.A. (Health care equipment & supplies)		1,239		155
	Total S.A. (Oil, gas & consumable fuels)		5,650		253
	Veolia Environnement S.A. (Multi-utilities)		10,025		238
					1,235
	Germany—5.7%
	BASF SE (Chemicals)		1,858		143
	Bayerische Motoren Werke AG (Automobiles)		1,437		153
	Continental AG (Auto components)		980		239
	Fresenius SE & Co. KGaA (Health care providers & services)		2,726		195
	Infineon Technologies AG (Semiconductors & semiconductor equipment)		12,728		187
					917
	Italy—1.2%
	Intesa Sanpaolo SpA (Banks)		56,505		190
	Netherlands—6.1%
*	NXP Semiconductor N.V. (Semiconductors & semiconductor equipment)†		1,874		158
	Royal Dutch Shell plc Class “A” (Oil, gas & consumable fuels)		10,846		249
*	Sensata Technologies Holding N.V. (Electrical equipment)†		4,148		191
	Unilever N.V. (Personal products)		8,882		387
					985
	Spain—1.3%
	Industria de Diseno Textil S.A. (Specialty retail)		6,226		214
	Sweden—2.6%
	Assa Abloy AB Class “B” (Building products)		9,907		209
	Atlas Copco AB Class “A” (Machinery)		8,222		203
					412
	Switzerland—4.5%
	Cie Financiere Richemont S.A. (Textiles, apparel & luxury goods)		2,468		178
	Nestle S.A. (Food products)		1,635		122
	Novartis AG (Pharmaceuticals)		2,926		253

Issuer	Shares		Value
Common Stocks—(continued)
Europe—(continued)
Switzerland—(continued)
Roche Holding AG (Pharmaceuticals)		608	$	168
				721
United Kingdom—30.6%
Ashtead Group plc (Trading companies & distributors)		11,307		186
Babcock International Group plc (Commercial services & supplies)		14,102		211
Bunzl plc (Trading companies & distributors)		4,556		127
Capita plc (Professional services)		11,363		202
Compass Group plc (Hotels, restaurants & leisure)		24,696		428
Diageo plc (Beverages)		8,526		233
easyJet plc (Airlines)		5,399		138
Experian plc (Professional services)		13,686		242
InterContinental Hotels Group plc (Hotels, restaurants & leisure)		4,035		158
Legal & General Group plc (Insurance)		67,092		265
Lloyds Banking Group plc (Banks)		195,895		211
Next plc (Multiline retail)		1,089		117
Prudential plc (Insurance)		10,570		239
Reckitt Benckiser Group plc (Household products)		3,905		362
Regus plc (Commercial services & supplies)		31,737		156
RELX plc (Media)		16,881		298
Rio Tinto plc (Metals & mining)		10,133		296
Schroders plc (Capital markets)		5,544		243
Travis Perkins plc (Trading companies & distributors)		6,030		175
UBM plc (Media)		14,378		112
Wolseley plc (Trading companies & distributors)		4,631		252
WPP plc (Media)		10,892		251
				4,902
Japan—20.1%
Astellas Pharma, Inc. (Pharmaceuticals)		9,838		142
Daikin Industries, Ltd. (Building products)		1,606		119
FANUC Corporation (Machinery)		1,100		193
Fuji Heavy Industries, Ltd. (Automobiles)		5,700		238
Hitachi Capital Corporation (Consumer finance)		5,000		136
Hoya Corporation (Health care equipment & supplies)		4,500		187
Japan Exchange Group, Inc. (Diversified financial services)		11,200		178
Kao Corporation (Personal products)		3,700		193
Keyence Corporation (Electronic equipment, instruments & components)		300		167
Mitsubishi UFJ Financial Group, Inc. (Banks)		38,300		241

See accompanying Notes to Financial Statements.

60 Annual Report December 31, 2015

Institutional International Equity Fund

Portfolio of Investments, December 31, 2015 (all dollar amounts in thousands)

Issuer	Shares		Value
Common Stocks—(continued)
Japan—(continued)
Murata Manufacturing Co., Ltd. (Electronic equipment, instruments & components)		1,100	$	161
Nihon M&A Center, Inc. (Professional services)		2,200		107
Nippon Prologis REIT, Inc. (Real estate investment trusts (REITs))		65		118
Obic Co., Ltd. (IT services)		2,100		113
ORIX Corporation (Diversified financial services)		14,812		211
SCSK Corporation (IT services)		5,383		219
Seino Holdings Co., Ltd. (Road & rail)		8,826		93
Shimano, Inc. (Leisure products)		900		140
Sumitomo Mitsui Financial Group, Inc. (Banks)		4,600		176
Suruga Bank, Ltd. (Banks)		4,268		89
				3,221
Canada—8.6%
Alimentation Couche Tard, Inc. Class “B” (Food & staples retailing)		4,711		207
Brookfield Asset Management, Inc. Class “A” (Real estate management & development)†		5,172		163
Canadian National Railway Co. (Road & rail)†		3,766		210
Canadian Natural Resources, Ltd. (Oil, gas & consumable fuels)		9,960		218
CI Financial Corporation (Capital markets)		5,254		116
Enerplus Corporation (Oil, gas & consumable fuels)		35,147		121
Intact Financial Corporation (Insurance)		1,787		115
The Toronto-Dominion Bank (Banks)†		6,048		237
				1,387
Emerging Asia—4.0%
China—0.6%
China Everbright International, Ltd. (Commercial services & supplies)		77,037		99
India—1.2%
HDFC Bank, Ltd.-ADR (Banks)		3,194		197
Taiwan—2.2%
Largan Precision Co., Ltd. (Electronic equipment, instruments & components)		1,000		69
MediaTek, Inc. (Semiconductors & semiconductor equipment)		14,000		106
Taiwan Semiconductor Manufacturing Co., Ltd.-ADR (Semiconductors & semiconductor equipment)		7,344		167
				342
Asia—1.8%
Hong Kong—1.8%
AIA Group, Ltd. (Insurance)		47,071		283
Total Common Stocks—99.4% (cost $15,115)				15,930

	Principal
Issuer	Amount		Value
Repurchase Agreement
Fixed Income Clearing Corporation, 0.030% dated 12/31/15, due 1/4/16, repurchase price $119, collateralized by FNMA, 2.625%, due 9/6/24	$	119	$	119
Total Repurchase Agreement—0.7% (cost $119)				119
Total Investments—100.1% (cost $15,234)				16,049
Liabilities, plus cash and other assets—(0.1)%				(19	)
Net assets—100.0%			$	16,030

ADR = American Depository Receipt

* Non-income producing securities

† = U.S. listed foreign security

For securities primarily traded on exchanges or markets that close before the close of regular trading on the New York Stock Exchange, the Fund may use an independent pricing service to fair value price the securities pursuant to Valuation Procedures approved by the Board of Trustees.

At December 31, 2015, the Fund’s Portfolio of Investments includes the following industry categories (as a percentage of long-term investments):

Financials	24.0	%
Industrials	20.6	%
Consumer Discretionary	15.9	%
Consumer Staples	11.0	%
Information Technology	9.5	%
Health Care	9.4	%
Energy	5.3	%
Materials	2.8	%
Utilities	1.5	%
Total	100.0	%

At December 31, 2015, the Fund’s Portfolio of Investments includes the following currency categories (as a percentage of long-term investments):

British Pound Sterling	30.8	%
Euro	24.0	%
Japanese Yen	20.2	%
U.S. Dollar	8.3	%
Canadian Dollar	4.9	%
Swiss Franc	4.5	%
Swedish Krona	2.6	%
Hong Kong Dollar	2.4	%
Danish Krone	1.2	%
New Taiwan Dollar	1.1	%
Total	100.0	%

See accompanying Notes to Financial Statements.

December 31, 2015 William Blair Funds 61

	International Growth Fund
	The International Growth Fund seeks long-term capital appreciation.
	AN OVERVIEW FROM THE PORTFOLIO MANAGERS
Jeffrey A. Urbina   Simon Fennell Stephanie G. Braming	The William Blair International Growth Fund (Class N shares) posted a 0.27% decrease, net of fees, for the twelve months ended December 31, 2015. By comparison, the Fund’s benchmark index, the MSCI All Country World ex-U.S. IMI Index (net) (the “Index”), decreased 4.60%. The Fund’s outperformance relative to Index during 2015 benefited from favorable style tailwinds, as higher-quality, growth-oriented companies with relatively strong earnings trends and price momentum generally outperformed on a global basis. Stock selection was strong across most sectors and regions during the year. From a sector perspective, Financials and Consumer Discretionary stock selection were leading contributors to relative performance. The Fund’s overweightings to Consumer Discretionary and Information Technology, and underweightings to Energy and Materials were also positive. Within Financials, stock selection was positive across all industries, and the underweighting to banks was favorable amid the low interest rate environment. Insurance company AXA (France) was a leading contributor, benefiting from solid business trends and stable capital coverage despite macroeconomic volatility. Within Consumer Discretionary, Japanese automaker Fuji Heavy Industries and U.K. media company ITV were notable contributors. Fuji Heavy benefitted from positive sales trends and its plans to expand their production capacity in North America where it has been straining to meet record demand for Subaru vehicles, in addition to an increased dividend payout. ITV was supported by favorable growth in its production studios business and audience share gains. These positive effects were partially mitigated by Consumer Staples stock selection, as Latin American beverage company Ambev declined on broad macroeconomic weakness, despite posting solid volume growth in its core Brazilian beer business. Energy stock selection also detracted, hampered by oil pipeline company Enbridge (Canada) and exploration & production company Canadian Natural Resources. From a regional perspective, Europe ex-U.K. stock selection was the leading contributor to 2015 performance, benefiting from relative strength in European Consumer Discretionary, Healthcare, Financials and Technology holdings. In contrast, stock selection in Emerging EMEA (Europe, the Middle East and Africa) and Latin America detracted, but these effects were mitigated by the Fund’s underweight positions. Please refer to the Global Markets Review and Outlook relating to the Fund on page 39.

62 Annual Report December 31, 2015

International Growth Fund

Performance Highlights (Unaudited)

Average Annual Total Return at 12/31/2015

	1 Year			3 Year			5 Year			10 Year
Class N		(0.27	)%		4.61	%		3.89	%		3.66	%
Class I		(0.03	)		4.92			4.19			3.97
MSCI ACW Ex-U.S. IMI (net)		(4.60	)		2.02			1.27			3.18

Performance cited represents past performance. Past performance does not guarantee future results and current performance may be lower or higher than the data quoted. Results shown are average annual total returns, which assume reinvestment of dividends and capital gains. Investment returns and principal will fluctuate and you may have a gain or loss when you sell shares. For the most current month-end performance information, please call 1-800-742-7272, or visit our Web site at www.williamblairfunds.com. From time to time, the investment adviser may waive fees or reimburse expenses for the Fund. Without these waivers/reimbursements, performance would be lower. International investing involves special risk considerations, including currency fluctuations, lower liquidity, economic and political risk. Class N shares are available to the general public without a sales load. Class I shares are available to certain institutional investors and advisory clients of William Blair Investment Management, LLC and William Blair & Company, L.L.C., without a sales load or distribution (12b-1) or service fees.

The performance highlights and graph presented above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

The Morgan Stanley Capital International (MSCI) All Country World (ACW) Ex-U.S. Investable Market Index (IMI) (net) is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets, excluding the United States. This series approximates the minimum possible dividend reinvestment.

This report identifies the Fund’s investments on December 31, 2015. These holdings are subject to change. Not all stocks in the Fund performed the same, nor is there any guarantee that these stocks will perform as well in the future. Market forecasts provided in this report may not necessarily come to pass.

Sector Diversification (Unaudited)

 

The sector diversification shown is based on the total long-term securities.

December 31, 2015 William Blair Funds 63

International Growth Fund

Portfolio of Investments, December 31, 2015 (all dollar amounts in thousands)

	Issuer	Shares		Value
	Common Stocks
	Europe, Mid-East—37.3%
	Belgium—1.1%
	KBC Groep N.V. (Banks)		487,276	$	30,539
*	Telenet Group Holding N.V. (Media)		192,448		10,409
					40,948
	Denmark—2.0%
	DSV A/S (Road & rail)		136,350		5,395
	Novo Nordisk A/S Class “B” (Pharmaceuticals)		337,057		19,628
	Novozymes A/S Class “B” (Chemicals)		257,349		12,389
	Pandora A/S (Textiles, apparel & luxury goods)		199,460		25,327
	Vestas Wind Systems A/S (Electrical equipment)		129,675		9,136
					71,875
	Finland—1.9%
	Elisa Oyj (Diversified telecommunication services)		199,920		7,559
	Kone Oyj Class ’‘B’’ (Machinery)		433,337		18,446
	Sampo Oyj Class ’‘A’’ (Insurance)		850,691		43,451
					69,456
	France—8.4%
	AXA S.A. (Insurance)		2,058,989		56,455
	Cap Gemini S.A. (IT services)		397,868		37,012
	Christian Dior SE (Textiles, apparel & luxury goods)		94,184		16,044
	Essilor International S.A. (Health care equipment & supplies)		115,753		14,473
	Hermes International (Textiles, apparel & luxury goods)		31,445		10,653
	Orpea (Health care providers & services)		71,730		5,751
	Rubis SCA (Gas utilities)		25,079		1,906
	Safran S.A. (Aerospace & defense)		349,422		24,064
	Technicolor S.A. (Media)		236,713		1,924
	Thales S.A. (Aerospace & defense)		151,770		11,397
	Total S.A. (Oil, gas & consumable fuels)		1,116,595		50,073
	Unibail-Rodamco SE (Real estate investment trusts (REITs))		50,885		12,962
	Valeo S.A. (Auto components)		243,812		37,771
	Veolia Environnement S.A. (Multi-utilities)		1,175,107		27,923
					308,408
	Germany—5.2%
	Bayerische Motoren Werke AG (Automobiles)		293,272		31,116
	Brenntag AG (Trading companies & distributors)		288,748		15,150
	Continental AG (Auto components)		180,897		44,144
	Deutsche Wohnen AG (Real estate management & development)		290,485		8,086
	Evonik Industries AG (Chemicals)		230,859		7,681
	Gerresheimer AG (Life sciences tools & services)		70,834		5,557
	ProSiebenSat.1 Media SE (Media)		576,186		29,283
	SAP SE (Software)		186,767		14,894

	Issuer	Shares		Value
	Common Stocks—(continued)
	Europe, Mid-East—(continued)
	Germany—(continued)
	TUI AG (Hotels, restaurants & leisure)		1,045,402	$	19,070
	Vonovia SE (Real estate management & development)		260,687		8,088
*	Zalando SE-144A (Internet & catalog retail)		223,753		8,851
					191,920
	Ireland—1.1%
*	ICON plc (Life sciences tools & services)†		260,333		20,228
	Kingspan Group plc (Building products)		304,322		8,040
	Smurfit Kappa Group plc (Containers & packaging)		507,810		12,991
					41,259
	Israel—2.4%
*	Check Point Software Technologies, Ltd. (Software)†		398,631		32,440
	Teva Pharmaceutical Industries, Ltd.— ADR (Pharmaceuticals)		867,883		56,968
					89,408
	Italy—2.4%
	Azimut Holding SpA (Capital markets)		470,284		11,786
	Banca Generali SpA (Capital markets)		464,919		14,743
	Intesa Sanpaolo SpA (Banks)		16,383,525		54,981
*	Yoox Net-A—Porter Group SpA (Internet & catalog retail)		185,003		6,946
					88,456
	Luxembourg—0.3%
	Eurofins Scientific SE (Life sciences tools & services)		29,922		10,466
	Netherlands—2.5%
*	NXP Semiconductor N.V. (Semiconductors & semiconductor equipment)†		382,780		32,249
	Royal Dutch Shell plc Class “A” (Oil, gas & consumable fuels)		1,620,167		37,142
	Wolters Kluwer N.V. (Media)		664,991		22,378
					91,769
	Norway—0.5%
	Gjensidige Forsikring ASA (Insurance)		315,214		5,060
	Telenor ASA (Diversified telecommunication services)		886,430		14,851
					19,911
	Portugal—0.4%
	Jeronimo Martins SGPS S.A. (Food & staples retailing)		806,390		10,512
	NOS SGPS S.A. (Media)		704,590		5,548
					16,060
	Spain—3.0%
	Amadeus IT Holding S.A. Class “A” (IT services)		758,010		33,515
	Banco Bilbao Vizcaya Argentaria S.A. (Banks)		3,306,072		24,213
	Bankinter S.A. (Banks)		2,183,871		15,531

See accompanying Notes to Financial Statements.

64 Annual Report December 31, 2015

International Growth Fund

Portfolio of Investments, December 31, 2015 (all dollar amounts in thousands)

	Issuer	Shares		Value
	Common Stocks—(continued)
	Europe, Mid-East—(continued)
	Spain—(continued)
*	Distribuidora Internacional de Alimentacion S.A. (Food & staples retailing)		1,381,287	$	8,172
	Industria de Diseno Textil S.A. (Specialty retail)		645,840		22,242
	Viscofan S.A. (Food products)		86,876		5,253
					108,926
	Sweden—2.0%
	Assa Abloy AB Class “B” (Building products)		780,636		16,461
	Atlas Copco AB Class “A” (Machinery)		1,239,965		30,612
	BillerudKorsnas AB (Containers & packaging)		183,850		3,424
	Hexpol AB (Chemicals)		585,232		6,316
	Intrum Justitia AB (Commercial services & supplies)		181,992		6,222
	Swedbank AB Class “A” (Banks)		447,144		9,910
					72,945
	Switzerland—4.1%
*	Actelion, Ltd. (Biotechnology)		193,866		27,020
	Cie Financiere Richemont S.A. (Textiles, apparel & luxury goods)		278,054		20,016
*	Clariant AG (Chemicals)		900,380		17,089
*	Lonza Group AG (Life sciences tools & services)		94,262		15,350
*	Luxoft Holding, Inc. (IT services)†		79,482		6,130
	Nestle S.A. (Food products)		400,521		29,811
	Partners Group Holding AG (Capital markets)		84,294		30,403
	Straumann Holding AG (Health care equipment & supplies)		19,501		5,938
					151,757
	Japan—19.2%
	Alps Electric Co., Ltd. (Electronic equipment, instruments & components)		303,500		8,371
	Casio Computer Co., Ltd. (Household durables)		584,300		13,840
	Daicel Corporation (Chemicals)		874,200		13,194
	Daifuku Co., Ltd. (Machinery)		356,026		6,146
	Daikin Industries, Ltd. (Building products)		370,500		27,437
	Daiwa House Industry Co., Ltd. (Real estate management & development)		686,400		20,005
	FANUC Corporation (Machinery)		111,000		19,467
	Fuji Electric Co., Ltd. (Electrical equipment)		1,235,000		5,251
	Fuji Heavy Industries, Ltd. (Automobiles)		1,466,300		61,326
	Haseko Corporation (Household durables)		453,100		5,082
	Hitachi Capital Corporation (Consumer finance)		171,000		4,659
	Hoya Corporation (Health care equipment & supplies)		995,300		41,246
	IT Holdings Corporation (IT services)		241,100		5,582
	Japan Tobacco, Inc. (Tobacco)		664,200		24,707

Issuer	Shares		Value
Common Stocks—(continued)
Japan—(continued)
Kao Corporation (Personal products)		390,000	$	20,296
KDDI Corporation (Wireless telecommunication services)		1,144,900		30,043
Keyence Corporation (Electronic equipment, instruments & components)		49,900		27,849
M3, Inc. (Health care technology)		381,800		8,011
Makita Corporation (Machinery)		178,400		10,434
Mitsubishi UFJ Financial Group, Inc. (Banks)		4,246,600		26,749
Murata Manufacturing Co., Ltd. (Electronic equipment, instruments & components)		326,100		47,669
Nissan Chemical Industries, Ltd. (Chemicals)		280,900		6,471
Nitori Holdings Co., Ltd. (Specialty retail)		68,200		5,805
Nomura Research Institute, Ltd. (IT services)		487,300		18,933
ORIX Corporation (Diversified financial services)		3,878,100		55,351
Pola Orbis Holdings, Inc. (Personal products)		80,800		5,391
Sawai Pharmaceutical Co., Ltd. (Pharmaceuticals)		70,000		4,840
SCSK Corporation (IT services)		199,500		8,108
Secom Co., Ltd. (Commercial services & supplies)		143,000		9,803
Shionogi & Co., Ltd. (Pharmaceuticals)		470,600		21,546
Sumitomo Mitsui Financial Group, Inc. (Banks)		1,197,900		45,905
Suruga Bank, Ltd. (Banks)		857,000		17,918
Sysmex Corporation (Health care equipment & supplies)		114,500		7,459
Tadano, Ltd. (Machinery)		616,000		7,565
Taisei Corporation (Construction & engineering)		2,626,000		17,478
Temp Holdings Co., Ltd. (Professional services)		377,100		5,914
Tokio Marine Holdings, Inc. (Insurance)		585,500		22,953
Trend Micro, Inc. (Software)		165,200		6,776
Tsuruha Holdings, Inc. (Food & staples retailing)		106,400		9,304
				704,884
United Kingdom—15.5%
Berkeley Group Holdings plc (Household durables)		299,036		16,258
BT Group plc (Diversified telecommunication services)		5,974,173		41,543
Bunzl plc (Trading companies & distributors)		617,308		17,154
Capita plc (Professional services)		827,080		14,729
Compass Group plc (Hotels, restaurants & leisure)		1,683,634		29,164
Derwent London plc (Real estate investment trusts (REITs))		177,933		9,632
easyJet plc (Airlines)		1,395,296		35,791

See accompanying Notes to Financial Statements.

December 31, 2015 William Blair Funds 65

International Growth Fund

Portfolio of Investments, December 31, 2015 (all dollar amounts in thousands)

	Issuer	Shares		Value
	Common Stocks—(continued)
	United Kingdom—(continued)
	Halma plc (Electronic equipment, instruments & components)		556,396	$	7,095
	Hiscox, Ltd. (Insurance)		625,548		9,720
	Inchcape plc (Distributors)		739,132		8,554
	InterContinental Hotels Group plc (Hotels, restaurants & leisure)		410,482		16,084
	Intertek Group plc (Professional services)		131,495		5,383
	ITV plc (Media)		10,450,899		42,615
	Micro Focus International plc (Software)		303,894		7,146
	Next plc (Multiline retail)		239,059		25,692
	Provident Financial plc (Consumer finance)		386,524		19,186
	Prudential plc (Insurance)		2,284,686		51,565
	Reckitt Benckiser Group plc (Household products)		198,879		18,415
	RELX plc (Media)		1,278,898		22,568
	Schroders plc (Capital markets)		223,792		9,818
	SSE plc (Electric utilities)		611,457		13,774
	Taylor Wimpey plc (Household durables)		3,608,567		10,804
	The Sage Group plc (Software)		1,101,094		9,796
	UBM plc (Media)		703,254		5,458
	Unilever plc (Personal products)		1,298,470		56,019
	WH Smith plc (Specialty retail)		213,710		5,573
	Whitbread plc (Hotels, restaurants & leisure)		249,269		16,173
	Wolseley plc (Trading companies & distributors)		269,336		14,655
	WPP plc (Media)		1,275,264		29,384
					569,748
	Emerging Asia—11.5%
	China—5.3%
*	Alibaba Group Holding, Ltd.—ADR (Internet software & services)		154,251		12,536
*	Baidu, Inc.-ADR (Internet software & services)		104,391		19,734
	China Overseas Land & Investment, Ltd. (Real estate management & development)		6,950,000		24,303
	China Resources Land, Ltd. (Real estate management & development)		6,826,000		19,905
	China Vanke Co., Ltd. Class “H” (Real estate management & development)**§		5,760,200		17,020
	ENN Energy Holdings, Ltd. (Gas utilities)		1,902,000		10,099
	Geely Automobile Holdings, Ltd. (Automobiles)		10,555,000		5,625
	NetEase, Inc.—ADR (Internet software & services)		98,302		17,816
	Ping An Insurance Group Co. of China, Ltd. Class “H” (Insurance)		7,353,000		40,702
	Tencent Holdings, Ltd. (Internet software & services)		1,401,600		27,616
					195,356
	India—1.5%
	Axis Bank, Ltd. (Banks)		1,753,066		11,918
	HDFC Bank, Ltd. (Banks)		955,180		15,617

	Issuer	Shares		Value
	Common Stocks—(continued)
	Emerging Asia—(continued)
	India—(continued)
	Housing Development Finance Corporation, Ltd. (Thrifts & mortgage finance)		570,187	$	10,890
	Maruti Suzuki India, Ltd. (Automobiles)		154,337		10,778
	Yes Bank, Ltd. (Banks)		475,134		5,214
					54,417
	Indonesia—0.2%
	PT Bank Central Asia Tbk (Banks)		7,871,100		7,594
	South Korea—1.8%
*	Amorepacific Corporation (Personal products)		19,147		6,769
*	LG Chem, Ltd. (Chemicals)		31,440		8,808
	Samsung Electronics Co., Ltd. (Technology hardware, storage & peripherals)		39,019		41,929
*	SK Hynix, Inc. (Semiconductors & semiconductor equipment)		363,810		9,541
					67,047
	Taiwan—2.7%
	Catcher Technology Co., Ltd. (Technology hardware, storage & peripherals)		1,169,000		9,823
	Delta Electronics, Inc. (Electronic equipment, instruments & components)		2,670,106		12,640
	Fubon Financial Holding Co., Ltd. (Diversified financial services)		8,204,000		11,239
	Largan Precision Co., Ltd. (Electronic equipment, instruments & components)		101,000		6,980
	MediaTek, Inc. (Semiconductors & semiconductor equipment)		942,000		7,170
	Taiwan Semiconductor Manufacturing Co., Ltd.—ADR (Semiconductors & semiconductor equipment)		2,170,630		49,382
					97,234
	Asia—4.9%
	Australia—1.3%
	Challenger, Ltd. (Diversified financial services)		800,465		5,086
	Flight Centre Travel Group Ltd. (Hotels, restaurants & leisure)		193,094		5,613
	LendLease Group (Real estate management & development)		625,992		6,505
	Macquarie Group, Ltd. (Capital markets)		514,195		31,014
					48,218
	Hong Kong—2.6%
	AIA Group, Ltd. (Insurance)		12,808,000		77,013
*	China High Precision Automation Group, Ltd. (Electronic equipment, instruments & components)**§		6,597,000		17
	Techtronic Industries Co., Ltd. (Household durables)		4,462,500		18,195
					95,225

See accompanying Notes to Financial Statements.

66 Annual Report December 31, 2015

International Growth Fund

Portfolio of Investments, December 31, 2015 (all dollar amounts in thousands)

	Issuer	Shares		Value
	Common Stocks—(continued)
	Asia—(continued)
	Singapore—1.0%
	DBS Group Holdings, Ltd. (Banks)		1,848,100	$	21,754
	Singapore Telecommunications, Ltd. (Diversified telecommunication services)		6,675,500		17,278
					39,032
	Canada—4.7%
	Alimentation Couche Tard, Inc. Class “B” (Food & staples retailing)		408,135		17,966
	Brookfield Asset Management, Inc. Class “A” (Real estate management & development)†		945,515		29,812
	CI Financial Corporation (Capital markets)		896,575		19,828
	Constellation Software, Inc. (Software)		16,136		6,727
	Dollarama, Inc. (Multiline retail)		222,841		12,874
	Enbridge, Inc. (Oil, gas & consumable fuels)		778,159		25,869
	Intact Financial Corporation (Insurance)		163,682		10,490
	Suncor Energy, Inc. (Oil, gas & consumable fuels)		931,545		24,048
	The Toronto-Dominion Bank (Banks)		630,912		24,731
					172,345
	Emerging Europe, Mid-East, Africa—1.7%
	Russia—0.1%
*	Yandex N.V. Class “A” (Internet software & services)†		329,570		5,181
	South Africa—1.4%
	Bidvest Group, Ltd. (Industrial conglomerates)		349,340		7,414
	Naspers, Ltd. (Media)		179,121		24,555
	Steinhoff International Holdings N.V. (Household durables)		4,082,929		20,727
					52,696
	United Arab Emirates—0.2%
	Dubai Islamic Bank PJSC (Banks)		3,245,647		5,461
	Emerging Latin America—1.6%
	Brazil—0.9%
	AMBEV S.A.—ADR (Beverages)		5,748,534		25,638
	BB Seguridade Participacoes S.A. (Insurance)		1,409,000		8,665
					34,303
	Mexico—0.4%
	Arca Continental S.A.B. de C.V. (Beverages)		1,078,994		6,554
	Fomento Economico Mexicano S.A.B. de C.V.—ADR (Beverages)		83,581		7,719
					14,273
	Peru—0.3%
	Credicorp, Ltd. (Banks)†		93,000		9,051

	Shares or
	Principal
Issuer	Amount		Value
Common Stocks—(continued)
Total Common Stocks—96.4% (cost $3,236,178)			$	3,545,629
Preferred Stock
Brazil—0.2%
Itau Unibanco Holding S.A. (Banks)		955,600		6,360
Total Preferred Stock—0.2% (cost $7,358)				6,360
Affiliated Fund
China—0.1%
William Blair China A-Share Fund, LLC**§		223,614		3,928
Total Affiliated Fund—0.1% (cost $2,236)				3,928
Repurchase Agreement
Fixed Income Clearing Corporation, 0.030% dated 12/31/15, due 1/4/16, repurchase price $113,846, collateralized by FNMA, 2.625%, due 9/6/24, and U.S. Treasury Note, 2.375%, due 8/15/24		$113,846		113,846
Total Repurchase Agreement—3.1% (cost $113,846)				113,846
Total Investments—99.8% (cost $3,359,618)				3,669,763
Cash and other assets, less liabilities—0.2%				8,981
Net assets—100.0%			$	3,678,744

ADR = American Depository Receipt

* Non-income producing securities

† = U.S. listed foreign security

** = Fair valued pursuant to Valuation Procedures approved by the Board of Trustees. These holdings represent 0.57% of the Fund’s net assets at December 31, 2015.

§ = Deemed illiquid pursuant to Liquidity Procedures approved by the Board of Trustees. These holdings represent 0.57% of the Fund’s net assets at December 31, 2015.

For securities primarily traded on exchanges or markets that close before the close of regular trading on the New York Stock Exchange, the Fund may use an independent pricing service to fair value price the securities pursuant to Valuation Procedures approved by the Board of Trustees.

See accompanying Notes to Financial Statements.

December 31, 2015 William Blair Funds 67

International Growth Fund

Portfolio of Investments, December 31, 2015 (all dollar amounts in thousands)

At December 31, 2015, the Fund’s Portfolio of Investments includes the following industry categories (as a percentage of long-term investments):

Financials	29.2	%
Consumer Discretionary	20.5	%
Information Technology	15.0	%
Industrials	9.8	%
Health Care	7.4	%
Consumer Staples	7.1	%
Energy	3.9	%
Telecommunication Services	3.1	%
Materials	2.5	%
Utilities	1.5	%
Total	100.0	%

At December 31, 2015, the Fund’s Portfolio of Investments includes the following currency categories (as a percentage of long-term investments):

Euro	25.7	%
Japanese Yen	19.8	%
British Pound Sterling	16.0	%
U.S. Dollar	9.3	%
Hong Kong Dollar	6.8	%
Swiss Franc	4.1	%
Canadian Dollar	4.0	%
Swedish Krona	2.1	%
Danish Krone	2.0	%
South Korean Won	1.9	%
Indian Rupee	1.5	%
South African Rand	1.5	%
Australian Dollar	1.4	%
New Taiwan Dollar	1.3	%
Singapore Dollar	1.1	%
All Other Currencies	1.5	%
Total	100.0	%

As of December 31, 2015, the Fund invested in William Blair China A-Share Fund, LLC, an affiliated fund. There are no unfunded commitments to the affiliated fund. The Fund may redeem its investment weekly, but is subject to monthly repatriation and other redemption restrictions imposed on the William Blair China A-Share Fund, LLC by the Chinese government.

	Share Activity				Year ended December 31, 2015
								Change in net
								unrealized
	Balance			Balance		Dividend	Net realized	appreciation
Fund Name	12/31/2014	Purchases	Sales	12/31/2015	Value	Income	gain (loss)	(depreciation)
William Blair China A-Share Fund, LLC	2,202,200	—	1,978,586	223,614	$3,928	$—	$18,124	$(9,385)

See accompanying Notes to Financial Statements.

68 Annual Report December 31, 2015

	Institutional International Growth Fund
	The Institutional International Growth Fund seeks long-term capital appreciation.
	AN OVERVIEW FROM THE PORTFOLIO MANAGERS
Jeffrey A. Urbina Simon Fennell Stephanie G. Braming	The William Blair Institutional International Growth Fund (Class N shares) posted a 0.09% increase, net of fees, for the twelve months ended December 31, 2015. By comparison, the Fund’s benchmark index, the MSCI All Country World ex-U.S. IMI Index (net) (the “Index”), decreased 4.60%. The Fund’s outperformance relative to Index during 2015 benefited from favorable style tailwinds, as higher-quality, growth-oriented companies with relatively strong earnings trends and price momentum generally outperformed on a global basis. Stock selection was strong across most sectors and regions during the year. From a sector perspective, Financials and Consumer Discretionary stock selection were leading contributors to relative performance. The Fund’s overweightings to Consumer Discretionary and Information Technology, and underweightings to Energy and Materials were also positive. Within Financials, stock selection was positive across all industries, and the underweighting to banks was favorable amid the low interest rate environment. Insurance company AXA (France) was a leading contributor, benefiting from solid business trends and stable capital coverage despite macroeconomic volatility. Within Consumer Discretionary, Japanese automaker Fuji Heavy Industries and U.K. media company ITV were notable contributors. Fuji Heavy benefitted from positive sales trends and its plans to expand their production capacity in North America where it has been straining to meet record demand for Subaru vehicles, in addition to an increased dividend payout. ITV was supported by favorable growth in its production studios business and audience share gains. These positive effects were partially mitigated by Consumer Staples stock selection, as Latin American beverage company Ambev declined on broad macroeconomic weakness, despite posting solid volume growth in its core Brazilian beer business. Energy stock selection also detracted, hampered by oil pipeline company Enbridge (Canada) and exploration & production company Canadian Natural Resources. From a regional perspective, Europe ex-U.K. stock selection was the leading contributor to 2015 performance, benefiting from relative strength in European Consumer Discretionary, Healthcare, Financials and Technology holdings. In contrast, stock selection in Emerging EMEA (Europe, the Middle East and Africa) and Latin America detracted, but these effects were mitigated by the Fund’s underweight positions. Please refer to the Global Markets Review and Outlook relating to the Fund on page 39.

December 31, 2015 William Blair Funds 69

Institutional International Growth Fund

Performance Highlights (Unaudited)

Average Annual Total Return at 12/31/2015
	1 Year			3 Year			5 Year			10 Year
Institutional Class		0.09	%		5.02	%		4.42	%		4.11	%
MSCI ACW Ex-U.S. IMI (net)		(4.60	)		2.02			1.27			3.18

Performance cited represents past performance. Past performance does not guarantee future results and current performance may be lower or higher than the data quoted. Results shown are average annual returns, which assume reinvestment of dividends and capital gains. Investment returns and principal will fluctuate and you may have a gain or loss when you sell shares. For the most current month-end performance information, please call 1-800-742-7272, or visit our Web site at www.williamblairfunds.com. International investing involves special risk considerations, including currency fluctuations, lower liquidity, economic and political risk. Shares of the Fund are available without a sales load or distribution (12b-1) or service fees.

The performance highlights and graph presented above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

The Morgan Stanley Capital International (MSCI) All Country World (ACW) Ex-U.S. Investable Market Index (IMI) (net) is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets, excluding the United States. This series approximates the minimum possible dividend reinvestment.

This report identifies the Fund’s investments on December 31, 2015. These holdings are subject to change. Not all stocks in the Fund performed the same, nor is there any guarantee that these stocks will perform as well in the future. Market forecasts provided in this report may not necessarily come to pass.

Sector Diversification (Unaudited)

The sector diversification shown is based on the total long-term securities.

70 Annual Report December 31, 2015

Institutional International Growth Fund

Portfolio of Investments, December 31, 2015 (all dollar amounts in thousands)

	Issuer	Shares		Value
	Common Stocks
	Europe, Mid-East—37.4%
	Belgium—1.1%
	KBC Groep N.V. (Banks)		309,235	$	19,380
*	Telenet Group Holding N.V. (Media)		122,131		6,606
					25,986
	Denmark—2.0%
	DSV A/S (Road & rail)		86,550		3,424
	Novo Nordisk A/S Class “B” (Pharmaceuticals)		213,903		12,456
	Novozymes A/S Class “B” (Chemicals)		163,319		7,863
	Pandora A/S (Textiles, apparel & luxury goods)		126,581		16,073
	Vestas Wind Systems A/S (Electrical equipment)		84,125		5,927
					45,743
	Finland—1.9%
	Elisa Oyj (Diversified telecommunication services)		126,873		4,797
	Kone Oyj Class “B” (Machinery)		275,005		11,706
	Sampo Oyj Class “A” (Insurance)		539,866		27,575
					44,078
	France—8.4%
	AXA S.A. (Insurance)		1,306,676		35,827
	Cap Gemini S.A. (IT services)		252,495		23,489
	Christian Dior SE (Textiles, apparel & luxury goods)		59,771		10,182
	Essilor International S.A. (Health care equipment & supplies)		74,473		9,311
	Hermes International (Textiles, apparel & luxury goods)		19,956		6,761
	Orpea (Health care providers & services)		45,521		3,650
	Rubis SCA (Gas utilities)		16,156		1,228
	Safran S.A. (Aerospace & defense)		221,750		15,271
	Technicolor S.A. (Media)		152,953		1,243
	Thales S.A. (Aerospace & defense)		96,316		7,233
	Total S.A. (Oil, gas & consumable fuels)		708,614		31,778
	Unibail-Rodamco SE (Real estate investment trusts (REITs))		32,292		8,226
	Valeo S.A. (Auto components)		154,728		23,970
	Veolia Environnement S.A. (Multi-utilities)		745,747		17,720
					195,889
	Germany—5.3%
	Bayerische Motoren Werke AG (Automobiles)		190,677		20,231
	Brenntag AG (Trading companies & distributors)		183,245		9,614
	Continental AG (Auto components)		114,801		28,015
	Deutsche Wohnen AG (Real estate management & development)		184,348		5,132
	Evonik Industries AG (Chemicals)		146,508		4,874
	Gerresheimer AG (Life sciences tools & services)		44,953		3,527
	ProSiebenSat.1 Media SE (Media)		365,659		18,583
	SAP SE (Software)		120,315		9,595

	Issuer	Shares		Value
	Common Stocks—(continued)
	Europe, Mid-East—(continued)
	Germany—(continued)
	TUI AG (Hotels, restaurants & leisure)		663,434	$	12,102
	Vonovia SE (Real estate management & development)		165,438		5,133
*	Zalando SE-144A (Internet & catalog retail)		141,998		5,617
					122,423
	Ireland—1.1%
*	ICON plc (Life sciences tools & services)†		165,213		12,837
	Kingspan Group plc (Building products)		193,129		5,102
	Smurfit Kappa Group plc (Containers & packaging)		322,267		8,245
					26,184
	Israel—2.4%
*	Check Point Software Technologies, Ltd. (Software)†		252,980		20,588
	Teva Pharmaceutical Industries, Ltd.—ADR (Pharmaceuticals)		550,776		36,153
					56,741
	Italy—2.4%
	Azimut Holding SpA (Capital markets)		298,452		7,480
	Banca Generali SpA (Capital markets)		295,047		9,356
	Intesa Sanpaolo SpA (Banks)		10,397,318		34,892
*	Yoox Net-A—Porter Group SpA (Internet & catalog retail)		117,407		4,408
					56,136
	Luxembourg—0.3%
	Eurofins Scientific SE (Life sciences tools & services)		18,989		6,642
	Netherlands—2.5%
*	NXP Semiconductor N.V. (Semiconductors & semiconductor equipment)†		242,920		20,466
	Royal Dutch Shell plc Class “A” (Oil, gas & consumable fuels)		1,028,191		23,571
	Wolters Kluwer N.V. (Media)		422,017		14,202
					58,239
	Norway—0.5%
	Gjensidige Forsikring ASA (Insurance)		200,041		3,211
	Telenor ASA (Diversified telecommunication services)		562,546		9,425
					12,636
	Portugal—0.4%
	Jeronimo Martins SGPS S.A. (Food & staples retailing)		511,752		6,671
	NOS SGPS S.A. (Media)		447,147		3,521
					10,192
	Spain—3.0%
	Amadeus IT Holding S.A. Class “A” (IT services)		481,049		21,269
	Banco Bilbao Vizcaya Argentaria S.A. (Banks)		2,098,100		15,366
	Bankinter S.A. (Banks)		1,385,929		9,856

See accompanying Notes to Financial Statements.

December 31, 2015 William Blair Funds 71

Institutional International Growth Fund

Portfolio of Investments, December 31, 2015 (all dollar amounts in thousands)

	Issuer	Shares		Value
	Common Stocks—(continued)
	Europe, Mid-East—(continued)
	Spain—(continued)
*	Distribuidora Internacional de Alimentacion S.A. (Food & staples retailing)		876,593	$	5,186
	Industria de Diseno Textil S.A. (Specialty retail)		409,863		14,115
	Viscofan S.A. (Food products)		55,133		3,334
					69,126
	Sweden—2.0%
	Assa Abloy AB Class “B” (Building products)		495,408		10,446
	Atlas Copco AB Class “A” (Machinery)		786,907		19,427
	BillerudKorsnas AB (Containers & packaging)		117,995		2,197
	Hexpol AB (Chemicals)		371,400		4,008
	Intrum Justitia AB (Commercial services & supplies)		115,496		3,949
	Swedbank AB Class “A” (Banks)		283,766		6,290
					46,317
	Switzerland—4.1%
*	Actelion, Ltd. (Biotechnology)		123,031		17,148
	Cie Financiere Richemont S.A. (Textiles, apparel & luxury goods)		176,459		12,702
*	Clariant AG (Chemicals)		571,399		10,845
*	Lonza Group AG (Life sciences tools & services)		59,821		9,741
*	Luxoft Holding, Inc. (IT services)†		50,441		3,890
	Nestle S.A. (Food products)		254,179		18,919
	Partners Group Holding AG (Capital markets)		53,494		19,294
	Straumann Holding AG (Health care equipment & supplies)		12,376		3,769
					96,308
	Japan—19.1%
	Alps Electric Co., Ltd. (Electronic equipment, instruments & components)		192,600		5,312
	Casio Computer Co., Ltd. (Household durables)		370,800		8,783
	Daicel Corporation (Chemicals)		554,800		8,373
	Daifuku Co., Ltd. (Machinery)		226,000		3,902
	Daikin Industries, Ltd. (Building products)		235,100		17,410
	Daiwa House Industry Co., Ltd. (Real estate management & development)		435,600		12,695
	FANUC Corporation (Machinery)		70,500		12,364
	Fuji Electric Co., Ltd. (Electrical equipment)		784,000		3,333
	Fuji Heavy Industries, Ltd. (Automobiles)		930,600		38,921
	Haseko Corporation (Household durables)		287,500		3,224
	Hitachi Capital Corporation (Consumer finance)		108,500		2,956
	Hoya Corporation (Health care equipment & supplies)		631,700		26,178
	IT Holdings Corporation (IT services)		153,000		3,543
	Japan Tobacco, Inc. (Tobacco)		421,500		15,679

Issuer	Shares		Value
Common Stocks—(continued)
Japan—(continued)
Kao Corporation (Personal products)		247,500	$	12,880
KDDI Corporation (Wireless telecommunication services)		726,600		19,067
Keyence Corporation (Electronic equipment, instruments & components)		31,600		17,636
M3, Inc. (Health care technology)		242,300		5,084
Makita Corporation (Machinery)		113,200		6,621
Mitsubishi UFJ Financial Group, Inc. (Banks)		2,695,000		16,976
Murata Manufacturing Co., Ltd. (Electronic equipment, instruments & components)		206,900		30,244
Nissan Chemical Industries, Ltd. (Chemicals)		178,200		4,105
Nitori Holdings Co., Ltd. (Specialty retail)		43,300		3,685
Nomura Research Institute, Ltd. (IT services)		309,300		12,017
ORIX Corporation (Diversified financial services)		2,461,100		35,126
Pola Orbis Holdings, Inc. (Personal products)		51,300		3,423
Sawai Pharmaceutical Co., Ltd. (Pharmaceuticals)		45,200		3,125
SCSK Corporation (IT services)		126,600		5,145
Secom Co., Ltd. (Commercial services & supplies)		90,700		6,218
Shionogi & Co., Ltd. (Pharmaceuticals)		298,600		13,671
Sumitomo Mitsui Financial Group, Inc. (Banks)		760,200		29,132
Suruga Bank, Ltd. (Banks)		544,000		11,374
Sysmex Corporation (Health care equipment & supplies)		72,700		4,736
Tadano, Ltd. (Machinery)		391,000		4,802
Taisei Corporation (Construction & engineering)		1,666,000		11,089
Temp Holdings Co., Ltd. (Professional services)		239,800		3,761
Tokio Marine Holdings, Inc. (Insurance)		371,600		14,568
Trend Micro, Inc. (Software)		104,900		4,303
Tsuruha Holdings, Inc. (Food & staples retailing)		67,600		5,911
				447,372
United Kingdom—15.5%
Berkeley Group Holdings plc (Household durables)		189,774		10,318
BT Group plc (Diversified telecommunication services)		3,791,332		26,364
Bunzl plc (Trading companies & distributors)		391,756		10,886
Capita plc (Professional services)		524,882		9,347
Compass Group plc (Hotels, restaurants & leisure)		1,068,468		18,508
Derwent London plc (Real estate investment trusts (REITs))		112,920		6,113
easyJet plc (Airlines)		885,483		22,714

See accompanying Notes to Financial Statements.

72 Annual Report December 31, 2015

Institutional International Growth Fund

Portfolio of Investments, December 31, 2015 (all dollar amounts in thousands)

	Issuer	Shares		Value
	Common Stocks—(continued)
	United Kingdom—(continued)
	Halma plc (Electronic equipment, instruments & components)		353,100	$	4,503
	Hiscox, Ltd. (Insurance)		396,985		6,168
	Inchcape plc (Distributors)		469,068		5,428
	InterContinental Hotels Group plc (Hotels, restaurants & leisure)		260,500		10,207
	Intertek Group plc (Professional services)		84,709		3,468
	ITV plc (Media)		6,632,353		27,044
	Micro Focus International plc (Software)		192,857		4,535
	Next plc (Multiline retail)		151,712		16,304
	Provident Financial plc (Consumer finance)		245,296		12,176
	Prudential plc (Insurance)		1,449,908		32,724
	Reckitt Benckiser Group plc (Household products)		126,213		11,687
	RELX plc (Media)		811,615		14,322
	Schroders plc (Capital markets)		142,023		6,231
	SSE plc (Electric utilities)		388,043		8,741
	Taylor Wimpey plc (Household durables)		2,290,070		6,857
	The Sage Group plc (Software)		698,777		6,217
	UBM plc (Media)		446,299		3,464
	Unilever plc (Personal products)		824,035		35,551
	WH Smith plc (Specialty retail)		135,625		3,537
	Whitbread plc (Hotels, restaurants & leisure)		158,191		10,263
	Wolseley plc (Trading companies & distributors)		170,926		9,300
	WPP plc (Media)		809,308		18,648
					361,625
	Emerging Asia—11.5%
	China—5.3%
*	Alibaba Group Holding, Ltd.—ADR (Internet software & services)		97,891		7,956
*	Baidu, Inc.—ADR (Internet software & services)		66,249		12,524
	China Overseas Land & Investment, Ltd. (Real estate management & development)		4,410,000		15,421
	China Resources Land, Ltd. (Real estate management & development)		4,332,000		12,632
	China Vanke Co., Ltd. Class “H” (Real estate management & development)**§		3,672,400		10,851
	ENN Energy Holdings, Ltd. (Gas utilities)		1,206,000		6,403
	Geely Automobile Holdings, Ltd. (Automobiles)		6,700,000		3,570
	NetEase, Inc.—ADR (Internet software & services)		62,385		11,307
	Ping An Insurance Group Co. of China, Ltd. Class “H” (Insurance)		4,666,500		25,831
	Tencent Holdings, Ltd. (Internet software & services)		889,500		17,526
					124,021
	India—1.5%
	Axis Bank, Ltd. (Banks)		1,112,531		7,563

	Issuer	Shares		Value
	Common Stocks—(continued)
	Emerging Asia—(continued)
	India—(continued)
	HDFC Bank, Ltd. (Banks)		606,176	$	9,911
	Housing Development Finance Corporation, Ltd. (Thrifts & mortgage finance)		361,852		6,911
	Maruti Suzuki India, Ltd. (Automobiles)		97,945		6,840
	Yes Bank, Ltd. (Banks)		301,529		3,309
					34,534
	Indonesia—0.2%
	PT Bank Central Asia Tbk (Banks)		4,995,200		4,820
	South Korea—1.8%
*	Amorepacific Corporation (Personal products)		12,151		4,295
*	LG Chem, Ltd. (Chemicals)		20,253		5,674
	Samsung Electronics Co., Ltd. (Technology hardware, storage & peripherals)		24,762		26,609
*	SK Hynix, Inc. (Semiconductors & semiconductor equipment)		230,880		6,055
					42,633
	Taiwan—2.7%
	Catcher Technology Co., Ltd. (Technology hardware, storage & peripherals)		742,000		6,235
	Delta Electronics, Inc. (Electronic equipment, instruments & components)		1,693,382		8,016
	Fubon Financial Holding Co., Ltd. (Diversified financial services)		5,207,000		7,133
	Largan Precision Co., Ltd. (Electronic equipment, instruments & components)		64,000		4,423
	MediaTek, Inc. (Semiconductors & semiconductor equipment)		607,000		4,620
	Taiwan Semiconductor Manufacturing Co., Ltd.—ADR (Semiconductors & semiconductor equipment)		1,377,526		31,339
					61,766
	Asia—4.9%
	Australia—1.3%
	Challenger, Ltd. (Diversified financial services)		507,991		3,228
	Flight Centre Travel Group Ltd. (Hotels, restaurants & leisure)		122,542		3,562
	LendLease Group (Real estate management & development)		397,267		4,128
	Macquarie Group, Ltd. (Capital markets)		326,319		19,682
					30,600
	Hong Kong—2.6%
	AIA Group, Ltd. (Insurance)		8,128,200		48,874
*	China High Precision Automation Group, Ltd. (Electronic equipment, instruments & components)**§		3,373,000		9
	Techtronic Industries Co., Ltd. (Household durables)		2,832,000		11,547
					60,430

See accompanying Notes to Financial Statements.

December 31, 2015 William Blair Funds 73

Institutional International Growth Fund

Portfolio of Investments, December 31, 2015 (all dollar amounts in thousands)

	Issuer	Shares		Value
	Common Stocks—(continued)
	Asia—(continued)
	Singapore—1.0%
	DBS Group Holdings, Ltd. (Banks)		1,172,800	$	13,805
	Singapore Telecommunications, Ltd. (Diversified telecommunication services)		4,236,400		10,965
					24,770
	Canada—4.7%
	Alimentation Couche Tard, Inc. Class “B” (Food & staples retailing)		258,618		11,384
	Brookfield Asset Management, Inc. Class “A” (Real estate management & development)†		600,043		18,920
	CI Financial Corporation (Capital markets)		566,804		12,535
	Constellation Software, Inc. (Software)		10,240		4,269
	Dollarama, Inc. (Multiline retail)		141,420		8,170
	Enbridge, Inc. (Oil, gas & consumable fuels)		493,835		16,417
	Intact Financial Corporation (Insurance)		103,876		6,657
	Suncor Energy, Inc. (Oil, gas & consumable fuels)		591,177		15,261
	The Toronto-Dominion Bank (Banks)		400,390		15,695
					109,308
	Emerging Europe, Mid-East, Africa—1.7%
	Russia—0.1%
*	Yandex N.V. Class “A” (Internet software & services)†		209,152		3,288
	South Africa—1.4%
	Bidvest Group, Ltd. (Industrial conglomerates)		221,698		4,705
	Naspers, Ltd. (Media)		113,674		15,583
	Steinhoff International Holdings N.V. (Household durables)		2,591,110		13,154
					33,442
	United Arab Emirates—0.2%
	Dubai Islamic Bank PJSC (Banks)		2,059,754		3,465
	Emerging Latin America—1.6%
	Brazil—0.9%
	AMBEV S.A.—ADR (Beverages)		3,648,137		16,271
	BB Seguridade Participacoes S.A. (Insurance)		894,200		5,499
					21,770
	Mexico—0.4%
	Arca Continental S.A.B. de C.V. (Beverages)		684,752		4,160
	Fomento Economico Mexicano S.A.B. de C.V.—ADR (Beverages)		53,042		4,898
					9,058

Issuer	Shares or Principal Amount		Value
Common Stocks—(continued)
Peru—0.3%
Credicorp, Ltd. (Banks)†		59,020	$	5,744
Total Common Stocks—96.4% (cost $2,061,218)				2,251,286
Preferred Stock
Brazil—0.1%
Itau Unibanco Holding S.A. (Banks)		606,400		4,036
Total Preferred Stock—0.1% (cost $4,669)				4,036
Affiliated Fund
China—0.1%
William Blair China A-Share Fund, LLC**§		138,952		2,441
Total Affiliated Fund—0.1% (cost $1,390)				2,441
Repurchase Agreement
Fixed Income Clearing Corporation, 0.030% dated 12/31/15, due 1/4/16, repurchase price $74,149, collateralized by FNMA, 2.625%, due 9/6/24		$74,149		74,149
Total Repurchase Agreement—3.2% (cost $74,149)				74,149
Total Investments—99.8% (cost $2,141,426)				2,331,912
Cash and other assets, less liabilities—0.2%				3,720
Net assets—100.0%			$	2,335,632

ADR = American Depository Receipt

* Non-income producing securities

† = U.S. listed foreign security

** = Fair valued pursuant to Valuation Procedures approved by the Board of Trustees. These holdings represent 0.57% of the Fund’s net assets at December 31, 2015.

§ = Deemed illiquid pursuant to Liquidity Procedures approved by the Board of Trustees. These holdings represent 0.57% of the Fund’s net assets at December 31, 2015.

For securities primarily traded on exchanges or markets that close before the close of regular trading on the New York Stock Exchange, the Fund may use an independent pricing service to fair value price the securities pursuant to Valuation Procedures approved by the Board of Trustees.

See accompanying Notes to Financial Statements.

74 Annual Report December 31, 2015

Institutional International Growth Fund

Portfolio of Investments, December 31, 2015 (all dollar amounts in thousands)

At December 31, 2015, the Fund’s Portfolio of Investments includes the following industry categories (as a percentage of long-term investments):

Financials	29.2	%
Consumer Discretionary	20.5	%
Information Technology	15.0	%
Industrials	9.8	%
Health Care	7.4	%
Consumer Staples	7.1	%
Energy	3.9	%
Telecommunication Services	3.1	%
Materials	2.5	%
Utilities	1.5	%
Total	100.0	%

At December 31, 2015, the Fund’s Portfolio of Investments includes the following currency categories (as a percentage of long-term investments):

Euro	25.8	%
Japanese Yen	19.8	%
British Pound Sterling	16.0	%
U.S. Dollar	9.2	%
Hong Kong Dollar	6.8	%
Swiss Franc	4.1	%
Canadian Dollar	4.0	%
Swedish Krona	2.1	%
Danish Krone	2.0	%
South Korean Won	1.9	%
Indian Rupee	1.5	%
South African Rand	1.5	%
Australian Dollar	1.4	%
New Taiwan Dollar	1.3	%
Singapore Dollar	1.1	%
All Other Currencies	1.5	%
Total	100.0	%

As of December 31, 2015, the Fund invested in William Blair China A-Share Fund, LLC, an affiliated fund. There are no unfunded commitments to the affiliated fund. The Fund may redeem its investment weekly, but is subject to monthly repatriation and other redemption restrictions imposed on the William Blair China A-Share Fund, LLC by the Chinese government.

	Share Activity						Year ended December 31, 2015
Fund Name	Balance 12/31/2014		Purchases		Sales	Balance 12/31/2015	Value		Dividend Income	Net realized gain (loss)	Change in net unrealized appreciation (depreciation)
William Blair China A-Share Fund, LLC		1,183,400		—	1,044,448	138,952		$2,441	$—	$9,106		$(4,902)

See accompanying Notes to Financial Statements.

December 31, 2015 William Blair Funds 75

	International Small Cap Growth Fund
	The International Small Cap Growth Fund seeks long-term capital appreciation.
	AN OVERVIEW FROM THE PORTFOLIO MANAGERS
Jeffrey A. Urbina Andrew G. Flynn   Stephanie G. Braming	The William Blair International Small Cap Growth Fund (Class N shares) posted a 9.67% increase, net of fees, for the twelve months ended December 31, 2015. By comparison, the Fund’s benchmark index, the MSCI All Country World ex-U.S. Small Cap Index (net) (the “Index”), increased 2.60%. Our emphasis on high-quality growth companies was a broad contributor to relative performance during 2015, as higher-quality companies with strong earnings trends led the market. From a sector perspective, the Fund’s overweighting to, and stock selection in, Consumer Discretionary were key drivers of outperformance. Restaurant and leisure holdings such as Domino’s Pizza Group (U.K.) and Ireland-based gaming company Paddy Power were notable contributors within the Consumer Discretionary sector. Household durables holdings such as Casio Computer (Japan), Haseko (Japan) and De’Longhi (Italy) also contributed. Stock selection was positive across several other sectors, including Materials, as the emphasis on specialty chemicals companies at the expense of metals & mining exposure benefited results. The Financials sector was the other notable area of strength during the period, led by capital markets, real estate and diversified financial services holdings. From a regional perspective, the Fund’s overweighting and stock selection in the Europe ex-U.K. region was the leading contributor. These positive effects were partially offset by Consumer Staples stock selection. Discount food retailer Distribuidora Internacional de Alimentacion’s (Spain) share price declined amid tougher trading conditions in Iberia and concerns about its Latin America business due to the weaker macroeconomic environment. Energy stock selection also detracted from relative performance, although the impact was mitigated by the Fund’s underweighted position. Canadian Energy Services & Technology was the largest detractor within the sector, hampered by a sharp decline in drilling activity. The underweightings to Industrials, Information Technology, and Materials also detracted. Canadian stock selection was negatively impacted by energy holdings and WestJet Airlines, which was hampered by concerns about the carrier’s exposure to Alberta’s oil-driven economy, coupled with Canadian dollar weakness. Emerging Asia stock selection also weighed negatively on relative performance. Within Emerging Asia, Quality Houses (Thailand) suffered share price deterioration due to Thailand economic weakness and the strict mortgage lending environment. Chinese infant formula company Biostime International was another notable regional detractor, as gross margins came under pressure due to higher discounting and increased competition. Please refer to the Global Markets Review and Outlook relating to the Fund on page 39.

76 Annual Report December 31, 2015

International Small Cap Growth Fund

Performance Highlights (Unaudited)

Average Annual Total Return at 12/31/2015
	1 Year		3 Year		5 Year		10 Year
Class N	9.67	%	8.11	%	6.02	%		5.67	%
Class I	10.00		8.43		6.36			6.01
Institutional Class	10.03		8.62		6.58			6.20
MSCI ACW Ex-U.S. Small Cap Index (net)	2.60		5.64		2.63			4.97

Performance cited represents past performance. Past performance does not guarantee future results and current performance may be lower or higher than the data quoted. Results shown are average annual returns, which assume reinvestment of dividends and capital gains. Investment returns and principal will fluctuate and you may have a gain or loss when you sell shares. For the most current month-end performance information, please call 1-800-742-7272, or visit our Web site at www.williamblairfunds.com. From time to time, the investment adviser may waive fees or reimburse expenses for the Fund. Without these waivers/reimbursements, performance would be lower. Smaller capitalization stocks are also more sensitive to purchase/sale transactions and changes in the issuer’s financial condition. International investing involves special risk considerations, including currency fluctuations, lower liquidity, economic and political risk. Class N shares are available to the general public without a sales load. Class I shares are available to certain institutional investors and advisory clients of William Blair Investment Management, LLC and William Blair & Company, L.L.C., without a sales load or distribution (12b-1) fees. Institutional Class shares are available to institutional investors without a sales load or distribution (12b-1) or service fees.

The performance highlights and graph presented above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

The Morgan Stanley Capital International (MSCI) All Country World (ACW) Ex-U.S. Small Cap Index (net) is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of small capitalization developed and emerging markets, excluding the United States. This series approximates the minimum possible dividend reinvestment.

This report identifies the Fund’s investments on December 31, 2015. These holdings are subject to change. Not all stocks in the Fund performed the same, nor is there any guarantee that these stocks will perform as well in the future. Market forecasts provided in this report may not necessarily come to pass.

Sector Diversification (Unaudited)

The sector diversification shown is based on the total long-term securities.

December 31, 2015 William Blair Funds 77

International Small Cap Growth Fund

Portfolio of Investments, December 31, 2015 (all dollar amounts in thousands)

	Issuer	Shares		Value
	Common Stocks
	Europe, Mid-East—33.2%
	Denmark—1.0%
	Royal Unibrew A/S (Beverages)		145,159	$	5,921
	Finland—0.7%
	Huhtamaki Oyj (Containers & packaging)		116,987		4,259
	France—5.5%
	Alten S.A. (IT services)		68,255		3,962
	Ipsen S.A. (Pharmaceuticals)		111,137		7,368
	Korian S.A. (Health care providers & services)		65,326		2,391
	Metropole Television S.A. (Media)		211,651		3,643
	Orpea (Health care providers & services)		35,887		2,878
	Rubis SCA (Gas utilities)		11,294		858
	Technicolor S.A. (Media)		131,776		1,071
	Teleperformance (Professional services)		67,098		5,651
*	UBISOFT Entertainment (Software)		134,123		3,887
					31,709
	Germany—4.6%
	Aareal Bank AG (Thrifts & mortgage finance)		158,104		5,007
	Aurelius AG (Capital markets)		145,047		7,585
	CTS Eventim AG & Co KGaA (Media)		85,825		3,427
	Gerresheimer AG (Life sciences tools & services)		55,712		4,370
	Norma Group SE (Machinery)		105,330		5,855
					26,244
	Ireland—4.7%
	Beazley plc (Insurance)		1,298,746		7,480
*	ICON plc (Life sciences tools & services)†		100,142		7,781
	Irish Continental Group plc (Marine)		477,798		2,811
	Kingspan Group plc (Building products)		209,755		5,542
	Paddy Power plc (Hotels, restaurants & leisure)		26,241		3,511
					27,125
	Israel—1.8%
	Elbit Systems, Ltd. (Aerospace & defense)		84,455		7,441
	Frutarom Industries, Ltd. (Chemicals)		55,134		2,961
					10,402
	Italy—7.6%
	Anima Holding SpA—144A (Capital markets)		421,483		3,673
	Banca IFIS SpA (Diversified financial services)		132,101		4,139
	Brembo SpA (Auto components)		110,033		5,343
*	Cerved Information Solutions SpA (Diversified financial services)		716,692		5,997
	De’Longhi SpA (Household durables)		142,347		4,280
	DiaSorin SpA (Health care equipment & supplies)		54,545		2,872
	FinecoBank Banca Fineco SpA (Banks)		477,148		3,954
	Industria Macchine Automatiche SpA (Machinery)		94,733		4,941
	Recordati SpA (Pharmaceuticals)		140,332		3,674
*	Yoox Net-A-Porter Group SpA (Internet & catalog retail)		127,491		4,787
					43,660

	Issuer	Shares		Value
	Common Stocks—(continued)
	Europe, Mid-East—(continued)
	Luxembourg—1.0%
	Grand City Properties S.A. (Real estate management & development)		239,623	$	5,570
	Spain—1.7%
*	Distribuidora Internacional de Alimentacion S.A. (Food & staples retailing)		780,563		4,618
	Viscofan S.A. (Food products)		88,914		5,376
					9,994
	Sweden—2.8%
	BillerudKorsnas AB (Containers & packaging)		125,328		2,334
	Hexpol AB (Chemicals)		329,192		3,553
	Intrum Justitia AB (Commercial services & supplies)		113,443		3,878
	Loomis AB Class “B” (Commercial services & supplies)		106,675		3,343
*	NetEnt AB (Internet software & services)		47,851		2,803
					15,911
	Switzerland—1.8%
*	Leonteq AG (Capital markets)		16,318		2,371
*	Luxoft Holding, Inc. (IT services)†		41,317		3,187
	Straumann Holding AG (Health care equipment & supplies)		14,661		4,464
					10,022
	Japan—19.4%
	ABC-Mart, Inc. (Specialty retail)		52,300		2,894
	Casio Computer Co., Ltd. (Household durables)		279,700		6,625
	Daicel Corporation (Chemicals)		528,100		7,970
	Daiichikosho Co., Ltd. (Media)		110,600		4,421
	Fuji Electric Co., Ltd. (Electrical equipment)		1,089,000		4,630
	Haseko Corporation (Household durables)		618,400		6,935
	Hitachi Capital Corporation (Consumer finance)		207,400		5,651
	Hitachi Kokusai Electric, Inc. (Communications equipment)		188,000		2,592
	Hoshizaki Electric Co., Ltd. (Machinery)		39,000		2,453
	IT Holdings Corporation (IT services)		217,700		5,041
	M3, Inc. (Health care technology)		154,800		3,248
	Meitec Corporation (Professional services)		123,800		4,280
	Nihon Kohden Corporation (Health care equipment & supplies)		62,900		1,539
	Nihon M&A Center, Inc. (Professional services)		96,900		4,724
	Nissan Chemical Industries, Ltd. (Chemicals)		304,800		7,022
	NS Solutions Corporation (IT services)		170,000		3,918
	OSG Corporation (Machinery)		203,500		3,892
	Pigeon Corporation (Household products)		98,800		2,437
	Resorttrust, Inc. (Hotels, restaurants & leisure)		140,800		3,754
	Sato Holdings Corporation (Commercial services & supplies)		103,000		2,057
	Sawai Pharmaceutical Co., Ltd. (Pharmaceuticals)		47,600		3,291

See accompanying Notes to Financial Statements.

78 Annual Report December 31, 2015

International Small Cap Growth Fund

Portfolio of Investments, December 31, 2015 (all dollar amounts in thousands)

	Issuer	Shares		Value
	Common Stocks—(continued)
	Japan—(continued)
	Skylark Co., Ltd. (Hotels, restaurants & leisure)		300,000	$	3,916
	Temp Holdings Co., Ltd. (Professional services)		187,400		2,939
	The Hiroshima Bank, Ltd. (Banks)		1,250,000		7,207
	Tsubakimoto Chain Co. (Machinery)		561,000		4,378
	Zenkoku Hosho Co., Ltd. (Diversified financial services)		103,700		3,473
					111,287
	United Kingdom—16.8%
	Bellway plc (Household durables)		113,021		4,725
	Berendsen plc (Commercial services & supplies)		228,312		3,632
	Cineworld Group plc (Media)		506,390		4,199
	Close Brothers Group plc (Capital markets)		235,967		4,651
	Domino’s Pizza Group plc (Hotels, restaurants & leisure)		329,236		5,106
	Great Portland Estates plc (Real estate investment trusts (REITs))		259,530		3,168
	Halma plc (Electronic equipment, instruments & components)		301,360		3,843
	Howden Joinery Group plc (Specialty retail)		615,847		4,780
	IG Group Holdings plc (Diversified financial services)		238,606		2,823
	Inchcape plc (Distributors)		570,649		6,604
	Jupiter Fund Management plc (Capital markets)		711,644		4,739
	Man Group plc (Capital markets)		1,412,726		3,655
	Micro Focus International plc (Software)		270,361		6,357
	Moneysupermarket.com Group plc (Internet software & services)		898,216		4,860
	OneSavings Bank plc (Thrifts & mortgage finance)		463,198		2,415
	Provident Financial plc (Consumer finance)		53,662		2,664
	Rightmove plc (Media)		50,679		3,082
	Senior plc (Aerospace & defense)		684,124		2,317
	SSP Group plc (Hotels, restaurants & leisure)		881,293		4,222
	Ted Baker plc (Textiles, apparel & luxury goods)		67,981		2,994
	The Restaurant Group plc (Hotels,
	restaurants & leisure)		358,417		3,622
	The UNITE Group plc (Real estate management & development)		596,779		5,771
	Victrex plc (Chemicals)		130,357		3,467
	Workspace Group plc (Real estate investment trusts (REITs))		216,445		3,058
					96,754
	Emerging Asia—10.4%
	China—5.2%
	Beijing Capital International Airport Co., Ltd. Class “H” (Transportation infrastructure)		4,038,000		4,361
*	China Biologic Products, Inc. (Biotechnology)		38,308		5,457

	Issuer	Shares		Value
	Common Stocks—(continued)
	Emerging Asia-—(continued)
	China—(continued)
	China Lodging Group, Ltd.—ADR (Hotels, restaurants & leisure)		81,282	$	2,541
	Hollysys Automation Technologies, Ltd. (Electronic equipment, instruments & components)†		192,842		4,277
	Shenzhou International Group Holdings, Ltd. (Textiles, apparel & luxury goods)		801,000		4,605
	Sino Biopharmaceutical, Ltd. (Pharmaceuticals)		4,806,000		4,366
	Travelsky Technology, Ltd. Class “H” (IT services)		2,546,000		4,205
					29,812
	India—1.7%
	Indiabulls Housing Finance, Ltd. (Thrifts & mortgage finance)		260,998		2,888
	Yes Bank, Ltd. (Banks)		602,750		6,614
					9,502
	South Korea—1.2%
*	Kangwon Land, Inc. (Hotels, restaurants & leisure)		99,950		3,273
*	KEPCO Plant Service & Engineering Co., Ltd. (Commercial services & supplies)		50,233		3,813
					7,086
	Taiwan—1.7%
	Advantech Co., Ltd. (Technology hardware, storage & peripherals)		325,000		2,092
	E.Sun Financial Holding Co., Ltd. (Banks)		8,683,769		5,063
	Novatek Microelectronics Corporation (Semiconductors & semiconductor equipment)		685,000		2,690
					9,845
	Thailand—0.6%
	Minor International PCL (Hotels, restaurants & leisure)		3,145,200		3,168
	Asia—8.0%
	Australia—4.9%
	Domino’s Pizza Enterprises, Ltd. (Hotels, restaurants & leisure)		80,934		3,406
	DuluxGroup, Ltd. (Chemicals)		1,338,604		6,487
	Magellan Financial Group, Ltd. (Capital markets)		398,726		7,915
	Orora, Ltd. (Containers & packaging)		2,401,403		3,937
	The Star Entertainment Grp, Ltd. (Hotels, restaurants & leisure)		1,693,574		6,269
					28,014
	Hong Kong—0.7%
	Man Wah Holdings, Ltd. (Household durables)		3,292,000		3,874
	New Zealand—0.6%
	Fisher & Paykel Healthcare Corp., Ltd. (Health care equipment & supplies)		623,889		3,798

See accompanying Notes to Financial Statements.

December 31, 2015 William Blair Funds 79

International Small Cap Growth Fund

Portfolio of Investments, December 31, 2015 (all dollar amounts in thousands)

	Issuer	Shares		Value
	Common Stocks—(continued)
	Asia—(continued)
	Singapore—1.8%
	ComfortDelGro Corporation, Ltd. (Road & rail)		2,519,000	$	5,418
	SATS, Ltd. (Transportation infrastructure)		1,755,000		4,753
					10,171
	Emerging Latin America—3.4%
	Mexico—3.4%
	Alsea S.A.B. de C.V. (Hotels, restaurants & leisure)		892,830		3,108
	Gentera S.A.B. de C.V. (Consumer finance)		2,498,200		4,805
	Gruma S.A.B. de C.V. Class “B” (Food products)		356,600		5,017
	Grupo Aeroportuario del Sureste S.A.B. de C.V.—ADR (Transportation infrastructure)		27,911		3,926
*	Promotora y Operadora de Infraestructura S.A.B. de C.V. (Construction & engineering)		234,800		2,765
					19,621
	Canada—3.0%
	Canadian Energy Services & Technology Corporation (Energy equipment & services)		627,255		1,759
	Linamar Corporation (Auto components)		126,241		6,818
	Peyto Exploration & Development Corporation (Oil, gas & consumable fuels)		129,414		2,326
*	Raging River Exploration, Inc. (Oil, gas & consumable fuels)		398,352		2,409
	WestJet Airlines, Ltd. (Airlines)		150,177		2,199
	Whitecap Resources, Inc. (Oil, gas & consumable fuels)		279,796		1,834
					17,345
	Emerging Europe, Mid-East, Africa—2.0%
	Hungary—0.2%
	Richter Gedeon Nyrt (Pharmaceuticals)		54,819		1,039
	South Africa-1.0%
	Clicks Group, Ltd. (Food & staples retailing)		492,649		2,835
	Rand Merchant Insurance Holdings, Ltd. (Insurance)		822,744		2,059
	Resilient REIT, Ltd. (Real estate investment trusts (REITs))		86,627		647
					5,541
	Turkey—0.8%
	Ford Otomotiv Sanayi A.S. (Automobiles)		295,124		3,064
	Turkiye Sinai Kalkinma Bankasi A.S. (Banks)		3,340,072		1,741
					4,805
	Total Common Stocks—96.2% (cost $488,217)				552,479

	Principal
Issuer	Amount		Value
Repurchase Agreement
Fixed Income Clearing Corporation, 0.030% dated 12/31/15, due 1/4/16, repurchase price $20,131, collateralized by U.S.Treasury Note, 2.375%, due 8/15/24		$20,131	$	20,131
Total Repurchase Agreement—3.5% (cost $20,131)				20,131
Total Investments—99.7% (cost $508,348)				572,610
Cash and other assets, less liabilities—0.3%				1,990
Net assets—100.0%			$	574,600

ADR = American Depository Receipt

* Non-income producing securities

† = U.S. listed foreign security

For securities primarily traded on exchanges or markets that close before the close of regular trading on the New York Stock Exchange, the Fund may use an independent pricing service to fair value price the securities pursuant to Valuation Procedures approved by the Board of Trustees.

At December 31, 2015, the Fund’s Portfolio of Investments includes the following industry categories (as a percentage of long-term investments):

Consumer Discretionary	24.3	%
Financials	22.9	%
Industrials	18.5	%
Health Care	10.6	%
Information Technology	9.7	%
Materials	7.6	%
Consumer Staples	4.7	%
Energy	1.5	%
Utilities	0.2	%
Total	100.0	%

See accompanying Notes to Financial Statements.

80 Annual Report December 31, 2015

International Small Cap Growth Fund

Portfolio of Investments, December 31, 2015

At December 31, 2015, the Fund’s Portfolio of Investments includes the following currency categories (as a percentage of long-term investments):

Euro	24.1	%
Japanese Yen	20.2	%
British Pound Sterling	18.9	%
Australian Dollar	5.1	%
U.S. Dollar	4.9	%
Hong Kong Dollar	3.9	%
Canadian Dollar	3.1	%
Swedish Krona	2.9	%
Mexican Peso	2.8	%
Israeli Shekel	1.9	%
Singapore Dollar	1.8	%
New Taiwan Dollar	1.8	%
Indian Rupee	1.7	%
South Korean Won	1.3	%
Swiss Franc	1.2	%
Danish Krone	1.1	%
South African Rand	1.0	%
All Other Currencies	2.3	%
Total	100.0	%

See accompanying Notes to Financial Statements.

December 31, 2015 William Blair Funds 81

	Emerging Markets Leaders Fund
	The Emerging Markets Leaders Fund seeks long-term capital appreciation.
	AN OVERVIEW FROM THE PORTFOLIO MANAGERS
Todd M. McClone   Jeffrey A. Urbina	The William Blair Emerging Markets Leaders Fund (Class N shares) posted a 14.56% decrease, net of fees, for the twelve months ended December 31, 2015. By comparison, the Fund’s benchmark index, the MSCI Emerging Markets Index (net) (the “Index”), decreased 14.92%. While the Fund’s absolute performance was negative in 2015, the Fund outperformed the Index. The Fund’s 2015 outperformance relative to the Index was primarily from Financials, Consumer Discretionary, Industrials, and Materials stock selection, combined with favorable sector positioning. Within Financials, bank and real estate holdings were significant contributors. HDFC Bank (India) was a leading contributor, benefiting from strong growth in retail loans and digital initiatives that drove its market share higher. Real estate developer China Overseas Land & Investment’s share price was supported by healthy trends in property sales and rental income, in addition to the government’s policy easing measures. In contrast, Healthcare stock selection was a key detractor for the year, as pharmaceutical holdings such as Aspen Pharmacare (South Africa) and Kalbe Farma (Thailand) suffered significant share price declines due to weaker operating trends. Telecommunication Services and Energy stock selection were also weak, but the effects were mitigated by the Fund’s large underweight positions in both sectors. Within the Information Technology sector, semiconductor holdings were detractors in 2015; notably MediaTek (Taiwan) and SK Hynix (Korea). From a country perspective, relative performance in 2015 was primarily enhanced by stock selection in China and the Fund’s overweighting to India, which helped to offset the negative impact of the Fund’s overweighting to Brazil and underweightings to Korea, Taiwan, and Russia. Please refer to the Global Markets Review and Outlook relating to the Fund on page 39.

82 Annual Report December 31, 2015

Emerging Markets Leaders Fund

Performance Highlights (Unaudited)

Average Annual Total Return at 12/31/2015
	1 Year			3 Year			5 Year			Since Inception
Class N(b)		(14.56	)%		(4.67	)%		(3.45	)%		(0.11	)%
MSCI Emerging Markets
Index – (net)(b)		(14.92	)		(6.76	)		(4.81	)		(1.71	)
Class I(a)		(14.37	)		(4.41	)		(3.20	)		(1.37	)
Institutional Class(a)		(14.24	)		(4.30	)		(3.07	)		(1.23	)
MSCI Emerging Markets
Index (net)(a)		(14.92	)		(6.76	)		(4.81	)		(1.81	)

(a)	Since inception is for the period from March 26, 2008 (Commencement of Operations) to December 31, 2015.
(b)	Since inception is for the period from May 3, 2010 (Commencement of Operations) to December 31, 2015.

Performance cited represents past performance. Past performance does not guarantee future results and current performance may be lower or higher than the data quoted. Results shown are average annual total returns, which assume reinvestment of dividends and capital gains. Investment returns and principal will fluctuate and you may have a gain or loss when you sell shares. For the most current month-end performance information, please call 1-800-742-7272, or visit our Web site at www.williamblairfunds.com. International investing involves special risk considerations, including currency fluctuations, lower liquidity, economic and political risk. From time to time, the investment adviser may waive fees or reimburse expenses for the Fund. Without these waivers/reimbursements, performance would be lower. Class N shares are available to the general public without a sales load. Class I shares are available to certain institutional investors and advisory clients of William Blair Investment Management, LLC and William Blair & Company, L.L.C., without a sales load or distribution (12b-1) fees. Institutional Class shares are available to institutional investors without a sales load or distribution (12b-1) or service fees.

The performance highlights and graph presented above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

The Morgan Stanley Capital International (MSCI) Emerging Markets Index (net) is a free float-adjusted market-capitalization-weighted index that is designed to measure equity market performance of emerging markets. This series approximates the minimum possible dividend reinvestment.

This report identifies the Fund’s investments on December 31, 2015. These holdings are subject to change. Not all stocks in the Fund performed the same, nor is there any guarantee that these stocks will perform as well in the future. Market forecasts provided in this report may not necessarily come to pass.

Sector Diversification (Unaudited)

The sector diversification shown is based on the total long-term securities.

December 31, 2015 William Blair Funds 83

Emerging Markets Leaders Fund

Portfolio of Investments, December 31, 2015 (all dollar amounts in thousands)

	Issuer	Shares		Value
	Common Stocks
	Emerging Asia—69.5%
	China—24.6%
*	Alibaba Group Holding, Ltd.—ADR
	(Internet software & services)		56,138	$	4,562
*	Baidu, Inc.—ADR (Internet software services)		13,677		2,586
	China Mengniu Dairy Co., Ltd. (Food products)		352,000		574
	China Overseas Land & Investment, Ltd. (Real estate management & development)		1,074,000		3,756
	CNOOC, Ltd. (Oil, gas & consumable fuels)		1,205,000		1,255
*	Ctrip.com International, Ltd.—ADR (Internet & catalog retail)		26,590		1,232
*	Dali Foods Group Co., Ltd.—144A (Food products)		2,216,500		1,258
	ENN Energy Holdings, Ltd. (Gas utilities)		218,000		1,158
	Great Wall Motor Co., Ltd. Class “H” (Automobiles)		2,136,000		2,494
	NetEase, Inc.—ADR (Internet software & services)		10,894		1,974
	Ping An Insurance Group Co. of China, Ltd. Class “H” (Insurance)		802,000		4,439
	Sinopharm Group Co., Ltd. Class “H” (Health care providers & services)		163,200		655
	Tencent Holdings, Ltd. (Internet software & services)		276,000		5,438
					31,381
	India—15.7%
	Asian Paints, Ltd. (Chemicals)		127,989		1,707
	Axis Bank, Ltd. (Banks)		281,162		1,911
	Bharti Infratel, Ltd. (Wireless telecommunication services)		343,475		2,210
	HCL Technologies, Ltd. (IT services)		40,672		528
	HDFC Bank, Ltd. (Banks)		137,091		2,241
	Hindustan Unilever, Ltd. (Household products)		51,993		677
	Housing Development Finance Corporation, Ltd. (Thrifts & mortgage finance)		107,637		2,056
	Infosys, Ltd. (IT services)		121,671		2,036
	Lupin, Ltd. (Pharmaceuticals)		49,048		1,358
	Maruti Suzuki India, Ltd. (Automobiles)		21,056		1,471
*	Tata Motors, Ltd. (Automobiles)		659,229		3,902
					20,097
	Indonesia—3.1%
	PT Bank Rakyat Indonesia Persero Tbk (Banks)		2,737,500		2,269
	PT Kalbe Farma Tbk (Pharmaceuticals)		7,766,000		744
	PT Telekomunikasi Indonesia Persero Tbk (Diversified telecommunication services)		4,417,100		995
					4,008
	Malaysia—0.6%
	IHH Healthcare Bhd (Health care providers & services)		464,700		712

	Issuer	Shares		Value
	Common Stocks—(continued)
	Emerging Asia—(continued)
	Philippines—1.1%
	SM Prime Holdings, Inc. (Real estate management & development)		1,374,900	$	634
	Universal Robina Corporation (Food products)		204,660		809
					1,443
	South Korea—11.4%
*	Amorepacific Corporation (Personal products)		4,273		1,511
*	Coway Co., Ltd. (Household durables)		16,275		1,167
*	LG Chem, Ltd. (Chemicals)		2,087		585
*	LG Household & Health Care, Ltd. (Household products)		4,493		4,023
	Samsung Electronics Co., Ltd. (Technology hardware, storage & peripherals)		4,442		4,773
*	SK Hynix, Inc. (Semiconductors & semiconductor equipment)		94,040		2,466
					14,525
	Taiwan—8.9%
	Delta Electronics, Inc. (Electronic equipment, instruments & components)		378,009		1,790
	Fubon Financial Holding Co., Ltd. (Diversified financial services)		1,084,000		1,485
	Largan Precision Co., Ltd. (Electronic equipment, instruments & components)		32,000		2,211
	MediaTek, Inc. (Semiconductors & semiconductor equipment)		83,000		632
	Taiwan Semiconductor Manufacturing Co., Ltd.—ADR (Semiconductors & semiconductor equipment)		230,078		5,234
					11,352
	Thailand—4.1%
	Airports of Thailand PCL (Transportation infrastructure)		242,900		2,336
	Bangkok Dusit Medical Services PCL Class “F” (Health care providers & services)		1,689,900		1,047
	CP ALL PCL (Food & staples retailing)		1,032,500		1,126
	Kasikornbank PCL (Banks)		169,400		704
					5,213
	Emerging Europe, Mid-East, Africa—15.9%
	Czech Republic—0.5%
	Komercni banka A.S. (Banks)		2,885		574
	Russia—2.9%
	Magnit PJSC—GDR (Food & staples retailing)		34,312		1,380
*	Mail.Ru Group, Ltd.—GDR (Internet software & services)		102,558		2,313
					3,693

See accompanying Notes to Financial Statements.

84 Annual Report December 31, 2015

Emerging Markets Leaders Fund

Portfolio of Investments, December 31, 2015 (all dollar amounts in thousands)

	Issuer	Shares		Value
	Common Stocks—(continued)
	Emerging Europe, Mid-East, Africa—(continued)
	South Africa—7.6%
*	Aspen Pharmacare Holdings, Ltd. (Pharmaceuticals)		37,888	$	758
	Bidvest Group, Ltd. (Industrial conglomerates)		57,214		1,214
	Discovery, Ltd. (Insurance)		87,329		751
	Naspers, Ltd. (Media)		31,547		4,325
	Steinhoff International Holdings N.V. (Household durables)		397,765		2,019
	Woolworths Holdings, Ltd. (Multiline retail)		95,873		621
					9,688
	Turkey—2.2%
	BIM Birlesik Magazalar A.S. (Food & staples retailing)		63,113		1,111
	KOC Holding A.S. (Industrial conglomerates)		463,264		1,736
					2,847
	United Arab Emirates—2.7%
	DP World, Ltd. (Transportation infrastructure)		49,276		1,001
*	Emaar Malls Group PJSC (Real estate management & development)		873,037		656
	Emaar Properties PJSC (Real estate management & development)		675,168		1,046
	First Gulf Bank PJSC (Banks)		200,714		691
					3,394
	Emerging Latin America—13.1%
	Brazil—6.4%
	AMBEV S.A.—ADR (Beverages)		516,892		2,305
	BB Seguridade Participacoes S.A. (Insurance)		271,600		1,670
	BRF S.A. (Food products)		42,600		596
	CETIP S.A. — Mercados Organizados (Capital markets)		77,600		736
	Cielo S.A. (IT services)		142,600		1,211
	Lojas Renner S.A. (Multiline retail)		92,900		402
	Ultrapar Participacoes S.A. (Oil, gas & consumable fuels)		47,900		732
	WEG S.A. (Machinery)		147,400		557
					8,209
	Chile—0.7%
	Banco Santander Chile—ADR (Banks)		51,587		910
	Mexico—4.9%
	Fomento Economico Mexicano S.A.B. de C.V.—ADR (Beverages)		14,728		1,360
	Grupo Financiero Inbursa S.A.B. de C.V. Class “O” (Banks)		511,400		926
	Wal-Mart de Mexico S.A.B. de C.V. (Food & staples retailing)		1,554,500		3,924
					6,210

Issuer	Shares or Principal Amount		Value
Common Stocks—(continued)
Emerging Latin America-—(continued)
Peru—1.1%
Credicorp, Ltd. (Banks)†		14,588	$	1,419
Total Common Stocks-98.5% (cost $131,772)				125,675
Repurchase Agreement
Fixed Income Clearing Corporation, 0.030% dated 12/31/15, due 1/4/16, repurchase price $1,820, collateralized by FNMA, 2.625%, due 9/6/24		$1,820		1,820
Total Repurchase Agreement—1.4% (cost $1,820)				1,820
Total Investments—99.9% (cost $133,592)				127,495
Cash and other assets, less liabilities—0.1%				183
Net assets—100.0%			$	127,678

ADR = American Depository Receipt

GDR = Global Depository Receipt

* Non-income producing securities

† = U.S. listed foreign security

For securities primarily traded on exchanges or markets that close before the close of regular trading on the New York Stock Exchange, the Fund may use an independent pricing service to fair value price the securities pursuant to Valuation Procedures approved by the Board of Trustees.

At December 31, 2015, the Fund’s Portfolio of Investments includes the following industry categories (as a percentage of long- term investments):

Information Technology	30.1	%
Financials	23.1	%
Consumer Staples	16.4	%
Consumer Discretionary	14.0	%
Industrials	5.4	%
Health Care	4.2	%
Telecommunication Services	2.5	%
Materials	1.8	%
Energy	1.6	%
Utilities	0.9	%
Total	100.0	%

See accompanying Notes to Financial Statements.

December 31, 2015 William Blair Funds 85

Emerging Markets Leaders Fund

Portfolio of Investments, December 31, 2015

At December 31, 2015, the Fund’s Portfolio of Investments includes the following currency categories (as a percentage of long-term investments):

U.S. Dollar	20.9	%
Hong Kong Dollar	16.7	%
Indian Rupee	16.0	%
South Korean Won	11.6	%
South African Rand	7.7	%
New Taiwan Dollar	4.9	%
Brazilian Real	4.7	%
Thai Baht	4.1	%
Mexican Peso	3.9	%
Indonesian Rupiah	3.2	%
Turkish Lira	2.3	%
UAE Dirham	1.9	%
Philippine Peso	1.1	%
All Other Currencies	1.0	%
Total	100.0	%

See accompanying Notes to Financial Statements.

86 Annual Report December 31, 2015

	Emerging Markets Growth Fund
	The Emerging Markets Growth Fund seeks long-term capital appreciation.
	AN OVERVIEW FROM THE PORTFOLIO MANAGERS
Todd M. McClone Jeffrey A. Urbina Casey K. Preyss	The William Blair Emerging Markets Growth Fund (Class N shares) posted a 15.03% decrease, net of fees, for the twelve months ended December 31, 2015. By comparison, the Fund’s benchmark index, the MSCI Emerging Markets IMI Index (net) (the “Index”), decreased 13.86%. The Fund’s underperformance relative to the Index during 2015 was primarily driven by stock selection in the Information Technology sector, as semiconductor holdings lagged amid a cyclical industry downturn. Taiwan-based MediaTek’s share price came under pressure during the year due to increasing pricing pressure and intensified competition amid decelerating smartphone growth. SK Hynix (Korea) was another key detractor, hampered by a weak DRAM (dynamic random access memory) pricing environment. Healthcare and Consumer Discretionary stock selection also lagged. Within Healthcare, pharmaceutical holdings such as Aspen Pharmacare (South Africa) and Kalbe Farma (Thailand) suffered significant share price declines due to weaker operating trends. Energy stock selection in 2015 was also weak, but the effects were mitigated by the Fund’s large underweight position. Offsetting these negative effects were Financials, Materials, and Utilities stock selection. Within Financials, bank and real estate holdings were significant contributors. HDFC Bank (India) was a leading contributor, benefiting from strong growth in retail loans and digital initiatives that drove its market share higher. Real estate developers China Overseas Land & Investment and China Vanke’s share prices were supported by improving sales and rental income, in addition to the government’s policy easing measures. The overweighting and stock selection in Consumer Staples were also positive in 2015, benefiting from the position in LG Household & Health Care (Korea). LG Household and Health Care benefitted from positive financial results led by its cosmetics division, with improving fundamentals in the household and beverage businesses. From a country perspective, relative performance was primarily enhanced by stock selection in China and the overweighting to India throughout the year, which helped to offset the negative impacts of the Fund’s overweightings to Brazil and underweightings to Korea and Taiwan. Please refer to the Global Markets Review and Outlook relating to the Fund on page 39.

December 31, 2015 William Blair Funds 87

Emerging Markets Growth Fund

Performance Highlights (Unaudited)

Average Annual Total Return at 12/31/2015
	1 Year			3 Year			5 Year			10 Year
Class N		(15.03	)%		(3.89	)%		(2.38	)%		3.30	%
Class I		(14.83	)		(3.64	)		(2.12	)		3.56
Institutional Class		(14.67	)		(3.47	)		(1.92	)		3.74
MSCI Emerging Markets IMI (net)		(13.86	)		(6.12	)		(4.59	)		3.94

Performance cited represents past performance. Past performance does not guarantee future results and current performance may be lower or higher than the data quoted. Results shown are average annual returns, which assume reinvestment of dividends and capital gains. Investment returns and principal will fluctuate and you may have a gain or loss when you sell shares. For the most current month-end performance information, please call 1-800-742-7272, or visit our Web site at www.williamblairfunds.com. From time to time, the investment adviser may waive fees or reimburse expenses for the Fund. Without these waivers/reimbursements, performance would be lower. International investing involves special risk considerations, including currency fluctuations, lower liquidity, economic and political risk. Class N shares are available to the general public without a sales load. Class I shares are available to certain institutional investors and advisory clients of William Blair Investment Management, LLC and William Blair & Company, L.L.C., without a sales load or distribution (12b-1) fees. Institutional Class shares are available to institutional investors without a sales load or distribution (12b-1) or service fees.

The performance highlights and graph presented above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

The Morgan Stanley Capital International (MSCI) Emerging Markets Investable Market Index (IMI) (net) is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of emerging markets. This series approximates the minimum possible dividend reinvestment.

This report identifies the Fund’s investments on December 31, 2015. These holdings are subject to change. Not all stocks in the Fund performed the same, nor is there any guarantee that these stocks will perform as well in the future. Market forecasts provided in this report may not necessarily come to pass.

Sector Diversification (Unaudited)

The sector diversification shown is based on the total long-term securities.

88 Annual Report December 31, 2015

Emerging Markets Growth Fund

Portfolio of Investments, December 31, 2015 (all dollar amounts in thousands)

	Issuer	Shares		Value
	Common Stocks
	Emerging Asia—69.1%
	China—24.1%
*	Alibaba Group Holding, Ltd.—ADR (Internet software & services)		331,889	$	26,973
	ANTA Sports Products, Ltd. (Textiles, apparel & luxury goods)		911,000		2,504
	AviChina Industry & Technology Co., Ltd. Class “H” (Aerospace & defense)		3,208,000		2,525
*	Baidu, Inc.—ADR (Internet software & services)		94,349		17,836
*	Beijing Enterprises Water Group, Ltd. (Water utilities)		7,414,000		5,214
	China Everbright International, Ltd. (Commercial services & supplies)		3,425,000		4,397
	China Mengniu Dairy Co., Ltd. (Food products)		2,038,000		3,324
	China Overseas Land & Investment, Ltd. (Real estate management & development)		4,250,000		14,861
	China Vanke Co., Ltd. Class “H” (Real estate management & development)**§		5,339,850		15,778
*	Ctrip.com International, Ltd.—ADR (Hotels, restaurants & leisure)		137,849		6,387
*	Dali Foods Group Co., Ltd.-144A (Food products)		6,666,500		3,785
	Geely Automobile Holdings, Ltd. (Automobiles)		6,180,000		3,293
	Great Wall Motor Co., Ltd. Class “H” (Automobiles)		7,468,500		8,721
	Huaneng Renewables Corporation, Ltd. Class “H” (Independent power & renewable electricity producers)		16,865,932		5,049
	NetEase, Inc.—ADR (Internet software & services)		70,978		12,864
	Ping An Insurance Group Co. of China, Ltd. Class “H” (Insurance)		4,520,000		25,020
*	Semiconductor Manufacturing International Corporation (Semiconductors & semiconductor equipment)		50,968,000		5,195
	Shanghai Fosun Pharmaceutical Group Co., Ltd. Class “H” (Pharmaceuticals)		296,500		859
	Shenzhou International Group Holdings, Ltd. (Textiles, apparel & luxury goods)		455,000		2,615
	Sino Biopharmaceutical, Ltd. (Pharmaceuticals)		2,600,000		2,362
	Sinopharm Group Co., Ltd. Class “H” (Health care providers & services)		828,800		3,326
	Tencent Holdings, Ltd. (Internet software & services)		1,623,760		31,993
	Xinjiang Goldwind Science & Technology Co., Ltd. Class “H” (Electrical equipment)		2,107,200		4,046
	Xinyi Solar Holdings, Ltd. (Semiconductors & semiconductor equipment)		8,064,000		3,288
					212,215

	Issuer	Shares		Value
	Common Stocks—(continued)
	Emerging Asia—(continued)
	India—15.0%
	Adani Ports & Special Economic Zone, Ltd. (Transportation infrastructure)		605,157	$	2,385
	Apollo Hospitals Enterprise, Ltd. (Health care providers & services)		118,694		2,627
	Asian Paints, Ltd. (Chemicals)		297,961		3,975
	Aurobindo Pharma, Ltd. (Pharmaceuticals)		329,439		4,355
	Bharti Infratel, Ltd. (Wireless telecommunication services)		706,161		4,543
	Britannia Industries, Ltd. (Food products)		100,202		4,514
	Dabur India, Ltd. (Personal products)		703,863		2,940
	Eicher Motors, Ltd. (Machinery)		7,935		2,021
	HDFC Bank, Ltd. (Banks)		989,900		16,185
	Hindustan Unilever, Ltd. (Household products)		367,768		4,787
	Housing Development Finance Corporation, Ltd. (Thrifts & mortgage finance)		750,626		14,336
	IndusInd Bank, Ltd. (Banks)		648,299		9,447
	Infosys, Ltd. (IT services)		878,490		14,700
	Lupin, Ltd. (Pharmaceuticals)		276,260		7,651
	Maruti Suzuki India, Ltd. (Automobiles)		60,073		4,195
	Motherson Sumi Systems, Ltd. (Auto components)		1,171,703		5,202
*	Tata Motors, Ltd. (Automobiles)		3,126,573		18,507
	Yes Bank, Ltd. (Banks)		831,251		9,121
					131,491
	Indonesia—3.7%
	PT Astra International Tbk (Automobiles)		13,152,900		5,725
	PT Bank Rakyat Indonesia Persero Tbk (Banks)		16,552,221		13,718
	PT Kalbe Farma Tbk (Pharmaceuticals)		18,066,015		1,730
	PT Lippo Karawaci Tbk (Real estate management & development)		24,055,400		1,806
	PT Matahari Department Store Tbk (Multiline retail)		1,810,000		2,311
	PT Telekomunikasi Indonesia Persero Tbk (Diversified telecommunication services)		30,409,200		6,850
					32,140
	Malaysia—0.3%
	IHH Healthcare Bhd (Health care providers & services)		1,678,000		2,572
	Philippines—2.1%
	Ayala Land, Inc. (Real estate management & development)		8,830,000		6,465
	BDO Unibank, Inc. (Banks)		2,990,880		6,674
	International Container Terminal Services, Inc. (Transportation infrastructure)		947,690		1,416
	Universal Robina Corporation (Food products)		1,059,900		4,189
					18,744

See accompanying Notes to Financial Statements.

December 31, 2015 William Blair Funds 89

Emerging Markets Growth Fund

Portfolio of Investments, December 31, 2015 (all dollar amounts in thousands)

	Issuer	Shares		Value
	Common Stocks—(continued)
	Emerging Asia—(continued)
	South Korea—10.1%
*	Amorepacific Corporation (Personal products)		20,899	$	7,388
*	Coway Co., Ltd. (Household durables)		60,225		4,319
*	Hotel Shilla Co., Ltd. (Specialty retail)		21,494		1,417
*	Kangwon Land, Inc. (Hotels, restaurants & leisure)		131,380		4,303
*	LG Chem, Ltd. (Chemicals)		14,481		4,057
*	LG Household & Health Care, Ltd. (Household products)		20,769		18,598
	Medy-Tox, Inc. (Biotechnology)		5,528		2,418
	Samsung Electronics Co., Ltd. (Technology hardware, storage & peripherals)		31,045		33,360
*	SK Hynix, Inc. (Semiconductors & semiconductor equipment)		484,970		12,718
					88,578
	Taiwan—10.3%
	Advantech Co., Ltd. (Technology hardware, storage & peripherals)		986,145		6,350
	Cub Elecparts, Inc. (Auto components)		249,168		2,981
	Delta Electronics, Inc. (Electronic equipment, instruments & components)		2,597,868		12,298
	E.Sun Financial Holding Co., Ltd. (Banks)		8,653,146		5,045
	Eclat Textile Co., Ltd. (Textiles, apparel & luxury goods)		282,000		3,893
	Feng TAY Enterprise Co., Ltd. (Textiles, apparel & luxury goods)		390,000		1,995
	Fubon Financial Holding Co., Ltd. (Diversified financial services)		2,912,560		3,990
	Largan Precision Co., Ltd. (Electronic equipment, instruments & components)		130,000		8,984
	MediaTek, Inc. (Semiconductors & semiconductor equipment)		824,000		6,272
	Taiwan Semiconductor Manufacturing Co., Ltd.-ADR (Semiconductors & semiconductor equipment)		1,319,166		30,011
	Taiwan Semiconductor Manufacturing Co., Ltd. (Semiconductors & semiconductor equipment)		2,060,000		8,968
					90,787
	Thailand—3.5%
	Airports of Thailand PCL (Transportation infrastructure)		784,800		7,546
	Bangkok Dusit Medical Services PCL Class “F” (Health care providers & services)		8,155,800		5,054
	Central Pattana PCL (Real estate management & development)		3,681,200		4,808
	CP ALL PCL (Food & staples retailing)		4,847,500		5,288
	Kasikornbank PCL (Banks)		1,365,800		5,674
	Thai Beverage PCL (Beverages)		5,484,500		2,669
					31,039

	Issuer	Shares		Value
	Common Stocks—(continued)
	Emerging Latin America—15.5%
	Argentina—0.5%
	MercadoLibre, Inc. (Internet software & services)		34,774	$	3,976
	Brazil—6.0%
	AMBEV S.A.—ADR (Beverages)		4,498,355		20,063
	BB Seguridade Participacoes S.A. (Insurance)		992,900		6,106
	BRF S.A. (Food products)		294,800		4,128
	CETIP S.A. — Mercados Organizados (Capital markets)		526,919		4,995
	Cielo S.A. (IT services)		732,800		6,222
	Lojas Renner S.A. (Multiline retail)		633,000		2,736
	Raia Drogasil S.A. (Food & staples retailing)		344,700		3,091
	Ultrapar Participacoes S.A. (Oil, gas & consumable fuels)		186,400		2,848
	WEG S.A. (Machinery)		572,780		2,164
					52,353
	Chile—1.0%
	Banco Santander Chile—ADR (Banks)		260,889		4,602
	S.A.C.I. Falabella (Multiline retail)		723,722		4,617
					9,219
	Mexico—7.0%
	Fibra Uno Administracion S.A. de C.V. (Real estate investment trusts (REITs))		2,983,069		6,576
	Fomento Economico Mexicano S.A.B. de C.V.—ADR (Beverages)		101,459		9,370
	Grupo Aeroportuario del Pacifico S.A.B.de C.V. Class “B” (Transportation infrastructure)		294,100		2,598
	Grupo Aeroportuario del Sureste S.A.B. de C.V.—ADR (Transportation infrastructure)		31,240		4,394
	Grupo Financiero Inbursa S.A.B. de C.V. Class “O” (Banks)		1,562,900		2,830
	Grupo Financiero Santander Mexico S.A.B. de C.V. (Banks)		1,653,700		2,896
	Infraestructura Energetica Nova S.A.B. de C.V. (Gas utilities)		667,400		2,788
	Nemak S.A.B. de C.V.-144A (Auto components)		2,768,500		3,744
*	Promotora y Operadora de Infraestructura S.A.B. de C.V. (Construction & engineering)		370,200		4,359
	Wal-Mart de Mexico S.A.B. de C.V. (Food & staples retailing)		8,752,000		22,090
					61,645
	Peru—1.0%
	Credicorp, Ltd. (Banks)†		92,549		9,007
	Emerging Europe, Mid-East, Africa—12.3%
	Czech Republic—0.3%
	Komercni banka A.S. (Banks)		14,092		2,805
	Qatar—0.5%
	Qatar National Bank S.A.Q. (Banks)		97,579		4,689

See accompanying Notes to Financial Statements.

90 Annual Report December 31, 2015

Emerging Markets Growth Fund

Portfolio of Investments, December 31, 2015 (all dollar amounts in thousands)

	Issuer	Shares		Value
	Common Stocks—(continued)
	Emerging Europe, Mid-East, Africa-—(continued)
	Russia—0.5%
	Magnit PJSC-GDR (Food & staples retailing)		96,863	$	3,896
	South Africa—5.8%
*	Aspen Pharmacare Holdings, Ltd. (Pharmaceuticals)		316,432		6,332
	Bidvest Group, Ltd. (Industrial conglomerates)		162,422		3,447
	Discovery, Ltd. (Insurance)		314,719		2,706
	FirstRand, Ltd. (Diversified financial services)		1,555,387		4,261
	Naspers, Ltd. (Media)		189,347		25,957
	Sanlam, Ltd. (Insurance)		632,017		2,474
	Steinhoff International Holdings N.V. (Household durables)		1,170,273		5,941
					51,118
	Turkey—2.3%
	BIM Birlesik Magazalar A.S. (Food & staples retailing)		173,890		3,062
	KOC Holding A.S. (Industrial conglomerates)		2,310,259		8,658
	TAV Havalimanlari Holding A.S. (Transportation infrastructure)		378,023		2,358
	Tofas Turk Otomobil Fabrikasi A.S. (Automobiles)		514,364		3,342
*	Tupras Turkiye Petrol Rafinerileri A.S. (Oil, gas & consumable fuels)		99,985		2,386
					19,806
	United Arab Emirates—2.9%
	Air Arabia PJSC (Airlines)		6,125,455		2,268
	DP World, Ltd. (Transportation infrastructure)		276,086		5,605
	Dubai Islamic Bank PJSC (Banks)		2,241,406		3,771
*	Emaar Malls Group PJSC (Real estate management & development)		4,334,178		3,257
	Emaar Properties PJSC (Real estate management & development)		4,748,578		7,356
	First Gulf Bank PJSC (Banks)		960,677		3,309
					25,566
	Total Common Stocks—96.9% (cost $883,702)				851,646
	Preferred Stock
	Brazil—1.3%
	Itau Unibanco Holding S.A. (Banks)		1,725,700		11,485
	Total Preferred Stock—1.3% (cost $12,627)				11,485
	Affiliated Fund
	Emerging Asia—0.5%
	China—0.5%
	William Blair China A-Share Fund, LLC**§		274,339		4,819
	Total Affiliated Fund—0.5% (cost $2,743)				4,819

	Principal
Issuer	Amount		Value
Repurchase Agreement
Fixed Income Clearing Corporation, 0.030% dated 12/31/15, due 1/4/16, repurchase price $11,079, collateralized by FNMA, 2.625%, due 9/6/24		$11,079	$	11,079
Total Repurchase Agreement—1.3% (cost $11,079)				11,079
Total Investments—100.0% (cost $910,151)				879,029
Cash and other assets, less liabilities—0.0%				82
Net assets—100.0%			$	879,111

ADR = American Depository Receipt

GDR = Global Depository Receipt

* Non-income producing securities

** = Fair valued pursuant to Valuation Procedures approved by the Board of Trustees. These holdings represent 2.34% of the Fund’s net assets at December 31, 2015.

§ = Deemed illiquid pursuant to Liquidity Procedures approved by the Board of Trustees. These holdings represent 2.34% of the Fund’s net assets at December 31, 2015.

† = U.S. listed foreign security

For securities primarily traded on exchanges or markets that close before the close of regular trading on the New York Stock Exchange, the Fund may use an independent pricing service to fair value price the securities pursuant to Valuation Procedures approved by the Board of Trustees.

See accompanying Notes to Financial Statements.

December 31, 2015 William Blair Funds 91

Emerging Markets Growth Fund

Portfolio of Investments, December 31, 2015 (all dollar amounts in thousands)

At December 31, 2015, the Fund’s Portfolio of Investments includes the following industry categories (as a percentage of long-term investments):

Information Technology	28.1	%
Financials	27.2	%
Consumer Discretionary	14.8	%
Consumer Staples	14.2	%
Industrials	6.9	%
Health Care	4.5	%
Utilities	1.5	%
Telecommunication Services	1.3	%
Materials	0.9	%
Energy	0.6	%
Total	100.0	%

At December 31, 2015, the Fund’s Portfolio of Investments includes the following currency categories (as a percentage of long-term investments):

U.S. Dollar	18.4	%
Hong Kong Dollar	17.1	%
Indian Rupee	15.1	%
South Korean Won	10.2	%
New Taiwan Dollar	7.0	%
South African Rand	5.9	%
Mexican Peso	5.5	%
Brazilian Real	5.0	%
Indonesian Rupiah	3.7	%
Thai Baht	3.3	%
UAE Dirham	2.3	%
Turkish Lira	2.3	%
Philippine Peso	2.2	%
All Other Currencies	2.0	%
Total	100.0	%

As of December 31, 2015, the Fund invested in William Blair China A-Share Fund, LLC, an affiliated fund. There are no unfunded commitments to the affiliated fund and the Fund may redeem its investment weekly, but is subject to monthly repatriation and other redemption restrictions imposed on the William Blair China A-Share Fund, LLC by the Chinese government.

Share Activity

Year Ended December 31, 2015

Change in net

unrealized

Balance

Balance

Dividend

Net realized

appreciation

Fund Name

12/31/2014

Purchases

Sales

12/31/2015

Value

Income

gain (loss)

(depreciation)

William Blair China A-Share Fund, LLC

2,362,400

—

2,088,061

274,339

$4,819

$—

$18,280

$(9,807)

See accompanying Notes to Financial Statements.

92 Annual Report December 31, 2015

	Emerging Markets Small Cap Growth Fund
	The Emerging Markets Small Cap Growth Fund seeks long-term capital appreciation.
	AN OVERVIEW FROM THE PORTFOLIO MANAGERS
Todd M. McClone Jeffrey A. Urbina	The William Blair Emerging Markets Small Cap Growth Fund (Class N shares) posted a 6.40% decrease, net of fees, for the twelve months ended December 31, 2015. By comparison, the Fund’s benchmark index, the MSCI Emerging Markets Small Cap Index (net) (the “Index”), decreased 6.85%. While the Fund’s absolute performance was negative in 2015, the Fund outperformed the Index. The Fund’s outperformance relative to the Index during 2015 was driven by positive stock selection across most sectors and countries, as well as favorable sector positioning. From a sector perspective, Consumer Discretionary, Industrials, and Materials stock selection were the primary contributors to relative performance versus the Index. Exposures to Korean travel and home furnishings companies Hana Tour Service and Hanssem, respectively, were key sources of strength in the Consumer Discretionary sector. Taiwan-based apparel manufacturers Eclat Textile and Makalot Industrial were also significant contributors. Materials sector performance was enhanced by good stock selection in the chemicals and construction materials industries, combined with the exclusion of metals & mining companies. These positive effects were partially mitigated by weak stock selection in the Financials, Healthcare, and Information Technology sectors. Within Financials, real estate holdings were the primary source of weakness. Indonesia property developer Pakuwon Jati’s share price was hampered by broad macroeconomic growth concerns and earnings that fell short of expectations due in part to foreign exchange losses on unhedged debt. Philippines developer Robinsons Land also detracted from relative performance due to deteriorating earnings trends and investor uncertainty about the company’s ability to meet its aggressive project timeline. Within Healthcare, Chinese pharmaceutical holdings Luye Pharma Group and China Medical System were notable detractors. Luye Pharma was hampered by its termination of a proposed acquisition that was viewed favorably by investors, resulting in an uncertain outlook as Luye’s research and development pipeline became its primary growth driver. China Medical System’s share price was hurt by drug pricing pressures given the company’s focus on higher-priced imported drugs. From a country perspective, Korea and Taiwan stock selection were the leading contributors for 2015, but the positive effects were moderated by the Fund’s underweightings to both countries. The overweightings and stock selection in India and Mexico were also notable contributors, while Chinese stock selection was a primary detractor. Please refer to the Global Markets Review and Outlook relating to the Fund on page 39.

December 31, 2015 William Blair Funds 93

Emerging Markets Small Cap Growth Fund

Performance Highlights (Unaudited)

Average Annual Total Return at 12/31/2015
	1 Year		3 Year		Since Inception
Class N(a)	(6.40	)%	7.63	%	12.34	%
Class I(a)	(6.03	)	7.96		12.67
MSCI Emerging Markets Small Cap Index (net)(a)	(6.85	)	(1.67	)	2.05
Institutional Class(b)	(5.97	)	8.05		8.54
MSCI Emerging Markets Small Cap Index (net)(b)	(6.85	)	(1.67	)	(1.19	)

(a)	Since inception is for the period from October 24, 2011 (Commencement of Operations) to December 31, 2015.
(b)	Since inception is for the period from December 20, 2012 (Commencement of Operations) to December 31, 2015.

Performance cited represents past performance. Past performance does not guarantee future results and current performance may be lower or higher than the data quoted. Results shown are average annual returns, which assume reinvestment of dividends and capital gains. Investment returns and principal will fluctuate and you may have a gain or loss when you sell shares. For the most current month-end performance information, please call 1-800-742-7272, or visit our Web site at www.williamblairfunds.com. From time to time, the investment adviser may waive fees or reimburse expenses for the Fund. Without these waivers/reimbursements, performance would be lower. International investing involves special risk considerations, including currency fluctuations, lower liquidity, economic and political risk. Smaller capitalization stocks are also more sensitive to purchase/sale transactions and changes in the issuer’s financial condition. Class N shares are available to the general public without a sales load. Class I shares are available to certain institutional investors and advisory clients of William Blair Investment Management, LLC and William Blair & Company, L.L.C., without a sales load or distribution (12b-1) fees. Institutional Class shares are available to institutional investors without a sales load or distribution (12b-1) or service fees.

The performance highlights and graph presented above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

The Morgan Stanley Capital International (MSCI) Emerging Markets Small Cap Index (net) is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of emerging markets. This series approximates the minimum possible dividend reinvestment.

This report identifies the Fund’s investments on December 31, 2015. These holdings are subject to change. Not all stocks in the Fund performed the same, nor is there any guarantee that these stocks will perform as well in the future. Market forecasts provided in this report may not necessarily come to pass.

Sector Diversification (Unaudited)

 

The sector diversification shown is based on the total long-term securities.

94 Annual Report December 31, 2015

Emerging Markets Small Cap Growth Fund

Portfolio of Investments, December 31, 2015 (all dollar amounts in thousands)

	Issuer	Shares		Value
	Common Stocks
	Emerging Asia—78.8%
	China—22.5%
	Anta Sports Products, Ltd. (Textiles, apparel & luxury goods)		758,000	$	2,083
	Beijing Capital International Airport Co., Ltd. Class “H” (Transportation infrastructure)		2,266,000		2,447
*	Beijing Enterprises Water Group, Ltd. (Water utilities)		1,614,000		1,135
	Bloomage BioTechnology Corporation, Ltd. (Chemicals)		602,500		1,493
	Boer Power Holdings, Ltd. (Electrical equipment)		1,188,000		2,143
*	CAR, Inc. (Road & rail)		577,000		956
*	China Biologic Products, Inc. (Biotechnology)		25,519		3,635
	China Everbright International, Ltd. (Commercial services & supplies)		554,700		712
	China Lilang, Ltd. (Textiles, apparel & luxury goods)		1,158,000		858
	China Lodging Group, Ltd.—ADR (Hotels, restaurants & leisure)		56,857		1,777
*	China Taiping Insurance Holdings Co., Ltd. (Insurance)		1,209,800		3,754
*	China Traditional Chinese Medicine Co., Ltd. (Pharmaceuticals)		2,058,000		1,410
	Chongqing Rural Commercial Bank Co., Ltd. Class “H” (Banks)		4,749,000		2,880
	Cosmo Lady China Holdings Co., Ltd.—144A (Textiles, apparel & luxury goods)		1,404,000		1,176
	CT Environmental Group, Ltd. (Water utilities)		10,398,000		3,448
	Geely Automobile Holdings, Ltd. (Automobiles)		7,085,000		3,776
	Hollysys Automation Technologies, Ltd. (Electronic equipment, instruments & components)†		38,813		861
	KWG Property Holding, Ltd. (Real estate management & development)		3,458,000		2,561
*	Noah Holdings, Ltd.-ADR (Capital markets)		88,348		2,468
	PAX Global Technology, Ltd. (Electronic equipment, instruments & components)		1,958,000		2,019
	Shenzhou International Group Holdings, Ltd. (Textiles, apparel & luxury goods)		848,000		4,875
	Silergy Corporation (Semiconductors & semiconductor equipment)		167,000		1,729
	Sino Biopharmaceutical, Ltd. (Pharmaceuticals)		3,837,000		3,485
*	Sound Global, Ltd. (Water utilities)**§		1,824,000		1,294
*	TAL Education Group-ADR (Diversified consumer services)		89,948		4,180
	Travelsky Technology, Ltd. Class “H” (IT services)		1,301,000		2,149
	Wasion Group Holdings, Ltd. (Electronic equipment, instruments & components)		1,810,000		1,868
	Xinjiang Goldwind Science & Technology Co., Ltd. Class “H” (Electrical equipment)		1,058,400		2,032

	Issuer	Shares		Value
	Common Stocks—(continued)
	Emerging Asia—(continued)
	China—(continued)
	Xinyi Solar Holdings, Ltd. (Semiconductors & semiconductor equipment)		8,904,000	$	3,631
					66,835
	Hong Kong—1.1%
*	IMAX China Holding, Inc.-144A (Media)		307,000		2,179
	Shenzhen Investment, Ltd. (Real estate management & development)		2,240,000		1,046
					3,225
	India—18.5%
	Alembic Pharmaceuticals, Ltd. (Pharmaceuticals)		156,041		1,635
	Apollo Hospitals Enterprise, Ltd. (Health care providers & services)		87,139		1,929
	Aurobindo Pharma, Ltd. (Pharmaceuticals)		206,683		2,733
	Bajaj Finance, Ltd. (Consumer finance)		37,407		3,399
	Berger Paints India, Ltd. (Chemicals)		501,483		2,024
	Blue Dart Express, Ltd. (Air freight & logistics)		19,397		1,979
	Britannia Industries, Ltd. (Food products)		13,799		622
	Dabur India, Ltd. (Personal products)		385,269		1,609
*	Dish TV India, Ltd. (Media)		931,443		1,433
	Emami, Ltd. (Personal products)		20,373		307
	Finolex Industries, Ltd. (Chemicals)		190,673		869
	Godrej Consumer Products, Ltd. (Personal products)		94,993		1,900
	Gruh Finance, Ltd. (Thrifts & mortgage finance)		645,286		2,663
	Havells India, Ltd. (Electrical equipment)		504,854		2,327
	Indiabulls Housing Finance, Ltd. (Thrifts & mortgage finance)		137,776		1,524
	IndusInd Bank, Ltd. (Banks)		153,959		2,243
*	InterGlobe Aviation, Ltd.—144A (Airlines)		16,196		303
	Kajaria Ceramics, Ltd. (Building products)		160,135		2,372
	LIC Housing Finance, Ltd. (Thrifts & mortgage finance)		486,551		3,746
	Marico, Ltd.		622,030		2,124
	Max India, Ltd. (Insurance)		183,450		1,408
	Oracle Financial Services Software, Ltd. (Software)		23,002		1,294
	PI Industries, Ltd. (Chemicals)		152,099		1,496
	Repco Home Finance, Ltd. (Consumer finance)		191,306		1,988
	Sadbhav Engineering, Ltd. (Construction & engineering)		291,975		1,505
*	SKS Microfinance, Ltd. (Consumer finance)		142,244		1,071
	Supreme Industries, Ltd. (Chemicals)		150,805		1,557
	Torrent Pharmaceuticals, Ltd. (Pharmaceuticals)		116,024		2,552
	Voltas, Ltd. (Construction & engineering)		410,010		2,020
	Yes Bank, Ltd. (Banks)		223,148		2,449
					55,081

See accompanying Notes to Financial Statements.

December 31, 2015 William Blair Funds 95

Emerging Markets Small Cap Growth Fund

Portfolio of Investments, December 31, 2015 (all dollar amounts in thousands)

	Issuer	Shares		Value
	Common Stocks—(continued)
	Emerging Asia—(continued)
	Indonesia—2.9%
	PT Ciputra Development Tbk (Real estate management & development)		12,285,500	$	1,301
	PT Indofood CBP Sukses Makmur Tbk (Food products)		919,000		898
	PT Matahari Department Store Tbk (Multiline retail)		1,797,500		2,295
	PT Pakuwon Jati Tbk (Real estate management & development)		43,302,500		1,558
	PT Summarecon Agung Tbk (Real estate management & development)		9,741,100		1,166
	PT Surya Citra Media Tbk (Media)		5,681,300		1,278
					8,496
	Malaysia—0.8%
	Globetronics Technology Bhd (Semiconductors & semiconductor equipment)		568,300		860
	Inari Amertron Bhd (Electronic equipment, instruments & components)		665,800		710
	My EG Services Bhd (IT services)		765,700		771
					2,341
	Pakistan—2.3%
	D.G. Khan Cement Co., Ltd. (Construction materials)		1,639,000		2,305
	Engro Fertilizers, Ltd. (Chemicals)		858,500		691
*	Engro Foods, Ltd. (Food products)		1,517,500		2,126
	Lucky Cement, Ltd. (Construction materials)		224,200		1,055
	Maple Leaf Cement Factory, Ltd. (Construction materials)		1,029,621		734
					6,911
	Philippines—2.9%
	D&L Industries, Inc. (Chemicals)		3,124,900		608
	GT Capital Holdings, Inc. (Diversified financial services)		61,665		1,730
	Robinsons Land Corporation (Real estate management & development)		3,103,100		1,814
	Robinsons Retail Holdings, Inc. (Food & staples retailing)		48,550		65
	Security Bank Corporation (Banks)		536,650		1,619
	Universal Robina Corporation (Food products)		553,000		2,186
	Vista Land & Lifescapes, Inc. (Real estate management & development)		4,482,700		493
					8,515
	South Korea—9.9%
	BGF retail Co., Ltd. (Food & staples retailing)		16,267		2,379
	Cell Biotech Co., Ltd. (Biotechnology)		1,288		63
	Cosmax, Inc. (Personal products)		10,875		1,706
	Hana Tour Service, Inc. (Hotels, restaurants & leisure)		20,440		2,005
	Hanssem Co., Ltd. (Household durables)		14,140		2,792
	InBody Co., Ltd. (Health care equipment & supplies)		57,677		2,853

Issuer	Shares		Value
Common Stocks—(continued)
Emerging Asia—(continued)
South Korea—(continued)
Kangwon Land, Inc. (Hotels, restaurants & leisure)		91,340	$	2,991
KEPCO Plant Service & Engineering Co., Ltd. (Commercial services & supplies)		25,340		1,923
Korea Investment Holdings Co., Ltd. (Capital markets)		65,690		2,776
Korea Kolmar Co., Ltd. (Personal products)		30,399		2,460
Medy-Tox, Inc. (Biotechnology)		8,471		3,705
Modetour Network, Inc. (Hotels, restaurants & leisure)		55,462		1,594
OCI Materials Co., Ltd. (Chemicals)		21,796		2,164
				29,411
Taiwan—13.4%
Advantech Co., Ltd. (Technology hardware, storage & peripherals)		187,000		1,204
Cleanaway Co., Ltd. (Commercial services & supplies)		234,000		1,243
Cub Elecparts, Inc. (Auto components)		180,080		2,155
E.Sun Financial Holding Co., Ltd. (Banks)		6,851,611		3,995
Eclat Textile Co., Ltd. (Textiles, apparel & luxury goods)		77,000		1,063
Ennoconn Corporation (Technology hardware, storage & peripherals)		96,000		1,087
Feng TAY Enterprise Co., Ltd. (Textiles, apparel & luxury goods)		339,000		1,734
Ginko International Co., Ltd. (Health care equipment & supplies)		112,000		1,483
Hota Industrial Manufacturing Co., Ltd. (Auto components)		705,000		2,597
Kung Long Batteries Industrial Co., Ltd. (Electrical equipment)		238,000		956
Macauto Industrial Co., Ltd. (Auto components)		300,000		1,525
Makalot Industrial Co., Ltd. (Textiles, apparel & luxury goods)		248,601		1,763
Novatek Microelectronics Corporation (Semiconductors & semiconductor equipment)		469,000		1,842
Poya Co., Ltd. (Multiline retail)		162,100		1,500
Shin Zu Shing Co., Ltd. (Machinery)		578,000		2,226
Sinbon Electronics Co., Ltd. (Electronic equipment, instruments & components)		799,000		1,494
Sporton International, Inc. (Professional services)		482,757		2,962
St Shine Optical Co., Ltd. (Health care equipment & supplies)		172,000		3,461
Taiwan Paiho, Ltd. (Textiles, apparel & luxury goods)		1,144,000		2,536
Tung Thih Electronic Co., Ltd. (Auto components)		103,600		1,009
Voltronic Power Technology Corporation (Electrical equipment)		126,103		1,879
				39,714

See accompanying Notes to Financial Statements.

96 Annual Report December 31, 2015

Emerging Markets Small Cap Growth Fund

Portfolio of Investments, December 31, 2015 (all dollar amounts in thousands)

	Issuer	Shares		Value
	Common Stocks—(continued)
	Emerging Asia—(continued)
	Thailand—4.5%
	Beauty Community PCL (Specialty retail)		15,935,500	$	2,546
	Central Plaza Hotel PCL (Hotels, restaurants & leisure)		1,842,000		2,252
	Delta Electronics Thailand PCL (Electronic equipment, instruments & components)		441,100		938
	KCE Electronics PCL (Electronic equipment, instruments & components)		1,506,100		2,930
	Minor International PCL (Hotels, restaurants & leisure)		2,800,101		2,821
	Srisawad Power 1979 PCL Class “F” (Consumer finance)		1,471,200		1,952
					13,439
	Emerging Europe, Mid-East, Africa—10.4%
	Hungary—0.4%
	Richter Gedeon Nyrt (Pharmaceuticals)		60,895		1,154
	Kenya—0.7%
	Safaricom, Ltd. (Wireless telecommunication services)		13,284,400		2,091
	Poland—1.1%
	Eurocash S.A. (Food & staples retailing)		183,781		2,272
	KRUK S.A. (Consumer finance)		19,463		863
					3,135
	Qatar—0.5%
	Al Meera Consumer Goods Co. (Food & staples retailing)		26,553		1,604
	South Africa—4.2%
	AVI, Ltd. (Food products)		302,497		1,513
	Capitec Bank Holdings, Ltd. (Banks)		28,401		989
	Cashbuild, Ltd. (Specialty retail)		62,181		1,206
	Clicks Group, Ltd. (Food & staples retailing)		338,118		1,946
	EOH Holdings, Ltd. (IT services)		135,897		1,186
	Famous Brands, Ltd. (Hotels, restaurants & leisure)		109,278		919
	Mr Price Group, Ltd. (Specialty retail)		73,324		948
	Nampak, Ltd. (Containers & packaging)		634,047		1,019
	PSG Group, Ltd. (Diversified financial services)		58,728		849
	Resilient REIT, Ltd. (Real estate investment trusts (REITs))		65,998		493
	Telkom S.A. SOC, Ltd. (Diversified telecommunication services)		313,170		1,303
					12,371
	Turkey—2.5%
	Arcelik A.S. (Household durables)		234,772		1,124
	TAV Havalimanlari Holding A.S. (Transportation infrastructure)		133,546		833
	Tofas Turk Otomobil Fabrikasi A.S. (Automobiles)		544,455		3,538
*	Tupras Turkiye Petrol Rafinerileri A.S. (Oil, gas & consumable fuels)		79,486		1,897
					7,392

	Issuer	Shares		Value
	Common Stocks—(continued)
	Emerging Europe, Mid-East, Africa—(continued)
	United Arab Emirates—1.0%
*	Emaar Malls Group PJSC (Real estate management & development)		2,065,583	$	1,552
	NMC Health plc (Health care providers & services)		114,907		1,424
					2,976
	Emerging Latin America—9.3%
	Brazil—1.1%
	Lojas Renner S.A. (Multiline retail)		164,100		709
	Raia Drogasil S.A. (Food & staples retailing)		176,000		1,579
	Valid Solucoes e Servicos de Seguranca em Meios de Pagamento e Identificacao S.A (Commercial services & supplies)		84,321		906
					3,194
	Mexico—8.2%
	Alsea S.A.B. de C.V. (Hotels, restaurants & leisure)		851,300		2,963
	Banregio Grupo Financiero S.A.B. de C.V. (Banks)		651,008		3,325
*	Controladora Vuela Cia de Aviacion S.A.B. de C.V.—ADR (Airlines)		106,739		1,832
	Credito Real S.A.B. de C.V. SOFOM E.R. (Consumer finance)		1,232,659		3,126
	Gruma S.A.B. de C.V. Class “B” (Food products)		106,300		1,496
*	Grupo Aeroportuario del Centro Norte S.A.B. de C.V. (Transportation infrastructure)		641,709		3,125
	Grupo Aeroportuario del Pacifico S.A.B. de C.V. Class “B” (Transportation infrastructure)		352,800		3,117
	Grupo Financiero Santander Mexico S.A.B. de C.V. (Banks)		549,501		962
	Grupo Lala S.A.B. de C.V. (Food products)		640,490		1,482
	Nemak S.A.B. de C.V.—144A (Auto components)		1,569,200		2,122
*	Unifin Financiera SAPI de C.V. SOFOM E.N.R. (Consumer finance)		294,200		911
					24,461
	Total Common Stocks—98.5% (cost $285,624)				292,346

See accompanying Notes to Financial Statements.

December 31, 2015 William Blair Funds 97

Emerging Markets Small Cap Growth Fund

Portfolio of Investments, December 31, 2015 (all dollar amounts in thousands)

	Principal
Issuer	Amount		Value
Repurchase Agreement
Fixed Income Clearing Corporation, 0.030% dated 12/31/15, due 1/4/16, repurchase price $1,128, collateralized by FNMA, 2.625%, due 9/6/24		$1,128	$	1,128
Total Repurchase Agreement—0.4% (cost $1,128)				1,128
Total Investments—98.9% (cost $286,752)				293,474
Cash and other assets, less liabilities—1.1%				3,367
Net assets—100.0%			$	296,841

ADR = American Depository Receipt

* Non-income producing securities

† = U.S. listed foreign security

** = Fair valued pursuant to Valuation Procedures approved by the Board of Trustees. This holding represents 0.44% of the Fund’s net assets at December 31, 2015.

§ = Deemed illiquid pursuant to Liquidity Procedures approved by the Board of Trustees. This holding represents 0.44% of the Fund’s net assets at December 31, 2015.

For securities primarily traded on exchanges or markets that close before the close of regular trading on the New York Stock Exchange, the Fund may use an independent pricing service to fair value price the securities pursuant to Valuation Procedures approved by the Board of Trustees.

At December 31, 2015, the Fund’s Portfolio of Investments includes the following industry categories (as a percentage of long-term investments):

Consumer Discretionary	24.7	%
Financials	22.1	%
Industrials	13.6	%
Health Care	10.8	%
Consumer Staples	10.4	%
Information Technology	9.1	%
Materials	5.5	%
Utilities	2.0	%
Telecommunication Services	1.2	%
Energy	0.6	%
Total	100.0	%

At December 31, 2015, the Fund’s Portfolio of Investments includes the following currency categories (as a percentage of long-term investments):

Hong Kong Dollar	19.0	%
Indian Rupee	18.8	%
New Taiwan Dollar	14.2	%
South Korean Won	10.1	%
Mexican Peso	7.7	%
U.S. Dollar	5.0	%
Thai Baht	4.6	%
South African Rand	4.2	%
Philippine Peso	2.9	%
Indonesian Rupiah	2.9	%
Turkish Lira	2.5	%
Pakistan Rupee	2.4	%
Brazilian Real	1.1	%
All Other Currencies	4.6	%
Total	100.0	%

See accompanying Notes to Financial Statements.

98 Annual Report December 31, 2015

Fixed Income Market Review and Outlook

The capital markets experienced mixed results during calendar year 2015. Stocks achieved sub-par performance. The broad U.S. stock market returned 0.48%. Large-cap stocks outperformed small-cap stocks; large-cap stocks returned 1.38% while small-cap stocks returned -4.41%. International stocks generated negative returns; developed markets returned -0.81%, while emerging markets stocks declined 14.92%. Investment-grade, U.S. dollar-denominated bonds gained 0.55% during the year.

The first half of 2015 was relatively quiet, but the second half of the year was marked by an increase in volatility. A number of the factors weighed on the markets during the volatile third quarter, including concerns over growth in China, declines in commodity prices, and monetary policy in the U.S. However, riskier assets rebounded during the fourth quarter and helped to mark a reversal of the broad-based weakness experienced during the third quarter of the year.

Two of the world’s largest economies appeared to be at the forefront of investors’ attention: the U.S. and China. In the U.S., the economy appeared to have continued to improve, with growth of roughly 2%, the unemployment rate declining to 5.0%, and inflationary pressures benign. The Federal Reserve (the “Fed”) deemed it appropriate to tighten monetary policy by raising the target range of the Federal Funds rate by 25 basis points to 0.25 – 0.50%. Meanwhile, there were concerns over the implications of what slowing Chinese growth means for the global economy. Chinese stocks posted significant declines during 2015. In addition, many market participants attributed the weakness in commodity prices to concerns that conditions in China will weaken the demand for commodities. Commodity prices weakened throughout the year; oil prices declined significantly to end the year at $37/barrel, and broader-based commodity indexes revealed a near-continuous decline in prices during the second half of 2015.

As mentioned, the Federal Open Market Committee (“FOMC”) raised interest rates in December 2015 for the first time since 2006. By doing so, the U.S. exited the zero interest rate policy that has been in place since December 2008. The FOMC’s statement cited expanding economic activity, strong labor market conditions, and confidence that inflationary pressures will rise as the reasons behind the policy decision. The FOMC also stated that it expected the pace of interest rate increases to be gradual. This stance was reflected in the markets following the policy decision, as market-implied probabilities suggested the FOMC will embark on a series of four 25 basis points hike during calendar year 2016.

Fixed income market liquidity continues to garner significant attention. The concerns surround a scenario where large-scale redemptions force pooled fixed income funds to accept liquidity at prices below where the securities were valued on a mark-to-market basis. These concerns are magnified by two structural changes to the fixed income markets that have occurred over the past ten years. First, dealer banks have less ability to use their firms’ capital to make markets for fixed income securities, so the dealers adjust prices in an attempt to match buyers and sellers. Second, pooled fixed income investment vehicles that promise daily or second-by-second liquidity (mutual funds and exchange-traded funds, respectively) have grown in importance. We believe that price volatility will continue to manifest itself during periods of increased redemption activity in such a regime. We do note that while pooled investment funds have grown in prominence, they still represent less than 25% of the holders of corporate bonds, and there remains significant demand for fixed income securities from investors that do not mark their positions daily, including pension funds seeking to de-risk their plans, insurance companies, and foreign investors seeking incremental yield.

Some of these concerns over fixed income market liquidity came to fruition during the fourth quarter of 2015 when a large high-yield mutual fund announced that it was suspending redemptions and liquidating the Fund. The fund had invested in lower-quality and less-liquid high yield bonds. In the immediate aftermath of the announcement, the high yield bond market declined, with lower-quality segments of the market suffering the worst.

During 2015, the Barclays U.S. Aggregate Index returned 0.55%. Interest rates rose marginally during the year. Mortgage-backed securities (“MBS”) earned similar returns to Treasuries after adjusting for duration. Within the MBS market, higher-coupon 30- and 15-year pools generated the strongest gains on a duration-adjusted basis. High-grade corporate bonds also trailed Treasuries after adjusting for the effects of duration. One bright spot within the credit market was Financials, as the sector posted gains after adjusting for duration. High yield and emerging market-related corporate bonds generated negative total returns on an absolute and duration-adjusted basis.

We believe that the FOMC will stick to its plan to raise the Federal Funds rate gradually throughout 2016. Growth and employment in the U.S. has improved; estimates indicate that GDP grew by 2.0 – 2.5% in real terms during 2015, and the unemployment rate declined to 5.0%. However, inflationary pressures have weakened. Commodity prices declined, price indexes such as the Consumer Price Index and Personal Consumption Expenditures Price Index showed that inflation was below the FOMC’s stated target range of 2.0% – 2.5%, and forward-looking, market-implied inflation expectations decreased below the target range. We believe that the FOMC will pay careful attention to its price stability objective when they decide whether to further raise the Federal Funds rate to ensure that doing so will not spur disinflationary pressures.

December 31, 2015 William Blair Funds 99

Fixed Income Market Review and Outlook

We believe that interest rate volatility may persist in the short-term as taxable fixed income fund flows remain elevated. These fund flows have been large in magnitude and have impacted long-term Treasury securities and the spread sectors. We believe that one byproduct of this volatility will be that opportunities will emerge in the spread sectors (corporate and mortgage-backed securities) at favorable valuation levels.

We believe that spread sectors are poised to lead the market over the longer term. Corporate risk premiums are at levels above their longer-term averages, and risk premiums of higher-coupon segments of the agency MBS market remain attractive. In addition, we believe Treasuries are likely to struggle as the FOMC embarks on a tightening cycle.

We believe that higher-coupon segments (coupon rates of 5.0% and above for 30-year) of the agency MBS market offer compelling value. These segments of the agency MBS market offer attractive spreads and a defensive duration profile. The key risk of these securities is that the underlying borrowers are in-the-money to refinance their loan. We believe this risk can be mitigated by focusing on pools comprised of borrowers that do not have the economic incentive to refinance their loans, namely, low-loan balance pools.

We believe that the corporate bond market remains attractive. Although fundamentals have recently deteriorated, valuations have also increased. We observed an increase in leverage among industrial companies over the past year as companies secured financing at low nominal yields in the robust new issue market for corporate bonds. Corporate risk spreads have adjusted to reflect these changes, and we find current valuation levels to be appealing. We remain concerned about idiosyncratic risks, including shareholder-friendly activities such as leveraged finance mergers and acquisitions, large share repurchases, and special dividends. Importantly, we do not believe the fixed income market will enter a period of excessive leveraged buyout activity.

100 Annual Report December 31, 2015

	Bond Fund
	The Bond Fund seeks to outperform the Barclays Capital U.S. Aggregate Bond Index by maximizing total return through a combination of income and capital appreciation.
	AN OVERVIEW FROM THE PORTFOLIO MANAGERS
Christopher T. Vincent Paul J. Sularz	The William Blair Bond Fund (Class N shares) posted a 0.23% decrease, net of fees, for the twelve months ended December 31, 2015. By comparison, the Fund’s benchmark, the Barclays U.S. Aggregate Bond Index (the “Index”), increased 0.55%. There were a couple of factors that detracted from the Fund’s relative performance during the period. Sector allocation detracted from relative performance, as the Fund was underweight to fixed-rate Treasury securities, which outperformed mortgage-backed and corporate securities. An allocation to U.S. Treasury Inflation-Protected Securities impacted relative performance negatively, as market-implied inflation expectations declined during the year. Some corporate bonds in the energy and materials sectors detracted from performance, as those sectors lagged the broad market as oil and other commodity prices declined during the year. Finally, positions in bonds of Brazilian issuers Odebrecht and Petrobras negatively impacted relative performance as the Brazilian government continued its investigation into corruption that included executives from each company. A couple of factors contributed to the Fund’s relative performance during the year. The Fund’s high yield corporate bonds impacted results favorably. Within the sector, positions in bonds issued by Credit Suisse Group, Standard Pacific Corp., and Goodyear Tire & Rubber Company were among the Fund holdings that performed well. Security selection of mortgage-backed securities also positively impacted relative performance. The Fund favored higher-coupon segments of the 30-year market, and that segment performed well during 2015. Finally, the Fund experienced positive selection results of investment-grade corporate bonds, in part due to the Fund’s overweight to bonds issued by financial institutions. Please refer to the Fixed Income Market Review and Outlook relating to the Fund on page 99.

December 31, 2015 William Blair Funds 101

Bond Fund

Performance Highlights (Unaudited)

Average Annual Total Return at 12/31/2015
	1 Year			3 Year			5 Year			Since Inception(a)
Class N		(0.23	)%		1.13	%		3.77	%		4.91	%
Class I		(0.05	)		1.31			3.97			5.08
Institutional Class		0.01			1.43			4.10			5.23
Barclays U.S. Aggregate Bond Index		0.55			1.44			3.25			4.47

(a) For the period from May 1, 2007 (Commencement of Operations) to December 31, 2015.

Performance cited represents past performance. Past performance does not guarantee future results and current performance may be lower or higher than the data quoted. Results shown are average annual total returns, which assume reinvestment of dividends and capital gains. Investment returns and principal will fluctuate and you may have a gain or loss when you sell shares. For the most current month-end performance information, please call 1-800-742-7272, or visit our Web site at www.williamblairfunds.com. From time to time, the investment adviser may waive fees or reimburse expenses for the Fund. Without these waivers/reimbursements, performance would be lower. Class N shares are available to the general public without a sales load. Class I shares are available to certain institutional investors and advisory clients of William Blair Investment Management, LLC and William Blair & Company, L.L.C., without a sales load or distribution (12b-1) fees. Institutional Class shares are available to institutional investors without a sales load or distribution (12b-1) or service fees.

The performance highlights and graph presented above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

The Barclays U.S. Aggregate Bond Index indicates broad intermediate government/corporate bond market performance.

This report identifies the Fund’s investments on December 31, 2015. These holdings are subject to change. Not all investments in the Fund performed the same, nor is there any guarantee that these investments will perform as well in the future. Market forecasts provided in this report may not necessarily come to pass.

Sector Diversification (Unaudited)

The sector diversification shown is based on the total investments.

102 Annual Report December 31, 2015

Bond Fund

Portfolio of Investments, December 31, 2015 (all dollar amounts in thousands)

Issuer	Principal Amount		Value
U.S. Government and U.S. Government Agency—51.8%
U.S. Treasury Inflation Indexed Notes/Bonds—5.7%
U.S. Treasury Inflation Indexed Note, 1.875%, due 7/15/19	$	4,456	$	4,728
U.S. Treasury Inflation Indexed Bond, 3.875%, due 4/15/29		16,638		22,637
Total U.S. Treasury Inflation Indexed Notes/Bonds				27,365
U.S. Treasury—0.6%
U.S. Treasury Strip Principal, 0.000%, due 5/15/20		3,100		2,875
Government National Mortgage Association (GNMA)—0.4%
#623162, 6.500%, due 7/15/18		16		16
#589335, 6.500%, due 10/15/22		26		30
#357322, 7.000%, due 9/15/23		9		10
#616250, 6.000%, due 2/15/24		3		4
#509405, 7.500%, due 8/15/29		1		1
GNR 2004-2 M5, 4.891%, due 7/16/34		28		29
#699118, 6.000%, due 9/15/38		1,853		2,080
Total GNMA Mortgage Obligations				2,170
Federal Home Loan Mortgage Corp. (FHLMC)—14.4%
#G12258, 6.000%, due 8/1/16		1		1
#J04096, 6.500%, due 1/1/17		3		3
#E90398, 7.000%, due 5/1/17		12		13
#G11549, 7.000%, due 7/1/17		1		1
#G90027, 6.000%, due 11/17/17		3		3
#G30093, 7.000%, due 12/1/17		4		4
#O20005, 6.500%, due 1/1/18		3		4
#E96940, 4.500%, due 6/1/18		20		21
#B13747, 5.000%, due 4/1/19		266		280
#G30254, 6.500%, due 5/1/19		5		5
#G11697, 5.500%, due 4/1/20		471		495
#G12113, 5.500%, due 5/1/21		424		455
#J02986, 6.500%, due 7/1/21		17		19
#G30255, 7.000%, due 7/1/21		4		4
#G30243, 6.000%, due 12/1/21		5		5
#G12720, 5.500%, due 6/1/22		48		52
#D95621, 6.500%, due 7/1/22		30		35
#G14150, 4.500%, due 4/1/26		2,238		2,405
#J16051, 4.500%, due 7/1/26		1,004		1,075
#G02183, 6.500%, due 3/1/30		32		37
#G01728, 7.500%, due 7/1/32		137		168
#C01385, 6.500%, due 8/1/32		112		130
#G01551, 6.000%, due 4/1/33		2,496		2,849
#C01623, 5.500%, due 9/1/33		140		156
#A15039, 5.500%, due 10/1/33		2		3
#A17603, 5.500%, due 1/1/34		2,339		2,654
#G01705, 5.500%, due 6/1/34		987		1,130
#G01843, 6.000%, due 6/1/35		26		29
#G02141, 6.000%, due 3/1/36		695		794
#A62179, 6.000%, due 6/1/37		293		334
#G03711, 6.000%, due 6/1/37		986		1,123

Issuer	Principal Amount		Value
U.S. Government and U.S. Government Agency—(continued)
Federal Home Loan Mortgage Corp. (FHLMC)—(continued)
#A63539, 6.000%, due 7/1/37	$	377	$	428
#A62858, 6.500%, due 7/1/37		153		174
#G03170, 6.500%, due 8/1/37		319		364
#A66843, 6.500%, due 10/1/37		1,045		1,218
#G04053, 5.500%, due 3/1/38		723		816
#A78138, 5.500%, due 6/1/38		435		489
#G04466, 5.500%, due 7/1/38		19,832		22,597
#G04544, 6.000%, due 8/1/38		907		1,038
#A81799, 6.500%, due 9/1/38		733		835
#G05723, 6.500%, due 11/1/38		1,873		2,135
#A86143, 5.000%, due 5/1/39		66		73
#G05810, 5.000%, due 2/1/40		17,661		19,782
#G05875, 5.500%, due 2/1/40		879		993
#G06017, 5.500%, due 6/1/40		221		249
#C03665, 9.000%, due 4/1/41		893		1,097
#G06583, 5.000%, due 6/1/41		2,222		2,489
Total FHLMC Mortgage Obligations				69,064
Federal National Mortgage Association (FNMA)—30.7%
#679247, 7.000%, due 8/1/17		2		2
#683100, 5.500%, due 2/1/18		93		96
#689612, 5.000%, due 5/1/18		43		45
#695910, 5.000%, due 5/1/18		113		117
#697593, 5.000%, due 5/1/18		99		103
#704049, 5.500%, due 5/1/18		220		226
#735357, 5.500%, due 5/1/18		294		304
#735003, 5.500%, due 7/1/18		303		313
#251960, 6.000%, due 9/1/18		2		2
#745498, 7.000%, due 11/1/18		179		183
#770395, 5.000%, due 4/1/19		3		3
#788424, 5.500%, due 9/1/19		18		19
#835563, 7.000%, due 10/1/20		16		17
#900725, 6.000%, due 8/1/21		40		44
#893325, 7.000%, due 9/1/21		15		16
#735104, 7.000%, due 5/1/22		2		2
#949589, 5.500%, due 8/1/22		3,141		3,406
#949592, 6.000%, due 8/1/22		4,942		5,436
#889342, 5.000%, due 3/1/23		57		61
#AA2924, 4.500%, due 4/1/24		286		307
#931299, 4.500%, due 6/1/24		661		707
#AC1848, 4.500%, due 9/1/24		415		448
#AC5410, 4.500%, due 10/1/24		327		351
#932095, 4.000%, due 11/1/24		1,542		1,648
#932100, 4.500%, due 11/1/24		277		298
#AC9560, 5.000%, due 1/1/25		1,987		2,147
#AD8164, 4.000%, due 8/1/25		683		733
#AB1459, 4.000%, due 9/1/25		302		323
#255956, 5.500%, due 10/1/25		21		23
#AH2671, 4.000%, due 1/1/26		1,238		1,328
#AI4872, 4.500%, due 6/1/26		444		479
#AL2851, 4.000%, due 8/1/26		2,144		2,293
#AI9811, 4.500%, due 8/1/26		271		292
#AJ3203, 4.000%, due 10/1/26		119		128
#AJ7724, 4.000%, due 12/1/26		926		989

See accompanying Notes to Financial Statements.

December 31, 2015 William Blair Funds 103

Bond Fund

Portfolio of Investments, December 31, 2015 (all dollar amounts in thousands)

Issuer	Principal Amount		Value
U.S. Government and U.S. Government Agency—(continued)
Federal National Mortgage Association (FNMA)—(continued)
#AJ9402, 4.000%, due 12/1/26	$	1,311	$	1,406
#AK7384, 4.000%, due 3/1/27		1,096		1,172
#AB4818, 4.000%, due 4/1/27		690		735
#AL2590, 4.000%, due 7/1/27		4,793		5,126
#AV6413, 4.000%, due 2/1/29		3,502		3,732
#252925, 7.500%, due 12/1/29		1		2
#535977, 6.500%, due 4/1/31		10		11
#253907, 7.000%, due 7/1/31		2		2
#587849, 6.500%, due 11/1/31		14		16
#545437, 7.000%, due 2/1/32		63		75
#545759, 6.500%, due 7/1/32		580		673
#545869, 6.500%, due 7/1/32		1,850		2,130
#678007, 6.000%, due 9/1/32		9		10
#670385, 6.500%, due 9/1/32		870		996
#254548, 5.500%, due 12/1/32		61		68
#677290, 6.000%, due 1/1/33		2,639		3,037
#684601, 6.000%, due 3/1/33		629		722
#703391, 5.000%, due 5/1/33		196		220
#708993, 5.000%, due 6/1/33		32		36
#730131, 5.000%, due 8/1/33		62		70
#741850, 5.500%, due 9/1/33		706		803
#739243, 6.000%, due 9/1/33		724		829
#739331, 6.000%, due 9/1/33		392		450
#555800, 5.500%, due 10/1/33		69		77
#555946, 5.500%, due 11/1/33		508		581
#756153, 5.500%, due 11/1/33		696		790
#AL3455, 5.500%, due 11/1/33		8,052		9,214
#725017, 5.500%, due 12/1/33		64		73
#AL3380, 5.500%, due 1/1/34		1,018		1,165
#763798, 5.500%, due 3/1/34		103		116
#725611, 5.500%, due 6/1/34		137		154
#783786, 5.500%, due 7/1/34		133		152
#786546, 6.000%, due 7/1/34		277		318
#787816, 6.000%, due 7/1/34		409		470
#745563, 5.500%, due 8/1/34		781		887
#794474, 6.000%, due 10/1/34		54		62
#745092, 6.500%, due 7/1/35		444		523
#357944, 6.000%, due 9/1/35		27		31
#829306, 6.000%, due 9/1/35		309		351
#836140, 5.500%, due 10/1/35		67		77
#843487, 6.000%, due 10/1/35		123		141
#849191, 6.000%, due 1/1/36		172		197
#745349, 6.500%, due 2/1/36		407		482
#888305, 7.000%, due 3/1/36		13		15
#895637, 6.500%, due 5/1/36		111		127
#831540, 6.000%, due 6/1/36		36		41
#745802, 6.000%, due 7/1/36		202		232
#886220, 6.000%, due 7/1/36		397		456
#AL3449, 6.000%, due 7/1/36		2,012		2,315
#893318, 6.500%, due 8/1/36		43		51
#831926, 6.000%, due 12/1/36		12		13
#902974, 6.000%, due 12/1/36		296		336
#909480, 6.000%, due 2/1/37		324		370
#888418, 5.500%, due 5/1/37		1,547		1,769
#938440, 6.000%, due 7/1/37		129		147
#928561, 6.000%, due 8/1/37		274		315

Issuer	NRSRO Rating (unaudited)	Principal Amount		Value
U.S. Government and U.S. Government Agency—(continued)
Federal National Mortgage Association (FNMA)—(continued)
#948689, 6.000%, due 8/1/37		$	246	$	281
#888703, 6.500%, due 8/1/37			5,316		6,229
#946646, 6.000%, due 9/1/37			88		101
#888967, 6.000%, due 12/1/37			919		1,057
#AL0904, 5.500%, due 1/1/38			71		80
#889371, 6.000%, due 1/1/38			4,559		5,232
#889385, 6.000%, due 2/1/38			210		241
#962058, 6.500%, due 3/1/38			1,708		1,995
#934006, 6.500%, due 9/1/38			494		568
#986856, 6.500%, due 9/1/38			252		288
#AL5817, 6.000%, due 11/1/38			1,889		2,169
#991911, 7.000%, due 11/1/38			288		333
#AL3775, 5.000%, due 1/1/39			2,245		2,525
#AA7611, 5.000%, due 5/1/39			1,060		1,192
#AA8443, 5.000%, due 6/1/39			241		272
#AA8587, 5.500%, due 7/1/39			4,149		4,710
#931492, 6.000%, due 7/1/39			218		251
#AA6898, 6.000%, due 7/1/39			816		939
#931801, 5.000%, due 8/1/39			975		1,092
#AC1619, 5.500%, due 8/1/39			576		651
#AD0315, 6.500%, due 8/1/39			3,629		4,151
#AC0505, 5.500%, due 9/1/39			467		535
#932279, 5.000%, due 12/1/39			112		126
#AC9569, 5.000%, due 2/1/40			1,907		2,152
#932638, 5.000%, due 3/1/40			209		233
#932751, 5.000%, due 4/1/40			4,800		5,416
#AE0082, 5.000%, due 5/1/40			591		660
#AB1146, 5.000%, due 6/1/40			124		139
#AD7531, 5.500%, due 6/1/40			296		339
#AD8810, 5.500%, due 6/1/40			723		827
#AB1200, 5.500%, due 7/1/40			,488		1,686
#AD7137, 5.500%, due 7/1/40			5,509		6,305
#AH0955, 5.000%, due 12/1/40			6,234		7,011
#AL0028, 5.000%, due 2/1/41			3,073		3,443
#AL5815, 5.500%, due 4/1/41			4,078		4,667
#AI6071, 5.000%, due 6/1/41			2,261		2,546
#AL0672, 5.000%, due 7/1/41			3,605		4,068
#AL0913, 6.000%, due 7/1/41			2,739		3,093
#AK2733, 5.000%, due 2/1/42			2,437		2,750
Total FNMA Mortgage Obligations					147,611
Asset-Backed Securities—3.4%
Hertz Vehicle Financing LLC—144A, 2013-1A, Tranche B1, 1.860%, 8/25/17	Baa1		3,450		3,438
GE Capital Credit Card Master Note Trust, 2012-6, Tranche B, 1.830%, 8/17/20	AA+		3,000		3,002
American Express Credit Account Master Trust, 2008-2, Tranche A, 1.591%, 9/15/20, VRN	AAA		4,800		4,895
Centre Point Funding LLC—144A, 2012-2A, Tranche 1, 2.610%, 8/20/21	Baa2		3,180		3,141

See accompanying Notes to Financial Statements.

104 Annual Report December 31, 2015

Bond Fund

Portfolio of Investments, December 31, 2015 (all dollar amounts in thousands)

Issuer	NRSRO Rating (unaudited)	Principal Amount		Value
Asset-Backed Securities—(continued)
SLM Private Education Loan Trust—144A, 2011-A, Tranche A3, 2.831%, 1/15/43, VRN	AAA		$2,000	$	2,062
Total Asset-Backed Securities					16,538
Corporate Obligations—40.6%
Penske Truck Leasing Co. L.P.—144A, 3.750%, due 5/11/17	BBB+		3,000		3,062
Toll Brothers Finance Corporation, 8.910%, due 10/15/17	BBB-		1,050		1,176
Morgan Stanley, 6.625%, due 4/1/18	A		3,400		3,730
The Goldman Sachs Group, Inc., 1.522%, due 4/30/18, VRN	A		3,744		3,763
Bank of America Corporation, 6.875%, due 11/15/18	A		1,100		1,237
Glencore Funding LLC—144A, 1.681%, due 1/15/19, VRN	BBB		1,500		1,242
Petrobras Global Finance BV, 2.461%, due 1/15/19, VRN	BB+		4,000		3,050
CSX Corporation, 7.375%, due 2/1/19	BBB+		1,870		2,142
Cemex S.A.B. de C.V.—144A, 5.875%, due 3/25/19	BB-		3,000		2,865
Baidu, Inc., 2.750%, due 6/9/19	A		1,707		1,700
Roper Industries, Inc., 6.250%, due 9/1/19	BBB		1,850		2,054
Republic Services, Inc., 5.500%, due 9/15/19	BBB+		1,725		1,899
Boston Properties L.P., 5.875%, due 10/15/19	A-		4,000		4,444
Toll Brothers Finance Corporation, 6.750%, due 11/1/19	BBB-		500		553
Ford Motor Credit Co. LLC, 8.125%, due 1/15/20	BBB-		4,000		4,715
Georgia-Pacific LLC-144A, 5.400%, due 11/1/20	A+		4,000		4,417
United Continental Holdings, Inc., 6.000%, due 12/1/20	BB-		2,500		2,598
JBS USA LLC / JBS USA Finance, Inc.—144A, 7.250%, due 6/1/21	BB+		3,000		2,992
O’Reilly Automotive, Inc., 4.625%, due 9/15/21	BBB+		2,855		3,045
Fresenius Medical Care US Finance II, Inc.—144A, 5.875%, due 1/31/22	BB+		1,200		1,290
Post Holdings, Inc., 7.375%, due 2/15/22	B		3,000		3,139
Ball Corporation, 5.000%, due 3/15/22	BB+		2,500		2,562
Masco Corporation, 5.950%, due 3/15/22	BBB		3,800		4,113
United Rentals North America, Inc., 7.625%, due 4/15/22	BB-		2,500		2,684
Discover Financial Services, 5.200%, due 4/27/22	BBB+		3,000		3,212

Issuer	NRSRO Rating (unaudited)	Principal Amount		Value
Corporate Obligations—(continued)
The Goodyear Tire & Rubber Co., 7.000%, due 5/15/22	BB		$2,000	$	2,147
Triumph Group, Inc., 5.250%, due 6/1/22	Ba3		2,000		1,620
Penske Automotive Group, Inc., 5.750%, due 10/1/22	B+		1,500		1,549
American Axle & Manufacturing, Inc., 6.625%, due 10/15/22	BB-		3,000		3,150
Jones Lang LaSalle, Inc., 4.400%, due 11/15/22	BBB+		1,750		1,797
Jaguar Land Rover Automotive plc—144A, 5.625%, due 2/1/23	BB		3,225		3,269
Wyndham Worldwide Corporation, 3.900%, due 3/1/23	BBB-		3,500		3,411
MGM Resorts International, 6.000%, due 3/15/23	BB		3,000		2,985
Avis Budget Car Rental LLC, 5.500%, due 4/1/23	B+		2,500		2,516
Toll Brothers Finance Corporation, 4.375%, due 4/15/23	BBB-		1,300		1,268
Wells Fargo & Co., 4.480%, due 1/16/24	A+		3,000		3,158
Fibria Overseas Finance, Ltd., 5.250%, due 5/12/24	BBB-		3,500		3,334
BRF S.A.—144A, 4.750%, due 5/22/24	BBB		2,000		1,845
Banco Inbursa S.A. Institucion de Banca Multiple-144A, 4.125%, due 6/6/24	BBB+		2,000		1,885
Grupo Bimbo S.A.B. de C.V.— 144A, 3.875%, due 6/27/24	BBB		2,000		1,951
Synchrony Financial, 4.250%, due 8/15/24	BBB-		4,250		4,200
HSBC Holdings plc, 6.375%, due 9/17/24, VRN	BBB		3,500		3,461
BNP Paribas S.A., 4.250%, due 10/15/24	A		3,000		2,976
Owens Corning, 4.200%, due 12/1/24	BBB-		3,200		3,120
Credit Suisse Group AG—144A, 6.250%, due 12/18/24, VRN	BB+		2,000		2,005
USG Corp.—144A, 5.500%, due 3/1/25	BB+		3,000		3,056
Valeant Pharmaceuticals International, Inc.—144A, 6.125%, due 4/15/25	B1		1,500		1,343
Embraer Netherlands Finance BV, 5.050%, due 6/15/25	BBB		3,000		2,737
Seagate HDD Cayman—144A, 4.875%, due 6/1/27	BBB-		2,000		1,538
The Kroger Co., 8.000%, due 9/15/29	BBB		1,173		1,587
Comcast Corporation, 6.450%, due 3/15/37	A-		4,000		4,988
JPMorgan Chase & Co., 6.400%, due 5/15/38	A+		3,500		4,470

See accompanying Notes to Financial Statements.

December 31, 2015 William Blair Funds 105

Bond Fund

Portfolio of Investments, December 31, 2015 (all dollar amounts in thousands)

Issuer	NRSRO Rating (unaudited)	Principal Amount		Value
Corporate Obligations—(continued)
Philip Morris International, Inc., 6.375%, due 5/16/38	A		$2,175	$	2,749
Burlington Northern Santa Fe LLC, 5.750%, due 5/1/40	A3		3,495		3,926
Petroleos Mexicanos, 6.500%, due 6/2/41	BBB+		2,500		2,174
Express Scripts Holding Co., 6.125%, due 11/15/41	BBB+		4,000		4,561
Gilead Sciences, Inc., 5.650%, due 12/1/41	A-		4,000		4,567
Citigroup, Inc., 5.875%, due 1/30/42	A		4,000		4,606
Bank of America Corporation, 5.875%, due 2/7/42	A		4,000		4,685
Odebrecht Finance Ltd.—144A, 7.125%, due 6/26/42	BBB-		2,000		1,035
American International Group, Inc., 4.500%, due 7/16/44	A-		3,500		3,249
Mexichem S.A.B. de C.V.— 144A, 5.875%, due 9/17/44	BBB		3,500		2,949
Northrop Grumman Corporation, 3.850%, due 4/15/45	BBB+		4,500		4,061
ERP Operating L.P., 4.500%, due 6/1/45	A-		3,500		3,570
PepsiCo, Inc., 4.450%, due 4/14/46	A1		4,500		4,660
AT&T, Inc., 4.750%, due 5/15/46	A-		4,500		4,136
Microsoft Corporation, 4.750%, due 11/3/55	AAA		4,950		5,141
Total Corporate Obligations					195,119
Total Long-Term Investments—95.8% (cost $462,969)					460,742

Issuer	Principal Amount or Contracts		Value
Repurchase Agreement
Fixed Income Clearing Corporation, 0.030% dated 12/31/15, due 1/4/16, repurchase price $15,197, collateralized by U.S. Treasury Note, 2.375%, due 8/15/24		$15,197	$	15,197
Total Repurchase Agreement-3.2% (cost $15,197)				15,197
U.S. Government and U.S. Government Agency
U.S. Treasury Bill, 0.073%, due 1/14/16(a)		$200		200
Total U.S. Government and U.S. Government Agency—0.0% (cost $200)				200
Purchased Option—0.0%
Eurodollar Future, September 2016, Strike $97, PUT		300		2
Total Purchased Option—0.0% (cost $95)				2
Total Investments—99.0% (cost $478,461)				476,141
Cash and other assets, less liabilities—1.0%				4,653
Net assets—100.0%			$	480,794

NRSRO = Nationally Recognized Statistical Rating Organization—The credit quality ratings of the securities in the Fund reflect the highest category rating by any of Fitch Ratings, Moody’s Investors Service Inc., or Standard & Poor’s, a division of the McGraw-Hill Companies, Inc.

The obligations of certain U.S. Government-sponsored securities are neither issued nor guaranteed by the U.S. Treasury.

VRN = Variable Rate Note

(a) Security, or portion of security, is segregated as collateral for the credit default swap aggregating a total value of $157.

Centrally Cleared Credit Default Swap

Reference Entity	Buy/Sell Protection	Fixed Deal Pay Rate	Maturity Date	Cleared Exchange	Notional Amount	Unrealized Appreciation (Depreciation)
CDX.IG-25	Buy	1.000%	December 2020	CME	$15,000	$(37)

See accompanying Notes to Financial Statements.

106 Annual Report December 31, 2015

	Income Fund
	The Income Fund seeks a high level of current income with relative stability of principal.
	AN OVERVIEW FROM THE PORTFOLIO MANAGER
Christopher T. Vincent	The William Blair Income Fund (Class N shares) increased 0.39%, net of fees, for the twelve months ended December 31, 2015. By comparison, the Fund’s benchmark, the Barclays Intermediate Government/Credit Bond Index (the “Index”), increased 1.07%. A couple of factors contributed to the Fund’s underperformance relative to the Index during the year. The Fund’s interest rate positioning detracted from performance. The Fund maintained a defensive duration posture, and this impacted results negatively because interest rates did not rise enough to hamper total returns significantly. An allocation to U.S. Treasury Inflation-Protected Securities impacted relative performance negatively, as market-implied inflation expectations declined during the year. Finally, positions in bonds of Brazilian issuers Odebrecht and Petrobras negatively impacted relative performance as the Brazilian government continued its investigation into corruption that included executives from each company. There were a couple of factors that contributed to relative performance during 2015. Security selection of mortgage-backed securities was additive to results. The Fund favored higher-coupon segments of the 30- and 15-year markets, and those higher-coupon segments performed well during 2015. Finally, the Fund experienced positive selection results of investment-grade corporate bonds, in part due to the Fund’s overweight to bonds issued by financial institutions. Positions that performed well included bonds issued by Toll Brothers, Georgia-Pacific, Masco Corporation, Citigroup, Jones Lang LaSalle, and Simon Property Group. Please refer to the Fixed Income Market Review and Outlook relating to the Fund on page 99.

December 31, 2015 William Blair Funds 107

Income Fund

Performance Highlights (Unaudited)

Average Annual Total Return at 12/31/2015

	1 Year			3 Year			5 Year			10 Year
Class N		0.39	%		0.60	%		2.57	%		3.12	%
Class I		0.63			0.80			2.80			3.32
Barclays Intermediate Government/Credit Bond Index		1.07			1.10			2.58			4.04

Performance cited represents past performance. Past performance does not guarantee future results and current performance may be lower or higher than the data quoted. Results shown are average annual total returns, which assume reinvestment of dividends and capital gains. Investment returns and principal will fluctuate and you may have a gain or loss when you sell shares. For the most current month-end performance information, please call 1-800-742-7272, or visit our Web site at www.williamblairfunds.com. From time to time, the investment adviser may waive fees or reimburse expenses for the Fund. Without these waivers/reimbursements, performance would be lower. Class N shares are available to the general public without a sales load. Class I shares are available to certain institutional investors and advisory clients of William Blair Investment Management, LLC and William Blair & Company, L.L.C., without a sales load or distribution (12b-1) or service fees.

The performance highlights and graph presented above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

The Barclays Intermediate Government/Credit Bond Index indicates broad intermediate government/corporate bond market performance.

This report identifies the Fund’s investments on December 31, 2015. These holdings are subject to change. Not all investments in the Fund performed the same, nor is there any guarantee that these investments will perform as well in the future. Market forecasts provided in this report may not necessarily come to pass.

Sector Diversification (Unaudited)

The sector diversification shown is based on the total investments.

108 Annual Report December 31, 2015

Income Fund

Portfolio of Investments, December 31, 2015 (all dollar amounts in thousands)

Issuer	Principal Amount		Value
U.S. Government and U.S. Government Agency—59.4%
U.S. Treasury Inflation Indexed Notes/Bonds—4.8%
U.S. Treasury Inflation Indexed Note, 1.875%, due 7/15/19	$	1,114	$	1,182
U.S. Treasury Inflation Indexed Note, 1.125%, due 1/15/21		3,262		3,366
Total U.S. Treasury Inflation Indexed  Notes/Bonds				4,548
U.S. Treasury—1.0%
U.S. Treasury Strip Principal, 0.000%, due 5/15/20		1,000		927
Government National Mortgage Association (GNMA)—0.0%
#780405, 9.500%, due 11/15/17		7		7
#357322, 7.000%, due 9/15/23		33		36
Total GNMA Mortgage  Obligations				43
Federal Home Loan Mortgage Corp.  (FHLMC)—10.1%
#E90398, 7.000%, due 5/1/17		84		86
#E97112, 4.000%, due 5/1/18		38		40
#D95621, 6.500%, due 7/1/22		792		903
#J13022, 4.000%, due 9/1/25		588		625
#J16051, 4.500%, due 7/1/26		1,151		1,233
#A17603, 5.500%, due 1/1/34		819		930
#A45790, 7.500%, due 5/1/35		140		161
#G02141, 6.000%, due 3/1/36		348		398
#G03201, 6.500%, due 6/1/37		216		246
#A66843, 6.500%, due 10/1/37		378		441
#A81799, 6.500%, due 9/1/38		411		468
#G06964, 5.500%, due 11/1/38		1,250		1,421
#G05875, 5.500%, due 2/1/40		176		199
#C03665, 9.000%, due 4/1/41		433		532
#G06583, 5.000%, due 6/1/41		1,749		1,959
Total FHLMC Mortgage Obligations				9,642
Federal National Mortgage  Association (FNMA)—43.5%
#576553, 8.000%, due 2/1/16		2		2
#735569, 8.000%, due 10/1/16		4		4
#643217, 6.500%, due 6/1/17		33		34
#679247, 7.000%, due 8/1/17		93		95
#695910, 5.000%, due 5/1/18		117		122
#740847, 6.000%, due 10/1/18		65		67
#323501, 6.500%, due 1/1/19		24		27
#751313, 5.000%, due 3/1/19		138		146
#852864, 7.000%, due 7/1/20		434		460
#458147, 10.000%, due 8/15/20		52		55
#835563, 7.000%, due 10/1/20		168		179
#831430, 5.500%, due 3/1/21		276		294
#735574, 8.000%, due 3/1/22		136		146
#679253, 6.000%, due 10/1/22		369		418
FNR G93-19 SH, 11.234%, due 4/25/23, VRN		11		16
#982878, 4.500%, due 5/1/23		249		267

Issuer	Principal Amount		Value
U.S. Government and U.S. Government Agency—(continued)
Federal National Mortgage  Association (FNMA)—(continued)
#AA6066, 4.000%, due 5/1/24	$	946	$	1,008
#AC5124, 4.000%, due 11/1/24		807		866
#932095, 4.000%, due 11/1/24		4,362		4,663
#932100, 4.500%, due 11/1/24		1,058		1,138
#AC6257, 4.000%, due 12/1/24		897		962
#AC0596, 4.000%, due 12/1/24		232		247
#AD4073, 4.000%, due 5/1/25		118		126
#935995, 4.000%, due 6/1/25		117		125
#AD4677, 4.000%, due 6/1/25		791		837
#AE1176, 4.000%, due 8/1/25		333		355
#255956, 5.500%, due 10/1/25		63		70
#AL2851, 4.000%, due 8/1/26		2,680		2,867
#AI9811, 4.500%, due 8/1/26		509		548
#AJ3203, 4.000%, due 10/1/26		1,189		1,277
#AJ7724, 4.000%, due 12/1/26		988		1,055
#256639, 5.000%, due 2/1/27		12		14
#AB4818, 4.000%, due 4/1/27		2,133		2,275
#AL2590, 4.000%, due 7/1/27		1,699		1,816
#806458, 8.000%, due 6/1/28		151		171
#880155, 8.500%, due 7/1/29		220		255
#797846, 7.000%, due 3/1/32		117		123
#745519, 8.500%, due 5/1/32		159		187
#654674, 6.500%, due 9/1/32		64		73
#733897, 6.500%, due 12/1/32		241		271
#688034, 5.500%, due 3/1/33		185		212
#254693, 5.500%, due 4/1/33		10		11
#555531, 5.500%, due 6/1/33		99		112
#711736, 5.500%, due 6/1/33		110		126
#555591, 5.500%, due 7/1/33		16		18
#762505, 5.500%, due 11/1/33		158		179
#AL3455, 5.500%, due 11/1/33		2,365		2,706
#776964, 5.000%, due 4/1/34		445		499
#725424, 5.500%, due 4/1/34		103		116
#824463, 5.500%, due 7/1/35		208		231
#888884, 5.500%, due 12/1/35		212		240
#AL3449, 6.000%, due 7/1/36		1,150		1,323
#886220, 6.000%, due 7/1/36		283		325
#888703, 6.500%, due 8/1/37		1,139		1,334
#928658, 6.500%, due 9/1/37		39		46
#889385, 6.000%, due 2/1/38		491		562
#962058, 6.500%, due 3/1/38		591		690
#AL5817, 6.000%, due 11/1/38		1,157		1,328
#991911, 7.000%, due 11/1/38		184		213
#AA8587, 5.500%, due 7/1/39		951		1,079
#AD0315, 6.500%, due 8/1/39		383		438
#AC3237, 5.000%, due 10/1/39		175		195
#AC6156, 5.500%, due 11/1/39		2,389		2,757
#AC9569, 5.000%, due 2/1/40		254		287
#AB1200, 5.500%, due 7/1/40		496		562
#AL0028, 5.000%, due 2/1/41		1,311		1,469
#AL5815, 5.500%, due 4/1/41		816		933
Total FNMA Mortgage Obligations				41,652

See accompanying Notes to Financial Statements.

December 31, 2015 William Blair Funds 109

Income Fund

Portfolio of Investments, December 31, 2015 (all dollar amounts in thousands)

Issuer	NRSRO Rating (unaudited)	Principal Amount		Value
Asset-Backed Securities—8.8%
Hertz Vehicle Financing LLC—144A, 2013-1A, Tranche B1, 1.860%, 8/25/17	Baa1		$1,000	$	997
Nissan Master Owner Trust Receivables, 2013-A, Tranche A, 0.631%, 2/15/18, VRN	Aaa		1,000		1,000
Harley-Davidson Motorcycle Trust, 2014-1, Tranche A2B, 0.501%, 4/15/18, VRN	AAA		226		225
Harley-Davidson Motorcycle Trust, 2015-2, Tranche A2B, 0.581%, 1/15/19, VRN	AAA		1,733		1,730
Citibank Credit Card Issuance Trust, 2008-A2, Tranche A2, 1.570%, 1/23/20, VRN	AAA		1,225		1,244
GE Capital Credit Card Master Note Trust, 2012-6, Tranche B, 1.830%, 8/17/20	AA+		1,705		1,706
American Express Credit Account Master Trust, 2008-2, Tranche A, 1.591%, 9/15/20, VRN	AAA		1,000		1,020
SLM Private Education Loan Trust— 144A, 2011-A, Tranche A3, 2.831%, 1/15/43, VRN	AAA		500		516
Total Asset-Backed Securities					8,438
Corporate Obligations—26.1%
JPMorgan Chase & Co., 6.125%, due 6/27/17	A		800		847
Macquarie Group Ltd.-144A, 4.875%, due 8/10/17	A3		1,000		1,035
Morgan Stanley, 6.625%, due 4/1/18	A		1,000		1,097
The Goldman Sachs Group, Inc., 1.522%, due 4/30/18, VRN	A		1,000		1,005
Bank of America Corporation, 6.875%, due 11/15/18	A		1,000		1,124
Honeywell International, Inc., 5.000%, due 2/15/19	A		750		822
Burlington Northern Santa Fe LLC, 4.700%, due 10/1/19	A3		750		812
Boston Properties L.P., 5.875%, due 10/15/19	A-		1,000		1,111
Petroleos Mexicanos, 6.000%, due 3/5/20	BBB+		500		521
PepsiCo, Inc., 2.150%, due 10/14/20	A1		900		897
Georgia-Pacific LLC-144A, 5.400%, due 11/1/20	A+		1,000		1,104
Simon Property Group L.P., 4.375%, due 3/1/21	A		750		814
Capital One Financial Corporation, 4.750%, due 7/15/21	A-		1,000		1,084
General Electric Capital Corporation, 4.650%, due 10/17/21	AA+		1,000		1,108
Gilead Sciences, Inc., 4.400%, due 12/1/21	A-		1,000		1,081
Masco Corporation, 5.950%, due 3/15/22	BBB		750		812

Issuer	NRSRO Rating (unaudited)	Principal Amount/ Contracts		Value
Corporate Obligations—(continued)
American International Group, Inc., 4.875%, due 6/1/22	A-		$1,000	$	1,081
Jones Lang LaSalle, Inc., 4.400%, due 11/15/22	BBB+		658		676
Wyndham Worldwide Corporation, 3.900%, due 3/1/23	BBB-		750		731
Toll Brothers Finance Corporation, 4.375%, due 4/15/23	BBB-		850		829
Wells Fargo & Co., 4.480%, due 1/16/24	A+		1,000		1,053
Fibria Overseas Finance, Ltd., 5.250%, due 5/12/24	BBB-		750		714
BRF S.A.-144A, 4.750%, due 5/22/24	BBB		750		692
Grupo Bimbo S.A.B. de C.V.-144A, 3.875%, due 6/27/24	BBB		750		732
Synchrony Financial, 4.250%, due 8/15/24	BBB-		700		692
BNP Paribas S.A., 4.250%, due 10/15/24	A		500		496
Embraer Netherlands Finance BV, 5.050%, due 6/15/25	BBB		600		547
Seagate HDD Cayman-144A, 4.875%, due 6/1/27	BBB-		500		384
Crown Castle Towers LLC-144A, 6.113%, due 1/15/40	A2		1,000		1,094
Total Corporate Obligations					24,995
Total Long-Term Investments—94.3% (cost $90,464)					90,245
Repurchase Agreement
Fixed Income Clearing Corporation, 0.030% dated 12/31/15, due 1/4/16, repurchase price $5,007, collateralized by FNMA, 2.625%, due 9/6/24			5,007		5,007
Total Repurchase Agreement—5.3% (cost $5,007)					5,007
Purchased Option—0.0%
Eurodollar Future, September 2016, Strike $97, PUT			150		1
Total Purchased Option—0.0% (cost $47)					1
Total Investments—99.6% (cost $95,518)					95,253
Cash and other assets, less liabilities—0.4%					411
Net assets—100.0%				$	95,664

VRN = Variable Rate Note

NRSRO = Nationally Recognized Statistical Rating Organization—The credit quality ratings of the securities in the Fund reflect the highest category rating by any of Fitch Ratings, Moody’s Investors Service Inc., or Standard & Poor’s, a division of the McGraw-Hill Companies, Inc.

The obligations of certain U.S. Government-sponsored securities are neither issued nor guaranteed by the U.S. Treasury.

See accompanying Notes to Financial Statements.

110 Annual Report December 31, 2015

	Low Duration Fund
	The Low Duration Fund seeks to maximize total return. Total return includes both income and capital appreciation.
	AN OVERVIEW FROM THE PORTFOLIO MANAGERS
Christopher T. Vincent Paul J. Sularz	The William Blair Low Duration Fund (Class N shares) returned 0.01%, net of fees, for the twelve months ended December 31, 2015. By comparison, the Fund’s benchmark, the Bank of America Merrill Lynch 1-Year U.S. Treasury Note Index (the “Index”), returned 0.15%. The Fund’s underperformance relative to the Index during the year was primarily due to the result of the Fund’s expenses. Additionally, the Fund hedged a portion of its interest rate risk exposure, and those hedges reduced relative performance. However, the Fund’s interest rate positioning contributed to relative performance during the period. The Fund’s selection results from investing in a combination of agency mortgage-backed securities, asset-backed securities, and high-quality corporate bonds also contributed to relative performance. Please refer to the Fixed Income Market Review and Outlook relating to the Fund on page 99.

December 31, 2015 William Blair Funds 111

Low Duration Fund

Performance Highlights (Unaudited)

Average Annual Total Return at 12/31/2015
	1 Year			3 Year			5 Year			Since Inception(a)
Class N		0.01	%		0.19	%		1.01	%		1.04	%
Class I		0.30			0.36			1.19			1.19
Institutional Class		0.22			0.47			1.30			1.33
Bank of America Merrill Lynch 1-Year U.S. Treasury Note Index		0.15			0.20			0.28			0.34

(a) For the period from December 1, 2009 (Commencement of Operations) to December 31, 2015.

Performance cited represents past performance. Past performance does not guarantee future results and current performance may be lower or higher than the data quoted. Results shown are average annual total returns, which assume reinvestment of dividends and capital gains. Investment returns and principal will fluctuate and you may have a gain or loss when you sell shares. For the most current month-end performance information, please call 1-800-742-7272, or visit our Web site at www.williamblairfunds.com. From time to time, the investment adviser may waive fees or reimburse expenses for the Fund. Without these waivers/reimbursements, performance would be lower. Class N shares are available to the general public without a sales load. Class I shares are available to certain institutional investors and advisory clients of William Blair Investment Management, LLC and William Blair & Company, L.L.C., without a sales load or distribution (12b-1) fees. Institutional Class shares are available to institutional investors without a sales load or distribution (12b-1) or service fees.

The performance highlights and graph presented above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

The Bank of America Merrill Lynch 1-Year U.S. Treasury Note Index is comprised of a single U.S. Treasury Note issue purchased at the beginning of the month and held for a full month. Each month the index is rebalanced and the issue selected is the outstanding U.S. Treasury Note that matures closest to, but not beyond one year from the rebalancing date.

This report identifies the Fund’s investments on December 31, 2015. These holdings are subject to change. Not all investments in the Fund performed the same, nor is there any guarantee that these investments will perform as well in the future. Market forecasts provided in this report may not necessarily come to pass.

Sector Diversification (Unaudited)

The sector diversification shown is based on the total investments.

112 Annual Report December 31, 2015

Low Duration Fund

Portfolio of Investments, December 31, 2015 (all dollar amounts in thousands)

	Principal
Issuer	Amount		Value
U.S. Government and U.S. Government Agency—48.2%
Government National Mortgage Association (GNMA)—0.0%
GNR 2011-24 VA, 3.500%, due 2/20/16		$64	$	64
Federal Home Loan Mortgage Corp. (FHLMC)—15.8%
#E95760, 4.500%, due 4/1/18		5		5
#E99582, 5.000%, due 9/1/18		10		11
#B11362, 5.500%, due 12/1/18		23		24
#B11849, 5.500%, due 1/1/19		62		64
#B13870, 4.500%, due 5/1/19		50		52
#G11604, 5.000%, due 7/1/19		60		63
#G11596, 5.500%, due 8/1/19		52		55
#G11605, 5.500%, due 9/1/19		28		29
#J02537, 5.000%, due 9/1/20		48		50
#G11836, 5.500%, due 12/1/20		15		16
#G12113, 5.500%, due 5/1/21		150		161
#E02322, 5.500%, due 5/1/22		32		34
#G13124, 6.000%, due 12/1/22		105		116
#J06871, 5.500%, due 1/1/23		92		98
#J08450, 5.500%, due 7/1/23		43		47
#J08703, 5.500%, due 9/1/23		87		94
#J10351, 4.000%, due 7/1/24		174		186
#C00351, 8.000%, due 7/1/24		62		74
#J10600, 4.000%, due 8/1/24		11		12
#G13695, 4.000%, due 9/1/24		743		792
#J11208, 5.000%, due 11/1/24		104		112
#G00363, 8.000%, due 6/1/25		93		105
#J12853, 4.000%, due 8/1/25		111		118
#C80329, 8.000%, due 8/1/25		20		23
#J14491, 4.000%, due 2/1/26		3,790		4,035
#J16051, 4.500%, due 7/1/26		2,513		2,692
#G30348, 6.000%, due 7/1/27		1,346		1,539
#G04424, 6.000%, due 6/1/38		91		102
#G04778, 6.000%, due 7/1/38		113		130
#G04544, 6.000%, due 8/1/38		454		519
#G04687, 6.000%, due 9/1/38		124		142
#G04745, 6.000%, due 9/1/38		63		72
#A81799, 6.500%, due 9/1/38		386		440
#G06085, 6.500%, due 9/1/38		16		18
#G06964, 5.500%, due 11/1/38		3,646		4,146
#G05723, 6.500%, due 11/1/38		1,703		1,941
#G06017, 5.500%, due 6/1/40		1,443		1,628
#4122, Tranche FP, 0.731%, due 10/15/42, VRN		1,005		1,010
Total FHLMC Mortgage Obligations				20,755
Federal National Mortgage Association (FNMA)—32.4%
#672953, 5.000%, due 12/1/17		8		8
#888979, 6.000%, due 12/1/17		2		2
#678938, 5.500%, due 2/1/18		42		43
#695838, 5.500%, due 4/1/18		20		21
#697593, 5.000%, due 5/1/18		66		69
#656573, 5.000%, due 6/1/18		50		52
#709848, 5.000%, due 6/1/18		40		42
#705741, 5.000%, due 6/1/18		36		37

	Principal
Issuer	Amount		Value
U.S. Government and U.S. Government Agency—(continued)
Federal National Mortgage Association (FNMA)—(continued)
#728715, 5.000%, due 7/1/18		$91	$	94
#711991, 5.000%, due 8/1/18		52		53
#257378, 5.000%, due 9/1/18		11		12
#743183, 5.000%, due 10/1/18		23		24
#749596, 5.000%, due 11/1/18		90		94
#753866, 6.000%, due 12/1/18		140		146
#761246, 5.000%, due 1/1/19		117		123
#766059, 5.500%, due 2/1/19		100		104
#766276, 5.000%, due 3/1/19		294		309
#751313, 5.000%, due 3/1/19		61		64
#779363, 5.000%, due 6/1/19		28		29
#785259, 5.000%, due 8/1/19		114		121
#788424, 5.500%, due 9/1/19		73		76
#761489, 5.500%, due 9/1/19		65		68
#725953, 5.000%, due 10/1/19		37		39
#745877, 5.000%, due 1/1/20		81		86
#357865, 5.000%, due 7/1/20		76		81
#888105, 5.000%, due 8/1/20		6		6
#357978, 5.000%, due 9/1/20		93		99
#745735, 5.000%, due 3/1/21		312		333
#879607, 5.500%, due 4/1/21		50		53
#831497, 6.000%, due 4/1/21		168		180
#831525, 5.500%, due 6/1/21		64		69
#880993, 6.000%, due 1/1/22		13		13
#972934, 5.500%, due 2/1/23		172		187
#889342, 5.000%, due 3/1/23		61		65
#982878, 4.500%, due 5/1/23		225		241
#889670, 5.500%, due 6/1/23		65		71
#555734, 5.000%, due 7/1/23		471		518
#AE0011, 5.500%, due 9/1/23		80		86
#747339, 5.500%, due 10/1/23		256		285
#934808, 4.500%, due 3/1/24		112		119
#AA4519, 4.500%, due 3/1/24		786		837
#AA5028, 4.500%, due 4/1/24		195		209
#AA5999, 4.500%, due 5/1/24		1,301		1,393
#190988, 9.000%, due 6/1/24		54		59
#AC6600, 4.500%, due 11/1/24		48		52
#AL3422, 5.000%, due 1/1/25		770		834
#AE1176, 4.000%, due 8/1/25		375		400
#AI4856, 4.500%, due 6/1/26		1,649		1,766
#AI4872, 4.500%, due 6/1/26		67		72
#AL2851, 4.000%, due 8/1/26		2,144		2,293
#AL2590, 4.000%, due 7/1/27		2,831		3,027
#759336, 6.000%, due 1/1/34		1,765		2,031
#AL3449, 6.000%, due 7/1/36		1,839		2,117
#886762, 7.000%, due 9/1/36		412		466
#831926, 6.000%, due 12/1/36		769		874
#899057, 6.000%, due 3/1/37		87		99
#928574, 6.000%, due 7/1/37		162		183
#948637, 6.500%, due 8/1/37		523		599
#888703, 6.500%, due 8/1/37		4,253		4,983
#889371, 6.000%, due 1/1/38		1,042		1,196
#965534, 6.000%, due 1/1/38		63		71
#889385, 6.000%, due 2/1/38		701		804
#975649, 6.000%, due 7/1/38		162		185
#889987, 5.500%, due 8/1/38		112		127

See accompanying Notes to Financial Statements.

December 31, 2015 William Blair Funds 113

Low Duration Fund

Portfolio of Investments, December 31, 2015 (all dollar amounts in thousands)

	NRSRO
	Rating		Principal
Issuer	(unaudited)		Amount		Value
U.S. Government and U.S. Government Agency—(continued)
Federal National Mortgage Association (FNMA)—(continued)
#AA8706, 5.500%, due 6/1/39				$2,965	$	3,393
#AD0315, 6.500%, due 8/1/39				832		952
#AC3270, 5.500%, due 9/1/39				1,885		2,175
#AD3360, 5.500%, due 5/1/40				2,302		2,634
#AL5815, 5.500%, due 4/1/41				4,078		4,667
Total FNMA Mortgage Obligations						42,620
Asset-Backed Securities—27.4%
Nissan Auto Lease Trust, 2014-A, Tranche A2B, 0.491%, 9/15/16, VRN		Aaa		561		561
Mercedes Benz Auto Lease Trust, 2014—A, Tranche A3, 0.680%, 12/15/16		AAA		383		383
Ally Auto Receivables Trust, 2014-1, Tranche A2, 0.480%, 2/15/17		AAA		26		26
BMW Vehicle Owner Trust, 2014-A, Tranche A2, 0.530%, 4/25/17		Aaa		67		67
Nissan Auto Receivables 2013-A Owner Trust, 2013-A, Tranche A3, 0.500%, 5/15/17		Aaa		125		125
CNH Equipment Trust, 2014-B, Tranche A2, 0.480%, 8/15/17		AAA		193		193
Volvo Financial Equipment LLC— 144A, 2015-1A, Tranche A2, 0.950%, 11/15/17		Aaa		991		990
Ford Credit Floorplan Master Owner Trust A, 2013-1, Tranche A2, 0.711%, 1/15/18, VRN		AAA		2,200		2,200
Nissan Master Owner Trust Receivables, 2013-A, Tranche A, 0.631%, 2/15/18, VRN		Aaa		2,500		2,500
World Omni Master Owner Trust—144A, 2013-1, Tranche A, 0.681%, 2/15/18, VRN		Aaa		1,000		1,000
Ford Credit Auto Owner Trust 2015-B, 2015-B, Tranche A2B, 0.561%, 3/15/18, VRN		Aaa		1,332		1,332
Harley-Davidson Motorcycle Trust, 2014-1, Tranche A2B, 0.501%, 4/15/18, VRN		AAA		526		526
Discover Card Execution Note Trust, 2013-A2, Tranche A2, 0.690%, 8/15/18		AAA		500		500
Ford Credit Floorplan Master Owner Trust A, 2013-5, Tranche A2, 0.801%, 9/15/18, VRN		AAA		200		200
Citibank Credit Card Issuance Trust, 2006-A8, Tranche A8, 0.361%, 12/17/18, VRN		AAA		200		199

	NRSRO
	Rating		Principal
Issuer	(unaudited)		Amount		Value
Asset-Backed Securities—(continued)
Harley-Davidson Motorcycle Trust, 2015-2, Tranche A2B, 0.581%, 1/15/19, VRN		AAA	$	1,651	$	1,648
Capital One Multi-Asset Execution Trust, 2013-A2, Tranche A2, 0.511%, 2/15/19, VRN		AAA		2,000		2,000
Discover Card Master Trust, 2012-A4, Tranche A, 0.796%, 11/15/19, VRN		AAA		2,000		2,001
Bank of America Credit Card Trust, 2007-A11, Tranche A11, 0.401%, 12/15/19, VRN		AAA		915		910
Capital One Multi-Asset Execution Trust, 2007-A2, Tranche A2, 0.411%, 12/16/19, VRN		AAA		715		713
Citibank Credit Card Issuance Trust, 2008-A2, Tranche A2, 1.570%, 1/23/20, VRN		AAA		2,880		2,924
Mercedes-Benz Master Owner Trust—144A, 2015-BA, Tranche A, 0.711%, 4/15/20, VRN		Aaa		1,500		1,492
Citibank Credit Card Issuance Trust, 2013-A2, Tranche A2, 0.698%, 5/26/20, VRN		AAA		1,900		1,895
Chase Issuance Trust, 2013-A6, Tranche A6, 0.751%, 7/15/20, VRN		AAA		1,820		1,821
Discover Card Execution Note Trust, 2015-A1, Tranche A1, 0.681%, 8/17/20, VRN		AAA		1,950		1,947
American Express Credit Account Master Trust, 2008-2, Tranche A, 1.591%, 9/15/20, VRN		AAA		2,000		2,040
Bank of America Credit Card Trust, 2014-A1, Tranche A, 0.711%, 6/15/21, VRN		AAA		1,000		999
MBNA Credit Card Master Note Trust, 2004-A3, Tranche A3, 0.591%, 8/16/21, VRN		AAA		515		512
Capital One Multi-Asset Execution Trust, 2014-A3, Tranche A3, 0.711%, 1/18/22, VRN		AAA		750		747
SLM Student Loan Trust, 2008-4, Tranche A4, 1.970%, 7/25/22, VRN		Aaa		930		936
Sierra Timeshare 2012-2 Receivables Funding LLC—144A, 2012-2A, Tranche A, 2.380%, 3/20/29		A+		343		343
SLM Private Education Loan Trust—144A, 2011-A, Tranche A3, 2.831%, 1/15/43, VRN		AAA		2,250		2,320
Total Asset-Backed Securities						36,050

See accompanying Notes to Financial Statements.

114 Annual Report December 31, 2015

Low Duration Fund

Portfolio of Investments, December 31, 2015 (all dollar amounts in thousands)

	NRSRO
	Rating		Principal
Issuer	(unaudited)		Amount		Value
Corporate Obligations—21.9%
Bank of America Corporation, 1.406%, due 3/22/16, VRN		A		$1,000		$1,000
HSBC Finance Corporation, 0.844%, due 6/1/16, VRN		A+		1,500		1,497
Macquarie Bank Ltd.—144A, 0.962%, due 6/15/16, VRN		A		1,400		1,399
Verizon Communications, Inc., 2.042%, due 9/15/16, VRN		A-		1,000		1,006
Bayer US Finance LLC—144A, 0.573%, due 10/7/16, VRN		A-		1,000		1,000
Fifth Third Bancorp, 0.990%, due 12/20/16, VRN		A-		1,000		996
Capital One Bank USA NA, 0.859%, due 2/13/17, VRN		A-		1,500		1,494
JPMorgan Chase & Co., 0.882%, due 2/15/17, VRN		A+		1,000		1,000
Barclays Bank plc, 0.944%, due 2/17/17, VRN		A2		1,620		1,620
Nissan Motor Acceptance Corp.—44A, 0.972%, due 3/3/17, VRN		A-		1,500		1,497
Citigroup, Inc., 1.027%, due 3/10/17, VRN		A		1,500		1,497
Mizuho Bank Ltd.—144A, 0.747%, due 4/16/17, VRN		A1		1,000		997
Tencent Holdings Ltd.—144A, 2.000%, due 5/2/17		A+		1,200		1,202
American Express Credit Corporation, 0.722%, due 6/5/17, VRN		A+		1,000		995
Standard Chartered plc—144A, 0.802%, due 9/8/17, VRN		Aa3		2,000		1,981
Royal Bank of Canada, 0.581%, due 10/13/17, VRN		AA		1,725		1,720
Canadian National Railway Co., 0.532%, due 11/14/17, VRN		A		500		496
General Electric Capital Corporation, 0.952%, due 12/7/17, VRN		AA+		500		498
Wells Fargo & Co., 0.946%, due 4/23/18, VRN		AA-		1,000		1,000
Morgan Stanley, 1.600%, due 4/25/18, VRN		A		2,000		2,022
The Goldman Sachs Group, Inc., 1.522%, due 4/30/18, VRN		A		2,000		2,010
KeyBank NA, 0.934%, due 6/1/18, VRN		A-		1,200		1,198
PNC Bank NA, 0.834%, due 6/1/18, VRN		A+		800		797
Total Corporate Obligations						28,922
Total Long-Term Investments—97.5% (cost $128,914)						128,411

	Principal
	Amount/
Issuer	Contracts			Value
Repurchase Agreement
Fixed Income Clearing Corporation, 0.030% dated 12/31/15, due 1/4/16, repurchase price $1,422, collateralized by FNMA, 2.625%, due 9/6/24		$1,422		$	1,422
Total Repurchase Agreement—1.1% (cost $1,422)					1,422
Purchased Option—0.0%
Eurodollar Future, September 2016, Strike $97, PUT		300			2
Total Purchased Option—0.0% (cost $95)					2
Total Investments—98.6% (cost $130,431)					129,835
Securities Sold Short, Not Yet Purchased
U.S. Government and U.S. Government Agency—(7.7)%
Federal National Mortgage Association (FNMA)—(7.7)%
TBA, 2.500%, due 1/1/31		$(10,000	)		(10,080	)
Total Securities Sold Short, Not Yet Purchased—(7.7)% (proceeds $10,092)					(10,080	)
Cash and other assets, less liabilities—9.1%					11,957
Net assets—100.0%				$	131,712

NRSRO = Nationally Recognized Statistical Rating Organization—The credit quality ratings of the securities in the Fund reflect the highest category rating by any of Fitch Ratings, Moody’s Investors Service Inc., or Standard & Poor’s, a division of the McGraw-Hill Companies, Inc.

The obligations of certain U.S. Government-sponsored securities are neither issued nor guaranteed by the U.S. Treasury.

VRN = Variable Rate Note

TBA = To Be Announced—TBAs are mortgage-backed securities traded under delayed delivery commitments, settling after December 31, 2015. The term TBA comes from the fact that the specific mortgage-backed security that will be delivered to fulfill a TBA trade is not designated at the time the trade is made.

See accompanying Notes to Financial Statements.

December 31, 2015 William Blair Funds 115

	Macro Allocation Fund
	AN OVERVIEW FROM THE PORTFOLIO MANAGERS
Brian D. Singer Thomas Clarke	The William Blair Macro Allocation Fund (Class N shares) posted a 6.24% decrease, net of fees, for the twelve months ended December 31, 2015. By comparison, the Fund’s primary benchmark index, the Bank of America Merrill Lynch 3-Month U.S. Treasury Bill Index, increased 0.05%. The Fund saw negative contributions from both its market-oriented strategies and its currency-oriented strategies during the year. Detractors from market-oriented exposures included the Fund’s positioning within U.S. equity and generally long exposures within emerging market equities. From currency-oriented exposures, negative impacts arose from long exposures to the Malaysian ringgit and the Columbian peso. The Fund’s market-oriented strategies benefited from an aggregate long exposure to equities within Europe as well as from a moderately long exposure to U.S. sovereign debt. The Fund’s currency-oriented strategies were helped by short exposures to the euro and the New Zealand dollar.

116 Annual Report December 31, 2015

Macro Allocation Fund

Performance Highlights (Unaudited)

Average Annual Total Return at 12/31/2015
							Since
	1 Year			3 Year			Inception
Class N(a)		(6.24	)%		2.86	%		6.12	%
Class I(a)		(6.00	)		3.10			6.38
BofA Merrill Lynch 3-Month U.S. Treasury Bill Index(a)		0.05			0.05			0.07
Long-Term Comparative Index(a)		(0.27	)		3.00			3.89
Institutional Class(b)		(5.92	)		—			(0.59	)
BofA Merrill Lynch 3-Month U.S. Treasury Bill Index(b)		0.05			—			0.11
Long-Term Comparative Index(b)		(0.27	)		—			1.90

(a)	For the period from November 29, 2011 (Commencement of Operations) to December 31, 2015.
(b)	For the period from October 21, 2013 (Commencement of Operations) to December 31, 2015.

Performance cited represents past performance. Past performance does not guarantee future results and current performance may be lower or higher than the data quoted. Results shown are average annual total returns, which assume reinvestment of dividends and capital gains. Investment returns and principal will fluctuate and you may have a gain or loss when you sell shares. For the most current month-end performance information, please call 1-800-742-7272, or visit our Web site at www.williamblairfunds.com. The Fund involves a high level of risk and may not be appropriate for everyone. You could lose money by investing in the Fund. There can be no assurance that the Fund’s investment objective will be achieved or that the Fund’s investment strategies will be successful. The Fund is not a complete investment program. From time to time, the investment adviser may waive fees or reimburse expenses for the Fund. Without these waivers/reimbursements, performance would be lower. Class N shares are available to the general public without a sales load. Class I shares are available to certain institutional investors and advisory clients of William Blair Investment Management, LLC and William Blair & Company, L.L.C., without a sales load or distribution fee (12b-1 fee). Institutional Class shares are available to institutional investors without a sales load or distribution (12b-1) or service fees.

The performance highlights and graph presented above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

The Bank of America (“BofA”) Merrill Lynch 3-Month U.S. Treasury Bill Index measures total return on cash, including price and interest income, based on short-term government Treasury Bills of about 90-day maturity. The Index is unmanaged, does not incur fees or expenses, and cannot be invested in directly.

The Long-Term Comparative Index return is comprised of the following indices: 40% Barclays Capital U.S. Aggregate Index, 30% Morgan Stanley Capital International (MSCI) All Country World Index (net), and 30% BofA Merrill Lynch 3-month U.S. Treasury Bill Index.

This report identifies the Fund’s investments on December 31, 2015. These holdings are subject to change. Not all investments in the Fund performed the same, nor is there any guarantee that these investments will perform as well in the future. Market forecasts provided in this report may not necessarily come to pass.

Portfolio Allocation (Unaudited)

The table below provides the allocation of the Fund’s holdings as a percent of net assets as of December 31, 2015.

Category	%
Equity Exchange-Traded Funds	49.5	%
Fixed Income Exchange-Traded Funds	15.3	%
U.S. Government	9.0	%
Purchased Options	0.3	%
Repurchase Agreements	22.1	%
Written Option	0.0	%
Cash and Other Assets, Less Liabilities	3.8	%
Net Assets	100.0	%

December 31, 2015 William Blair Funds 117

Macro Allocation Fund

Portfolio of Investments, December 31, 2015 (all dollar amounts in thousands)

	Shares or
	Principal
Issuer	Amount		Value
Exchange-Traded Funds—64.8%
Equity Exchange-Traded Funds—49.5%
Consumer Staples Select Sector SPDR Fund		189,400	$	9,563
Energy Select Sector SPDR Fund		212,000		12,837
Global X FTSE Greece 20 ETF		1,987,000		15,817
iShares Global Energy ETF(a)		596,000		16,676
iShares MSCI Brazil Capped ETF		338,000		6,990
iShares MSCI India ETF		1,005,000		27,678
iShares MSCI Japan ETF(a)		2,396,000		29,039
iShares MSCI Switzerland Capped ETF		510,000		15,830
iShares Russell 1000 Growth ETF		313,000		31,137
iShares Russell 1000 Value ETF		2,227,000		217,934
Market Vectors Russia ETF		2,137,000		31,307
SPDR S&P 500 ETF Trust		1,983,000		404,314
SPDR S&P Emerging Markets Small Cap ETF		280,000		10,559
Utilities Select Sector SPDR Fund		647,000		28,002
Total Equity Exchange-Traded Funds				857,683
Fixed Income Exchange-Traded Funds—15.3%
iShares iBoxx $ Investment Grade Corporate Bond ETF		1,701,000		193,931
SPDR Barclays High Yield Bond ETF		1,653,000		56,053
WisdomTree Emerging Markets Local
Debt Fund ETF		415,000		14,226
Total Fixed Income Exchange-Traded Funds				264,210
Total Exchange-Traded Funds—64.8% (cost $1,154,801)				1,121,893
Repurchase Agreement—22.1%
Fixed Income Clearing Corporation, 0.030% dated 12/31/15, due 1/4/16, repurchase price $382,338, collateralized by U.S. Treasury Note, 2.375%, due 8/15/24		$382,337		382,337
Total Repurchase Agreement—22.1% (cost $382,337)				382,337
U.S. Government—9.0%
U.S. Treasury Bill, 0.021%, due 1/7/16		12,000		12,000
U.S. Treasury Bill, 0.082%, due 2/4/16(b)		12,000		11,999
U.S. Treasury Bill, 0.092%, due 3/3/16(b)		12,000		11,998
U.S. Treasury Bill, 0.163%, due 3/31/16(a) (b)		12,000		11,995
U.S. Treasury Bill, 0.247%, due 4/28/16(a) (b)		12,000		11,990
U.S. Treasury Bill, 0.373%, due 5/26/16(b)		12,000		11,982
U.S. Treasury Bill, 0.458%, due 6/23/16(a) (b)		12,000		11,974
U.S. Treasury Bill, 0.503%, due 7/21/16(a) (b)		12,000		11,967
U.S. Treasury Bill, 0.524%, due 8/18/16(a) (b)		12,000		11,960

	Principal
	Amount/
Issuer	Contracts			Value
U.S. Government—(continued)
U.S. Treasury Bill, 0.506%, due 9/15/16(a) (b)		$12,000		$	11,957
U.S. Treasury Bill, 0.507%, due 10/13/16(a) (b)		12,000			11,952
U.S. Treasury Bill, 0.519%, due 11/10/16(a)		12,000			11,947
U.S. Treasury Bill, 0.603%, due 12/8/16(a) (b)		12,000			11,933
Total U.S. Government—9.0% (cost $155,707)					155,654
Purchased Options—0.3%
Euro STOXX 50 Index, January 2016, Strike 3,375 EUR, CALL		5,750			1,163
FTSE 100 Index, January 2016, Strike 6,150 GBP, CALL		970			2,009
IBEX 35 Index, January 2016, Strike 10,200 EUR, CALL		13,851			153
KOSPI 200 Index, January 2016, Strike 245 KRW, CALL		359,924,000			271
JPY CALL/AUD PUT, January 2016, Strike 86.94		13,031,575,000			653
S&P 500 Index, January 2016, Strike $2,030, PUT		900			2,025
US 10 YR, January 2016, Strike $124.5, PUT		2,200			310
Total Purchased Options—0.3% (cost $15,935)					6,584
Total Investments in Securities—96.2% (cost $1,708,780)					1,666,468
Written Option
iShares iBoxx High Yield Core, January 2016, Strike $80, PUT		(4,746	)		(261	)
Total Written Option—0.0% (proceeds $652)					(261	)
Cash and other assets, less liabilities—3.8%					65,680
Net assets—100.0%				$	1,731,887

(a) Security, or portion of security, is segregated as collateral for OTC swap contracts and a written option aggregating a total value of $24,241.

(b) Security, or portion of security, is pledged as collateral for the credit default swap and to cover initial margin requirements on open futures contracts aggregating a total value of $66,884.

See accompanying Notes to Financial Statements.

118 Annual Report December 31, 2015

Macro Allocation Fund

Portfolio of Investments, December 31, 2015 (all dollar amounts in thousands)

If a fund’s portfolio holdings represent ownership of 5% or more of the voting securities of a company, the company is deemed to be an affiliate as defined in the Investment Company Act of 1940, as amended. The Fund had the following transactions during the year ended December 31, 2015 with companies deemed affiliated during the year or at December 31, 2015.

		Share Activity								Year Ended December 31, 2015
	Security Name	Balance 12/31/2014		Purchases		Sales		Balance 12/31/2015		Value			Dividend Income			Net realized gain (loss)				Change in net unrealized appreciation (depreciation)
ᴫ	Global X FTSE Greece 20 ETF		—		1,987,000		—		1,987,000		$	15,817		$	241		$	—			$	(3,564	)
	Guggenheim China Small Cap ETF		957,000		117,000		1,074,000		—			—			—			(711	)			(222	)
	SPDR S&P Emerging Markets Small Cap ETF		438,000		198,000		356,000		280,000			10,559			412			(2,384	)			(1,373	)
											$	26,376		$	653		$	(3,095	)		$	(5,159	)

ᴫ = Affiliated company at December 31, 2015. The Fund’s total value in companies deemed to be affiliated at December 31, 2015 was $15,817.

Forward Foreign Currency Contracts

Settlement Date	Deliver/Receive	Counterparty	Local Currency (in thousands)		Current Value		Net Unrealized Appreciation (Depreciation)
Purchased
3/16/16	Brazilian Real	Citibank N.A. London		235,639	$	58,067	$	(2,525	)
3/16/16	Chinese Yuan Renminbi	Citibank N.A. London		552,102		83,427		(674	)
3/16/16	Colombian Peso	Citibank N.A. London		156,564,391		48,891		1,291
3/16/16	Hong Kong Dollar	Citibank N.A. London		53,223		6,872		1
3/16/16	Hungarian Forint	Citibank N.A. London		15,638,284		53,823		(369	)
3/16/16	Indonesian Rupiah	Citibank N.A. London		1,753,583,870		123,776		1,481
3/16/16	Indian Rupee	Citibank N.A. London		6,870,711		102,614		1,159
3/16/16	Mexican Peso	Citibank N.A. London		768,915		44,368		(436	)
3/16/16	Malaysian Ringgit	Citibank N.A. London		310,347		71,791		(1,105	)
3/16/16	New Zealand Dollar	Citibank N.A. London		16,821		11,451		(20	)
3/16/16	Polish Zloty	Citibank N.A. London		183,134		46,616		536
3/16/16	Russian Ruble	Citibank N.A. London		2,751,733		36,899		(1,574	)
3/16/16	New Turkish Lira	Citibank N.A. London		50,259		16,863		43
3/16/16	South African Rand	Citibank N.A. London		420,830		26,826		(385	)
							$	(2,577	)
Sold
3/16/16	Australian Dollar	Citibank N.A. London		24,105	$	17,498	$	(3	)
3/16/16	Swiss Franc	Citibank N.A. London		186,058		186,377		2,666
3/16/16	Czech Koruna	Citibank N.A. London		1,917,406		77,289		906
3/16/16	Euro	Citibank N.A. London		166,368		181,158		1,621
3/16/16	British Pound Sterling	Citibank N.A. London		39,956		58,911		1,555
3/16/16	Hong Kong Dollar	Citibank N.A. London		413,984		53,449		(15	)
3/16/16	Indonesian Rupiah	Citibank N.A. London		87,228,167		6,157		(1	)
3/16/16	Japanese Yen	Citibank N.A. London		3,494,863		29,133		(273	)
3/16/16	New Zealand Dollar	Citibank N.A. London		221,168		150,557		(1,821	)
3/16/16	Thai Baht	Citibank N.A. London		4,636,505		128,606		(362	)
3/16/16	Taiwan Dollar	Citibank N.A. London		245,758		7,450		37
							$	4,310

See accompanying Notes to Financial Statements.

December 31, 2015 William Blair Funds 119

Macro Allocation Fund

Portfolio of Investments, December 31, 2015 (all dollar amounts in thousands)

Futures Contracts

Number of Contracts	Description	Expiration Date	Local Currency	Notional Amount (Local, in thousands)		Net Unrealized Appreciation (Depreciation)
Long
240	Amsterdam Index	January 2016	Euro		21,209	$	503
660	IBEX 35 Index	January 2016	Euro		62,873		(504	)
90	HANG SENG Index	January 2016	Hong Kong Dollar		98,595		35
2,020	MSCI Singapore ETS Index	January 2016	Singapore Dollar		65,367		710
325	MSCI Taiwan Index	January 2016	U.S. Dollar		9,893		9
164	KOSPI 200 Index	March 2016	South Korean Won		19,716,900		17
275	SPI 200 Index	March 2016	Australian Dollar		36,142		1,376
100	EURO STOXX 50 Index	March 2016	Euro		3,282		55
305	FTSE 100 Index	March 2016	British Pound Sterling		18,904		1,299
660	FTSE MIB Index	March 2016	Euro		70,759		1,348
280	5YR US Treasury Notes*	March 2016	U.S. Dollar		33,130		(62	)
						$	4,786
Short
190	CAC 40 Index	January 2016	Euro		8,813	$	(176	)
335	H-Shares Index	January 2016	Hong Kong Dollar		162,559		183
30	EURO-BTP	March 2016	Euro		4,138		53
275	Euro-OAT*	March 2016	Euro		41,264		659
90	German Euro Bund*	March 2016	Euro		14,213		225
360	NIKKEI 225 Index	March 2016	Japanese Yen		3,396,600		1,028
220	10YR JGB Mini	March 2016	Japanese Yen		3,279,320		(90	)
2,385	FTSE 40 Index	March 2016	South African Rand		1,103,587		(2,891	)
155	S&P TSX 60 Index	March 2016	Canadian Dollar		23,588		(139	)
155	DAX Index	March 2016	Euro		41,741		(1,714	)
660	Russell 2000 Mini Index	March 2016	U.S. Dollar		74,679		704
4,400	S&P 500 E Mini Index	March 2016	U.S. Dollar		447,788		1,256
700	10YR Can Bond	March 2016	Canadian Dollar		98,693		(1,540	)
455	10YR US Treasury Notes*	March 2016	U.S. Dollar		57,287		198
130	Long Gilt	March 2016	British Pound Sterling		15,180		86
						$	(2,158	)

* Exposure to Futures Contract is achieved through the use of a swap contract with Credit Suisse.

Interest Rate Swap

Floating Rate Reference	Pay/Receive Floating Rate	Fixed Rates			Maturity Dates	Counterparty	Notional Amount (in thousands)	Unrealized Appreciation (Depreciation)
6 Month Swiss Franc LIBOR Rate	Receive		1.250	%	June 2025	Credit Suisse International	55,010 CHF	$	(850	)
6 Month Swiss Franc LIBOR Rate	Receive		1.250	%	June 2025	Goldman Sachs International	4,200 CHF		54
								$	(796	)

See accompanying Notes to Financial Statements.

120 Annual Report December 31, 2015

Macro Allocation Fund

Portfolio of Investments, December 31, 2015 (all dollar amounts in thousands)

Total Return Swaps

Reference Entity	Pay/Receive Floating Rate	Floating Rates	Maturity Dates	Counterparty	Notional Amount (in thousands)		Unrealized Appreciation (Depreciation)
Consumer Discretionary Select Sector Total Return Index	Receive	3 Month LIBOR minus 40 bp	Feb 2016	Goldman Sachs International		$48,080		$	1,596
Dow Jones US Health Care Total Return Index	Receive	3 Month LIBOR minus 28 bp	Feb 2016	Goldman Sachs International		28,663			(268	)
Dow Jones US Telecommunications Total Return Index	Receive	3 Month LIBOR minus 44 bp	Feb 2016	Goldman Sachs International		37,841			(638	)
MSCI China Small Cap Index (Net)	Pay	1 Month LIBOR plus 30 bp–40 bp	Feb 2016 to May 2016	Credit Suisse International		16,854			(1,292	)
MSCI China Small Cap Index (Net)	Pay	1 Month LIBOR plus 125 bp	Aug 2016 to Nov 2016	Goldman Sachs International		20,123			(310	)
MSCI China Small Cap Index (Net)	Pay	1 Month LIBOR plus 20 bp	Dec 2016	Citibank N.A.		7,042			60
MSCI Emerging Markets Small Cap (Net)	Pay	1 Month LIBOR plus 110 bp–115 bp	Aug 2016 to Sep 2016	Goldman Sachs International		4,161			(475	)
MSCI Emerging Markets Small Cap (Net)	Pay	1 Month LIBOR plus 94 bp	Nov 2016	Credit Suisse International		18,095			(667	)
MSCI Vietnam Daily Total Return Index	Pay	3 Month LIBOR plus 100 bp	Feb 2016	Goldman Sachs International		19,523			(75	)
Vietnam Equity Basket	Pay	3 Month LIBOR plus 100 bp	Feb 2016	Goldman Sachs International		19,647			(1,077	)
								$	(3,146	)

Centrally Cleared Credit Default Swap
Reference Entity	Buy/Sell Protection	Fixed Deal Pay Rate		Maturity Date	Cleared Exchange	Notional Amount (in thousands)	Unrealized Appreciation (Depreciation)
iTRAXX Europe Crossover S24	Sell	5.000	%	December 2020	ICE	15,895 EUR		$	158
		Total Net Unrealized Appreciation (Depreciation) on Swaps						$	(3,784	)

See accompanying Notes to Financial Statements.

December 31, 2015 William Blair Funds 121

Statements of Assets and Liabilities

As of December 31, 2015 (dollar amounts in thousands)

	Growth Fund		Large Cap Growth Fund			Large Cap Value Fund			Mid Cap Growth Fund
Assets
Investments in securities, at cost	$	672,231	$	56,205			$	2,776	$	185,222
Investments in securities, at value	$	843,057	$	69,024			$	3,150	$	198,365
Receivable for securities sold		3,796		—				64		5,956
Receivable for fund shares sold		1,214		665				—		208
Receivable from Adviser		—		7				10		21
Dividend and interest receivable		423		31				4		22
Total assets		848,490		69,727				3,228		204,572
Liabilities
Payable for investment securities purchased		—		—				—		134
Payable for fund shares redeemed		1,148		154				9		837
Payable to custodian		—		—				8		3,591
Management fee payable		543		41				2		171
Distribution fee payable		35		2				—		6
Other payables and accrued expenses		266		49				33		111
Total liabilities		1,992		246				52		4,850
Net assets	$	846,498	$	69,481			$	3,176	$	199,722
Capital
Composition of net assets
Par value of shares of beneficial interest	$	64	$	7			$	—	$	17
Capital paid in excess of par value		663,768		57,077				2,801		180,893
Accumulated net investment income (loss)		—		—				1		—
Accumulated net realized gain (loss)		11,840		(422	)			—		5,669
Net unrealized appreciation (depreciation) of investments and foreign currencies		170,826		12,819				374		13,143
Net assets	$	846,498	$	69,481			$	3,176	$	199,722
Class N shares
Net assets	$	149,754	$	10,443			$	1,151	$	25,105
Shares outstanding		11,962,708		1,029,001				103,101		2,225,464
Net asset value per share	$	12.52	$	10.15			$	11.17	$	11.28
Class I shares
Net assets	$	696,744	$	59,038			$	2,025	$	174,617
Shares outstanding		51,627,413		5,579,164				181,503		14,845,906
Net asset value per share	$	13.50	$	10.58			$	11.15	$	11.76

See accompanying Notes to Financial Statements.

122 Annual Report December 31, 2015

Statements of Operations

For the Year Ended December 31, 2015 (all amounts in thousands)

	Growth Fund				Large Cap Growth Fund				Large Cap Value Fund				Mid Cap Growth Fund
Investment income
Dividends		$	8,307			$	551			$	75			$	1,943
Less foreign tax withheld			(30	)			—				—				—
Total income			8,277				551				75				1,943
Expenses
Investment advisory fees			6,651				455				29				2,788
Distribution fees			561				24				3				86
Custodian fees			35				28				31				47
Transfer agent fees			116				11				3				25
Sub-transfer agent fees
Class N			321				14				1				52
Class I			620				40				1				287
Professional fees			75				32				30				43
Registration fees			39				33				36				17
Shareholder reporting fees			23				4				2				47
Trustee fees			46				3				—				18
Other expenses			40				7				5				19
Total expenses before expense limitation			8,527				651				141				3,429
Expenses waived or reimbursed by the Adviser			—				(96	)			(104	)			(211	)
Net expenses			8,527				555				37				3,218
Net investment income (loss)			(250	)			(4	)			38				(1,275	)
Realized and unrealized gain (loss)
Net realized gain (loss) on transactions from:
Investments in securities			57,036				4,789				323				36,493
Total net realized gain (loss)			57,036				4,789				323				36,493
Change in net unrealized appreciation (depreciation) of:
Investments in securities			(9,544	)			(463	)			(584	)			(30,371	)
Change in net unrealized appreciation (depreciation)			(9,544	)			(463	)			(584	)			(30,371	)
Net increase (decrease) in net assets resulting from operations		$	47,242			$	4,322			$	(223	)		$	4,847

See accompanying Notes to Financial Statements.

December 31, 2015 William Blair Funds 123

Statements of Changes in Net Assets

For the Years Ended December 31, 2015 and 2014 (all amounts in thousands)

	Growth Fund						Large Cap Growth Fund								Large Cap Value Fund								Mid Cap Growth Fund
	2015			2014			2015				2014				2015				2014				2015			2014
Operations
Net investment income (loss)	$	(250	)	$	(2,652	)		$	(4	)		$	(10	)		$	38			$	41		$	(1,275	)	$	(2,292	)
Net realized gain (loss) on investments, and other assets and liabilities		57,036			160,635				4,789				5,646				323				422			36,493			54,804
Change in net unrealized appreciation (depreciation) on investments, and other assets and liabilities		(9,544	)		(98,071	)			(463	)			1,780				(584	)			(57	)		(30,371	)		(23,846	)
Net increase (decrease) in net assets resulting from operations		47,242			59,912				4,322				7,416				(223	)			406			4,847			28,666
Distributions to shareholders from
Net investment income
Class N		—			—				—				—				(9	)			(11	)		—			—
Class I		—			—				—				—				(25	)			(32	)		—			—
Net realized gain
Class N		(18,526	)		(38,561	)			(971	)			(766	)			(124	)			(127	)		(5,530	)		(4,943	)
Class I		(80,435	)		(92,382	)			(5,265	)			(4,395	)			(230	)			(281	)		(35,853	)		(43,297	)
Total distributions		(98,961	)		(130,943	)			(6,236	)			(5,161	)			(388	)			(451	)		(41,383	)		(48,240	)
Capital stock transactions
Net proceeds from sale of shares		122,787			168,221				17,152				12,804				188				329			33,162			47,300
Shares issued in reinvestment of income dividends and capital gain distributions		95,837			122,205				5,376				4,464				358				424			39,576			46,677
Less cost of shares redeemed		(281,210	)		(173,143	)			(10,742	)			(7,105	)			(1,380	)			(1,194	)		(176,266	)		(162,245	)
Net increase (decrease) in net assets resulting from capital share transactions		(62,586	)		117,283				11,786				10,163				(834	)			(441	)		(103,528	)		(68,268	)
Increase (decrease) in net assets		(114,305	)		46,252				9,872				12,418				(1,445	)			(486	)		(140,064	)		(87,842	)
Net assets
Beginning of period		960,803			914,551				59,609				47,191				4,621				5,107			339,786			427,628
End of period	$	846,498		$	960,803			$	69,481			$	59,609			$	3,176			$	4,621		$	199,722		$	339,786
Accumulated net investment income (loss) at the end of the period	$	—		$	—			$	—			$	—			$	1			$	—		$	—		$	—

See accompanying Notes to Financial Statements.

124 Annual Report December 31, 2015

Statements of Assets and Liabilities

As of December 31, 2015 (dollar amounts in thousands)

	Mid Cap Value Fund			Small-Mid Cap Growth Fund		Small-Mid Cap Value Fund			Small Cap Growth Fund
Assets
Investments in securities, at cost		$	2,261	$	1,045,396		$	3,671	$	324,746
Investments in affiliated companies, at cost			—		—			—		4,878
Investments in securities, at value		$	2,669	$	1,193,063		$	4,013	$	367,540
Investments in affiliated companies, at value			—		—			—		4,995
Receivable for securities sold			144		11,231			65		1,496
Receivable for fund shares sold			1		16,291			38		914
Receivable from Adviser			4		122			16		11
Dividend and interest receivable			5		429			9		102
Total assets			2,823		1,221,136			4,141		375,058
Liabilities
Payable for securities purchased			28		25,079			—		763
Payable for fund shares redeemed			9		5,485			—		478
Payable to custodian			84		—			25		—
Management fee payable			2		993			4		355
Distribution fee payable			—		35			—		24
Other payables and accrued expenses			32		405			37		225
Total liabilities			155		31,997			66		1,845
Net assets		$	2,668	$	1,189,139		$	4,075	$	373,213
Capital
Composition of net assets
Par value of shares of beneficial interest		$	—	$	61		$	1	$	16
Capital paid in excess of par value			2,174		1,035,664			3,715		332,575
Accumulated net investment income (loss)			5		—			4		—
Accumulated net realized gain (loss)			81		5,747			13		(2,289	)
Net unrealized appreciation (depreciation) of investments and foreign currencies			408		147,667			342		42,911
Net assets		$	2,668	$	1,189,139		$	4,075	$	373,213
Class N shares
Net assets		$	694	$	169,595		$	855	$	111,944
Shares outstanding			69,924		9,150,488			68,149		4,981,302
Net asset value per share		$	9.92	$	18.53		$	12.54	$	22.47
Class I shares
Net assets		$	1,974	$	1,019,544		$	3,220	$	261,269
Shares outstanding			198,648		52,949,184			256,658		10,808,035
Net asset value per share		$	9.94	$	19.25		$	12.54	$	24.17

See accompanying Notes to Financial Statements.

December 31, 2015 William Blair Funds 125

Statements of Operations

For the Year Ended December 31, 2015 (all amounts in thousands)

	Mid Cap Value Fund				Small-Mid Cap Growth Fund				Small-Mid Cap Value Fund				Small Cap Growth Fund
Investment income
Dividends		$	58			$	8,544			$	71			$	2,967
Less foreign tax withheld			—				(44	)			—				(18	)
Total income			58				8,500				71				2,949
Expenses
Investment advisory fees			32				10,379				43				5,064
Distribution fees			1				323				2				340
Custodian fees			32				40				38				46
Transfer agent fees			1				61				1				71
Sub-transfer agent fees
Class N			1				172				—				196
Class I			—				942				2				331
Professional fees			26				79				34				59
Registration fees			31				71				37				48
Shareholder reporting fees			—				103				—				165
Trustee fees			—				42				—				26
Other expenses			3				34				5				26
Total expenses before expense limitation			127				12,246				162				6,372
Expenses waived or reimbursed by the Adviser			(91	)			(507	)			(112	)			(277	)
Net expenses			36				11,739				50				6,095
Net investment income (loss)			22				(3,239	)			21				(3,146	)
Realized and unrealized gain (loss)
Net realized gain (loss) on transactions from:
Investments in securities			661				61,943				129				27,594	(1)
Total net realized gain (loss)			661				61,943				129				27,594
Change in net unrealized appreciation (depreciation) of:
Investments in securities			(671	)			(21,167	)			(280	)			(39,914	)(2)
Change in net unrealized appreciation (depreciation)			(671	)			(21,167	)			(280	)			(39,914	)
Net increase (decrease) in net assets resulting from operations		$	12			$	37,537			$	(130	)		$	(15,466	)

(1) Includes $(330) from companies deemed affiliated during the year or at December 31, 2015.

(2) Includes $(1,163) from companies deemed affiliated during the year or at December 31, 2015.

See accompanying Notes to Financial Statements.

126 Annual Report December 31, 2015

Statements of Changes in Net Assets

For the Years Ended December 31, 2015 and 2014 (all amounts in thousands)

	Mid Cap Value Fund								Small-Mid Cap Growth Fund						Small-Mid Cap Value Fund								Small Cap Growth Fund
	2015				2014				2015			2014			2015				2014				2015			2014
Operations
Net investment income (loss)		$	22			$	21		$	(3,239	)	$	(2,965	)		$	21			$	9		$	(3,146	)	$	(4,620	)
Net realized gain (loss) on investments, and other assets and liabilities			661				468			61,943			67,816				129				361			27,594			73,574
Change in net unrealized appreciation (depreciation) on investments, and other assets and liabilities			(671	)			(89	)		(21,167	)		(675	)			(280	)			(182	)		(39,914	)		(56,321	)
Net increase (decrease) in net assets resulting from operations			12				400			37,537			64,176				(130	)			188			(15,466	)		12,633
Distributions to shareholders from
Net investment income
Class N			(2	)			(1	)		—			—				(1	)			—			—			—
Class I			(10	)			(21	)		—			—				(10	)			(12	)		—			—
Net realized gain
Class N			(149	)			(24	)		(8,564	)		(6,031	)			(44	)			(76	)		(9,437	)		(25,936	)
Class I			(438	)			(471	)		(50,588	)		(62,751	)			(162	)			(266	)		(20,150	)		(59,140	)
Total distributions			(599	)			(517	)		(59,152	)		(68,782	)			(217	)			(354	)		(29,587	)		(85,076	)
Capital stock transactions
Net proceeds from sale of shares			661				49			428,159			295,395				435				2,169			94,104			100,914
Shares issued in reinvestment of income dividends and capital gain distributions			573				412			57,336			66,503				136				214			28,974			82,817
Less cost of shares redeemed			(1,747	)			(1,033	)		(151,577	)		(171,037	)			(502	)			(1,142	)		(217,254	)		(226,205	)
Net increase (decrease) in net assets resulting from capital share transactions			(513	)			(572	)		333,918			190,861				69				1,241			(94,176	)		(42,474	)
Increase (decrease) in net assets			(1,100	)			(689	)		312,303			186,255				(278	)			1,075			(139,229	)		(114,917	)
Net assets
Beginning of period			3,768				4,457			876,836			690,581				4,353				3,278			512,442			627,359
End of period		$	2,668			$	3,768		$	1,189,139		$	876,836			$	4,075			$	4,353		$	373,213		$	512,442
Accumulated net investment income (loss) at the end of the period		$	5			$	—		$	—		$	—			$	4			$	—		$	—		$	—

See accompanying Notes to Financial Statements.

December 31, 2015 William Blair Funds 127

Statements of Assets and Liabilities

As of December 31, 2015 (dollar amounts in thousands)

	Small Cap Value Fund		Global Leaders Fund			Global Small Cap Growth Fund (In Liquidation)				International Leaders Fund
Assets
Investments in securities, at cost	$	545,910	$	169,702			$	16,476			$	104,884
Investments in securities, at value	$	610,326	$	187,377			$	18,466			$	115,360
Cash		—		7				—				7
Foreign currency, at value (cost $— ; $241; $5; $24)		—		223				5				24
Receivable for securities sold		637		1,256				28				310
Receivable for fund shares sold		1,786		151				1				401
Receivable from Adviser		1		23				18				17
Dividend and interest receivable		1,413		172				27				133
Total assets		614,163		189,209				18,545				116,252
Liabilities
Payable for investment securities purchased		926		—				—				—
Payable for fund shares redeemed		142		6				8				—
Management fee payable		584		161				17				92
Shareholder administration fee payable		—		7				3				2
Distribution fee payable		7		1				—				—
Foreign capital gains tax liability		—		—				—				2
Other payables and accrued expenses		143		66				73				78
Total liabilities		1,802		241				101				174
Net assets	$	612,361	$	188,968			$	18,444			$	116,078
Capital
Composition of net assets
Par value of shares of beneficial interest	$	36	$	16			$	1			$	9
Capital paid in excess of par value		543,724		171,169				13,384				105,681
Accumulated net investment income (loss)		236		(40	)			(165	)			92
Accumulated net realized gain (loss)		3,949		174				3,235				(167	)
Net unrealized appreciation (depreciation) of investments and foreign currencies		64,416		17,649				1,989				10,463
Net assets	$	612,361	$	188,968			$	18,444			$	116,078
Class N shares
Net assets	$	33,351	$	5,588			$	761			$	377
Shares outstanding		1,999,248		482,636				59,000				29,235
Net asset value per share	$	16.68	$	11.58			$	12.89			$	12.89
Class I shares
Net assets	$	579,010	$	45,853			$	17,683			$	13,474
Shares outstanding		33,906,978		3,956,642				1,365,766				1,043,729
Net asset value per share	$	17.08	$	11.59			$	12.95			$	12.91
Institutional Class shares
Net assets		—	$	137,527				—			$	102,227
Shares outstanding		—		11,866,752				—				7,924,018
Net asset value per share		—	$	11.59				—			$	12.90

See accompanying Notes to Financial Statements.

128 Annual Report December 31, 2015

Statements of Operations

For the Year Ended December 31, 2015 (all amounts in thousands)

	Small Cap Value Fund				Global Leaders Fund				Global Small Cap Growth Fund (In Liquidation)				International Leaders Fund
Investment income
Dividends		$	9,758			$	3,021			$	832			$	2,018
Less foreign tax withheld			—				(207	)			(52	)			(166	)
Total income			9,758				2,814				780				1,852
Expenses
Investment advisory fees			6,423				1,853				501				945
Distribution fees			92				14				2				1
Shareholder administration fees			—				87				75				19
Custodian fees			36				58				65				57
Transfer agent fees			38				12				19				2
Sub-transfer agent fees
Class N			51				6				2				—
Class I			522				33				3				20
Professional fees			55				61				68				74
Registration fees			36				47				56				51
Shareholder reporting fees			54				1				2				—
Trustee fees			29				8				2				4
Other expenses			28				15				7				12
Total expenses before expense limitation			7,364				2,195				802				1,185
Expenses waived or reimbursed by the Adviser			(13	)			(229	)			(168	)			(190	)
Net expenses			7,351				1,966				634				995
Net investment income (loss)			2,407				848				146				857
Realized and unrealized gain (loss)
Net realized gain (loss) on transactions from:
Investments in securities, net of foreign capital gains taxes, if applicable			6,099				7,215				4,297				(115	)
Foreign currency transactions			—				(89	)			(63	)			(34	)
Total net realized gain (loss)			6,099				7,126				4,234				(149	)
Change in net unrealized appreciation (depreciation) of:
Investments in securities			(41,101	)			(3,409	)			(113	)			4,617
Foreign currency translations			—				(6	)			37				67
Change in net unrealized appreciation (depreciation)			(41,101	)			(3,415	)			(76	)			4,684
Net increase (decrease) in net assets resulting from operations		$	(32,595	)		$	4,559			$	4,304			$	5,392

See accompanying Notes to Financial Statements.

December 31, 2015 William Blair Funds 129

Statements of Changes in Net Assets

For the Years Ended December 31, 2015 and 2014 (all amounts in thousands)

	Small Cap Value Fund						Global Leaders Fund						Global Small Cap Growth Fund (In Liquidation)								International Leaders Fund
	2015			2014			2015			2014			2015				2014				2015				2014
Operations
Net investment income (loss)	$	2,407		$	519		$	848		$	695			$	146			$	(57	)		$	857			$	1,122
Net realized gain (loss) on investments, and other assets and liabilities		6,099			24,178			7,126			7,314				4,234				1,914				(149	)			1,690
Change in net unrealized appreciation (depreciation) on investments, and other assets and liabilities		(41,101	)		4,446			(3,415	)		(1,694	)			(76	)			(415	)			4,684				(4,687	)
Net increase (decrease) in net assets resulting from operations		(32,595	)		29,143			4,559			6,315				4,304				1,442				5,392				(1,875	)
Distributions to shareholders from
Net investment income
Class N		—			—			(3	)		—				(11	)			—				(1	)			(1	)
Class I		(1,363	)		(610	)		(152	)		(75	)			(327	)			—				(22	)			(72	)
Institutional Class		—			—			(552	)		(301	)			—				—				(323	)			(746	)
Net realized gain
Class N		(107	)		(1,435	)		(252	)		(8	)			(16	)			(25	)			(2	)			—
Class I		(1,836	)		(18,791	)		(2,063	)		(85	)			(441	)			(1,623	)			(73	)			—
Institutional Class		—			—			(6,144	)		(165	)			—				—				(578	)			—
Total distributions		(3,306	)		(20,836	)		(9,166	)		(634	)			(795	)			(1,648	)			(999	)			(819	)
Capital stock transactions
Net proceeds from sale of shares		174,197			291,841			41,785			53,874				13,920				26,372				24,052				26,388
Shares issued in reinvestment of income dividends and capital gain distributions		3,045			19,104			8,986			567				642				576				773				243
Less cost of shares redeemed		(114,166	)		(142,362	)		(20,858	)		(43,543	)			(42,755	)			(1,039	)			(1,102	)			(4,749	)
Net increase (decrease) in net assets resulting from capital share transactions		63,076			168,583			29,913			10,898				(28,193	)			25,909				23,723				21,882
Increase (decrease) in net assets		27,175			176,890			25,306			16,579				(24,684	)			25,703				28,116				19,188
Net assets
Beginning of period		585,186			408,296			163,662			147,083				43,128				17,425				87,962				68,774
End of period	$	612,361		$	585,186		$	188,968		$	163,662			$	18,444			$	43,128			$	116,078			$	87,962
Accumulated net investment income (loss) at the end of the period	$	236		$	—		$	(40	)	$	6			$	(165	)		$	(45	)		$	92			$	(385	)

See accompanying Notes to Financial Statements.

130 Annual Report December 31, 2015

Statements of Assets and Liabilities

As of December 31, 2015 (dollar amounts in thousands)

	International Equity Fund				Institutional International Equity Fund				International Growth Fund			Institutional International Growth Fund
Assets
Investments in securities, at cost		$	58,383			$	15,234		$	3,357,382		$	2,140,036
Investment in affiliated fund, at cost			—				—			2,236			1,390
Investments in securities, at value		$	63,567			$	16,049		$	3,665,835		$	2,329,471
Investment in affiliated fund, at value			—				—			3,928			2,441
Cash			5				1			100			63
Foreign currency, at value (cost $44; $14; $415; $518)			43				14			415			518
Receivable for securities sold			—				—			4,008			2,535
Receivable for fund shares sold			930				—			16,060			4,615
Receivable from Adviser			14				11			—			—
Dividend and interest receivable			129				35			8,468			3,893
Total assets			64,688				16,110			3,698,814			2,343,536
Liabilities
Payable for investment securities purchased			638				7			5,359			3,465
Payable for fund shares redeemed			16				—			9,912			2,277
Management fee payable			53				12			3,152			1,866
Distribution fee payable			1				—			225			—
Other payables and accrued expenses			74				61			1,422			296
Total liabilities			782				80			20,070			7,904
Net assets		$	63,906			$	16,030		$	3,678,744		$	2,335,632
Capital
Composition of net assets
Par value of shares of beneficial interest		$	5			$	1		$	145		$	155
Capital paid in excess of par value			133,087				105,357			3,748,765			2,182,306
Accumulated net investment income (loss)			586				(62	)		21,204			7,048
Accumulated net realized gain (loss)			(74,949	)			(90,078	)		(401,395	)		(44,198	)
Net unrealized appreciation (depreciation) of investments and foreign currencies			5,177				812			310,025			190,321
Net assets		$	63,906			$	16,030		$	3,678,744		$	2,335,632
Class N shares
Net assets		$	3,020				—		$	1,023,588			—
Shares outstanding			218,067				—			41,050,215			—
Net asset value per share		$	13.85				—		$	24.94			—
Class I shares
Net assets		$	60,886				—		$	2,655,156			—
Shares outstanding			4,356,284				—			104,073,211			—
Net asset value per share		$	13.98				—		$	25.51			—
Institutional Class shares
Net assets			—			$	16,030			—		$	2,335,632
Shares outstanding			—				1,322,089			—			154,926,068
Net asset value per share			—			$	12.12			—		$	15.08

See accompanying Notes to Financial Statements.

December 31, 2015 William Blair Funds 131

Statements of Operations

For the Year Ended December 31, 2015 (all amounts in thousands)

	International Equity Fund				Institutional International Equity Fund				International Growth Fund				Institutional International Growth Fund
Investment income
Dividends		$	1,774			$	384			$	90,394			$	57,147
Less foreign tax withheld			(142	)			(32	)			(8,301	)			(5,242	)
Total income			1,632				352				82,093				51,905
Expenses
Investment advisory fees			700				142				38,286				22,490
Distribution fees			9				—				2,590				—
Custodian fees			53				51				373				270
Transfer agent fees			4				—				231				49
Sub-transfer agent fees
Class N			4				—				1,318				—
Class I			75				—				2,516				—
Professional fees			58				57				312				221
Registration fees			31				22				104				35
Shareholder reporting fees			1				—				321				20
Trustee fees			4				1				196				120
Other expenses			8				5				163				94
Total expenses before expense limitation			947				278				46,410				23,299
Expenses waived or reimbursed by the Adviser			(190	)			(120	)			—				—
Net expenses			757				158				46,410				23,299
Net investment income (loss)			875				194				35,683				28,606
Realized and unrealized gain (loss)
Net realized gain (loss) on transactions from:
Investments in securities, net of foreign capital gains taxes, if applicable			1,926				423				(20,024	)(1)			(28,210	)(1)
Foreign currency transactions			(32	)			(6	)			(3,507	)			(2,229	)
Total net realized gain (loss)			1,894				417				(23,531	)			(30,439	)
Change in net unrealized appreciation (depreciation) of:
Investments in securities			(1,353	)			(428	)			(17,154	)(2)			5,125	(2)
Foreign currency translations			4				2				2,692				1,805
Change in net unrealized appreciation (depreciation)			(1,349	)			(426	)			(14,462	)			6,930
Net increase (decrease) in net assets resulting from operations		$	1,420			$	185			$	(2,310	)		$	5,097

(1) Includes $18,124 and $9,106 related to an affiliated fund (William Blair China A-Share Fund, LLC) for International Growth Fund and Institutional International Growth Fund, respectively.

(2) Includes $(9,385) and $(4,902) related to an affiliated fund (William Blair China A-Share Fund, LLC) for International Growth Fund and Institutional International Growth Fund, respectively.

See accompanying Notes to Financial Statements.

132 Annual Report December 31, 2015

Statements of Changes in Net Assets

For the Years Ended December 31, 2015 and 2014 (all amounts in thousands)

	International Equity Fund						Institutional International Equity Fund						International Growth Fund						Institutional International Growth Fund
	2015			2014			2015			2014			2015			2014			2015			2014
Operations
Net investment income (loss)	$	875		$	1,045		$	194		$	370		$	35,683		$	52,083		$	28,606		$	35,796
Net realized gain (loss) on investments, and other assets and liabilities		1,894			6,632			417			18,138			(23,531	)		416,906			(30,439	)		199,722
Change in net unrealized appreciation (depreciation) on investments, and other assets and liabilities		(1,349	)		(9,783	)		(426	)		(19,690	)		(14,462	)		(579,470	)		6,930			(304,800	)
Net increase (decrease) in net assets resulting from operations		1,420			(2,106	)		185			(1,182	)		(2,310	)		(110,481	)		5,097			(69,282	)
Distributions to shareholders from
Net investment income
Class N		(26	)		(21	)		—			—			(9,482	)		(8,591	)		—			—
Class I		(750	)		(576	)		—			—			(30,923	)		(33,318	)		—			—
Institutional Class		—			—			(156	)		(293	)		—			—			(13,779	)		(44,638	)
Net realized gain
Class N		—			—			—			—			—			—			—			—
Class I		—			—			—			—			—			—			—			—
Institutional Class		—			—			—			—			—			—			(15,858	)		(189,453	)
Total distributions		(776	)		(597	)		(156	)		(293	)		(40,405	)		(41,909	)		(29,637	)		(234,091	)
Capital stock transactions
Net proceeds from sale of shares		5,655			1,780			2,425			—			837,025			722,959			297,180			338,472
Shares issued in reinvestment of income dividends and capital gain distributions		706			543			156			293			36,885			37,862			28,849			227,055
Less cost of shares redeemed		(11,608	)		(10,689	)		(1,154	)		(85,049	)		(835,938	)		(1,220,568	)		(305,026	)		(363,134	)
Net increase (decrease) in net assets resulting from capital share transactions		(5,247	)		(8,366	)		1,427			(84,756	)		37,972			(459,747	)		21,003			202,393
Increase (decrease) in net assets		(4,603	)		(11,069	)		1,456			(86,231	)		(4,743	)		(612,137	)		(3,537	)		(100,980	)
Net assets
Beginning of period		68,509			79,578			14,574			100,805			3,683,487			4,295,624			2,339,169			2,440,149
End of period	$	63,906		$	68,509		$	16,030		$	14,574		$	3,678,744		$	3,683,487		$	2,335,632		$	2,339,169
Accumulated net investment income (loss) at the end of the period	$	586		$	491		$	(62	)	$	(99	)	$	21,204		$	22,829		$	7,048		$	(9,291	)

See accompanying Notes to Financial Statements.

December 31, 2015 William Blair Funds 133

Statements of Assets and Liabilities

As of December 31, 2015 (dollar amounts in thousands)

	International Small Cap Growth Fund				Emerging Markets Leaders Fund			Emerging Markets Growth Fund			Emerging Markets Small Cap Growth Fund
Assets
Investments in securities, at cost		$	508,348		$	133,592		$	907,408			$	286,752
Investment in affiliated fund, at cost			—			—			2,743				—
Investments in securities, at value		$	572,610		$	127,495		$	874,210			$	293,474
Investment in affiliated fund, at value			—			—			4,819				—
Foreign currency, at value (cost $2,243; $469; $2,252; $3,349)			2,231			469			2,250				3,351
Receivable for securities sold			411			135			1,611				2,318
Receivable for fund shares sold			856			1,052			1,542				2,683
Receivable from Adviser			46			15			18				49
Dividend and interest receivable			693			73			469				114
Total assets			576,847			129,239			884,919				301,989
Liabilities
Payable for investment securities purchased			1,108			494			3,115				3,701
Payable for fund shares redeemed			366			841			1,567				722
Management fee payable			495			120			832				272
Shareholder administration fee payable			46			5			18				21
Distribution fee payable			2			—			2				2
Foreign capital gains tax liability			27			—			—				181
Other payables and accrued expenses			203			101			274				249
Total liabilities			2,247			1,561			5,808				5,148
Net assets		$	574,600		$	127,678		$	879,111			$	296,841
Capital
Composition of net assets
Par value of shares of beneficial interest		$	42		$	16		$	80			$	20
Capital paid in excess of par value			520,015			145,440			972,672				297,351
Accumulated net investment income (loss)			(7,282	)		59			3,196				(2,799	)
Accumulated net realized gain (loss)			(2,356	)		(11,738	)		(65,711	)			(4,272	)
Net unrealized appreciation (depreciation) of investments and foreign currencies			64,181			(6,099	)		(31,126	)			6,541
Net assets		$	574,600		$	127,678		$	879,111			$	296,841
Class N shares
Net assets		$	11,350		$	1,599		$	9,367			$	11,306
Shares outstanding			840,740			206,866			863,075				761,760
Net asset value per share		$	13.50		$	7.73		$	10.85			$	14.84
Class I shares
Net assets		$	342,232		$	32,862		$	130,491			$	162,375
Shares outstanding			25,075,034			4,243,472			11,900,993				10,903,164
Net asset value per share		$	13.65		$	7.74		$	10.96			$	14.90
Institutional Class shares
Net assets		$	221,018		$	93,217		$	739,253			$	123,160
Shares outstanding			16,110,360			12,044,909			66,917,585				8,257,384
Net asset value per share		$	13.72		$	7.74		$	11.05			$	14.92

See accompanying Notes to Financial Statements.

134 Annual Report December 31, 2015

Statements of Operations

For the Year Ended December 31, 2015 (all amounts in thousands)

	International Small Cap Growth Fund				Emerging Markets Leaders Fund				Emerging Markets Growth Fund			Emerging Markets Small Cap Growth Fund
Investment income
Dividends		$	12,247			$	2,260		$	19,215			$	5,286
Less foreign tax withheld			(1,034	)			(220	)		(2,057	)			(533	)
Total income			11,213				2,040			17,158				4,753
Expenses
Investment advisory fees			6,139				1,273			10,543				3,267
Distribution fees			30				5			31				30
Shareholder administration fees			569				54			268				250
Custodian fees			153				113			380				303
Transfer agent fees			28				12			47				43
Sub-transfer agent fees
Class N			17				3			9				28
Class I			299				12			122				92
Professional fees			102				91			130				162
Registration fees			57				43			54				59
Shareholder reporting fees			67				16			—				17
Trustee fees			38				5			48				12
Other expenses			43				11			41				18
Total expenses before expense limitation			7,542				1,638			11,673				4,281
Expenses waived or reimbursed by the Adviser			(569	)			(173	)		(268	)			(430	)
Net expenses			6,973				1,465			11,405				3,851
Net investment income (loss)			4,240				575			5,753				902
Realized and unrealized gain (loss)
Net realized gain (loss) on transactions from:
Investments in securities, net of foreign capital gains taxes, if applicable			19,344				(10,400	)		(52,040	)(1)			4,964
Foreign currency transactions			(685	)			(180	)		(1,658	)			(1,161	)
Total net realized gain (loss)			18,659				(10,580	)		(53,698	)			3,803
Change in net unrealized appreciation (depreciation) of:
Investments in securities			35,682				(9,186	)		(94,295	)(2)			(26,559	)
Foreign currency translations			575				163			2,334				2,272
Change in net unrealized appreciation (depreciation)			36,257				(9,023	)		(91,961	)			(24,287	)
Net increase (decrease) in net assets resulting from operations		$	59,156			$	(19,028	)	$	(139,906	)		$	(19,582	)

(1) Includes $18,280 related to an affiliated fund (William Blair China A-Share Fund, LLC).

(2) Includes $(9,807) related to an affiliated fund (William Blair China A-Share Fund, LLC).

See accompanying Notes to Financial Statements.

December 31, 2015 William Blair Funds 135

Statements of Changes in Net Assets

For the Years Ended December 31, 2015 and 2014 (all amounts in thousands)

	International Small Cap Growth Fund						Emerging Markets Leaders Fund						Emerging Markets Growth Fund						Emerging Markets Small Cap Growth Fund
	2015			2014			2015			2014			2015			2014			2015			2014
Operations
Net investment income (loss)	$	4,240		$	5,384		$	575		$	633		$	5,753		$	9,183		$	902		$	562
Net realized gain (loss) on investments, and other assets and liabilities		18,659			68,350			(10,580	)		2,776			(53,698	)		57,548			3,803			19,077
Change in net unrealized appreciation (depreciation) on investments, and other assets and liabilities		36,257			(142,863	)		(9,023	)		(3,517	)		(91,961	)		(37,456	)		(24,287	)		7,112
Net increase (decrease) in net assets resulting from operations		59,156			(69,129	)		(19,028	)		(108	)		(139,906	)		29,275			(19,582	)		26,751
Distributions to shareholders from
Net investment income
Class N		(195	)		(164	)		—			—			—			(72	)		—			(16	)
Class I		(7,300	)		(6,193	)		(105	)		(69	)		—			(1,383	)		—			(584	)
Institutional Class		(4,603	)		(4,459	)		(331	)		(303	)		—			(8,124	)		(1	)		(767	)
Net realized gain
Class N		(29	)		(1,818	)		(2	)		(33	)		(107	)		(690	)		(474	)		(433	)
Class I		(919	)		(53,418	)		(44	)		(718	)		(1,427	)		(8,947	)		(6,262	)		(4,971	)
Institutional Class		(557	)		(32,680	)		(126	)		(1,894	)		(8,324	)		(41,802	)		(4,988	)		(5,350	)
Total distributions		(13,603	)		(98,732	)		(608	)		(3,017	)		(9,858	)		(61,018	)		(11,725	)		(12,121	)
Capital stock transactions
Net proceeds from sale of shares		78,346			158,782			81,180			57,003			315,208			196,777			123,362			96,155
Shares issued in reinvestment of income dividends and capital gain distributions		11,877			83,789			549			2,742			8,609			52,055			9,559			9,684
Less cost of shares redeemed		(184,116	)		(387,962	)		(40,597	)		(23,496	)		(280,776	)		(231,277	)		(58,676	)		(25,665	)
Net increase (decrease) in net assets resulting from capital share transactions		(93,893	)		(145,391	)		41,132			36,249			43,041			17,555			74,245			80,174
Increase (decrease) in net assets		(48,340	)		(313,252	)		21,496			33,124			(106,723	)		(14,188	)		42,938			94,804
Net assets
Beginning of period		622,940			936,192			106,182			73,058			985,834			1,000,022			253,903			159,099
End of period	$	574,600		$	622,940		$	127,678		$	106,182		$	879,111		$	985,834		$	296,841		$	253,903
Accumulated net investment income (loss) at the end of the period	$	(7,282	)	$	(5,614	)	$	59		$	(230	)	$	3,196		$	(3,688	)	$	(2,799	)	$	(1,853	)

See accompanying Notes to Financial Statements.

136 Annual Report December 31, 2015

Statements of Assets and Liabilities

As of December 31, 2015 (dollar amounts in thousands)

	Bond Fund			Income Fund			Low Duration Fund			Macro Allocation Fund
Assets
Investments in securities, at cost	$	463,264		$	90,511		$	129,009		$	1,307,062
Investments in affiliated companies, at cost		—			—			—			19,381
Repurchase agreement, at cost		15,197			5,007			1,422			382,337
Investments in securities, at value	$	460,944		$	90,246		$	128,413		$	1,268,314
Investments in affiliated companies, at value		—			—			—			15,817
Repurchase agreement, at value		15,197			5,007			1,422			382,337
Cash		—			—			—			67,867
Receivable for securities sold		—			—			10,092			—
Receivable for fund shares sold		2,909			612			2,019			11,841
Receivable for variation margin on futures		—			—			—			5,560
Receivable for variation margin on centrally cleared swaps		—			—			—			3
Receivable from Adviser		57			—			18			170
Dividend and interest receivable		3,389			469			305			2,965
Unrealized appreciation on swap contracts		—			—			—			60
Unrealized appreciation on forward foreign currency contracts		—			—			—			1,733
Total assets		482,496			96,334			142,269			1,756,667
Liabilities
Securities sold, not yet purchased (proceeds $— ; $— ; $10,092 ; $—)		—			—			10,080			—
Option written, at value (proceeds $— ; $— ; $— ; $652)		—			—			—			261
Payable for fund shares redeemed		1,282			563			328			12,696
Swap premium received		—			—			—			5,866
Unrealized depreciation on swap contracts		—			—			—			4,002
Management fee payable		120			27			34			1,190
Shareholder administration fee payable		47			—			14			170
Distribution fee payable		18			4			—			36
Distributions payable to shareholders		107			3			43			—
Other payables and accrued expenses		128			73			58			559
Total liabilities		1,702			670			10,557			24,780
Net assets	$	480,794		$	95,664		$	131,712		$	1,731,887
Capital
Composition of net assets
Par value of shares of beneficial interest	$	47		$	11		$	14		$	152
Capital paid in excess of par value		485,327			116,985			149,595			1,901,743
Accumulated net investment income (loss)		24			10			22			(10,874	)
Accumulated net realized gain (loss)		(2,247	)		(21,077	)		(17,335	)		(117,647	)
Net unrealized appreciation (depreciation) of investments and foreign currencies		(2,357	)		(265	)		(584	)		(41,487	)
Net assets	$	480,794		$	95,664		$	131,712		$	1,731,887
Class N shares
Net assets	$	139,303		$	32,942		$	2,712		$	150,606
Shares outstanding		13,468,692			3,703,406			295,956			13,308,491
Net asset value per share	$	10.34		$	8.90		$	9.16		$	11.32
Class I shares
Net assets	$	237,587		$	62,722		$	107,137		$	1,155,051
Shares outstanding		23,207,736			7,102,341			11,692,059			101,500,055
Net asset value per share	$	10.24		$	8.83		$	9.16		$	11.38
Institutional Class shares
Net assets	$	103,904			—		$	21,863		$	426,230
Shares outstanding		10,157,364			—			2,385,995			37,407,939
Net asset value per share	$	10.23			—		$	9.16		$	11.39

See accompanying Notes to Financial Statements.

December 31, 2015 William Blair Funds 137

Statements of Operations

For the Year Ended December 31, 2015 (all amounts in thousands)

	Bond Fund				Income Fund				Low Duration Fund				Macro Allocation Fund
Investment income
Dividends		$	—			$	—			$	—			$	24,954	(1)
Interest			10,905				2,506				2,079				301
Total income			10,905				2,506				2,079				25,255
Expenses
Investment advisory fees			982				371				479				11,699
Distribution fees			79				53				6				520
Shareholder administration fees			352				—				172				1,785
Custodian fees			69				45				68				147
Transfer agent fees			43				17				17				353
Sub-transfer agent fees
Class N			57				51				2				268
Class I			104				22				25				979
Professional fees			55				33				44				273
Registration fees			59				35				45				134
Shareholder reporting fees			8				4				—				149
Trustee fees			14				5				8				53
Other expenses			17				8				12				312
Total expenses before expense limitation			1,839				644				878				16,672
Expenses waived or reimbursed by the Adviser			(453	)			—				(208	)			(1,785	)
Net expenses			1,386				644				670				14,887
Net investment income (loss)			9,519				1,862				1,409				10,368
Realized and unrealized gain (loss)
Net realized gain (loss) on transactions from:
Investments in securities			618				(28	)			(531	)			(30,907	)(2)
Options			(121	)			(60	)			(121	)			(10,114	)
Futures contracts			—				—				—				(8,670	)
Swaps			17				—				—				(47,497	)
Forward foreign currency contracts			—				—				—				(8,735	)
Foreign currency transactions			—				—				—				(1,809	)
Total net realized gain (loss)			514				(88	)			(652	)			(107,732	)
Change in net unrealized appreciation (depreciation) of:
Investments in securities			(11,369	)			(1,293	)			(316	)			(44,065	)(3)
Options			49				25				49				(7,713	)
Futures contracts			—				—				—				4,953
Swaps			(20	)			—				—				11,813
Forward foreign currency contracts			—				—				—				(5,467	)
Foreign currency translations			—				—				—				(139	)
Change in net unrealized appreciation (depreciation)			(11,340	)			(1,268	)			(267	)			(40,618	)
Net increase (decrease) in net assets resulting from operations		$	(1,307	)		$	506			$	490			$	(137,982	)

(1) Includes $653 from companies deemed affiliated during the year or at December 31, 2015.

(2) Includes $(3,095) from companies deemed affiliated during the year or at December 31, 2015.

(3) Includes $(5,159) from companies deemed affiliated during the year or at December 31, 2015.

See accompanying Notes to Financial Statements.

138 Annual Report December 31, 2015

Statements of Changes in Net Assets

For the Years Ended December 31, 2015 and 2014 (all amounts in thousands)

	Bond Fund						Income Fund						Low Duration Fund						Macro Allocation Fund
	2015			2014			2015			2014			2015			2014			2015			2014(a)			2014(b)
Operations
Net investment income (loss)	$	9,519		$	8,066		$	1,862		$	2,155		$	1,409		$	2,236		$	10,368		$	3,622		$	1,769
Net realized gain (loss) on investments, and other assets and liabilities		514			1,868			(88	)		864			(652	)		(639	)		(107,732	)		16,476			9,286
Change in net unrealized appreciation (depreciation) on investments, and other assets and liabilities		(11,340	)		3,438			(1,268	)		157			(267	)		471			(40,618	)		(38,838	)		28,167
Net increase (decrease) in net assets resulting from operations		(1,307	)		13,372			506			3,176			490			2,068			(137,982	)		(18,740	)		39,222
Distributions to shareholders from
Net investment income
Class N		(1,822	)		(463	)		(1,007	)		(1,089	)		(95	)		(138	)		(915	)		(7,774	)		(868	)
Class I		(6,812	)		(5,570	)		(1,971	)		(1,984	)		(2,839	)		(3,119	)		(10,747	)		(32,682	)		(1,927	)
Institutional Class		(3,598	)		(3,958	)		—			—			(1,185	)		(1,371	)		(4,368	)		(8,256	)		(41	)
Net realized gain
Class N		—			—			—			—			—			—			—			—			(2,106	)
Class I		—			(3	)		—			—			—			—			—			—			(4,366	)
Institutional Class		—			(2	)		—			—			—			—			—			—			(89	)
Total distributions		(12,232	)		(9,996	)		(2,978	)		(3,073	)		(4,119	)		(4,628	)		(16,030	)		(48,712	)		(9,397	)
Capital stock transactions
Net proceeds from sale of shares		300,131			59,547			24,005			19,953			47,534			82,798			1,559,297			140,703			760,807
Shares issued in reinvestment of income dividends and capital gain distributions		9,535			7,797			2,686			2,700			3,096			3,419			14,020			33,755			6,241
Less cost of shares redeemed		(78,860	)		(52,048	)		(27,409	)		(29,716	)		(92,786	)		(80,386	)		(646,104	)		(67,083	)		(205,482	)
Net increase (decrease) in net assets resulting from capital share transactions		230,806			15,296			(718	)		(7,063	)		(42,156	)		5,831			927,213			107,375			561,566
Increase (decrease) in net assets		217,267			18,672			(3,190	)		(6,960	)		(45,785	)		3,271			773,201			39,923			591,391
Net assets
Beginning of period		263,527			244,855			98,854			105,814			177,497			174,226			958,686			918,763			327,372
End of period	$	480,794		$	263,527		$	95,664		$	98,854		$	131,712		$	177,497		$	1,731,887		$	958,686		$	918,763
Accumulated net investment income (loss) at the end of the period	$	24		$	2		$	10		$	10		$	22		$	—		$	(10,874	)	$	4,123		$	17,367

(a) For the period from November 1, 2014 to December 31, 2014. On October 31, 2014, the Board of Trustees approved a change in the Macro Allocation Fund’s fiscal year end from October 31 to December 31.

(b) For the year ended October 31, 2014.

See accompanying Notes to Financial Statements.

December 31, 2015 William Blair Funds 139

Notes to Financial Statements

(1) Organization

(a) Description of the Trust

William Blair Funds (the “Trust”) is a mutual fund registered under the Investment Company Act of 1940 (the “1940 Act”), as amended, as an open-end management investment company. The Trust currently consists of the following twenty-four funds (the “Funds”), each with its own investment objective and policies. For each Fund, the number of shares authorized is unlimited.

Domestic Equity Funds

Growth

Large Cap Growth

Large Cap Value

Mid Cap Growth

Mid Cap Value

Small-Mid Cap Growth

Small-Mid Cap Value

Small Cap Growth

Small Cap Value

Global Equity Funds

Global Leaders

Global Small Cap Growth

Multi-Asset and Alternative Fund

Macro Allocation

International Equity Funds

International Leaders
International Equity

Institutional International Equity

International Growth
Institutional International Growth

International Small Cap Growth

Emerging Markets Leaders

Emerging Markets Growth

Emerging Markets Small Cap Growth

Fixed Income Funds

Bond

Income

Low Duration

Prior to July 1, 2015, William Blair & Company, L.L.C. (“WBC” or the “Distributor”) served as both the Trust’s investment adviser and the Trust’s principal underwriter and distributor. Effective July 1, 2015, WBC transferred the management agreement for the Trust to William Blair Investment Management, LLC (“WBIM”). There were no changes to the Funds’ portfolio management teams or principal investment strategies as a result of the transfer. Any reference to the “Adviser” prior to July 1, 2015 should be read to mean WBC; any reference to the “Adviser” subsequent to July 1, 2015 should be read to mean WBIM. WBC continues to serve as the principal underwriter and distributor of the Trust.

On October 27, 2015, upon the recommendation of the Adviser, the Fund’s Board of Trustees determined that it was in the best interest of Global Small Cap Growth Fund to redeem all shares of Global Small Cap Growth Fund outstanding on January 15, 2016, and then to terminate Global Small Cap Growth Fund. Global Small Cap Growth Fund was terminated on January 15, 2016, at which time all outstanding shares of Global Small Cap Growth Fund were redeemed.

(b) Share Classes

Three different classes of shares currently exist: N, I and Institutional.

Class N shares are offered to the general public, either directly through the Trust’s distributor or through a select number of financial intermediaries. Class N shares are sold without any sales load, and carry an annual 12b-1 distribution fee (0.25% for the Domestic Equity, Global Equity, International Equity and Multi-Asset and Alternative Funds and 0.15% for the Fixed Income Funds), a sub-transfer agent fee that is not a fixed rate and may vary by Fund and class, and an annual shareholder administration fee (0.15% for Global Leaders, Global Small Cap Growth, International Leaders, International Small Cap Growth, Emerging Markets Leaders, Emerging Markets Growth, Emerging Markets Small Cap Growth, Bond, Low Duration and Macro Allocation Funds). The shareholder administration fee is currently being waived. This waiver will not be removed without approval of the Board of Trustees.

Class I shares are offered to a limited group of investors. They do not carry any sales load or distribution fees and generally have lower ongoing expenses than the Class N shares. Class I shares have a sub-transfer agent fee that is not a fixed rate and may vary by Fund and class, and an annual shareholder administration fee (0.15% for Global Leaders, Global Small Cap Growth, International Leaders, International Small Cap Growth, Emerging Markets Leaders, Emerging Markets Growth, Emerging Markets Small Cap Growth, Bond, Low Duration and Macro Allocation Funds). The shareholder administration fee is currently being waived. This waiver will not be removed without approval of the Board of Trustees.

140 Annual Report December 31, 2015

Institutional Class shares are offered to institutional investors, including but not limited to employee benefit plans, endowments, foundations, trusts and corporations, who are able to meet the share class’s high minimum investment requirement. The minimum initial investment required is $5 million.

Sub-transfer agent fees: For Class N and Class I shares, the Funds may reimburse WBC for fees paid to intermediaries such as banks, broker-dealers, financial advisers or other financial institutions for sub-administration, sub-transfer agency and other services provided to investors whose shares are held of record in omnibus, other group accounts, retirement plans or accounts traded through registered securities clearing agents. These fees may vary based on, for example, the nature of services provided, but generally range up to 0.15% of the assets of the class serviced or maintained by the intermediary or up to $15 per sub-account maintained by the intermediary.

(c) Fund Objectives

The investment objectives of the Funds are as follows:

Domestic Equity	Long-term capital appreciation.
Global Equity	Long-term capital appreciation.
International Equity	Long-term capital appreciation.
Fixed Income	High level of current income with relative stability of principal.
	(Maximize total return-Low Duration).
Multi-Asset and Alternative	Maximize long-term risk-adjusted total return.

(2) Significant Accounting Policies

The following is a summary of the Trust’s significant accounting policies in effect during the periods covered by the financial statements, which are in accordance with U.S. generally accepted accounting principles, which includes the accounting and reporting guidelines under Accounting Standards Topic 946, Financial Services—Investment Companies.

(a) Investment income and transactions

Investment income, realized and unrealized gains and losses, and certain Fund level expenses and expense reductions, if any, are allocated based on the relative net assets of each class, except for certain class specific expenses, which are charged directly to the appropriate class. Differences in class expenses may result in the payment of different per share dividends by class. All share classes of the Funds have equal rights with respect to voting, subject to class specific arrangements.

Dividend income and expense are recorded on the ex-dividend date, except for those dividends from certain foreign securities that are recorded when the information is available.

Interest income is recorded on an accrual basis, adjusted for amortization of premium or accretion of discount. Variable rate bonds and floating rate notes earn interest at coupon rates that fluctuate at specific time intervals. The interest rates shown in the Portfolio of Investments for the Bond, Income, Low Duration and Macro Allocation Funds were the rates in effect on December 31, 2015. Put bonds may be redeemed at the discretion of the holder on specified dates prior to maturity.

Premiums and discounts are amortized and accreted on a straight-line basis for short-term investments and on an effective interest method for long-term investments.

Paydown gains and losses on mortgage-backed and asset-backed securities are treated as an adjustment to interest income. For the year ended December 31, 2015, the Bond, Income and Low Duration Funds recognized a reduction of interest income and a decrease of net realized loss of $2,889, $1,117 and $2,725, respectively (in thousands). This reclassification had no effect on the net asset value or the net assets of the Funds.

December 31, 2015 William Blair Funds 141

The Funds do not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in value of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments.

Reported net realized foreign currency gains or losses arise from disposition of foreign currency, the difference in the foreign exchange rates between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the ex-date or accrual date and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes (due to the changes in the exchange rate) in the value of foreign currency and other assets and liabilities denominated in foreign currencies held at year end.

Security and shareholder transactions are accounted for no later than one business day following the trade date. However, for financial reporting purposes, security and shareholder transactions are accounted for on the trade date of the last business day of the reporting period. Realized gains and losses from securities transactions are recognized on a specifically identified cost basis.

Awards from class action litigation may be recorded as a reduction of cost. If the Funds no longer own the applicable securities, the proceeds are recorded as realized gains.

(b) Share Valuation and Distributions to Shareholders

Shares are sold and redeemed on a continuous basis at net asset value. The net asset value per share is determined separately for each class by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding as of the close of regular trading on the New York Stock Exchange (the “NYSE”), which is generally 4:00 p.m. Eastern time, on each day the NYSE is open.

Distributions from net investment income, if any, for all Equity and Multi-Asset and Alternative Funds are declared and paid at least annually. Distributions from net investment income for the Bond, Income and Low Duration Funds are declared daily and paid monthly. Capital gain distributions, if any, for all Funds, are declared and paid at least annually in December. Distributions payable to shareholders are recorded on the ex-dividend date.

(c) Foreign Currency Translation

The Funds may invest in securities denominated in foreign currencies. As such, assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at the current exchange rate on the date of valuation. The values of foreign investments, open forward foreign currency contracts, and cash denominated in foreign currencies are translated into U.S. dollars using a spot market rate of exchange as of the time of the determination of each Fund’s Net Asset Value, typically 4:00 p.m. Eastern time on days when there is regular trading on the NYSE. Payables and receivables for securities transactions, dividends, interest income and tax reclaims are translated into U.S. dollars using a spot market rate of exchange as of 4:00 p.m. Eastern time. Settlement of purchases and sales and dividend and interest receipts are translated into U.S. dollars using a spot market rate of exchange as of 11:00 a.m. Eastern time.

(d) Income Taxes

Each Fund intends to comply with the provisions of Subchapter M of the Internal Revenue Code available to regulated investment companies. Each Fund intends to make the requisite distributions of income and capital gains to its shareholders sufficient to relieve it from all, or substantially all, federal income and excise taxes. No provision for federal income and excise taxes has been made.

Certain Funds may be subject to foreign income taxes imposed on realized gains on securities of issuers from certain foreign countries. Such taxes, if applicable, are included within net realized gain (loss) on transactions from investments in securities on the Statement of Operations.

Management has evaluated all of the uncertain tax positions of the Funds and has determined that no liability is required to be recorded in the financial statements.

The statute of limitations on the Funds’ prior three years tax returns remain open and the returns are subject to examination.

142 Annual Report December 31, 2015

Adjustments to the cost of investments for tax purposes are due to the deferred loss associated with current and prior year wash sales, income recognition from investments in real estate investment trusts and partnerships, and the Funds’ election to mark-to-market their investments in Passive Foreign Investment Companies (“PFICs”). The cost of investments for federal income tax purposes and related gross unrealized appreciation (depreciation) and net unrealized appreciation/(depreciation) at December 31, 2015, were as follows (in thousands):

Fund	Cost of Investments		Gross Unrealized Appreciation		Gross Unrealized Depreciation		Net Unrealized Appreciation/ (Depreciation)
Growth		$    674,018		$181,635		$  12,596		$169,039
Large Cap Growth		56,383		13,925		1,284		12,641
Large Cap Value		2,809		503		162		341
Mid Cap Growth		186,883		20,531		9,049		11,482
Mid Cap Value		2,289		514		134		380
Small-Mid Cap Growth		1,047,797		186,598		41,332		145,266
Small-Mid Cap Value		3,686		579		252		327
Small Cap Growth		336,048		60,321		23,834		36,487
Small Cap Value		548,221		95,632		33,527		62,105
Global Leaders		170,338		22,859		5,820		17,039
Global Small Cap Growth		16,703		2,540		777		1,763
International Leaders		105,490		13,491		3,621		9,870
International Equity		58,746		8,466		3,645		4,821
Institutional International Equity		15,344		1,693		988		705
International Growth		3,378,689		449,626		158,552		291,074
Institutional International Growth		2,155,207		276,912		100,207		176,705
International Small Cap Growth		516,683		77,313		21,386		55,927
Emerging Markets Leaders		136,594		6,046		15,145		(9,099	)
Emerging Markets Growth		925,539		48,683		95,193		(46,510	)
Emerging Markets Small Cap Growth		292,508		15,333		14,367		966
Bond		478,472		5,761		8,092		(2,331	)
Income		95,518		976		1,241		(265	)
Low Duration		130,435		348		948		(600	)
Macro Allocation		1,713,032		10,953		57,517		(46,564	)

In addition, the Funds may periodically record reclassifications among certain capital accounts to reflect differences between financial reporting and income tax basis distributions. The reclassifications were reported in order to reflect the tax treatment for certain permanent differences that exist between income tax regulations and U.S. generally accepted accounting principles. The reclassifications generally relate to net operating losses, Section 988 currency gains and losses, PFIC gains and losses, expiration of capital loss carryforward, paydown gains and losses, investments in real estate investment trusts and partnerships, and utilization of earnings and profits distributed to shareholders on redemption of shares. These reclassifications have no impact on the net asset values of the Funds. Accordingly, at December 31, 2015, the following reclassifications were recorded (in thousands):

December 31, 2015 William Blair Funds 143

Fund	Accumulated Undistributed Net Investment Income (Loss)			Accumulated Undistributed Net Realized Gain/(Loss)			Capital Paid in Excess of Par Value
Growth		$     250			$      118			$     (368	)
Large Cap Growth		4			(4	)		—
Large Cap Value		(3	)		3			—
Mid Cap Growth		1,275			13			(1,288	)
Mid Cap Value		(5	)		4			1
Small-Mid Cap Growth		3,239			513			(3,752	)
Small-Mid Cap Value		(6	)		7			(1	)
Small Cap Growth		3,146			193			(3,339	)
Small Cap Value		(808	)		808			—
Global Leaders		(187	)		187			—
Global Small Cap Growth		72			(799	)		727
International Leaders		(34	)		34			—
International Equity		(4	)		3			1
Institutional International Equity		(1	)		3			(2	)
International Growth		3,097			(3,097	)		—
Institutional International Growth		1,512			(1,512	)		—
International Small Cap Growth		6,190			(6,188	)		(2	)
Emerging Markets Leaders		150			(147	)		(3	)
Emerging Markets Growth		1,131			(1,134	)		3
Emerging Markets Small Cap Growth		(1,847	)		2,305			(458	)
Bond		2,735			(2,734	)		(1	)
Income		1,116			8,074			(9,190	)
Low Duration		2,732			(2,732	)		—
Macro Allocation		(9,335	)		9,335			—

The timing and characterization of certain income and capital gain distributions are determined annually in accordance with federal income tax regulations that may differ from U.S. generally accepted accounting principles. As a result, net investment income or loss and net realized gain or loss for a reporting period may differ from the amount distributed during such period.

Distributions from net realized gains for book purposes may include short-term capital gains, which are included as ordinary income for tax purposes. The tax character of distributions paid during 2015 and 2014 was as follows (in thousands):

	Distributions Paid in 2015								Distributions Paid in 2014
	Ordinary				Long-Term				Ordinary				Long-Term
	Income				Capital Gains				Income				Capital Gains
Fund	Class N		Class I		Class N		Class I		Class N		Class I		Class N		Class I
Growth		$   416		$  1,808		$18,110		$78,627		$2,675		$  6,408		$35,886		$85,974
Large Cap Growth		17		89		954		5,176		60		342		706		4,053
Large Cap Value		9		25		124		230		19		50		119		263
Mid Cap Growth		—		—		5,530		35,853		—		—		4,943		43,297
Mid Cap Value		2		10		149		438		2		50		23		442
Small-Mid Cap Growth		13		75		8,551		50,513		—		—		6,031		62,751
Small-Mid Cap Value		1		10		44		162		12		54		64		224
Small Cap Growth		—		—		9,437		20,150		940		2,145		24,996		56,995
Small Cap Value		—		1,363		107		1,836		34		1,020		1,401		18,381
Global Leaders		3		152		252		2,063		—		75		8		85
Global Small Cap Growth		11		319		16		449		5		422		19		1,202
International Leaders		1		22		2		73		1		71		—		1
International Equity		26		750		—		—		21		576		—		—
International Growth		9,482		30,923		—		—		8,591		33,318		—		—
International Small Cap Growth		195		7,300		29		919		153		5,751		1,829		53,860

144 Annual Report December 31, 2015

	Distributions Paid in 2015								Distributions Paid in 2014
	Ordinary				Long-Term				Ordinary				Long-Term
	Income				Capital Gains				Income				Capital Gains
Fund	Class N		Class I		Class N		Class I		Class N		Class I		Class N		Class I
Emerging Markets Leaders		$     —		$     105		$    2		$     44		$     —		$       69		$  33		$   718
Emerging Markets Growth		—		—		107		1,427		75		1,350		688		8,980
Emerging Markets Small Cap Growth		—		—		474		6,262		15		558		434		4,997
Bond		1,822		6,812		—		—		463		5,570		—		3
Income		1,007		1,971		—		—		1,089		1,984		—		—
Low Duration		95		2,839		—		—		138		3,119		—		—
Macro Allocation		915		10,747		—		—		7,774		32,682		—		—

	Distributions Paid in 2015				Distributions Paid in 2014
	Ordinary		Long-Term		Ordinary		Long-Term
	Income		Capital Gains		Income		Capital Gains
	Institutional		Institutional		Institutional		Institutional
Global Leaders	$	552	$	6,144	$	301	$	165
International Leaders		323		578		738		8
Institutional International Equity		156		—		293		—
Institutional International Growth		13,779		15,858		47,484		186,607
International Small Cap Growth		4,603		557		4,140		32,999
Emerging Markets Leaders		331		126		303		1,894
Emerging Markets Growth		—		8,324		7,711		42,214
Emerging Markets Small Cap Growth		1		4,988		732		5,385
Bond		3,598		—		3,958		2
Low Duration		1,185		—		1,371		—
Macro Allocation		4,368		—		8,256		—

As of December 31, 2015, the components of distributable earnings on a tax basis were as follows (in thousands):

			Accumulated			Undistributed		Net Unrealized
	Undistributed		Capital and			Long-Term		Appreciation/
Fund	Ordinary Income		Other Losses			Capital Gain		(Depreciation)
Growth	$	—	$	—		$	13,627	$	169,039
Large Cap Growth		57		(301	)		—		12,641
Large Cap Value		1		—			33		341
Mid Cap Growth		—		—			7,330		11,482
Mid Cap Value		6		—			108		380
Small-Mid Cap Growth		—		—			8,148		145,266
Small-Mid Cap Value		4		—			28		327
Small Cap Growth		—		—			4,135		36,487
Small Cap Value		237		—			6,259		62,105
Global Leaders		—		(23	)		794		17,012
Global Small Cap Growth		—		—			3,299		1,760
International Leaders		595		(65	)		—		9,858
International Equity		850		(74,849	)		—		4,813
Institutional International Equity		2		(90,033	)		—		703
International Growth		34,033		(395,163	)		—		290,964
Institutional International Growth		14,993		(38,368	)		—		176,546
International Small Cap Growth		—		(1,400	)		96		55,847
Emerging Markets Leaders		77		(8,757	)		—		(9,098	)
Emerging Markets Growth		4,462		(51,589	)		—		(46,514	)
Emerging Markets Small Cap Growth		—		(2,116	)		796		790
Bond		2		(2,339	)		—		(2,243	)
Income		15		(21,125	)		—		(219	)
Low Duration		65		(17,424	)		—		(495	)
Macro Allocation		—		(122,596	)		—		(47,412	)

December 31, 2015 William Blair Funds 145

As of December 31, 2015, the Funds have unused capital loss carryforwards available for federal income tax purposes to be applied against future capital gains, if any. If not applied, the carryforwards will expire as follows (in thousands):

Fund	2016		2017		2018		Total
International Equity	$	—	$	74,815	$	—	$	74,815
Institutional International Equity		—		90,030		—		90,030
International Growth		—		358,606		—		358,606
Income		14,459		4,577		—		19,036
Low Duration		—		—		955		955

Income Fund had $9,190 (in thousands) of capital loss carryforward that expired in 2015 unused.

Under current law, the Funds may carry forward net capital losses indefinitely to use to offset capital gains realized in future years. Previous law limited the carry forward of capital losses to the eight tax years following the year the capital loss was realized. If a Fund has capital losses that are subject to current law and also has capital losses subject to prior law, the losses realized under current law will be utilized to offset capital gains before any of the losses governed by prior law can be used. As a result of these ordering rules, capital losses realized under previous law may be more likely to expire unused. Capital losses realized under current law will carry forward retaining their classification as long-term or short-term losses; as compared to under prior law in which all capital losses were carried forward as short term capital losses.

As of December 31, 2015, the Funds incurred the following capital losses which will not expire (in thousands):

	Short-		Long-
Fund	Term		Term
International Leaders	$	65	$	—
International Growth		36,557		—
Institutional International Growth		34,229		—
Emerging Markets Leaders		5,694		—
Emerging Markets Growth		27,954		—
Bond		1,545		794
Income		787		1,194
Low Duration		8,090		8,099
Macro Allocation		75,778		37,778

In order to meet certain excise tax distribution requirements, the Funds are required to measure and distribute annually, net capital gains realized during a twelve month period ending October 31 and net investment income earned during a twelve month period ending December 31. In connection with this, the Funds are permitted for tax purposes to defer into their next fiscal year qualified late year losses. Qualified late year capital losses are any short term or long term capital losses incurred between November 1 and the end of their fiscal year, December 31, 2015. Qualified late year ordinary losses are comprised of losses related to foreign currency and PFICs incurred between November 1 and the end of their fiscal year, December 31, 2015.

As of December 31, 2015, the following Funds deferred, on a tax basis, qualified late year losses of (in thousands):

	Qualified Late Year Losses
	Ordinary		Short-Term		Long-Term
Fund	Income		Capital		Capital
Large Cap Growth	$	—	$	141		$      160
Global Leaders		23		—		—
International Equity		—		34		—
Institutional International Equity		3		—		—
Institutional International Growth		—		4,139		—
International Small Cap Growth		1,400		—		—
Emerging Markets Leaders		—		2,797		266
Emerging Markets Growth		—		20,829		2,806
Emerging Markets Small Cap Growth		—		2,116		—
Income		—		75		33
Low Duration		—		115		165
Macro Allocation		9,040		—		—

146 Annual Report December 31, 2015

(e) Repurchase Agreements

In a repurchase agreement, a Fund buys a security at one price and at the time of sale, the seller agrees to repurchase the security at a mutually agreed upon time and price (usually within seven days). The repurchase agreement thereby determines the yield during the purchaser’s holding period, while the seller’s obligation to repurchase is secured by the value of the underlying collateral. The Adviser monitors, on an ongoing basis, the value of the underlying collateral to ensure that the value always equals or exceeds the repurchase price plus accrued interest. Repurchase agreements may involve certain risks in the event of a default or insolvency of the other party to the agreement, including possible delays or restrictions upon a Fund’s ability to dispose of the underlying collateral. The risk to a Fund is limited to the ability of the seller to pay the agreed upon sum on the delivery date. In the event of default, a repurchase agreement provides that a Fund is entitled to sell the underlying collateral. The loss, if any, to a Fund will be the difference between the proceeds from the sale and the repurchase price. However, if bankruptcy proceedings are commenced with respect to the seller of the security, disposition of the collateral by the Fund may be delayed or limited. The Funds have master repurchase agreements which allow the Funds to offset amounts owed to a counterparty with amounts owed from the same counterparty, including any collateral, in the event the counterparty defaults. As of December 31, 2015, each Fund’s outstanding repurchase agreements, if any, and related collateral, are shown on the Fund’s Portfolio of Investments. Although no definitive creditworthiness criteria are used, the Adviser reviews the creditworthiness of the banks and non-bank dealers with which a Fund enters into repurchase agreements to evaluate those risks. A Fund may, for tax purposes, deem repurchase agreements collateralized by U.S. Government securities to be investments in U.S. Government securities.

(f) TBA Securities

The Fixed Income Funds may invest in mortgage pass-through securities eligible to be sold in the “to-be announced” market (“TBAs”). TBAs provide for the forward or delayed delivery of the underlying instrument with settlement up to 180 days. The term TBA comes from the fact that the specific mortgage-backed security that will be delivered to fulfill a TBA trade is not designated at the time the trade is made, but rather is generally announced 48 hours before the settlement date. When a Fund sells TBAs, it incurs a risk of loss because it could have to purchase the securities at a price that is higher than the price at which it sold the securities. A Fund generally has the ability to close out a TBA obligation on or before the settlement date, rather than take delivery of the security.

(g) Securities Sold, Not Yet Purchased

Certain Funds may sell a security it does not own in anticipation of a decline in the fair value of that security. When a fund sells a security short, it must borrow the security sold short and deliver it to the broker through which it made the short sale. A gain, limited to the price at which the fund sold the security short, or a loss, unlimited in size, will be recognized upon the termination of the short sale. A fund is also subject to the risk that it may be unable to reacquire a security to terminate a short position except at a price substantially in excess of the price it sold the security short.

(h) Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results may differ from those estimates.

(i) Indemnification

In the normal course of business, the Funds have entered into contracts in which the Funds agree to indemnify the other party or parties against various potential costs or liabilities. The Funds’ maximum exposure under these arrangements is unknown. No claim has been made for indemnification pursuant to any such agreement of the Funds.

(j) Recent Accounting Pronouncement

In May 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2015-07 (“ASU 2015-07”) Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent). ASU 2015-07 removes the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using net asset value per share as a practical expedient. For public business entities, ASU 2015-07 is effective for fiscal years beginning after December 15, 2015 and interim periods within those years. Management is currently evaluating the implications of ASU 2015-07 and its impact on financial statement disclosures.

December 31, 2015 William Blair Funds 147

(3) Valuation

(a) Investment Valuation

The value of domestic equity securities, including exchange-traded funds, is determined by valuing securities traded on national securities markets or in the over-the-counter markets at the last sale price or, if applicable, the official closing price or, in the absence of a recent sale on the date of determination, at the mean between the last reported bid and ask prices.

The value of foreign equity securities is generally determined based upon the last sale price on the foreign exchange or market on which it is primarily traded and in the currency of that market as of the close of the appropriate exchange or, if there have been no sales during that day, at the mean between the last reported bid and ask prices. The Board of Trustees has determined that the passage of time between when the foreign exchanges or markets close and when the Funds compute their net asset values could cause the value of foreign equity securities to no longer be representative or accurate and, as a result, may necessitate that such securities be fair valued. Accordingly, for foreign equity securities, the Funds may use an independent pricing service to fair value price the security as of the close of regular trading on the NYSE. As a result, a Fund’s value for a security may be different from the last sale price (or the mean between the last reported bid and ask prices).

Fixed-income securities are generally valued using evaluated prices provided by an independent pricing service. The evaluated prices are formed using various market inputs that the pricing service believes accurately represent the market value of a security at a particular point in time. The pricing service determines evaluated prices for fixed-income securities using inputs including, but not limited to, recent transaction prices, dealer quotes, transaction prices for securities with similar characteristics, collateral characteristics, credit quality, payment history, liquidity and market conditions.

Repurchase agreements are valued at cost, which approximates fair value.

Option contracts on securities, currencies and other financial instruments traded on one or more exchanges are valued at their most recent sale price on the exchange on which they are traded most extensively. Option contracts on foreign indices are valued at the settlement price. Futures contracts (and options and swaps thereon) are valued at the most recent settlement price on the exchange on which they are traded most extensively. Forward foreign currency contracts are valued on the basis of the value of the underlying currencies at the prevailing currency exchange rate as supplied by an independent pricing service.

Over-the-Counter (“OTC”) swap contracts are valued by an independent pricing service. Depending on the product and the terms of the transaction, the independent pricing service may use a series of techniques, including simulation pricing models. The pricing models use inputs that are observed from actively quoted markets such as issuer details, indices, spreads, interest rates, yield curves, dividends and exchange rates.

Centrally cleared swaps listed or settled on a multilateral or trade facility platform, such as a registered exchange, are valued at the daily settlement price determined by the respective exchange. For centrally cleared credit default swaps the clearing facility requires its members to provide actionable price levels across complete term structures. These levels along with external third-party prices are used to produce daily settlement prices.

Investments in other investment funds that are not exchange-traded funds are valued at the underlying fund’s ending net asset value on the date of valuation.

Securities, and other assets, for which a market price is not available or is deemed unreliable (e.g., securities affected by unusual or extraordinary events, such as natural disasters or securities affected by market or economic events, such as bankruptcy filings), or the value of which is affected by a significant valuation event, are valued at a fair value as determined in good faith by, or under the direction of, the Board of Trustees and in accordance with the Valuation Procedures approved by the Board of Trustees. The value of fair valued securities may be different from the last sale price (or the mean between the last reported bid and ask prices), and there is no guarantee that a fair valued security will be sold at the price at which a Fund is carrying the security.

As of December 31, 2015, there were securities held in the International Growth, Institutional International Growth and Emerging Markets Small Cap Growth Funds requiring fair valuation pursuant to the Valuation Procedures.

(b) Fair Value Measurements

Fair value is defined as the price that a Fund would receive upon selling a security in an orderly transaction to an independent buyer in the principal or most advantageous market for the investment. Various inputs are used in determining the value of a Fund’s investments. A three-tier hierarchy of inputs is used to classify fair value measurements for disclosure purposes. The three-tier hierarchy of inputs is summarized in the three broad levels listed below:

• Level 1—Quoted prices (unadjusted) in active markets for an identical security.

148 Annual Report December 31, 2015

• Level 2—Prices determined using other significant observable inputs. Observable inputs are inputs that other market participants would use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, and others. In addition, other observable inputs such as foreign exchange rates, benchmark securities indices and foreign futures contracts may be utilized in the valuation of certain foreign securities when significant events occur between the last sale on the foreign securities exchange and the time the net asset value of the Fund is calculated.

• Level 3—Prices determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in pricing an investment, and would be based on the best information available.

The inputs or methodology used for valuing an investment are not necessarily an indication of the risk associated with investing in those securities. For example, money market securities are valued using amortized cost, in accordance with rules under the 1940 Act. Generally, amortized cost approximates the current fair value of a security, but since the value is not obtained from a quoted price in an active market, such securities are reflected as Level 2.

A description of the valuation technique applied to the Fund’s major categories of assets and liabilities measured at fair value on a recurring basis as follows:

Exchange-Traded Securities

Securities traded on a national securities exchange (or reported on the NASDAQ national market), including exchange-traded funds, are stated at the last reported sales price on the day of valuation. Other securities traded in the over-the-counter market and listed securities for which no sale was reported on that date are stated at the mean between the last reported bid and ask prices. To the extent these securities are actively traded and valuation adjustments are not applied, they are categorized as Level 1 of the fair value hierarchy. Securities traded on inactive markets or valued by reference to similar instruments are generally categorized as Level 2 of the fair value hierarchy.

Fixed-Income Securities

Fixed-income securities including corporate, convertible and municipal bonds and notes, U.S. government agencies, U.S. treasury obligations, sovereign issues, bank loans, convertible preferred securities and non-U.S. bonds are generally valued using evaluated prices provided by an independent pricing service. The evaluated prices are formed using various market inputs that the pricing service believes accurately represent the fair value of a security at a particular point in time. The pricing service determines evaluated prices for fixed-income securities using inputs including, but not limited to, recent transaction prices, dealer quotes, transaction prices for securities with similar characteristics, collateral characteristics, credit quality, payment history, liquidity and market conditions. Securities that use similar valuation techniques and observable inputs as described above are categorized as Level 2 of the fair value hierarchy.

Short-Term Investments

Repurchase agreements are valued at cost, which approximates fair value. These investments are categorized as Level 2 of the fair value hierarchy.

Derivative Instruments

Listed derivatives, such as certain options and futures contracts, that are actively traded are valued based on quoted prices from the exchange on which they are traded most extensively and are categorized as Level 1 of the fair value hierarchy. OTC derivative contracts include forward foreign currency contracts, swap and certain option contracts related to interest rates, foreign currencies, credit standing of reference entities, equity prices, or commodity prices. Depending on the product and the terms of the transaction, the fair value of OTC derivative products can be modeled taking into account the counterparties’ creditworthiness and using a series of techniques, including simulation models. Many pricing models do not entail material subjectivity because the methodologies employed do not necessitate significant judgments and the pricing inputs are observed from actively quoted markets, as is the case of forward foreign currency contracts and interest rate swaps. A substantial majority of OTC derivative products valued by a Fund using pricing models fall into this category and are categorized as Level 2 of the fair value hierarchy.

Any transfers between Level 1 and Level 2 are disclosed, effective as of the beginning of the period, in the following tables with the reasons for the transfers disclosed in a note to the tables, if applicable. Transfer amounts are based on end of period values.

December 31, 2015 William Blair Funds 149

As of December 31, 2015, the hierarchical input levels of securities in each Fund, segregated by security class or other financial instruments, are as follows (in thousands):

			Large Cap		Large Cap		Mid Cap		Mid Cap
Investments in securities	Growth		Growth		Value		Growth		Value
Level 1—Quoted prices
Common Stocks	$	835,262		$ 68,284		$   3,150	$	198,365		$2,669
Level 2—Other significant observable inputs
Short-Term Investments		7,795		740		—		—		—
Level 3—Significant unobservable inputs
None		—		—		—		—		—
Total investments in securities	$	843,057		$ 69,024		$   3,150	$	198,365		$2,669

	Small-Mid		Small-Mid		Small Cap		Small Cap
Investments in securities	Cap Growth		Cap Value		Growth		Value
Level 1—Quoted prices
Common Stocks		$ 1,170,147		$ 4,013		$360,793		$593,959
Exchange-Traded Fund		—		—		2,175		—
Level 2—Other significant observable inputs
Short-Term Investments		22,916		—		9,567		16,367
Level 3—Significant unobservable inputs
None		—		—		—		—
Total investments in securities		$ 1,193,063		$ 4,013		$372,535		$610,326

				Global									Institutional
	Global			Small Cap			International			International			International			International
Investments in securities	Leaders			Growth			Leaders			Equity			Equity			Growth
Level 1—Quoted prices
Common Stocks		$	184,550		$	18,073		$	111,210		$	62,614		$	15,930		$	3,528,592
Preferred Stock			—			—			—			—			—			6,360
Level 2—Other significant observable inputs
Affiliated Fund			—			—			—			—			—			3,928
Common Stocks			—			—			—			—			—			17,020
Short-Term Investments			2,827			393			4,150			953			119			113,846
Level 3—Significant unobservable inputs
Common Stocks			—			—			—			—			—			17
Total investments in securities		$	187,377		$	18,466		$	115,360		$	63,567		$	16,049		$	3,669,763
Level 1 and Level 2 transfers
Transfers from Level 1 to Level 2		$	—		$	—		$	—		$	—		$	—		$	—
Transfers from Level 2 to Level 1 (a)			57,747			4,857			74,608			34,993			8,911			2,035,707

													Emerging
	Institutional			International			Emerging			Emerging			Markets
	International			Small Cap			Markets			Markets			Small Cap
Investments in securities	Growth			Growth			Leaders			Growth			Growth
Level 1—Quoted prices
Common Stocks		$	2,240,426		$	549,311		$	121,166		$	813,172		$	277,613
Preferred Stock			4,036			—			—			11,485			—
Level 2—Other significant observable inputs
Affiliated Fund			2,441			—			—			4,819			—
Common Stocks			10,851			3,168			4,509			38,474			13,439
Short-Term Investments			74,149			20,131			1,820			11,079			1,128
Level 3—Significant unobservable inputs
Common Stocks			9			—			—			—			1,294
Total investments in securities		$	2,331,912		$	572,610		$	127,495		$	879,029		$	293,474
Level 1 and Level 2 transfers
Transfers from Level 1 to Level 2		$	—		$	—		$	—		$	—		$	—
Transfers from Level 2 to Level 1 (a)			1,292,485			215,324			64,320			405,483			96,481

150 Annual Report December 31, 2015

						Low			Macro
Investments in securities	Bond			Income		Duration			Allocation
Assets
Level 1—Quoted Prices
Exchange-Traded Funds	$	—		$	—	$	—		$	1,121,893
Purchased Options		2			1		2			5,507
Level 2—Other significant observable inputs
Asset-Backed Securities		16,538			8,438		36,050			—
Corporate Obligation/Notes		195,119			24,995		28,922			—
Purchased Options		—			—		—			1,077
Short-Term Investments		15,197			5,007		1,422			382,337
U.S. Government and U.S. Government Agency		249,285			56,812		63,439			155,654
Level 3—Significant unobservable inputs
None		—			—		—			—
Liabilities
Level 1 - Quoted Prices
Written Options		—			—		—			(261	)
Level 2 - Other significant observable inputs
None		—			—		—			—
Level 3 - Significant unobservable inputs
None		—			—		—			—
Total investments in securities	$	476,141		$	95,253	$	129,835		$	1,666,207
Other financial instruments
Assets
Level 1—Quoted Prices
Futures Contracts	$	—		$	—	$	—		$	8,662
Level 2—Other significant observable inputs
Forward Foreign Currency Contracts		—			—		—			11,296
Futures Contracts		—			—		—			1,082
Swaps		—			—		—			1,868
Level 3—Significant unobservable inputs
None		—			—		—			—
Liabilities
Level 1—Quoted Prices
Futures Contracts		—			—		—			(7,054	)
Level 2—Other significant observable inputs
Forward Foreign Currency Contracts		—			—		—			(9,563	)
Futures Contracts		—			—		—			(62	)
Swaps		(37	)		—		—			(5,652	)
U.S Government and U.S. Government Agency		—			—		(10,080	)		—
Level 3—Significant unobservable inputs
None		—			—		—			—
Total other financial instruments	$	(37	)	$	—	$	(10,080)		$	577

(a) Fair valuation estimates were obtained from the Funds’ pricing vendor and applied to certain foreign securities at December 31, 2014, but not at December 31, 2015.

Level 1 Common Stocks are exchange-traded securities with a quoted price. See Portfolio of Investments for Sector Classification.

The fair value estimates for the Level 3 securities in the International Growth, Institutional International Growth and Emerging Markets Small Cap Growth Funds were determined in good faith by the Pricing Committee, pursuant to the Valuation Procedures approved by the Board of Trustees. There were various factors considered in reaching this fair value determination, including, but not limited to, the following: the type of security, the extent of public trading of the security, information obtained from a broker-dealer for the security, analysis of the company’s performance and market trends that influence its performance. Level 3 securities represented 0.00%, 0.00%, and 0.44% as a percentage of net assets in the International Growth, Institutional International Growth and Emerging Markets Small Cap Growth Funds, respectively. The change in net unrealized gain (loss) related to those securities held at December 31, 2015 is included in the change in net unrealized appreciation (depreciation) of investments on the Statements of Operations.

December 31, 2015 William Blair Funds 151

(4) Transactions with Affiliates

(a) Management and Expense Limitation Agreements

Each Fund has a management agreement with the Adviser for investment management, clerical, bookkeeping and administrative services. Each Fund pays the Adviser an annual fee, payable monthly, based on a specified percentage of its average daily net assets. A summary of the annual rates expressed as a percentage of average daily net assets is as follows:

Domestic Equity Funds
Growth	0.75	%
Large Cap Growth	0.70	%
Large Cap Value	0.70	%
Mid Cap Growth	0.95	%
Mid Cap Value	0.95	%
Small-Mid Cap Growth	1.00	%
Small-Mid Cap Value	1.00	%
Small Cap Growth	1.10	%
Small Cap Value	1.10	%
Fixed Income Funds
Bond	0.30	%
Income1:
First $250 million	0.25	%
In excess of $250 million	0.20	%
Low Duration	0.30	%
Multi-Asset and Alternative Fund
Macro Allocation	0.80	%
Global Equity Funds
Global Leaders	1.00	%
Global Small Cap Growth	1.00	%

International Equity Funds
International Leaders	0.95	%
International Equity:
First $250 million	1.00	%
In excess of $250 million	0.90	%
Institutional International Equity:
First $500 million	0.90	%
Next $500 million	0.85	%
In excess of $1 billion	0.80	%
International Growth2:
First $250 million	1.10	%
Next $2.25 billion	1.00	%
Next $2.5 billion	0.975	%
Next $5 billion	0.95	%
Next $5 billion	0.925	%
In excess of $15 billion	0.90	%
Institutional International Growth:
First $500 million	1.00	%
Next $500 million	0.95	%
Next $1.5 billion	0.90	%
Next $2.5 billion	0.875	%
Next $5 billion	0.85	%
Next $5 billion	0.825	%
In excess of $15 billion	0.80	%
International Small Cap Growth	1.00	%
Emerging Markets Leaders	1.10	%
Emerging Markets Growth	1.10	%
Emerging Markets Small Cap Growth	1.10	%

1

Management fee also includes a charge of 5% of gross income.

2

Prior to May 1, 2015, the International Growth Fund paid a management fee at a rate of 1.10% of the first $250 million of the Fund’s average daily net assets; plus 1.00% of the next $4.75 billion of the Fund’s average daily net assets; plus 0.95% of the next $5 billion of the Fund’s average daily net assets; plus 0.925% of the next $5 billion of the Fund’s average daily net assets; plus 0.90% of the Fund’s average daily net assets over $15 billion. Effective May 1, 2015, the management fee paid to the Adviser was reduced to 1.10% of the first $250 million of the Fund’s average daily net assets; plus 1.00% of the next $2.25 billion of the Fund’s average daily net assets; plus 0.975% of the next $2.5 billion of the Fund’s average daily net assets; plus 0.95% of the next $5 billion of the Fund’s average daily net assets; plus 0.925% of the next $5 billion of the Fund’s average daily net assets; plus 0.90% of the Fund’s average daily net assets over $15 billion.

152 Annual Report December 31, 2015

Some of the Funds have also entered into an Amended and Restated Expense Limitation Agreement with the Adviser. Under the terms of the agreement, the Adviser will waive its management fee and/or reimburse a Fund for expenses in excess of the agreed upon rate. The amount the Adviser owes a Fund as of the reporting date is recorded as Receivable from Adviser on the Statements of Assets and Liabilities. The Adviser reimburses the Funds on a monthly basis. Under the terms of the agreement, the Adviser has agreed to waive its management fees and/or absorb other operating expenses through April 30, 2016, if total expenses for each class of the following Funds exceed the following rates (as a percentage of average daily net assets):

	Class N						Class I						Institutional Class
Fund	Effective May 1, 2015 through April 30, 2016			Effective May 1, 2014 through April 30, 2015			Effective May 1, 2015 through April 30, 2016			Effective May 1, 2014 through April 30, 2015			Effective May 1, 2015 through April 30, 2016			Effective May 1, 2014 through April 30, 2015
Growth		N/A			N/A			N/A			N/A			N/A			N/A
Large Cap Growth		1.05	%		1.10	%		0.80	%		0.85	%		N/A			N/A
Large Cap Value		1.05	%		1.10	%		0.80	%		0.85	%		N/A			N/A
Mid Cap Growth		1.30	%		1.35	%		1.05	%		1.10	%		N/A			N/A
Mid Cap Value		1.30	%		1.35	%		1.05	%		1.10	%		N/A			N/A
Small-Mid Cap Growth		1.35	%		1.35	%		1.10	%		1.10	%		N/A			N/A
Small-Mid Cap Value		1.35	%		1.40	%		1.10	%		1.15	%		N/A			N/A
Small Cap Growth		1.50	%		1.50	%		1.25	%		1.25	%		N/A			N/A
Small Cap Value		1.50	%		1.50	%		1.25	%		1.25	%		N/A			N/A
Global Leaders		1.40	%		1.50	%		1.15	%		1.25	%		1.00	%		1.10	%
Global Small Cap Growth		1.65	%		1.65	%		1.40	%		1.40	%		1.25	%		1.25	%
International Leaders		1.35	%		1.45	%		1.10	%		1.20	%		0.95	%		1.05	%
International Equity		1.30	%		1.35	%		1.05	%		1.10	%		N/A			N/A
Institutional International Equity		N/A			N/A			N/A			N/A			1.00	%		1.00	%
International Growth		1.45	%		1.45	%		1.20	%		1.20	%		N/A			N/A
Institutional International Growth		N/A			N/A			N/A			N/A			N/A			N/A
International Small Cap Growth		1.65	%		1.65	%		1.40	%		1.40	%		1.25	%		1.25	%
Emerging Markets Leaders		1.65	%		1.65	%		1.40	%		1.40	%		1.25	%		1.25	%
Emerging Markets Growth		1.70	%		1.70	%		1.45	%		1.45	%		1.30	%		1.30	%
Emerging Markets Small Cap Growth		1.65	%		1.65	%		1.40	%		1.40	%		1.25	%		1.25	%
Bond		0.65	%		0.65	%		0.50	%		0.50	%		0.35	%		0.35	%
Income		0.85	%		0.85	%		0.70	%		0.70	%		N/A			N/A
Low Duration		0.70	%		0.70	%		0.55	%		0.55	%		0.40	%		0.40	%
Macro Allocation		1.35	%(a)		1.35	%(b)		1.10	%(a)		1.10	%(b)		0.95	%(a)		0.95	%(b)

(a)	Effective March 1, 2015 through April 30, 2016.
(b)	Effective March 1, 2014 through February 28, 2015.

December 31, 2015 William Blair Funds 153

For the year ended December 31, 2015, the fee waivers and/or reimbursements for each Fund (includes the expense limitation described above and the shareholder administration fee waiver described below) were as follows (in thousands):

Fund	Fund Level Waiver		Class N Specific Waiver		Class I Specific Waiver		Total Waiver
Large Cap Growth		$  42		$  14		$     40		$     96
Large Cap Value		102		1		1		104
Mid Cap Growth		—		37		174		211
Mid Cap Value		90		1		—		91
Small-Mid Cap Growth		—		98		409		507
Small-Mid Cap Value		110		—		2		112
Small Cap Growth		—		123		154		277
Small Cap Value		—		13		—		13
Global Leaders		142		8		79		229
Global Small Cap Growth		92		2		74		168
International Leaders		170		—		20		190
International Equity		114		4		72		190
Institutional International Equity		120		—		—		120
International Small Cap Growth		—		18		551		569
Emerging Markets Leaders		119		3		51		173
Emerging Markets Growth		—		19		249		268
Emerging Markets Small Cap Growth		169		28		233		430
Bond		100		81		272		453
Low Duration		36		6		166		208
Macro Allocation		—		312		1,473		1,785

(b) Underwriting, Distribution Services, and Shareholder Administration Agreements

Pursuant to separate Underwriting and Distribution Agreements, WBC is the principal underwriter and distributor for the continuous offering of shares of the Trust and acts as agent of the Trust in the sale of its shares. The Underwriting Agreement provides that the Distributor will use its best efforts to distribute the Trust’s shares. The Distributor is not compensated under the Underwriting Agreement.

Each Fund, except the Institutional International Equity Fund and Institutional International Growth Fund, has a Distribution Agreement with WBC for distribution services to the Funds’ Class N shares. Each Fund pays WBC an annual fee, payable monthly, based on a specified percentage of its average daily net assets of Class N shares. The annual rate expressed as a percentage of average daily net assets for Class N is 0.25% for all Funds except the Bond, Income and Low Duration Funds, which is 0.15%. Pursuant to the Distribution Agreement, WBC enters into related selling group agreements with various firms at various rates for sales of the Funds’ Class N shares.

The Global Leaders, Global Small Cap Growth, International Leaders, International Small Cap Growth, Emerging Markets Leaders, Emerging Markets Growth, Emerging Markets Small Cap Growth, Bond, Low Duration and Macro Allocation Funds have a Shareholder Administration Agreement with WBC to provide shareholder administration services to Class N and Class I shares. Class N and Class I shares of the Funds have agreed to pay an annual fee, payable monthly, of 0.15% of average daily net assets attributable to each class, respectively. Beginning in 2013, the SEC conducted a limited scope examination of a number of mutual fund sponsors, including WBC, regarding distribution and servicing of mutual fund shares through intermediaries. In November 2014, the SEC informed WBC that it had opened a non-public investigation with respect to shareholder administration fees paid by the applicable Funds. The investigation does not involve the investment management operations of the Funds. Recently, the SEC staff sent WBC a notification that staff intended to recommend an enforcement action against WBC to the SEC Commissioners (Wells Notice), and WBC has submitted a response. At this time, it is unclear whether or not the Commission will allow the matter to enter enforcement proceedings. While WBC believes that any possible claims made by the staff would be without merit, WBC cannot predict the outcome of any enforcement proceeding the SEC may choose to bring. In light of the preliminary concerns expressed by the SEC staff, the shareholder administration fee for each Fund is currently being waived by WBC. This waiver will not be removed without approval of the Board of Trustees.

154 Annual Report December 31, 2015

For the year ended December 31, 2015, the following shareholder administration fees were incurred and waived (in thousands):

Fund	Class N		Class I		Total		Total Waived		Net Total Shareholder Administration Fee
Global Leaders	$	8	$	79	$	87	$	87		$—
Global Small Cap Growth		1		74		75		75		—
International Leaders		—		19		19		19		—
International Small Cap Growth		18		551		569		569		—
Emerging Markets Leaders		3		51		54		54		—
Emerging Markets Growth		19		249		268		268		—
Emerging Markets Small Cap Growth		17		233		250		250		—
Bond		80		272		352		352		—
Low Duration		6		166		172		172		—
Macro Allocation		312		1,473		1,785		1,785		—

(5) Investment Transactions

Investment transactions, excluding money market instruments, repurchase agreements and U.S. government securities for the year ended December 31, 2015, were as follows (in thousands):

Fund	Purchases		Sales
Growth	$	676,149	$	840,830
Large Cap Growth		28,970		24,001
Large Cap Value		1,806		2,987
Mid Cap Growth		186,017		322,750
Mid Cap Value		1,727		2,767
Small-Mid Cap Growth		703,594		445,592
Small-Mid Cap Value		1,495		1,671
Small Cap Growth		404,400		529,927
Small Cap Value		220,094		168,054
Global Leaders		119,583		98,862
Global Small Cap Growth		38,340		66,409
International Leaders		48,150		28,269
International Equity		36,333		40,995
Institutional International Equity		9,959		8,209
International Growth		2,599,563		2,616,152
Institutional International Growth		1,649,044		1,660,472
International Small Cap Growth		541,367		662,003
Emerging Markets Leaders		164,668		123,788
Emerging Markets Growth		1,170,865		1,128,319
Emerging Markets Small Cap Growth		543,234		483,204
Bond		362,007		113,870
Income		31,828		20,766
Low Duration		183,790		178,241
Macro Allocation		936,200		288,069

Transactions in written call and put options for the Macro Allocation Fund for the year ended December 31, 2015 were as follows:

	# of Contracts			Premium (in thousands)
Balance at December 31, 2014		3,800			$	820
Sales		78,594				20,237
Closing Buys		(72,748	)			(19,706	)
Expirations		(4,900	)			(699	)
Exercised		—				—
Balance at December 31, 2015		4,746			$	652

December 31, 2015 William Blair Funds 155

(6) Financial Derivative Instruments

Each Fund may use derivative instruments to maintain liquidity, to provide hedging, or in anticipation of changes in the composition of its portfolio holdings or as otherwise provided in each Fund’s prospectus. The Macro Allocation Fund may also use derivative instruments to obtain investment exposures. The derivative instruments held as of December 31, 2015, as disclosed in each Fund’s Portfolios of Investments, are representative of each Fund’s derivative instrument trading activity during the year ended December 31, 2015.

Derivative transactions carry counterparty risk as they are based on contracts between a Fund and the applicable counterparty. For exchange-traded or cleared derivative contracts, such counterparty risk is limited due to the role of the exchange or clearinghouse. OTC derivative contracts, however, are exposed to counterparty risk in the amount of unrealized gains, net of collateral held, for the duration of the contract.

The Macro Allocation Fund is subject to certain netting arrangements through International Swaps and Derivatives Association, Inc. Master Agreements and Credit Support Annexes (“ISDAs”). The ISDAs maintain provisions for general obligations, representations, agreements, collateral and events of default or termination. The ISDAs cover certain OTC derivative securities entered into by Macro Allocation Fund with various counterparties and allow the Macro Allocation Fund to close out and net its total exposure to a counterparty in the event of a default.

Futures Contracts

A futures contract provides for the future sale by one party and purchase by another party of a specified amount of a specific financial instrument for a specified price at a designated date, time and place. An index futures contract is an agreement pursuant to which the parties agree to take or make delivery of an amount of cash equal to the difference between the value of the index at the close of the last trading day of the contract and the price at which the index futures contract was originally written. If the offsetting purchase price is less than the original sale price, a Fund realizes a gain; if it is more, a Fund realizes a loss. Conversely, if the offsetting sale price is more than the original purchase price, a Fund realizes a gain; if it is less, a Fund realizes a loss. The transaction costs must also be included in these calculations. There can be no assurance, however, that a Fund will be able to enter into an offsetting transaction with respect to a particular futures contract at a particular time. If a Fund is not able to enter into an offsetting transaction, a Fund will continue to be required to maintain the margin deposits on the futures contract.

Upon entering into a futures contract, a Fund is required to pledge to the broker an amount of cash, U.S. government securities, or other liquid assets equal to a certain percentage of the contract amount (“initial margin deposit”). Futures contracts are marked to market daily and an appropriate payable or receivable for the change in value (“variation margin”) is recorded by a Fund and a cash payment is either made to or received from the broker. Futures held through swaps are marked to market daily, however, a Fund does not make or receive cash payments to/from the broker. Gains or losses are recognized but not considered realized until the contracts expire or are closed and are included in the Statement of Operations.

Options

The purchase or sale of an option by a Fund involves the payment or receipt of a premium by the investor and the corresponding right or obligation, as the case may be, either to purchase or sell the underlying security, commodity, or other instrument for a specific price at a certain time or during a certain period. Purchasing options involves the risk that the underlying instrument will not change price in the manner expected, so the investor loses its premium. Writing options involves potentially greater risk because the investor is exposed to the extent of the actual price movement in the underlying security rather than only the amount of the premium paid (which could result in a potentially unlimited loss). OTC options also involve counterparty credit risk. Purchased options are shown as an asset on the Statement of Assets and Liabilities and are included in Investments in securities. Premiums received for written options are shown as a liability on the Statement of Assets and Liabilities. Realized gains and losses on the sale, expiration or assignment of an option are disclosed on the Statement of Operations.

Forward Foreign Currency Contracts

The Global Equity, International Equity and Multi-Asset and Alternative Funds may enter into forward foreign currency contracts. When entering into a forward foreign currency contract, a Fund agrees to receive or deliver a fixed quantity of foreign currency for an agreed-upon price on an agreed future date. A Fund’s net equity therein, representing unrealized gain or loss on the contracts as measured by the difference between the forward foreign exchange rates at the dates of entry into the contracts and the forward rates at the reporting date, is included in the Statement of Assets and Liabilities. Realized and unrealized gains and losses are included in the Statement of Operations. These instruments may involve market risk, credit risk, or both kinds of risks in excess of the amount recognized in the Statement of Assets and Liabilities. Risks arise from the possible inability of counterparties to meet the terms of their contracts and from the price movements in currencies.

156 Annual Report December 31, 2015

Swap Contracts

Swap agreements may include total return, interest rate, securities index, commodity, security, currency exchange rate, credit default index, volatility and variance swaps. Swap agreements typically are two-party contracts entered into primarily by institutional investors for periods ranging from a few weeks to several years. Cleared swaps are transacted through futures commission merchants that are members of central clearing houses with the clearing house serving as a central counterparty similar to transactions in futures contracts. In a standard “swap” transaction, two parties agree to exchange the returns (or differentials in rates of return) earned or realized on particular predetermined investments or instruments. The gross returns to be exchanged or “swapped” between the parties are calculated with respect to a “notional amount” (i.e., the change in the value of a particular dollar amount invested at a particular interest rate, in a particular foreign currency, or in a “basket” of securities representing a particular index). Swap agreements are subject to the risk that the counterparty to the swap will default on its obligation to pay a Fund and the risk that a Fund will not be able to meet its obligations to pay the counterparty to the swap. Swap agreements may also involve fees, commissions or other costs that may reduce a Fund’s gains from a swap agreement or may cause a Fund to lose money.

Credit Default Swaps—A Fund may invest in credit default swaps as a means of “buying” credit protection (i.e., attempting to mitigate the risk of default or credit quality deterioration in some portion of a Fund’s holdings) or “selling” credit protection (i.e., attempting to gain exposure to an underlying issuer’s credit quality characteristics without directly investing in that issuer). A credit default swap is a contract between a buyer and a seller of protection against a pre-defined credit event (e.g., a ratings downgrade or default) on an underlying reference obligation, which may be a single debt instrument or baskets or indices of securities. A Fund may be a buyer or seller of a credit default swap. As a seller of protection on credit default swap agreements, a Fund will generally receive from the buyer of protection a fixed rate of income throughout the term of the swap provided that there is no credit event. A Fund adds leverage to its portfolio because the Fund is subject to investment exposure on the notional amount of the swap. The maximum potential amount of future payments that a Fund as a seller of protection could be required to make under a credit default swap agreement equals the notional amount of the agreement. Notional amounts of each individual credit default swap agreement outstanding as of period end for which a Fund is the seller of protection are disclosed in Portfolio of Investments. These potential amounts would be partially offset by any recovery values of the respective referenced obligations, upfront payments received upon entering into the agreement, or net amounts received from the settlement of buy protection credit default swap agreements entered into by a Fund for the same referenced entity or entities. For credit default swap contracts on credit indices, the quoted market prices and resulting values serve as an indicator of the payment performance risk. Increasing market values, in absolute terms when compared to the notional amount of the swap, represent deterioration of the referenced entities’ credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the swap.

Interest Rate Swap—A Fund may invest in interest rate swaps to gain or mitigate exposure to changes in interest rates. Interest rate swap agreements involve a commitment between parties to pay either a fixed interest rate or a floating interest rate based on a notional amount of principal. The parties make payments at predetermined intervals throughout the life of the swap. As a payer, a Fund would make the fixed payment and receive the floating payment. As a receiver, a Fund would make the floating payment and receive the fixed payment.

Total Return Swap—A Fund may invest in total return swaps to gain or mitigate exposure to an underlying security, or securities. Total return swap agreements may involve commitments to pay interest in exchange for the return on the underlying security, or securities. At maturity, a net cash flow is exchanged between the parties based on the total return of the underlying security, or securities, less a financing rate. As a receiver, a Fund would receive a payment for a positive return and would make a payment for a negative return. As a payer, a Fund would make a payment for a positive return and would receive a payment for a negative return.

Variance Swap—A Fund may invest in variance swaps in order to gain or mitigate its exposure to an underlying reference entity such as a broad based index. A variance swap is an agreement between two parties to exchange cash flows based on the measured variance of a reference entity. The payer agrees to exchange the fixed rate, or the variance strike price of the reference entity, to the receiver for the floating rate, or realized variance price of the reference entity. At the time the trade is originated, the agreed upon variance strike price is generally set so that the fair value of the swap is near zero. At maturity, a net cash flow is exchanged between the parties based on the difference between the final realized variance price of the swap and the variance strike price multiplied by the notional, or vega amount. As a receiver of the floating rate, a Fund would receive a payment if the final realized variance price is greater than the variance strike price and would make a payment if the final realized variance price is less than the variance strike price. As a payer of the floating rate, a Fund would receive a payment if the final realized variance price is less than the variance strike price and would make a payment if the final realized variance price is greater than the variance strike price.

December 31, 2015 William Blair Funds 157

The following table presents the value of financial derivative instruments, by primary risk exposure, as of December 31, 2015 and their respective location on the Statements of Assets and Liabilities (in thousands):

	Assets			Liabilities
Primary Risk Exposure	Statements of Assets and Liabilities	Value		Statements of Assets and Liabilities	Value
Bond
Interest rate	Investments in securities, at value	$	2	None	$	—
Credit	Receivable for variation margin on centrally cleared swaps		—	Payable for variation margin on centrally cleared swaps		37
Income
Interest rate	Investments in securities, at value		1	None		—
Low Duration
Interest rate	Investments in securities, at value		2	None		—
Macro Allocation
Credit	Receivable for variation margin on centrally cleared swaps		158	Payable for variation margin on centrally cleared swaps		—
Currency	Investments in securities, at value		653	Options written, at value		—
Currency	Unrealized appreciation on forward currency contracts		11,296	Unrealized depreciation on forward currency contracts		9,563
Equity	Investments in securities, at value		5,621	Options written, at value		—
Equity	Receivable for variation margin on futures		8,523	Payable for variation margin on futures		5,424
Equity	Unrealized appreciation on swap contract		1,656	Unrealized depreciation on swap contract		4,802
Interest rate	Investments in securities, at value		310	Options written, at value		261
Interest rate	Receivable for variation margin on futures		1,221	Payable for variation margin on futures		1,692
Interest rate	Unrealized appreciation on swap contract		54	Unrealized depreciation on swap contract		850

158 Annual Report December 31, 2015

The following table indicates the effect of derivatives, by primary risk exposure, on the Statements of Operations for the year ended December 31, 2015 (in thousands):

	Realized Gain (Loss)				Change in Net Unrealized Appreciation (Depreciation)
Primary Risk Exposure	Statements of Operations	Value			Statements of Operations	Value
Bond
Interest Rate	Options	$	(121	)	Options	$	49
Credit	Swaps		17		Swaps		(20	)
Income
Interest Rate	Options		(60	)	Options		25
Low Duration
Interest Rate	Options		(121	)	Options		49
Macro Allocation
Credit	Swaps		4		Swaps		173
Currency	Forward foreign currency contracts		(8,735	)	Forward foreign currency contracts		(5,467	)
Currency	Options		4,506		Options		(1,602	)
Equity	Futures Contracts		(5,612	)	Futures Contracts		1,509
Equity	Options		(14,620	)	Options		(5,316	)
Equity	Swaps		(43,692	)	Swaps		10,264
Interest rate	Futures Contracts		(3,058	)	Futures Contracts		3,444
Interest Rate	Options		—		Options		(795	)
Interest Rate	Swaps		(3,809	)	Swaps		1,376

The following table indicates gross OTC derivative asset exposure, by investment type, included in the Statements of Assets and Liabilities at December 31, 2015 (in thousands):

	Gross		Gross Amounts Offset in the			Net Amounts of Assets Presented in the		Gross Amounts Not Offset in the Statements of Assets and Liabilities
Description	Amounts of Recognized Assets		Statements of Assets and Liabilities			Statements of Assets and Liabilities		Financial Instruments		Cash Collateral Received		Net Amount
Macro Allocation
Citibank N.A.
Forward foreign currency contracts	$	11,296	$	(9,563	)	$	1,733	$	—	$	—	$	1,733
Option		653		—			653		—		—		653
Swaps		60		—			60		—		—		60
Credit Suisse
Option		153		—			153		—		—		153
Goldman Sachs
Option		271		—			271		—		—		271
Swaps		1,650		(1,650	)		—		—		—		—

The following table indicates gross OTC derivative liability exposure, by investment type, included in the Statements of Assets and Liabilities at December 31, 2015 (in thousands):

	Gross		Gross Amounts Offset in the			Net Amounts of Liabilities Presented in the		Gross Amounts Not Offset in the Statements of Assets and Liabilities
Description	Amounts of Recognized Liabilities		Statements of Assets and Liabilities			Statements of Assets and Liabilities		Financial Instruments		Cash Collateral Pledged		Net Amount (not less than zero)
Macro Allocation
Citibank N.A.
Forward foreign currency contracts		$9,563		$(9,563	)		$     —		$        —		$        —		$        —
Credit Suisse
Swaps		2,809		—			$2,809		12,047		—		—
Goldman Sachs
Swaps		2,843		(1,650	)		$1,193		2,773		—		—

December 31, 2015 William Blair Funds 159

(7) Fund Share Transactions

The following tables summarizes the activity in capital shares of each Fund for the year ended December 31, 2015 (in thousands):

	Class N
	Dollars									Shares
Fund	Sales		Reinvest		Redemptions		Total			Sales		Reinvest		Redemptions		Total
Growth	$	20,920		$18,415		$155,588	$	(116,253	)		1,510		1,477		11,153		(8,166	)
Large Cap Growth		3,479		966		2,462		1,983			315		96		226		185
Large Cap Value		169		123		371		(79	)		13		11		28		(4	)
Mid Cap Growth		5,086		4,873		16,859		(6,900	)		358		436		1,203		(409	)
Mid Cap Value		632		151		127		656			50		15		10		55
Small-Mid Cap Growth		113,394		8,500		28,874		93,020			5,722		460		1,469		4,713
Small-Mid Cap Value		72		7		100		(21	)		5		1		7		(1	)
Small Cap Growth		11,167		9,324		41,312		(20,821	)		440		416		1,662		(806	)
Small Cap Value		5,971		107		10,763		(4,685	)		344		6		616		(266	)
Global Leaders		766		246		275		737			61		21		22		60
Global Small Cap Growth		460		27		345		142			35		2		26		11
International Leaders		226		2		8		220			18		—		1		17
International Equity		279		26		830		(525	)		19		2		57		(36	)
International Growth		359,131		9,388		312,397		56,122			14,223		378		12,310		2,291
International Small Cap Growth		2,310		205		5,668		(3,153	)		176		15		439		(248	)
Emerging Markets Leaders		6,520		2		6,488		34			751		—		746		5
Emerging Markets Growth		2,105		97		3,386		(1,184	)		164		9		289		(116	)
Emerging Markets Small Cap Growth		5,302		473		3,847		1,928			319		32		240		111
Bond		137,843		1,819		14,345		125,317			13,112		173		1,372		11,913
Income		13,105		972		14,256		(179	)		1,439		107		1,574		(28	)
Low Duration		1,525		49		3,744		(2,170	)		164		5		403		(234	)
Macro Allocation		180,974		898		162,486		19,386			14,474		79		13,669		884

	Class I
	Dollars									Shares
Fund	Sales		Reinvest		Redemptions		Total			Sales		Reinvest		Redemptions		Total
Growth	$	101,867		$77,422		$125,622	$	53,667			6,840		5,761		8,641		3,960
Large Cap Growth		13,673		4,410		8,280		9,803			1,213		418		736		895
Large Cap Value		19		235		1,009		(755	)		2		21		78		(55	)
Mid Cap Growth		28,076		34,703		159,407		(96,628	)		1,907		2,974		10,676		(5,795	)
Mid Cap Value		29		422		1,620		(1,169	)		2		43		124		(79	)
Small-Mid Cap Growth		314,765		48,836		122,703		240,898			15,422		2,545		6,027		11,940
Small-Mid Cap Value		363		129		402		90			27		10		30		7
Small Cap Growth		82,937		19,650		175,942		(73,355	)		3,105		816		6,445		(2,524	)
Small Cap Value		168,226		2,938		103,403		67,761			9,544		173		5,798		3,919
Global Leaders		11,928		2,130		19,402		(5,344	)		963		185		1,586		(438	)
Global Small Cap Growth		13,460		615		42,410		(28,335	)		1,041		47		3,193		(2,105	)
International Leaders		4,408		96		1,095		3,409			340		7		83		264
International Equity		5,376		680		10,778		(4,722	)		365		49		730		(316	)
International Growth		477,894		27,497		523,541		(18,150	)		17,911		1,082		19,687		(694	)
International Small Cap Growth		62,196		6,895		116,983		(47,892	)		4,698		511		8,807		(3,598	)
Emerging Markets Leaders		15,832		113		5,667		10,278			1,800		15		709		1,106
Emerging Markets Growth		46,581		1,207		55,599		(7,811	)		3,709		109		4,716		(898	)
Emerging Markets Small Cap Growth		107,086		4,486		51,918		59,654			6,516		302		3,162		3,656
Bond		136,906		4,457		45,989		95,374			13,136		426		4,406		9,156
Income		10,900		1,714		13,153		(539	)		1,216		191		1,466		(59	)
Low Duration		41,356		1,978		38,076		5,258			4,452		213		4,113		552
Macro Allocation		1,054,314		8,797		456,003		607,108			85,643		772		38,103		48,312

160 Annual Report December 31, 2015

	Institutional Class
	Dollars										Shares
Fund	Sales		Reinvest		Redemptions			Total			Sales		Reinvest		Redemptions		Total
Global Leaders	$	29,091		$6,610		$    1,181		$	34,520			2,398		574		95		2,877
International Leaders		19,418		675		(1	)		20,094			1,480		53		—		1,533
Institutional International Equity		2,425		156		1,154			1,427			187		13		91		109
Institutional International Growth		297,180		28,849		305,026			21,003			18,912		1,922		19,237		1,597
International Small Cap Growth		13,840		4,777		61,465			(42,848	)		1,040		352		4,482		(3,090	)
Emerging Markets Leaders		58,828		434		28,442			30,820			6,983		56		3,358		3,681
Emerging Markets Growth		266,522		7,305		221,791			52,036			22,032		656		17,376		5,312
Emerging Markets Small Cap Growth		10,974		4,600		2,911			12,663			660		309		186		783
Bond		25,382		3,259		18,526			10,115			2,443		311		1,756		998
Low Duration		4,653		1,069		50,966			(45,244	)		497		115		5,489		(4,877	)
Macro Allocation		324,009		4,325		27,615			300,719			26,463		379		2,365		24,477

	Net Change in Net Assets Relating to Fund Share Activity
	Dollars									Shares
Fund	Sales		Reinvest		Redemptions		Total			Sales		Reinvest		Redemptions		Total
Growth		$   122,787		$95,837		$281,210		$ (62,586	)		8,350		7,238		19,794		(4,206	)
Large Cap Growth		17,152		5,376		10,742		11,786			1,528		514		962		1,080
Large Cap Value		188		358		1,380		(834	)		15		32		106		(59	)
Mid Cap Growth		33,162		39,576		176,266		(103,528	)		2,265		3,410		11,879		(6,204	)
Mid Cap Value		661		573		1,747		(513	)		52		58		134		(24	)
Small-Mid Cap Growth		428,159		57,336		151,577		333,918			21,144		3,005		7,496		16,653
Small-Mid Cap Value		435		136		502		69			32		11		37		6
Small Cap Growth		94,104		28,974		217,254		(94,176	)		3,545		1,232		8,107		(3,330	)
Small Cap Value		174,197		3,045		114,166		63,076			9,888		179		6,414		3,653
Global Leaders		41,785		8,986		20,858		29,913			3,422		780		1,703		2,499
Global Small Cap Growth		13,920		642		42,755		(28,193	)		1,076		49		3,219		(2,094	)
International Leaders		24,052		773		1,102		23,723			1,838		60		84		1,814
International Equity		5,655		706		11,608		(5,247	)		384		51		787		(352	)
Institutional International Equity		2,425		156		1,154		1,427			187		13		91		109
International Growth		837,025		36,885		835,938		37,972			32,134		1,460		31,997		1,597
Institutional International Growth		297,180		28,849		305,026		21,003			18,912		1,922		19,237		1,597
International Small Cap Growth		78,346		11,877		184,116		(93,893	)		5,914		878		13,728		(6,936	)
Emerging Markets Leaders		81,180		549		40,597		41,132			9,534		71		4,813		4,792
Emerging Markets Growth		315,208		8,609		280,776		43,041			25,905		774		22,381		4,298
Emerging Markets Small Cap Growth		123,362		9,559		58,676		74,245			7,495		643		3,588		4,550
Bond		300,131		9,535		78,860		230,806			28,691		910		7,534		22,067
Income		24,005		2,686		27,409		(718	)		2,655		298		3,040		(87	)
Low Duration		47,534		3,096		92,786		(42,156	)		5,113		333		10,005		(4,559	)
Macro Allocation		1,559,297		14,020		646,104		927,213			126,580		1,230		54,137		73,673

December 31, 2015 William Blair Funds 161

The following tables summarizes the activity in capital shares of each Fund for the year ended December 31, 2014 (in thousands):

	Class N
	Dollars									Shares
Fund	Sales		Reinvest		Redemptions		Total			Sales		Reinvest		Redemptions		Total
Growth		$  31,769		$38,364		$  67,646	$	2,487			2,133		2,844		4,552		425
Large Cap Growth		1,924		760		801		1,883			183		72		78		177
Large Cap Value		176		131		460		(153	)		13		10		32		(9	)
Mid Cap Growth		7,467		4,305		14,065		(2,293	)		494		304		916		(118	)
Mid Cap Value		10		25		73		(38	)		1		2		5		(2	)
Small-Mid Cap Growth		39,843		5,936		35,973		9,806			2,127		317		1,901		543
Small-Mid Cap Value		68		12		305		(225	)		5		1		21		(15	)
Small Cap Growth		25,046		25,674		91,030		(40,310	)		846		1,015		3,121		(1,260	)
Small Cap Value		9,135		1,424		26,250		(15,691	)		522		82		1,485		(881	)
Global Leaders		482		8		2,092		(1,602	)		41		1		179		(137	)
Global Small Cap Growth		576		24		208		392			46		2		17		31
International Leaders		18		—		17		1			1		—		1		—
International Equity		149		21		845		(675	)		10		2		60		(48	)
International Growth		151,647		8,469		567,333		(407,217	)		5,859		333		21,360		(15,168	)
International Small Cap Growth		3,098		1,836		6,812		(1,878	)		208		146		441		(87	)
Emerging Markets Leaders		2,361		24		2,404		(19	)		254		2		269		(13	)
Emerging Markets Growth		961		600		2,362		(801	)		71		47		173		(55	)
Emerging Markets Small Cap Growth		15,026		446		15,349		123			920		28		913		35
Bond		8,599		442		3,830		5,211			797		41		357		481
Income		7,606		1,016		16,330		(7,708	)		829		111		1,782		(842	)
Low Duration		1,876		56		2,039		(107	)		199		6		217		(12	)
Macro Allocation (a)		16,779		7,675		13,673		10,781			1,332		639		1,085		886
Macro Allocation (b)		152,928		2,968		109,094		46,802			12,151		241		8,583		3,809

	Class I
	Dollars									Shares
Fund	Sales		Reinvest		Redemptions		Total			Sales		Reinvest		Redemptions		Total
Growth	$	136,452		$83,841		$105,497	$	114,796			8,531		5,835		6,741		7,625
Large Cap Growth		10,880		3,704		6,304		8,280			998		341		575		764
Large Cap Value		153		293		734		(288	)		10		22		52		(20	)
Mid Cap Growth		39,833		42,372		148,180		(65,975	)		2,561		2,894		9,573		(4,118	)
Mid Cap Value		39		387		960		(534	)		4		30		71		(37	)
Small-Mid Cap Growth		255,552		60,567		135,064		181,055			12,889		3,132		6,930		9,091
Small-Mid Cap Value		2,101		202		837		1,466			146		15		58		103
Small Cap Growth		75,868		57,143		135,175		(2,164	)		2,433		2,119		4,372		180
Small Cap Value		282,706		17,680		116,112		184,274			15,870		987		6,474		10,383
Global Leaders		3,392		155		6,905		(3,358	)		293		13		602		(296	)
Global Small Cap Growth		25,796		552		831		25,517			2,077		45		67		2,055
International Leaders		770		72		2,634		(1,792	)		62		6		207		(139	)
International Equity		1,631		522		9,844		(7,691	)		115		37		695		(543	)
International Growth		571,312		29,393		653,235		(52,530	)		21,072		1,131		24,369		(2,166	)
International Small Cap Growth		101,871		46,099		190,903		(42,933	)		6,462		3,619		12,746		(2,665	)
Emerging Markets Leaders		3,054		543		9,540		(5,943	)		327		61		1,049		(661	)
Emerging Markets Growth		33,599		8,779		24,068		18,310			2,457		681		1,747		1,391
Emerging Markets Small Cap Growth		59,395		3,664		6,200		56,859			3,551		226		371		3,406
Bond		24,075		3,775		26,212		1,638			2,256		353		2,466		143
Income		12,347		1,684		13,386		645			1,358		185		1,472		71
Low Duration		34,535		2,010		52,964		(16,419	)		3,656		213		5,602		(1,733	)
Macro Allocation (a)		112,136		18,740		53,316		77,560			8,904		1,550		4,228		6,226
Macro Allocation (b)		466,290		3,143		96,388		373,045			36,494		254		7,541		29,207

162 Annual Report December 31, 2015

	Institutional Class
	Dollars									Shares
Fund	Sales		Reinvest		Redemptions		Total			Sales		Reinvest		Redemptions		Total
Global Leaders	$	50,000	$	404		$  34,546	$	15,858			4,295		34		2,964		1,365
International Leaders		25,600		171		2,098		23,673			2,039		14		168		1,885
Institutional International Equity		—		293		85,049		(84,756	)		—		24		6,746		(6,722	)
Institutional International Growth		338,472		227,055		363,134		202,393			19,547		14,783		21,209		13,121
International Small Cap Growth		53,813		35,854		190,247		(100,580	)		3,360		2,801		11,999		(5,838	)
Emerging Markets Leaders		51,588		2,175		11,552		42,211			5,352		242		1,243		4,351
Emerging Markets Growth		162,217		42,676		204,847		46			11,405		3,288		15,033		(340	)
Emerging Markets Small Cap Growth		21,734		5,574		4,116		23,192			1,326		342		249		1,419
Bond		26,873		3,580		22,006		8,447			2,538		336		2,063		811
Low Duration		46,387		1,353		25,383		22,357			4,926		143		2,687		2,382
Macro Allocation (a)		11,788		7,340		94		19,034			904		607		8		1,503
Macro Allocation (b)		141,589		130		—		141,719			11,022		11		—		11,033

	Net Change in Net Assets Relating to Fund Share Activity
	Dollars									Shares
Fund	Sales		Reinvest		Redemptions		Total			Sales		Reinvest		Redemptions		Total
Growth	$	168,221	$	122,205		$   173,143	$	117,283			10,664		8,679		11,293		8,050
Large Cap Growth		12,804		4,464		7,105		10,163			1,181		413		653		941
Large Cap Value		329		424		1,194		(441	)		23		32		84		(29	)
Mid Cap Growth		47,300		46,677		162,245		(68,268	)		3,055		3,198		10,489		(4,236	)
Mid Cap Value		49		412		1,033		(572	)		5		32		76		(39	)
Small-Mid Cap Growth		295,395		66,503		171,037		190,861			15,016		3,449		8,831		9,634
Small-Mid Cap Value		2,169		214		1,142		1,241			151		16		79		88
Small Cap Growth		100,914		82,817		226,205		(42,474	)		3,279		3,134		7,493		(1,080	)
Small Cap Value		291,841		19,104		142,362		168,583			16,392		1,069		7,959		9,502
Global Leaders		53,874		567		43,543		10,898			4,629		48		3,745		932
Global Small Cap Growth		26,372		576		1,039		25,909			2,123		47		84		2,086
International Leaders		26,388		243		4,749		21,882			2,102		20		376		1,746
International Equity		1,780		543		10,689		(8,366	)		125		39		755		(591	)
Institutional International Equity		—		293		85,049		(84,756	)		—		24		6,746		(6,722	)
International Growth		722,959		37,862		1,220,568		(459,747	)		26,931		1,464		45,729		(17,334	)
Institutional International Growth		338,472		227,055		363,134		202,393			19,547		14,783		21,209		13,121
International Small Cap Growth		158,782		83,789		387,962		(145,391	)		10,030		6,566		25,186		(8,590	)
Emerging Markets Leaders		57,003		2,742		23,496		36,249			5,933		305		2,561		3,677
Emerging Markets Growth		196,777		52,055		231,277		17,555			13,933		4,016		16,953		996
Emerging Markets Small Cap Growth		96,155		9,684		25,665		80,174			5,797		596		1,533		4,860
Bond		59,547		7,797		52,048		15,296			5,591		730		4,886		1,435
Income		19,953		2,700		29,716		(7,063	)		2,187		296		3,254		(771	)
Low Duration		82,798		3,419		80,386		5,831			8,781		362		8,506		637
Macro Allocation (a)		140,703		33,755		67,083		107,375			11,140		2,796		5,321		8,615
Macro Allocation (b)		760,807		6,241		205,482		561,566			59,667		506		16,124		44,049

(a)	For the period from November 1, 2014 to December 31, 2014.
(b)	For the year ended October 31, 2014.

December 31, 2015 William Blair Funds 163

Financial Highlights

Growth Fund

	Class N
	Years Ended December 31,
	2015			2014			2013			2012			2011
Net asset value, beginning of year	$	13.55		$	14.79		$	12.05		$	10.73		$	11.28
Income (loss) from investment operations:
Net investment income (loss)		(0.04	)		(0.07	)		(0.07	)		(0.01	)		(0.04	)
Net realized and unrealized gain (loss) on investments		0.75			1.03			4.25			1.69			(0.19	)
Total from investment operations		0.71			0.96			4.18			1.68			(0.23	)
Less distributions from:
Net investment income		—			—			—			0.00	^		—
Net realized gain		1.74			2.20			1.44			0.36			0.32
Total distributions		1.74			2.20			1.44			0.36			0.32
Net asset value, end of year	$	12.52		$	13.55		$	14.79		$	12.05		$	10.73
Total return (%)		5.31			6.59			35.00			15.67			(1.93	)
Ratios to average daily net assets (%):
Expenses		1.19			1.18			1.19			1.20			1.21
Net investment income (loss)		(0.29	)		(0.50	)		(0.51	)		(0.06	)		(0.37	)
Class N net assets at end of year (in thousands)	$	149,754		$	272,765		$	291,326		$	248,121		$	204,476
Portfolio turnover rate (%)		78			100			52			73			59

	Class I
	Years Ended December 31,
	2015		2014			2013			2012		2011
Net asset value, beginning of year	$	14.43	$	15.56		$	12.58		$	11.18	$	11.71
Income (loss) from investment operations:
Net investment income (loss)		0.01		(0.03	)		(0.03	)		0.04		0.00	^
Net realized and unrealized gain (loss) on investments		0.80		1.10			4.45			1.75		(0.20	)
Total from investment operations		0.81		1.07			4.42			1.79		(0.20	)
Less distributions from:
Net investment income		—		—			0.00	^		0.03		0.01
Net realized gain		1.74		2.20			1.44			0.36		0.32
Total distributions		1.74		2.20			1.44			0.39		0.33
Net asset value, end of year	$	13.50	$	14.43		$	15.56		$	12.58	$	11.18
Total return (%)		5.69		6.96			35.43			16.03		(1.60	)
Ratios to average daily net assets (%):
Expenses		0.89		0.86			0.85			0.89		0.86
Net investment income (loss)		0.06		(0.20	)		(0.17	)		0.30		(0.03	)
Class I net assets at end of year (in thousands)	$	696,744	$	688,038		$	623,225		$	468,124	$	362,266
Portfolio turnover rate (%)		78		100			52			73		59

^ Amount is less than $0.005 per share.

Note: Net investment income (loss) per share is based on the average shares outstanding during the year.

Performance cited represents past performance. Past performance does not guarantee future results and current performance may be lower or higher than the data quoted. Results shown are annual returns, which assume reinvestment of dividends and capital gains. Investment returns and principal will fluctuate and you may have a gain or loss when you sell shares. For the most current month-end performance information, please call 1-800-742-7272 or visit our Web site at www.williamblairfunds.com.

See accompanying Notes to Financial Statements.

164 Annual Report December 31, 2015

Financial Highlights

Large Cap Growth Fund

	Class N
	Years Ended December 31,
	2015			2014			2013			2012			2011
Net asset value, beginning of year	$	10.46		$	10.03		$	8.14		$	6.88		$	7.14
Income (loss) from investment operations:
Net investment income (loss)		(0.02	)		(0.02	)		(0.03	)		(0.02	)		(0.01	)
Net realized and unrealized gain (loss) on investments		0.75			1.46			2.70			1.28			(0.25	)
Total from investment operations		0.73			1.44			2.67			1.26			(0.26	)
Less distributions from:
Net investment income		—			—			—			—			—
Net realized gain		1.04			1.01			0.78			—			—
Total distributions		1.04			1.01			0.78			—			—
Net asset value, end of year	$	10.15		$	10.46		$	10.03		$	8.14		$	6.88
Total return (%)		7.04			14.29			33.00			18.31			(3.64	)
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		1.07			1.13			1.20			1.20			1.20
Expenses, before waivers and reimbursements		1.28			1.31			1.46			1.57			1.51
Net investment income (loss), net of waivers and reimbursements		(0.22	)		(0.23	)		(0.36	)		(0.21	)		(0.13	)
Net investment income (loss), before waivers and reimbursements		(0.43	)		(0.41	)		(0.62	)		(0.58	)		(0.44	)
Class N net assets at end of year (in thousands)	$	10,443		$	8,831		$	6,678		$	4,238		$	3,387
Portfolio turnover rate (%)		38			50			48			50			67

	Class I
	Years Ended December 31,
	2015			2014			2013			2012			2011
Net asset value, beginning of year	$	10.84		$	10.33		$	8.35		$	7.03		$	7.30
Income (loss) from investment operations:
Net investment income (loss)		(0.00	)^		0.00	^		(0.01	)		0.00	^		0.01
Net realized and unrealized gain (loss) on investments		0.78			1.52			2.77			1.32			(0.27	)
Total from investment operations		0.78			1.52			2.76			1.32			(0.26	)
Less distributions from:
Net investment income		—			—			—			—			0.01
Net realized gain		1.04			1.01			0.78			—			—
Total distributions		1.04			1.01			0.78			—			0.01
Net asset value, end of year	$	10.58		$	10.84		$	10.33		$	8.35		$	7.03
Total return (%)		7.26			14.65			33.24			18.78			(3.54	)
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		0.82			0.88			0.95			0.95			0.95
Expenses, before waivers and reimbursements		0.95			1.00			1.11			1.23			1.16
Net investment income (loss), net of waivers and reimbursements		0.03			0.02			(0.11	)		0.03			0.11
Net investment income (loss), before waivers and reimbursements		(0.10	)		(0.10	)		(0.27	)		(0.25	)		(0.10	)
Class I net assets at end of year (in thousands)	$	59,038		$	50,778		$	40,513		$	24,175		$	21,562
Portfolio turnover rate (%)		38			50			48			50			67

^ Amount is less than $0.005 per share.

Note: Net investment income (loss) per share is based on the average shares outstanding during the year.

Performance cited represents past performance. Past performance does not guarantee future results and current performance may be lower or higher than the data quoted. Results shown are annual returns, which assume reinvestment of dividends and capital gains. Investment returns and principal will fluctuate and you may have a gain or loss when you sell shares. For the most current month-end performance information, please call 1-800-742-7272 or visit our Web site at www.williamblairfunds.com.

December 31, 2015 William Blair Funds 165

Financial Highlights

Large Cap Value Fund

	Class N
	Periods Ended December 31,
	2015			2014			2013			2012			2011(a)
Net asset value, beginning of year	$	13.41		$	13.69		$	11.54		$	9.95		$	10.00
Income (loss) from investment operations:
Net investment income (loss)		0.10			0.10			0.09			0.11			0.03
Net realized and unrealized gain (loss) on investments		(0.88	)		1.04			3.70			1.57			(0.05	)
Total from investment operations		(0.78	)		1.14			3.79			1.68			(0.02	)
Less distributions from:
Net investment income		0.10			0.11			0.08			0.09			0.03
Net realized gain		1.36			1.31			1.56			—			0.00	^
Total distributions		1.46			1.42			1.64			0.09			0.03
Net asset value, end of year	$	11.17		$	13.41		$	13.69		$	11.54		$	9.95
Total return (%)*		(5.70	)		8.35			33.23			16.92			(0.19	)
Ratios to average daily net assets (%):**
Expenses, net of waivers and reimbursements		1.07			1.13			1.20			1.20			1.20
Expenses, before waivers and reimbursements		3.65			3.12			3.44			4.25			7.83
Net investment income (loss), net of waivers and reimbursements		0.76			0.71			0.64			0.96			1.41
Net investment income (loss), before waivers and reimbursements		(1.82	)		(1.28	)		(1.60	)		(2.09	)		(5.22	)
Class N net assets at end of year (in thousands)	$	1,151		$	1,438		$	1,604		$	1,416		$	998
Portfolio turnover rate (%)*		45			37			83			20			5

	Class I
	Periods Ended December 31,
	2015			2014			2013			2012			2011(a)
Net asset value, beginning of year	$	13.42		$	13.70		$	11.55		$	9.95		$	10.00
Income (loss) from investment operations:
Net investment income (loss)		0.13			0.14			0.12			0.14			0.03
Net realized and unrealized gain (loss) on investments		(0.89	)		1.04			3.70			1.58			(0.05	)
Total from investment operations		(0.76	)		1.18			3.82			1.72			(0.02	)
Less distributions from:
Net investment income		0.15			0.15			0.11			0.12			0.03
Net realized gain		1.36			1.31			1.56			—			0.00	^
Total distributions		1.51			1.46			1.67			0.12			0.03
Net asset value, end of year	$	11.15		$	13.42		$	13.70		$	11.55		$	9.95
Total return (%)*		(5.58	)		8.65			33.47			17.28			(0.19	)
Ratios to average daily net assets (%):**
Expenses, net of waivers and reimbursements		0.82			0.89			0.95			0.95			0.95
Expenses, before waivers and reimbursements		3.34			2.87			3.06			4.06			7.58
Net investment income (loss), net of waivers and reimbursements		1.00			0.95			0.90			1.22			1.66
Net investment income (loss), before waivers and reimbursements		(1.52	)		(1.03	)		(1.21	)		(1.89	)		(4.97	)
Class I net assets at end of year (in thousands)	$	2,025		$	3,183		$	3,503		$	2,429		$	1,455
Portfolio turnover rate (%)*		45			37			83			20			5

(a)	For the period from October 24, 2011 (Commencement of Operations) to December 31, 2011.
*	Not annualized for periods less than a year.
**	Annualized for periods less than a year.
^	Amount is less than $0.005 per share.

Note: Net investment income (loss) per share is based on the average shares outstanding during the year.

Performance cited represents past performance. Past performance does not guarantee future results and current performance may be lower or higher than the data quoted. Results shown are annual returns, which assume reinvestment of dividends and capital gains. Investment returns and principal will fluctuate and you may have a gain or loss when you sell shares. For the most current month-end performance information, please call 1-800-742-7272 or visit our Web site at www.williamblairfunds.com.

166 Annual Report December 31, 2015

Financial Highlights

Mid Cap Growth Fund

	Class N
	Years Ended December 31,
	2015			2014			2013			2012			2011
Net asset value, beginning of year	$	14.20		$	15.21		$	12.65		$	11.66		$	12.50
Income (loss) from investment operations:
Net investment income (loss)		(0.09	)		(0.12	)		(0.13	)		(0.02	)		(0.08	)
Net realized and unrealized gain (loss) on investments		0.04			1.26			3.74			1.29			0.25
Total from investment operations		(0.05	)		1.14			3.61			1.27			0.17
Less distributions from:
Net investment income		—			—			—			—			—
Net realized gain		2.87			2.15			1.05			0.28			1.01
Total distributions		2.87			2.15			1.05			0.28			1.01
Net asset value, end of year	$	11.28		$	14.20		$	15.21		$	12.65		$	11.66
Total return (%)		(0.20	)		7.53			28.77			10.90			1.65
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		1.32			1.35			1.35			1.35			1.35
Expenses, before waivers and reimbursements		1.43			1.35			1.42			1.42			1.43
Net investment income (loss), net of waivers and reimbursements		(0.65	)		(0.80	)		(0.90	)		(0.15	)		(0.65	)
Net investment income (loss), before waivers and reimbursements		(0.76	)		(0.80	)		(0.97	)		(0.22	)		(0.73	)
Class N net assets at end of year (in thousands)	$	25,105		$	37,413		$	41,849		$	40,940		$	30,093
Portfolio turnover rate (%)		65			81			83			62			70

	Class I
	Years Ended December 31,
	2015			2014			2013			2012		2011
Net asset value, beginning of year	$	14.65		$	15.58		$	12.91		$	11.87	$	12.68
Income (loss) from investment operations:
Net investment income (loss)		(0.06	)		(0.09	)		(0.10	)		0.03		(0.05	)
Net realized and unrealized gain (loss) on investments		0.04			1.31			3.82			1.31		0.25
Total from investment operations		(0.02	)		1.22			3.72			1.34		0.20
Less distributions from:
Net investment income		—			—			—			0.02		—
Net realized gain		2.87			2.15			1.05			0.28		1.01
Total distributions		2.87			2.15			1.05			0.30		1.01
Net asset value, end of year	$	11.76		$	14.65		$	15.58		$	12.91	$	11.87
Total return (%)		0.00			7.87			29.04			11.30		1.86
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		1.07			1.10			1.10			1.07		1.10
Expenses, before waivers and reimbursements		1.14			1.10			1.15			1.07		1.13
Net investment income (loss), net of waivers and reimbursements		(0.41	)		(0.55	)		(0.65	)		0.19		(0.42	)
Net investment income (loss), before waivers and reimbursements		(0.48	)		(0.55	)		(0.70	)		0.19		(0.45	)
Class I net assets at end of year (in thousands)	$	174,617		$	302,373		$	385,779		$	329,295	$	115,661
Portfolio turnover rate (%)		65			81			83			62		70

Note: Net investment income (loss) per share is based on the average shares outstanding during the year.

Performance cited represents past performance. Past performance does not guarantee future results and current performance may be lower or higher than the data quoted. Results shown are annual returns, which assume reinvestment of dividends and capital gains. Investment returns and principal will fluctuate and you may have a gain or loss when you sell shares. For the most current month-end performance information, please call 1-800-742-7272 or visit our Web site at www.williamblairfunds.com.

December 31, 2015 William Blair Funds 167

Financial Highlights

Mid Cap Value Fund

	Class N
	Years Ended December 31,
	2015			2014			2013			2012			2011
Net asset value, beginning of year	$	12.88		$	13.39		$	11.39		$	10.48		$	10.75
Income (loss) from investment operations:
Net investment income (loss)		0.07			0.03			0.05			0.08			0.12
Net realized and unrealized gain (loss) on investments		(0.36	)		1.40			3.50			1.34			(0.17	)
Total from investment operations		(0.29	)		1.43			3.55			1.42			(0.05	)
Less distributions from:
Net investment income		0.03			0.04			0.06			0.08			0.09
Net realized gain		2.64			1.90			1.49			0.43			0.13
Total distributions		2.67			1.94			1.55			0.51			0.22
Net asset value, end of year	$	9.92		$	12.88		$	13.39		$	11.39		$	10.48
Total return (%)		(2.13	)		10.83			31.46			13.54			(0.34	)
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		1.32			1.35			1.35			1.35			1.35
Expenses, before waivers and reimbursements		4.14			3.77			3.37			3.40			3.85
Net investment income (loss), net of waivers and reimbursements		0.59			0.23			0.36			0.70			1.15
Net investment income (loss), before waivers and reimbursements		(2.23	)		(2.19	)		(1.66	)		(1.35	)		(1.35	)
Class N net assets at end of year (in thousands)	$	694		$	189		$	232		$	79		$	58
Portfolio turnover rate (%)		53			33			42			63			69

	Class I
	Years Ended December 31,
	2015			2014			2013			2012			2011
Net asset value, beginning of year	$	12.88		$	13.40		$	11.39		$	10.48		$	10.76
Income (loss) from investment operations:
Net investment income (loss)		0.08			0.07			0.08			0.10			0.13
Net realized and unrealized gain (loss) on investments		(0.32	)		1.39			3.51			1.35			(0.17	)
Total from investment operations		(0.24	)		1.46			3.59			1.45			(0.04	)
Less distributions from:
Net investment income		0.06			0.08			0.09			0.11			0.11
Net realized gain		2.64			1.90			1.49			0.43			0.13
Total distributions		2.70			1.98			1.58			0.54			0.24
Net asset value, end of year	$	9.94		$	12.88		$	13.40		$	11.39		$	10.48
Total return (%)		(1.73	)		11.04			31.82			13.77			(0.25	)
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		1.07			1.10			1.10			1.10			1.10
Expenses, before waivers and reimbursements		3.77			3.08			3.04			3.13			3.60
Net investment income (loss), net of waivers and reimbursements		0.65			0.49			0.59			0.92			1.20
Net investment income (loss), before waivers and reimbursements		(2.05	)		(1.49	)		(1.35	)		(1.11	)		(1.30	)
Class I net assets at end of year (in thousands)	$	1,974		$	3,579		$	4,225		$	4,058		$	4,515
Portfolio turnover rate (%)		53			33			42			63			69

Note: Net investment income (loss) per share is based on the average shares outstanding during the year.

Performance cited represents past performance. Past performance does not guarantee future results and current performance may be lower or higher than the data quoted. Results shown are annual returns, which assume reinvestment of dividends and capital gains. Investment returns and principal will fluctuate and you may have a gain or loss when you sell shares. For the most current month-end performance information, please call 1-800-742-7272 or visit our Web site at www.williamblairfunds.com.

168 Annual Report December 31, 2015

Financial Highlights

Small-Mid Cap Growth Fund

	Class N
	Years Ended December 31,
	2015			2014			2013			2012		2011
Net asset value, beginning of year	$	18.72		$	18.80		$	14.21		$	13.00	$	14.40
Income (loss) from investment operations:
Net investment income (loss)		(0.10	)		(0.12	)		(0.15	)		0.02		(0.11	)
Net realized and unrealized gain (loss) on investments		0.93			1.68			6.01			1.57		0.03
Total from investment operations		0.83			1.56			5.86			1.59		(0.08	)
Less distributions from:
Net investment income		—			—			—			0.02		—
Net realized gain		1.02			1.64			1.27			0.36		1.32
Total distributions		1.02			1.64			1.27			0.38		1.32
Net asset value, end of year	$	18.53		$	18.72		$	18.80		$	14.21	$	13.00
Total return (%)		4.47			8.33			41.49			12.20		(0.27	)
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		1.35			1.35			1.35			1.35		1.35
Expenses, before waivers and reimbursements		1.42			1.38			1.46			1.47		1.46
Net investment income (loss), net of waivers and reimbursements		(0.51	)		(0.63	)		(0.88	)		0.16		(0.77	)
Net investment income (loss), before waivers and reimbursements		(0.58	)		(0.66	)		(0.99	)		0.04		(0.88	)
Class N net assets at end of year (in thousands)	$	169,595		$	83,047		$	73,207		$	42,015	$	34,123
Portfolio turnover rate (%)		44			49			53			82		76

	Class I
	Years Ended December 31,
	2015			2014			2013			2012		2011
Net asset value, beginning of year	$	19.36		$	19.34		$	14.55		$	13.32	$	14.68
Income (loss) from investment operations:
Net investment income (loss)		(0.06	)		(0.08	)		(0.11	)		0.07		(0.08	)
Net realized and unrealized gain (loss) on investments		0.97			1.74			6.17			1.58		0.04
Total from investment operations		0.91			1.66			6.06			1.65		(0.04	)
Less distributions from:
Net investment income		—			—			—			0.06		—
Net realized gain		1.02			1.64			1.27			0.36		1.32
Total distributions		1.02			1.64			1.27			0.42		1.32
Net asset value, end of year	$	19.25		$	19.36		$	19.34		$	14.55	$	13.32
Total return (%)		4.74			8.62			41.89			12.36		0.01
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		1.10			1.10			1.10			1.10		1.10
Expenses, before waivers and reimbursements		1.15			1.15			1.10			1.20		1.12
Net investment income (loss), net of waivers and reimbursements		(0.28	)		(0.38	)		(0.62	)		0.48		(0.54	)
Net investment income (loss), before waivers and reimbursements		(0.33	)		(0.43	)		(0.62	)		0.38		(0.56	)
Class I net assets at end of year (in thousands)	$	1,019,544		$	793,789		$	617,374		$	349,345	$	219,474
Portfolio turnover rate (%)		44			49			53			82		76

Note: Net investment income (loss) per share is based on the average shares outstanding during the year.

Performance cited represents past performance. Past performance does not guarantee future results and current performance may be lower or higher than the data quoted. Results shown are annual returns, which assume reinvestment of dividends and capital gains. Investment returns and principal will fluctuate and you may have a gain or loss when you sell shares. For the most current month-end performance information, please call 1-800-742-7272 or visit our Web site at www.williamblairfunds.com.

December 31, 2015 William Blair Funds 169

Financial Highlights

Small-Mid Cap Value Fund

	Class N
	Periods Ended December 31,
	2015			2014			2013			2012			2011(a)
Net asset value, beginning of year	$	13.63		$	14.11		$	11.29		$	10.45		$	10.00
Income (loss) from investment operations:
Net investment income (loss)		0.04			0.00	^		0.00	^		0.10			0.00	^
Net realized and unrealized gain (loss) on investments		(0.47	)		0.64			4.06			1.15			0.45
Total from investment operations		(0.43	)		0.64			4.06			1.25			0.45
Less distributions from:
Net investment income		0.01			—			—			0.09			—
Net realized gain		0.65			1.12			1.24			0.32			—
Total distributions		0.66			1.12			1.24			0.41			—
Net asset value, end of year	$	12.54		$	13.63		$	14.11		$	11.29		$	10.45
Total return (%)*		(3.13	)		4.66			36.29			11.95			4.50
Ratios to average daily net assets (%):**
Expenses, net of waivers and reimbursements		1.37			1.40			1.40			1.40			1.40
Expenses, before waivers and reimbursements		3.93			4.50			4.50			6.34			18.68
Net investment income (loss), net of waivers and reimbursements		0.27			0.02			(0.04	)		0.87			0.53
Net investment income (loss), before waivers and reimbursements		(2.29	)		(3.08	)		(3.14	)		(4.07	)		(16.75	)
Class N net assets at end of year (in thousands)	$	855		$	946		$	1,205		$	950		$	860
Portfolio turnover rate (%)*		35			69			61			56			1

	Class I
	Periods Ended December 31,
	2015			2014			2013			2012			2011(a)
Net asset value, beginning of year	$	13.63		$	14.12		$	11.29		$	10.45		$	10.00
Income (loss) from investment operations:
Net investment income (loss)		0.07			0.05			0.03			0.13			0.00	^
Net realized and unrealized gain (loss) on investments		(0.47	)		0.63			4.07			1.15			0.45
Total from investment operations		(0.40	)		0.68			4.10			1.28			0.45
Less distributions from:
Net investment income		0.04			0.05			0.03			0.12			—
Net realized gain		0.65			1.12			1.24			0.32			—
Total distributions		0.69			1.17			1.27			0.44			—
Net asset value, end of year	$	12.54		$	13.63		$	14.12		$	11.29		$	10.45
Total return (%)*		(2.86	)		4.96			36.69			12.22			4.50
Ratios to average daily net assets (%):**
Expenses, net of waivers and reimbursements		1.12			1.15			1.15			1.15			1.15
Expenses, before waivers and reimbursements		3.72			4.16			4.24			5.88			18.43
Net investment income (loss), net of waivers and reimbursements		0.52			0.36			0.21			1.12			0.79
Net investment income (loss), before waivers and reimbursements		(2.08	)		(2.65	)		(2.88	)		(3.61	)		(16.49	)
Class I net assets at end of year (in thousands)	$	3,220		$	3,407		$	2,073		$	1,442		$	1,296
Portfolio turnover rate (%)*		35			69			61			56			1

(a)	For the period from December 15, 2011 (Commencement of Operations) to December 31, 2011.
*	Not annualized for periods less than a year.
**	Annualized for periods less than a year.
^	Amount is less than $0.005 per share.

Note: Net investment income (loss) per share is based on the average shares outstanding during the year.

Performance cited represents past performance. Past performance does not guarantee future results and current performance may be lower or higher than the data quoted. Results shown are annual returns, which assume reinvestment of dividends and capital gains. Investment returns and principal will fluctuate and you may have a gain or loss when you sell shares. For the most current month-end performance information, please call 1-800-742-7272 or visit our Web site at www.williamblairfunds.com.

170 Annual Report December 31, 2015

Financial Highlights

Small Cap Growth Fund

	Class N
	Years Ended December 31,
	2015			2014			2013			2012			2011
Net asset value, beginning of year	$	25.61		$	30.02		$	23.68		$	20.13		$	23.22
Income (loss) from investment operations:
Net investment income (loss)		(0.22	)		(0.30	)		(0.26	)		(0.22	)		(0.28	)
Net realized and unrealized gain (loss) on investments		(0.93	)		1.02			12.52			3.87			(2.81	)
Total from investment operations		(1.15	)		0.72			12.26			3.65			(3.09	)
Less distributions from:
Net investment income		—			—			—			—			—
Net realized gain		1.99			5.13			5.92			0.10			—
Total distributions		1.99			5.13			5.92			0.10			—
Net asset value, end of year	$	22.47		$	25.61		$	30.02		$	23.68		$	20.13
Total return (%)		(4.44	)		2.62			52.76			18.15			(13.31	)
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		1.50			1.50			1.50			1.50			1.50
Expenses, before waivers and reimbursements		1.59			1.56			1.57			1.59			1.59
Net investment income (loss), net of waivers and reimbursements		(0.85	)		(1.00	)		(0.87	)		(0.96	)		(1.25	)
Net investment income (loss), before waivers and reimbursements		(0.94	)		(1.06	)		(0.94	)		(1.05	)		(1.34	)
Class N net assets at end of year (in thousands)	$	111,944		$	148,201		$	211,562		$	130,382		$	202,341
Portfolio turnover rate (%)		91			82			91			89			97

	Class I
	Years Ended December 31,
	2015			2014			2013			2012			2011
Net asset value, beginning of year	$	27.32		$	31.61		$	24.66		$	20.91		$	24.07
Income (loss) from investment operations:
Net investment income (loss)		(0.17	)		(0.23	)		(0.19	)		(0.16	)		(0.23	)
Net realized and unrealized gain (loss) on investments		(0.99	)		1.07			13.06			4.01			(2.93	)
Total from investment operations		(1.16	)		0.84			12.87			3.85			(3.16	)
Less distributions from:
Net investment income		—			—			—			—			—
Net realized gain		1.99			5.13			5.92			0.10			—
Total distributions		1.99			5.13			5.92			0.10			—
Net asset value, end of year	$	24.17		$	27.32		$	31.61		$	24.66		$	20.91
Total return (%)		(4.20	)		2.87			53.13			18.43			(13.13	)
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		1.25			1.25			1.25			1.25			1.25
Expenses, before waivers and reimbursements		1.30			1.30			1.27			1.35			1.35
Net investment income (loss), net of waivers and reimbursements		(0.61	)		(0.75	)		(0.63	)		(0.71	)		(1.00	)
Net investment income (loss), before waivers and reimbursements		(0.66	)		(0.80	)		(0.65	)		(0.81	)		(1.10	)
Class I net assets at end of year (in thousands)	$	261,269		$	364,241		$	415,797		$	266,431		$	352,397
Portfolio turnover rate (%)		91			82			91			89			97

Note: Net investment income (loss) per share is based on the average shares outstanding during the year.

Performance cited represents past performance. Past performance does not guarantee future results and current performance may be lower or higher than the data quoted. Results shown are annual returns, which assume reinvestment of dividends and capital gains. Investment returns and principal will fluctuate and you may have a gain or loss when you sell shares. For the most current month-end performance information, please call 1-800-742-7272 or visit our Web site at www.williamblairfunds.com.

December 31, 2015 William Blair Funds 171

Financial Highlights

Small Cap Value Fund

	Class N
	Years Ended December 31,
	2015			2014			2013			2012		2011
Net asset value, beginning of year	$	17.76		$	17.63		$	13.65		$	12.26	$	13.71
Income (loss) from investment operations:
Net investment income (loss)		0.02			(0.03	)		(0.05	)		0.10		0.00	^
Net realized and unrealized gain (loss) on investments		(1.05	)		0.81			5.32			1.43		(0.97	)
Total from investment operations		(1.03	)		0.78			5.27			1.53		(0.97	)
Less distributions from:
Net investment income		—			—			—			0.08		0.02
Net realized gain		0.05			0.65			1.29			0.06		0.46
Return of capital		—			—			—			—		0.00	^
Total distributions		0.05			0.65			1.29			0.14		0.48
Net asset value, end of year	$	16.68		$	17.76		$	17.63		$	13.65	$	12.26
Total return (%)		(5.77	)		4.49			38.91			12.49		(6.95	)
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		1.50			1.50			1.49			1.43		1.38
Expenses, before waivers and reimbursements		1.54			1.53			1.55			1.60		1.60
Net investment income (loss), net of waivers and reimbursements		0.14			(0.17	)		(0.33	)		0.78		(0.01	)
Net investment income (loss), before waivers and reimbursements		0.10			(0.20	)		(0.39	)		0.61		(0.23	)
Class N net assets at end of year (in thousands)	$	33,351		$	40,223		$	55,464		$	39,084	$	40,712
Portfolio turnover rate (%)		30			39			51			51		65

	Class I
	Years Ended December 31,
	2015			2014		2013			2012		2011
Net asset value, beginning of year	$	18.17		$	18.00	$	13.88		$	12.47	$	13.93
Income (loss) from investment operations:
Net investment income (loss)		0.08			0.02		(0.01	)		0.14		0.03
Net realized and unrealized gain (loss) on investments		(1.08	)		0.82		5.42			1.45		(0.98	)
Total from investment operations		(1.00	)		0.84		5.41			1.59		(0.95	)
Less distributions from:
Net investment income		0.04			0.02		0.00	^		0.12		0.03
Net realized gain		0.05			0.65		1.29			0.06		0.46
Return of capital		—			—		—			—		0.02
Total distributions		0.09			0.67		1.29			0.18		0.51
Net asset value, end of year	$	17.08		$	18.17	$	18.00		$	13.88	$	12.47
Total return (%)		(5.47	)		4.73		39.31			12.73		(6.68	)
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		1.24			1.23		1.24			1.18		1.14
Expenses, before waivers and reimbursements		1.24			1.23		1.25			1.29		1.30
Net investment income (loss), net of waivers and reimbursements		0.43			0.12		(0.07	)		1.02		0.26
Net investment income (loss), before waivers and reimbursements		0.43			0.12		(0.08	)		0.91		0.10
Class I net assets at end of year (in thousands)	$	579,010		$	544,963	$	352,832		$	196,184	$	190,686
Portfolio turnover rate (%)		30			39		51			51		65

^ Amount is less than $0.005 per share.

Note: Net investment income (loss) per share is based on the average shares outstanding during the year.

Performance cited represents past performance. Past performance does not guarantee future results and current performance may be lower or higher than the data quoted. Results shown are annual returns, which assume reinvestment of dividends and capital gains. Investment returns and principal will fluctuate and you may have a gain or loss when you sell shares. For the most current month-end performance information, please call 1-800-742-7272 or visit our Web site at www.williamblairfunds.com.

172 Annual Report December 31, 2015

Financial Highlights

Global Leaders Fund

	Class N
	Years Ended December 31,
	2015			2014		2013		2012			2011
Net asset value, beginning of year	$	11.84		$	11.43	$	9.47	$	8.10		$	8.40
Income (loss) from investment operations:
Net investment income (loss)		0.02			0.02		0.02		0.03			0.02
Net realized and unrealized gain (loss) on investments		0.27			0.41		1.96		1.37			(0.31	)
Total from investment operations		0.29			0.43		1.98		1.40			(0.29	)
Less distributions from:
Net investment income		0.01			—		0.02		0.03			0.01
Net realized gain		0.54			0.02		—		—			—
Total distributions		0.55			0.02		0.02		0.03			0.01
Net asset value, end of year	$	11.58		$	11.84	$	11.43	$	9.47		$	8.10
Total return (%)		2.49			3.76		20.86		17.25			(3.47	)
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		1.39			1.50		1.50		1.50			1.50
Expenses, before waivers and reimbursements		1.61			1.62		1.63		1.84			1.82
Net investment income (loss), net of waivers and reimbursements		0.12			0.16		0.18		0.29			0.29
Net investment income (loss), before waivers and reimbursements		(0.10	)		0.04		0.05		(0.05	)		(0.03	)
Class N net assets at end of year (in thousands)	$	5,588		$	5,007	$	6,403	$	5,215		$	3,740
Portfolio turnover rate (%)		55			60		70		73			75

	Class I
	Years Ended December 31,
	2015		2014		2013		2012		2011
Net asset value, beginning of year	$	11.85	$	11.42	$	9.47	$	8.09	$	8.40
Income (loss) from investment operations:
Net investment income (loss)		0.06		0.04		0.04		0.05		0.04
Net realized and unrealized gain (loss) on investments		0.26		0.43		1.95		1.38		(0.31	)
Total from investment operations		0.32		0.47		1.99		1.43		(0.27	)
Less distributions from:
Net investment income		0.04		0.02		0.04		0.05		0.04
Net realized gain		0.54		0.02		—		—		—
Total distributions		0.58		0.04		0.04		0.05		0.04
Net asset value, end of year	$	11.59	$	11.85	$	11.42	$	9.47	$	8.09
Total return (%)		2.77		4.08		21.05		17.64		(3.26	)
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		1.10		1.25		1.25		1.25		1.25
Expenses, before waivers and reimbursements		1.32		1.33		1.35		1.56		1.55
Net investment income (loss), net of waivers and reimbursements		0.45		0.38		0.40		0.54		0.52
Net investment income (loss), before waive3and reimbursements		0.23		0.30		0.30		0.23		0.22
Class I net assets at end of year (in thousands)	$	45,853	$	52,090	$	53,562	$	45,757	$	38,834
Portfolio turnover rate (%)		55		60		70		73		75

Note: Net investment income (loss) per share is based on the average shares outstanding during the year.

Performance cited represents past performance. Past performance does not guarantee future results and current performance may be lower or higher than the data quoted. Results shown are annual returns, which assume reinvestment of dividends and capital gains. Investment returns and principal will fluctuate and you may have a gain or loss when you sell shares. For the most current month-end performance information, please call 1-800-742-7272 or visit our Web site at www.williamblairfunds.com.

December 31, 2015 William Blair Funds 173

Financial Highlights

Global Leaders Fund

	Institutional Class
	Periods Ended December 31,
	2015		2014		2013		2012(a)
Net asset value, beginning of year	$	11.85	$	11.42	$	9.47	$	9.50
Income (loss) from investment operations:
Net investment income (loss)		0.06		0.06		0.04		0.00	^
Net realized and unrealized gain (loss) on investments		0.27		0.43		1.97		(0.03	)
Total from investment operations		0.33		0.49		2.01		(0.03	)
Less distributions from:
Net investment income		0.05		0.04		0.06		—
Net realized gain		0.54		0.02		—		—
Total distributions		0.59		0.06		0.06		—
Net asset value, end of year	$	11.59	$	11.85	$	11.42	$	9.47
Total return (%)*		2.85		4.24		21.23		(0.32	)
Ratios to average daily net assets (%):**
Expenses, net of waivers and reimbursements		1.03		1.10		1.10		1.10
Expenses, before waivers and reimbursements		1.11		1.13		1.14		1.26
Net investment income (loss), net of waivers and reimbursements		0.47		0.51		0.37		(0.91	)
Net investment income (loss), before waivers and reimbursements		0.39		0.48		0.33		(1.07	)
Institutional Class net assets at end of year (in thousands)	$	137,527	$	106,565	$	87,118	$	16,022
Portfolio turnover rate (%)*		55		60		70		73

(a)	For the period from December 19, 2012 (Commencement of Operations) to December 31, 2012.
*	Not annualized for periods less than a year.
**	Annualized for periods less than a year.
^	Amount is less than $0.005 per share.

Note: Net investment income (loss) per share is based on the average shares outstanding during the year.

Performance cited represents past performance. Past performance does not guarantee future results and current performance may be lower or higher than the data quoted. Results shown are annual returns, which assume reinvestment of dividends and capital gains. Investment returns and principal will fluctuate and you may have a gain or loss when you sell shares. For the most current month-end performance information, please call 1-800-742-7272 or visit our Web site at www.williamblairfunds.com.

174 Annual Report December 31, 2015

Financial Highlights

Global Small Cap Growth Fund (In Liquidation)

	Class N
	Periods Ended December 31,
	2015			2014			2013(a)
Net asset value, beginning of year	$	12.20		$	12.14		$	10.00
Income (loss) from investment operations:
Net investment income (loss)		(0.02	)		(0.05	)		(0.02	)
Net realized and unrealized gain (loss) on investments		1.12			0.64			2.49
Total from investment operations		1.10			0.59			2.47
Less distributions from:
Net investment income		0.17			—			—
Net realized gain		0.24			0.53			0.33
Total distributions		0.41			0.53			0.33
Net asset value, end of year	$	12.89		$	12.20		$	12.14
Total return (%)*		9.07			4.93			24.75
Ratios to average daily net assets (%):**
Expenses, net of waivers and reimbursements		1.65			1.65			1.65
Expenses, before waivers and reimbursements		2.07			2.07			2.47
Net investment income (loss), net of waivers and reimbursements		(0.15	)		(0.42	)		(0.23	)
Net investment income (loss), before waivers and reimbursements		(0.57	)		(0.84	)		(1.05	)
Class N net assets at end of year (in thousands)	$	761		$	591		$	203
Portfolio turnover rate (%)*		81			117			86

	Class I
	Periods Ended December 31,
	2015			2014			2013(a)
Net asset value, beginning of year	$	12.26		$	12.16		$	10.00
Income (loss) from investment operations:
Net investment income (loss)		0.04			(0.02	)		(0.00	)^
Net realized and unrealized gain (loss) on investments		1.12			0.65			2.50
Total from investment operations		1.16			0.63			2.50
Less distributions from:
Net investment income		0.23			—			0.01
Net realized gain		0.24			0.53			0.33
Total distributions		0.47			0.53			0.34
Net asset value, end of year	$	12.95		$	12.26		$	12.16
Total return (%)*		9.48			5.26			25.00
Ratios to average daily net assets (%):**
Expenses, net of waivers and reimbursements		1.26			1.40			1.40
Expenses, before waivers and reimbursements		1.59			1.81			2.20
Net investment income (loss), net of waivers and reimbursements		0.30			(0.18	)		0.03
Net investment income (loss), before waivers and reimbursements		(0.03	)		(0.59	)		(0.77	)
Class I net assets at end of year (in thousands)	$	17,683		$	42,537		$	17,222
Portfolio turnover rate (%)*		81			117			86

(a)	For the period from April 10, 2013 (Commencement of Operations) to December 31, 2013.
*	Not annualized for periods less than a year.
**	Annualized for periods less than a year.
^	Amount is less than $0.005 per share.

Note: Net investment income (loss) per share is based on the average shares outstanding during the year.

Performance cited represents past performance. Past performance does not guarantee future results and current performance may be lower or higher than the data quoted. Results shown are annual returns, which assume reinvestment of dividends and capital gains. Investment returns and principal will fluctuate and you may have a gain or loss when you sell shares. For the most current month-end performance information, please call 1-800-742-7272 or visit our Web site at www.williamblairfunds.com.

December 31, 2015 William Blair Funds 175

Financial Highlights

International Leaders Fund

	Class N
	Periods Ended December 31,
	2015		2014			2013		2012(a)
Net asset value, beginning of year	$	12.25	$	12.65		$	10.81	$	10.00
Income (loss) from investment operations:
Net investment income (loss)		0.07		0.13			0.03		0.00	^
Net realized and unrealized gain (loss) on investments		0.66		(0.47	)		1.99		0.82
Total from investment operations		0.73		(0.34	)		2.02		0.82
Less distributions from:
Net investment income		0.02		0.06			0.18		0.01
Net realized gain		0.07		—			—		—
Total distributions		0.09		0.06			0.18		0.01
Net asset value, end of year	$	12.89	$	12.25		$	12.65	$	10.81
Total return (%)*		6.01		(2.67	)		18.75		8.16
Ratios to average daily net assets (%):**
Expenses, net of waivers and reimbursements		1.24		1.45			1.45		1.45
Expenses, before waivers and reimbursements		1.56		1.59			1.73		4.98
Net investment income (loss), net of waivers and reimbursements		0.51		1.00			0.29		0.00
Net investment income (loss), before waivers and reimbursements		0.19		0.86			0.01		(3.53	)
Class N net assets at end of year (in thousands)	$	377	$	150		$	154	$	542
Portfolio turnover rate (%)*		29		79			73		16

	Class I
	Periods Ended December 31,
	2015		2014			2013		2012(a)
Net asset value, beginning of year	$	12.25	$	12.65		$	10.81	$	10.00
Income (loss) from investment operations:
Net investment income (loss)		0.10		0.16			0.12		0.01
Net realized and unrealized gain (loss) on investments		0.65		(0.47	)		1.94		0.82
Total from investment operations		0.75		(0.31	)		2.06		0.83
Less distributions from:
Net investment income		0.02		0.09			0.22		0.02
Net realized gain		0.07		—			—		—
Total distributions		0.09		0.09			0.22		0.02
Net asset value, end of year	$	12.91	$	12.25		$	12.65	$	10.81
Total return (%)*		6.18		(2.43	)		19.10		8.26
Ratios to average daily net assets (%):**
Expenses, net of waivers and reimbursements		1.13		1.20			1.20		1.20
Expenses, before waivers and reimbursements		1.46		1.29			1.40		4.56
Net investment income (loss), net of waivers and reimbursements		0.75		1.25			1.06		0.22
Net investment income (loss), before waivers and reimbursements		0.42		1.16			0.86		(3.14	)
Class I net assets at end of year (in thousands)	$	13,474	$	9,561		$	11,629	$	4,336
Portfolio turnover rate (%)*		29		79			73		16

(a)	For the period from August 16, 2012 (Commencement of Operations) to December 31, 2012.
*	Not annualized for periods less than a year.
**	Annualized for periods less than a year.
^	Amount is less than $0.005 per share.

Note: Net investment income (loss) per share is based on the average shares outstanding during the year.

Performance cited represents past performance. Past performance does not guarantee future results and current performance may be lower or higher than the data quoted. Results shown are annual returns, which assume reinvestment of dividends and capital gains. Investment returns and principal will fluctuate and you may have a gain or loss when you sell shares. For the most current month-end performance information, please call 1-800-742-7272 or visit our Web site at www.williamblairfunds.com.

176 Annual Report December 31, 2015

Financial Highlights

International Leaders Fund

	Institutional Class
	Periods Ended December 31,
	2015		2014			2013		2012(a)
Net asset value, beginning of year	$	12.24	$	12.65		$	10.80	$	10.24
Income (loss) from investment operations:
Net investment income (loss)		0.11		0.17			0.15		0.00	^
Net realized and unrealized gain (loss) on investments		0.66		(0.47	)		1.94		0.58
Total from investment operations		0.77		(0.30	)		2.09		0.58
Less distributions from:
Net investment income		0.04		0.11			0.24		0.02
Net realized gain		0.07		—			—		—
Total distributions		0.11		0.11			0.24		0.02
Net asset value, end of year	$	12.90	$	12.24		$	12.65	$	10.80
Total return (%)*		6.33		(2.34	)		19.39		5.67
Ratios to average daily net assets (%):**
Expenses, net of waivers and reimbursements		0.98		1.05			1.05		1.05
Expenses, before waivers and reimbursements		1.15		1.14			1.25		1.84
Net investment income (loss), net of waivers and reimbursements		0.88		1.33			1.31		0.01
Net investment income (loss), before waivers and reimbursements		0.71		1.24			1.11		(0.78	)
Institutional Class net assets at end of year (in thousands)	$	102,227	$	78,251		$	56,991	$	5,286
Portfolio turnover rate (%)*		29		79			73		16

(a)	For the period from November 2, 2012 (Commencement of Operations) to December 31, 2012.
*	Not annualized for periods less than a year.
**	Annualized for periods less than a year.
^	Amount is less than $0.005 per share.

Note: Net investment income (loss) per share is based on the average shares outstanding during the year.

Performance cited represents past performance. Past performance does not guarantee future results and current performance may be lower or higher than the data quoted. Results shown are annual returns, which assume reinvestment of dividends and capital gains. Investment returns and principal will fluctuate and you may have a gain or loss when you sell shares. For the most current month-end performance information, please call 1-800-742-7272 or visit our Web site at www.williamblairfunds.com.

December 31, 2015 William Blair Funds 177

Financial Highlights

International Equity Fund

	Class N
	Years Ended December 31,
	2015		2014			2013		2012		2011
Net asset value, beginning of year	$	13.76	$	14.28		$	12.05	$	10.56	$	12.12
Income (loss) from investment operations:
Net investment income (loss)		0.15		0.16			0.09		0.11		0.13
Net realized and unrealized gain (loss) on investments		0.06		(0.60	)		2.25		1.75		(1.69	)
Total from investment operations		0.21		(0.44	)		2.34		1.86		(1.56	)
Less distributions from:
Net investment income		0.12		0.08			0.11		0.37		—
Net realized gain		—		—			—		—		—
Total distributions		0.12		0.08			0.11		0.37		—
Net asset value, end of year	$	13.85	$	13.76		$	14.28	$	12.05	$	10.56
Total return (%)		1.54		(3.09	)		19.47		17.57		(12.87	)
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		1.32		1.38			1.45		1.45		1.45
Expenses, before waivers and reimbursements		1.60		1.56			1.65		1.71		1.60
Net investment income (loss), net of waivers and reimbursements		1.01		1.11			0.73		0.95		1.09
Net investment income (loss), before waivers and reimbursements		0.73		0.93			0.53		0.69		0.94
Class N net assets at end of year (in thousands)	$	3,020	$	3,497		$	4,307	$	5,648	$	6,773
Portfolio turnover rate (%)		54		73			88		80		99

	Class I
	Years Ended December 31,
	2015		2014			2013		2012		2011
Net asset value, beginning of year	$	13.91	$	14.43		$	12.18	$	10.67	$	12.22
Income (loss) from investment operations:
Net investment income (loss)		0.18		0.19			0.14		0.14		0.17
Net realized and unrealized gain (loss) on investments		0.07		(0.59	)		2.26		1.77		(1.72	)
Total from investment operations		0.25		(0.40	)		2.40		1.91		(1.55	)
Less distributions from:
Net investment income		0.18		0.12			0.15		0.40		—
Net realized gain		—		—			—		—		—
Total distributions		0.18		0.12			0.15		0.40		—
Net asset value, end of year	$	13.98	$	13.91		$	14.43	$	12.18	$	10.67
Total return (%)		1.80		(2.80	)		19.74		17.89		(12.68	)
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		1.07		1.13			1.20		1.20		1.20
Expenses, before waivers and reimbursements		1.34		1.32			1.41		1.44		1.33
Net investment income (loss), net of waivers and reimbursements		1.26		1.35			1.07		1.17		1.43
Net investment income (loss), before waivers and reimbursements		0.99		1.16			0.86		0.93		1.30
Class I net assets at end of year (in thousands)	$	60,886	$	65,012		$	75,271	$	64,536	$	68,884
Portfolio turnover rate (%)		54		73			88		80		99

Note: Net investment income (loss) per share is based on the average shares outstanding during the year.

Performance cited represents past performance. Past performance does not guarantee future results and current performance may be lower or higher than the data quoted. Results shown are annual returns, which assume reinvestment of dividends and capital gains. Investment returns and principal will fluctuate and you may have a gain or loss when you sell shares. For the most current month-end performance information, please call 1-800-742-7272 or visit our Web site at www.williamblairfunds.com.

178 Annual Report December 31, 2015

Financial Highlights

Institutional International Equity Fund

	Institutional Class
	Years Ended December 31,
	2015		2014			2013		2012		2011
Net asset value, beginning of year	$	12.01	$	12.70		$	10.82	$	9.27	$	10.78
Income (loss) from investment operations:
Net investment income (loss)		0.15		0.21			0.13		0.13		0.16
Net realized and unrealized gain (loss) on investments		0.08		(0.65	)		2.00		1.57		(1.47	)
Total from investment operations		0.23		(0.44	)		2.13		1.70		(1.31	)
Less distributions from:
Net investment income		0.12		0.25			0.25		0.15		0.20
Net realized gain		—		—			—		—		—
Total distributions		0.12		0.25			0.25		0.15		0.20
Net asset value, end of year	$	12.12	$	12.01		$	12.70	$	10.82	$	9.27
Total return (%)		1.91		(3.50	)		19.78		18.31		(12.12	)
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		1.00		1.03			1.10		1.10		1.10
Expenses, before waivers and reimbursements		1.76		1.63			1.12		1.16		1.10
Net investment income (loss), net of waivers and reimbursements		1.23		1.61			1.12		1.28		1.48
Net investment income (loss), before waivers and reimbursements		0.47		1.01			1.10		1.22		1.48
Institutional Class net assets at end of year (in thousands)	$	16,030	$	14,574		$	100,805	$	109,690	$	111,474
Portfolio turnover rate (%)		54		61			84		86		91

Note: Net investment income (loss) per share is based on the average shares outstanding during the year.

Performance cited represents past performance. Past performance does not guarantee future results and current performance may be lower or higher than the data quoted. Results shown are annual returns, which assume reinvestment of dividends and capital gains. Investment returns and principal will fluctuate and you may have a gain or loss when you sell shares. For the most current month-end performance information, please call 1-800-742-7272 or visit our Web site at www.williamblairfunds.com.

December 31, 2015 William Blair Funds 179

Financial Highlights

International Growth Fund

	Class N
	Years Ended December 31,
	2015			2014			2013		2012		2011
Net asset value, beginning of year	$	25.24		$	26.30		$	22.43	$	18.68	$	21.85
Income (loss) from investment operations:
Net investment income (loss)		0.18			0.31			0.27		0.26		0.26
Net realized and unrealized gain (loss) on investments		(0.25	)		(1.15	)		3.89		4.16		(3.43	)
Total from investment operations		(0.07	)		(0.84	)		4.16		4.42		(3.17	)
Less distributions from:
Net investment income		0.23			0.22			0.29		0.67		—
Net realized gain		—			—			—		—		—
Total distributions		0.23			0.22			0.29		0.67		—
Net asset value, end of year	$	24.94		$	25.24		$	26.30	$	22.43	$	18.68
Total return (%)		(0.27	)		(3.19	)		18.57		23.67		(14.51	)
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		1.42			1.44			1.44		1.44		1.45
Expenses, before waivers and reimbursements		1.42			1.44			1.44		1.44		1.46
Net investment income (loss), net of waivers and reimbursements		0.71			1.17			1.13		1.25		1.22
Net investment income (loss), before waivers and reimbursements		0.71			1.17			1.13		1.25		1.21
Class N net assets at end of year (in thousands)	$	1,023,588		$	978,433		$	1,418,083	$	1,269,736	$	1,277,534
Portfolio turnover rate (%)		70			79			97		81		103

	Class I
	Years Ended December 31,
	2015			2014			2013		2012		2011
Net asset value, beginning of year	$	25.82		$	26.91		$	22.94	$	19.10	$	22.34
Income (loss) from investment operations:
Net investment income (loss)		0.27			0.36			0.35		0.32		0.30
Net realized and unrealized gain (loss) on investments		(0.28	)		(1.13	)		3.99		4.25		(3.48	)
Total from investment operations		(0.01	)		(0.77	)		4.34		4.57		(3.18	)
Less distributions from:
Net investment income		0.30			0.32			0.37		0.73		0.06
Net realized gain		—			—			—		—		—
Total distributions		0.30			0.32			0.37		0.73		0.06
Net asset value, end of year	$	25.51		$	25.82		$	26.91	$	22.94	$	19.10
Total return (%)		(0.03	)		(2.86	)		18.96		23.96		(14.23	)
Ratios to average daily net assets (%):
Expenses		1.14			1.14			1.11		1.15		1.15
Net investment income (loss)		1.02			1.36			1.43		1.51		1.40
Class I net assets at end of year (in thousands)	$	2,655,156		$	2,705,054		$	2,877,541	$	2,402,897	$	1,951,368
Portfolio turnover rate (%)		70			79			97		81		103

Note: Net investment income (loss) per share is based on the average shares outstanding during the year.

Performance cited represents past performance. Past performance does not guarantee future results and current performance may be lower or higher than the data quoted. Results shown are annual returns, which assume reinvestment of dividends and capital gains. Investment returns and principal will fluctuate and you may have a gain or loss when you sell shares. For the most current month-end performance information, please call 1-800-742-7272 or visit our Web site at www.williamblairfunds.com.

180 Annual Report December 31, 2015

Financial Highlights

Institutional International Growth Fund

	Institutional Class
	Years Ended December 31,
	2015			2014			2013		2012		2011
Net asset value, beginning of year	$	15.26		$	17.40		$	14.89	$	12.39	$	14.37
Income (loss) from investment operations:
Net investment income (loss)		0.19			0.26			0.25		0.23		0.21
Net realized and unrealized gain (loss) on investments		(0.18	)		(0.71	)		2.56		2.76		(2.17	)
Total from investment operations		0.01			(0.45	)		2.81		2.99		(1.96	)
Less distributions from:
Net investment income		0.09			0.32			0.30		0.49		0.02
Net realized gain		0.10			1.37			—		—		—
Total distributions		0.19			1.69			0.30		0.49		0.02
Net asset value, end of year	$	15.08		$	15.26		$	17.40	$	14.89	$	12.39
Total return (%)		0.09			(2.66	)		18.90		24.11		(13.66	)
Ratios to average daily net assets (%):
Expenses		0.96			0.97			0.97		0.98		0.99
Net investment income (loss)		1.18			1.50			1.58		1.64		1.51
Institutional Class net assets at end of year (in thousands)	$	2,335,632		$	2,339,169		$	2,440,149	$	1,974,130	$	1,542,594
Portfolio turnover rate (%)		70			83			97		83		111

Note: Net investment income (loss) per share is based on the average shares outstanding during the year.

Performance cited represents past performance. Past performance does not guarantee future results and current performance may be lower or higher than the data quoted. Results shown are annual returns, which assume reinvestment of dividends and capital gains. Investment returns and principal will fluctuate and you may have a gain or loss when you sell shares. For the most current month-end performance information, please call 1-800-742-7272 or visit our Web site at www.williamblairfunds.com.

December 31, 2015 William Blair Funds 181

Financial Highlights

International Small Cap Growth Fund

	Class N
	Years Ended December 31,
	2015		2014			2013		2012		2011
Net asset value, beginning of year	$	12.56	$	16.08		$	13.46	$	11.36	$	13.07
Income (loss) from investment operations:
Net investment income (loss)		0.05		0.03			0.10		0.08		0.07
Net realized and unrealized gain (loss) on investments		1.16		(1.38	)		3.35		2.27		(1.66	)
Total from investment operations		1.21		(1.35	)		3.45		2.35		(1.59	)
Less distributions from:
Net investment income		0.24		0.18			0.16		0.25		0.12
Net realized gain		0.03		1.99			0.67		—		—
Total distributions		0.27		2.17			0.83		0.25		0.12
Net asset value, end of year	$	13.50	$	12.56		$	16.08	$	13.46	$	11.36
Total return (%)		9.67		(8.43	)		25.80		20.73		(12.16	)
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		1.47		1.58			1.59		1.61		1.64
Expenses, before waivers and reimbursements		1.62		1.58			1.59		1.61		1.64
Net investment income (loss), net of waivers and reimbursements		0.34		0.20			0.67		0.65		0.55
Net investment income (loss), before waivers and reimbursements		0.19		0.20			0.67		0.65		0.55
Class N net assets at end of year (in thousands)	$	11,350	$	13,676		$	18,910	$	14,771	$	18,991
Portfolio turnover rate (%)		90		127			111		76		85

	Class I
	Years Ended December 31,
	2015		2014			2013		2012		2011
Net asset value, beginning of year	$	12.70	$	16.23		$	13.58	$	11.46	$	13.19
Income (loss) from investment operations:
Net investment income (loss)		0.09		0.09			0.15		0.12		0.12
Net realized and unrealized gain (loss) on investments		1.18		(1.40	)		3.37		2.30		(1.69	)
Total from investment operations		1.27		(1.31	)		3.52		2.42		(1.57	)
Less distributions from:
Net investment income		0.29		0.23			0.20		0.30		0.16
Net realized gain		0.03		1.99			0.67		—		—
Total distributions		0.32		2.22			0.87		0.30		0.16
Net asset value, end of year	$	13.65	$	12.70		$	16.23	$	13.58	$	11.46
Total return (%)		10.00		(8.10	)		26.11		21.10		(11.84	)
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		1.16		1.28			1.30		1.30		1.28
Expenses, before waivers and reimbursements		1.31		1.28			1.30		1.30		1.28
Net investment income (loss), net of waivers and reimbursements		0.66		0.56			0.96		0.95		0.92
Net investment income (loss), before waivers and reimbursements		0.51		0.56			0.96		0.95		0.92
Class I net assets at end of year (in thousands)	$	342,232	$	364,161		$	508,758	$	359,557	$	364,574
Portfolio turnover rate (%)		90		127			111		76		85

Note: Net investment income (loss) per share is based on the average shares outstanding during the year.

Performance cited represents past performance. Past performance does not guarantee future results and current performance may be lower or higher than the data quoted. Results shown are annual returns, which assume reinvestment of dividends and capital gains. Investment returns and principal will fluctuate and you may have a gain or loss when you sell shares. For the most current month-end performance information, please call 1-800-742-7272 or visit our Web site at www.williamblairfunds.com.

182 Annual Report December 31, 2015

Financial Highlights

International Small Cap Growth Fund

	Institutional Class
	Years Ended December 31,
	2015		2014			2013		2012		2011
Net asset value, beginning of year	$	12.77	$	16.32		$	13.64	$	11.51	$	13.24
Income (loss) from investment operations:
Net investment income (loss)		0.10		0.12			0.18		0.15		0.14
Net realized and unrealized gain (loss) on investments		1.18		(1.41	)		3.41		2.31		(1.68	)
Total from investment operations		1.28		(1.29	)		3.59		2.46		(1.54	)
Less distributions from:
Net investment income		0.30		0.27			0.24		0.33		0.19
Net realized gain		0.03		1.99			0.67		—		—
Total distributions		0.33		2.26			0.91		0.33		0.19
Net asset value, end of year	$	13.72	$	12.77		$	16.32	$	13.64	$	11.51
Total return (%)		10.03		(7.91	)		26.49		21.36		(11.60	)
Ratios to average daily net assets (%):
Expenses		1.08		1.06			1.06		1.08		1.08
Net investment income (loss)		0.76		0.74			1.20		1.14		1.10
Institutional Class net assets at end of year (in thousands)	$	221,018	$	245,103		$	408,524	$	345,180	$	334,656
Portfolio turnover rate (%)		90		127			111		76		85

Note: Net investment income (loss) per share is based on the average shares outstanding during the year.

Performance cited represents past performance. Past performance does not guarantee future results and current performance may be lower or higher than the data quoted. Results shown are annual returns, which assume reinvestment of dividends and capital gains. Investment returns and principal will fluctuate and you may have a gain or loss when you sell shares. For the most current month-end performance information, please call 1-800-742-7272 or visit our Web site at www.williamblairfunds.com.

December 31, 2015 William Blair Funds 183

Financial Highlights

Emerging Markets Leaders Fund

	Class N
	Years Ended December 31,
	2015			2014			2013			2012			2011
Net asset value, beginning of year	$	9.06		$	9.10		$	9.20		$	7.68		$	10.34
Income (loss) from investment operations:
Net investment income (loss)		0.02			0.05			(0.02	)		0.02			0.04
Net realized and unrealized gain (loss) on investments		(1.34	)		0.14			(0.05	)		1.54			(2.08	)
Total from investment operations		(1.32	)		0.19			(0.07	)		1.56			(2.04	)
Less distributions from:
Net investment income		—			0.00	^		0.03			0.04			—
Net realized gain		0.01			0.23			—			—			0.62
Total distributions		0.01			0.23			0.03			0.04			0.62
Net asset value, end of year	$	7.73		$	9.06		$	9.10		$	9.20		$	7.68
Total return (%)		(14.56	)		2.17			(0.74	)		20.37			(19.55	)
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		1.64			1.65			1.65			1.65			1.65
Expenses, before waivers and reimbursements		1.89			1.82			1.83			2.10			1.83
Net investment income (loss), net of waivers and reimbursements		0.18			0.51			(0.23	)		0.26			0.44
Net investment income (loss), before waivers and reimbursements		(0.07	)		0.34			(0.41	)		(0.19	)		0.26
Class N net assets at end of year (in thousands)	$	1,599		$	1,832		$	1,959		$	249		$	46
Portfolio turnover rate (%)		110			131			131			94			142

	Class I
	Years Ended December 31,
	2015			2014		2013			2012		2011
Net asset value, beginning of year	$	9.08		$	9.10	$	9.18		$	7.66	$	10.35
Income (loss) from investment operations:
Net investment income (loss)		0.05			0.08		0.05			0.07		0.06
Net realized and unrealized gain (loss) on investments		(1.36	)		0.15		(0.10	)		1.51		(2.08	)
Total from investment operations		(1.31	)		0.23		(0.05	)		1.58		(2.02	)
Less distributions from:
Net investment income		0.02			0.02		0.03			0.06		0.05
Net realized gain		0.01			0.23		—			—		0.62
Return of capital		—			—		—			—		0.00	^
Total distributions		0.03			0.25		0.03			0.06		0.67
Net asset value, end of year	$	7.74		$	9.08	$	9.10		$	9.18	$	7.66
Total return (%)		(14.37	)		2.62		(0.60	)		20.64		(19.34	)
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		1.29			1.40		1.40			1.40		1.40
Expenses, before waivers and reimbursements		1.54			1.60		1.58			1.75		1.58
Net investment income (loss), net of waivers and reimbursements		0.53			0.84		0.51			0.83		0.69
Net investment income (loss), before waivers and reimbursements		0.28			0.64		0.33			0.48		0.51
Class I net assets at end of year (in thousands)	$	32,862		$	28,475	$	34,590		$	25,628	$	21,610
Portfolio turnover rate (%)		110			131		131			94		142

^ Amount is less than $0.005 per share.

Note: Net investment income (loss) per share is based on the average shares outstanding during the year.

Performance cited represents past performance. Past performance does not guarantee future results and current performance may be lower or higher than the data quoted. Results shown are annual returns, which assume reinvestment of dividends and capital gains. Investment returns and principal will fluctuate and you may have a gain or loss when you sell shares. For the most current month-end performance information, please call 1-800-742-7272 or visit our Web site at www.williamblairfunds.com.

184 Annual Report December 31, 2015

Financial Highlights

Emerging Markets Leaders Fund

	Institutional Class
	Years Ended December 31,
	2015			2014		2013			2012		2011
Net asset value, beginning of year	$	9.07		$	9.10	$	9.18		$	7.65	$	10.35
Income (loss) from investment operations:
Net investment income (loss)		0.04			0.08		0.06			0.08		0.09
Net realized and unrealized gain (loss) on investments		(1.33	)		0.16		(0.10	)		1.52		(2.10	)
Total from investment operations		(1.29	)		0.24		(0.04	)		1.60		(2.01	)
Less distributions from:
Net investment income		0.03			0.04		0.04			0.07		0.06
Net realized gain		0.01			0.23		—			—		0.63
Return of capital		—			—		—			—		0.00	^
Total distributions		0.04			0.27		0.04			0.07		0.69
Net asset value, end of year	$	7.74		$	9.07	$	9.10		$	9.18	$	7.65
Total return (%)		(14.24	)		2.68		(0.46	)		20.97		(19.30	)
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		1.25			1.25		1.25			1.25		1.25
Expenses, before waivers and reimbursements		1.35			1.42		1.42			1.59		1.41
Net investment income (loss), net of waivers and reimbursements		0.49			0.83		0.68			0.90		0.90
Net investment income (loss), before waivers and reimbursements		0.39			0.66		0.51			0.56		0.74
Institutional Class net assets at end of year (in thousands)	$	93,217		$	75,875	$	36,509		$	43,102	$	26,166
Portfolio turnover rate (%)		110			131		131			94		142

^ Amount is less than $0.005 per share.

Note: Net investment income (loss) per share is based on the average shares outstanding during the year.

Performance cited represents past performance. Past performance does not guarantee future results and current performance may be lower or higher than the data quoted. Results shown are annual returns, which assume reinvestment of dividends and capital gains. Investment returns and principal will fluctuate and you may have a gain or loss when you sell shares. For the most current month-end performance information, please call 1-800-742-7272 or visit our Web site at www.williamblairfunds.com.

December 31, 2015 William Blair Funds 185

Financial Highlights

Emerging Markets Growth Fund

	Class N
	Years Ended December 31,
	2015			2014		2013		2012		2011
Net asset value, beginning of year	$	12.91		$	13.28	$	13.40	$	11.16	$	15.76
Income (loss) from investment operations:
Net investment income (loss)		0.04			0.08		0.05		0.07		0.07
Net realized and unrealized gain (loss) on investments		(1.98	)		0.37		0.09		2.24		(2.84	)
Total from investment operations		(1.94	)		0.45		0.14		2.31		(2.77	)
Less distributions from:
Net investment income		—			0.08		0.01		0.07		—
Net realized gain		0.12			0.74		0.25		—		1.83
Total distributions		0.12			0.82		0.26		0.07		1.83
Net asset value, end of year	$	10.85		$	12.91	$	13.28	$	13.40	$	11.16
Total return (%)		(15.03	)		3.40		1.05		20.70		(17.29	)
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		1.50			1.64		1.68		1.69		1.68
Expenses, before waivers and reimbursements		1.65			1.64		1.68		1.69		1.68
Net investment income (loss), net of waivers and reimbursements		0.33			0.55		0.39		0.59		0.48
Net investment income (loss), before waivers and reimbursements		0.18			0.55		0.39		0.59		0.48
Class N net assets at end of year (in thousands)	$	9,367		$	12,638	$	13,723	$	16,724	$	17,474
Portfolio turnover rate (%)		121			101		118		90		104

	Class I
	Years Ended December 31,
	2015			2014		2013		2012		2011
Net asset value, beginning of year	$	13.01		$	13.38	$	13.50	$	11.25	$	15.87
Income (loss) from investment operations:
Net investment income (loss)		0.07			0.11		0.08		0.11		0.11
Net realized and unrealized gain (loss) on investments		(2.00	)		0.37		0.10		2.25		(2.85	)
Total from investment operations		(1.93	)		0.48		0.18		2.36		(2.74	)
Less distributions from:
Net investment income		—			0.11		0.05		0.11		0.05
Net realized gain		0.12			0.74		0.25		—		1.83
Total distributions		0.12			0.85		0.30		0.11		1.88
Net asset value, end of year	$	10.96		$	13.01	$	13.38	$	13.50	$	11.25
Total return (%)		(14.83	)		3.65		1.36		21.01		(17.00	)
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		1.25			1.40		1.41		1.41		1.38
Expenses, before waivers and reimbursements		1.40			1.40		1.41		1.41		1.38
Net investment income (loss), net of waivers and reimbursements		0.58			0.79		0.62		0.86		0.77
Net investment income (loss), before waivers and reimbursements		0.43			0.79		0.62		0.86		0.77
Class I net assets at end of year (in thousands)	$	130,491		$	166,488	$	152,588	$	144,942	$	124,739
Portfolio turnover rate (%)		121			101		118		90		104

Note: Net investment income (loss) per share is based on the average shares outstanding during the year.

Performance cited represents past performance. Past performance does not guarantee future results and current performance may be lower or higher than the data quoted. Results shown are annual returns, which assume reinvestment of dividends and capital gains. Investment returns and principal will fluctuate and you may have a gain or loss when you sell shares. For the most current month-end performance information, please call 1-800-742-7272 or visit our Web site at www.williamblairfunds.com.

186 Annual Report December 31, 2015

Financial Highlights

Emerging Markets Growth Fund

	Institutional Class
	Years Ended December 31,
	2015			2014		2013		2012		2011
Net asset value, beginning of year	$	13.09		$	13.46	$	13.59	$	11.32	$	15.96
Income (loss) from investment operations:
Net investment income (loss)		0.08			0.14		0.12		0.14		0.14
Net realized and unrealized gain (loss) on investments		(2.00	)		0.37		0.08		2.27		(2.87	)
Total from investment operations		(1.92	)		0.51		0.20		2.41		(2.73	)
Less distributions from:
Net investment income		—			0.14		0.08		0.14		0.08
Net realized gain		0.12			0.74		0.25		—		1.83
Total distributions		0.12			0.88		0.33		0.14		1.91
Net asset value, end of year	$	11.05		$	13.09	$	13.46	$	13.59	$	11.32
Total return (%)		(14.67	)		3.85		1.49		21.28		(16.82	)
Ratios to average daily net assets (%):
Expenses		1.17			1.18		1.19		1.20		1.19
Net investment income (loss)		0.61			1.00		0.87		1.12		0.93
Institutional Class net assets at end of year (in thousands)	$	739,253		$	806,708	$	833,711	$	802,571	$	675,633
Portfolio turnover rate (%)		121			101		118		90		104

Note: Net investment income (loss) per share is based on the average shares outstanding during the year.

Performance cited represents past performance. Past performance does not guarantee future results and current performance may be lower or higher than the data quoted. Results shown are annual returns, which assume reinvestment of dividends and capital gains. Investment returns and principal will fluctuate and you may have a gain or loss when you sell shares. For the most current month-end performance information, please call 1-800-742-7272 or visit our Web site at www.williamblairfunds.com.

December 31, 2015 William Blair Funds 187

Financial Highlights

Emerging Markets Small Cap Growth Fund

	Class N
	Periods Ended December 31,
	2015			2014		2013			2012			2011(a)
Net asset value, beginning of year	$	16.52		$	15.12	$	12.99		$	9.73		$	10.00
Income (loss) from investment operations:
Net investment income (loss)		(0.01	)		0.04		0.05			0.06			0.00	^
Net realized and unrealized gain (loss) on investments		(1.05	)		2.13		2.08			3.27			(0.27	)
Total from investment operations		(1.06	)		2.17		2.13			3.33			(0.27	)
Less distributions from:
Net investment income		—			0.03		—			0.07			—
Net realized gain		0.62			0.74		0.00	^		—			—
Total distributions		0.62			0.77		0.00	^		0.07			—
Net asset value, end of year	$	14.84		$	16.52	$	15.12		$	12.99		$	9.73
Total return (%)*		(6.40	)		14.41		16.42			34.23			(2.70	)
Ratios to average daily net assets (%):**
Expenses, net of waivers and reimbursements		1.65			1.65		1.65			1.65			1.65
Expenses, before waivers and reimbursements		1.94			1.74		2.19			4.76			9.53
Net investment income (loss), net of waivers and reimbursements		(0.06	)		0.21		0.38			0.56			0.08
Net investment income (loss), before waivers and reimbursements		(0.35	)		0.12		(0.16	)		(2.54	)		(7.80	)
Class N net assets at end of year (in thousands)	$	11,306		$	10,745	$	9,313		$	3,016		$	1,012
Portfolio turnover rate (%)*		167			124		138			78			17

	Class I
	Periods Ended December 31,
	2015			2014		2013			2012			2011(a)
Net asset value, beginning of year	$	16.52		$	15.13	$	12.99		$	9.73		$	10.00
Income (loss) from investment operations:
Net investment income (loss)		0.05			0.02		0.05			0.08			0.01
Net realized and unrealized gain (loss) on investments		(1.05	)		2.20		2.12			3.29			(0.28	)
Total from investment operations		(1.00	)		2.22		2.17			3.37			(0.27	)
Less distributions from:
Net investment income		—			0.09		0.03			0.11			—
Net realized gain		0.62			0.74		0.00	^		—			—
Total distributions		0.62			0.83		0.03			0.11			—
Net asset value, end of year	$	14.90		$	16.52	$	15.13		$	12.99		$	9.73
Total return (%)*		(6.03	)		14.73		16.70			34.62			(2.70	)
Ratios to average daily net assets (%):**
Expenses, net of waivers and reimbursements		1.31			1.40		1.40			1.40			1.40
Expenses, before waivers and reimbursements		1.52			1.49		1.72			4.40			9.28
Net investment income (loss), net of waivers and reimbursements		0.30			0.15		0.35			0.70			0.33
Net investment income (loss), before waivers and reimbursements		0.09			0.06		0.03			(2.30	)		(7.55	)
Class I net assets at end of year (in thousands)	$	162,375		$	119,662	$	58,123		$	8,763		$	2,260
Portfolio turnover rate (%)*		167			124		138			78			17

(a)	For the period from October 24, 2011 (Commencement of Operations) to December 31, 2011.
*	Not annualized for periods that are less than a year.
**	Annualized for periods that are less than a year.
^	Amount is less than $0.005 per share.

Note: Net investment income (loss) per share is based on the average shares outstanding during the year.

Performance cited represents past performance. Past performance does not guarantee future results and current performance may be lower or higher than the data quoted. Results shown are annual returns, which assume reinvestment of dividends and capital gains. Investment returns and principal will fluctuate and you may have a gain or loss when you sell shares. For the most current month-end performance information, please call 1-800-742-7272 or visit our Web site at www.williamblairfunds.com.

188 Annual Report December 31, 2015

Financial Highlights

Emerging Markets Small Cap Growth Fund

	Institutional Class
	Periods Ended December 31,
	2015			2014		2013			2012(a)
Net asset value, beginning of year	$	16.53		$	15.14	$	13.00		$	12.79
Income (loss) from investment operations:
Net investment income (loss)		0.06			0.06		0.07			0.00	^
Net realized and unrealized gain (loss) on investments		(1.05	)		2.18		2.11			0.21
Total from investment operations		(0.99	)		2.24		2.18			0.21
Less distributions from:
Net investment income		0.00	^		0.11		0.04			—
Net realized gain		0.62			0.74		0.00	^		—
Total distributions		0.62			0.85		0.04			—
Net asset value, end of year	$	14.92		$	16.53	$	15.14		$	13.00
Total return (%)*		(5.97	)		14.85		16.80			1.64
Ratios to average daily net assets (%):**
Expenses, net of waivers and reimbursements		1.25			1.25		1.25			1.25
Expenses, before waivers and reimbursements		1.31			1.34		1.56			2.32
Net investment income (loss), net of waivers and reimbursements		0.34			0.37		0.47			(0.87	)
Net investment income (loss), before waivers and reimbursements		0.28			0.28		0.16			(1.93	)
Institutional Class net assets at end of year (in thousands)	$	123,160		$	123,496	$	91,663		$	15,242
Portfolio turnover rate (%)*		167			124		138			78

(a)	For the period from December 20, 2012 (Commencement of Operations) to December 31, 2012.
*	Not annualized for periods less than a year.
**	Annualized for periods less than a year.
^	Amount is less than $0.005 per share.

Note: Net investment income (loss) per share is based on the average shares outstanding during the year.

Performance cited represents past performance. Past performance does not guarantee future results and current performance may be lower or higher than the data quoted. Results shown are annual returns, which assume reinvestment of dividends and capital gains. Investment returns and principal will fluctuate and you may have a gain or loss when you sell shares. For the most current month-end performance information, please call 1-800-742-7272 or visit our Web site at www.williamblairfunds.com.

December 31, 2015 William Blair Funds 189

Financial Highlights

Bond Fund

	Class N
	Years Ended December 31,
	2015			2014			2013			2012		2011
Net asset value, beginning of year	$	10.74		$	10.60		$	11.28		$	10.91	$	10.70
Income (loss) from investment operations:
Net investment income (loss)		0.27			0.31			0.32			0.36		0.43
Net realized and unrealized gain (loss) on investments		(0.29	)		0.23			(0.47	)		0.53		0.34
Total from investment operations		(0.02	)		0.54			(0.15	)		0.89		0.77
Less distributions from:
Net investment income		0.38			0.40			0.42			0.45		0.47
Net realized gain		—			0.00	^		0.11			0.07		0.09
Total distributions		0.38			0.40			0.53			0.52		0.56
Net asset value, end of year	$	10.34		$	10.74		$	10.60		$	11.28	$	10.91
Total return (%)		(0.23	)		5.10			(1.37	)		8.33		7.41
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		0.61			0.65			0.65			0.65		0.65
Expenses, before waivers and reimbursements		0.79			0.85			0.82			0.81		0.76
Net investment income (loss), net of waivers and reimbursements		2.60			2.90			2.89			3.25		3.97
Net investment income (loss), before waivers and reimbursements		2.42			2.70			2.72			3.09		3.86
Class N net assets at end of year (in thousands)	$	139,303		$	16,720		$	11,389		$	32,867	$	8,345
Portfolio turnover rate (%)		32			35			41			25		28

	Class I
	Years Ended December 31,
	2015			2014			2013			2012		2011
Net asset value, beginning of year	$	10.64		$	10.49		$	11.17		$	10.80	$	10.59
Income (loss) from investment operations:
Net investment income (loss)		0.31			0.33			0.33			0.38		0.45
Net realized and unrealized gain (loss) on investments		(0.31	)		0.23			(0.48	)		0.52		0.33
Total from investment operations		—			0.56			(0.15	)		0.90		0.78
Less distributions from:
Net investment income		0.40			0.41			0.42			0.46		0.48
Net realized gain		—			0.00	^		0.11			0.07		0.09
Total distributions		0.40			0.41			0.53			0.53		0.57
Net asset value, end of year	$	10.24		$	10.64		$	10.49		$	11.17	$	10.80
Total return (%)		(0.05	)		5.37			(1.28	)		8.54		7.62
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		0.41			0.50			0.50			0.50		0.50
Expenses, before waivers and reimbursements		0.59			0.60			0.58			0.56		0.55
Net investment income (loss), net of waivers and reimbursements		2.93			3.07			3.05			3.45		4.17
Net investment income (loss), before waivers and reimbursements		2.75			2.97			2.97			3.39		4.12
Class I net assets at end of year (in thousands)	$	237,587		$	149,466		$	145,939		$	172,836	$	154,224
Portfolio turnover rate (%)		32			35			41			25		28

^ Amount is less than $0.005 per share.

Note: Net investment income (loss) per share is based on the average shares outstanding during the year.

Performance cited represents past performance. Past performance does not guarantee future results and current performance may be lower or higher than the data quoted. Results shown are annual returns, which assume reinvestment of dividends and capital gains. Investment returns and principal will fluctuate and you may have a gain or loss when you sell shares. For the most current month-end performance information, please call 1-800-742-7272 or visit our Web site at www.williamblairfunds.com.

190 Annual Report December 31, 2015

Financial Highlights

Bond Fund

	Institutional Class
	Years Ended December 31,
	2015			2014			2013			2012		2011
Net asset value, beginning of year	$	10.63		$	10.48		$	11.16		$	10.80	$	10.58
Income (loss) from investment operations:
Net investment income (loss)		0.32			0.34			0.35			0.40		0.45
Net realized and unrealized gain (loss) on investments		(0.31	)		0.23			(0.48	)		0.51		0.36
Total from investment operations		0.01			0.57			(0.13	)		0.91		0.81
Less distributions from:
Net investment income		0.41			0.42			0.44			0.48		0.50
Net realized gain		—			0.00	^		0.11			0.07		0.09
Total distributions		0.41			0.42			0.55			0.55		0.59
Net asset value, end of year	$	10.23		$	10.63		$	10.48		$	11.16	$	10.80
Total return (%)		0.01			5.53			(1.13	)		8.61		7.88
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		0.35			0.35			0.35			0.35		0.35
Expenses, before waivers and reimbursements		0.38			0.41			0.39			0.38		0.39
Net investment income (loss), net of waivers and reimbursements		3.01			3.23			3.19			3.60		4.24
Net investment income (loss), before waivers and reimbursements		2.98			3.17			3.15			3.57		4.20
Institutional Class net assets at end of year (in thousands)	$	103,904		$	97,341		$	87,527		$	91,039	$	69,447
Portfolio turnover rate (%)		32			35			41			25		28

^ Amount is less than $0.005 per share.

Note: Net investment income (loss) per share is based on the average shares outstanding during the year.

Performance cited represents past performance. Past performance does not guarantee future results and current performance may be lower or higher than the data quoted. Results shown are annual returns, which assume reinvestment of dividends and capital gains. Investment returns and principal will fluctuate and you may have a gain or loss when you sell shares. For the most current month-end performance information, please call 1-800-742-7272 or visit our Web site at www.williamblairfunds.com.

December 31, 2015 William Blair Funds 191

Financial Highlights

Income Fund

	Class N
	Years Ended December 31,
	2015			2014		2013			2012		2011
Net asset value, beginning of year	$	9.12		$	9.11	$	9.55		$	9.32	$	9.22
Income (loss) from investment operations:
Net investment income (loss)		0.15			0.18		0.20			0.24		0.32
Net realized and unrealized gain (loss) on investments		(0.11	)		0.10		(0.35	)		0.31		0.15
Total from investment operations		0.04			0.28		(0.15	)		0.55		0.47
Less distributions from:
Net investment income		0.26			0.27		0.29			0.32		0.37
Net realized gain		—			—		—			—		—
Total distributions		0.26			0.27		0.29			0.32		0.37
Net asset value, end of year	$	8.90		$	9.12	$	9.11		$	9.55	$	9.32
Total return (%)		0.39			3.06		(1.61	)		6.00		5.21
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		0.81			0.84		0.85			0.83		0.85
Expenses, before waivers and reimbursements		0.81			0.84		1.03			0.83		0.91
Net investment income (loss), net of waivers and reimbursements		1.71			1.99		2.13			2.49		3.40
Net investment income (loss), before waivers and reimbursements		1.71			1.99		1.95			2.49		3.34
Class N net assets at end of year (in thousands)	$	32,942		$	34,020	$	41,662		$	68,947	$	44,802
Portfolio turnover rate (%)		21			30		41			33		39

	Class I
	Years Ended December 31,
	2015			2014		2013			2012		2011
Net asset value, beginning of year	$	9.05		$	9.05	$	9.48		$	9.25	$	9.15
Income (loss) from investment operations:
Net investment income (loss)		0.18			0.20		0.21			0.26		0.34
Net realized and unrealized gain (loss) on investments		(0.12	)		0.09		(0.34	)		0.31		0.15
Total from investment operations		0.06			0.29		(0.13	)		0.57		0.49
Less distributions from:
Net investment income		0.28			0.29		0.30			0.34		0.39
Net realized gain		—			—		—			—		—
Total distributions		0.28			0.29		0.30			0.34		0.39
Net asset value, end of year	$	8.83		$	9.05	$	9.05		$	9.48	$	9.25
Total return (%)		0.63			3.20		(1.41	)		6.28		5.46
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		0.55			0.59		0.70			0.58		0.64
Expenses, before waivers and reimbursements		0.55			0.59		0.77			0.58		0.64
Net investment income (loss), net of waivers and reimbursements		1.97			2.24		2.30			2.78		3.66
Net investment income (loss), before waivers and reimbursements		1.97			2.24		2.23			2.78		3.66
Class I net assets at end of year (in thousands)	$	62,722		$	64,834	$	64,152		$	72,830	$	67,183
Portfolio turnover rate (%)		21			30		41			33		39

Note: Net investment income (loss) per share is based on the average shares outstanding during the year.

Performance cited represents past performance. Past performance does not guarantee future results and current performance may be lower or higher than the data quoted. Results shown are annual returns, which assume reinvestment of dividends and capital gains. Investment returns and principal will fluctuate and you may have a gain or loss when you sell shares. For the most current month-end performance information, please call 1-800-742-7272 or visit our Web site at www.williamblairfunds.com.

192 Annual Report December 31, 2015

Financial Highlights

Low Duration Fund

	Class N
	Years Ended December 31,
	2015			2014			2013			2012		2011
Net asset value, beginning of year	$	9.38		$	9.52		$	9.83		$	9.82	$	9.90
Income (loss) from investment operations:
Net investment income (loss)		0.07			0.11			0.10			0.13		0.15
Net realized and unrealized gain (loss) on investments		(0.07	)		(0.00	)^		(0.16	)		0.14		0.02
Total from investment operations		—			0.11			(0.06	)		0.27		0.17
Less distributions from:
Net investment income		0.22			0.25			0.25			0.26		0.25
Net realized gain		—			—			—			—		—
Total distributions		0.22			0.25			0.25			0.26		0.25
Net asset value, end of year	$	9.16		$	9.38		$	9.52		$	9.83	$	9.82
Total return (%)		0.01			1.20			(0.62	)		2.80		1.73
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		0.60			0.70			0.70			0.70		0.70
Expenses, before waivers and reimbursements		0.77			0.75			0.71			0.74		0.73
Net investment income (loss), net of waivers and reimbursements		0.71			1.19			1.06			1.37		1.52
Net investment income (loss), before waivers and reimbursements		0.54			1.14			1.05			1.33		1.49
Class N net assets at end of year (in thousands)	$	2,712		$	4,969		$	5,158		$	11,216	$	6,260
Portfolio turnover rate (%)		106			83			56			20		43

	Class I
	Years Ended December 31,
	2015			2014			2013			2012		2011
Net asset value, beginning of year	$	9.37		$	9.52		$	9.83		$	9.82	$	9.89
Income (loss) from investment operations:
Net investment income (loss)		0.08			0.13			0.12			0.15		0.17
Net realized and unrealized gain (loss) on investments		(0.05	)		(0.01	)		(0.17	)		0.14		0.02
Total from investment operations		0.03			0.12			(0.05	)		0.29		0.19
Less distributions from:
Net investment income		0.24			0.27			0.26			0.28		0.26
Net realized gain		—			—			—			—		—
Total distributions		0.24			0.27			0.26			0.28		0.26
Net asset value, end of year	$	9.16		$	9.37		$	9.52		$	9.83	$	9.82
Total return (%)		0.30			1.24			(0.47	)		2.96		1.99
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		0.42			0.55			0.55			0.55		0.55
Expenses, before waivers and reimbursements		0.59			0.60			0.56			0.57		0.58
Net investment income (loss), net of waivers and reimbursements		0.87			1.35			1.24			1.52		1.67
Net investment income (loss), before waivers and reimbursements		0.70			1.30			1.23			1.50		1.64
Class I net assets at end of year (in thousands)	$	107,137		$	104,433		$	122,583		$	157,213	$	82,828
Portfolio turnover rate (%)		106			83			56			20		43

^ Amount is less than $0.005 per share.

Note: Net investment income (loss) per share is based on the average shares outstanding during the year.

Performance cited represents past performance. Past performance does not guarantee future results and current performance may be lower or higher than the data quoted. Results shown are annual returns, which assume reinvestment of dividends and capital gains. Investment returns and principal will fluctuate and you may have a gain or loss when you sell shares. For the most current month-end performance information, please call 1-800-742-7272 or visit our Web site at www.williamblairfunds.com.

December 31, 2015 William Blair Funds 193

Financial Highlights

Low Duration Fund

	Institutional Class
	Years Ended December 31,
	2015			2014			2013			2012		2011
Net asset value, beginning of year	$	9.38		$	9.53		$	9.83		$	9.83	$	9.90
Income (loss) from investment operations:
Net investment income (loss)		0.09			0.14			0.13			0.17		0.18
Net realized and unrealized gain (loss) on investments		(0.07	)		(0.01	)		(0.15	)		0.12		0.03
Total from investment operations		0.02			0.13			(0.02	)		0.29		0.21
Less distributions from:
Net investment income		0.24			0.28			0.28			0.29		0.28
Net realized gain		—			—			—			—		—
Total distributions		0.24			0.28			0.28			0.29		0.28
Net asset value, end of year	$	9.16		$	9.38		$	9.53		$	9.83	$	9.83
Total return (%)		0.22			1.40			(0.20	)		3.01		2.14
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		0.40			0.40			0.39			0.40		0.40
Expenses, before waivers and reimbursements		0.42			0.43			0.39			0.41		0.42
Net investment income (loss), net of waivers and reimbursements		0.94			1.45			1.37			1.68		1.81
Net investment income (loss), before waivers and reimbursements		0.92			1.42			1.37			1.67		1.79
Institutional Class net assets at end of year (in thousands)	$	21,863		$	68,095		$	46,485		$	118,401	$	68,059
Portfolio turnover rate (%)		106			83			56			20		43

Note: Net investment income (loss) per share is based on the average shares outstanding during the year.

Performance cited represents past performance. Past performance does not guarantee future results and current performance may be lower or higher than the data quoted. Results shown are annual returns, which assume reinvestment of dividends and capital gains. Investment returns and principal will fluctuate and you may have a gain or loss when you sell shares. For the most current month-end performance information, please call 1-800-742-7272 or visit our Web site at www.williamblairfunds.com.

194 Annual Report December 31, 2015

Financial Highlights

Macro Allocation Fund

	Class N
	Periods Ended December 31,						Periods Ended October 31,
	2015			2014(b)			2014		2013		2012(a)
Net asset value, beginning of year	$	12.14		$	13.07		$	12.61	$	11.28	$	10.00
Income (loss) from investment operations:
Net investment income (loss)		0.04			0.04			0.02		0.05		0.11
Net realized and unrealized gain (loss) on investments		(0.80	)		(0.31	)		0.76		1.59		1.24
Total from investment operations		(0.76	)		(0.27	)		0.78		1.64		1.35
Less distributions from:
Net investment income		0.06			0.66			0.09		0.11		0.07
Net realized gain		—			—			0.23		0.20		—
Total distributions		0.06			0.66			0.32		0.31		0.07
Net asset value, end of year	$	11.32		$	12.14		$	13.07	$	12.61	$	11.28
Total return (%)*		(6.24	)		(2.00	)		6.34		14.87		13.61
Ratios to average daily net assets (%)**:
Expenses (excluding short dividend expense), net of waivers and reimbursements		1.27			1.35			1.35		1.35		1.35
Expenses, net of waivers and reimbursements		1.27			1.38			1.47		1.49		1.41
Expenses, before waivers and reimbursements		1.42			1.46			1.60		1.78		2.95
Net investment income (loss), net of waivers and reimbursements		0.32			2.06			0.20		0.37		1.18
Net investment income (loss), before waivers and reimbursements		0.17			1.98			0.07		0.08		(0.36	)
Class N net assets at end of year (in thousands)	$	150,606		$	150,778		$	150,785	$	97,498	$	10,045
Portfolio turnover rate (%)*		34			17			59		10		40

	Class I
	Periods Ended December 31,						Periods Ended October 31,
	2015			2014(b)			2014		2013		2012(a)
Net asset value, beginning of year	$	12.22		$	13.15		$	12.66	$	11.31	$	10.00
Income (loss) from investment operations:
Net investment income (loss)		0.09			0.05			0.04		0.07		0.16
Net realized and unrealized gain (loss) on investments		(0.82	)		(0.31	)		0.78		1.60		1.22
Total from investment operations		(0.73	)		(0.26	)		0.82		1.67		1.38
Less distributions from:
Net investment income		0.11			0.67			0.10		0.12		0.07
Net realized gain		—			—			0.23		0.20		—
Total distributions		0.11			0.67			0.33		0.32		0.07
Net asset value, end of year	$	11.38		$	12.22		$	13.15	$	12.66	$	11.31
Total return (%)*		(6.00	)		(1.94	)		6.60		15.06		13.91
Ratios to average daily net assets (%)**:
Expenses (excluding short dividend expense), net of waivers and reimbursements		0.98			1.07			1.10		1.10		1.10
Expenses, net of waivers and reimbursements		0.99			1.10			1.22		1.24		1.18
Expenses, before waivers and reimbursements		1.14			1.10			1.27		1.41		2.94
Net investment income (loss), net of waivers and reimbursements		0.73			2.33			0.32		0.62		1.67
Net investment income (loss), before waivers and reimbursements		0.58			2.33			0.27		0.45		(0.09	)
Class I net assets at end of year (in thousands)	$	1,155,051		$	649,756		$	617,531	$	224,860	$	23,095
Portfolio turnover rate (%)*		34			17			59		10		40

(a)	For the period from November 29, 2011 (Commencement of Operations) to October 31, 2012.
(b)	For the period from November 1, 2014 to December 31, 2014.
*	Not annualized for periods less than a year.
**	Annualized for periods less than a year.

Note: Net investment income (loss) per share is based on the average shares outstanding during the year.

Performance cited represents past performance. Past performance does not guarantee future results and current performance may be lower or higher than the data quoted. Results shown are annual returns, which assume reinvestment of dividends and capital gains. Investment returns and principal will fluctuate and you may have a gain or loss when you sell shares. For the most current month-end performance information, please call 1-800-742-7272 or visit our Web site at www.williamblairfunds.com.

December 31, 2015 William Blair Funds 195

Financial Highlights

Macro Allocation Fund

	Institutional Class
							Periods Ended
	Periods Ended December 31,						October 31,
	2015			2014(b)			2014		2013(a)
Net asset value, beginning of year	$	12.23		$	13.16		$	12.66	$	12.63
Income (loss) from investment operations:
Net investment income (loss)		0.12			0.05			0.04		0.00	^
Net realized and unrealized gain (loss) on investments		(0.84	)		(0.31	)		0.79		0.03
Total from investment operations		(0.72	)		(0.26	)		0.83		0.03
Less distributions from:
Net investment income		0.12			0.67			0.10		—
Net realized gain		—			—			0.23		—
Total distributions.		0.12			0.67			0.33		—
Net asset value, end of year	$	11.39		$	12.23		$	13.16	$	12.66
Total return (%)*		(5.92	)		(1.91	)		6.71		0.24
Ratios to average daily net assets (%)**:
Expenses (excluding short dividend expense), net of waivers and reimbursements		0.90			0.88			0.93		0.95
Expenses, net of waivers and reimbursements		0.90			0.91			1.05		1.00
Expenses, before waivers and reimbursements		0.90			0.91			1.05		1.11
Net investment income (loss), net of waivers and reimbursements		0.95			2.54			0.32		(0.99	)
Net investment income (loss), before waivers and reimbursements		0.95			2.54			0.32		(1.10	)
Institutional Class net assets at end of year (in thousands)	$	426,230		$	158,152		$	150,447	$	5,014
Portfolio turnover rate (%)*		34			17			59		10

(a)	For the period from October 21, 2013 (Commencement of Share Class) to October 31, 2013.
(b)	For the period from November 1, 2014 to December 31, 2014.
*	Not annualized for periods less than a year.
**	Annualized for periods less than a year.
^	Amount is less than $0.005 per share.

Note: Net investment income (loss) per share is based on the average shares outstanding during the year.

Performance cited represents past performance. Past performance does not guarantee future results and current performance may be lower or higher than the data quoted. Results shown are annual returns, which assume reinvestment of dividends and capital gains. Investment returns and principal will fluctuate and you may have a gain or loss when you sell shares. For the most current month-end performance information, please call 1-800-742-7272 or visit our Web site at www.williamblairfunds.com.

196 Annual Report December 31, 2015

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Trustees and Shareholders of William Blair Funds

We have audited the accompanying statements of assets and liabilities, including the portfolios of investments, of the William Blair Funds (comprising, respectively, the Growth Fund, Large Cap Growth Fund, Large Cap Value Fund, Mid Cap Growth Fund, Mid Cap Value Fund, Small-Mid Cap Growth Fund, Small-Mid Cap Value Fund, Small Cap Growth Fund, Small Cap Value Fund, Global Leaders Fund, Global Small Cap Growth Fund (in liquidation), International Leaders Fund, International Equity Fund, Institutional International Equity Fund, International Growth Fund, Institutional International Growth Fund, International Small Cap Growth Fund, Emerging Markets Leaders Fund, Emerging Markets Growth Fund, Emerging Markets Small Cap Growth Fund, Bond Fund, Income Fund, Low Duration Fund, and Macro Allocation Fund (collectively, the “Funds”)) as of December 31, 2015, and the related statements of operations, statements of changes in net assets, and the financial highlights for the periods indicated therein. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds’ internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2015, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the respective funds constituting the William Blair Funds at December 31, 2015, the results of their operations, the changes in their net assets, and the financial highlights for the periods indicated therein in conformity with U.S. generally accepted accounting principles.

Chicago, Illinois
February 25, 2016

December 31, 2015 William Blair Funds 197

Trustees and Officers (Unaudited).^† The trustees and officers of the William Blair Funds, their year of birth, their principal occupations during the last five years, their affiliations, if any, with William Blair, and other significant affiliations are set forth below. The address of each officer and trustee is 222 West Adams Street, Chicago, Illinois 60606.

				Number of
		Term of		Portfolios
		Office and		in Trust
	Position(s)	Length of	Principal	Complex
	Held with	Time	Occupation(s)	Overseen	Other Directorships
Name and Year of Birth	Trust	Served	During Past 5 Years	by Trustee	Held by Trustee
Interested Trustees
Michelle R. Seitz, 1965*	Chairman of the Board of Trustees and President	Trustee since 2002; Chairman since 2010 and President since 2007	Partner, William Blair: Limited Partner, WBC Holdings, L.P. (since 2008); Member, WBC GP L.L.P. (since November 2008); Director, William Blair International, Ltd. (U.K.) (since 2012)	25	Chairman, William Blair SICAV; Director, William Blair MAS Ltd.; Financial Accounting Foundation (FAF)
Richard W. Smirl, 1967*	Trustee and Senior Vice President	Trustee since 2010 and Senior Vice President since 2008	Partner, William Blair; Limited Partner, WBC Holdings, L.P. (since 2008); Director, William Blair International, Ltd. (U.K.) (since 2012)	25	Director, William Blair SICAV; Director, William Blair MAS Ltd.
Non-Interested Trustees
Vann A. Avedisian, 19642	Trustee	Since 2012	Principal, Highgate Holdings (hotel investments) since 2009; formerly co-founder and Managing Director, Oxford Capital Partners Inc., 1994 to 2006	25	Potbelly Corporation
Kathleen T. Barr, 1955	Trustee	Since 2013	Retired; formerly, President, Productive Capital Management, Inc. (registered investment adviser to public entities) and Owner, KT Barr Consulting, LLC (mutual fund and investment management consulting) 2010 to 2013; prior thereto, Chief Administrative Officer, Senior Vice President and Senior Managing Director of Allegiant Asset Management Company (merged with PNC Capital Advisors, LLC in 2009) from 2004 to 2010; Chief Administrative Officer, Chief Compliance Officer and Senior Vice President of PNC Funds and PNC Advantage Funds (f/k/a Allegiant Funds) from 2003 to 2010	25	AmericaFirst Quantitative Funds (5 portfolios)

†	William Blair Investment Management, LLC and William Blair & Company, L.L.C. are collectively referred to in this section as “William Blair”, each of which is a wholly owned subsidiary of WBC Holdings, L.P., which is wholly owned by certain William Blair employees (employee owners are referred to as ‘partners’).
*	Ms. Seitz and Mr. Smirl are interested persons of the Trust because of their positions at William Blair.

See accompanying Notes to Financial Statements.

198 Annual Report December 31, 2015

				Number of
		Term of		Portfolios
		Office and		in Trust
	Position(s)	Length of	Principal	Complex
	Held with	Time	Occupation(s)	Overseen	Other Directorships
Name and Year of Birth	Trust	Served1	During Past 5 Years	by Trustee	Held by Trustee
Phillip O. Peterson, 1944	Trustee	Since 2007	Retired; formerly, President, Strong Mutual Funds, 2004 to 2005; formerly, Partner, KPMG LLP	25	The Hartford Group of Mutual Funds (66 portfolios); Symetra Mutual Funds Trust (variable annuity funds) (2012 to 2014)
Donald J. Reaves, 19463	Trustee	Since 2004	Retired; formerly, Chancellor of Winston-Salem State University, 2007 to 2014; prior thereto, Vice President for Administration and Chief Financial Officer, University of Chicago, 2002 to 2007	25	American Student Assistance Corp., guarantor of student loans; Amica Mutual Insurance Company
Donald L. Seeley, 1944	Trustee	Since 2003	Retired; formerly Director, Applied Investment Management Program, University of Arizona Department of Finance; prior thereto, Vice Chairman and Chief Financial Officer, True North Communications, Inc. (marketing communications and advertising firm)	25	Warnaco Group, Inc., intimate apparel, sportswear, and swimwear manufacturer (2005 to 2013); Beverly Enterprises, Inc., provider of elder care and rehabilitative services (2002 to 2006)
Thomas J. Skelly, 1951	Trustee	Since 2007	Advisory Board Member for various U.S. companies; prior to 2005, Managing Partner of various divisions at Accenture	25	Mutual Trust Financial Group, provider of insurance and investment products; Board Member, First MetLife Insurance Company, NY chartered company for Metropolitan Life Insurance; Clayton Holdings, Inc., provider of information-based analytics, consulting and outsourced services to various financial institutions and investors (2007 to 2008)

(1)	Each Trustee serves until the election and qualification of a successor, or until death, resignation or retirement, or removal as provided in the Trust’s Declaration of Trust. Retirement for Non-Interested Trustees occurs no later than at the conclusion of the first regularly scheduled Board meeting of the calendar year that occurs after the earlier of (a) the Non-Interested Trustee’s 72nd birthday or (b) the 15th anniversary of the date that the Non-Interested Trustee became a member of the Board of Trustees.
(2)	Mr. Avedisian has served as a member of the Board of Directors of Potbelly Corporation (“Potbelly”) since September 2001. In October 2013, Potbelly completed an underwritten initial public offering of its common stock (the “Offering”). William Blair served as a member of the underwriting syndicate. At the time of the Offering, Mr. Avedisian, through entities he owns or controls, indirectly beneficially owned 1,607,448 shares of Potbelly common stock and warrants to purchase 241,704 shares of common stock representing approximately 8.9% of the shares before the Offering. Mr. Avedisian disclaimed beneficial ownership of the shares except to the extent of his pecuniary interest therein. Potbelly sold 8,474,869 shares and certain stockholders, including two entities affiliated with William Blair, sold 150,131 shares in the Offering at a price to the public of $14.00 per share. Neither Mr. Avedisian nor the entities he owns or controls was a selling stockholder in the Offering. A portion of the net proceeds received by Potbelly from the Offering was used to pay a previously declared cash dividend, in an aggregate amount of approximately $49.9 million, on Potbelly common and preferred shares outstanding immediately prior to the closing of the Offering, which included the outstanding shares indirectly beneficially owned by Mr. Avedisian, William Blair and the two entities affiliated with William Blair.
(3)	In his former role as chief financial officer at the University of Chicago, Mr. Reaves had a working relationship with E. David Coolidge III, Vice Chairman of William Blair who is also a trustee of the University of Chicago.

See accompanying Notes to Financial Statements.

December 31, 2015 William Blair Funds 199

		Term of Office
	Position(s) Held	and Length of	Principal Occupation(s)
Name and Year of Birth	with Trust	Time Served1	During Past 5 Years2
Officers
Michael P. Balkin,	Senior Vice President	Since 2008	Partner, William Blair
1959
Stephanie G. Braming,	Senior Vice President	Since 2014	Partner, William Blair
1970
Karl W. Brewer,	Senior Vice President	Since 2000	Partner, William Blair
1966
Thomas Clarke, 1968	Senior Vice President	Since 2011	Partner, William Blair (since 2014); prior thereto, Associate, William Blair (2011-2014); Managing Partner, Singer Partners, LLC (2009-2011)
Daniel Crowe, 1972	Senior Vice President	Since 2015	Partner, William Blair (since 2011); prior thereto, Associate, William Blair
Simon Fennell, 1969	Senior Vice President	Since 2013	Partner, William Blair (since 2013); prior thereto, Associate, William Blair (2011-2013); Goldman Sachs (1997-2011)
Andrew G. Flynn,	Senior Vice President	Since 2013	Partner, William Blair
1961
David C. Fording,	Senior Vice President	Since 2006	Partner, William Blair
1967
James S. Golan,	Senior Vice President	Since 2005	Partner, William Blair
1961
Michael A. Jancosek,	Senior Vice President	Since 2000	Partner, William Blair
1959
John F. Jostrand,	Senior Vice President	Since 1999	Partner, William Blair
1954
Chad M. Kilmer, 1975	Senior Vice President	Since 2006	Partner, William Blair (since 2011); prior thereto, Associate, William Blair
Robert C. Lanphier IV,	Senior Vice President	Since 2003	Partner, William Blair
1956
Mark T. Leslie,	Senior Vice President	Since 2005	Partner, William Blair
1967
Kenneth J. McAtamney,	Senior Vice President	Since 2008	Partner, William Blair
1966
Todd M. McClone,	Senior Vice President	Since 2005	Partner, William Blair
1968
David Merjan,	Senior Vice President	Since 2008	Partner, William Blair
1960
David S. Mitchell,	Senior Vice President	Since 2003	Partner, William Blair
1960
John C. Murphy,	Senior Vice President	Since 2014	Partner, William Blair
1969
Casey K. Preyss,	Senior Vice President	Since 2015	Partner, William Blair
1976

See accompanying Notes to Financial Statements.

200 Annual Report December 31, 2015

		Term of Office
	Position(s) Held	and Length of	Principal Occupation(s)
Name and Year of Birth	with Trust	Time Served1	During Past 5 Years
David P. Ricci,	Senior Vice President	Since 2006	Partner, William Blair
1958
Brian D. Singer, 1960	Senior Vice President	Since 2011	Partner, William Blair (since 2012); prior thereto, Associate, William Blair (2011-2012), Managing Partner, Singer Partners, LLC (2009-2011)
Jeffrey A. Urbina,	Senior Vice President	Since 1998	Partner, William Blair
1955
Christopher T. Vincent,	Senior Vice President	Since 2002	Partner, William Blair
1956
David F. Hone, 1967	Vice President	Since 2011	Associate, William Blair (since 2011); prior thereto, Portfolio Manager—Large Cap Value, Deutsche Asset Management (2002-2010)
Paul J. Sularz, 1967	Vice President	Since 2009	Associate, William Blair (2006-2012 and since 2014); Partner, William Blair (2012-2014)
Colette M. Garavalia,	Treasurer	Since 2000	Associate, William Blair
1961
Andrew T. Pfau,	Secretary	Since 2009	Associate, William Blair
1970
John M. Raczek,	Assistant Treasurer	Since 2010	Associate, William Blair
1970
Walter R. Randall, Jr., 1960	Chief Compliance Officer and Assistant Secretary	Since 2009	Associate, William Blair

(1) The Trust’s officers, except the Chief Compliance Officer, are elected annually by the Board of Trustees. The Trust’s Chief Compliance Officer is designated by the Board of Trustees and may only be removed by action of the Board of Trustees, including a majority of independent trustees. Length of Time Served for all officers indicates the year the individual became an officer of the Trust.

The Statement of Additional Information for the William Blair Funds includes additional information about the trustees and is available without charge by calling 1-800-635-2886 (in Massachusetts 1-800-635-2840) or by writing the Fund.

See accompanying Notes to Financial Statements.

December 31, 2015 William Blair Funds 201

(Unaudited)

Proxy Voting

A description of the policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities and information regarding how the Funds voted proxies relating to portfolio securities for the most recent 12-month period ended December 31 are available without charge, upon request, by calling 1-800-635-2886 (in Massachusetts 1-800-635-2840), at www.williamblairfunds.com and on the SEC’s website at http://www.sec.gov.

Quarterly Portfolio Schedules

Each Fund files its complete schedule of portfolio holdings with the SEC for the first and third fiscal quarters of each fiscal year (quarters ended March 31 and September 30) on Form N-Q. The Fund’s Forms N-Q are available on the SEC’s website at http://www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the SEC’s Public Reference Room may be obtained by calling 1-800-SEC-0330.

Additional Federal Income Tax Information: (unaudited)

Under Section 852(b)(3)(C) of the Code, the Funds hereby designate the following amounts as capital gain dividends for the fiscal year ended December 31, 2015 (in thousands):

Fund	Capital Gain Dividend
Growth	$	96,737
Large Cap Growth		6,130
Large Cap Value		354
Mid Cap Growth		41,383
Mid Cap Value		587
Small-Mid Cap Growth		59,064
Small-Mid Cap Value		206
Small Cap Growth		29,587
Small Cap Value		1,943
Global Leaders		8,459
Global Small Cap Growth		457
International Leaders		653
Institutional International Growth		15,858
International Small Cap Growth		1,505
Emerging Markets Leaders		172
Emerging Markets Growth		9,858
Emerging Markets Small Cap Growth		11,724

202 Annual Report December 31, 2015

Useful Information About Your Report (Unaudited)

Please refer to this information when reviewing the Expense Example for each Fund.

Expense Example

As a shareholder of a Fund, you incur two types of costs: (1) transaction costs and (2) ongoing costs, including management fees, distribution (12b-1) fees (for Class N shares except for the Institutional International Growth Fund and the Institutional International Equity Fund), shareholder administration fees (for Class N and Class I shares of the Global Leaders Fund, the Global Small Cap Growth Fund, the International Leaders Fund, the International Small Cap Growth Fund, the Emerging Markets Leaders Fund, the Emerging Markets Growth Fund, the Emerging Markets Small Cap Growth Fund, the Bond Fund, the Low Duration Fund and the Macro Allocation Fund) and other Fund expenses. The example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. To do so, compare the Fund’s 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire six-month period from July 1, 2015 to December 31, 2015.

Actual Expenses

In each example, the first line for each share class in the table provides information about the actual account values and actual expenses. These expenses reflect the effect of any expense cap applicable to the share class during the period. Without this expense cap, the costs shown in the table would have been higher. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During the Period” to estimate the expenses you paid on your account during the period.

Hypothetical Example for Comparison Purposes

In each example, the second line for each share class in the table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses. This is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund to other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.

Please note that the expenses shown in both examples are meant to highlight your ongoing costs only and do not reflect any transactional costs or account type fees, such as IRA Fiduciary Administration fees. These fees are fully described in the prospectus. Therefore, the second line of each share class in the table is useful in comparing ongoing costs only and will not help you determine the relative costs of owning different funds. In addition, if these transactional costs or account fees were included, your costs would have been higher.

December 31, 2015 William Blair Funds 203

Fund Expenses (Unaudited)

	Beginning		Ending		Expenses Paid
	Account Value		Account Value		During		Annualized
Expense Example	7/1/2015		12/31/2015		the Period (a)		Expense Ratio
Growth Fund
Class N-actual return	$	1,000.00	$	1,022.18	$	6.07		1.19	%
Class N-hypothetical 5% return	$	1,000.00	$	1,044.00	$	6.13		1.19
Class I-actual return	$	1,000.00	$	1,024.20	$	4.54		0.89
Class I-hypothetical 5% return	$	1,000.00	$	1,045.51	$	4.59		0.89
Large Cap Growth Fund
Class N-actual return	$	1,000.00	$	1,012.35	$	5.43		1.07
Class N-hypothetical 5% return	$	1,000.00	$	1,044.61	$	5.51		1.07
Class I-actual return	$	1,000.00	$	1,012.76	$	4.16		0.82
Class I-hypothetical 5% return	$	1,000.00	$	1,045.87	$	4.23		0.82
Large Cap Value Fund
Class N-actual return	$	1,000.00	$	952.18	$	5.27		1.07
Class N-hypothetical 5% return	$	1,000.00	$	1,044.61	$	5.51		1.07
Class I-actual return	$	1,000.00	$	952.77	$	4.04		0.82
Class I-hypothetical 5% return	$	1,000.00	$	1,045.87	$	4.23		0.82
Mid Cap Growth Fund
Class N-actual return	$	1,000.00	$	953.67	$	6.50		1.32
Class N-hypothetical 5% return	$	1,000.00	$	1,043.35	$	6.80		1.32
Class I-actual return	$	1,000.00	$	955.06	$	5.27		1.07
Class I-hypothetical 5% return	$	1,000.00	$	1,044.61	$	5.51		1.07
Mid Cap Value Fund
Class N-actual return	$	1,000.00	$	956.38	$	6.51		1.32
Class N-hypothetical 5% return	$	1,000.00	$	1,043.35	$	6.80		1.32
Class I-actual return	$	1,000.00	$	958.12	$	5.28		1.07
Class I-hypothetical 5% return	$	1,000.00	$	1,044.61	$	5.51		1.07
Small-Mid Cap Growth Fund
Class N-actual return	$	1,000.00	$	959.14	$	6.67		1.35
Class N-hypothetical 5% return	$	1,000.00	$	1,043.19	$	6.95		1.35
Class I-actual return	$	1,000.00	$	960.53	$	5.44		1.10
Class I-hypothetical 5% return	$	1,000.00	$	1,044.45	$	5.67		1.10
Small-Mid Cap Value Fund
Class N-actual return	$	1,000.00	$	950.57	$	6.74		1.37
Class N-hypothetical 5% return	$	1,000.00	$	1,043.09	$	7.06		1.37
Class I-actual return	$	1,000.00	$	951.89	$	5.51		1.12
Class I-hypothetical 5% return	$	1,000.00	$	1,044.35	$	5.77		1.12
Small Cap Growth Fund
Class N-actual return	$	1,000.00	$	925.20	$	7.28		1.50
Class N-hypothetical 5% return	$	1,000.00	$	1,042.44	$	7.72		1.50
Class I-actual return	$	1,000.00	$	926.44	$	6.07		1.25
Class I-hypothetical 5% return	$	1,000.00	$	1,043.70	$	6.44		1.25
Small Cap Value Fund
Class N-actual return	$	1,000.00	$	935.44	$	7.32		1.50
Class N-hypothetical 5% return	$	1,000.00	$	1,042.44	$	7.72		1.50
Class I-actual return	$	1,000.00	$	937.04	$	6.05		1.24
Class I-hypothetical 5% return	$	1,000.00	$	1,043.75	$	6.39		1.24
Global Leaders Fund
Class N-actual return	$	1,000.00	$	977.82	$	6.93		1.39
Class N-hypothetical 5% return	$	1,000.00	$	1,042.99	$	7.16		1.39
Class I-actual return	$	1,000.00	$	979.78	$	5.49		1.10
Class I-hypothetical 5% return	$	1,000.00	$	1,044.45	$	5.67		1.10
Institutional Class-actual return	$	1,000.00	$	979.70	$	5.31		1.03
Institutional Class-hypothetical 5% return	$	1,000.00	$	1,044.81	$	5.31		1.03
Global Small Cap Growth Fund (In Liquidation)
Class N-actual return	$	1,000.00	$	995.22	$	8.30		1.65
Class N-hypothetical 5% return	$	1,000.00	$	1,041.68	$	8.49		1.65
Class I-actual return	$	1,000.00	$	997.95	$	6.35		1.26
Class I-hypothetical 5% return	$	1,000.00	$	1,043.65	$	6.49		1.26

204 Annual Report December 31, 2015

Fund Expenses (Unaudited)

	Beginning		Ending		Expenses Paid
	Account Value		Account Value		During		Annualized
Expense Example	7/1/2015		12/31/2015		the Period (a)		Expense Ratio
International Leaders Fund
Class N-actual return	$	1,000.00	$	984.56	$	6.20		1.24	%
Class N-hypothetical 5% return	$	1,000.00	$	1,043.75	$	6.39		1.24
Class I-actual return	$	1,000.00	$	985.35	$	5.65		1.13
Class I-hypothetical 5% return	$	1,000.00	$	1,044.30	$	5.82		1.13
Institutional Class-actual return	$	1,000.00	$	986.01	$	4.91		0.98
Institutional Class-hypothetical 5% return	$	1,000.00	$	1,045.06	$	5.05		0.98
International Equity Fund
Class N-actual return	$	1,000.00	$	954.99	$	6.50		1.32
Class N-hypothetical 5% return	$	1,000.00	$	1,043.35	$	6.80		1.32
Class I-actual return	$	1,000.00	$	956.11	$	5.28		1.07
Class I-hypothetical 5% return	$	1,000.00	$	1,044.61	$	5.51		1.07
Institutional International Equity Fund
Institutional Class-actual return	$	1,000.00	$	956.24	$	4.93		1.00
Institutional Class-hypothetical 5% return	$	1,000.00	$	1,044.96	$	5.15		1.00
International Growth Fund
Class N-actual return	$	1,000.00	$	940.63	$	6.95		1.42
Class N-hypothetical 5% return	$	1,000.00	$	1,042.84	$	7.31		1.42
Class I-actual return	$	1,000.00	$	941.69	$	5.58		1.14
Class I-hypothetical 5% return	$	1,000.00	$	1,044.25	$	5.87		1.14
Institutional International Growth Fund
Institutional Class-actual return	$	1,000.00	$	942.85	$	4.70		0.96
Institutional Class-hypothetical 5% return	$	1,000.00	$	1,045.16	$	4.95		0.96
International Small Cap Growth Fund
Class N-actual return	$	1,000.00	$	1,025.64	$	7.51		1.47
Class N-hypothetical 5% return	$	1,000.00	$	1,042.59	$	7.57		1.47
Class I-actual return	$	1,000.00	$	1,027.94	$	5.93		1.16
Class I-hypothetical 5% return	$	1,000.00	$	1,044.15	$	5.98		1.16
Institutional Class-actual return	$	1,000.00	$	1,027.89	$	5.52		1.08
Institutional Class-hypothetical 5% return	$	1,000.00	$	1,044.56	$	5.57		1.08
Emerging Markets Leaders Fund
Class N-actual return	$	1,000.00	$	845.95	$	7.63		1.64
Class N-hypothetical 5% return	$	1,000.00	$	1,041.73	$	8.44		1.64
Class I-actual return	$	1,000.00	$	846.97	$	6.01		1.29
Class I-hypothetical 5% return	$	1,000.00	$	1,043.50	$	6.64		1.29
Institutional Class-actual return	$	1,000.00	$	848.20	$	5.82		1.25
Institutional Class-hypothetical 5% return	$	1,000.00	$	1,043.70	$	6.44		1.25
Emerging Markets Growth Fund
Class N-actual return	$	1,000.00	$	829.81	$	6.92		1.50
Class N-hypothetical 5% return	$	1,000.00	$	1,042.44	$	7.72		1.50
Class I-actual return	$	1,000.00	$	831.22	$	5.77		1.25
Class I-hypothetical 5% return	$	1,000.00	$	1,043.70	$	6.44		1.25
Institutional Class-actual return	$	1,000.00	$	831.74	$	5.40		1.17
Institutional Class-hypothetical 5% return	$	1,000.00	$	1,044.10	$	6.03		1.17
Emerging Markets Small Cap Growth Fund
Class N-actual return	$	1,000.00	$	886.63	$	7.85		1.65
Class N-hypothetical 5% return	$	1,000.00	$	1,041.68	$	8.49		1.65
Class I-actual return	$	1,000.00	$	888.56	$	6.24		1.31
Class I-hypothetical 5% return	$	1,000.00	$	1,043.40	$	6.75		1.31
Institutional Class-actual return	$	1,000.00	$	889.18	$	5.95		1.25
Institutional Class-hypothetical 5% return	$	1,000.00	$	1,043.70	$	6.44		1.25
Bond Fund
Class N-actual return	$	1,000.00	$	994.29	$	3.07		0.61
Class N-hypothetical 5% return	$	1,000.00	$	1,046.92	$	3.15		0.61
Class I-actual return	$	1,000.00	$	996.10	$	2.06		0.41
Class I-hypothetical 5% return	$	1,000.00	$	1,047.93	$	2.12		0.41
Institutional Class-actual return	$	1,000.00	$	996.41	$	1.76		0.35
Institutional Class-hypothetical 5% return	$	1,000.00	$	1,048.24	$	1.81		0.35

December 31, 2015 William Blair Funds 205

Fund Expenses (Unaudited)

	Beginning		Ending		Expenses Paid
	Account Value		Account Value		During		Annualized
Expense Example	7/1/2015		12/31/2015		the Period (a)		Expense Ratio
Income Fund
Class N-actual return	$	1,000.00	$	997.69	$	4.08		0.81	%
Class N-hypothetical 5% return	$	1,000.00	$	1,045.92	$	4.18		0.81
Class I-actual return	$	1,000.00	$	998.98	$	2.77		0.55
Class I-hypothetical 5% return	$	1,000.00	$	1,047.23	$	2.84		0.55
Low Duration Fund
Class N-actual return	$	1,000.00	$	999.55	$	3.02		0.60
Class N-hypothetical 5%	$	1,000.00	$	1,046.98	$	3.10		0.60
Class I-actual return	$	1,000.00	$	1,000.56	$	2.12		0.42
Class I-hypothetical 5%	$	1,000.00	$	1,047.88	$	2.17		0.42
Institutional Class-actual return	$	1,000.00	$	1,000.70	$	2.02		0.40
Institutional Class-hypothetical 5% return	$	1,000.00	$	1,047.98	$	2.06		0.40
Macro Allocation Fund
Class N-actual return	$	1,000.00	$	901.22	$	6.09		1.27
Class N-hypothetical 5%	$	1,000.00	$	1,043.60	$	6.54		1.27
Class I-actual return	$	1,000.00	$	902.31	$	4.70		0.98
Class I-hypothetical 5%	$	1,000.00	$	1,045.01	$	5.05		0.98
Institutional Class-actual return	$	1,000.00	$	902.43	$	4.32		0.90
Institutional Class-hypothetical 5% return	$	1,000.00	$	1,045.46	$	4.64		0.90

(a) Expenses are equal to the annualized expense ratio, multiplied by the average account value over the period, multiplied by the number of days in the period, 184, and divided by 365 (to reflect the one-half year period).

206 Annual Report December 31, 2015

BOARD OF TRUSTEES

Vann A. Avedisian

Principal, Highgate Holdings

Kathleen T. Barr

Retired Senior Managing Director, PNC Capital Advisors, LLC

Phillip O. Peterson

Retired Partner, KPMG LLP

Donald J. Reaves

Retired Chancellor, Winston-Salem State University

Donald L. Seeley

Retired Adjunct Lecturer and Director, University of Arizona Department of Finance

Michelle R. Seitz, Chairman and President

Partner, William Blair

Thomas J. Skelly

Retired Managing Partner, Accenture

Richard W. Smirl, Senior Vice President

Partner, William Blair

Officers

Michael P. Balkin, Senior Vice President

Stephanie G. Braming, Senior Vice President

Karl W. Brewer, Senior Vice President

Thomas Clarke, Senior Vice President

Daniel Crowe, Senior Vice President

Simon Fennell, Senior Vice President

Andrew G. Flynn, Senior Vice President

David C. Fording, Senior Vice President

James S. Golan, Senior Vice President

Michael A. Jancosek, Senior Vice President

John F. Jostrand, Senior Vice President

Chad M. Kilmer, Senior Vice President

Robert C. Lanphier, IV, Senior Vice President

Mark T. Leslie, Senior Vice President

Kenneth J. McAtamney, Senior Vice President

Todd M. McClone, Senior Vice President

David Merjan, Senior Vice President

David S. Mitchell, Senior Vice President

John C. Murphy, Senior Vice President

Casey K. Preyss, Senior Vice President

David P. Ricci, Senior Vice President

Brian D. Singer, Senior Vice President

Jeffrey A. Urbina, Senior Vice President

Christopher T. Vincent, Senior Vice President

David F. Hone, Vice President

Paul J. Sularz, Vice President

Colette M. Garavalia, Treasurer

Andrew T. Pfau, Secretary

John M. Raczek, Assistant Treasurer

Walter R. Randall, Jr., Chief Compliance Officer and Assistant Secretary

Investment Adviser

William Blair Investment Management, LLC

Distributor

William Blair & Company, L.L.C.

Independent Registered Public Accounting Firm

Ernst & Young LLP

Legal Counsel

Vedder Price P.C.

Transfer Agent

Boston Financial Data Services, Inc.

P.O. Box 8506

Boston, MA 02266-8506

For customer assistance, call 1-800-635-2886

(Massachusetts 1-800-635-2840)

December 31, 2015 William Blair Funds 207

William Blair Funds
DOMESTIC EQUITY	GLOBAL EQUITY	FIXED-INCOME
Growth Fund	Global Leaders Fund	Bond Fund
Large Cap Growth Fund	Global Small Cap Growth Fund	Income Fund
Large Cap Value Fund		Low Duration Fund
Mid Cap Growth Fund	INTERNATIONAL EQUITY
Mid Cap Value Fund	International Leaders Fund	MULTI-ASSET AND
Small-Mid Cap Growth Fund	International Equity Fund	ALTERNATIVE
Small-Mid Cap Value Fund	Institutional International Equity Fund	Macro Allocation Fund
Small Cap Growth Fund	International Growth Fund
Small Cap Value Fund	Institutional International Growth Fund
	International Small Cap Growth Fund
	Emerging Markets Leaders Fund
	Emerging Markets Growth Fund
	Emerging Markets Small Cap Growth Fund

		©	William Blair & Company, L.L.C., distributor
	+1 800 742 7272		222 West Adams Street
	williamblairfunds.com		Chicago, Illinois 60606	00103188

Item 2. Code of Ethics

As of the end of the period covered by this Form N-CSR, the Registrant has adopted a code of ethics that applies to its principal executive officer and principal financial officer. Such code of ethics is posted on the Registrant’s website: www.williamblairfunds.com. There were no amendments to or waivers of the code of ethics during the period covered by this report. 

Item 3. Audit Committee Financial Expert

The Registrant’s Board of Trustees has determined that the Registrant has at least one “audit committee financial expert” (as defined in Item 3 of Form N-CSR) serving on its Audit Committee. Mr. Phillip O. Peterson, the Registrant’s audit committee financial expert, is “independent” for purposes of Item 3 to Form N-CSR.

An “audit committee financial expert” is not an “expert” for any purpose, including for purposes of Section 11 of the Securities Act of 1933, as a result of being designated as an “audit committee financial expert.” Further, the designation of a person as an “audit committee financial expert” does not mean that the person has any greater duties, obligations, or liability than those imposed on the person without the “audit committee financial expert” designation. Similarly, the designation of a person as an “audit committee financial expert” does not affect the duties, obligations, or liability of any other member of the audit committee or Board of Trustees. 

Item 4. Principal Accountant Fees and Services

Audit Fees

For the fiscal years ended December 31, 2014 and 2015, Ernst & Young, LLP, the Registrant’s principal accountant (“E&Y”), billed the Registrant $708,600 and $719,700, respectively, for professional services rendered for the audit of the Registrant’s annual financial statements or services that are normally provided in connection with statutory and regulatory filings.

Audit-Related Fees

For the fiscal years ended December 31, 2014 and 2015, E&Y billed the Registrant $0 and $0, respectively, for assurance and related services that are reasonably related to the performance of the audit of the Registrant’s financial statements and that are not reported above, such as reviewing prospectuses, semiannual reports and SEC filings. For the fiscal years ended December 31, 2014 and 2015, E&Y provided no audit-related services to William Blair Investment Management, LLC, the Registrant’s investment advisor (“William Blair”) or any of its control affiliates that were for engagements directly related to the Registrant’s operations and financial reporting.

Tax Fees

For the fiscal years ended December 31, 2014 and 2015, E&Y billed the Registrant $256,150 and $311,900, respectively, for professional services rendered for tax compliance, tax advice and tax planning. Such services consisted of preparation of tax returns, year-end distribution review, qualifying dividend income analysis and computation of foreign tax credit pass-through. For the fiscal years ended December 31, 2014 and 2015, E&Y did not bill William Blair and its control affiliates for any services that were for engagements directly related to the Registrant’s operations and financial reporting.

All Other Fees

For the fiscal years ended December 31, 2014 and 2015, E&Y did not bill the Registrant for products and services other than the services reported above. For the fiscal year ended December 31, 2014 and 2015, E&Y provided no other services to William Blair or any of its control affiliates that were for engagements directly related to the Registrant’s operations and financial reporting.

Audit Committee Pre-Approval Policies and Procedures

Pursuant to Registrant’s Audit Committee Charter (the “Charter”), the Audit Committee is responsible for pre-approving any engagement of the principal accountant to provide non-prohibited services to the Registrant, including the fees and other compensation to be paid to the principal accountant, to the extent required by Rule 2-01(c)(7) of Regulation S-X. Pursuant to the Charter, the Audit Committee is also responsible for pre-approving any engagement of the principal accountant, including the fees and other compensation to be paid to the principal accountant, to provide non-audit services to the Registrant’s investment advisor (or any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the Registrant), if the engagement relates directly to the operations and financial reporting of the Registrant, to the extent required by Rule 2-01(c)(7) of Regulation S-X. The Chair of the Audit Committee may grant the pre-approval referenced above for non-prohibited and non-audit services. All such delegated pre-approvals will be presented to the Audit Committee no later than the next Audit Committee meeting. 

Item 5. Audit Committee of Listed Registrants

Not Applicable to this Registrant, insofar as the Registrant is not a listed company.

Item 6. Schedule of Investments

See Schedule of Investments in Item 1.

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies

Not applicable to this Registrant, insofar as the Registrant is not a closed-end management investment company.

Item 8. Portfolio Managers of Closed Investment Companies

Not applicable to this Registrant, insofar as the Registrant is not a closed-end management investment company.

Item 9. Purchase of Equity Securities by Closed-End Management Investment Companies and Affiliated Purchasers

Not applicable to this Registrant, insofar as the Registrant is not a closed-end management investment company.

Item 10. Submission of Matters to a Vote of Security Holders

There have been no material changes to the procedures by which shareholders may recommend nominees to the Registrant’s Board of Trustees since the Registrant last provided disclosure in response to this item.

Item 11.

Controls and Procedures

(a) The Registrant’s principal executive and principal financial officer, or persons performing similar functions, have concluded that the Registrant’s Disclosure Controls and Procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”) (17 CFR 270.30a-3(c)) are effective, as of a date within 90 days of the filing date of this report that includes the disclosure required by this paragraph, based on their evaluation of these controls and procedures required by Rule 30a-3 (b) under the 1940 Act (17 CFR 270.30a-3(b) and Rules 13a-15(b) or 15d-15(b) under the Exchange Act (17 CFR 240.13a-15(b) or 240.15d-15(b)).

(b) There were no changes in the Registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d)) that occurred during the final quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting.

Item 12. Exhibits

12. (a) (1) Code of Ethics

Not applicable because it is posted on Registrant’s website.

12. (a) (2) (1)

Certification of Principal Executive Officer Required by Rule 30a-2(a) of the Investment Company Act

12. (a) (2) (2)

Certification of Principal Financial Officer Required by Rule 30a-2(a) of the Investment Company Act.

12. (a) (3)

Not applicable to this Registrant.

12. (b)

Certification of Chief Executive Officer and Certification of Chief Financial Officer Required by Rule 30a-2(b) of the Investment Company Act

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	William Blair Funds
	/s/ Michelle R. Seitz
By:	Michelle R. Seitz
	President (Chief Executive Officer)

Date: February 25, 2016

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

	/s/ Michelle R. Seitz
By:	Michelle R. Seitz
	President (Chief Executive Officer)

Date: February 25, 2016

	/s/ Colette M. Garavalia
By:	Colette M. Garavalia
	Treasurer (Chief Financial Officer)

Date: February 25, 2016